The deepening economic recession, changing entertainment landscape and shifting consumer demand has once again hit the media industry and its exchange traded funds (ETFs). It certainly dispels the notion that Hollywood is “recession-proof.”

“Dark Knight” Can’t Save It. Warner Brothers has announced that it is expected to eliminate 800 jobs, or about 10% of its global workforce, despite being the leader in domestic box office market share in 2008, mainly due to the strong performance of movies like “Dark Knight.” Perhaps Heath Ledger’s Oscar nomination today will be an added and needed boost for the film and the company.

This cost reduction measure will save the company approximately $50 million annually, states Claudia Eller of The Los Angeles Times.  Of these jobs, a big chunk will be outsourced to India, Poland and a third party outsourcing agency. 

Others Are Ailing. Warner Brothers isn’t the only one suffering.  Walt Disney Co. (DIS) is expected to cut a significant number of jobs; Clear Channel Communications slashed roughly 9% of its labor force; and media conglomerate Time Warner (TWX) got nailed with a $25 billion write down as a result of falling values in its AOL, cable and publishing assets.

These are devastating times for the entertainment industry and hopefully President Barack Obama’s massive spending plans will boost consumer spending and help the diminishing industry in an indirect way.

ETFs that may be influenced by these cost cutting strategies are:

PowerShares Dynamic Media (PBS): down 2.2% over the last month; TWX is 4.71% and DIS is 5.93%

PowerShares FTSE RAFI Consumer Services (PRFS): down 4.7% over the last month; media is 20.7% of stocks and TWX is 4%

Tags: Leisure & Entertainment, Media, Obama, PBS, PRFS, Retail, Sector ETFs