Hollywood is primed to have a miserable 2008, and that doesn’t bode well for the leisure and entertainment exchange traded fund (ETF). If this were a movie, it would be marketed as a suspenseful tear-jerker. Think "Panic Room" meets "Beaches."
This summer was a record-breaker for the movie studios, reports Paul R. La Monica at the Media Biz blog on CNNMoney. But this fall, things became sluggish and suddenly whether box-office sales would top last year’s $9.2 billion was in doubt.
Box office analyst Jeff Beck predicts there’s a decent chance that next year will top 2007, but it’s not a done deal. Studios are planning to take more gambles next summer, launching more potential franchises instead of "safer" sequels. Hallelujah!
And don’t forget the writer’s strike, which is just wrapping up its sixth week. And the Director’s Guild of America (DGA) may go on strike next year if they can’t reach a deal with the Alliance of Motion Picture & Television Producers (AMPTP). The effects, if any, likely won’t be seen at the movies until 2009. Will all of this activity be good or bad for the studios in 2008? One possible effect it could have is with less to watch on TV, people might head to the movies more, especially now that they know the studios aren’t planning to bore them with "Pirates of the Caribbean 7."
The PowerShares Dynamic Leisure & Entertainment (PEJ) could feel the effects of Hollywood’s actions in 2008. Year-to-date, it’s down 10.4%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.