The failure of attempts to negotiate contracts between the Screen Actors Guild (SAG) and Hollywood studios may stir up a strike and be detrimental to entertainment and media related exchange traded funds (ETFs).

These feuds seem to be common to the industry, and even with the help of federal mediator Juan Carlos Gonzales, the two parties still can’t come to a compromise.  SAG states that “management continues to insist on terms we cannot responsibly accept,” and the Alliance of Motion Picture and Television Producers (AMPTP) states that due to economic conditions, it is not realistic for SAG to ask for a better deal then the one accepted earlier this year.  SAG is seeking union coverage for all internet-only productions, regardless of budget and residual payments for Internet productions replayed online and continued actor protection during times of no work, states the the Los Angeles Times.

What influence could a strike have?  After all, the industry considers itself fairly “recession proof”, still attracting financiers rolling the dice on Hollywood.  Additionally, of the approximately 120,000 actors that SAG represents, about 80% of them aren’t working actors.  Of the actors who are working, the average salary is between $50,000 and $60,000. With current economic conditions, one would think they wouldn’t give up work.

With investors and an array of actors on hand, movies, television shows and internet content are still being created and will continue to be created.  Hopefully, this potential strike won’t be as devastating as when the Writers Guild of America hit the picket lines, costing Los Angeles close to $2.5 billion.

PowerShares Leisure & Entertainment (PEJ): down 54.3% year-to-date

PowerShares Dynamic Media (PBS): down 56.3% year-to-date

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.