Media Stocks Ride Dow Roller-Coaster

COMMENTS (8)

• It’s not like the media companies have been doing much to boost investor confidence. Never has so much money been spent by so many for films seen by so few.

  I’ve been doing some research on some of the accounting rules involved in the current crisis. Apparently some of the mortgage backed securities are being valued not on the value of the property, and the solvency of the people paying the mortgage, but on what the securities market is willing to pay for them. Which right now isn’t much, which causes their value to plummet even further.

  It was started to stop Enron like shenanigans, but now many economy wonks consider it a key ingredient in the current troubles.

  It’s definitely an interesting view, and I’m going to have to look into it further.

  Comment by Furious D — Tuesday September 23, 2008 @ 2:39pm PDT  Reply to this post

• Wha?! But…but….how are the CEO’s going to survive without those million dollar golden parachutes?! People seem to quickly forget that they too are taking a BIG hit with the market, some have probably lost millions in value. That only leaves millions more! Where’s the humanity when such as CEO’s are judged like the rest of us.

  Comment by shaun — Tuesday September 23, 2008 @ 2:52pm PDT  Reply to this post

• “Apparently some of the mortgage backed securities are being valued not on the value of the property, and the solvency of the people paying the mortgage, but on what the securities market is willing to pay for them. Which right now isn’t much, which causes their value to plummet even further.”

  If RMBS and CMBS are such a bargain, why isn’t Warren Buffet swooping in and buying it all up? A: Much of it nearly worthless paper. As both the housing and commercial real estate market more fully decline, much of it will be completely worthless. Whatever Paulson would pay for that paper would be above market.

  Comment by Lionel — Tuesday September 23, 2008 @ 5:57pm PDT  Reply to this post

• If RMBS and CMBS are such a bargain, why isn’t Warren Buffet swooping in and buying it all up?

  I just saw on the news that Warren Buffet’s company is buying $5 billion in one of the big brokerages that’s been hit hard by the sub-prime boondoggle. And while the paper maybe worthless, the underlying assets, even with falling home prices, is still valuable than the paper.

  I also just saw that the FBI has opened a file on Lehman, Fannie Mae, Freddie Mac, and AIG. This could mean a perp walk instead of a golden parachute, because when it comes to white collar crime Federal Attorneys can get anyone convicted of anything.

  Comment by Furious D — Tuesday September 23, 2008 @ 7:19pm PDT  Reply to this post

• Media companies are bad investments over the long run. Media companies are for the most part poorly run with overpaid managers who overpay talent. The next few years should see a dramatic drop in pay across the board. Money is drying up for ‘risk’ investments. Why should Hollywood be immune from the credit crunch.

  There is a lot more downside in the markets in the next month. And it’s not the short sellers that people should be blaming.

  Comment by longridge — Tuesday September 23, 2008 @ 7:41pm PDT  Reply to this post

• Berkshire to GS: “I Got $5 Billion, but Its Gonna Cost Ya”
  Posted by Barry Ritholtz on Tuesday, September 23, 2008 | 10:04 PM
  in Corporate Management | Credit | Finance | M&A | Psychology/Sentiment
  Tonight’s Goldman Sachs/Warren Buffett deal is a classic example of our post 2001 news: Looks good as a headline, is godawful underneath. Of course, futures popped on the announcement.

  The WSJ subhead read “Move by Famed Investor Amid Crisis Seen as Vote of Confidence in Banking System.”

  Puh-leeze.

  Vote of confidence? Hardly. Doubtful. It is merely an opportunistic deal, and probably a damn good one, for Berkshire Hathaway (BRK). On the other hand, for Goldman Sachs, it is a very expensive deal. If you delve beneath the headlines, you see that Warren is not so much making a vote of confidence as he is extracting pound of flesh (and then some).

  Comment by Lionel — Tuesday September 23, 2008 @ 9:30pm PDT  Reply to this post

• the feds overreach all the time and get slapped back and charges get dropped, sometimes quietly

  most recently, in las vegas, charges were dropped in some ALLEGED doctor/lawyer kickback scheme

  Comment by not true that the feds can convict anybody of anything — Wednesday September 24, 2008 @ 12:11am PDT  Reply to this post

• There are 3 valuation models out there that FuriousD and all of those who don’t know a lot about the financial crises needs to be schooled on

  1) Mark to Market…where all these fancy-pants complex securities based on all kinds of debt (mortgages, car loans, credit cards, forms of insurance on all of the above…the list is endless) are actually bought and sold in a real market…this is something that has never been done before in any large scale way for CDOs of a lot of kinds (many of which are very recent inventions). This is what needs to happen now but has so scared the bejeezus out of the investment bankers that they all are no longer in the business of pure investment banking but have become bank holding companies, meaning they can buy commercial bank deposits and most inportantly (and shockingly) go to the FDIC emergency window for immediate cash.

  2) Mark to Model…where all the pricing of these ‘financial products’ is done by theoretical computer modeling which if the bankers have coerced the quants (their computer programmers and mathematicians and statisticians) into making all kinds of crazy and overly optimistic assumptions about the pricing and the markets you get…

  3) Mark to Make-Believe…which is how these instruments are currently carried on the books (if they are carried at all…in which case they’re squirreled away…or at the very least the debt associated with them into so called ‘structured investment vehicles’ This is the kind of bookkeeping that got Enron and WorldCom into trouble (not to mention what it is doing to our own federal government…the costs of the Iraq war, Medicare and Social Security being but 3 programs that are not officially carried in the US budget figures…Congress and the Bush administration have been trying to do the same with all the bailouts — keep them off the books — with varying degrees of success. You should have seen how freaked out Bush and his administration were when the government accountants told them that they had to declare the Fannie Mae & Freddie Mac bailouts on the federal government books…priceless!)

  Now throw in a largely ignorant Congress (Ron Paul may be one of the few members of the House banking committee that appreciates these issues as he has been on the committee since the late 1970s and is fascinated by this stuff), a clearly clueless President and a Fed Reserve chairman and a Treasury secretary who are making this sh*t up as they go along and tell me this will end well for any industry, especially an industry that for the last several years that has so heavily depended on OPM — other people’s money — and you should come to the same conclusion that William Goldman came to about Hollywood.

  Nobody knows anything.

  I don’t see this global financial drama ending happily but maybe there’s a deus ex machina that can fix it…or does that only happen in Hollywood stories?

  I think people still want to and have a need for entertainment even in the darkest of times but the way it currently gets made and financed may have to change.

  At least we can say we live in interesting times even if a lot of Hollywood product isn’t very compelling to watch. I am hopeful that at least the way entertainment gets made can change but I am not so optimistic about our government or our financial system.

  Comment by Anonymous Fan Wag — Thursday September 25, 2008 @ 9:26am PDT  Reply to this post