5 Stocks To Keep An Eye On As WGA Strike Could Bring Hollywood To A Halt: Why History Suggests Selling Movie Stocks During Strikes

Entertainment stocks were down on Tuesday after the Writers Guild of America (WGA) labor union endorsed a strike on the eve of May 2, disrupting the movie production industry.

Shares of Netflix Inc. NFLX fell 1.5% on the day, but other movie studio stocks experienced even greater declines.
Walt Disney Co. DIS eased 1.9%, Warner Bros. Discovery WBD was 2% down and Paramount Global PARA fell 2.4%. AMC Entertainment Holdings Inc AMC was the underperformer, tumbling 3.5%.

Chart: Entertainment Stocks Reaction To Hollywood's Writers Strike

The decision was made by the WGA after six weeks of fruitless negotiations with the Alliance of Motion Picture and Television Producers, which includes Netflix, Amazon.com, Inc. AMZN, Apple Inc AAPL, Disney, Warner Bros. Discovery, Comcast Corporation CMCSA NBCUniversal, Paramount and Sony Group Corp. SONY.

About 11,500 TV and film writers are now demanding higher pay and more secure employment, arguing that the shift to streaming in Hollywood has created an unstable, gig-like economy that has disrupted the sector.

Studios say they're cutting costs because decades-old network and cable TV business models are no longer viable as more consumers migrate to streaming.

On Monday, the Alliance of Motion Picture and Television Producers (AMPTP) announced "generous increases in compensation for writers as well as improvements in streaming residuals."

While the impacts of the strike will first be seen on talk shows, the effects on scripted programs and movies may take a while to be felt, but if the strike lasts long enough, future releases may be delayed.

The previous writers' strike, lasted three months, from November 2007 to February 2008.

During this period, studio stock prices declined significantly, with Walt Disney down 5%, Paramount down 10%, Comcast down 14%, and Warner Bros. down 16.6%.

Chart: Price Performance Of Movie Studio Stocks During The 2007–08 Writers Guild of America Strike