Film and TV execs around the world are bracing for the worst as the global economic downturn continues to bite.
In some cases, such as Asia, it may be more a case of a perception that troubled times are ahead that's tightening execs' wallets, but there is sobering reality, too.
Broadcasters across Europe are being hit hard. U.K. net Channel 4 is axing nearly 15% of its 162-strong commercial team as part of its drive to save £100 million ($150 million) over two years.
Europe's second-largest TV group, ProSiebenSat.1, is cutting 225 jobs or some 7% of its 3,000 employees from its base in Germany.
Publicly quoted companies such as Virgin Media, RTL and BSkyB have all seen share prices fall by more than half in the past 12 months.
Russian film and TV producers are calling for cuts of up to 50% in crew and talent fees, while Mosfilm -- the country's largest studio -- has iced 20% of projects scheduled to go into production.
Film festivals including Spain's San Sebastian and Holland's CineKid have issued public warnings that threatened budget cuts could put them out of business. Most of these events rely on the public purse, which is being tightened, and sponsorship, which is falling off.
It's not all bad news, though. Pay TV and home entertainment are relatively recession resistant, according to analysts Screen Digest.
Trips to the cinemas are still good value, and admissions are unlikely to fall in the major European markets, said Karsten Grummitt, managing director of cinema research group Dodona, who describes his mood as "optimistic." However, admissions are likely to be hit in emerging markets, such as Hungary and Latvia, Grummitt said.
In the U.K., cinema advertising has grown this year by 4.7% to $279 million, according to ZenithOptimedia, pumped by pics including the latest Bond instalment, "Quantum of Solace," which has attracted auds worldwide.
In a sign that auds are hungry for feel-good fare -- and perhaps proof that people are preparing to stay at home more in the weeks ahead -- "Mamma Mia!" became the fastest-selling DVD of all time in the U.K., according to Universal. It sold 1.6 million units on its first day of release (Nov. 24), breaking the record set by "Titanic," which sold 1.1 million on its first day in 1998.
The recession will retard hardware upgrades, however, hitting Blu-ray, said Richard Cooper at Screen Digest.
In Asia, companies weathered a financial crisis that lasted from 1997 to the SARS outbreak in 2003, and most emerged lean and with little debt.
The central banks in Japan, China, Taiwan, Hong Kong and Singapore have some of the deepest reserves of any countries in the world.
However, that hasn't stopped economic spillover -- notably as multinationals have cut jobs, exports have slowed, and banks have become ultra-cautious -- and Japan and Singapore have now tipped into official recession.
"Global contagion has clearly hit Asia," said Vivek Couto, exec director at consultancy Media Partners Asia. "We expect advertising to decline in Japan, Hong Kong and Singapore, as well as in Australasia, next year."
Entertainment biz slowdown is at its sharpest in Japan, where TV advertising is plummeting, and South Korea, where box office revenues are falling in relation to ebbing consumer confidence. In contrast, box office has overtaken 2007 totals in China and Hong Kong.
Some analysts forecast that Asia could recover from the global slowdown quicker than Europe and the U.S., powered by China and India.
Last week Chinese state broadcaster CCTV reported advanced ad sales for 2009 were up 15%. And venture capital investment in China was up 22% to $964 million in the third quarter, breaking the annual record.
India's economy looks shakier than China's and overexpansion in certain sectors, such as Hindi-language generalist TV channels, is bound to mean casualties.
The message is mixed in the Middle East, until recently seen by many U.S. studios as a big growth market.
Dubai played host Nov. 20 to the lavish, celeb-filled opening of mega-hotel Atlantis, which reportedly cost $30 million. Some analysts, however, are questioning whether the event was Dubai's attempt to show the world it was open for business as usual or a last hurrah before a financial crash. For weeks now, Dubai authorities have faced questions from investors as about the stability of its financial system. Much of Dubai's spectacular growth in recent years has been funded by highly leveraged debt and speculation on future income.
"The government can and will meet all obligations," Mohammed Ali Alabbar, a member of the Dubai Executive Council, told an audience at the Dubai Intl. Financial Center on Monday.
Investment rating agency Moody's expects Dubai's debt to outpace gross domestic product for five years. That could mean the more grandiose schemes, such as the planned Singapore-sized entertainment destination Dubailand, which includes Universal, Paramount and Marvel theme parks, could be affected by the global recession.
Another source of concern affecting all Gulf states is the decline in the price of oil, from an all-time high $147 per barrel in July to its current level around $50. That is close to the minimum price required by the operating costs of Saudi Arabia and Abu Dhabi.
Amid so much economic gloom, Latin America remains an exception. Slowing but not yet contracting, major economies are not yet in official recession.
But the slowdown is already hurting cinema attendance, and recession in much of the world may catch up with some major TV ad markets such as Mexico and Argentina next year. Argentine nets have already taken to broadcasting domestic reruns.
B.O. is flat in Brazil and Mexico but dipping in much of the region. A strong dollar is exacerbating woes.
"Some distributors in Latin America are running out of cash because of lower cinema admissions," said Eduardo Costantini, prexy of Buenos Aires based-Costa Films, a rare cash-rich Latin American film company. "Distributors are willing to pay some 25% less than six months ago."
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