A favourite crutch of underperforming public companies: Blame the weather. Miss your sales goals for the quarter? That’s because it was too hot or too cold. But this spring saw a new twist on an old idea: Rather than blame mother nature for their woes, companies are pointing the finger at Hollywood.
Miraculously, the networks and studios themsleves emerged from this winter’s writers’ strike largely unscathed. But retail chains, restaurants and other companies — most of them with faint relationships with Hollywood — have all blamed the 14-week strike for their problems.
Limelight Networks (LLNW): CEO Jeff Lunsford claimed in the company’s Q4 2007 earnings call that the CDN would lose millions this year because of the writers’ strike. “New content is what draws viewers online, and there’s simply less new content in the ecosystem this year because of the strike,” Lunsford said. But Akamai (AKAM), Limelight’s much bigger competitor, says the strike had no impact on its business.
Neiman Marcus, Inc.: The upscale clothing-store chain saw revenues for the month of February decrease 7.3 per cent from the year before, particularly in its California stores. “The writers’ strike I think had an impact, no question,” said CEO Burt Tansky. “It took a great deal of money out of the economy while that strike was on.”
Warner Music Group (WMG): Warner said that publishing business saw “synchronisation revenue,” — money made when TV shows and advertisers use WMG-owned songs drop 4.5% in Q2. WMG said sync sales were “negatively impacted by the Writers Guild of America strike.”
Entercom Communications Corp (ETM): Q1 revenues for the radio broadcasting company were down, due in part to weaker national advertising. “I think for radio and Q1, you tie some of that to the writers strike so the spillover to television as people do national spot overlays…” CFO Stephen Fisher mused during Entercom’s Q1 call.
Morton’s Restaurant Group (MRT): A two-fer: During the steak chain’s Q4 2007 conference call, CEO Tom Baldwin said that both bad weather and the writers’ strike had an “adverse impact” on Q1 2008 results in the LA metro area.
Saks, Inc (SKS): At a Bank of America conference in March, CEO Steve Sadove said the company experienced “pockets of weakness,” in some areas, like Beverly Hills, where he claims Saks experienced a slowdown because of the writers’ strike.
Macquarie Infrastructure Company Trust (MIC): The infrastructure company, which provides fueling and transportation services at airports, suggested in their Q4 2007 earnings call that the strike decreased activity around Los Angeles, hurting its aviation facilities there.
Sport Chalet (SPCHA): CEO Craig Levra had an array of excuses for the sporting goods chain’s lousy performance in Q3 2008: Wildfires, warmer weather that led to a later start to the winter season and, of course, the writers’ strike.