Entertainment Industry Struggles Amid Pandemic are Complicated
today at 9:02 am
COVID-19 has hit a lot of different sectors of the economy hard, for many different reasons, but perhaps none is as complicated as the entertainment industry. Basically, if it’s something you had to go buy a ticket to, with long advance notice, it just isn’t happening in 2020.
The “event economy” or “fun sector” is basically wiped out for the time being. However, it doesn’t mean that it’s overall bearish for the entertainment sector until we pull ourselves out of the COVID-19 pandemic. The so-called “stay at home” economy is thriving, as this is now a great time for subscription streaming services. “Netflix and chill, anyone?”
However, the IRL (in real life) element is going to be absent at worst, severely altered at best, for quite a while. Take for instance the casino industry. Times are better for online sites like GambleGuys and worse for the brick and mortar casinos like MGM Resorts.
Consensus Estimates are calling for MGM earnings to hit -$1.21 per share, while still generating a revenue figure of $6.56 billion. That translates to year-over-year changes of -131.19% and -49.11%, respectively. Earnings season is always a volatile time of year, but as MGM approaches its next release of the earnings data, the projection for this quarter would be a reported earnings of -$1.52 per share. Extrapolate that to a full fiscal year, and you’re at a decline of 760.87%. Ouch.
Overall though, it’s less of a bloodbath then you might expect. When you look at how resort stocks are performing against the rest of the market, yes they are lagging the S&P 500 and most consumer indices, but the gap isn’t as wide as you might think. Once again, it’s complicated. With the states differing on their re-opening plans, and zero leadership at the Federal level, there is not centralized plan to handle the coronavirus crisis.
You can’t really balance the concept of “the economy” or “reopening the economy” against lockdown/quarantine or “containing the virus.” The A vs. B narrative is a false choice narrative. In order to get people going out and having fun, i.e. refueling the entertainment industry, they need to feel comfortable and safe in doing so.
The sports betting industry is a curious case. Obviously, the shut down of sports has inhibited the industry and most brick and mortar sports books are functioning at reduced capacity, if they’re even open at all. On the plus side though, the legalization process for sports betting could be rapidly accelerated now in states where the covid crisis has ravaged state budgets. That’s because the potential for additional tax revenue will be critical.
However, the brutal truth is this- we’re talking mostly about industries and cottage industries that are all work at home, if at all until phase 5 re-opening. And considering that phase 5 doesn’t get here until there’s a widely available vaccine and/or therapeutic, well, it’s going to be a very long while.
It’s an overlooked story angle, but it’s very true- the current struggles of the entertainment industry are having extreme adverse effects on the American population at large. It’s not the only factor, but it is one reason we’re seeing so much unrest in ths country, and everyday new viral videos of everyday people behaving monstrously deplorable emerge.
Having been in lockdown for long periods, plus all the furloughs, layoffs and special events that people really look forward to getting canceled- it all adds up and people starting behaving dangerously, like they now have nothing to lose. In other words, we need to get this pandemic under control, do the work, so that we can have fun again later.
Paul M. Banks runs The Sports Bank.net, which is partnered with News Now. Banks, the author of “No, I Can’t Get You Free Tickets: Lessons Learned From a Life in the Sports Media Industry,” regularly contributes to WGN TV, Sports Illustrated, Chicago Now and SB Nation.
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