Credit crisis taking new victims
The credit crisis is behaving as if it were a vampire searching around for fresh blood. This time it's the supposedly "recession proof" tech, entertainment and art sectors. Stacey Vanek-Smith has the story.
Christie's employee looks at a portrait by British artist Francis Bacon, at Christie's auction house, in London, on October 14, 2008. (Carl de Souza/AFP/Getty Images)
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TEXT OF STORY
Tess Vigeland: This fiscal mess has been around long enough now that it has its own list of usual suspects. The businesses that've suffered either through their own making or by proxy. The real estate industry. Investment bankers. Retailers. But other sectors like technology, entertainment, the art market, they seemed to be faring okay. Even talked about as "recession proof." Notice we put those sentences in past tense.
Marketplace's Stacey Vanek Smith reports.
Stacey Vanek Smith: Conventional wisdom has it that some businesses have become immune to economic ups and downs. Take it from Tony Soprano.
Tony Soprano: What two businesses have traditionally been recession proof since time immemorial? Certain aspects of show-business and our thing.
Well, no comment on Tony's business, but the movie business is taking a hit says Porter Bibb with Mediatech capital partners.
Porter Bibb: They are typically considered recession-proof because movies are among the cheapest form of entertainment. But there's new competition now. You have DVDs, movies on demand, on cable and free downloads on the internet.
Many studios have said they'll make fewer movies. Paramount is reportedly putting two major films on ice to tighten budgets. And it's not just traditionally recession-proof businesses getting squeezed. Recession-proof people are too. After years of record profits, the art market looks like its entering a red period. Syracuse University Art economist Arthur Brooks says that's because the market relies on wealthy collectors.
Arthur Brooks: Even people who were apparently recession-proof are having their net wealth affected.
That goes for Silicon Valley too. Venture capital money is drying up, and jobs are disappearing. Yahoo is expected to announce hundreds of layoffs when it reports earnings tomorrow. Jimmy Shaeffler is an analyst with the Carmel Group.
Jimmy Shaeffler: The tech sector, is about one-third full as opposed to two-thirds empty.
Shaffler says that's because a lot of technology has become an essential part of life. But he still predicts a very rough holiday season.
I'm Stacey Vanek Smith for Marketplace.
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