Press Release: September 13, 2000

WR Hambrecht + Co Issues Filmed Entertainment Industry Report

Digital technology, M&A activity, and labor upset to dominate sector through 2001

San Francisco, CA, September 13, 2000—WR Hambrecht + Co today announced it began coverage of and issued an industry report on the filmed entertainment sector. The report looks at trends of the $27 billion movie (theatrical and home video), television, and cable industry. Perspectives on the Filmed Entertainment Industry is available on WR Hambrecht + Co’s web site at www.wrhambrecht.com.

“Entertainment conglomerates are becoming more consumer focused and less asset driven. Content has moved from King to catalyst as entertainment conglomerates evolve toward leveraging their brands in a convergent world. We sense a major shift in product creation and distribution as new pipelines to the consumer emerge, especially the opportunity presented by satellite and Internet technology,” said WR Hambrecht + Co’s Director of Equity Research and Entertainment analyst Jeff Logsdon.

The reports key findings include:

• Early adopters to e-distribution should benefit - Companies with a head start in electronic distribution should lead the valuation metrics as digital technology unfolds according to Logsdon.
• Technology creates demand for content - Content demand should increase as new distributions platforms (e.g., pay-per-view, video-on-demand, satellite and Internet) emerge. Domestic spending for pay-per-view nearly quadrupled last year to $1.5 billion, while spending on Direct Broadcast Satellite grew 18.7 percent last year to $8.2 billion.
• Labor issues could upset 2001 productions - A possible strike by the Screen Actors Guild and Writers Guild of America means major studios are hurrying productions through the pipelines for a film backlog in 2001. Logsdon adds that a strike longer than three months will affect the stocks of the major players.

Logsdon adds that the recent spate of mergers and acquisitions that began with AOL/Time Warner, Vivendi/Segram and Viacom/CBS is likely to continue.

“We expect more M&A activity in the months to come as both international and domestic convergence-conscious companies play musical chairs with a scarcity of options,” Logsdon said.

WR Hambrecht + Co today also initiated coverage on four Entertainment companies - Disney (DIS - Strong Buy), MGM (MGM - Strong Buy), Pixar (PIXR - Buy) and Viacom (VIA.B - Strong Buy).