Stocks Bear Black Tuesday Stocks Bear Black Tuesday / Dow Plummets Almost 300; Media Shares Take...

The U.S. stock market plunged Tuesday in its worst decline of the year, pummeling media and entertainment stocks and triggering worries that the big grizzly bear may be waking up from his long hibernation.

"All of the support seems to be disappearing very quickly," said Marc Gabelli, portfolio manager with Gabelli Funds. "But there's a smart place to put and keep money, and it includes some of these entertainment companies."

The Dow Jones industrial average, a widely watched barometer of Wall Street's health, sank 299.43, or 3.4%, to 8,487.31. It was the Dow's worst point decline this year and the third largest ever. The average has fallen more than 880 points, or 9.7%, since setting an intraday record July 20.

The broader market also has been trounced amid increasing economic and political worries. The Standard & Poor's 500-stock index is down nearly 10% since setting a record in July, and the technology-laden Nasdaq Composite Index is off nearly 12% from its high.

Still, the Dow remains up nearly fourfold since Oct. 19, 1987, when Wall Street plunged an incredible 22.6% in what became known as Black Monday. The bull market began in earnest around 1990 and has continued throughout the presidency of Bill Clinton, who was subpoenaed last month in the Monica Lewinsky case.

Observers said the market has tended to react negatively to presidents in trouble and facing uncertainty. For instance, they pointed out that the Dow sank 10% in less than two weeks after President Eisenhower suffered a heart attack in September 1955. And the market sank nearly 20% around the time of Richard Nixon's resignation as president in August 1974.

"The presidential stuff has been a little problematic for the market," Cruttenden Roth Inc. analyst Jeffrey Logsdon said. "The market is nervous about a lot of things, including disappointing corporate earnings and Asia's economic downturn."

Analysts said the summer rally that lifted many media stocks to new highs was helped by recent deals, including the proposed $40 billion-plus merger of long-distance telco AT&T Corp. and cable giant Tele-Communications Inc. There's also been more aggressive investment in the media industry by Dallas-based buyout firm Hicks, Muse, Tate & Furst Inc. and from billionaire Paul Allen.

"Cable stocks have been hot," Drake & Co. analyst Arthur Rockwell said. "They have had a terrific run-up as Bill Gates and Paul Allen have rushed to find cable as the medium that will handle the wired world of the future."

Cable-related stocks were among the hardest hit industry stocks Tuesday. Cablevision Systems Corp. sank 57Ú16, or 6.1%, to 831Ú2; Time Warner fell 37Ú8, or 4.3%, to 853Ú8; TCI Class A eased 11Ú2, or 3.7%, to 383Ú4; and Comcast Corp. lost 11Ú4, or 2.8%, to 437Ú16. Also, Century Communications Corp. dropped9Ú16, or 2.7%, to 1915Ú16; Jones Intercable Inc. slipped 19Ú16, or 5.7%, to 2511Ú16; and MediaOne Group Inc. fell 11Ú16, or 1.5%, to 461Ú8.

Tuesday's drop also erased summer gains by studio parents such as Viacom Inc. and Rupert Murdoch's News Corp. Viacom's widely held Class B stock slipped 2, or about 3%, to 651Ú4, and News Corp.'s U.S.-listed stock lost 7Ú16, or 1.5%, to 283Ú8.

The Walt Disney Co., a top-performing entertainment stock through most of the 1990s bull market, touched an all-time high in May but has underperformed this summer because of an earnings slowdown. On Tuesday, Disney fell 17Ú8, or 5.4%, to 3213Ú16.

Analysts said Disney was hit hard Tuesday in part because it is one of 30 components in the Dow average and subject to computer-based programming trading by big institutional investors. Selling on Tuesday widened after Ralph Acampora, an influential market strategist at Prudential Securities, made a bearish market forecast to the firm's army of brokers and predicted that the Dow would fall as much as 20% from its record close of 9,337.97 on July 17.

Other industry Dow stocks were pounded. NBC parent General Electric Corp. dropped 41Ú16, or 4.5%, to 857Ú16, and film products giant Eastman Kodak Co. sank 7Ú16, or .5%, to 811Ú16.

Elsewhere, Universal Studios parent Seagram Co.'s U.S.-traded stock fell 21Ú16, or 5.7%, to 343Ú16; MGM Inc. sank 111Ú16, or 8.6%, to 1715Ú16; USA Networks Inc. lost 21Ú16, or about 7%, to 275Ú8; and Sony Corp.'s U.S.-listed stock fell 15Ú16, or 1.1%, to 821Ú16.

Analysts said it may be too early to tell whether the bear market has arrived. But they said jittery investors appear to be fleeing to companies with strong earnings growth and avoiding companies without a proven track record.

As evidence, observers pointed to the recent declines of many Internet-related stocks, which just a month ago were hitting record highs. Many of these stocks were trading without a earnings history and based on profit projections going into the new millennium.

"There's a rush to quality," analyst Rockwell said. "I don't think the fundamentals have changed much, but with a slowing economy and the effects of the Asian economy, we're in a flat to slightly down period."

Even with market confidence shaken, Furman Selz Llc. analyst Stewart Halpern said investors shouldn't get rid of all their entertainment stocks. "A number of these companies are in businesses that are defensive in nature," he said. "If the market continues to fall, I would expect some of them to hold up better."

TD Securities analyst Richard MacDonald said the market was ripe for a slide. "Some of these prices are crazy," he said, adding that his firm lowered its investment rating Tuesday on Time Warner stock to a "hold" given the stocks recent run-up. He pointed out that Time Warner stock has enjoyed a rally for more than a year.

Portfolio manager Gabelli remains bullish on the media and entertainment giant. "I would hold onto stocks such as Time Warner (that) continue to show growth," he said. "They are showing solid, double-digit growth across all of their businesses and paying down debt."

Gabelli also likes Viacom Inc., the parent of Paramount, video rental chain Blockbuster and MTV Networks. "Right now, Viacom is trading at the value of the MTV Networks alone," he said. "It's a very cheap stock."

Gabelli also sees cable as a smart area, particularly if the market goes into a bearish period. "Those type of stocks tend to have more of an orientation toward assets," he said. "They have good cash flow with a strong customer base."

But Gabelli is more cautious about Disney, given the profit slowdown and its high multiple relative to earnings. "They have great (brand) values," he said. "I wouldn't sell if you own it but wouldn't aggressively buy it."

Some also are leery of advertiser-driven stocks if the economy slides. They also worry about earnings for broadcasters in the third quarter given the impact of the General Motors strike.

"We're seeing more reports on the impact of the GM strike," Josephthal & Co. analyst Dennis McAlpine. "There's an expectation of advertising slowing down."

McAlpine said the broadcasting stocks were "pushed to high premiums" on the industry consolidation. "The stuff that had the biggest run-up will be the stuff that gets the hit earliest."