Three big banking companies said last week that they had identified media-related weaknesses in their loan portfolios.
They cited factors ranging from lower advertising revenues to increased cable competition and exposure to the beleaguered movie theater industry.
Unionbancal Corp., the San Francisco-based parent of Union Bank of California, said in a conference call Thursday that it is shifting scrutiny from syndicated lending to other parts of its loan book. Included is its $2 billion to $2.5 billion communications media portfolio, which the company said may come under pressure in a weakening economy.
Likewise, BancWest Corp. of Honolulu said that it had sold off a $14.8 million media credit this quarter.
And Bank of New York Co. said that part of an 8% increase in nonperforming loans came from a customer in the movie theater industry.
Phil Flynn, chief credit officer for Unionbancal, which is mostly owned by Bank of Tokyo-Mitsubishi Ltd., said that a variety of industry-specific issues were causing the portfolio to soften.
Cable companies, which make up 10% to 15% of Unionbancals communications loans, are a concern because of the increased competition to many smaller cable operators from direct satellite television, Mr. Flynn said. And broadcast companies, which account for about 30% of the portfolio, are starting to feel the pinch of an advertising slowdown.
In contrast, Bank of New Yorks problem media credit came from a group whose difficulties started to show up in loan portfolios last year.
One analyst, Ron Mandle of Sanford Bernstein, commended Bank of New York for its efforts to handle its loan difficulties. The bank has been pretty aggressive about dealing with its credits, he said.
Some analysts are worried that banking companies exposed to Southern California, such as Unionbancal, City National Corp. of Beverly Hills, and Comerica Inc., could be affected links to media-related businesses if a pending strike by writers and actors should go longer than expected.
Entertainment is one of the main drivers of the economy in Southern California, said Campbell Chaney, an analyst at Sutro & Co. Anyone who does business there will be hurt by a protracted strike, he said.