Economic linkage effects of September 11, 2001 terrorist attacks
"What's Eating Those Giant Media Stocks?" and "Demand Up for Security Services," New York Times, September 27, 2001
An immediate effect of the September 11, 2001 terrorist attacks was the more than 50% reduction of tourists traveling to such popular areas as New York, Las Vegas, New Orleans and Orlando. This in turn depressed the stock values of those giant media companies with a heavy emphasis on tourism.
For example, Walt Disney experienced an immediate decline of its stock value by more than 26%. A review of individual media companies reveals a close correlation between the percentages of revenues earned from tourism and advertising and declines in their stock values. Among giant media companies, the percentage of revenues from tourism and advertising were as follows: Disney-56%, Viacom-47%, News Corporation- 22%, and Time Werner-23%. The percentages of immediate declines of their stock values were Disney-26%, Viacom-14%, News Corporation- 22% and Time Warner-6%. During the same period, the stock price of media giant named Vivendi, which had a very little involvement with tourism and earned only 4% of total revenue from it, actually went up by 3%.
While airlines, hotels, restaurants, and tourism, and advertising were seriously suffering, demands for security services and protection soared from business, colleges, public agencies and cultural institutions. These services included not only enhancement of the current physical security but also background checks of new applicants, evacuation plans for overseas employees and security against chemical and biological warfare. The demands were so overwhelming that many companies had to hire retired or off-duty police officers, or simply had to refuse new demands. Before September 11, 2001, the security industry in America had annual revenues of $100 billion, but its growth outlook was flat. Following the terrorist attacks, its revenue was expected to grow significantly higher in the future.