The stock market is tanking, debt levels are rising, China is locked in a trade war with the United States and economics sage Alan Greenspan recently warned investors to run for cover. No wonder people fear there’s a recession coming.

“When you see all this market volatility, it’s a sign that a lot of people who think very hard about these things and have a lot of money on the line are worried that things are slowing down,” said Charles Ballard, professor of economics at Michigan State University.

If investors’ fears are justified, then the decade of economic growth the world has been enjoying could soon come to an end, leading to significant job losses, a capital crunch and a whole lot of pain.

But what does that mean for the media and entertainment sector, a business that has historically endured financial downturns better than other industries?

Though the movie business has been able to largely weather tough economic times, given that going to local multiplexes is still a relatively cheap form of entertainment, media companies that make and distribute content have become so conglomerated that it’s difficult for them to be totally immune to a financial downturn.

Nearly every major movie studio exists as a small cog in a much larger enterprise, residing alongside television studios, cable businesses or phone companies. These sectors are more likely to feel the impact of a major slump.

For one thing, advertising often takes a hit during a recession as companies look for ways to cut costs. That’s bad news for both the broadcast and cable businesses, which depend on advertising to boost their bottom lines. In 2009, for instance, with the country mired in a downturn, companies cut way back on their print and television spots, pushing total U.S. ad sales down more than 15%. A similar decline could be in store during the next slowdown, causing problems for media giants.

“The media industry is not insulated from broader economic trends,” said media analyst Hal Vogel, head of Vogel Capital Management. “If companies are running on empty, they can’t pay millions for a 30-second spot on the Super Bowl or the Oscars.”

There are other causes for concern that suggest a downturn could be even more damaging to Hollywood. Cord cutting, the industry term for consumers’ abandonment of cable in favor of lower-cost streaming services, has been a major issue for the Disneys and WarnerMedias of the world — companies that have grown rich on retransmission fees. The number of people who canceled pay-TV subscriptions in 2018 grew 32.8%, to 33 million adults, according to research firm eMarketer. That trend could accelerate as disposable income grows tighter and Disney and WarnerMedia launch streaming services that could siphon off bargain hunters tired of writing big checks to Time Warner Cable and Comcast.

“Generally, we are an industry that’s recession proof. If there are good movies, people will want to see them.”

Jeff Goldstein, head of domestic distribution, Warner Bros.

The last financial disaster was precipitated by a housing bubble and a shadow banking system that enabled a subprime mortgage crisis to take root. The next one will almost inevitably have different triggers. Economists are worried about the amount of debt that companies have been taking on, and media and telecom giants such as Comcast, Disney, Netflix and AT&T are no strangers to using other people’s money to fuel their growth. Some of this borrowing has reached dizzying heights. Comcast’s acquisition of European pay-TV behemoth Sky has pushed its net debt to an estimated $108 billion, while AT&T’s purchase of DirecTV and Time Warner has left it with a net debt of $177 billion, according to CreditSights.

Disney has made some strides toward reducing its debt, selling regional sports networks to pay for its acquisition of Fox, but it still will be more heavily leveraged once the deal closes. And Netflix keeps returning to the debt markets as it buys more content and produces more and more “Brights” and “Romas.” In September, the company reported that its long-term debt had climbed 71% to $8.34 billion. A month later, the streaming giant was back at it, raising an additional $2 billion in financing through debt securities. That leaves these media titans in hock up to their eyeballs at a time when they may not be able to afford it.

“It may be that all these companies that kept adding more and more debt will wake up to find that they’re no longer getting much bang for the buck,” Vogel noted.

That said, the media and entertainment business fared much better during the Great Recession of 2009 than other industries did. Over the course of the downturn, the U.S. economy shrank by 4%, with some of the most severe losses coming in the durable goods and manufacturing sectors, which fell 35%, and construction, which dropped by more than 20%. In contrast, the motion picture sector was relatively unscathed, growing by 8.6%, while the broadcasting and telecommunications business fell by less than 2%.

The sector that has historically survived best is the film business.

“The movie industry has been resilient in tough economic times, and that’s because where else in America can you get two hours of great entertainment for $9?” said Adam Aron, CEO of AMC, the largest theater chain in the world.

The data suggests that Aron is right. Since the Great Depression, people have sought refuge from their troubles by visiting the cinema — a comparatively affordable entertainment option when money is scarce. Box office revenues increased during five of the last eight recessions and even set domestic records in 2001 and 2009 as the economy sputtered.

“Generally we are an industry that’s recession proof,” said Jeff Goldstein, head of domestic distribution at Warner Bros. “If there are good movies, [people] will want to see them.”

Netflix’s debt climbs as it buys more content and produces pricey films such as “Bright.”

Matt Kennedy/Netflix

But moviegoing may not be the cheaper entertainment option that it used to be. Ticket prices have been rising steadily in recent years, fueled by the exhibition industry’s push into providing recliner seats, alcoholic beverages, 3D, Imax and other trappings of a premium experience that enable exhibitors to charge more for admission. Prices hit a record high of $9.38 during the second quarter of 2018, roughly the cost of a monthly subscription to Netflix or other streaming services. In cities such as New York and Los Angeles, going to the movies can cost $20 or more.

“I’m scared that movies in many places are very expensive,” said Chris Aronson, head of distribution at 20th Century Fox. “Price was never a barrier for moviegoing before, but now it is.”

There is a palpable fear among those working in entertainment about the potential negative effects of a serious economic downturn. Warren Buffett, the legendary investment oracle, has a colorful way of describing the consequences of a recession. It has a tendency, he noted, to separate the best-run and most visionary companies from the ones that took heedless risks.

“You only find out who is swimming naked when the tide goes out,” he quipped. If an economic crisis comes, we may discover which media giants were wearing bathing suits.