I'm a part of the school of thoughts that believe there is no such thing as bad publicity. I'd have appreciated it more if you had included a description of what you feel is bad publicity in the entertainment industry.
I'll give an example of a bad publicity, and why I feel it actually have good benefits. Recently, a popular musician was accused of buying YouTube views by a music blogger. The musician was really angry with what he read on the blog, so he said some rude things to blogger. We don't know if what the blogger said was true or false.
But what was the result?
Because of the blogger's article many people heard about the music video the blogger wrote about. They liked the video, it actually had great concept. I, too, knew about the video because of the blogger's article. So I would say the "bad publicity" by the blogger had positive effects on the music video by the musician.
Conclusively, bad publicity is still publicity. Hides my mic. :)