Don’t look for a recovery in 2009. Rather, Wachovia Securities bond analyst Bishop Cheen told RBR/TVBR in a recent interview, 2009 is going to be a year when broadcasters try to get back to stability. So, his advice is to focus on fundamentals and keep a tight rein on expenses.
The veteran analyst didn’t sugarcoat what’s been happening in 2008. “Oh, it’s been tough. It is a retail economy. When housing failed, retail was carrying the load. Retail has stutter-stepped,” he noted. As for the financial sector, he noted that it has been bumpy, going back to the sudden collapse of Bear Stearns and the more recent bankruptcy of Lehman Brothers. And Cheen was speaking before President Bush asked Cngress for a $700 billion bailout of the mortgage backed securities market and the analyst’s own employer, Wachovia, seeking a buyer.
“This is a shake-out, as much as any shakeout that you and I have analyzed over the decades. It’s not gonna get a whole lot better anytime soon. We have to hunker down,” Cheen said.
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What, then, should broadcasters be doing as they head into 2009? “Focus on fundamentals. Keep your overhead low. This is going to be the year we try to get back to stability. This is not a recovery year, the way I can see it at this time – it’s a year when we seek stability,” Cheen advised.
In his view, stations need to get as much revenue as they can on the top line, while at the same time controlling expenses “without sacrificing or undermining the product.” Those who will get through this are broadcasters who can keep their overhead under control. “It’s a management-intensive industry, this ‘old media’ of ours – and those who do that have the best shot at coming through this shaky transition into the cyclical upside, whenever that will be,” Cheen said. “I’m hopeful that will be, and we’ll feel it firmly, in 2010,” he added.
RBR/TVBR observation: Bishop’s comments were made at the NAB Radio Show in Austin, shortly after Lehman Brothers filed bankruptcy. Little did he know that his own firm, Wachovia, would soon be in the headlines as well. The turmoil in the financial sector is being felt heavily in broadcasting and every other industry as well. We wait to see when stability returns. We wait, and wait…