With August ad sales in the book, Wells Fargo Securities analyst Marci Ryvicker has been checking with broadcasters to get an update on how local ad sales are going for Q3. Her conclusion is that the “overall tone is of caution, not concern.”
“For most of the broadcasters that we spoke with last week, August ‘held in’ or even finished marginally better than expected. In general, there were no cancellations above and beyond the norm. While operators sounded relatively good, they did warn that i) August faced really easy comps, ii) no one knows what is going on in Washington, and iii) September and October are currently below budget,” Ryvicker said in a note Tuesday (9/6).
“At the moment, September and October are pacing below budget (we heard anywhere from flat-to-down mid-single digits), with TV groups sounding somewhat healthier than radio. We do think it is early and the best gauge for September will be the week and a half post Labor Day – which is when radio should have a good sense for how the month will end and TV groups will start to see dealer pacings for October. Recall that October has been the ‘key’ month for auto dealership dollars to return post the Japanese tsunami. Right now, we would characterize September and October as ‘wait and see’,” the analyst told clients
From her talks with broadcasters, Ryvicker said Hurricane Irene’s romp on the East Coast had only a minimal impact on ad sales. “Some big contracts/events were cancelled only to be rebooked for later in the year, so if anything the hurricane caused a timing difference in ad spend. In some instances, ad categories increased their commitments – namely insurance (to capture those who suffered damage to their homes and surrounding areas) and restaurants. For TV, we imagine ratings went through the roof as people clamored for info on where the storm was and when it would hit, but at the same time regular ads were preempted, so these two may cancel out,” the analyst wrote. “To put the hurricane in perspective, one operator told us the winter blizzards had a much greater impact on the business than this past tropical storm,” she added.
Here, then, is Ryvicker’s bottom line analysis: “While the overall tone of business is still cautious, we think it is marginally better than what we heard on Q2 earnings calls and much better than recent stock price performance would suggest. September is a key month for the quarter, and while pacings appear to be down, it is still early and advertisers have been booking very late.”