After reporting Q2 core ad revenues (sans political) essentially flat, LIN Media told Wall Street that Q3 is currently pacing down 4% for core TV ad sales. But one analyst thinks that could change pretty quickly once the auto production chain from Japan gets back to normal.
“We got the sense from management’s response to analyst questions that Q3 guidance (core revenue -4%) is reflective of the environment as we sit today – which is NOT taking into account upside in auto likely to come in late September and in Q4,” said Wells Fargo Securities analyst Marci Ryvicker in a quick note to clients. “Management did state that 3 of the top 5 ad categories are currently pacing down likely due to the economy (in contrast, 3 of the top 5 categories were up in Q2),” she added.
The auto downturn is not across the board.
“The makeup of the deficit of down 4% right now in pacing for the third quarter, domestic is actually up 6%, foreign is up 4.5%. It’s down a little bit because of local dealerships. That’s what’s in the tank,” said Scott Blumenthal, Executive VP, Television, at LIN in the Q&A session with analysts. He said there are multiple reasons, including inventory allocations.
“But as we get new model years, as inventories start to come back from Japan, coupled with the fact that the NFL settlement is going to start to generate automotive expenditures. That’s a very popular category for automotive and they’ve been holding money waiting the outcome of the NFL deal. So we’re expecting to see that category come back to a more reasonable number,” Blumenthal said, without offering any specific prediction.