As stock prices plunged Monday, the first trading session after S&P downgraded US Treasury debt, Gray Television was reporting a pretty good Q2 and decent pacings for Q3. Both Gray management and Wall Street analysts are trying to figure out just what the debt downgrade is going to mean ad sales by broadcasters.
Like everyone else, Gray CEO Hilton Howell is watching the US debt situation and referred to Friday as the “infamous day” that brought the first in history US debt downgrade. So, like so many people, he is concerned about the possibility of a double-dip recession. So far, though, business is good. “We have seen no evidence yet of an advertising pull-back in our local markets,” he said. He and other Gray officials remain optimistic about the second half of 2011. Howell noted that four of the five top advertising categories were up for Gray in Q2, with auto the only one down – and by only 1%.
Later in the call the debt issue came up again, with an analyst asking Gray President Bob Prather where the company would expect to see any impact from the Wall Street retreat. Prather said it would likely first be seen with national advertisers pulling back if they become nervous about the economy. At the local level, he noted, many advertisers have been on the air with the Gray stations for decades through ups and downs – and it’s all about getting customers through their doors.
RBR-TVBR observation: Are perceptions different on Wall Street and Main Street? Do consumers think that they are personally impacted by US Treasuries being rated only AA+ by S&P? (And it is worth noting that both Moody’s and Fitch reiterated their triple-A ratings.) If pent-up demand to buy cars and other products keeps consumer spending going, the slow recovery will continue and broadcasters will be in good shape. It all depends on how much the voters are rattled by the bickering in Washington between the people they elected to run the country.