Like other broadcasters, Gray Television President Bob Prather is a bit worried about how supply chain problems in Japan may impact auto sales and advertising. But while it’s merely anecdotal at this point, he told Wall Street analysts in his quarterly conference call that there’s some evidence of Korean carmakers upping their ad spending in the US.
Prather was actually asked by Barry Lucas of Gabelli & Co. whether the US car companies in Detroit are moving to grab market share as their Japanese competitors deal with manufacturing problems in the wake of the country’s massive earthquake and tsunami.
“We have not seen that Barry with the domestic [car companies], as I said. It looks like the Koreans, KIA and Hyundai, may be picking up though. You know, they’re not exactly friends with the Japanese anyway, so maybe they’re jumping on quicker than our guys over here,” Prather said. “Evidently General Motors and Ford seem to be doing well, and they may think they’re just fine doing like they’re doing [for ad spending],” the broadcaster said of the domestic car companies.
“I don’t think anybody knows how long this parts shortage and car shortage is going to last, so it may be a 90-day thing, a six month thing or a year thing. I don’t think anybody knows at this point. You know, the Japanese are pretty resourceful and I wouldn’t count them out from getting cars built quicker than we think they can,” Prather said.
Earlier, the Gray president said 2011 I looking like a better revenue year than had been expected. “The only thing that really worries me are the rising gas prices. Nobody knows what $5 [per gallon] gas will do. I don’t think we’ve ever seen it before and if it comes in and stays for a length of time I think it could have a significant effect on the economy, but right now we feel pretty optimistic,” Prather said.
While Gray is projecting that Q2 revenues will be down 1-2%, CFO Jim Ryan said Q2 is currently tracing ahead of that baseline. And that’s despite some slowdown in auto, due to the Japanese nameplates pulling back. Local, he said, is better than had been anticipated. “So all in all I think we right now feel pretty good about second quarter,” the CFO told analysts.
RBR-TVBR observation: Makes sense to us. Not only do the Korean carmakers have the ability to boost deliveries to the US market and go after market share, but they also specialize in the smaller, more fuel-efficient end of the car market, where demand is growing because of rising gas prices.