This comes from Wells Fargo Securities analyst Marci Ryvicker, but she’s relaying some comments from Gray Television CFO Jim Ryan at an investor conference this week. Auto remains strong, so Ryan offered some thoughts on why local is leading the way right now.
“National has been somewhat soft, which could be influenced by national auto. Mr. Ryan suggested an interesting theory that the strength in local auto has been reflective of dealers moving inventory, using ad stipends from the OEMs and spending money in the ordinary course of business. Because inventories are moving, the manufacturing side (where the national dollars sit) does not need to help support the local dealers. Therefore, OEMs are either shifting their dollars to other markets or they are holding back in general,” Ryvicker wrote in a note to clients. “Auto still has a long way to go – percentage increases have been strong but absolute dollars are still well below pre-recession levels,” she added.
As for Q1 business, Gray continues to see improvement in most categories. “Specifically, management mentioned that auto remains strong and restaurants are coming back, while supermarkets have softened. Overall, management guided Q1 national revenue of flat and local revenue of +3-4% but the quarter could come in better than this,” the Wells Fargo analyst reported.