Wells Fargo Sees Radio 'Better Prepared' To Survive Recession
September 7, 2011 at 5:00 AM (PT)
WELLS FARGO Broadcast Analysts MARCI RYVICKER and STEPHAN BISSON see broadcasters better prepared for the current recession cycle than they were during the first dip three years ago, reports TELEVISIONBROADCAST.COM.
During the period from JULY 19th through SEPTEMBER 2nd, radio stocks lost 15% of their value while the S&P was down 12%. However, cable stocks covered by WELLS FARGO dropped 17%, satellite was down 20% and TV was off 30%.
"During the Great Recession of 2008-09, one of the biggest threats to most of the media stocks under our coverage was the potential threat of a covenant breach, and ultimately, the potential threat of bankruptcy," wrote the analysts.
The report notes a possible problem ahead with expenses. "Broadcasters across the industry cut expenses so radically during the 2008-09 downturn, that investors can see little if anything left to cut," notes TELEVISIONBROADCAST.
"Recall that OCTOBER has been the key month for auto dealership dollars to return post the JAPANESE tsunami," the analysts said. "Right now, we would characterize SEPTEMBER and OCTOBER as wait and see."