Prexy sez first-quarter growth slow, but 2nd Q will grow
NEW YORK — Viacom prexy Mel Karmazin is well and truly back in the saddle. The company’s consummate salesman, freed from the stress of renegotiating his contract with chairman Sumner Redstone, got back to what he does best Monday: pitching just how well the company is doing and predicting even better times to come.
Not one to let a war or recession of indeterminate length get in the way of business, Karmazin delivered one of the most sanguine forecasts of advertising health to date in a Goldman Sachs-hosted meeting with a select group of institutional investors Monday.
Karmazin said advertisers were moving schedules rather than canceling them, and none has yet exercised options to cancel third-quarter upfront commitments. He insisted both retail and auto advertising were strong (despite the fact that Ford and Chrysler Tuesday announced sales slowdowns) and said theme parks are beginning to advertise again to attract visitors. He also noted there were greater pricing concessions on local spot than in the national ad business, despite greater hesitancy and caution from national advertisers during this war.
Even radio and outdoor, which most pundits say are bearing the brunt of the slowdown and war-induced confusion, are heading in the right direction at Viacom. While first-quarter radio sales will be up only in the low single digits compared with last year, said Karmazin, second-quarter results should double that growth rate.
Evidently only Clear Channel and Westwood One (partly owned by Viacom’s Infinity) are feeling the pain. Karmazin did note that advertisers were avoiding all-news formats.
The outdoor market, he said, was showing absolutely no near-term effects from the war.
Karmazin conceded first-quarter growth would be slower than expected, but promised second-quarter will show growth in high-single to low-double digits.
Some advertisers are concerned about running spots during war reports, he said, and have shifted their ads to sports and weather in the latter half of the local news broadcasts.
Otherwise, Karmazin was predictably bullish about the 2003-04 upfront, which he believes will be strong despite the war, thanks to a presidential election in ’04, the Super Bowl on CBS and stronger ratings, particularly across cable networks that will be participating in this year’s upfront.
Karmazin’s crystal-ball gazing was certainly in line with most network sales execs’ giddiness about the coming upfront season, which some say could top last year’s record-breaking $8 billion haul by as much as $1 billion.
But not all investors on the conference call were buying Karmazin’s rosy view of the next few quarters.
“There’s no guarantee that when this war ends, the economy is suddenly going to bounce back,” said one fund manager. Others questioned Karmazin’s confidence that advertisers can simply shift to new spots and somehow make up the volume difference in future quarters.
The real problem with Karmazin’s pep rally is determining whether it’s based on reality or crossed fingers. Viacom acknowledges it has sold only 40% of April inventory (normally it would have sold about 80% by now), so Karmazin’s confidence in a big second-quarter rebound seems to be wishful thinking.