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D.I.S. Consulting Brief
The NAB Show Holds Strong — Underscores Start of an Industry Recovery

by Douglas I. Sheer

Two primary gauges of industry improvement are the annual NAB Show and the USA’s Television Bureau of Advertising calculations of broadcaster budgets. Both seem to be indicating that the recovery everyone is hoping for is already under way. There may still be obstacles ahead, and setbacks, but irrefutable indications of a recovery are already evident.

True, the recently concluded NAB Show in Las Vegas was off 20 percent in attendance from last year, yet the number of exhibitors was just about the same, despite some notable manufacturer names such as Quantel and Apple missing. That is consistent with my firm, D.I.S.’ research results that predicted a 14 percent decline, overall, in equipment purchases planned for 2009. And, square footage, a major arbiter of success held close to even with the past.

Traffic seemed generally strong with the possible exception of the last day, Thursday, but that, too, is normal. And, exhibitors were uniformly pleased with the quality, the numbers of leads, and the business they accomplished. At 84,000 attendees registered, down from last year’s 104,000, clearly things were off, but not devastatingly so. The event retains its place as the industry’s largest and led the way by showing that, even in the midst of the present recession, there is reason to be hopeful.

As of the close of the show, renewals were running pretty close to what could be expected in terms of the queuing and jockeying for 2010 positions and relative square footage plans. From a purely qualitative basis, incidentally, feedback from exhibitors seems to indicate that, while overall numbers were down, major constituent groups, such as station groups and networks, were nonetheless well represented, even if they sent less individuals than last year. The decision-makers were still present.

Meanwhile, the longtime research body that keeps track of budgets of broadcasters in the USA — and therefore can be predictive of equipment spending generally — the Television Bureau of Advertising — predicted the current downturn ahead of the September 2008 stock market tumble, showed at the end of 2007 that there was already a 6 percent percent decline in budgets. That same group has recently issued its four quarters report for 2009 and that shows a 6.3 percent decline from 2008 budgetary numbers.

The Bureau was prescient in its 4th quarter 2000 numbers that preceded the 9/11 financial crisis, which illustrated that we were already in an industry recession before the attack occurred. But, what could be brighter news and indicative of an improvement, however mild it may seem, in budgets and ultimately equipment spending is the T B of A’s 2010 forecast that calls for between 1.5 percent and 5.5 percent growth for that year. Splitting the difference, that would predict an average of 3.5 percent growth. Although they do not yet make any predictions for forward quarters in 2009, we have forecast that the 4th quarter can be expected to rise in anticipation of the assumption that 2010 will be a better one than 2009.

Once such an advertising budget increase begins to occur, the next step is a related rise in equipment spending, and that is very good news for the industry, overall. And, that trend also tends to spill into increases in production and post services, rentals, and ultimately the hiring or re-hiring of staff that were either fired or furloughed during the recession. Good news, indeed!

About the author
Douglas I. Sheer is CEO and Chief Analyst of D.I.S. Consulting Corporation in New York and may be reached at Doug@DISResearch.com.