Analyst To ISC: Why Aren't You Doing Better?
At last week's Q4 conference call, analyst Barry Lucas, of Gabelli & Company, had a hard time reconciling ISC's flat sponsorship projections in light of an improving economy. Earlier in the call, ISC President John Saunders had mentioned in regard to sponsorship escalators, that "flat is the new up." Lucas posed this blunt follow-up question to ISC execs:
"Whether we are talking about corporate sponsorship or entitlements, [ISC is] roughly at the same level that we were a year ago. So bookings are essentially flat. While the economy has improved, ad spending is up. We got GM with its IPO in good shape, Chrysler is back. So I don’t know how to put this any other way, but why aren’t you doing better?"
ISC President John Saunders response:
"Well, I think I mentioned that from an entitlement standpoint I think we have one more cup entitlement open versus last year and one more nationwide entitlement opened last year, but I stress a lot of these things are in discussion and we have a lot of confidence that these entitlement inventories will get sold. We’ve done that historically when the environment was worse last year. But sometimes the timing – but as you pointed out, we are on track with what our target was last year versus this year and again touched on the enthusiasm and the optimism that our marketing and sales folks have across the company. So sure, we would like to have it further along a year ago, but we are not really concerned about that this point and time."
Sr. VP & CFO, Dan Houser, said that the barometer of success may be skewed based on how many open entitlements are coming up for renewal this year and where in the season they land.
"Yes, another thing is while the number of entitlements are – can service is a barometer of source. Cable minded depends on the churn. The entitlements are 25%, 30% of the overall corporate spend," Houser said. "So if you have more entitlements coming up this year than last year, its not out of question that you’ve got some more of those right now opened than you did a year ago.
It doesn’t give us a high level concern and the ones that are opened for the most part are late in the season," Houser continued. "Our teams are working hard and discussing many, many options and we feel like we are holding our own pretty well in that area."