Will Big Media “Kitchen Sink” Q3 Earnings To Make Future Reports Look Good?

Bernstein Research’s Todd Juenger raises that possibility this morning as he and other analysts tweak their forecasts (mostly down) ahead of the barrage of Big Media reports due to be released beginning next week. The strategy — which companies virtually never acknowledge publicly — is called a “kitchen sink” because execs find creative ways to load every cost they can find in to a quarter that they figure investors are going to ignore. (In other words, they throw everything in but the kitchen sink.) That sets a low bar later on when they want to show how much things have improved. You often see companies kitchen sink earnings when a new CEO steps in. But it can also happen in a quarter like Q3: Execs have said that results could be strange. Expectations “are very low, as the Olympics stole an avalanche of ratings points and advertising dollars,” Juenger says. Investors also are unusually tolerant of Big Media companies these days. They’re seen as safe havens since they make most of their profits from cable networks — still a solid, growing business — and aren’t heavily exposed to the shaky economies in Europe and elsewhere. It’s dangerous, though, for companies to go with a kitchen sink strategy. If they don’t improve then they “will start to lose credibility in claiming that Q3 was an aberration.” (more…)

This article was printed from https://deadline.com/2012/11/will-big-media-kitchen-sink-q3-earnings-to-make-future-reports-look-good-363790/