The economic climate is still overcast, executives say
The economic prognosis continues to be challenging, according to two of Atlanta’s top CEOs.
Frank Blake, CEO of the Home Depot, and Phil Kent, CEO of Turner Broadcasting System, were interviewed this morning by public broadcasting talk show host Charlie Rose.
They were part of the closing session of the 2009 Urban Land Institute’s 2009 Spring meeting, which brought thousands of real estate, planning and development professionals to Atlanta at the Georgia World Congress Center over the past three days.
“We still think we are in a very difficult time,” Blake said. “We see 2009 as a negative year. As we progress through the year, it gets less negative. The real test for us is do we start to see some sequential improvement. That hasn’t happened yet.”
One of the most important economic indicators for Home Depot is the percent of Gross Domestic Product that the country spends on residential construction. That number was higher than 6 percent three or so years ago. Today, it’s at 3.1 percent. The lowest it had ever been (before) was 3.2 percent.”
Blake expects it to drop even further. “We need to have some stability around housing prices,” Blake said. Until then, consumers will be uncomfortable spending money.
At Turner Broadcasting, the recession didn’t really hit until the first quarter of this year, Kent said. Although the economy has been struggling for the past four to five quarters, Turner’s revenues were strong. (The company receives about half of its revenues from cable subscriptions and the other half from advertising).
Some advertisers have cut back, and others, such as those in the fast food business, see this as an opportunity to improve market share.
By comparison, Kent said that “local broadcasting is a disaster right now.” The company has one local station, TBS, also known as Channel 17. “The revenues are down in the high double digits,” Kent said.
Both Kent and Blake said CEO behavior now is facing greater scrutiny.
“I have a real problem with the cult of the rock star CEO,” Kent said. “I have a huge problem with the CEO who spends millions of dollars to renovate his office and act in an imperious way.”
“We are not rock stars,” Blake said, adding that a major job of the CEO is to inspire “confidence in country, our industry and our associates.”