Gray Television’s Q2 revenue was up $10.6 million, or 16%, to $75.6 million, reflecting increases in local, national, internet and political ad revenue, retransmission consent revenue, production and other revenue and consulting revenue. Local, national and internet ad revenue increased due to increased spend by advertisers in an improving economic environment. Local ad revenue increased $2.6 million, or 6%, to $45.9 million. National ad revenue increased $1.4 million, or 11%, to $13.8 million. Internet ad revenue increased $0.4 million, or 15%, to $3.1 million. Political ad revenue increased $4.6 million, or 493%, to $5.6 million. Retransmission consent revenue increased $0.7 million, or 18%, to $4.7 million. Production and other revenue increased $0.2 million, or 14%, to $1.9 million.
Said CEO Hilton Howell on the earnings call: “We are very pleased that our operating results for Q2 exceeded all of their initial forecasts…these trends have led to our operating income increasing 102% for the quarter and 119% YTD. Our broadcast cash flow has also increased 49% for the quarter and YTD. As you might expect, we are very confident with regard to the balance of the year.”
Bob Prather, President/COO, said that the TV industry in general has had a strong year. “I think it’s a testament to our industry that we’ve bounced back much faster than most of Wall Street and probably a lot of us predicted. We are all obviously riding the auto coming back strong into television. We are joined at the hip with the auto industry. It was down tremendously last year and it’s back up, getting close to 2008 levels right now. We’re proud of the fact too that we’re running pretty much even with 2008, which was a very strong year for us. So we feel very good about the future of our business, in the short term and in the long term.”
Ad revenue categories by customer type, excluding political advertising, demonstrating significant improvement during the quarter were: automotive, increasing 48%; medical services, increasing 14%; financial and insurance services, increasing 13%; and home improvement, increasing 12%. Revenue categories reflecting period over period declines were: communications, decreasing 19%; paid programming, decreasing 19%; and restaurants, decreasing 11%.
Broadcast expenses (before depreciation, amortization and gain on disposal of assets) increased $0.9 million, or 2%, to $46.1 million. The increase was due primarily to an increase in compensation expense of $1.2 million and national sales representation expense of $0.3 million, partially offset by a decrease in bad debt expense of $0.4 million and internet related expenses of $0.3 million.
Gray believes local revenue, excluding political revenue, will increase by approximately 6%. “We currently believe our third quarter national revenue, excluding political revenue, will increase from the third quarter of 2009 by approximately 14%.”
They anticipate Q3 internet revenue will increase by 13%; and political ad revenue will increase to $11.8 million. Retrans. consent revenues during Q3 are expected to increase $0.2 million, to a total of $4.5 million, reflecting the successful retransmission negotiations concluded in 2009 and 2010.