Gray at top end of guidance


Q1 revenues for Gray Television rose 2% to $71 million, with political and Internet revenue gains countering declines in both local and national ad sales. President & COO Bob Prather thinks his company’s stock is a bargain, even if Wall Street doesn’t like it, so he’s been buying shares personally.

“I’ve been buying Gray stock. I hate to see the stock down this low. I’ll tell you right now I’ve got 90% of my net worth in Gray stocks, so I haven’t been faring too well lately, but I’ve got 100% faith in the strength of our company. I bought shares last week and I bought shares a month ago – and every time I buy them I think I’m stealing at the price I’m paying. I guess I’ll just keep stealing,” Prather told analysts in his conference call. “I think our stock is way undervalued, as are most of the television stocks. I think our whole industry has been unfairly painted with the old media brush. I think we’ve just got to all get out there and show the world that we’re going to be in business and profitable and growing for a long time in the future,” he added.

Prather is gung-ho on Gray’s digital strategy. The company already has 40 digital multicast channels on the air and every Gray market has at least one sales person dedicated to selling new media products. Prather says the goal for Gray is to be the number one source for local news in each of its markets on all three screens: television, computer and mobile.

Internet ad revenues were up sharply in Q1, rising 28% to $2.6 million. Political jumped even more, up 180% to $3.1 million. Meanwhile, local fell 2% to $45.7 million and national was off 4% to $16.3 million. Gray got relatively little Super Bowl advertising this year, with five of its six Fox affiliates being new multicast channels, vs. the 17 CBS affiliates that carried the game last year. But with political mostly going away for 2009, Prather is looking forward to having the Super Bowl on 10 NBC stations next Q1.

Q2 2008 performance is shaping up to be slightly below Q1 – “not much growth,” Prather noted, with the heavy political spending expected in Q3 and Q4. Gray’s guidance to Wall Street is that Q2 revenues will be flat to down 2%.

Gray’s previously announced staff reductions across all of its stations have been taking place through Q1 and are expected to be essentially completed by the end of Q2. Prather said about half of the head count reduction has come from attrition, with the other half from terminations, although the company has not disclosed personnel numbers. Gray expects the staff reductions to result in annualized payroll savings of $5 million.  

RBR/TVBR observation: Give Bob Prather credit for putting his money where his mouth is. Nothing demonstrates confidence in your own company like buying shares with your own money in the public market. Now we just have to wait for Wall Street to share that confidence so that Bob’s personal net worth can get back to where it was in early 2005.