Gray Television President Bob Prather says local is still strong, while national is struggling, so he was disappointed to report Q3 revenues down 9%. Ad sales are below expectations primarily because of Gray’s NBC stations, which are some of its largest, and performance below expectations for some multicast channels, due to poor channel placement by cable operators.
"We’re about 2% behind our budget for the year right now and 90% of that is our NBC stations," Prather told analysts. "NBC was on top for so long and now they probably have the worst primetime schedule of the big four out there and they continue to struggle. It’s hurt us just because of them being in our biggest markets and taking such a drastic fall," Prather said, noting the impact on primetime ratings and the lead-in to the local late news at his stations.
"Our digital stations have been behind what we though they would be," Prather said. He complained of bad channel placement, where he said some cable operators have placed the multicast channels on digital tiers not viewed by basic cable subscribers. He hopes to resolve that, though, when two-thirds of Gray’s retransmission consent agreements come up for renewal at the end of 2008. He’ll be pushing no only for payments from the MSOs, but also better channel placement for the multicast channels. In addition to the 36 stations that Gray operates in 30 markets, it also has 40 digital second channels including one ABC, five Fox, eight CW and 16 MyNetworkTV affiliates, plus eight local news/weather channels and two "independent" channels.
TVBR/RBR observation: Gray had been such a strong proponent of getting multicast channels launched that the company largely passed on demanding cash in the most recent round of retrans negotiations. But that is past and Prather has made it clear he wants both cash and multicast carriage in the next round. That strategy is based on the market-leading news strength of most of Gray’s major network affiliates. So, while the multicast channels aren’t yet doing as well as hoped, this could still pay off in the long-run. Meanwhile, Prather is expecting political revenues north of 50 million bucks next year to swell Gray’s coffers, so he’ll be sitting pretty as Gray sits down in mid-2008 to renegotiate their retrans agreements.