Gray Q1 down 14%


Gray Television’s Q1 had total net revenue down $9.6 million, or 14%, to $61.4 million due primarily to increased retransmission revenue offset by decreased local, national and political ad revenues. Retransmission revenue increased due to negotiating higher revenues as retransmission contracts were renewed. Internet advertising revenues were generally consistent with the internet revenues for the first quarter of the prior year while website traffic continued to increase.

Local and national ad revenue decreased due to reduced spending by advertisers in the current economic recession. Net advertising revenue associated with the broadcast of the 2009 Super Bowl on their 10 NBC-affiliated stations approximated $750,000 which is an increase from the approximate $130,000 of Super Bowl revenues earned in 2008 on their then six Fox affiliated channels. Political advertising revenues decreased due to reduced advertising from political candidates during the “off year” of the two-year political advertising cycle.

Local advertising revenue decreased $6.4 million, or 14%, to $39.3 million.
National advertising revenue decreased $3.4 million, or 21%, to $12.9 million.
Internet advertising revenue decreased 2%, to $2.6 million.
Political advertising revenues decreased $2.1 million, or 67%, to $1.0 million.
Retransmission revenue increased $3.0 million, or 463%, to $3.6 million.
Production and other revenue decreased $0.6 million, or 24%, to $1.8 million.

Said Bob Prather, President, COO: “I think most of our markets are actually doing better than the national average. We also finished ahead of the top end of our guidance.”

Prather noted that their ongoing transition to digital has remained smooth, mostly due to handling all of the viewers’ calls and “walking them through” step by step on the details. They’ve spent $60 million so far on the transition.

All of the company’s retrans consent contracts have been completed. “We’ve got $13 million of new money coming in through Jan. 1. We think this money will continue to grow in the future. We’ve got increases written into the contracts overt he next two-three years as well.”

Gray has also identified 15 million dollars of expense reduction which they’ve implemented at the end of last year. “We’re taking a bit of that benefit right now. And even in Q1, we’re coming up with probably another million dollars in savings. We’re looking at every single expense and we’re looking at more ways to save money and be more efficient.”

Prather also said they are determined to continue to be the dominant news factor in most of their markets. “We want to make sure we don’t do anything to harm our news product, because this is really the heart and soul of our company.”

He said they are very proud of their digital side, averaging 45 million page views per month on their websites, with 8.3 million unique visitors per month. Their mobile is averaging 7.2 page views per month.

Prather concluded by looking optimistically at 2010: “I think it’s going to be an extremely good year. I think the economy is going to be turned around at that point. We’ve got in our markets some strong governor and senator races; the Winter Olympics on our 10 NBC station and the Super Bowl on 17 CBS stations.”

Guidance for Q2 is shows local revenue and national revenue, excluding political revenue, will decrease from 2008 results by approximately 12% and 31%, respectively. While the decline is expected to be reflected in most advertising categories, the automotive advertising category is expected to be particularly challenged during Q2 2009. Political revenues reflect the off-year of the political cycle.