Gray Television beat its guidance for Q4

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Revenues shot up 48% in Q4 for Gray Television to $114.6 million as the group got a boost not only from political, but also gains in local, national, Internet and retrans revenues. For the full year revenues were up 28%.


“Quite simply, it was a blow-out quarter. A quarter for the record books.” CEO Hilton Howell told analysts in the company’s quarterly conference call. “Revenues for the fourth quarter increased 48% to a new record for Gray of $114.6 million. Revenues for the year grew by 28%, also a new record for Gray of $346.5 million. These increases in revenue, coupled with excellent expense control, resulted in net income of $21.9 million for the quarter, or 35 cents per share, and net income of $23.2 million for the year, or 16 cents per share. These outstanding results allowed us to pay down $50.2 million of our debt by year-end. Obviously this political season was particularly good for Gray Television because we hit an all-time record of political advertising, even eclipsing prior presidential election cycles, of $57.6 million. We believe these results portend extremely well for Gray in the next political cycle of 2012. It ius widely reported that President Obama will likely raise and spend over $1 billion on his re-election campaign. And with the Republican victories of 2010, we anticipate that whoever the Republican challenger may be, he or she will be able to match the president’s fundraising prowess,” Howell said. 

Gray, by the way, had predicted that its Q4 revenues would be up 35-36%. That was a pretty aggressive number back in November, but Gray blew it away with 48% growth.

Political was the big gainer, of course, rising 569% to $33.1 million. Only local brought in more revenues in the quarter, up 5% to $49.5 million. National rose 2% to $15.6 million. Internet ad revenues increased 21% to $3.9 million.

Aside from advertising revenues, retransmission consent fees increased 29% to $4.8 million and consulting revenue from Gray’s management agreement with Young Broadcasting increased 963% to $5.8 million. That Young contract paid only the base amount in Q4 2009, but Gray later became eligible for an incentive payment under the contract and received an additional $5.3 million in Q4 2010.

Broadcast expenses rose only 5% from a year earlier to $52.9 million. Thus, broadcast cash flow was up triple digits in Q4, rising 130% to $61.6 million.

Q1 carries tough comps, though, since Gray booked $2.8 million of Olympics revenue last year on its NBC stations. It had $900K of Super Bowl advertising on its 17 CBS primary stations last year, but only $200K this year on its one Fox primary station and four Fox digital multicast channels. Political is expected to total only $500K, compared to $2.3 million a year ago.

Gray is projecting that local revenues in Q1 will be on par with a year ago, but that national will decrease due to the lack of the Olympics and lower Super Bowl sales. Internet ad sales are expected to rise by 36%, so excluding political, ad sales are expected to come in about even with Q1 of 2010.

All in all, Q1 revenues are projected to be down 4-5%, which would produce total Q1 revenues of $67-68 million.

RBR-TVBR observation: Ah, the downside of success – tough comps. But just think what Gray will be able to do when the two-year political cycle repeats in 2012.