Gray Television is still working on the final figures for its annual 10-K filing with the SEC, but the company has issued preliminary numbers showing that Q4 2009 came in ahead of the guidance it had provided to Wall Street. However, the company is facing a loan covenant issue at the end of this month.
“While we continue to operate our business in a challenging environment, the operating results we expect to report following completion of the audit of our financial statements are better than we had initially forecasted. We have seen some improvements in our core local and national advertising revenue and believe we are well positioned to benefit from expected increases in political advertising in 2010,” the company said in a statement on Monday.
The preliminary tally shows that local advertising was up 5% in Q4 to $47.1 million. National revenue was down 1% to $15.9 million. Internet ad revenue was flat at $3.2 million.
Of course, political dropped. It was off 82% ($22.4 million) to $5 million.
Retransmission consent revenue increased 346% ($2.9 million) to $3.7 million. Gray also booked $600K in Q4 from its new agreement to manage most of the Young Broadcasting stations.
So, all in all, revenues were down 18% to $77.5 million. Broadcasting expenses were down 1% to $50.6 million. Thus, RBR-TVBR calculates that station operating income declined 38% to $26.9 million.
Despite the better than expected performance, Gray is facing a leverage covenant issue at the end of this month, when the leverage ratio covenant on its senior loan will step down to 7.0 times from the current 8.75 times. “Based upon our financial projections as of the date of this press release, we do not expect to be in compliance with our leverage ratio as of March 31, 2010. We have commenced discussions with lenders under the senior credit facility to seek certain modifications to the terms of that credit facility, including the leverage ratio covenant. However, we can provide no assurances that any amendment, or waiver of such covenant provisions, would be obtained by us nor of its terms. If we are unable to obtain any required amendment or waiver on satisfactory terms to us, we would be in default under the senior credit facility and any such default could have a material effect on our liquidity and could allow the lenders that hold a majority of the outstanding debt under our facility to demand an acceleration of the repayment of all outstanding amounts under our senior credit facility,” the company said on Monday, March 15th.
“We expect to report full financial results for 2009 following completion of our discussions with our lenders, the completion of the audit of our financial statements for 2009 and in connection with the filing of our Annual Report on Form 10-K for the year ended December 31, 2009,” Gray said.
