Gray Television rides high on political wave


The 2010 midterm elections were very good for Gray Television, which enjoyed a record windfall in political advertising. The company sold $16M worth of political during Q3, and although it won’t show up on the company’s Q3 results, it sold another $31M in political during the month of October alone. Q3 revenue was up 28% to $85.3M.

Year to date, revenues are up 20% to $231.5M.

Looking ahead, political was so hot in October it pushed core advertising down by $1.7M. Gray execs say they are doing well in November as some of the displaced business comes back. However, they are cautious looking ahead, even as far as December. Business began to return from recession-keyed slumping in December 2009 creating more difficult comps, and visibility remains poor.

2011 is expected to be a classic off-year. Gray thinks it may be a turnaround year that comes in better than expected, but of course political spending will be absent.

Gray says that a big positive is a return of automobile advertising, which was up 26% despite political displacement.

The company will continue to run a tight ship and keep as much of a lid on expenses as possible. However, it is investing in bringing its local news operations into HD ASAP, with the goal of being either first or a close second on that score in all of their markets.

One of the irons Gray has in the fire is providing management services for Young Broadcasting stations. Gray said it would consider acquisitions of some of these properties or the group as a whole, but at this point Young has not decided what it wants to do going forward. There is still a year and a half to go on the management contract.

The company noted the following highlights regarding Q3 performance.

* Local advertising revenue increased $3.1 million, or 8%, to $44.3 million.

* National advertising revenue increased $1.5 million, or 12%, to $14.3 million.

* Internet advertising revenue increased $0.4 million, or 14%, to $3.3 million.

* Political advertising revenue increased $13.0 million, or 422%, to $16.0 million. 

* Retransmission consent revenue increased $0.3 million, or 8%, to $4.7 million.

* Production and other revenue increased $0.3 million, or 17%, to $2.0 million.

* Consulting revenue from our agreement with Young Broadcasting, Inc. increased $0.2 million, or 76% to $0.6 million.