National softest at Gray Television


Local advertising was down only 13% in Q2 for Gray Television, but national was off 33% for an overall decline of 17%. However, the company is expecting a steeper decline in Q3, mainly due to the lack of political advertising.

CEO Hilton Howell told analysts that while Gray management wasn’t pleased with the down quarter, the company compared favorably with the television industry and other publicly traded TV companies. “And from everything we are seeing and hearing in this market, we feel like we are bumping up along the bottom of the advertising market. We have seen and heard a bunch of rumblings about improvement in the second half, but right now there’s nothing we can call one way or another,” Howell said.

Gray saw total revenues decrease 17% in Q2 to $65.1 million. Local was down 13% to $43.3 million. National fell 33% to $12.4 million. And Internet revenues were off 11% to $2.7 million. Of course, this is not a federal election year, so political dropped 81% to $900K. Moving the other was retransmission consent revenue, up 394% to $4 million. See our related story for Gray President Bob Prather’s comments on the issue of sharing retrans cash with the networks.

While other TV executives have been celebrating renewed auto business courtesy of the Cash for Clunkers program, Gray President Bob Prather remains cautious about any sustained boost in the auto sector. He said he’s been talking to many local dealers and the heads of large dealer groups and is still hearing about a problem he’s mentioned in previous conference calls – that there is still not much financing available for auto loans and dealers are having to turn away many would-be buyers.

Gray is going to be managing a much larger station portfolio, as a result of being chosen to oversee most of the stations of Young Broadcasting, which has been in bankruptcy. Prather noted that Gray will receive a management fee, plus higher payments for improving cash flow. “I call it a lot of up-side and virtually no down-side,” he said.

Looking to Q3, Gray is projecting that revenues will be down 23-24% against the election-heavy period of last year. Excluding political, the company expects local to be down about 9% and national 30%.