Q2 better than expected for Gray Television

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Gray Television has reworked its senior credit facility, prompting it to give Wall Street a week-early peek at its Q2 financial results. The final tally is an improvement over the 1-2% revenue decline that the company had predicted in its previous guidance.


Gray said Monday (8/1) that Q2 revenue was up 1% to $76.2 million. According to analyst Marci Ryvicker at Wells Fargo Securities, the reason for the company outperforming expectations was an extra million bucks of political advertising, bringing the quarter’s total to $2.3 million, while core advertising was “pretty much in line at +3%.”

According to the Gray announcement, here are preliminary revenue numbers for Q2:

Local advertising revenue increasing $1.9 million, or 4%, to $47.8 million.
National advertising revenue decreasing $0.4 million, or 3%, to $13.4 million.
Internet advertising revenue increasing $1.7 million, or 56%, to $4.9 million.
Political advertising revenue decreasing $3.3 million, or 59%, to $2.3 million.
Retransmission consent revenue increasing $0.4 million, or 8%, to $5.1 million.
Production and other revenue increasing $0.2 million, or 9%, to $2.0 million.
Consulting revenue from our agreement with Young remains at $0.6 million.

Expenses in Q2 also beat expectations, up only 3% overall, with actual broadcast operating expenses up 4% to $47.9 million.

As for the credit agreement change, Gray said that effective June 30th “we entered into the third amendment to our senior credit facility which provides for, among other things, our ability to use a portion of the proceeds from a potential issuance by us of certain capital stock and/or debt securities to redeem the outstanding shares of our perpetual preferred stock (including accrued dividends and any premiums), provided that we repay any term loans then outstanding under the senior credit facility on not less than a dollar for dollar basis of the amount used to redeem such preferred stock, except to the extent that the redemption of the perpetual preferred stock is effectuated with the proceeds of an issuance of common stock. Any such preferred stock redemption must be completed within 40 days of the issuance of such securities, or the proceeds therefrom will be required to be used to repay additional amounts of term loans then outstanding under the senior credit facility.”

That’s good news, according to Ryvicker: “This credit facility amendment should be viewed as a positive for the stock as it allows GTN to refinance its (very) expensive 17% preferred shares with capital that can likely be obtained at a lower rate (GTN’s average interest rate on notes is about 10.5%).”