Signs of hope at Gray Television


Gray Television President Bob Prather that he’s seeing a pick-up in auto advertising for the rest of this month and, if current pacings hold, Gray will be at the low end (the good end) of its Q1 guidance of a 15-18% decline in operating revenues. The company reported a 12% revenue increase for Q4, largely due to a huge jump in political ads.

Chairman and CEO Hilton Howell kicked off the quarterly conference call with analysts, ticking off the cost-cutting measures that the company had taken. By suspending its stock dividend payout the company has saved $5.8 million per year. Executives have had their salaries frozen and there will be no bonuses. Also, employees are getting no 401(k) match and the workforce dropped by 170 people in 2008. But he called the results posted by Gray “some fairly good news in a difficult environment.”

Q4 revenues were up 12% to $94.8 million. Political advertising increased 942% from the previous year to $27.4 million. Internet ad revenues were also up, by 21% to $3.2 million. Meanwhile, local ad revenues fell 17% to $45 million and national was down 24% to $16.1 million. With the political year past, Gray is projecting that Q1 revenues will be down 15-18% to a range of $58.5-60 million. Within that projection is only $700-800K of political advertising, compared to $3.1 million a year ago. However, retransmission consent revenues are projected to be $3.25-3.5 million, compared to $646K.

Later this week the Federal Reserve Bank of New York will begin selling notes under the Term Asset-Backed Securities Loan Facility (TALF) which will securitize consumer debt, including auto loans. An investment manager asked Prather in Q&A whether he expects that to spur any auto advertising. Prather recounted recent conversations with a friend who owns several auto dealerships. That friend said customer traffic was down only modestly, but that sales were down sharply because so few would-be buyers could qualify for financing in the tight market. So, the Gray Television President is hopeful. Prather reported some hopeful signs. “We’re actually seeing some pick-up in auto right now for the rest of this month and into next month.” With top stations in all of its markets, Gray, he said, may have suffered less in cutbacks of car dealer advertising than less-viewed stations.

RBR/TVBR observation: Bob Prather remains a long-term optimist and we recall that he was continuing to buy shares of the company last year, even as he watched his personal net worth sink with the stock price. A filing with the SEC showed that he bought 50,000 shares at 22 cents each back in November. The stock price has nearly doubled since then.