Gray Television reported higher second-quarter earnings, driven by acquisitions and strong political ad spending.

Net income was $86 million, or 91 cents a share, up from $26 million, or 27 cents a share a year ago.

Revenue rose 59% to $868 million.

Adjusted core advertising was flat, with $90 million of political revenue coming in, up from $6 million a year ago.

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Based on its current forecasts, Gray expects that political advertising for 2022 will match the $652 million it generated in 2020, a presidential election year. Broadcast cash flow increased 25% to $330 million.

Gray said that it renewed with Fox in all 27 markets where it owns Fox affiliates. 

For the third quarter, Gray said it expects core advertising revenue to hit $345 million to $355 million, retransmission revenue to be about $365 million to $370 million and for political revenue to be $193 million to $195 million. Total revenue is  expected to be in the $940 million to $959 million range. ■

Gray Television is fighting the FCC's unprecedented half-million-dollar fine related to its purchase of an Alaska TV station, saying it was a case of "mistaken identify."

Gray, in asking the FCC to cancel the fine, said it was not the "willful and repeated violator of Commission rules" that the FCC characterized, that the deal complied with the rules and that the result has been improved service to anchorage, for which Gray should be "lauded" not "punished."

In a first for an acquisition of a network affiliation, the FCC last month proposed to fine Gray Television a half million dollars for "willfully and repeatedly" violating the commission's prohibition on owning two of the top-four rated full-power TV stations in a market.

The FCC move had drawn applause from MVPDs.

It was the first time the commission proposed fining an affiliation purchase for resulting in what it said was a violation of its prohibition on owning two of the top-four rated TV stations in a market.

The proposed fine stemmed from Gray's acquisition of the CBS affiliation of KTVA-TV--which went dark--when it already owned NBC affiliate KTUU-TV, both in Anchorage, Alaska. At the time the stations were ranked number one and two in the market. Gray put the CBS programming on its KYES-TV Anchorage, but then moved it to a co-owned low power station and simulcast it on a digital subchannel of KTUU-TV.

In 2016, the FCC clarified that its rule on owning two of top four stations barred "the common ownership of two top-four stations with overlapping contours in the same DMA through the acquisition of a network affiliation."

Gray laid out its case for why the FCC was way off base.

1. "Gray’s purchase of assets from KTVA(TV) did not involve any swap of affiliations and was not the “functional equivalent” of a license transfer; in fact, the transaction was structured in precisely the same manner as a prior Gray purchase of a Big Four affiliation for a MyNetworkTV-affiliated full power television station as part of a transaction that the Commission intensely reviewed and approved and never mentioned as violating the rule against swaps;

2. "The transaction did not result in Gray’s KYES-TV becoming a Top 4 station because KYES-TV was already a Top 4 station at the time of the transaction, and Gray acquired that station with the Commission’s approval subject only to the condition that KYES-TV not add a Big Four network affiliation to the station before February 2018;

3. "Gray purchased the Anchorage CBS affiliation after the network inquired about Gray’s interest and participated in moving the affiliation to KYES-TV, bringing the Anchorage transaction squarely within an exception to the rule that the Commission adopted; and

4. "Gray’s transaction advanced the public interest by saving jobs in an economy that was in recession long before the pandemic crippled local businesses, by expanding local news hours and resources in Anchorage (as well as Juneau), by providing more and higher quality advertising opportunities for advertisers, and by permitting the state’s dominant cable operator to enter into a novel retransmission arrangement to expand access to local broadcast stations to local households."

Gray said that any one of the above leads to the conclusion the proposed fine must be canceled given that it is based in a "novel and retroactive re-interpretation of the five-year-old rule against swaps," even if the FCC announces a "new rule" against  such network affiliation moves.

Gray said the FCC lacks the authority to apply such a new rule without notice or comment, and while such a rule would likely not harm viewers in large markets like New York and D.C., it said, where they "already enjoy the best that local television  has to offer," it "surely will result in second-class citizenship for TV viewers in small markets like Anchorage, where smaller populations can’t generate sufficient revenues to support many independently owned news producing television stations."

In short, it said, the FCC's decision works against, not for, the public interest the commission is sworn to serve.

The average audiences for two key evening news time slots on the Big Four affiliated TV stations were up in 2020 over the year before, according to a new Pew analysis of various data released Tuesday (July 13).

Pew said that local TV news was on par or outpacing network and cable news.

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Pew, which issues an annual review of key audience and economic indicators from a variety of sectors and sources, pointed out that audiences for the 4-7 p.m. and 11 p.m.-2 a.m. time slots were each up an average 4% (Pew cited Comscore data).

Total revenue (according to MEDIA Pro Access/BIA) was $18.4 billion in 2020, an 8% increase over 2019, driven by election advertising.

Gray Television, Nexstar Media Group, Scripps, Sinclair Broadcast Group and Tegna — the big publicly held broadcast groups (and thus with publicly reported numbers) — reported a total $2 billion in political ad revenue, up from $1.2 billion in the 2018 mid-term election year, but almost two and a half times the $843 million spent in 2016, the most recent prior presidential election year.

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While digital advertising remains a fraction — less than 10% — of total TV station ad revenue, the category was up 6% to about $1.4 billion.

For a summary of Pew's methodology for analyzing the various data sources, go here.