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Booming Broadcaster Sees Growth As a Gray Area

Why This Matters:B&C Broadcaster of the Year Hilton H. Howell Jr. has shepherded Gray’s $3.6 billion Raycom merger without losing sight of its local markets.

Hilton H. Howell Jr., executive chairman and CEO of Gray Television, is B&C’s Broadcaster of the Year. In January, Howell was elevated to his new title, after the group completed its massive $3.6 billion merger with Raycom Media, adding stations in 34 markets to the group. Gray now operates in 93 markets and its station portfolio reaches 24% of U.S. households.

Call it Graycom: Howell said Gray and Raycom were kindred spirits with similar takes on local journalism. Pat LaPlatney, co-CEO and president of Gray Television, and former Raycom president/CEO, said the companies have known each other well for years, which has made the transition easier. “Hilton brings vision and a ton of energy,” LaPlatney said. “He wants us to be the best at everything we do.”

Howell grew up in the business, learning broadcasting in Texas from his father and grandfather. These days, Howell is bullish on ATSC 3.0 and what that platform means for local TV’s next iteration. LaPlatney describes him as a “dedicated broadcaster” who simply loves the business.

Howell will receive the Broadcaster of the Year award Sept. 26 at the TVB Forward Conference in New York. He spoke with B&C about how the Raycom acquisition makes Gray stronger, why local broadcast scores high in terms of the trust factor and the group turning back the clock to do a daily station sign-off. An edited transcript follows.

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B&C: How did the Raycom acquisition make Gray better?
Hilton H. Howell Jr.:
It doubles the size of the company, first and foremost. And it brings in a company that has a remarkably similar journalistic quality to Gray. It is a tremendous number of really remarkable television stations with heritage commitments to their communities that’s very similar to the footprint, and complementary to the footprint, that Gray Television has. That is really quite compelling.

We announced on our earnings call that we have already hit our preannounced synergy numbers and actually exceeded them, and we continue to do so.

The whole transition of making two great companies into one has gone very smoothly and quite remarkably well. I’m very excited to be able to talk about the team that we’ve built and what we’re going to be able to do with the company going forward.

B&C: Even with two companies that share a similar mindset, is it still a challenge to get everybody on the same page?
Absolutely, it’s a challenge. But that’s what you do each and every day. Everybody has worked very collectively and very well in getting everyone on the same page. The human species is kind of averse to change to begin with. The fear of the unknown is the biggest issue we have to overcome. With time and with our actions we’ve proved our words, and I think that has gone a long, long way.

The shareholders of Raycom are happy, the shareholders of Gray are happy and my management team is ecstatic.

B&C: Are you poking around for more acquisitions?
We are. At the very beginning of this year we were pretty bold in what we were doing. We are actively back in the market. We are very careful about what we do in terms of our leverage and where we take the company. We’re probably at the seventh-inning stretch in terms of consolidation in the TV industry. Gray Television wants to be part of that. We’re now in a position, after bringing Raycom on board and what we’ve done in a fast and furious fashion to continue to grow through mergers and acquisitions.

B&C: How do you see the future of local broadcast?
I put my money where my mouth is. We continue to buy shares in our company and continue to grow this business. I’ve been blessed to have been, in one way or another, in the business essentially my whole life and I see the future as exceptionally bright. It’s not the business it was back in the mom-and-pop days; consolidation had to occur to be able to compete. But I really think it’s an exceptionally great time.

Axios Media put out a piece that said most adults in the United States continue to rely on local television more than any other kind of television news, and that is true across all age groups and across almost all levels of education and household income. In terms of the most trusted source in the entire media universe, it always comes down to a local television station and local media.

When we talk to our people — our news directors, our management, our on-air talent, our sales people — we make sure that they understand that we have to maintain and build on that trust and that localism.

B&C: Any concern that younger viewers who grow up on Netflix just don’t follow in their parents’ footsteps and tune into news at 5 p.m., 6 p.m., 11 p.m.?
HH: Time-shifting continues to change and I think that broadcasting has to change along with it. But the power of our news continues to drive it. I sometimes think of this business as a Chicken Little business, because it’s always something — back in the day, it was the remote control or it was cable or it was Aereo. It’s always something that’s gonna take us out.

Netflix is a powerful thing. I watch it all the time, they do a great job. But if you really think about it, it’s really just a digital form of the old VHS rental stores — Blockbuster and all the rest. People are always going to watch movies. When you have live programming, when you have live news, when you have must-view television, which I think broadcasters continue to deliver, it’s going to get eyeballs.

I see bright things ahead. The only people that can mess up this business is the broadcast industry itself. We need to make sure we don’t have a circular firing squad, shooting at each other. We need to be in that circle, firing outward against our real competition.

B&C: Is there anything Gray is doing on the digital side, either at the station or group level, that has you excited?
Gray was the first local broadcaster to have mobile apps that we developed ourselves. We were the first ones out there and we remain committed to doing that. We are now getting literally billions of hits on a regular basis on our websites, on our apps. [Gray had over 2.3 billion total online sessions, or user clicks, January-July, up 19% from the prior year.] One of our guys sent us the consolidated summary of where we were and it’s really remarkable. Our digital properties are the leading ones in almost every one of our 93 markets. The sheer number of interactions in our markets is stunning.

We need to continue to sell that. We need to make sure we find a way to monetize that.

The most powerful ad mechanism is linear television coupled with digital. Digital by itself, while it’s great, isn’t as great an advertising product or as convincing an advertising product as what we can do by putting things on linear television.

You can run linear television over the top, you can run it on your websites. I just watched on YouTube — Gray brought back one of the traditions of local broadcasting. For decades, if not from the beginning of the industry, when we signed off, the national anthem was played. Gray brought back that tradition. We launched with a wonderful 9-year-old singer named Reina [Ozbay] in all 93 markets. We don’t sign off anymore, but we shift from one broadcast day to another. CBS liked it so much they asked if they could use it on their owned-and-operated stations. We were delighted to let them do so.

Just a few minutes ago, I watched our national anthem on the New York station owned by CBS. It was a great thing.

Television is accessed across the board in so many different ways. My biggest challenge is that we don’t get credit and it’s not measured. Somehow or another our industry needs to find a way to measure it better, because it’s compelling.

If you live in one of these local markets, if you put a couple ads on television, everyone in the city knows about it. You know the power of it.

B&C: What words come to mind when you think about a Gray station?
Local community. Many of these stations are the community hearth that everybody gathers around. It’s the one thing in a community that people have in common. In a world where there’s so many individual competitions for eyeballs, for Instagram views or Facebook likes or any of the rest of things, having the one product that brings the community together is unique.

B&C: Has there been a news story coming out of a Gray station this year that made you really proud?
There are so many of them that I can’t even list them for you. We have gotten more awards on a regional and national basis than ever in company history. WCTV (Tallahassee, Florida) and prior to that KWTX (Waco, Texas) and KOLO (Reno, Nevada) have been awarded by NABEF [the NAB Education Foundation] with Service to America awards. It’s really remarkable, the number of awards the company has won. We talk all the time about trying to encourage our people to get involved and to create stories that are locally meaningful and locally relevant. That for us is the key to everything, local relevance.

B&C: What does ATSC 3.0 mean to the group?
I’m extremely enthusiastic and excited about ATSC 3.0. When we acquired Raycom we really didn’t have any stations that were in the top 40 markets. Raycom was a member of [local broadcast consortium] Pearl [TV] and we continue to enthusiastically back what Pearl is doing. We are launching across the board because the protocol for doing so is less and the cost is less. We have a unique position because, in many of our markets, not only do we have a full-power television station, but low-power stations, too. So, we are experimenting with ATSC 3.0 and its opportunities in markets all over the United States.

We look at ATSC as an enabler of technologies. If we look back at when the smartphone came out, who would’ve imagined, 12 year later, what they could do? When ATSC is deployed and when consumers have the receivers they need to receive it, I think it’s going to be amazing, what it enables the broadcast industry to do.

If there are any naysayers in ATSC 3.0, I can’t imagine it because we know all the things it can do in terms of giving you the ability to expand local programming, in terms of microtargeting of your advertising. You can do so many things that are much more compelling than what pure over-the-air broadcasting used to be. I can’t even imagine, 10 years after its implementation, where it could take this industry.

I want to congratulate FCC chairman Ajit Pai for getting that approved. He got it out of development and now it’s our job to get it implemented and adopted by the viewing public. I think the opportunities are amazing.

B&C: Who do you consider a mentor?
I have had a lot of mentors, starting with my father and grandfather when I was a young kid and moving on to my father-in-law. [J. Mack Robinson acquired Gray in 1993.] People like Ralph Gabbard, who was one of the first guys to step into the company when we began to grow it. He tragically passed away way too early.

I’ve been very blessed. I’ve been able to watch really great broadcasters and pioneers like [Nexstar Media Group chairman and CEO] Perry Sook and [Sinclair Broadcast Group founder] David Smith, who in terms of technology and engineering is a genius. They’ve all inspired me in different ways.

B&C: How did you get your start in broadcasting?
My grandfather put our station in Lincoln, Texas, on the air in the early ’50s with a group of investors that included President Lyndon Johnson. I grew up listening to the stories of broadcasting, the trials and tribulations of the whole thing.

Waco, Texas, was my hometown. We used to have in KWTX both the ABC and CBS network affiliations. I don’t know what happened, but something came down from somewhere and the company had to choose which of the two to stay with. For whatever reason, the folks at the time decided to stay with CBS and we had to give up ABC.

A group of investors led by Roy Disney [brother of Walt Disney] bought it. I remember listening to the group of country boys like my father and his business associates, and candidly how frightened they were to compete with Roy Disney, an individual of that accomplishment and a company of that acclaim. As you look back at it, it was not what came from Beverly Hills and Hollywood, it was what people did in the local market that succeeded. Our station [KWTX] continues to succeed and that investment did not turn out that well for the competition.

That whole enterprise has guided the M&A philosophy behind Gray Television since we bought control of the company in the early ‘90s. We try to buy the locally dominant station with all the eyeballs, in markets of relevance. We’ve just been working at it day in and day out for decades now.

B&C: What are you watching on TV?
The HBO show Succession, I’m completely infatuated with. I make sure I’ve got it DVR’d, but Sundays at 9 p.m., that’s where I’m going to be, in front of my big-screen TV watching Succession.

I watch the evening news, I watch the local news. I watch a wide variety of the early morning programs, I kind of channel-surf the morning programs. We don’t have a station where I live.

60 Minutes is one of my must-sees also — I’m happy it comes on before Succession. Game of Thrones was one of my all time favorites. There’s just a lot of great television out there.

B&C: Do you feel the broadcast networks don’t get the love they deserve from Emmys voters?
I think the broadcast networks are working very hard and they do a remarkable job making really fantastic content that can be viewed by a lot of individuals. The cable networks don’t have to deal with decency rules. There are things they cover that maybe make a certain group of people enjoy it more. But the broadcasters try to hit a broad audience and really create some great shows, and have done so forever.

B&C: So there’s a young reporter considering job options in a market where Gray owns a station. Why should they come to you?
We’ve got the best corporate culture anywhere in the industry. We are devoted to the markets we’re in. We’ve now got the scale where you can start anywhere in our markets and work your way up within the company, into larger markets with more opportunities. We’re not a bureaucratic company. We’re a lean, mean organization that gives opportunity to the best individuals. We develop things from the bottom up, not the top down. It gives us a real unique position.

B&C: What else is going on at Gray?
We’re always testing new technologies. We run it all through our station in Omaha, where it’s created and put together and then it’s tested at a station in Lincoln, and if it works we put it across the board.

Five years ago, we launched our Washington bureau. It gives local officeholders access directly to their voters, without a lens other than a local one. It’s an exciting job to have. You’ve got to have that passion for politics and you have to be able to hide your preferences, because we are not opinionated. During a time like August, when Washington is not in session, we get our reporters out to the local markets to make sure they know what is driving the local viewer in those markets.

We launched Full Court Press with Greta Van Susteren Sept. 8. We’re exceptionally thrilled about it. She’s in all 93 Gray markets and we’re real excited about what she will be able to do, especially as we come up on a real exciting political year.