Gray Up 35% Amid Third Quarter Disappointments
Gray Television Tuesday reported a record third quarter—with total revenue rising 35% to $204.5 million. But even as a “disappointing” campaign season ends with Tuesday's vote, chairman and CEO Hilton Howell, Jr. said fallout from the acrimonious president election continues as displaced advertisers have yet to return.
“We see local and national advertisers seemingly sitting on the sidelines longer than usual,” Howell said. December ad sales are currently pacing behind what it was in 2015, the company said.
“The political uncertainty also appears to have led to significant economic uncertainty and created new headwinds for our core business that we hope will dissipate as the results of today’s elections are announced tonight,” Howell said. “In any event, the political revenue results and uncertain macro environment make it more likely that Gray will place the highest priority on debt repayment over the next four or five quarters.”
Campaign spending generated $22.3 million for Gray during the third quarter—significantly lower than the $37 million originally expected. Presidential spending was 66% lower than expected. Down-ballot campaign spending was 30% less than forecasted, with political revenue in states including Virginia, Wisconsin, Colorado and Ohio down 50-90%, Gray said.
“This year’s political election season presented extraordinary challenges from the top of the ticket to the bottom, especially after mid-September. These challenges created a perfect storm for our political revenue,” Howell said.
Other third quarter highlights include:
- Local advertising revenue increased 22% to $102.2 million.
- National ad revenue increased 22% to $25.4 million.
- The Rio Olympics generated $8.2 million in advertising.
- Retransmission consent revenue rose 30% to $51.1 million.
Gray also on Tuesday announced that its board of directors approved the company buying back $75 million in shares over the next three years in response to its deteriorating stock price, despite calling negative views of the company’s financial well-being “misguided.”
Kevin Latek, Gray executive VP and chief legal and development officer, said he sees the dearth of political spending this year as an anomaly. That Gray captured a larger share of the political dollars that were spent shows their value, he said.
“This did not result from a failure in execution by our stations,” he said.
In addition, Gray expects to see a 17% increase in retransmission revenue in 2017 resulting from negotiations with pay-TV providers currently underway, he said.
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