Gray Reports Record-Setting Revenue in 2Q

Gray Television Thursday reported revenue rose to $196.6 million during the three months ending June 30, making it a record-setting quarter for the company.

That number represents a $53.2 million, or 37%, increase over 2Q 2015, according to Gray.

“Gray had a very strong Q2 that met our expectations,” president and CEO Hilton Howell said in the company’s earnings call. “We think this is a notable achievement given the macroeconomics and geopolitical news reported throughout the quarter.”

Related: Sinclair Revenue Rises to $666.5 Million in 2Q

Gray attributed to the lift in revenue to a range of factors including:

  • A $104.7 million, or 26%, rise in local advertising revenue across platforms
  • A 38% increase in national ad revenue, bringing it up to $26 million
  • An influx of $9.6 million in political money, bringing the six-month total for 2016 to $19.3 million. Gray expects this year to take in roughly $144 million in political, with the bulk of it coming in during 4Q.
  • A 37% increase in retransmission consent revenue, bringing it up to $50.5 million

Related: Meredith TV Station Revenue Up 9% in Q2

Gray’s 2Q net income rose to $17.7 million, a 46% increase over last year. Broadcast cash flow was $79.3 million, which was a 38% increase over 2015 and a new record high, the company said.

Striking a deal with Nexstar to buy ABC affiliate WBAY in Green Bay, Wisc. and NBC affiliate KWQC in Davenport, Iowa (both currently owned by Media General, which is merging with Nexstar) for $270 million in cash was among 2Q highlights, Gray said. Acquisitions of stations in Clarksburg, W.V. and Anchorage, Alaska also progressed.

"The financial results demonstrate the success of our recent acquisitions, organic revenue growth and prudent operational cost controls across our entire portfolio of television stations,” Gray said in a statement. “In addition, we achieved additional milestones during the second quarter of 2016 as we continue to execute prudent and opportunistic transactions."

While Gray has been pursuing acquisitions for roughly three years, the company has no immediate plans to buy more stations, said Kevin Latek, Gray’s executive VP and chief legal and development officer.

“The telephone could ring,” he said. “However, we simply do not expect to be engaged in any significant M&A until we get past the election and the spectrum auction.”

While political spending is expected to be on track, Gray execs said they would like to see a quick end to the spectrum auction to put the uncertainty that comes with it behind them.

Yet between the potential benefits of the auction, and progress on the adoption of a new next-gen broadcast standard, they said they have few big gripes with Washington at the moment.

“This is the first time in a long time that the broadcast industry can look to the FCC as the potential driver of growth,” Latek said.