Gray TV Gives First Estimate Of 2022 Political

Wall Street analysts have been trying to get a grip on just how big the TV advertising pie is going to be for political advertising next year. Gray Television stepped up to the plate after reporting its third quarter results this morning and took a swing at the year ahead.

“For the first three quarters of 2021 we recorded about $24 million. About $400,000 of that revenue was attributable to the new Quincy stations [acquired in August],” said Kevin Latek, chief legal and development officer. He said that significantly exceeded the political revenues from the first nine months of 2017, the most recent post-presidential year.

“The most noteworthy development in the political area for us is that we continue to benefit from the strong trend to begin campaigns much earlier with each new cycle. In fact, roughly one-third of this year’s total net political revenue through the third quarter relates to elections that will occur in November 2022, not elections that occurred in November 2021. Only a few years ago, we remarked when we had one or two races that started spending with us nine to 12 months before Election Day.

“In 2021, by contrast, we have about a dozen races with ad spending in the third quarter — more than one year before Election Day. We even have a handful of races where spending started in the first or second quarter of this year for elections occurring in November of 2022. Clearly, earlier and earlier advertising is here to stay,” he said.

“Looking ahead to 2022, we now expect that our combined post-Quincy and post-Meredith company will experience another record-breaking non-presidential political year. Next year, control of both houses of congress will be in play. We have more races for governor next year than last year, including gubernatorial races in nearly every state served by the Quincy and Meredith stations that we are adding this year. Moreover, political fundraising records have been shattered with each new set of reports from both parties, candidates at all levels, interest groups and super PACs. And I’ll add that the results in Virginia and New Jersey this week have likely expanded the field of competitive races across the country,” Latek told the analysts.

“Given all these encouraging signs, we today issue our first political guidance for 2022. As a reminder, the combined Gray, Quincy, Meredith portfolio, less divested stations, recorded $652 million in total net political revenue in 2020. We anticipate that next year’s revenues will roughly reach 80% of last year’s total in a presidential election year. We are therefore today guiding to total net political revenue for 2022 of approximately $525 million,” said Latek.

For the immediate future, Gray CFO Jim Ryan told Wall Street to expect fourth quarter core advertising to be up 8-10% over the same quarter of 2020. “Auto is still lagging, due to well-reported supply chain issues,” Ryan said, but reminded analysts that auto is now only about 18% of total core for Gray. The services group — financial, legal and medical — is about 28% of core revenue. “In fact, current Q4 pacings for the services group is showing percentage increases in the low teens over 2020 and that increase is more than offsetting the weakness in auto,” he added.

In the Q&A session with analysts, Ryan added that the fourth quarter pro forma (including Quincy, but not Meredith) is pacing up low- to middle-single-digits for local advertising and national up high-single-digits.