Gray TV Boosts Political Forecast Again

After reporting second quarter political ad sales that shot past the company’s own forecast, Gray Television is telling investors to expect it to equal or exceed its political advertising record of $652 million (pro forma for acquisitions) set in 2020. And that’s without a presidential race at the top of the ballot this year.

“While we see some challenging environments for our clients and slowing retrans growth … and interest expenses, Gray Television is set for an exceptional year. On a combined historical basis, which gives effect to both acquisitions and dispositions, our core revenue was flat year-over-year, with our second quarter political revenue hitting an all-time record. And we remain on track to finish the year at a record retransmission revenue level of $1.5 billion,” Gray Television Chairman-CEO Hilton Howell said in his Friday conference call with Wall Street analysts.

“Core revenue held strong, roughly flat with Q2 2021, even though political advertising rose $82 million from the second quarter of last year” said Pat LaPlatney, president and co-CEO, as he reviewed the quarter.

“Normally, we would expect core advertising revenue to decline when political advertising rises substantially and takes advertising inventory normally utilized by local, regional and national advertisers. The reason our core advertising held up in the face of skyrocketing demand from political is the scale that Gray has achieved in the television industry. As the second-largest broadcaster nationally and often the largest media company in a state, Gray is earning viewers and dollars which otherwise would have flowed to other platforms and other parties,” LaPlatney said.

Looking at the current third quarter, CFO Jim Ryan said to expect core advertising of $345 million to $355 million. “Given the volume of political advertising revenue we’re expecting for Q3, our core advertising revenue will definitely start experiencing increasing displacement, due to political revenue,” he said. And he reminded analysts that the third quarter of last year had $14 million in Olympics revenue, which will not be repeated this year.

Political advertising is projected in a range of $193 million to $195 million. That compares to a combined $190 million for the current Gray station portfolio in the third quarter of 2020.

Analysts wanted to know more about the former General Motors plant outside Atlanta that Gray is rebuilding as a soundstage facility for movie and TV production. Howell clarified that Assembly Atlanta, as it is called, will not be used to produce content for Gray to distribute on its TV stations. Rather, it is an investment. NBCUniversal is renting the first large building, which is due to open in about a year from now. NBCU will be handling soundstage leasing for production. Howell said the thousands of new jobs being created at Assembly should make the remaining real estate even more valuable for development.