But CEO Bob Prather says he is “not very happy” about missing Wall Street guidance for the quarter–or about prospects for 2007.
Gray Television reported today that year-over-year revenue rose 13% in the third quarter to $80.6 million, but it was not enough to satisfy the company.
Excluding political, national advertising fell 2% compared to the same period of 2005, while local advertising increased just 1%.
The figures drawn from the company’s third-quarter earning report are pro forma—that is, they count the results of two stations, WSAZ Charleston-Huntington, W.Va., and WNDU South Bend, Ind.—as if they had been bought on Jan. 1, 2005. In actually, WSAZ was acquired in November 2005; WNDU, in March 2006.
The third quarter numbers missed targets the company had promised Wall Street.
“I am not very happy with our third quarter numbers,” said Gray CEO Robert Prather during a conference all with securities analysts this afternoon. “I always like to underpromise and overperform and this is the first time since we have been doing conference calls for about 10 years that we haven’t hit or beat our guidance.”
Prather attributed the third-quarter underperformace to political coming in late (in the fourth quarter rather than the third) and to an inexplicable drop in core advertising revenue.
The company reported that it took in $42 million in political advertising for the year, including $10.6 million in the third and $25 million in the fourth.
Of the fourth quarter spending, $8 million came in during the last week of the campaign—in November, Prather said. “That’s not good in the long run, because it means that not a lot of that is incremental. It’s just forcing out regular advertisers.”
Prather said he was surprised by the slowdown in core advertising in late August and September. “I’ve never seen it like that before,” he said. “Fast food/restaurants and telecommunications just disappeared almost. Nobody that I’ve talked to has any explanation—no manager, no national rep firm. Nobody can explain what happened.”
The company was making not big promises for the fourth quarter. The company said local would be down 2% and national, down 7%, partly because of the displacement of regular advertisers by the campaigners.
Prather was bearish on 2007, too, saying that he expected little or no growth in national. As a consequence, he said, he would work hard to keep expenses down. Expense budgets will show no increases or decreases, he said. “That’s my goal.”
Prather said he would use free cash flow to reduce debt, noting that the group is not in the market for additional stations. “Private market prices still remain very high,” he said.