It is canceling its contracts with reps Katz Media Group and CoxReps to take the business in-house. It has hired former Katz execs Becky Meyer and Mike Jones to head the effort, which it expects will save it $8 million-$9 million next year in commission costs.
Gray Television on Monday said that it has dropped Katz Media Group and CoxReps, its national advertising sales representatives, opting to handle such deals itself. Currently, Gray directly handles national advertising sales at approximately one-quarter of its television stations. In January 2016, Gray said it will expand this direct sales approach to nearly all of its television stations.
“Katz and CoxReps have served Gray’s stations very well over many years,” said Hilton H. Howell Jr., Gray’s CEO-president. “After very careful consideration, we have determined that the rapidly changing marketplace now requires that nearly all of our stations directly interface with national advertising agencies and clients.”
Gray has hired Becky Meyer, formerly the VP of sales for Katz Media Group’s Continental Television Sales division in Chicago, to lead its national sales efforts as its new VP of national sales. In addition, Gray has hired Mike Jones to be Gray’s new national director of political sales. Jones formerly represented scores of television stations in national political advertising sales, including many of Gray’s stations, as a VP with Continental.
Gray said that the amount by which its national advertising sales commissions will decrease (after increases in Gray’s own personnel costs) “depends primarily on the volume of national advertising sales revenue, and especially political advertising revenue, that the effected stations achieve once they directly handle their own national sales. We anticipate that expense savings due to the termination of the national advertising sales representation agreements, net of increased personnel expense, will be in the range of $8 million to $9 million in 2016, with net savings continuing in the years thereafter. In addition to these cost savings, we expect that our new strategy will have at least a marginally positive impact on national advertising revenue.”
The termination of the representation agreements will trigger termination fees payable to the former national representation firms that will be payable in monthly installments throughout 2016 and 2017. Gray said it will record a special charge to its third quarter 2015 broadcast expenses of approximately $6.1 million to reflect the anticipated termination fees. “We did not include this special charge in the guidance for our anticipated third quarter 2015 results that we issued on Aug. 6, 2015,” it said.