QUARTERLY REPORT

Gray Reports 4Q Record Revenue, Retrans

Revenue tops $169 million, driven by increased local and national sales, retrans and station acquisitions. Net income is $6.6 million. Retrans grows to $39.5 million. Excluding acquired stations, revenue decreased 12%, to $169.5 million.

Gray Television today announced that for the three months and year ended Dec. 31, 2015, revenue was $169.5 million and $597.4 million, respectively, and net income totaled $15 million and $39.3 million, respectively. On July 1, 2015, Gray completed the five acquisition transactions that added six television stations to its portfolio.

Financial highlights included:

  • Record Revenue and Broadcast Cash Flow — For the quarter, revenue of $169.5 million included record retransmission consent revenue of $39.5 million. For the year, it achieved record revenue of $597.4 million that included record retransmission consent revenue of $152 million. Gray also achieved record broadcast cash flow of $224.5 million for the year.
  • Acquisitions — As previously announced, between July 1, 2015, and Dec. 31, 2015, Gray added seven television stations and four new markets. The aggregate purchase price for these stations was approximately $184.4 million, all of which was funded from cash on hand.
  • Transaction Costs — In connection with its acquisition activities, Gray incurred professional fees of approximately $2 million and $6.5 million for the quarter and year, respectively.  These expenses are included in its corporate and administrative operating expenses.

Total revenue decreased $8.4 million, or 5%, to $169.5 million for the fourth quarter of 2015 compared to the fourth quarter of 2014. The 2015 Acquired Stations and 2014 Acquired Stations, collectively, accounted for approximately $53.4 million of total revenue in the fourth quarter of 2015, and the 2014 Acquired Stations accounted for approximately $42.7 million of total revenue for the fourth quarter of 2014.

Revenue increased primarily due to the additional revenue from the 2015 Acquired Stations and 2014 Acquired Stations and increases in retransmission consent revenue primarily due to increased subscriber rates. These increases were offset, in part, by decreases in political advertising revenue, which decreased due to 2015 being the “off year” of the two-year election cycle.

The principal types of revenue for the fourth quarter of 2015 compared to the fourth quarter of 2014 were as follows:

  • Local advertising revenue increased $11.0 million, or 15%, to $87.1 million.
  • National advertising revenue increased $2.9 million, or 14%, to $23.5 million.
  • Internet advertising revenue was unchanged at $7.5 million.
  • Political advertising revenue decreased $39.3 million, or 81%, to $9.2 million.
  • Retransmission consent revenue increased $18.0 million, or 84%, to $39.5 million.
  • Other revenue decreased $0.9 million, or 25%, to $2.8 million.

Within Gray’s local and national advertising revenue categories, and excluding revenue from the 2015 Acquired Stations and 2014 Acquired Stations, Gray’s five largest customer categories experienced the following changes during the fourth quarter of 2015 compared to the fourth quarter of 2014:

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  • Automotive increased 7%;
  • Medical increased 8%;
  • Restaurant decreased 10%;
  • Furniture and appliances increased 20%; and
  • Communications increased 3%.

Factoring out the new station acquisitions, in what Gray calls a “combined historical basis,” total revenue decreased $23.1 million, or 12%, to $169.5 million in the fourth quarter of 2015 as compared to the fourth quarter of 2014. On a Combined Historical Basis, the principal types of revenue for the fourth quarter of 2015 compared to the fourth quarter of 2014 were approximately:

  • Local advertising revenue increased $5.7 million, or 7%, to $87.1 million.
  • National advertising revenue decreased $0.7 million, or 3%, to $23.5 million.
  • Internet advertising revenue decreased $0.3 million, or 4%, to $7.5 million.
  • Political advertising revenue decreased $44.2 million, or 83%, to $9.2 million.
  • Retransmission consent revenue increased $16.4 million, or 71%, to $39.5 million.
  • Other revenue decreased $0.1 million, or 4%, to $2.8 million.

Within Gray’s local and national advertising revenue categories, and including the revenue attributable to the 2015 Acquired Stations and 2014 Acquired Stations, its five largest customer categories experienced the following 4Q changes:

  • Automotive increased 3%;
  • Medical increased 9%;
  • Restaurant decreased 15%;
  • Furniture and appliances increased 25%; and
  • Communications increased 10%.

 

 

For full-year 2015, total revenue increased $89.2 million, or 18%, to $597.4 million compared to the year before. The 2015 Acquired Stations and 2014 Acquired Stations, collectively, accounted for approximately $163.4 million of our total revenue for the year. The 2014 Acquired Stations accounted for approximately $72.1 million of total revenue in that year.

Revenue increased primarily due to the additional revenue from the 2015 Acquired Stations and 2014 Acquired Stations and increases in retransmission consent revenue primarily due to increased subscriber rates. These increases were offset, in part, by decreases in political advertising revenue.

The principal types of revenue for the year were:

  • Local advertising revenue increased $62.4 million, or 25%, to $308.2 million.
  • National advertising revenue increased $16.2 million, or 25%, to $81.1 million.
  • Internet advertising revenue was unchanged at $28.3 million.
  • Political advertising revenue decreased $64.8 million, or 79%, to $17.2 million.
  • Retransmission consent revenue increased $77.1 million, or 103%, to $152.0 million.
  • Other revenue decreased $1.6 million, or 13%, to $10.7 million.

Within local and national advertising revenue categories, and excluding revenue from the 2015 Acquired Stations and 2014 Acquired Stations, Gray’s five largest customer categories experienced the following changes during the year:

  • Automotive increased 3%;
  • Medical increased 9%;
  • Restaurant increased less than 1%;
  • Furniture and appliances increased 13%; and
  • Communications decreased 1%.

On a Combined Historical Basis, full-year total revenue increased $0.3 million, or less than 1%, to $621.3 million. On a Combined Historical Basis, the principal types of revenue for the year were approximately:

  • Local advertising revenue increased $18.1 million, or 6%, to $318.1 million.
  • National advertising revenue increased $2.5 million, or 3%, to $89.5 million.
  • Internet advertising revenue decreased $1.6 million, or 5%, to $28.9 million.
  • Political advertising revenue decreased $76.5 million, or 81%, to $17.7 million.
  • Retransmission consent revenue increased $64.5 million, or 71%, to $155.8 million.
  • Other revenue decreased $6.8 million, or 37%, to $11.4 million.

Within Gray’s local and national advertising revenue categories, and including revenue from the 2015 Acquired Stations and 2014 Acquired Stations, its five largest customer categories experienced the following changes in revenue during the year:

  • Automotive increased 2%;
  • Medical increased 9%;
  • Restaurant decreased 1%;
  • Furniture and appliances increased 14%; and
  • Communications increased 7%.

Read the company’s report here.


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