EARNINGS CALL

Gray Adding New Advertisers In Pandemic

After reporting local advertising down 6% in the first quarter, with the COVID plunge hitting in March, Gray is not offering formal guidance for the current quarter. However, CFO Jim Ryan told analysts that as states begin to lift restrictions, business should improve.

While many traditional advertisers have moved to the sidelines with their business operations hampered by COVID-19 stay-at-home orders, some other advertisers see opportunity. Gray Television reports that its stations added 700 new clients in March and 800 in April.

“It is a big number,” Gray President/Co-CEO Pat LaPlatney said in response to an analyst’s inquiry about the new business Thursday morning. “But I can tell you it is in line with non-pandemic times,” he added.

Who are those new advertisers? “There were a lot of different types of new advertisers. We actually had a fair number of churches and other spiritual groups reach out and want to air messages of hope and prayer lines and that type of thing. It actually added up to what is a pretty significant number. We had a lot of new home improvement clients. A lot of people were sitting at home and felt like they want to do those ‘honey do’ jobs that they’d been putting off for a while. We saw some of that. We saw some auto dealers that hadn’t been on TV for a long time,” LaPlatney detailed. “So, will we keep those clients? That’s certainly our hope. We see a good chance of keeping a lot of them,” he said.

Another upside to the COVID-19 restrictions is that local news viewership is up dramatically and Gray’s stations have seen newscast ratings rise by double digits and even 100%. “Not all of these viewers will stick around when summer arrives and the current crisis abates. We’ve established the value of our local news franchise to our loyal viewers, as well as large groups of younger consumers who rarely watched local news previously. That’s not all going to disappear once people return to work and school,” LaPlatney said in Gray’s quarterly conference call following release of its first quarter earnings results.

After reporting local advertising down 6% in the first quarter, with the COVID plunge hitting in March, Gray is not offering formal guidance for the current quarter. However, CFO Jim Ryan told analysts that as states begin to lift restrictions, business should improve. “As of today, again cautioning that the situation is fluid and our visibility is very limited, we believe that core ad revenue for Q2 will decline at least 33%, but with each month of the quarter showing sequential improvement,” he said.

Political ad revenue, retransmission consent revenue and “other” revenue are expected to increase over the second quarter of 2019. Ryan noted that core ad revenue will comprise about 44% of the quarter’s revenues, political 4% and retrans 48%.

BRAND CONNECTIONS

Gray executives remain confident that political advertising will hit record levels this year. Chief Legal and Development Officer Kevin Latek noted that the Trump campaign has begun placing ads and he sees more spending by political advertisers at all levels.

While Gray has never confirmed a Reuters report that it had been one of the parties pursuing Tegna before the COVID-19 advertising retreat, Gray Chairman-CEO Hilton Howell told an analyst that there might be some opportunities for M&A after the current crisis eases. “Our company is not for sale,” he emphasized, but added that Gray would be willing to consider different types of structures to get a good deal done.

 


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2018bstyrevr says:

May 8, 2020 at 7:33 am

Same old story from these people…They won’t admit they are in trouble but their employees know differently..


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