As stock prices fall due to worries about the coronavirus, Gray Television Chairman-CEO Hilton Howell suggested in the company’s quarterly conference call that broadcast stocks should be a “safe haven” for investors.
“We have no exposure to China, South Korea or Iran. Or Italy, for that matter,” said Howell, although he noted that a coronavirus case has now been reported in Sacramento,Calif., with no known connection to quarantined areas. “At the end of the day, guys, we have 15,000 people in the last 12 months that have passed away from the flu and we have yet to have a fatality in the United States on any of this new virus that’s out here.”
Like most companies, though, Gray has seen its stock price fall along with the broader market decline prompted by fears of the coronavirus impact. Gray is moving to buy back more of its stock and Howell confirmed that the board of directors may move to resume a dividend payment, although no action is likely until the latter half of this year. Gray had stopped dividend payments in 2008. The company is also aggressively paying down debt, following its merger with the former Raycom.
“We are bullish about political advertising revenue prospects for 2020 and are off to a fine start this year,” Howell told analysts today during its fourth quarter earnings call. Political has already been running well ahead of expectations, with fourth quarter sales of $38 million up 171% from the final quarter of 2017.
Gray is increasing its political guidance for 2020 to a range of $250 million-$275 million, well ahead of the company’s record of $235 million in 2018. With stations in all four of the early primary/caucus states, Gray has already benefitted from heavy political spending, including the self-financed campaigns of Michael Bloomberg and Tom Steyer.
“They had a noticeable impact on our results,” said Kevin Latek, Gray’s chief legal and development officer, noting that the two billionaires were the company’s top two political advertisers in 4Q. “But they did not account for all of the over-delivery on our fourth quarter political guide. To the contrary, if we exclude the spending for both Mr. Bloomberg and Mr. Steyer, our political advertising in the fourth quarter still exceeded our guidance, the high end of our guidance, by more than 20%. This tells us that their two campaigns are adding incremental money to a market that is already very robust,” he said.
Apart from the political bonanza, CFO Jim Ryan reported sequential improvement in auto advertising for 4Q — “it was still trailing, but it was better than the first three quarter of the year.” He pointed to strength in local services — legal, medical and financial — both in the fourth quarter and continuing into the current quarter. Also, he noted that national advertising for auto is looking a little bit better in 1Q than it had been in 2019. Overall, he said, adjusting for political displacement and having the Super Bowl on Fox vs. CBS, the quarter is pacing up low single digits.
“If you just combine legal with the health side, those two in aggregate will be close to the same number as auto in first quarter ’20,” interjected President-co-CEO Pat LaPlatney, emphasizing the growth categories.
On the retrans side, Gray is telling Wall Street to expect $213 million-$215 million in 1Q, following $195 million in 4Q. But that number is expected to be higher in the remaining quarters of 2020. Just how much higher is yet to be determined, since Gray has the majority of its retrans deals up for renewal over the next 10 months.
Stay tuned.
16 May 2024
23 May 2024
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