Gray Pleased With 1Q, Ready To Buy Stations

As TVNewsCheck reported this morning, Gray Television reported first quarter revenue increased by $292 million to $518 million.

“We are exceptionally pleased to report the results this morning of our very first quarter as the new, larger, more diversified Gray Television,” said Hilton Howell, CEO and chairman, on an earnings call.

Pointing to the 129% increase in revenue, he told analysts: “This is an exceptionally strong showing and I believe it confirms the wisdom of the Raycom transaction.” He was referring to Gray’s recent purchase of Raycom Media, which closed Jan. 2.

“Across the board, we saw continued improvement in our local business conditions that started last summer,” he said, adding that improvement started to “really build during the first quarter.”

Gray posted a first quarter loss of $31 million, compared to a $20 million profit a year ago. But Howell pointed out to analysts: “Our profits would have been an all-time high for the company — an outstanding record except for the transaction-related expenses.”

The broadcaster is still eyeing potential future acquisitions, but with a limited number of potential targets, Gray will be patient, according to Kevin Latek, its chief legal and development officer. “There are a limited number of markets and so, by definition, there’s a limited number of No. 1 and No. 2 TV stations that would meet our criteria,” he told analysts during the Q&A.

Many such stations are already owned by a large rival, he noted, adding when small organizations opt to be open to sell is out of Gray’s hands. “We keep close with lots of folks and will continue to do so,” he said, adding: “When people decide to sell, it will be up to them. We’re always looking at stuff and if something makes sense on a dollar value and it’s in a new state for us, we’re not going to walk away.”

Gray won’t walk away if a potential station is in a state the company is already in either, he said, telling analysts: “We’re going to be opportunistic, but also very patient.” But he added: “I would expect there will still be acquisitions this year.”

Gray, meanwhile, isn’t immune to the growing number of cord-cutters. Latek told analysts: “We are, like everyone else, seeing some modest sub erosion in the MVPD universe. At the same time, however, our non-traditional subscriber base has been growing faster than anticipated. In fact, our non-traditional sub count nearly doubled between the end of 2017 and the end of 2018.

“Moreover, we have now crossed an important milestone in that the number of monthly paid subscribers receiving a Big Four channel via an OTT or direct-to-consumer platform now exceeds last year’s decline in the number of traditional MVPD subs.”