Gray Television Wants Respect From Wall Street

Executives of Gray Television complained in their quarterly conference call Thursday that Wall Street undervalues their company’s stock. Along with reporting 3Q financial results, Gray announced that its board of directors had authorized the buyback of up to $150 million of the company’s shares through the end of 2022. Executive Chairman-CEO Hilton Howell also noted that Gray executives had been buying shares on the open market when SEC rules allowed them to do so.

Gray’s stock (GTN) had closed Wednesday at $16.68, well off the 52-week high of $25.31. After the company reported 3Q results at the high end of its guidance to Wall Street, the stock price opened at $18.15 and stayed above $18 for most of the day’s trading.

In a related note, analysts wanted to know whether Gray intends to return to paying a dividend, having ballooned in size from its Raycom merger and subsequently reducing its debt leverage through synergies and growth. Howell assured Wall Street that Gray will return to being a dividend payer “relatively soon.”

Auto advertising remains a challenging category for Gray, but President and Co-CEO Pat LaPlatney said auto is pacing “a little bit better” in the fourth quarter. As has been heard from some other TV companies, legal advertising has been strong. Also gaining has been financial, which includes insurance in Gray’s tracking.

Political advertising has outpaced expectations for Gray every quarter this year, despite the lack of a national election. How strong? Having a State Senate candidate advertising on TV in Virginia is rare, but Gray had 14 of them on the air at its Richmond station this year as the battle for control of the state legislature drew national attention and money.

LaPlatney said core advertising is slightly better than earlier this year, but warned that there could be some displacement by heavy political demand this quarter (which isn’t even finished yet, since there’s a runoff election in Louisiana). “If that happens, it’s a problem I’m happy to deal with,” he noted.

Gray — and pretty much every TV company — is anticipating record-breaking political advertising in 2020. One analyst wanted to know if there was anything that could go wrong.

Gray E VP and Chief Legal and Development Officer Kevin Latek covered the bases: “The president’s getting impeached right now. The House and Senate are in play. Virginia just flipped the state legislature. So, no. The president’s not going to get un-impeached. I don’t see a momentum that would make the House and the Senate less competitive. If anything, I think the bias is in favor of becoming more competitive.

“Impeachment’s only just starting. We don’t have public hearings yet. We don’t have a trial in the Senate. This is going to become more of an issue, more divisive. At any moment a Supreme Court justice could retire and that would bring out even more interest in the 2020 election. I think all of the bias is in favor of being better, not weaker.”