Auto And Political Both Grow At Gray

“Today, we beat guidance and consensus on all five key metrics,” Gray Television Chairman-CEO Hilton Howell proudly proclaimed as the company reported its second quarter results. The list: core advertising, retrans, political, EBITDA and free cash flow.

“We’re especially pleased at the performance of our television stations during the quarter. Our core advertising revenue increased 4% on a year-over-year basis, with both local and national core up in low single digits on a year-over-year basis,” said Howell.

Political continues to build well ahead of next year’s presidential election. Gray said it has already booked twice the political ad spending it recorded for the same period of 2019.

Noting reports elsewhere of some weakness in auto advertising, particularly on the national side, President and Co-CEO Pat LaPlatney said that was not the case at all for Gray. “To the contrary, Gray’s television stations posted a 20% year-over-year increase in auto in the second quarter — and this increase was led by even larger increases year-over-year in national auto advertising,” he said.

“Meanwhile, our stations continue to excel at developing new business from local customers who previously did not advertise on our platforms,” LaPlatney added.

What’s the secret sauce?

Analyst Craig Huber of Huber Research Partners asked why Gray is outperforming its peers on core advertising.

Gray CFO Jim Ryan answered: “I’m not going to comment on the peers, only to acknowledge the results that we published today seem to lead the peer group in core advertising, both for the quarter and year-to-date. You’d have to ask them.

“Answering for Gray,” Ryan continued: “It goes back to what we have been saying literally for decades. We have the preeminent portfolio with asset quality in the television business — and we have had that for decades. We have always had a focus on strong local operations. We’ve been exceedingly laser-focused on strong local news operations.

“When you have a strong local news operation wrapped around these strong, larger overall television operations in most of the 113 markets you operate in, you have a chance to consistently perform well, to exceedingly well, to outperforming the peer group.”

Looking ahead, the CFO told analysts to expect core local revenue to be up in a low-single-digit range for the third quarter. He added that local will continue to do a bit better than national.