Gray Expects Big Payoff From Gambling Ads
Gray Television executives had plenty to brag about on their quarterly conference call Thursday with Wall Street analysts after reporting record results earlier in the morning. Political advertising totaled $430 million for 2020 — a far cry from the company’s original guidance of $250 million to $275 million, which had been repeatedly increased throughout the year. The company recently announced a $925 million acquisition of Quincy Media and, just today, Gray announced its return to paying shareholders a dividend, which had been suspended since 2008.
But what’s hot going forward? It’s a hot new category. A sure bet, you might say.
“In 2019, we started to see new advertisers and growing budgets for gambling, which historically included state-run lotteries as well as casinos. With the increasing legalization of sports betting on a state-by-state basis, this category grew to a few million dollars in 2020, while most other categories were down for the year. The business is only accelerating in the last few months. Our pacings, which are not necessarily a great predictor of future revenue, are still very encouraging because the gambling category is now pointing to a more than 250% increase over 2020,” said Gray President-Co-CEO Pat LaPlatney.
“If anything near that holds, gambling would be the fastest growing core ad category for us for this year,” he told the analysts.
“The gambling money is going to be a significant category from this point forward,” COO Bob Smith explained later in the call.
“When you talk about it, I should add that most people think of FanDuel and DraftKings for example, because you see those all the time. But there are several more players in the market, and they’re all pretty active. They’re active currently in eight of our states with pretty heavy schedules in first quarter. There are four other states which are approved [for online gambling] but not live yet,” Smith said. Three of those states could be active as soon as second quarter and he noted that 14 more states are considering legislation which could have some joining in by the second half of this year.
“We’re pleased with what we’re seeing so far at the start of the year,” said CFO Jim Ryan in discussing guidance for the first quarter. For core advertising, Gray is telling Wall Street to expect revenues to be flat to up 2% from a year ago. Retrans revenue is expected to be up 15%-16%.
“January was down low-single-digits. February is up low-single-digits and currently March is appearing to be up low- to mid-single-digits. So we’re very encouraged by the cadence month-over-month of the continuing sequential improvement of core revenue,” Ryan said.
Letters of interest are due tomorrow for the stations in six markets to be divested in conjunction with the Quincy acquisition. Not surprisingly, Gray executives declined to give any hint of pricing.
Gray Television Chairman-CEO Hilton Howell did take time in the Wall Street call to pay tribute to Quincy President-CEO Ralph Oakley.
“The only regret that we have — the only regret that I have — in this transaction is that the broadcast industry will lose Ralph’s immense contributions to the NAB, to the NAB PAC, to the affiliate boards and his countless other important endeavors for the people who work in broadcasting and to the local residents and businesses who rely on our stations. We pledge to operate the fine stations that we acquire from Quincy in tribute to Ralph’s life-long contributions to local service, the local broadcast stations, local journalism and love of community and country,” Howell said.