Gray Sees Strong Pacing As Auto Lags

Gray Television had issued its first quarter financial results on Monday as it announced a $2.7 billion acquisition for Meredith Local Media. However, Wall Street analysts had to wait until today for a conference call discussing business trends.

Gray President-Co-CEO Pat LaPlatney noted that first quarter core advertising was up 4%. “While we didn’t quite rebound to 2019 levels, we were definitely in that ZIP code,” he said.

“We saw strength in financial, home improvement, health, legal, and the supermarket categories — all up mid-single digits to mid-teens over Q1 ’20. Our pacings, which are not always a great predictor for future revenue, are still quite strong. There are a lot of positive numbers here on our Q2 pacings as of today, and we’re optimistic about the quarter,” LaPlatney told analysts.

“We continue to believe gambling will be the fastest growing core ad category for us this year. The automotive category is pacing 48% ahead of last year’s horrendous second quarter. It nevertheless continues to lag improvement in other categories, due to the chip supply issue,” he said.

“I think we are having a very healthy return of advertising demand,” Chairman-CEO Hilton Howell said later in the call.

“My personal feeling is the fact that it is not all double-digits is largely to do with well-documented publicity about supply chain problems. Nearly everything in the world economy has been slowed down by production. So automobiles are behind in terms of production. I’ve got a car that I ordered a year ago, and I still don’t know when it’s going to get in. Chip supplies, you can’t get those. And so there’s a huge resistance. You’re not going to advertise if you’ve got nothing to sell, right? That is a hangover from COVID-19, but I think that will be rectified” Howell told the analysts.

“Sports betting is going to be the big story for some time, especially in our markets. We’re well positioned. Right now in the country, I believe it’s 25 states with legalized gambling. In those states we’re seeing quite a bit of money. First quarter was big. Second quarter is significant, even though it’s a light sports calendar from a betting standpoint. When football kicks up again in the third and fourth quarters we will see bigger spending at that time,” said COO Bob Smith.

“Also, next up it appears the three states that are going to legalize [sports betting] are South Dakota, Louisiana and North Carolina. And we are really, as you know, in those markets well positioned,” Smith added.