Gray’s Political Haul Just Kept Growing

“The big story, of course, is political, which surpassed our most wildly optimistic estimates,” Gray Television Chairman-CEO Hilton Howell told Wall Street analysts this morning after the company reported a 17% rise in third quarter revenues.

“We began the year predicting our political revenues would top our all-time record from 2018 of $234 million on a same-station basis,” Howell said. “In late February, we predicted full year political revenues in the range of $250 million to perhaps $275 million. Last month we publicly increased our estimate for political revenues to between $275 million and $300 million. Political somehow managed to pick up even more momentum soon thereafter.

“Now, as we all sit and digest the ongoing election process, and the results of Tuesday’s election, it appears that our political revenues will significantly exceed $380 million. And since we know that there is at least one runoff election in one of our significant states and markets over the next two months, our political revenue could well end the year significantly higher — and maybe even touch $400 million,” said Howell. The CEO also noted that Gray saved about $20 million from that political haul from having taking its national rep business in-house.

CFO Jim Ryan reported that core advertising was down 14% for the third quarter. “We saw sequential improvement during each month of the quarter. July core was down 16%, August core was down 12% and September core was also down 12%, but we have to consider the significant amount of political displacement that we began to see in September. In September, political revenue was $71 million just for the month, compared to a core revenue total of $85 million,” the CFO said.

Gray is not issuing formal guidance for the current fourth quarter. However, Ryan did provide some color on the current landscape. “Total core revenue for Q4 we expect to see decline again in the 10% to 15% range. But as we saw in Q2 and Q3, total core seems to be sequentially improving each month in Q4. October core is decreasing in a low-20% range because of massive political displacement. November is very encouraging. We’re seeing mid-single-digit declines in core at the present time. The December core decline is showing high-single to low-double-digits declines, but we believe there is an opportunity for momentum to pick up in December,” the CFO said.

“Across the board, everything is improving,” Ryan said when an analyst asked about core trends. “Auto is still down, but much less so,” he said. The CFO also noted strength in the financial, medical, legal, home improvement and supermarkets categories.

Even with the big Election Day over, Gray is expecting to book more political spending from a Senate runoff election in Georgia. Howell noted that the company has stations in Augusta, Savannah, Columbus and Albany in the state, along with the Tallahassee, Fla.-Thomasville, Ga., market.

Notably, Senate races are the biggest contributors of political ad dollars for Gray. COO Bob Smith noted that so far this cycle, 40% of political came from Senate races, 23% from the presidential battle, and 16% from House races.