Presidential Campaign Advertising Already Heating Up For Gray TV

“For the first time ever in the year before a presidential election we are receiving significant presidential ad buys from all major candidates and parties. This is a great sign for this year and for next year,” said Gray Television Chairman-CEO Hilton Howell as he spoke with Wall Street analysts on the company’s quarterly conference call. Howell also noted strong advertising demand at local stations and that sales gains are being recorded for the Meredith and Quincy groups acquired 18 months ago.

“We have seen dramatic improvement across the board,” he said, specifically calling out the operations in Atlanta, Phoenix, Nashville and Greenville, S.C.

“Gray’s television stations and production companies are executing well — seemingly better than other parts of the advertising ecosystem. Our local advertising continues to demonstrate positive results. National advertising, while softer, is a small portion of our business and tends to recover when the economy returns to growth,” said Pat LaPlatney, president/co-CEO.

“Overall, the auto category continued its recover in Q1 and is pacing to continue improving throughout the year. Other strong categories include services and home improvement. Our local direct ad business has been a big priority for us for the past few years and continues to produce new leads and new contracts. In the first quarter our new local direct brought in over 2,000 new accounts and 9% more revenue than the first quarter of 2022. This momentum has continued into the second quarter. In April of ’23 our stations brought in nearly $11 million of new business, which our best monthly number we’ve had,” LaPlatney said.

In the Q&A, analyst Dan Kurnos of The Benchmark Co. noted that while other TV groups had reported Services as a soft category, Gray had it as a leader. Why the difference?

“Services for us have been moving right along, Dan, so I think we have team sales focused on some of these categories. I think that helps us. So that’s one of the reasons I think we could be doing a little better than the other guys,” LaPlatney said.

“Take legal, for instance, that category for us has been on a steady upward arc for years. And home improvement continues to be growing, so, yes, I like where we are there,” he added.

“Services in Q1 ’23 is about 29% of core. Q1 of ’22 services was 28% of core,” added CFO Jim Ryan.

Adding some detail on the current quarter, Ryan told analysts “core in April is up healthy single digits, May is looking strong as well and June is a little too early to call.”

Noting that another group (Sinclair) had recently shut down news rooms in five markets, one analyst wanted to know if something similar might be expected from Gray.

“The answer, quickly, is no. We’re doing the exact reverse of that. We have in almost every market been increasing our local news coverage — in some cases quite significantly,” Howell said.

The CEO also took issue with the current market valuation of Gray’s stock. “I’m going to be buying stock. Our current price is ridiculous. The Assembly project is worth more than our market cap,” said Howell.

Assembly — Gray’s new production studio complex outside Atlanta, with NBCUniversal as its major tenant — is due to open next month. Gray execs say revenues will begin to come in this year and be “full on,” as Howell put it, in 2024.