Gray: Digital, Streaming Offer ‘Huge’ Profit Potential

Gray Television jumped into streaming with both feet, and the company’s chairman and CEO sees it — and digital overall — as “huge profit centers” for the company in a “golden age” for monetization that will also be enabled by NextGen TV.

In part two of an exclusive interview with TVNewsCheck Editor Michael Depp, Hilton Howell expounds on how important streaming has become for Gray, particularly the “OTT desks” it has adopted at its stations. He shares how they have allowed stations to keep broadcasting even after being knocked off the air by natural disasters and vandalism.

Howell also shares his frustrations with a lack of regulations for Big Tech and his hopes for more fair competition with a new FCC chair on the way.

An edited transcript.

Gray has had a particularly aggressive streaming strategy. What do you see as OTT’s specific potential in terms of audience development and revenue?

It is growing just so dramatically on streaming, on NextGen TV, on digital issues. One of the things that we are really excited about is, as we bring in this acquisition of Quincy and then Meredith, they have very little digital revenue in their companies. Gray has over $300 million with a 60% profit margin. We plan on taking that to the new assets that we have. That it is going to be the same thing on over the top. You just have to keep working it and figuring it all out because the technologies are coming at us so rapidly that figuring out how to monetize it takes it a few minutes.

All of these technological issues that we have in front of us, I look at all of them as huge profit centers in the future. It is going to be a new golden age for television because we have got NextGen right at the precipice. We have OTT right there, and it is going to give us a lot of opportunities to monetize things in a really great way. I am extremely bullish.

Each of your stations has an OTT desk capable of pushing broadcast to streaming. It seems they have come in pretty handy with the natural disasters your stations have faced.  

In New Orleans because of the power outages [after Hurricane Ida], we went live for eight days, 24 hours a day. We got back on the air really quickly, but we continued to put [the broadcast] out through our OTT desk in Baton Rouge, and then when we got back in New Orleans the same thing. We had over 3 million viewers. Sometimes necessity can be the mother of invention because I am sure there were a lot of folks that didn’t really know how to pick us up over the top. When the hurricane hit in New Orleans, they figured it out.

More recently you had your Panama City, Fla., station, vandalized and knocked off the air. Again, the OTT desks allowed you to continue to broadcast, in a way. Having invested in these, is this a backup plan that most stations ought to be considering if only for the potential disruptions to their broadcast?

I don’t think that we could operate the way we do right now without it. It was a simple decision. Our digital team gave a presentation of the OTT desks. Everybody loved it. I said we are going to buy one for every station right now. The great thing about it is we got the orders in before COVID hit. So, we didn’t have them everywhere, but we had them in a lot of places. It has been an immensely helpful investment. They are going to be rolling out in all of our newly acquired stations as quickly as we can get the technology in.

In addition to your local TV channels, Gray is an investor in VUit, which recently scaled up partnerships with other broadcasters. Is it your goal to go after ubiquity in your streaming presence, being on any viable vMVPD or platform that you can be? 

The absolute essence of broadcasting is to aggregate as large an audience as you can possibly get. And that has been the basis of broadcast versus microcast since the business got started. Do we want a big audience? You bet we do. We will have a unique opportunity that we haven’t had in the past, and that is to do microcasting. From my standpoint, I will use any form of technology to expand our broadcast reach.

This is a Chicken Little business because the sky is always falling. I look at it completely differently from that. It’s like the opportunities are always here. I have $300 million in digital revenue. Five years ago, I had zero. People wring their hands because the network tried to stop paying us to carry their network feed, now we have got to start paying them. I make more money on our digital than we ever got from network compensation. But the whole coverage of local television is always that the world is going to end.

Huge opportunities are coming our way, and we will be able to monetize each of those. The broadcast pie is going to get bigger if the government begins to rationalize its regulations of what we are doing and realizes that we are up against some massive institutions that we have never seen before.

If Google isn’t the Standard Oil of the 21^st century, I don’t know what is. We compete with them for ad dollars in every market day by day, and they take 80% of it. That to me is the only negative in what is otherwise a very rosy picture on our local markets and local advertising.

I was going to ask you what you see as the biggest challenge you are up against heading into 2022, and I am intuiting that Big Tech and the battle against it may be that.

It is a big challenge. I don’t consider us to be in a battle with Big Tech. We are an industry whose hands are tied behind its back in being able to compete with them, and they have no regulatory restrictions in what they are doing.  Then the government defines us as just being local TV broadcasting and ignores the reality of life.

We need to be able to compete with everyone on a fair basis, and the government needs to recognize that. They are dealing with rules and regulations put in place before the Japanese bombed Pearl Harbor. It is time to wake up.

Read part one of this interview here.