Gray Revenue Sets 4Q, Full-Year Records

Gray Television Inc. today announced results from operations that included record fourth quarter revenue of $126.6 million, topping the previous fourth quarter record of $114.6 million set in 2010. Full year revenue in 2012 was also a record — $404.8 million; the previous full year record was $346.1 million set in 2010.

For the quarter, revenue increased $41.9 million, or 50%, to $126.6 million for the fourth quarter of 2012 compared to the fourth quarter of 2011 due primarily to increased political advertising revenue, retransmission consent revenue and Internet advertising revenue, partially offset by decreased local and national advertising revenue.

Political advertising revenue increased due to increased advertising from political candidates and special interest groups in the “on year” of the two-year election cycle.

Retransmission consent revenue increased primarily due to the improved terms of Gray’s retransmission contracts. A significant portion of its retransmission consent contracts expired in 2011, and the company was able to renew substantially all of these contracts under terms more favorable to Gray, which resulted in increased revenue in the fourth quarter of 2012 compared to the fourth quarter of 2011.

Internet advertising revenue increased due to increased spending by advertisers in an improving economic environment. National and local advertising revenue decreased, in part, due to an increased portion of our available advertising time being sold for political advertising revenue rather than local and national advertising.

Gray continued to earn base consulting revenue from an agreement with Young Broadcasting, although it did not record any incentive consulting revenue from this agreement in either period. This agreement expired on Dec. 31, 2012.

The principal components of Gray’s revenue for the fourth quarter of 2012 compared to the fourth quarter of 2011 were as follows:

• Local advertising revenue decreased $0.4 million, or 1%, to $50.4 million.

• National advertising revenue decreased  $1 million, or 6%, to $15.1 million.

• Internet advertising revenue increased $0.8 million, or 14%, to $6.6 million.

• Political advertising revenue increased $38.8 million, or 853%, to $43.4 million.
• Retransmission consent revenue increased $3.5 million, or 71%, to $8.5 million.

• Other revenue increased $0.2 million, or 9%, to $2.1 million.

• Consulting revenue from the agreement with Young was consistent with the prior year period at $0.6 million.

Gray’s five largest nonpolitical advertising categories on a combined local and national basis by customer type for the fourth quarter of 2012 demonstrated the following changes during the period compared to the fourth quarter of 2011: automotive increased 10%; medical decreased 7%; restaurant decreased 5%; furniture and appliances increased 10%; and communications decreased 7%.

Broadcast expenses (before depreciation, amortization and loss or gain on disposal of assets, net) increased $7.2 million, or 15%, to $56.7 million in the fourth quarter of 2012 compared to the year earlier quarter. This increase was due primarily to increases in non-compensation expense of $4.7 million and compensation expense of $2.5 million.

Non-compensation expense increased primarily due to increases in national sales commissions of $2.7 million and programming costs of $1.5 million.

Full year revenue in 2012 was also a record — $404.8 million, an increase of 32% from full-year 2011; the previous full year record was $346.1 million set in 2010.

Local and national revenue increased due to increased spending by advertisers in a gradually improving economic environment and our broadcast of the 2012 Summer Olympics. During 2012, Gray earned approximately $4 million of revenue from local and national advertisers and $1.1 million of revenue from political advertisers during the broadcast of the 2012 Summer Olympics on its 10 primary NBC stations. There were no Olympic games during 2011.

In addition, local and national advertising revenue was positively influenced by the broadcast of the 2012 Super Bowl on its 10 primary NBC channels, earning approximately $800,000, an increase of approximately $600,000 compared to the broadcast of the 2011 Super Bowl on Gray’s then-one primary Fox-affiliated channel and then-four secondary digital Fox-affiliated channels, which earned it approximately $200,000.

For the full year, broadcast expenses increased $18.1 million, or 9%, to $212.3 million.

Read the company’s report here.