Lack Of Political, Olympics Lower Gray Rev.

Gray Television today reported that third quarter total revenue decreased $14.6 million, or 14%, to $88.3 million compared to the third quarter of 2012.  Local and internet advertising revenue, retransmission consent and consulting revenue increased, while political advertising revenue, national advertising revenue and other revenue decreased.

In the third quarter of 2013, its local and national advertising revenue did not have the benefit of Olympic advertising revenue as it did in 2012. During the third quarter of 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 our ten primary NBC stations.

Retransmission consent revenue increased primarily due to increased subscriber counts and rates. 

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

As previously disclosed, during the third quarter of 2013, Gray recognized a one-time payment of $7.1 million as incentive consulting revenue associated with a now-expired consulting agreement for services rendered prior to the expiration. It said it does not expect to recognize any further revenue from this agreement.

The principal components of our revenue for the third quarter of 2013 compared to the third quarter of 2012 were as follows:

• Local advertising revenue increased $2.1 million, or 4%, to $48.7 million.

• National advertising revenue decreased $0.8 million, or 5%, to $13.6 million.

• Internet advertising revenue increased $0.1 million, or 2%, to $6.5 million.

• Political advertising revenue decreased $23.1 million, or 94%, to $1.4 million.
• Retransmission consent revenue increased $0.6 million, or 8%, to $9.2 million.

• Other revenue decreased $0.1 million, or 6%, to $1.8 million.

• Consulting revenue increased $6.6 million to $7.1 million.

For the third quarter of 2013, Gray’s five largest nonpolitical advertising customer categories on a combined local and national basis, by customer type, demonstrated the following changes in revenue compared to the third quarter of 2012: automotive increased 5%; restaurant increased 2%; medical decreased 9%; communications increased 6%; and furniture and appliances increased 2%.

The company’s report, available here, said: “We are pleased with our operating results for the third quarter of 2013. We experienced period over period increases in local advertising, internet advertising and retransmission consent revenue. Our period over period decrease in total revenue was primarily due to the expected decrease in political advertising revenue during the “off-year” of the two-year political advertising cycle.

Our period over period increase in broadcast expenses (excluding depreciation, amortization and loss on disposal of assets) was due primarily to routine increases in salaries, healthcare expense and pension expense, offset in part by a decrease in incentive compensation. Our period over period increase in corporate and administrative expenses (excluding depreciation, amortization and loss on disposal of assets) was due primarily to increases in salaries, relocation expense and stock-based compensation expense, offset in part by a decrease in incentive compensation.”