ATLANTA, Nov. 5 /PRNewswire-FirstCall/ -- Gray Television, Inc.
("Gray," "we" or "us") (NYSE:GTN) today announced results from
operations for the three months (the "third quarter") and nine
months ended September 30, 2008 as compared to the three months and
nine months ended September 30, 2007. Comments on Results of
Operations for the Three Months Ended September 30, 2008: Revenues.
Total net revenue increased $9.0 million, or 12%, to $82.6 million
due primarily to increased political and internet advertising
revenue, partially offset by decreased local and national
advertising revenue in the third quarter of 2008. The increase in
political advertising revenue reflects increased advertising from
political candidates in the 2008 general elections. Spending on
political advertising during the third quarter of 2008 was the
strongest at our stations in Colorado, West Virginia, Wisconsin,
Michigan and North Carolina, accounting for approximately 67% of
the total political net revenue for the third quarter of 2008.
Increased internet advertising revenue reflects our internet sales
initiatives in each of our markets. The decrease in local and
national revenue was largely due to the general weakness in the
economy offset in part by $3.4 million of net revenue earned in the
third quarter attributable to the broadcast of the 2008 Summer
Olympics on our ten NBC stations. Political advertising revenue
increased $11.6 million, or 801%, to $13.1 million. Internet
advertising revenue increased $0.4 million, or 18%, to $3.0
million. Local advertising revenue decreased $1.5 million, or 3%,
to $46.3 million. National advertising revenue decreased $1.7
million, or 9%, to $17.5 million. Operating expenses. Broadcast
expenses (before depreciation, amortization and loss on disposal of
assets) increased $0.3 million, or 1%, to $49.9 million. This
modest increase primarily reflects the impact of increased national
sales representative commissions on the incremental political
advertising revenues offset in part by a slight reduction in
payroll related costs. Corporate and administrative expenses
(before depreciation, amortization and gain/loss on disposal of
assets) decreased $0.2 million, or 5%, to $3.8 million primarily
reflecting a decrease in incentive based compensation expenses. We
recorded non-cash stock-based compensation expense during the three
months ended September 30, 2008 and 2007 of $399,000 and $285,000,
respectively. Comments on Results of Operations for the Nine Months
Ended September 30, 2008: Revenues. Total net revenue increased
$9.4 million, or 4%, to $232.4 million due primarily to increased
political and internet advertising revenue, partially offset by
decreased local and national advertising revenue in the nine months
ended September 30, 2008. The increase in political advertising
revenue reflects increased advertising from political candidates in
the 2008 primary and general elections. Spending on political
advertising was the strongest at our stations in Colorado, West
Virginia, Wisconsin, Michigan and North Carolina, accounting for
approximately 60% of the total political net revenue for the nine
months ended September 30, 2008. Increased internet advertising
revenue reflects our internet sales initiatives in each of our
markets. The decrease in local and national revenue was largely due
to the general weakness in the economy and due to the change in
networks broadcasting the Super Bowl. During the first nine months
of 2008, we earned approximately $130,000 of net revenue relating
to the 2008 Super Bowl broadcast on our six Fox channels compared
to approximately $750,000 of net revenue relating to the 2007 Super
Bowl broadcast on our 17 CBS channels during the first nine months
of 2007. The decrease in local and national revenue was offset in
part by $3.4 million of net revenue earned in the third quarter
attributable to the broadcast of the 2008 Summer Olympics on our
ten NBC stations. Political advertising revenue increased $15.9
million, or 307%, to $21.1 million. Internet advertising revenue
increased $1.8 million, or 26%, to $8.6 million. Local advertising
revenue decreased $5.0 million, or 3%, to $141.5 million. National
advertising revenue decreased $3.8 million, or 7%, to $52.4
million. Operating expenses. Broadcast expenses (before
depreciation, amortization and gain/loss on disposal of assets)
increased $0.9 million, or 1%, to $148.4 million. This modest
increase primarily reflects the impact of increased national sales
representative commissions on the incremental political advertising
revenues. Corporate and administrative expenses (before
depreciation, amortization and loss on disposal of assets)
decreased $1.6 million, or 13%, to $10.0 million primarily
reflecting a decrease in incentive based compensation expenses. We
recorded non-cash stock-based compensation expense during the nine
months ended September 30, 2008 and 2007 of $1,088,000 and
$1,115,000, respectively. Internet Initiatives: We have continued
to expand our internet initiatives in each of our markets. Our
focus has been to expand local content to attract traffic to our
websites. This strong revenue growth reflects the significantly
increased traffic to our websites as illustrated below by the
aggregate page views reported by our websites in the three-month
and nine-month periods ended September 30, 2008 compared to the
three-month and nine-month periods ended September 30, 2007. Gray
Websites - Aggregate Page Views Three Months Ended September 30, %
2008 2007 Change (in millions) Total Aggregate Page Views
(including video plays and cell phone page views) 149.3 101.2 48%
Nine Months Ended September 30, % 2008 2007 Change (in millions)
Total Aggregate Page Views (including video plays and cell phone
page views) 461.8 304.8 52% We attribute the increase in our
website traffic to increased posting of local content and public
awareness of our websites as the result of our on-air promotion of
our websites. The aggregate internet revenues discussed above are
derived from two sources. The first source is advertising or
sponsorship opportunities directly on our websites. We call this
"direct internet revenue." The other source is television
advertising time purchased by our clients to directly promote their
involvement in our websites. We refer to this internet revenue
source as "internet related commercial time sales." In the future,
we anticipate our direct internet revenue will grow at a
significantly faster pace relative to our internet related
commercial time sales. Other Financial Data: September 30, December
31, 2008 2007 (in thousands) Cash and cash equivalents $32,575
$15,338 Total debt 830,446 925,000 Preferred stock 91,883 - Credit
commitment under senior credit facility 100,000 100,000 Nine Months
Ended September 30, 2008 2007 (in thousands) Net cash provided by
operating activities $36,692 $11,919 Net cash used in investing
activities (12,144) (22,575) Net cash (used in) provided by
financing activities (7,311) 7,148 On June 26, 2008, we issued 750
shares of Series D Perpetual Preferred Stock (the "Series D
Preferred Stock") having an aggregate liquidation value of $75.0
million in a privately placed transaction to qualified investors.
We received approximately $68.6 million in net proceeds after
issuance discounts and transaction expenses. Also on June 26, 2008,
we used $65.0 million of the net proceeds from the issuance to make
a voluntary prepayment on our term loan under our senior credit
facility. We retained the remaining $3.6 million of the net
proceeds for general corporate purposes. On July 15, 2008, we
issued an additional 250 shares of Series D Perpetual Preferred
Stock having an aggregate liquidation value of $25.0 million in a
privately placed transaction to qualified investors. We received
approximately $23.0 million in net proceeds after issuance
discounts and transaction expenses. Also on July 15, 2008, we used
the $23.0 million of net proceeds from the issuance to make a
voluntary prepayment on our term loan under our senior credit
facility. Subsequent Event: On October 3, 2008, we used cash on
hand to make a voluntary prepayment of $10 million on our term loan
under our senior credit facility. After applying this voluntary
prepayment, the total outstanding balance on our term loan was
$820.4 million and we had no amounts outstanding on our revolving
credit facility under our senior credit facility. Gray Television,
Inc. Selected Operating Data (Unaudited) (in thousands except for
per share data and percentages) Three Months Ended September 30, %
2008 2007 Change Revenues (less agency commissions) $82,631 $73,585
12% Operating expenses before depreciation, amortization and gain
on disposal of assets, net: Broadcast 49,907 49,583 1% Corporate
and administrative 3,754 3,932 (5)% Depreciation and amortization
of intangible assets 8,797 10,156 (13)% (Gain) loss on disposals of
assets, net (338) 5 (6860)% 62,120 63,676 (2)% Operating income
20,511 9,909 107% Other income (expense): Miscellaneous income, net
36 177 (80)% Interest expense (12,626) (16,812) (25)% Income (loss)
before income tax 7,921 (6,726) Income tax expense (benefit) 3,277
(2,546) Net income (loss) 4,644 (4,180) Preferred dividends
(includes accretion of issuance cost of $275 and $0, respectively)
3,167 - Net income (loss) available to common stockholders $1,477
$(4,180) Basic per share information: Net income (loss) available
to common stockholders $0.03 $(0.09) Weighted average shares
outstanding 48,370 47,760 1% Diluted per share information: Net
income (loss) available to common stockholders $0.03 $(0.09)
Weighted average shares outstanding 48,413 47,760 1% Political
revenue (less agency commission) $13,065 $1,450 801% Gray
Television, Inc. Selected Operating Data (Unaudited) (in thousands
except for per share data and percentages) Nine Months Ended
September 30, % 2008 2007 Change Revenues (less agency commissions)
$232,373 $223,015 4% Operating expenses before depreciation,
amortization and gain on disposal of assets, net: Broadcast 148,383
147,449 1% Corporate and administrative 10,015 11,577 (13)%
Depreciation and amortization of intangible assets 26,788 30,048
(11)% (Gain) loss on disposals of assets, net (1,343) 122 (1201)%
183,843 189,196 (3)% Operating income 48,530 33,819 43% Other
income (expense): Miscellaneous income, net 126 984 (87)% Interest
expense (41,827) (50,610) (17)% Loss on early extinguishment of
debt - (22,853) Income (loss) before income tax benefit 6,829
(38,660) Income tax expense (benefit) 2,820 (14,021) Net income
(loss) 4,009 (24,639) Preferred dividends (includes accretion of
issuance cost of $275 and $439, respectively) 3,292 1,626 102% Net
income (loss) available to common stockholders $717 $(26,265) Basic
per share information: Net income (loss) available to common
stockholders $0.01 $(0.55) Weighted average shares outstanding
48,253 47,728 1% Diluted per share information: Net income (loss)
available to common stockholders $0.01 $(0.55) Weighted average
shares outstanding 48,293 47,728 1% Political revenue (less agency
commission) $21,089 $5,181 307% Guidance for the Fourth Quarter of
2008 We currently anticipate that our broadcast results of
operations for the three months ending December 31, 2008 (the
"fourth quarter of 2008") will approximate the ranges presented in
the table below. % % 2008 Change 2008 Change Guidance From Guidance
From Low Actual High Actual Actual Selected Operating Data: Range
2007 Range 2007 2007 (dollars in thousands) OPERATING REVENUES:
Revenues (less agency commissions) $90,000 7% $95,000 13% $84,272
OPERATING EXPENSES: (before depreciation, amortization and other
expenses) Broadcast $51,500 (1)% $52,000 0% $52,238 Corporate and
administrative $3,000 (15)% $3,500 0% $3,513 OTHER SELECTED DATA:
Broadcast political revenues (less agency commissions) $26,000
$26,500 $2,627 Expense for non-cash contributions to 401(k) plan
$550 $600 $411 Expense for corporate non-cash stock-based
compensation $375 $400 $134 Comments on Guidance Total revenues
anticipated for the fourth quarter of 2008 reflect an incremental
increase in political revenues. Local non-political advertising
revenue for the fourth quarter of 2008 is currently anticipated to
be down approximately mid double digits compared to the results of
the three-month period ended December 31, 2007 (the "fourth quarter
of 2007"). National non- political advertising revenue is currently
anticipated to be down approximately 25% in the fourth quarter of
2008 compared to the fourth quarter of 2007. Internet advertising
revenue for the fourth quarter of 2008 is currently anticipated to
increase approximately 10% to 15% compared to the fourth quarter of
2007. Changes in the classification of certain items: The
classification of certain prior year amounts in the accompanying
consolidated financial statements have been changed in order to
conform to the current year presentation. In our disclosures issued
prior to December 31, 2007, we had included internet advertising
revenue with local advertising revenue and retransmission consent
revenue was included with production and other revenue. We are now
presenting internet advertising revenue and retransmission consent
revenue separately. The table below presents our expanded
disclosure for the three- month and nine month periods ended
September 30, 2008 and 2007, respectively (dollars in thousands):
Three Months Ended September 30, 2008 2007 Percent Percent Amount
of Total Amount of Total Broadcasting net revenues: Local $46,279
56.0% $47,761 64.9% National 17,546 21.2% 19,237 26.1% Internet
2,954 3.6% 2,505 3.4% Political 13,065 15.8% 1,450 2.0%
Retransmission consent 762 0.9% 501 0.7% Production and other 1,841
2.2% 1,951 2.7% Network compensation 184 0.3% 180 0.2% Total
$82,631 100.0% $73,585 100.0% Nine Months Ended September 30, 2008
2007 Percent Percent Amount of Total Amount of Total Broadcasting
net revenues: Local $141,493 60.9% $146,467 65.7% National 52,362
22.5% 56,192 25.2% Internet 8,631 3.7% 6,830 3.1% Political 21,089
9.1% 5,181 2.3% Retransmission consent 2,209 1.0% 1,443 0.6%
Production and other 6,025 2.6% 6,338 2.8% Network compensation 564
0.2% 564 0.3% Total $232,373 100.0% $223,015 100.0% The aggregate
internet revenue presented above are derived from two sources: (i)
direct internet revenue and (ii) internet related commercial time
sales. Conference Call Information We will host a conference call
to discuss our third quarter operating results on November 5, 2008.
The call will begin at 11:00 AM Eastern Time. The live dial-in
number is 1 (800) 533-7619 and the confirmation code is 8072046.
The call will be webcast live and available for replay at
http://www.gray.tv/. The taped replay of the conference call will
be available at 1 (888) 203-1112, Confirmation Code: 8072046 until
December 4, 2008. Reconciliations: Reconciliation of net income
(loss) to the non-GAAP terms (in thousands): As Reported Three
Months Ended September 30, 2008 2007 Net income (loss) $4,644
$(4,180) Adjustments to reconcile to Broadcast Cash Flow Less Cash
Corporate Expenses: Depreciation and amortization of intangible
assets 8,797 10,156 Amortization of non-cash stock based
compensation 399 285 (Gain) loss on disposals of assets, net (338)
5 Miscellaneous (income) expense, net (36) (177) Interest expense
12,626 16,812 Income tax expense (benefit) 3,277 (2,546)
Amortization of program broadcast rights 3,926 3,750 Common stock
contributed to 401(k) plan excluding corporate 401(k) contributions
553 550 Network compensation revenue recognized (184) (180) Network
compensation per network affiliation agreement 30 78 Payments for
program broadcast rights (3,708) (3,821) Broadcast Cash Flow Less
Cash Corporate Expenses 29,986 20,732 Corporate and administrative
expenses excluding amortization of non-cash stock-based
compensation 3,355 3,647 Broadcast Cash Flow $33,341 $24,379 As
Reported Nine Months Ended September 30, 2008 2007 Net income
(loss) $4,009 $(24,639) Adjustments to reconcile to Broadcast Cash
Flow Less Cash Corporate Expenses: Depreciation and amortization of
intangible assets 26,788 30,048 Amortization of non-cash stock
based compensation 1,088 1,115 (Gain) loss on disposals of assets,
net (1,343) 122 Miscellaneous (income) expense, net (126) (984)
Interest expense 41,827 50,610 Loss on early extinguishment of debt
- 22,853 Income tax expense (benefit) 2,820 (14,021) Amortization
of program broadcast rights 11,598 11,345 Common stock contributed
to 401(k) plan excluding corporate 401(k) contributions 1,751 1,750
Network compensation revenue recognized (564) (564) Network
compensation per network affiliation agreement 90 235 Payments for
program broadcast rights (10,149) (11,507) Broadcast Cash Flow Less
Cash Corporate Expenses 77,789 66,363 Corporate and administrative
expenses excluding amortization of non-cash stock-based
compensation 8,927 10,462 Broadcast Cash Flow $86,716 $76,825
Non-GAAP Terms This press release includes the non-GAAP financial
measure of Broadcast Cash Flow and Broadcast Cash Flow Less Cash
Corporate Expenses. These non- GAAP amounts are used by us to
approximate the amount used to calculate a key financial
performance covenant as defined in our senior credit facility.
Broadcast Cash Flow is defined as operating income, plus corporate
expense, depreciation and amortization (including amortization of
program broadcast rights), non-cash compensation and (gain) loss on
disposal of assets and cash payments received or receivable under
network affiliation agreements, less payments for program broadcast
obligations, less network compensation revenue and less income
(loss) from discontinued operations, net of income taxes. Corporate
expenses (excluding depreciation, amortization and non-cash stock-
based compensation) are deducted from Broadcast Cash Flow to
calculate "Broadcast Cash Flow Less Cash Corporate Expenses." These
non-GAAP terms are used in addition to and in conjunction with
results presented in accordance with GAAP and should be considered
as supplements to, and not as substitutes for, net loss calculated
in accordance with GAAP. Gray Television, Inc. Gray Television,
Inc. is a television broadcast company headquartered in Atlanta,
GA. We currently operate 36 television stations serving 30 markets.
Each of the stations are affiliated with either CBS (17 stations),
NBC (10 stations), ABC (8 stations) or FOX (1 station). In
addition, we currently operate 39 digital second channels including
1 ABC, 5 Fox, 7 CW and 16 MyNetworkTV affiliates plus 8 local
news/weather channels and 2 "independent" channels in certain of
our existing markets. Cautionary Statements for Purposes of the
"Safe Harbor" Provisions of the Private Securities Litigation
Reform Act The comments on our current expectations of operating
results for the fourth quarter of 2008 and other future events are
"forward-looking statements" for purposes of the Private Securities
Litigation Reform Act of 1995. Actual results of operations are
subject to a number of risks and uncertainties and may differ
materially from the current expectations discussed in this press
release. All information set forth in this release and its
attachments is as of November 5, 2008. We do not intend, and
undertake no duty, to update this information to reflect future
events or circumstances. Information about potential factors that
could affect our business and financial results and cause actual
results to differ materially from those in the forward-looking
statements are included under the captions, "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," in our Annual Report on Form 10-K for the
year ended December 31, 2007 which is on file with the SEC and
available at the SEC's website at http://www.sec.gov/. DATASOURCE:
Gray Television, Inc. CONTACT: Bob Prather, President and Chief
Operating Officer, +1-404-266-8333, or Jim Ryan, Senior V.P. and
Chief Financial Officer, +1-404-504-9828 Web site:
http://www.gray.tv/
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