ATLANTA, May 8 /PRNewswire-FirstCall/ -- Gray Television, Inc.
("we," "us" or "our") (NYSE:GTN) today announced results from
operations for the three-month period ("first quarter") ended March
31, 2009 as compared to the three-month period ended March 31,
2008. Highlights: For the three-month period ended March 31, 2009,
our total net revenue and broadcast expenses were as follows: Three
Months Ended March 31, --------- 2009 2008 % Change ---- ----
-------- (in thousands except for percentages) Revenues (less
agency commissions) $61,354 $70,999 (14)% Broadcast expense (before
depreciation, amortization and gain on disposal of assets) $45,654
$50,016 (9)% While the current national recession makes for a
difficult operating environment, we believe our operating results
validate our long-term strategy of focusing on leading local
television stations in midsize to smaller markets. Comments on
Results of Operations for the Three-Month Period Ended March 31,
2009: Revenues. Total net revenue decreased $9.6 million, or 14%,
to $61.4 million due primarily to increased retransmission revenue
offset by decreased local, national and political advertising
revenues. Retransmission revenue increased due to negotiating
higher revenues as our retransmission contracts were renewed.
Internet advertising revenues were generally consistent with the
internet revenues for the first quarter of the prior year while
website traffic continued to increase. Local and national
advertising revenue decreased due to reduced spending by
advertisers in the current economic recession. Net advertising
revenue associated with the broadcast of the 2009 Super Bowl on our
ten NBC affiliated stations approximated $750,000 which is an
increase from the approximate $130,000 of Super Bowl revenues
earned in 2008 on our then six Fox affiliated channels. Political
advertising revenues decreased due to reduced advertising from
political candidates during the "off year" of the two-year
political advertising cycle. Local advertising revenue decreased
$6.4 million, or 14%, to $39.3 million. National advertising
revenue decreased $3.4 million, or 21%, to $12.9 million. Internet
advertising revenue decreased 2%, to $2.6 million. Political
advertising revenues decreased $2.1 million, or 67%, to $1.0
million. Retransmission revenue increased $3.0 million, or 463%, to
$3.6 million. Production and other revenue decreased $0.6 million,
or 24%, to $1.8 million. Operating expenses. Broadcast expenses
(before depreciation, amortization and gain on disposal of assets)
decreased $4.4 million, or 9%, to $45.7 million. This decrease was
primarily due to reduced payroll costs resulting from a reduction
in the number of employees. We also had reduced non-payroll
expenses resulting from our efforts to control costs. Corporate and
administrative expenses (before depreciation, amortization and gain
on disposal of assets) increased $0.5 million, or 14%, to $4.0
million due primarily to increased legal expenses, relocation
expenses and non-cash stock-based compensation. The increase in
legal fees reflects approximately $330,000 of expenses relating to
finalizing certain retransmission consent contracts in 2009. We
incurred $350,000 in expenses related to our relocation in 2009 of
several general managers due to routine turnover. We recorded
non-cash stock-based compensation expense during the three-month
periods ended March 31, 2009 and 2008 of $353,000 and $294,000,
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 as
illustrated below by the aggregate page views reported by our
websites in the three-month period ended March 31, 2009 compared to
the three-month period ended March 31, 2008. Gray Websites -
Aggregate Page Views Three Months Ended March 31, --------- % 2009
2008 Change ---- ---- ------ (in millions) Total Aggregate Page
Views (including video plays and cell phone page views) 185.5 161.4
15% We attribute the increase in our website traffic to increased
posting of local content and to increased 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: March 31, 2009 December 31, 2008 --------------
----------------- (in thousands) Cash and cash equivalents $14,857
$30,649 Long-term debt including current portion 798,359 800,380
Borrowing ability under our senior credit facility 50,000 12,262
Three Months Ended March 31, ---------------------------- 2009 2008
---- ---- (in thousands) Net cash (used in) provided by operating
activities $(1,296) $6,671 Net cash used in investing activities
(5,469) (2,949) Net cash used in financing activities (9,027)
(3,766) Amendment of Senior Credit Facility: Effective as of March
31, 2009, we amended our senior credit facility. The terms of our
amended senior credit facility include, but are not limited to, an
increase in the maximum ratio allowed under our total net leverage
ratio covenant for the year ending December 31, 2009, a general
increase in the restrictiveness of our remaining covenants and
increased interest rates. In order to obtain this amendment, we
incurred loan issuance costs of approximately $7.0 million
including legal and professional fees. These fees were funded from
our existing cash balances. The amendment of our senior credit
facility was determined to be significant and as a result we
recorded a loss on early extinguishment of debt of $8.4 million.
The amendment to our senior credit facility is included as Exhibit
10.10 to our 2008 annual report as filed on Form 10-K with the
Securities and Exchange Commission on March 31, 2009. Detailed
table of operating results: Gray Television, Inc. Selected
Operating Data (Unaudited) (in thousands except for per share data
and percentages) Three Months Ended March 31, --------- % 2009 2008
Change ---- ---- ------ Revenues (less agency commissions) $61,354
$70,999 (14)% Operating expenses: Operating expenses before
depreciation, amortization and gain on disposal of assets, net:
45,654 50,016 (9)% Corporate and administrative 4,046 3,539 14%
Depreciation and amortization of intangible assets 8,410 9,084 (7)%
Gain on disposals of assets, net (1,522) (921) 65% ------ ----
56,588 61,718 (8)% ------ ------ Operating income 4,766 9,281 (49)%
Other income (expense): Miscellaneous income, net 12 27 (56)%
Interest expense (10,113) (15,799) (36)% Loss on early
extinguishment of debt (8,352) - ------ --- Loss before income tax
benefit (13,687) (6,491) 111% Income tax benefit (4,767) (2,641)
80% ------ ------ Net loss (8,920) (3,850) 132% Preferred dividends
(includes accretion of issuance cost of $301 and $0, respectively)
4,051 - ----- --- Net loss available to common stockholders
$(12,971) $(3,850) 237% ======== ======= Basic and diluted per
share information: Net loss available to common stockholders
$(0.27) $(0.08) ====== ====== Weighted-average shares outstanding
48,489 48,153 1% ====== ====== Political revenue (less agency
commission) $1,009 $3,073 (67)% Guidance for the Second Quarter of
2009 We currently anticipate that our broadcasting results of
operations for the three-month period ending June 30, 2009 will
approximate the ranges presented in the table below. % % 2009
Change 2009 Change Guidance From Guidance From Low Actual High
Actual Actual Selected operating data: Range 2008 Range 2008 2008
------------------------ ----- ---- ----- ---- ---- (dollars in
thousands) OPERATING REVENUES: Revenues (less agency commissions)
$63,000 (20)% $65,000 (17)% $78,743 OPERATING EXPENSES: (before
depreciation, amortization and other expenses) Broadcast $45,500
(6)% $46,250 (5)% $48,460 Corporate $3,500 29% $3,750 38% $2,722
OTHER SELECTED DATA: Broadcast political revenues (less agency
commissions) $600 $700 $4,951 Expense for corporate non-cash based
compensation $325 $350 $395 Comments on Guidance: Net Revenues: The
current national economic recession has severely impacted our
short-term revenue generation and has made revenue forecasting more
difficult than in prior periods. Based on advertising orders
received to date, pending advertising orders and advertising orders
expected to be received in the future, we currently believe our
second quarter 2009 local revenue and national revenue, excluding
political revenue, will decrease from 2008 results by approximately
12% and 31%, respectively. While the decline is expected to be
reflected in most advertising categories, the automotive
advertising category is expected to be particularly challenged
during the second quarter of 2009. At this time it is unclear as to
how the bankruptcy filing by Chrysler LLC will, or a possible
bankruptcy filing by General Motors Corp. would, affect our revenue
for the second quarter. Political revenues reflect the off-year of
the political cycle. We anticipate that our retransmission consent
revenues during the second quarter of 2009 will increase
approximately $3.0 million, to a total of approximately $3.8
million, reflecting the successful retransmission negotiations
concluded in December 2008. For the full year 2009, we currently
anticipate retransmission consent revenues will range between $15.0
million and $16.0 million compared to $3.0 million for full year
2008. Broadcast expenses (before depreciation, amortization and
gain/loss on disposal of assets) The anticipated decline in second
quarter 2009 broadcast expenses reflects an approximate $1.3
million, or 4%, reduction in payroll and related expenses
reflecting in part the staff reductions discussed above. At this
time it is unclear as to how the bankruptcy filing by Chrysler LLC
will, or a possible bankruptcy filing by General Motors Corp.
would, affect our accounts receivable reserves. Therefore, our
anticipated second quarter 2009 broadcast expenses do not include
additional expenses for either company's actual or potential
bankruptcy. For the full year 2009, we currently anticipate that
our broadcast operating expenses will decrease by at least $15.0
million, or approximately 7.5%, compared to 2008. Corporate
Expenses (before depreciation, amortization and gain/loss on
disposal of assets) The anticipated increase in corporate expense
for the second quarter of 2009 compared to the second quarter of
2008 is due primarily to a reduction of $780,000 in incentive-based
compensation during 2008. A similar benefit is not anticipated for
the second quarter of 2009. Net Revenue by Category: The table
below presents our net revenue by type for the three-month periods
ended March 31, 2009 and 2008, respectively (dollars in thousands):
Three Months Ended March 31, ------------------------------------
2009 2008 ----------------- ------------------ Percent Percent
Amount of Total Amount of Total ------- -------- ------- ---------
Broadcasting net revenues: Local $39,286 64.0% 45,719 64.4%
National 12,875 21.0% 16,337 23.0% Internet 2,564 4.2% 2,629 3.7%
Political 1,009 1.6% 3,073 4.3% Retransmission consent 3,640 5.9%
646 0.9% Production and other 1,842 3.0% 2,421 3.4% Network
compensation 138 0.3% 174 0.3% --- --- --- --- Total $61,354 100.0%
$70,999 100.0% ======= ===== ======= ===== The aggregate internet
revenues presented above are derived from two sources: (i) direct
internet revenue and (ii) internet related commercial time sales.
Conference Call Information Gray Television, Inc. will host a
conference call to discuss its first quarter operating results on
May 8, 2009. The call will begin at 11:00 AM Eastern Time. The live
dial-in number is 1-888-256-0990 and the confirmation code is
3864276. 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: 3864276 until
July 7, 2009. Reconciliation: Reconciliation of net loss to the
non-GAAP terms: Three Months Ended March 31, --------- 2009 2008
---- ---- (in thousands) Net loss $(8,920) $(3,850) Adjustments to
reconcile from net loss to Broadcast Cash Flow Less Cash Corporate
Expenses: Depreciation and amortization of intangible assets 8,410
9,084 Non-cash stock-based compensation 353 294 Gain on disposals
of assets, net (1,522) (921) Miscellaneous (income) expense, net
(12) (27) Interest expense 10,113 15,799 Loss on early
extinguishment of debt 8,352 - Income tax benefit (4,767) (2,641)
Amortization of program broadcast rights 3,770 3,851 Common stock
contributed to 401(k) plan excluding corporate 401(k) contributions
(41) 626 Network compensation revenue recognized (138) (174)
Network compensation per network affiliation agreement 30 30
Payments for program broadcast rights (3,856) (3,775) ------ ------
Broadcast Cash Flow Less Cash Corporate Expenses 11,772 18,296
Corporate and administrative expenses excluding amortization of
non-cash stock-based compensation 3,693 3,245 ----- ----- Broadcast
Cash Flow $15,465 $21,541 ======= ======= 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), impairment,
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 and
less network compensation revenue, 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. The Company Gray Television, Inc. is a
television broadcast company headquartered in Atlanta, GA. Gray
currently operates 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 38 digital second channels including 1 ABC, 4
FOX, 7 CW, 16 MyNetworkTV and 1 Universal Sports Network affiliates
plus 8 local news/weather channels and 1 "independent" channel in
certain of its 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 second quarter of 2009 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 May 8, 2009. 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 is 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, 2008 which is on file with the SEC and
available at the SEC's website at http://www.sec.gov/. For
information contact: Web site: http://www.gray.tv/ Bob Prather Jim
Ryan President and Senior V. P. and Chief Operating Officer Chief
Financial Officer (404) 266-8333 (404) 504-9828 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, both of Gray Television,
Inc. Web Site: http://www.gray.tv/
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