For the Three-Month and Six-Month Periods Ended June 30, 2009
ATLANTA, Aug. 7 /PRNewswire-FirstCall/ -- Gray Television, Inc.
("Gray," "we" or "us") (NYSE:GTN) today announced results from
operations for the three-month period (the "second quarter") and
six-month period ended June 30, 2009 as compared to the three-month
and six-month periods ended June 30, 2008. Highlights: Three Months
Ended June 30, -------- 2009 2008 % Change ---- ---- -------- (in
thousands except for percentages) Revenues (less agency
commissions) $65,057 $78,743 (17)% Broadcast expense (before
depreciation, amortization and gain on disposal of assets) $45,167
$48,460 (7)% The current economic recession continues to challenge
the television broadcast industry. We are committed to operating
our stations in a manner that generates maximum revenue while
minimizing operating expenses during these difficult times.
Although our operating results are down compared to the prior year,
we believe that our operating results compare favorably to other
television broadcast companies. Comments on Results of Operations
for the Three-Month Period Ended June 30, 2009: Revenue. Total net
revenue decreased $13.7 million, or 17%, to $65.1 million due
primarily to decreased local, national, political and internet
advertising revenue and decreased production and other revenue.
These decreases were partially offset by increased retransmission
consent revenue in the current period. Retransmission consent
revenue reflects the more profitable terms of our recently renewed
contracts. Local and national advertising revenue decreased due to
reduced spending by advertisers in the current economic recession.
Historically, our industry's largest advertiser category has been
the automotive industry. The current recession has significantly
reduced the automotive industry's advertising expenditures. Our
automotive advertising revenue decreased approximately 48% compared
to the prior year. Internet advertising revenue decreased due to
the same factors that affected our local and national advertising
revenue but to a lesser extent. Political advertising revenue
decreased reflecting decreased advertising from political
candidates during the "off year" of the two-year political
advertising cycle. Local advertising revenue decreased $6.2
million, or 13%, to $43.3 million. National advertising revenue
decreased $6.1 million, or 33%, to $12.4 million. Internet
advertising revenue decreased $0.3 million, or 11%, to $2.7
million. Political advertising revenue decreased $4.0 million, or
81%, to $0.9 million. Retransmission consent revenue increased $3.2
million, or 394%, to $4.0 million. Production and other revenue
decreased $0.1 million, or 8%, to $1.6 million. Operating expenses.
Broadcast expenses (before depreciation, amortization and gain on
disposal of assets) decreased $3.3 million, or 7%, to $45.2
million. This decrease was primarily due to a reduction in
compensation expense of $2.3 million, facility fees of $0.3 million
and professional services of $0.3 million partially offset by an
increase in bad debt expense of $0.6 million. Payroll expense
decreased primarily due to a reduction in the number of employees.
As of June 30, 2009 and 2008, we employed 2,216 and 2,331 total
employees, respectively, in our broadcast operations which included
full-time and part-time employees. Professional services decreased
primarily due to lower national representation fees which are paid
based upon a percentage of our lower national revenue. Facility
fees decreased primarily due to lower electricity expense resulting
from the discontinuance of our analog broadcasts. Bad debt expense
increased primarily due to an increased reserve for receivables due
from Chrysler LLC. Corporate and administrative expenses (before
depreciation, amortization and gain on disposal of assets)
increased $0.9 million, or 32%, to $3.6 million due primarily to an
increase in compensation expense of $0.6 million and an increase in
professional services expense of $0.4 million. This increase in
compensation expense was primarily due to increased incentive
compensation related expenses. During the first five months of
2008, we accrued compensation expense for executive officer
bonuses. During the three-month period ended June 30, 2008, we
determined that these executive bonuses would not be paid and as a
result the associated accrued expenses were reversed which resulted
in a reduction of compensation expense of $780,000. Executive
bonuses have not been accrued in 2009 and as a result we did not
have a reduction in 2009 which was similar to that of 2008.
Professional services increased primarily due to an increase in
legal expenses of $145,000 and an increase in consulting expenses
of $100,000 resulting from a consulting agreement with our former
Chairman. We recorded non-cash stock-based compensation expense
during the three-month periods ended June 30, 2009 and 2008 of
$345,000 and $395,000, respectively. Comments on Results of
Operations for the Six-Month Period Ended June 30, 2009: Revenue.
Total net revenue decreased $23.3 million, or 16%, to $126.4
million due primarily to decreased local, national, political and
internet advertising revenue and decreased production and other
revenue. These decreases were partially offset by increased
retransmission consent revenue in the current period.
Retransmission consent revenue reflects the more profitable terms
of our recently renewed contracts. Local and national advertising
revenue decreased due to reduced spending by advertisers in the
current economic recession. Historically, our industry's largest
advertiser category has been the automotive industry. The current
recession has significantly reduced the automotive industry's
advertising expenditures. Our automotive advertising revenue
decreased approximately 45% compared to the prior year. The
negative effects of the recession were partially offset by
increased advertising during the 2009 Super Bowl. 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 revenue earned
in 2008 on our then six Fox affiliated channels. Internet
advertising revenue decreased due to the same factors that affected
our local and national advertising revenue but to a lesser extent.
Political advertising revenue decreased due to reduced advertising
from political candidates during the "off year" of the two-year
political advertising cycle. Local advertising revenue decreased
$12.7 million, or 13%, to $82.6 million. National advertising
revenue decreased $9.6 million, or 27%, to $25.2 million. Internet
advertising revenue decreased $0.4 million, or 7%, to $5.3 million.
Political advertising revenue decreased $6.1 million, or 76%, to
$2.0 million. Retransmission consent revenue increased $6.2
million, or 425%, to $7.6 million. Production and other revenue
decreased $0.7 million, or 17%, to $3.5 million. Operating
expenses. Broadcast expenses (before depreciation, amortization and
gain on disposal of assets) decreased $7.7 million, or 8%, to $90.8
million. This decrease was primarily due to a reduction in
compensation expense of $4.5 million, professional services of $0.7
million, facility fees of $0.2 million and supply fees of $0.4
million partially offset by an increase in bad debt expense of $0.1
million. Compensation expense decreased primarily due to a
reduction in the number of employees. As of June 30, 2009 and 2008,
we employed 2,216 and 2,331 total employees, respectively, in our
broadcast operations which included full-time and part-time
employees. Professional services decreased primarily due to lower
national representation fees which are paid based upon a percentage
of our lower national revenue. Facility fees decreased primarily
due to lower electricity expense resulting from the discontinuance
of our analog broadcasts. Supply fees decreased due to lower
gasoline costs and controls on supply purchases. Bad debt expense
increased primarily due to an increased reserve for receivables due
from Chrysler LLC. Corporate and administrative expenses (before
depreciation, amortization and gain on disposal of assets)
increased $1.4 million, or 22%, to $7.6 million. The increase was
due primarily to increases in compensation expense and professional
service expense. This increase in compensation expense was
primarily due to an increase in severance expense of $135,000 and
an increase in relocation expense of $350,000. Professional
services increased primarily due to an increase in legal expenses
of $547,000 and an increase in consulting expense of $200,000
resulting from a consulting agreement with our former Chairman. We
recorded non-cash stock-based compensation expense during the
six-month periods ended June 30, 2009 and 2008 of $698,000 and
$689,000, 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 and six-month periods ended June 30,
2009 compared to the three-month and six-month periods ended June
30, 2008. Gray Websites - Aggregate Page Views Three Months Ended
June 30, -------- % 2009 2008 Change ---- ---- ------ (in millions)
Total Aggregate Page Views (including video plays and cell phone
page views) 181.3 150.3 21% Six Months Ended June 30, -------- %
2009 2008 Change ---- ---- ------ (in millions) Total Aggregate
Page Views (including video plays and cell phone page views) 366.8
312.5 17% 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 faster pace relative to our
internet related commercial time sales. Detailed table of operating
results: Gray Television, Inc. Selected Operating Data (Unaudited)
(in thousands except for per share data and percentages) Three
Months Ended June 30, -------- % 2009 2008 Change ---- ---- ------
Revenues (less agency commissions) $65,057 $78,743 (17)% Operating
expenses before depreciation, amortization and gain on disposal of
assets, net: Broadcast 45,167 48,460 (7)% Corporate and
administrative 3,592 2,722 32 % Depreciation and amortization of
intangible assets 8,398 8,907 (6)% Gain on disposals of assets, net
(1,098) (84) 1207 % ------ --- 56,059 60,005 (7)% ------ ------
Operating income 8,998 18,738 (52)% Other income (expense):
Miscellaneous income, net 1 63 (98)% Interest expense (20,007)
(13,402) 49 % ------- ------- (Loss) income before income tax
(11,008) 5,399 Income tax (benefit) expense (4,360) 2,184 ------
----- Net (loss) income (6,648) 3,215 Preferred dividends (includes
accretion of issuance cost of $301 and $0, respectively) 4,051 125
3141 % ----- --- Net (loss) income available to common stockholders
$(10,699) $3,090 ======== ====== Basic per share information: Net
(loss) income available to common stockholders $(0.22) $0.06 ======
===== Weighted-average shares outstanding 48,506 48,235 1 % ======
====== Diluted per share information: Net (loss) income available
to common stockholders $(0.22) $0.06 ====== ===== Weighted-average
shares outstanding 48,506 48,273 0 % ====== ====== Political
revenue (less agency commission) $942 $4,951 (81)% Gray Television,
Inc. Selected Operating Data (Unaudited) (in thousands except for
per share data and percentages) Six Months Ended June 30, --------
% 2009 2008 Change ---- ---- ------ Revenues (less agency
commissions) $126,411 $149,742 (16)% Operating expenses before
depreciation, amortization and gain on disposal of assets, net:
Broadcast 90,821 98,476 (8)% Corporate and administrative 7,638
6,261 22 % Depreciation and amortization of intangible assets
16,808 17,991 (7)% Gain on disposals of assets, net (2,620) (1,005)
161 % ------- ------- 112,647 121,723 (7)% ------- -------
Operating income 13,764 28,019 (51)% Other income (expense):
Miscellaneous income, net 13 90 (86)% Interest expense (30,120)
(29,201) 3 % Loss on early extinguishment of debt (8,352) - -------
--- Loss before income tax benefit (24,695) (1,092) Income tax
benefit (9,127) (457) ------- ---- Net loss (15,568) (635)
Preferred dividends (includes accretion of issuance cost of $602
and $0, respectively) 8,101 125 6381% ----- --- Net loss available
to common stockholders $(23,669) $(760) ======== ===== Basic per
share information: Net loss available to common stockholders
$(0.49) $(0.02) ======= ======= Weighted-average shares outstanding
48,498 48,194 1 % ====== ====== Diluted per share information: Net
loss available to common stockholders $(0.49) $(0.02) =======
======= Weighted-average shares outstanding 48,498 48,194 1 %
====== ====== Political revenue (less agency commission) $1,951
$8,024 (76)% Other Financial Data: --------------------- June 30,
2009 December 31, 2008 ------------- ----------------- (in
thousands) Cash and cash equivalents $9,786 $30,649 Long-term debt
including current portion $795,849 $800,380 Preferred stock $92,785
$92,183 Borrowing ability under our senior credit facility $27,134
$12,262 Six Months Ended June 30, ------------------------- 2009
2008 ---- ---- (in thousands) Net cash provided by operating
activities $377 $17,237 Net cash used in investing activities
(9,598) (6,277) Net cash used in financing activities (11,642)
(3,730) ------- ------ Net (decrease) increase in cash and cash
equivalents $(20,863) $7,230 ======== ====== Guidance for the Third
Quarter of 2009 We currently anticipate that our broadcast results
of operations for the three months ending September 30, 2009 (the
"third quarter of 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 REVENUE:
Revenue (less agency commissions) $63,000 (24)% $64,000 (23)%
$82,631 OPERATING EXPENSES: (before depreciation, amortization and
other expenses) Broadcast $46,000 (8)% $46,500 (7)% $49,907
Corporate and administrative $3,300 (12)% $3,600 (4)% $3,754 OTHER
SELECTED DATA: Broadcast political revenues (less agency
commissions) $500 $600 $13,065 Expense for corporate non-cash
stock-based compensation $325 $350 $399 Comments on Guidance: Net
Revenue: 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 third quarter 2009 local revenue and national
revenue, excluding political revenue, will decrease from 2008
results by approximately 9% and 30%, respectively. The decline is
expected to be reflected in most advertising categories. Political
revenues reflect the off-year of the political cycle. We anticipate
that our retransmission consent revenues during the third 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 Operating
Expense (before depreciation, amortization and gain/loss on
disposal of assets) The anticipated decline in third quarter 2009
broadcast expense reflects an approximate $1.2 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 filings by Chrysler LLC and General Motors Corp.
will affect our accounts receivable bad debt reserves. Therefore,
our anticipated third quarter 2009 broadcast expenses do not
include additional expenses for increased bad debt reserves for
either company's bankruptcy. For the full year 2009, we currently
anticipate that our broadcast operating expenses will decrease by
approximately $16.0 million, or 8.0%, compared to 2008. Corporate
Expense (before depreciation, amortization and gain/loss on
disposal of assets) The anticipated decrease in corporate expense
for the third quarter of 2009 compared to the third quarter of 2008
is due primarily to a reduction in research expense and
compensation expense. Net Revenue By Category: The table below
presents our net revenue by type for the three-month and six-month
periods ended June 30, 2009 and 2008, respectively (dollars in
thousands): Three Months Ended June 30, ---------------------------
2009 2008 ---- ---- Percent Percent Amount of Total Amount of Total
------ -------- ------ -------- Broadcasting net revenues: Local
$43,272 66.5% 49,495 62.9% National 12,373 19.0% 18,479 23.4%
Internet 2,711 4.2% 3,048 3.9% Political 942 1.4% 4,951 6.3%
Retransmission consent 3,959 6.1% 801 1.0% Production and other
1,628 2.5% 1,763 2.2% Network compensation 172 0.3% 206 0.3% ---
--- --- --- Total $65,057 100.0% $78,743 100.0% ======= =====
======= ===== Six Months Ended June 30, -------------------------
2009 2008 ---- ---- Percent Percent Amount of Total Amount of Total
------ -------- ------ -------- Broadcasting net revenues: Local
$82,558 65.3% 95,214 63.6% National 25,248 20.0% 34,816 23.2%
Internet 5,275 4.2% 5,677 3.8% Political 1,951 1.5% 8,024 5.4%
Retransmission consent 7,599 6.0% 1,447 1.0% Production and other
3,470 2.7% 4,184 2.8% Network compensation 310 0.3% 380 0.2% ---
--- --- --- Total $126,411 100.0% $149,742 100.0% ======== =====
======== ===== 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
We will host a conference call to discuss our second quarter
operating results on August 7, 2009. The call will begin at 1:00 PM
Eastern Time. The live dial-in number is 1 (888) 215-7030 and the
confirmation code is 9007245. 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: 9007245 until September 5, 2009.
Reconciliations: Reconciliation of net income (loss) to the
non-GAAP terms (in thousands): As Reported Three Months Ended June
30, -------- 2009 2008 ---- ---- Net (loss) income $(6,648) $3,215
Adjustments to reconcile to Broadcast Cash Flow Less Cash Corporate
Expenses: Depreciation and amortization of intangible assets 8,398
8,907 Amortization of non-cash stock based compensation 345 395
Gain on disposals of assets, net (1,098) (84) Miscellaneous
(income) expense, net (1) (63) Interest expense 20,007 13,402 Loss
on early extinguishment of debt - - Income tax (benefit) expense
(4,360) 2,184 Amortization of program broadcast rights 3,761 3,821
Common stock contributed to 401(k) plan excluding corporate 401(k)
contributions 7 641 Network compensation revenue recognized (172)
(206) Network compensation per network affiliation agreement (30)
30 Payments for program broadcast rights (3,801) (2,666) ------
------ Broadcast Cash Flow Less Cash Corporate Expenses 16,408
29,576 Corporate and administrative expenses excluding amortization
of non-cash stock-based compensation 3,247 2,327 ----- -----
Broadcast Cash Flow $19,655 $31,903 ======= ======= As Reported Six
Months Ended June 30, -------- 2009 2008 ---- ---- Net loss
$(15,568) $(635) Adjustments to reconcile to Broadcast Cash Flow
Less Cash Corporate Expenses: Depreciation and amortization of
intangible assets 16,808 17,991 Amortization of non-cash stock
based compensation 698 689 Gain on disposals of assets, net (2,620)
(1,005) Miscellaneous (income) expense, net (13) (90) Interest
expense 30,120 29,201 Loss on early extinguishment of debt 8,352 -
Income tax benefit (9,127) (457) Amortization of program broadcast
rights 7,531 7,672 Common stock contributed to 401(k) plan
excluding corporate 401(k) contributions (34) 1,267 Network
compensation revenue recognized (310) (380) Network compensation
per network affiliation agreement - 60 Payments for program
broadcast rights (7,656) (6,441) ------ ------ Broadcast Cash Flow
Less Cash Corporate Expenses 28,181 47,872 Corporate and
administrative expenses excluding amortization of non-cash
stock-based compensation 6,940 5,572 ----- ----- Broadcast Cash
Flow $35,121 $53,444 ======= ======= 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. 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 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 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 third 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 August 7, 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 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, 2008 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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