ATLANTA, Nov. 9 /PRNewswire-FirstCall/ -- Gray Television, Inc.
("Gray," "we" or "us") (NYSE:GTN) today announced results from
operations for the three-month period (the "third quarter") and
nine-month period ended September 30, 2009 as compared to the
three-month and nine-month periods ended September 30, 2008.
Highlights: Three Months Ended September 30,
-------------------------- 2009 2008 % Change ---- ---- --------
(in thousands, except for percentages) Revenues (less agency
commissions) $66,446 $82,631 (20)% Broadcast expenses (before
depreciation, amortization and gain on disposal of assets) $46,173
$49,907 (7)% Corporate expenses (before depreciation, amortization
and gain on disposal of assets) $3,308 $3,754 (12)% Our stations
and the television broadcast industry as a whole continued to deal
with the challenges of the current economic recession and increased
competition from internet advertising through the nine-month period
ended September 30, 2009. We remain committed to operating our
stations in a manner that generates maximum revenue while
minimizing operating expenses during these difficult times. Our
results for the third quarter were positively impacted by our entry
into an agreement with Young Broadcasting Inc. This agreement was
effective August 10, 2009. Under its terms we will provide
consulting services and receive an annual payment of $2.2 million.
We expect to provide these consulting services through December 31,
2012. Earlier this year we renegotiated many of our cable
distribution contracts, which has resulted in increased
retransmission consent revenue through the nine-month period ended
September 30, 2009. We continue to integrate new strategies into
our stations' websites to generate revenue. We continue to
experiment with new technologies such as mobile television in order
to lay the ground work for new revenue streams in the future.
Although our operating results are down compared to the prior year,
we believe that our recent operating results compare favorably to
other television broadcast companies. Comments on Results of
Operations for the Three-Month Period Ended September 30, 2009:
Revenue. Total net revenue decreased $16.2 million, or 20%, to
$66.4 million due primarily to decreased local, national and
political advertising revenue and decreased production and other
revenue. These decreases were partially offset by increased
retransmission consent revenue and increased consulting revenue in
the third quarter. Retransmission consent revenue reflects the more
profitable terms of our recently renewed contracts. Consulting
revenue increased to $0.3 million due to the agreement with Young
Broadcasting Inc. Local and national advertising revenue decreased
due to reduced spending by advertisers as a result of the current
economic recession. Historically, our industry's largest advertiser
category has been the automotive industry. The recession has
significantly reduced the automotive industry's advertising
expenditures. Our third quarter automotive advertising revenue
decreased approximately 33% compared to the prior year. In
addition, during the 2008 three-month period we earned a total of
$3.4 million of net revenue from local and national advertisers
during the broadcast of the 2008 Summer Olympics on our ten NBC
stations. There are no Olympic Game broadcasts during 2009.
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 $5.1 million, or 11%, to $41.1 million. National
advertising revenue decreased $4.8 million, or 27%, to $12.8
million. Internet advertising revenue remained relatively stable at
$2.9 million. Political advertising revenue decreased $10.0
million, or 76%, to $3.1 million. Retransmission consent revenue
increased $3.6 million, or 466%, to $4.3 million. Production and
other revenue decreased $0.1 million, or 6%, to $1.7 million.
Consulting revenue resulting from the Young Broadcasting, Inc.
agreement was $0.3 million in the third quarter. Operating
expenses. Broadcast expenses (before depreciation, amortization and
gain on disposal of assets) decreased $3.7 million, or 7%, to $46.2
million due primarily to a reduction in compensation expense of
$1.3 million, professional service expenses of $1.1 million,
facility fees of $0.4 million and syndicated programming of $0.3
million. Payroll expense decreased primarily due to a reduction in
the number of employees. As of September 30, 2009 and 2008, we
employed 2,202 and 2,313 full and part-time employees,
respectively, in our broadcast operations. Professional service
expenses decreased primarily due to lower national representation
fees, which are paid based upon a percentage of our national
revenue. Facility fees decreased primarily due to lower electricity
expense resulting from the discontinuance of our analog broadcasts.
Corporate and administrative expenses (before depreciation,
amortization and gain on disposal of assets) decreased $0.4
million, or 12%, to $3.3 million due primarily to a decrease in
market research consulting of $0.4 million. We recorded non-cash
stock-based compensation expense during the three-month periods
ended September 30, 2009 and 2008 of $0.3 million and $0.4 million,
respectively. Comments on Results of Operations for the Nine-Month
Period Ended September 30, 2009: Revenue. Total net revenue
decreased $39.5 million, or 17%, to $192.9 million due primarily to
decreased local, national, political and internet advertising
revenue, decreased network compensation revenue and decreased
production and other revenue. These decreases were partially offset
by increased retransmission consent revenue and consulting revenue
in the 2009 nine-month period. Retransmission consent revenue
reflects the more profitable terms of our recently renewed
contracts. Consulting revenue increased to $0.3 million for the
2009 nine-month period due to a new agreement for consulting
services with Young Broadcasting, Inc. Local and national
advertising revenue for the 2009 nine-month period 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 41% compared
to the prior year. In addition, during the 2008 nine-month period
we earned a total of $3.4 million of net revenue from local and
national advertisers during the broadcast of the 2008 Summer
Olympics on our ten NBC stations. There are no Olympic Game
broadcasts during 2009. 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 was 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 during the 2009
nine-month period due to the same factors that affected our local
and national advertising revenue but to a lesser extent. Political
advertising revenue decreased in this period due to reduced
advertising from political candidates during the "off year" of the
two-year political advertising cycle. Local advertising revenue
decreased $17.8 million, or 13%, to $123.7 million. National
advertising revenue decreased $14.3 million, or 27%, to $38.0
million. Internet advertising revenue decreased $0.4 million, or
5%, to $8.2 million. Political advertising revenue decreased $16.1
million, or 76%, to $5.0 million. Retransmission consent revenue
increased $9.7 million, or 439%, to $11.9 million. Production and
other revenue decreased $0.8 million, or 14%, to $5.2 million.
Consulting revenue resulting from the Young Broadcasting agreement
was $0.3 million for the 2009 nine-month period. Operating
expenses. Broadcast expenses (before depreciation, amortization and
gain on disposal of assets) decreased $11.4 million, or 8%, to
$137.0 million due primarily to a reduction in compensation expense
of $5.8 million, professional services expense of $1.8 million,
facility fees of $0.7 million, supply fees of $0.6 million and
syndicated programming expense of $0.4 million. Compensation
expense decreased primarily due to a reduction in the number of
employees. As of September 30, 2009 and 2008, we employed 2,202 and
2,313 full and part-time employees, respectively, in our broadcast
operations. Professional services expense decreased primarily due
to lower national representation fees which are paid based upon a
percentage of our 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 improved controls on supply purchases.
Corporate and administrative expenses (before depreciation,
amortization and gain on disposal of assets) increased $0.9
million, or 9%, to $10.9 million during the 2009 nine-month period.
The increase was due primarily to an increase in relocation expense
of $0.6 million, an increase in legal expense of $0.5 million and
an increase in severance expense of $0.1 million. We currently
believe the relocation cost incurred in 2009 will not recur in
future years to the same extent as 2009. Also, approximately $0.4
million of the increased legal costs were attributable to the
negotiation and documentation of our new retransmission consent
agreements, and such costs are currently not anticipated to recur
in future periods to the same extent. These increases were
partially offset by a decrease in market research of $0.4 million.
We recorded non-cash stock-based compensation expense during the
nine-month periods ended September 30, 2009 and 2008 of $1.0
million and $1.1 million, respectively. Internet Initiatives: We
are currently undertaking internet-based initiatives in each of our
markets. These initiatives include web, mobile and desktop
applications. Our focus has been to expand the applicable local
content on our websites and to drive increased traffic. The
increased traffic is illustrated below by the aggregate page views
reported by our websites in the three-month and nine-month periods
ended September 30, 2009 compared to the three-month and nine-month
periods ended September 30, 2008. Gray Websites - Aggregate Page
Views Three Months Ended September 30, ------------------------- %
2009 2008 Change ---- ---- ------ (views in millions) Total
aggregate page views (including video plays and cell phone page
views) 189.3 149.3 27% Nine Months Ended September 30,
------------------------- % 2009 2008 Change ---- ---- ------
(views in millions) Total aggregate page views (including video
plays and cell phone page views) 557.2 461.8 21% We attribute the
increase in our website traffic to increased posting of local
content and public awareness of our websites resulting from our
on-air promotion of our websites. The aggregate internet revenues
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 revenue 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 September 30,
----------------------- % 2009 2008 Change ---- ---- ------
Revenues (less agency commissions) $66,446 $82,631 (20)% Operating
expenses before depreciation, amortization and gain on disposal of
assets, net: Broadcast 46,173 49,907 (7)% Corporate and
administrative 3,308 3,754 (12)% Depreciation and amortization of
intangible assets 8,170 8,797 (7)% Gain on disposals of assets, net
(1,835) (338) 443% ------ ---- 55,816 62,120 (10)% ------ ------
Operating income 10,630 20,511 (48)% Other income (expense):
Miscellaneous income, net 13 36 (64)% Interest expense (19,400)
(12,626) 54% ------- ------- (Loss) income before income tax
(8,757) 7,921 Income tax (benefit) expense (3,237) 3,277 ------
----- Net (loss) income (5,520) 4,644 Preferred dividends (includes
accretion of issuance cost of $301 and $275, respectively) 4,468
3,167 41% ----- ----- Net (loss) income available to common
stockholders $(9,988) $1,477 ======= ====== Basic per share
information: Net (loss) income available to common stockholders
$(0.21) $0.03 ====== ===== Weighted-average shares outstanding
48,519 48,370 0% ====== ====== Diluted per share information: Net
(loss) income available to common stockholders $(0.21) $0.03 ======
===== Weighted-average shares outstanding 48,519 48,413 0% ======
====== Political revenue (less agency commissions) $3,071 $13,065
(76)% Gray Television, Inc. Selected Operating Data (Unaudited) (in
thousands except for per share data and percentages) Nine Months
Ended September 30, ----------------------- % 2009 2008 Change ----
---- ------ Revenues (less agency commissions) $192,857 $232,373
(17)% Operating expenses before depreciation, amortization and gain
on disposal of assets, net: Broadcast 136,994 148,383 (8)%
Corporate and administrative 10,946 10,015 9% Depreciation and
amortization of intangible assets 24,978 26,788 (7)% Gain on
disposals of assets, net (4,455) (1,343) 232% ------ ------ 168,463
183,843 (8)% ------- ------- Operating income 24,394 48,530 (50)%
Other income (expense): Miscellaneous income, net 26 126 (79)%
Interest expense (49,520) (41,827) 18% Loss on early extinguishment
of debt (8,352) - ------ --- (Loss) income before income tax
benefit (33,452) 6,829 Income tax (benefit) expense (12,364) 2,820
------- ----- Net (loss) income (21,088) 4,009 Preferred dividends
(includes accretion of issuance cost of $903 and $275,
respectively) 12,569 3,292 282% ------ ----- Net (loss) income
available to common stockholders $(33,657) $717 ======== ==== Basic
per share information: Net (loss) income available to common
stockholders $(0.69) $0.01 ====== ===== Weighted-average shares
outstanding 48,505 48,253 1% ====== ====== Diluted per share
information: Net (loss) income available to common stockholders
$(0.69) $0.01 ====== ===== Weighted-average shares outstanding
48,505 48,293 0% ====== ====== Political revenue (less agency
commissions) $5,022 $21,089 (76)% Other Financial Data: September
30, 2009 December 31, 2008 ------------------ ----------------- (in
thousands) (unaudited) Cash $8,200 $30,649 Long-term debt,
including current portion $793,829 $800,380 Preferred stock $93,085
$92,183 Borrowing availability under our senior credit facility
$29,191 $12,262 Nine Months Ended September 30,
------------------------------- 2009 2008 ---- ---- (unaudited and
in thousands) Net cash provided by operating activities $5,438
$36,692 Net cash used in investing activities (13,946) (12,144) Net
cash used in financing activities (13,941) (7,311) ------- ------
Net (decrease) increase in cash and cash equivalents $(22,449)
$17,237 ======== ======= Guidance for the Fourth Quarter of 2009 We
currently anticipate that our broadcast results of operations for
the three months ending December 31, 2009 (the "fourth 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)
$70,000 (26)% $71,500 (25)% $94,803 OPERATING EXPENSES: (before
depreciation, amortization and other expenses) Broadcast $48,000
(6)% $48,500 (5)% $51,189 Corporate and administrative $3,400 (17)%
$3,600 (12)% $4,082 OTHER SELECTED DATA: Broadcast political
revenues (less agency commissions) $2,000 $2,500 $27,366 Expense
for corporate non-cash stock-based compensation $325 $350 $362
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 fourth quarter 2009 local
revenue, excluding political revenue, will increase from 2008
results by approximately 1%. We currently believe our fourth
quarter 2009 national revenue, excluding political revenue, will
decrease from our 2008 results by approximately 9%. Expected
decreases in political revenues as forecast reflect the off-year of
the political cycle. We estimate our consulting revenue to increase
to $0.6 million for the fourth quarter of 2009. We anticipate that
our retransmission consent revenues during the fourth quarter of
2009 will increase approximately $2.9 million, to a total of
approximately $3.7 million, reflecting the successful
retransmission negotiations concluded in December 2008. For the
full year 2009, we currently anticipate retransmission consent
revenues will be approximately $15.7 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 fourth quarter 2009 broadcast expense
reflects our ongoing expense reduction initiatives and lower
national representation fees, which are paid based on a percentage
of our national revenue. For the full year 2009, we currently
anticipate that our broadcast operating expenses will decrease by
approximately $14.5 million, or 7.3%, compared to 2008. Corporate
Expense (before depreciation, amortization and gain/loss on
disposal of assets) The anticipated decrease in corporate expense
for the fourth quarter of 2009 compared to the fourth quarter of
2008 is due primarily to an expected decrease in relocation, market
research and legal expenses. Net Revenue By Category: The table
below presents our net revenue by type for the three-month and
nine-month periods ended September 30, 2009 and 2008, respectively
(dollars in thousands): Three Months Ended September 30,
--------------------------------------- 2009 2008 -----------------
----------------- Percent Percent Amount of Total Amount of Total
------ -------- ------ -------- Broadcasting net revenues: Local
$41,135 61.9% $46,279 56.0% National 12,783 19.2% 17,546 21.2%
Internet 2,925 4.4% 2,954 3.6% Political 3,071 4.6% 13,065 15.8%
Retransmission consent 4,312 6.5% 762 0.9% Production and other
1,735 2.6% 1,841 2.2% Network compensation 172 0.3% 184 0.3%
Consulting revenue 313 0.5% - 0.0% --- --- --- --- Total $66,446
100.0% $82,631 100.0% ======= ===== ======= ===== Nine Months Ended
September 30, --------------------------------------- 2009 2008
----------------- ----------------- Percent Percent Amount of Total
Amount of Total ------ -------- ------ -------- Broadcasting net
revenues: Local $123,693 64.1% $141,493 60.9% National 38,031 19.7%
52,362 22.5% Internet 8,200 4.3% 8,631 3.7% Political 5,022 2.6%
21,089 9.1% Retransmission consent 11,911 6.2% 2,209 1.0%
Production and other 5,205 2.7% 6,025 2.6% Network compensation 482
0.2% 564 0.2% Consulting revenue 313 0.2% - 0.0% --- --- --- ---
Total $192,857 100.0% $232,373 100.0% ======== ===== ======== =====
The aggregate internet revenues presented above are derived from
two sources: (i) direct internet revenue and (ii) internet related
commercial time sales, as described above. Conference Call
Information We will host a publicly accessible conference call to
discuss our third quarter operating results on November 9, 2009.
The call will begin at 1:00 PM Eastern Time. The live dial-in
number is 1 (800) 723-6751 and the confirmation code is 8794660.
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: 8794660 until
December 8, 2009. Reconciliations: Reconciliation of net income
(loss) to the non-GAAP terms (in thousands): As Reported Three
Months Ended September 30, ------------- 2009 2008 ---- ---- Net
(loss) income $(5,520) $4,644 Adjustments to reconcile to Broadcast
Cash Flow Less Cash Corporate Expenses: Depreciation and
amortization of intangible assets 8,170 8,797 Amortization of
non-cash stock based compensation 346 399 Gain on disposals of
assets, net (1,835) (338) Miscellaneous (income) expense, net (13)
(36) Interest expense 19,400 12,626 Income tax (benefit) expense
(3,237) 3,277 Amortization of program broadcast rights 3,822 3,926
Common stock contributed to 401(k) plan excluding corporate 401(k)
contributions 8 553 Network compensation revenue recognized (172)
(184) Network compensation per network affiliation agreement 30 30
Payments for program broadcast rights (3,827) (3,708) ------ ------
Broadcast Cash Flow Less Cash Corporate Expenses 17,172 29,986
Corporate and administrative expenses excluding amortization of
non-cash stock-based compensation 2,962 3,355 ----- ----- Broadcast
Cash Flow $20,134 $33,341 ======= ======= As Reported Nine Months
Ended September 30, ------------- 2009 2008 ---- ---- Net loss
$(21,088) $4,009 Adjustments to reconcile to Broadcast Cash Flow
Less Cash Corporate Expenses: Depreciation and amortization of
intangible assets 24,978 26,788 Amortization of non-cash stock
based compensation 1,044 1,088 Gain on disposals of assets, net
(4,455) (1,343) Miscellaneous (income) expense, net (26) (126)
Interest expense 49,520 41,827 Loss on early extinguishment of debt
8,352 - Income tax (benefit) expense (12,364) 2,820 Amortization of
program broadcast rights 11,353 11,598 Common stock contributed to
401(k) plan excluding corporate 401(k) contributions (26) 1,751
Network compensation revenue recognized (482) (564) Network
compensation per network affiliation agreement 30 90 Payments for
program broadcast rights (11,483) (10,149) ------- -------
Broadcast Cash Flow Less Cash Corporate Expenses 45,353 77,789
Corporate and administrative expenses excluding amortization of
non-cash stock-based compensation 9,902 8,927 ----- ----- Broadcast
Cash Flow $55,255 $86,716 ======= ======= See the next page for the
definition of Non-GAAP terms. Non-GAAP Terms This press release
includes the non-GAAP financial measures 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 contained in this
press release that are not statements of historical facts,
including statements on our current expectations of operating
results for the fourth quarter of 2009, internet strategies, future
expenses and other future events are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995 and the federal securities laws. 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 9, 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 and in subsequently filed quarterly
reports on Form 10-Q, which are on file with the SEC and available
at the SEC's website at http://www.sec.gov/. Web site:
http://www.gray.tv/ 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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