ATLANTA, May 9, 2011 /PRNewswire/ -- Gray Television,
Inc. ("Gray," "we," "us" or "our") (NYSE: GTN) today
announced results from operations for the three month period ended
March 31, 2011 ("first quarter of
2011") as compared to the three month period ended March 31, 2010 ("first quarter of 2010").
Highlights:
For the three month periods ended March
31, 2011 and 2010, our revenue, broadcast expense and
corporate and administrative expense were as follows:
|
Three Months
Ended March 31,
|
|
|
2011
|
|
2010
|
|
%
Change
|
|
|
(in
thousands except for percentages)
|
|
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
$ 69,742
|
|
$ 70,482
|
|
(1)%
|
|
|
|
|
|
|
|
|
Operating expenses (before
depreciation,
|
|
|
|
|
|
|
amortization and gain on
disposal of assets):
|
|
|
|
|
|
|
Broadcast
expense
|
$ 48,179
|
|
$ 47,567
|
|
1 %
|
|
|
|
|
|
|
|
|
Corporate and
administrative expense
|
$ 3,038
|
|
$ 2,922
|
|
4 %
|
|
|
|
|
|
|
|
We are pleased with our operating results for the first quarter
of 2011. Although our revenue decreased from the first
quarter of 2010, the decrease was largely due to reduced political
advertising revenue resulting from 2011 being an "off year" in a
two year political election cycle and reduced national advertising
resulting from the lack of the Olympic Games in 2011 and a change
in broadcast networks carrying the Super Bowl in 2011 compared to
2010. Even with these events, our non-political advertising
revenue for the first quarter of 2011 increased over our
non-political advertising revenue for the first quarter of 2010.
Our non-political advertising revenue includes our local, national
and internet advertising revenue.
Our broadcast and corporate and administrative expenses
(excluding depreciation, amortization and gain on disposal of
assets) increased in the first quarter of 2011 compared to the
first quarter of 2010 due primarily to compensation increases.
Financing Activities in 2010 Reduced Overall Cost of
Capital:
Interest expense decreased $3.6
million in the first quarter of 2011 compared to the first
quarter of 2010 primarily due to the issuance of our 10-1/2%
senior secured second lien notes due 2015 (the "Notes"), the
amendment of our senior credit facility in 2010, and the related
use of proceeds. Proceeds were used to, among other things,
repurchase $60.7 million of our
Series D Perpetual Preferred Stock on April
29, 2010, resulting in a decrease in our Series D Perpetual
Preferred Stock dividends of $2.8
million in the first quarter of 2011 compared to the first
quarter of 2010.
Comments on Results of Operations for the First
Quarter of 2011 Compared to the First Quarter of
2010:
Revenue.
Total revenue decreased $0.8
million, or 1%, to $69.7
million for the first quarter of 2011 compared to the first
quarter of 2010 primarily due to decreased national and political
advertising revenue, partially offset by increased local and
internet advertising revenue and retransmission consent revenue.
Political advertising revenue decreased due to decreased
advertising from political candidates and special interest groups
in the "off year" of the two year election cycle. Net advertising
revenue associated with the broadcast of the 2011 Super Bowl on our
one primary FOX-affiliated channel and four secondary digital
FOX-affiliated channels approximated $0.2
million which was a decrease from our approximated
$0.9 million earned in 2010 in
connection with the broadcast of the 2010 Super Bowl on our
seventeen CBS-affiliated channels. In addition, results in the
first quarter of 2010 benefited from approximately $2.8 million of net revenue earned from the
broadcast of the 2010 Winter Olympic Games on our NBC-affiliated
channels. There was no corresponding broadcast of Olympic Games
during the first quarter of 2011. Retransmission consent revenue
increased due to the improved terms of our retransmission contracts
compared to those of the first quarter of 2010. We continued to
earn base consulting revenue under our agreement with Young
Broadcasting, Inc.; however, we did not record any incentive
consulting revenue in the first quarter of 2011 based on its
operating results.
The principal components of our revenue were as follows:
Local advertising revenue increased $0.3
million, or 1%, to $43.8
million.
National advertising revenue decreased $1.0 million, or 7%, to $13.0 million.
Internet advertising revenue increased $1.1 million, or 38%, to $4.2 million.
Political advertising revenue decreased $1.4 million, or 50%, to $1.4 million.
Retransmission advertising revenue increased $0.4 million, or 9%, to $5.0 million.
Production and other revenue decreased $0.3 million, or 17%, to $1.6 million.
Consulting revenue from our agreement with Young Broadcasting,
Inc. was $0.6 million.
Our five largest advertising categories by customer type,
excluding political advertising, demonstrated the following changes
during the first quarter of 2011 compared to the first quarter of
2010: automotive increased 3%; medical increased 5%; restaurant
decreased 4%; communications decreased 1%; and furniture and
appliances increased 7%.
Operating expenses.
Broadcast expense (before depreciation, amortization and gain on
disposal of assets) increased $0.6
million, or 1%, to $48.2
million. This increase was due primarily to increases in
compensation expense of $1.0 million
partially offset by a decrease in non-compensation expense of
$0.4 million. Compensation expense
increased primarily due to increases in accruals for annual
incentive compensation of $0.5
million, increases in salary and commission expense of
$0.2 million and increases in health
care expense of $0.1 million.
Non-compensation expense decreased primarily due to a decrease in
professional services and national sales commissions.
Corporate and administrative expense (before depreciation,
amortization and gain on disposal of assets) increased $0.1 million, or 4%, to $3.0 million due primarily to increased
compensation expense. Compensation expense increased due to an
increase in accruals for annual incentive compensation expenses of
$0.2 million offset, in part, by a
decrease in non-cash stock-based compensation of $0.1 million. We recorded non-cash stock-based
compensation expense during the three month periods ended
March 31, 2011 and 2010 of
$34,000 and $155,000, respectively. Non-cash stock-based
compensation expense decreased primarily due to all stock options
becoming fully vested in 2010. We amortize the expense of our stock
options over their vesting period.
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,
|
|
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
$ 69,742
|
|
$ 70,482
|
|
Operating expenses before
depreciation,
|
|
|
|
|
amortization and gain on
disposal of assets, net:
|
|
|
|
|
Broadcast
|
48,179
|
|
47,567
|
|
Corporate and
administrative
|
3,038
|
|
2,922
|
|
Depreciation
|
6,998
|
|
7,975
|
|
Amortization of intangible
assets
|
34
|
|
122
|
|
Gain on disposals of assets,
net
|
(13)
|
|
(44)
|
|
|
58,236
|
|
58,542
|
|
Operating income
|
11,506
|
|
11,940
|
|
Other income
(expense):
|
|
|
|
|
Miscellaneous income,
net
|
-
|
|
39
|
|
Interest
expense
|
(16,000)
|
|
(19,611)
|
|
Loss from early
extinguishment of debt
|
-
|
|
(349)
|
|
Loss before income tax
benefit
|
(4,494)
|
|
(7,981)
|
|
Income tax benefit
|
(1,411)
|
|
(3,238)
|
|
Net loss
|
(3,083)
|
|
(4,743)
|
|
Preferred dividends (including
accretion of issuance
|
|
|
|
|
cost of $118 and $301,
respectively)
|
1,789
|
|
4,551
|
|
Net loss available to common
stockholders
|
$ (4,872)
|
|
$ (9,294)
|
|
|
|
|
|
|
Basic and diluted per share
information:
|
|
|
|
|
Net loss available to
common stockholders
|
$ (0.09)
|
|
$ (0.19)
|
|
Weighted-average shares
outstanding
|
57,112
|
|
48,565
|
|
|
|
|
|
|
Political revenue (less agency
commission)
|
$ 1,381
|
|
$ 2,783
|
|
|
|
|
|
Other Financial Data:
|
As
of
|
|
|
March
31,
|
|
December
31,
|
|
|
2011
|
|
2010
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
Cash
|
$ 9,772
|
|
$
5,431
|
|
Long-term debt, including
current portion
|
$ 825,836
|
|
$
826,704
|
|
Preferred stock(1)
|
$ 37,299
|
|
$
37,181
|
|
Borrowing availability under our
senior credit facility
|
$ 40,000
|
|
$
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
2011
|
|
2010
|
|
|
(in
thousands)
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
$ 14,860
|
|
$
6,986
|
|
Net cash used in investing
activities
|
(9,313)
|
|
(3,185)
|
|
Net cash used in financing
activities
|
(1,206)
|
|
(6,137)
|
|
Net increase (decrease) in
cash
|
$ 4,341
|
|
$
(2,336)
|
|
|
|
|
|
|
(1) As of March 31,
2011, preferred stock does not
include unaccreted original issuance costs and accrued
preferred stock dividends of $2.0 million
and $15.8 million,
respectively. As of December 31,
2010, preferred stock does not
include unaccreted original issuance costs and accrued preferred
stock dividends of $2.1 million
and $14.1 million,
respectively.
|
|
|
|
|
|
Internet Initiatives:
We continue to focus on expanding local content on our websites
to drive increased traffic. Our website page view data for the
three months ended March 31, 2011
compared to the three months ended March 31,
2010 is as follows:
Gray
Websites - Data
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
|
|
|
%
|
|
|
2011
|
|
2010
|
|
Change
|
|
|
(in millions
except for percentages)
|
|
|
|
|
|
|
|
|
Advertising impressions
generated
|
793
|
|
649
|
|
22 %
|
|
Total page views (including
mobile page views)
|
271
|
|
230
|
|
18 %
|
|
|
|
|
|
|
|
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.
Our 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."
Guidance for the Three Months Ending June 30, 2011 (the "Second Quarter of 2011")
We currently anticipate that our results of operations for the
three month period ending June 30,
2011 will approximate the ranges presented in the table
below:
|
|
Three Months
Ended June 30,
|
|
|
|
2011
|
|
%
Change
|
|
2011
|
|
%
Change
|
|
|
|
|
|
Guidance
|
|
From
|
|
Guidance
|
|
From
|
|
|
|
|
|
Low
|
|
Actual
|
|
High
|
|
Actual
|
|
Actual
|
|
Selected operating
data:
|
|
Range
|
|
2010
|
|
Range
|
|
2010
|
|
2010
|
|
|
|
(in
thousands except for percentages)
|
|
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Revenues (less agency
commissions)
|
|
$ 74,000
|
|
(2)%
|
|
$ 75,000
|
|
(1)%
|
|
$ 75,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
(before depreciation,
amortization
|
|
|
|
|
|
|
|
|
|
|
|
and other
expenses)
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast
|
|
$ 48,700
|
|
6 %
|
|
$ 49,200
|
|
7 %
|
|
$ 46,092
|
|
Corporate and
administrative
|
|
$ 3,400
|
|
(11)%
|
|
$ 3,700
|
|
(4)%
|
|
$ 3,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other selected data:
|
|
|
|
|
|
|
|
|
|
|
|
Political advertising
revenues (less
|
|
|
|
|
|
|
|
|
|
|
|
agency
commissions)
|
|
$ 1,250
|
|
(78)%
|
|
$ 1,350
|
|
(76)%
|
|
$ 5,588
|
|
|
|
|
|
|
|
|
|
|
|
|
Comments on Guidance:
Net Revenue.
Based on our current forecast, we currently believe our second
quarter of 2011 local revenue, excluding political advertising
revenue, will increase from the three months ended June 30, 2010 (the "second quarter of 2010") by
approximately 4%. We currently believe our second quarter of 2011
national revenue, excluding political advertising revenue, will
increase from the second quarter of 2010 by approximately 1%.
We anticipate our second quarter of 2011 internet revenue,
excluding political advertising revenue, will increase from the
second quarter of 2010 by approximately 50%.
We anticipate our second quarter of 2011 political advertising
revenue will be between $1.3 million and
$1.4 million.
We anticipate that our retransmission consent revenue during the
second quarter of 2011 will increase approximately $0.2 million, to a total of approximately
$4.9 million.
We estimate our base consulting revenue will remain at
$0.6 million for the second quarter
of 2011. We do not anticipate recording any incentive consulting
revenue in the second quarter of 2011.
Broadcast Operating Expense (before depreciation,
amortization and gain/loss on disposal of assets).
The anticipated increase in broadcast operating expense for the
second quarter of 2011 compared to the second quarter of 2010 is
due primarily to anticipated increases in base compensation expense
and benefits. For the full year of 2011, we currently anticipate
that total broadcast operating expense will range between
$193.5 million and $194.5 million in
comparison to an actual amount of $196.4
million for the full year of 2010.
Corporate and Administrative Expense (before depreciation,
amortization and gain on disposal of assets).
The anticipated decrease in corporate expense for the second
quarter of 2011 compared to the second quarter of 2010 is due
primarily to expected decreases in compensation expenses. In the
second quarter of 2010, Gray expensed and paid bonuses to certain
executive officers for their role in connection with the successful
completion of certain financing activities. Currently, we do
not anticipate such bonus expense in the second quarter of 2011.
For the full year of 2011, we currently anticipate that corporate
and administrative operating expense will range between
$13.1 million and $13.4 million in
comparison to an actual amount of $13.6
million for the full year of 2010.
Revenue (less agency commissions) by Category:
The table below presents our revenue (less agency commissions)
or "net revenue" by type for the three month periods ended
March 31, 2011 and 2010,
respectively:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
|
|
|
(in
thousands except for percentages)
|
|
Revenue (less agency
commissions)
|
|
|
|
|
|
|
|
|
|
Local
|
|
$ 43,765
|
|
62.8%
|
|
$ 43,511
|
|
61.7%
|
|
National
|
|
12,975
|
|
18.6%
|
|
13,951
|
|
19.8%
|
|
Internet
|
|
4,247
|
|
6.1%
|
|
3,072
|
|
4.4%
|
|
Political
|
|
1,381
|
|
2.0%
|
|
2,783
|
|
3.9%
|
|
Retransmission
consent
|
|
5,047
|
|
7.2%
|
|
4,639
|
|
6.6%
|
|
Production and
other
|
|
1,599
|
|
2.3%
|
|
1,932
|
|
2.7%
|
|
Network
compensation
|
|
178
|
|
0.3%
|
|
44
|
|
0.1%
|
|
Consulting
|
|
550
|
|
0.7%
|
|
550
|
|
0.8%
|
|
Total
|
|
$ 69,742
|
|
100.0%
|
|
$ 70,482
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
The aggregate internet revenues presented above are derived
from: (i) direct internet revenue and (ii) internet related
commercial time sales.
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 contained 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), loss on disposal of
assets, miscellaneous expense, interest expense, loss on early
extinguishment of debt, income tax expense and expense of common
stock contributed to our 401(k) plan, less gain on disposal of
assets, miscellaneous income, income tax benefit, payments for
program broadcast obligations and less network compensation revenue
and network payments. 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
not defined in GAAP and our definitions may differ from, and
therefore not be comparable to, similarly titled measures used by
other companies, thereby limiting their usefulness. Such terms are
used by management 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 income (loss) and
cash flows reported in accordance with GAAP.
Reconciliation:
Reconciliation of net loss to the non-GAAP terms:
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2011
|
|
2010
|
|
|
(in
thousands)
|
|
|
|
|
|
|
Net loss
|
$
(3,083)
|
|
$
(4,743)
|
|
Adjustments to reconcile
from net loss to Broadcast Cash Flow Less
|
|
|
|
|
Cash Corporate
Expenses:
|
|
|
|
|
Depreciation
|
6,998
|
|
7,975
|
|
Amortization of intangible
assets
|
34
|
|
122
|
|
Non-cash stock-based
compensation
|
34
|
|
155
|
|
Gain on disposals of
assets, net
|
(13)
|
|
(44)
|
|
Miscellaneous (income)
expense, net
|
-
|
|
(39)
|
|
Interest
expense
|
16,000
|
|
19,611
|
|
Loss on early
extinguishment of debt
|
-
|
|
349
|
|
Income tax
benefit
|
(1,411)
|
|
(3,238)
|
|
Amortization of program
broadcast rights
|
3,833
|
|
3,853
|
|
Common stock contributed
to 401(k) plan
|
|
|
|
|
excluding corporate 401(k)
contributions
|
8
|
|
7
|
|
Network compensation
revenue recognized
|
(178)
|
|
(44)
|
|
Network compensation per
network affiliation agreement
|
(60)
|
|
(16)
|
|
Payments for program
broadcast rights
|
(3,794)
|
|
(3,875)
|
|
Broadcast Cash Flow Less Cash
Corporate Expenses
|
18,368
|
|
20,073
|
|
Corporate and
administrative expenses excluding
|
|
|
|
|
amortization of non-cash
stock-based compensation
|
3,004
|
|
2,767
|
|
Broadcast Cash
Flow
|
$
21,372
|
|
$
22,840
|
|
|
|
|
|
The Company
Gray Television, Inc. is a television broadcast company
headquartered in Atlanta, GA.
Gray currently operates 36 television stations serving 30
markets. We broadcast a primary channel from each of our
stations and also operate at least one digital second channel from
the majority of our stations. Each of our primary channels are
affiliated with either CBS (17 channels), NBC (10 channels), ABC (8
channels) or FOX (1 channel). In addition, we currently
operate 40 digital second channels that are affiliated with either
ABC (1 channel), FOX (4 channels), CW (8 channels), MyNetworkTV (18
channels), Universal Sports Network (2 channels) and The Country
Network (1 channel) or are operated as local news/weather channels
(6 channels).
Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
This press release contains statements that constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and the federal securities
laws. These "forward-looking statements" are not statements
of historical facts, and may include, among other things,
statements regarding our current expectations and beliefs of
operating results for the second quarter of 2011 or other periods,
internet strategies, future expenses and other future events.
Actual results are subject to a number of risks and
uncertainties and may differ materially from the current
expectations and beliefs discussed in this press release. All
information set forth in this release is as of May 9, 2011. We do not intend, and
undertake no duty, to update this information to reflect future
events or circumstances. Information about certain potential
factors that could affect our business and financial results and
cause actual results to differ materially from those expressed or
implied in any 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, 2010 and in subsequently filed
reports, which are filed with the U.S. Securities and Exchange
Commission (the "SEC") and available at the SEC's website at
www.sec.gov.
Conference Call Information
Gray Television, Inc. will host a conference call to discuss its
first quarter operating results on May 9,
2011. The call will begin at 11:00 AM Eastern Time. The live dial-in
number is 1-877-874-1589 and the confirmation code is 7632816.
The call will be webcast live and available for replay at
www.gray.tv. The taped replay of the conference call will be
available at 1-888-203-1112, Confirmation Code: 7632816 until
June 8, 2011.
SOURCE Gray Television, Inc.