Gray Revenue Down 18% in Fourth Quarter

Lack of political advertising drags down revenue
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Gray Television reported revenues of $77.5 million in the
fourth quarter, down 18% from the same quarter the year before. Local ad
revenue was up 5%, national ad revenue was down 1%, and Internet revenue was
flat.

Gray reported that political advertising was down 82% in the
quarter, while retransmission consent revenue was $3.7 million-a 346% bump over
the same quarter in 2008.

Gray also tallied $600,000 in the quarter for consulting
with seven Young Broadcasting stations.

"While we continue to operate our business in a challenging
environment, our actual operating results exceeded our initial forecasts," Gray
said in a statement. "We have experienced improvements in our core local and
national advertising revenue in 2009 and believe we are well positioned to
benefit from expected increases in political advertising in 2010."

Gray amended its senior credit facility last week to give
the broadcaster more financial flexibility. Among other things, the amendment
reduces the lenders' revolving commitments from $50
million to $40 million and provides Gray with additional flexibility to
issue certain debt securities, the proceeds going towards repaying outstanding
amounts under the senior credit facility.

"This amendment provides additional flexibility to
improve our capital structure, and to strategically access the capital markets,
subject to market and other conditions, to enable us to repay existing
obligations, and strengthens our position as we move forward in these
challenging economic conditions," said President/COO Robert S. Prather Jr.

Gray TV said the revenue picture looks much brighter in
2010. "In 2009, we renegotiated many of our cable distribution contracts, which
resulted in increased retransmission consent revenue," it said. "We continue to
integrate new strategies into our stations' websites intended to generate
additional 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."

Atlanta-based Gray operates 36 stations in 30 markets.

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