Gray Television’s total revenue for the third quarter of 2015 climbed $19.4 million to a record $151.1 million, a 15% jump from Q3 2014.
A major driver in the increase was the seven stations in four markets that Gray acquired during the quarter, including KOSA in Odessa-Midland, Texas, KMVT and KSVT in Twin Falls, Idaho and KCRG in Cedar Rapids. Revenue from the acquired stations totaled around $43 million, up from the $24.2 million boost Gray stations acquired in Q3 2014. In addition, retransmission consent revenue was up 100% to a record $39.3 million.
Those two improvements negated the 79% decrease in political advertising revenue to $4.6 million, as the third quarter of 2014 came just before the midterm elections.
Local and national advertising revenue surged 24% and 29%, respectively, to $76.7 million and $20.9 million. Internet ad revenue was down 3% to $7.2 million.
Gray announced in September that it was acquiring Schurz Communications' TV and radio stations, although that deal has not yet closed (and when it does, Gray will divest the radio stations). Hilton Howell, Gray president and CEO, said he expects the Schurz transaction to close “in very prompt fashion.” And while the company is not currently working on any other deals, it is always looking for new opportunities.
“We’re definitely not on the sidelines. We have no acquisition targets that are currently imminent, but if you look at our track record over the course of this year and really the previous two years, you know that we move very very quick, and in a very disciplined way,” Howell said. “Opportunities in this current environment come up unexpectedly.”
Regarding the upcoming broadcast spectrum incentive auction, Kevin Latek, senior VP, business affairs, said Gray will participate but “to a limited extent.” Gray still plans to put WAGT in Augusta, Ga., which it acquired from Schurz, up for auction, and will move that programming over to its low-power CBS affiliate WRDW.
Latek said the company does not expect the auction will “present meaningful financial opportunities for Gray,” explaining that it has few stations in markets with strong spectrum demand. Nevertheless, he said, “if it appears the auction could lead to significant proceeds beyond WAGT we will not hesitate to pursue those opportunities.”
Gray officials also commented on the company’s announcement two months ago that it would start selling its national ads.
“We came to the conclusion after a full year of analysis that the quality of our stations combined with our new scale creates an opening for us to handle our national sales directly,” Latek said. “We are not building a new rep firm to replace or compete with the existing firms.”