Gray TV: Hands Off Stations' Retrans Cash

Prather says "Leno experiment" thus far a dud

Related Story: Broadcast Networks Seek Dual Revenue Stream

Gray Television President/COO Robert Prather called for station groups to form a "united front" in the escalating war between networks and affiliates over retransmission consent revenue. On a call to explain Gray's third quarter earnings this afternoon, Prather said the bulk of his group's affiliate agreements were in place through 2013 or 2014, but that he was carefully watching the retrans clashes play out with other groups.

"We need to really work hard so that the networks don't use the old divide-and-conquer on [station groups]," he said. "We worked very hard to get retrans from cable, with Sinclair and Nexstar the first ones out there. [Retrans cash] is based on our work, and nobody else's work."

Networks and their affiliates entering heated negotiations about splitting retransmission spoils from subscription TV is an emerging issue this earnings season. Addressing investors last week, Belo President/CEO Dunia Shive said, "I don't think there is any secret that the networks look for some sort of a reverse payment from the affiliate. As for ABC, I can't get into specifics because we're in the middle of negotiations."

Prather urged his fellow station groups to work with their affiliate boards and the TVB to combat the networks' demands for a taste of retrans cash.

Prather had equally blunt words for NBC and what he called its "Leno experiment." "The Leno experiment is not working so far," he said. "It's definitely hurt the lead-in to late news."

The president said the strength of various Gray-owned NBC affiliates, such as WSAZ Charleston-Huntington (W. Va.) and WOWT Omaha, would keep their late news robust for some time, but that an exodus of viewers leading in to late news would ultimately sap late local ratings. "I don't know how long they'll keep this experiment going," he said, "but we'll let NBC know our feelings."

Gray reported third quarter revenue of $66.4 million, a 20% decrease from the $82.6 million it posted in last year's third quarter. But Prather said 2010 looks very promising, with a blockbuster election season pending. The group's strategy of owning outlets in state capitals and university towns should make it well poised to cash in on political spending next year, he said. Coupled with Gray's new role in managing a majority of the Young Broadcasting stations for a $2.2 million fee, Prather said, "We feel like 2010 could be a very good year."