Gray Television, Inc. (GTN)
Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference
March 04, 2013 4:20 pm ET
James C. Ryan - Chief Financial Officer and Senior Vice President
Aaron Watts - Deutsche Bank AG, Research Division
Aaron Watts - Deutsche Bank AG, Research Division
Previous Statements by GTN
» Gray Television Management Discusses Q4 2012 Results - Earnings Call Transcript
» Gray Television Management Discusses Q3 2012 Results - Earnings Call Transcript
» Gray Television Management Discusses Q2 2012 Results - Earnings Call Transcript
James C. Ryan
Thank you, and good afternoon. As far as the format of the presentation, it's really very, very similar to a lot of what you've seen before. So I'm going to go through it quickly.
Again, we're 30 markets, 85 channels of programming, 40 Big 4 affiliations, good geographic footprint and good distribution on our stations as well. We like state capitals and big university towns for their stability. We're very proud of being able to say that we've got [indiscernible] of our 30 markets, where we have the #1 station or #2 station. And the only one we're out on is Albany, Georgia, where we were very late entrant to 2 established incumbents.
Just again, a snapshot of the university towns we're in and state capitals. 21 of our markets overall are #1, in 23 markets overall #1 in news. We're very, very proud of that and, really, no one else in the business can say the same thing on a per-capita basis, so an extremely high-quality portfolio that we're very proud of. And that, as we've talked about many times before, helps us drive revenue, takes -- let's us have disproportionate shares of the business. So we like the size markets we're in and being the #1 station in most of those markets.
Long history with the networks. We can be #1 regardless of what NBC is. And as this chart shows, it proves that. CBS has been in the same place, so has ABC. So as they all come around and go around, strong local news franchise is what really drives our business.
We've renewed our NBC affiliations for 9 out of our 10 markets through end of '15, so everything will recycle with NBC at the beginning of '16. Our -- ABCs, they're up for renewal at the end of this year. And our CBSs, for the most part, 17 of our CBSs will be up for renewal at the end of '14. So we've got a little bit more time before a full reverse compensation filters in. And within that time, we've got several opportunities to reprice on the retrans revenue front.
We -- with strong #1 stations in our local markets, we continually outdeliver the networks, and we do believe that the networks actually appreciate that and understand that out delivery.
The strong market in the ad -- we had good growth in '12, along with '11. We feel good about '13. Low costs of operation. As I've said before, very diversified in our channel lineups, in our secondary channels, in our market placement. Our largest market doesn't account for more than 10% of our revenue and cash flow, so a very diversified footprint, which we feel very good about.
We have consistently done exceedingly well in political years. As you know, '12 we had $86 million, which was an absolute all-time record. I'm anxious as everybody files their Ks over the next few weeks to get the actual numbers on everybody in the peer group, to be able to update on a percentage basis. But I have no doubt that we probably again, on a per-capita percentage basis, led the industry in political revenue, which is a testament to the strong news stations we run and makes us feel good about '14 when we hit another political cycle.
Our retrans revenue is growing well. It was just shy of $34 million at the end of '12. We said that we expect about $38 million or more, $38 to $39 million. In 2013, we have 1 million subscribers that we will reprice at the end of this October and another 1 million that we'll reprice at the end of the year, so we will get a good pop on 2 million worth of our subscribers going into '14, which we feel very, very good about. And then the contracts we did at the beginning of '12, as well as an additional million, which will be approximately 2/3 of our total subscript -- subbase, we'll be able to reprice at the end of '14 going into '15, just as our CBS stations come up for affiliation renewal. So we think in the -- over the next several years, we can advance the ball on the retrans revenue at -- while at the same time, the reverse comp is coming into play with the networks.
We said on our Q4 call that the aggregate amount we paid in reverse comps to the networks in '12 was $5.6 million. We're looking for about $7.2 million in '13
escalator in the agreements, some of it is a full year effect in '13 of the 3 small CBS stations we picked up to form the equivalent of duopolies in 3 of our smaller markets last fall. So we've got a full year effect in '13 under a reverse comp.
And we've had good growth, especially in '12, on our digital media. We expect continuing good growth there over the next few years. I view '13 as a little bit of repositioning there for us. And we're doubling down on some of our efforts to grow that revenue stream. It probably doesn't grow at the same rate as it did in '12. But as you see, we've -- a couple of years, we've kind of slowed -- the growth has slowed a little. We've redoubled our efforts and a year or so down the road, it pays off well for us. So we see a lot of growth here for the foreseeable future.