Gray Television, Inc. (GTN)

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Gray Television, Inc. (GTN)

Q1 2010 Earnings Call

May 10, 2010 11:00 am ET

Executives

Robert Prather – President & COO

James Ryan – SVP & CFO

Hilton Howell - CEO

Analysts

Larry [Schnurmacher] – Oppenheimer

Marci Ryvicker - Wells Fargo

Harry [Dumont] – Unspecified Company

Bishop Cheen – Wells Fargo Securities

Matt Slope - Broadpoint Capital

Presentation

Operator

Welcome to the Gray Television’s first quarter 2010 earnings release conference call. Today's call is being recorded. For opening remarks and introductions, I would like to turn things over to our moderator, Hilton Howell, CEO and Vice Chairman. Please go ahead.

Hilton Howell

Thank you Operator. Good morning everyone and welcome to the Gray Television first quarter 2010 conference call. I will begin with a brief overview of the highlights of the quarter and our activities year-to-date and then Robert Prather, our President and Chief Operating Officer, will update you on our operations and James Ryan, our Chief Financial Officer, will review our financial results. We will also have a question and answer session right at the completion of our brief remarks.

I am happy to report that it has been a very busy and productive quarter and year-to-date. Last quarter I said it was beginning to be fun to be a broadcaster again and I am happy to repeat that this quarter has been the same. Operationally, our net revenues have increased to $70.5 million from $61.4 million for the quarter previously and approximate 15% increase which has really been driven by increases in each and every of our advertising categories.

We have seen some of our competition that have had bigger percentage increases during the quarter but we feel that our operations are doing very well and are on plan and that in terms of comparisons from quarter-to-quarter we had sort of a smaller drop in the previous year than perhaps some of our other competitors have but we are very pleased with the results so far in this quarter and the uniform improvement we are seeing in the advertising environment.

Many of you if not most of you may have met with or been in the meeting with Bob and Jim because we have completed a lot of transactions I would like to summarize this quarter and year-to-date. As I am sure all of you know on March 31 at the end of the quarter we amended our senior credit facility which in and of itself gave us a great deal more flexibility. But then 12 days ago on April 29th we issued $365 million of second lien notes due in 2015. We used the majority of the funds to reduce our senior credit facility we had just amended at the end of March. Also on the 29th we repurchased $60.7 million of our Series D, base amount preferred stock and $14.9 million in approved dividends thereon.

At the same time, we issued approximately 8.5 million new common shares. All of these transactions taken together we feel have helped to tremendously improved the balance sheet and has moved us substantially towards our stated goal of de-leveraging Gray Television in the immediate present and for the next several years.

With that let me turn it over to Bob Prather.

Robert Prather

Thanks very much Hilton. Welcome everybody. As Hilton mentioned the television business is definitely looking better. I think everybody in the industry can quote Mark Twain that the reports of our death were greatly exaggerated. I think a year ago everybody was predicting gloom and doom for TV and we have definitely come back strong.

As Hilton mentioned we had a good quarter. We did get our debt refinancing done which I am very proud of. I think we hit it just at the right time and probably would have a lot tougher time doing it today than we did a couple of weeks ago. I am glad we got it done. One other thing he mentioned that is interesting regarding our comparison to our peer group last year first quarter we were down 13.6%. These are the public companies that reported during that quarter. I won’t give you their names but their percentages were down 23.6%, 27%, 18.9%, 19.8%, 20%, 19.1%, 22.9%, 31%, 20.5%, 18.4% and the Television Bureau Survey of 600 stations was down 27.9% first quarter of last year.

I think once again this validates our strategy of buying university towns and state capitals as many TV stations as we can because we think these markets fared better in this rough economy over the last couple of years and I think they will continue to grow and prosper in the future as the economy gets a lot better. I think we are in real good shape there.

Everybody is asking about Young Broadcasting. The judge in the Young Broadcasting bankruptcy ruled in favor of the first lien banks. We hope the confirmation will be sometime in the next 15-25 days. At that point we will be able to actively be involved in managing the Young properties again and we think we have a real strong future ahead of us with the Young stations. They have been performing better and we think there is still a lot of upside to go in the young market they are in.

We did do a new deal with DirectTV for retrans. We signed a five-year deal we are very proud of that we think is going to be very good for us over the next five years with considerably higher rates than they were paying in the past. So we feel very good about that.

Read the rest of this transcript for free on seekingalpha.com