Gray Television, Inc. GTN
Q2 2011 Earnings Call Transcript
Operator: Good day, everyone, and welcome to the Gray Television Second Quarter 2011 Earnings Release Conference. Today's call is being recorded.
At this time I’d like to things over to Mr. Hilton Howell. Please go ahead, sir.
Hilton H. Howell, Jr. - VC, CEO: Thank you, operator, and good afternoon, everyone. Welcome to the second quarter and six months review of Gray TV’s financial performance. Thank you for joining us. On this sort of infamous day for our country and our markets we appreciate your interest very, very much. As usual, I will begin with just a few brief comments, followed by Bob Prather, our President and Chief Operating Officer, who will add more color to this quarter’s performance; and then Jim Ryan, our Chief Financial Officer, who will follow with a brief discussion of our financial information and more information on the release we let go this morning.
We are happy with our results this quarter and think it speaks well for the TV assets of Gray Television as well as resiliency of the broadcast television industry as a whole. Our total revenue for the quarter advanced by 1% to $76.2 million from $75.6 million in Q2 2010 and exceeded our initial estimates for the quarter this year as well. The increase was driven primarily by increases in local advertising and Internet advertising which rose 4% or $1.9 million and 56% or $1.7 million respectfully.
These gains were offset by expected decreases in political advertising during this off-year cycle and national advertising which decreased by 59% or $3.3 million and 3% or $400,000 respectively. Of our five large advertising categories, automotive, restaurants, medical, communications and furniture and appliances only automotive decreased and that by only 1%. Restaurants increased by 7%, medical increased by 16%, communications increased by 10% and furniture and appliances increased by 5%.
We attribute the decrease in automotive advertising to the effects of the Japanese tsunami and the impacts it has had on the supply chain worldwide. As a consequence, we're cautiously optimistic that this will reverse itself out in the third quarter.
For the six months, total revenue was essentially flat, decreasing by just $200,000 to $145.9 million, also driven by decrease of political and national revenue and no Olympic related advertising this year whereas in 2010, we received approximately $2.8 million Olympic advertising revenue on our NBC-affiliated stations.
Furthermore the Super Bowl is broadcasted on FOX this year and our one primary FOX-affiliated station and four FOX-affiliated secondary digital channels generated just $200,000 of ad revenue this quarter compared to last year when the Super Bowl was broadcast on CBS and our 17 CBS-affiliated primary channels generated close to $1 million in Super Bowl revenue.
When you consider the magnitude of these two items alone close to $3.8 million, we're very pleased with our performance this year. While there is a great deal of discussion of second-dip recession and no one can predict what will happen in our markets after this unprecedented downgrade of the sovereign debt of the United States by Standard & Poor's, we have seen no evidence yet of an advertising pullback in our local markets and consequently we remain optimistic about the balance of the year from all that we know so far. I also want to quickly address the number of station groups that are recently come on the market, while we at Gray believe that the broadcast business needs to continue to consolidate and in time, we will continue to be one of those consolidators. We currently remained committed to improving our balance sheet, decreasing our debt and improving our shareholder's equity.
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