Gray Television Inc. (GTN, Financial) filed Quarterly Report for the period ended 2010-06-30.
Gray Television Inc. has a market cap of $131 million; its shares were traded at around $2.55 with and P/S ratio of 0.6. GTN is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC.
Broadcast expenses. Broadcast expenses (before depreciation, amortization and gain on disposal of assets) increased $0.9 million, or 2%, to $46.1 million in the 2010 three-month period, due primarily to an increase in compensation expense of $1.2 million and national sales representation expense of $0.3 million, partially offset by a decrease in bad debt expense of $0.4 million and internet related expenses of $0.3 million. Compensation expense increased primarily due to increases in sales incentive compensation of $0.6 million due to the increase in advertising revenue discussed above and an increase in pension expense of $0.4 million. As of June 30, 2010 and 2009, we employed 2,176 and 2,216 total employees, respectively, in our broadcast operations. Since December 31, 2007, we have decreased the total number of employees in our broadcast operations by 249 persons, a decrease of 10.3%. National sales representation expense is equal to a certain percentage of our national sales revenue (including certain political advertising revenue) and increases as this revenue increases. Bad debt expense decreased primarily due to an improvement in the quality of our accounts receivable balances. We attribute this to an improving economy and an increased focus on collections. Internet related expenses decreased primarily due to the use of a new text alert service provider at a lower cost.
Corporate and administrative expenses. Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets) increased $0.2 million, or 7%, to $3.8 million in the 2010 three-month period. The increase was due primarily to an increase in compensation expense of $0.7 million partially offset by a decrease in consulting expense of $0.2 million and a decrease in legal expense of $0.2 million. The increase in compensation expense was due primarily to the payment of certain bonuses to certain executive officers. No bonus payments had been made to these individuals in 2009. The total bonus payments aggregated $1.05 million. This increase in compensation expense was partially offset by a decrease in non-cash stock-based compensation expense of $0.3 million. We recorded non-cash stock-based compensation expense during the three-month periods ended June 30, 2010 and 2009 of $62,000 and $345,000, respectively. Non-cash stock based compensation has decreased due to the majority of our outstanding stock options becoming fully vested. Consulting expense decreased due to the expiration, on December 31, 2009, of a consulting agreement with our former Chairman and reduced income tax consulting. Legal expense decreased due to a decrease in the number of retransmission consent revenue contracts being negotiated in the current period compared to the comparable period of the prior year.
Revenue. Total revenue increased $19.7 million, or 16%, to $146.1 million in the 2010 six-month period due primarily to increased local, national, internet and political advertising revenue, retransmission consent revenue, production and other revenue and consulting revenue. These increases were partially offset by decreased network compensation revenue. Local advertising revenue increased approximately $6.8 million, or 8%, to $89.4 million. National advertising revenue increased approximately $2.5 million, or 10%, to $27.7 million. Internet advertising revenue increased $0.9 million, or 17%, to $6.2 million. Local, national and internet advertising revenue increased due to increased spending by advertisers in an improving economic environment. Advertising revenue categories by customer type, excluding political advertising, demonstrating significant improvement during the six-month period ended June 30, 2010 compared to the six-month period ended June 30, 2009 were: automotive, increasing 45%; financial and insurance services, increasing 18%; medical services, increasing 15%; and home improvement, increasing 9%. Revenue categories reflecting period over period declines were: paid programming, decreasing 20%; communications, decreasing 18%; and restaurants, decreasing 7%. Net advertising revenue associated with the broadcast of the 2010 Super Bowl on our seventeen CBS-affiliated stations approximated $860,000 which was an increase from our approximately $750,000 of Super Bowl revenues earned in 2009 on our ten NBC-affiliated stations. In addition, results in the 2010 six-month period benefited from approximately $2.8 million of net revenues earned from the broadcast of the 2010 Winter Olympic Games on our NBC-affiliated stations. There was no corresponding broadcast of Olympic Games during the 2009 six-month period. Political advertising revenue increased $6.4 million, or 329%, to $8.4 million, reflecting increased advertising from political candidates during the on year of the two-year political advertising cycle. Retransmission consent revenue increased $1.7 million, or 23%, to $9.3 million due to the improved terms of our retransmission contracts compared to those in effect during the 2009 six-month period. Production and other revenue increased $0.3 million, or 9%, to $3.8 million. We earned consulting revenue of $1.1 million from our agreement with Young Broadcasting, Inc.
Broadcast expenses. Broadcast expenses (before depreciation, amortization and gain on disposal of assets, net) increased $2.8 million, or 3%, to $93.7 million in the 2010 six-month period, due primarily to increases in compensation expense of $2.5 million and national sales representation expense of $0.5 million partially offset by decreases in electricity expense of $0.4 million and bad debt expense of $0.3 million. Compensation expense increased primarily due to increases in sales incentive compensation and pension expense partially offset by a decrease in healthcare expense. Sales incentive compensation increased $1.2 million due to the increase in advertising revenue discussed above. Pension expense increased $0.7 million. Healthcare expense decreased $0.4 million due to lower healthcare claims. National sales representation expense is equal to a certain percentage of our national sales revenue (including certain political advertising revenue) and increases as this revenue increases. Bad debt expense decreased primarily due to an improvement in the quality of our accounts receivable balances. We attribute this to an improving economy and an increased focus on collections. Electricity expenses decreased due to the discontinuance of our analog broadcasts.
Corporate and administrative expenses. Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets) decreased $0.9 million, or 12%, to $6.8 million for the 2010 six-month period. The decrease was due primarily to a decrease in consulting expense of $0.3 million and a decrease in legal expense of $0.5 million partially offset by an increase in compensation expense of $0.2 million. Consulting expense decreased due to the expiration, on December 31, 2009, of a consulting agreement with our former Chairman, and reduced income tax consulting. Legal expense decreased due to a decrease in the number of retransmission consent revenue contracts being negotiated in the current period compared to the comparable period of the prior year. The increase in compensation expense was due primarily to the payment of certain bonuses to certain executive officers. No bonus payments had been made to these individuals in 2009. The total bonus payments aggregated $1.05 million. This increase in compensation expense was partially offset by a decrease in non-cash stock-based compensation expense of $0.5 million and a decrease in severance expense of $0.1 million. We recorded non-cash stock-based compensation expense during the six-month periods ended June 30, 2010 and 2009 of $217,000 and $698,000, respectively. Non-cash stock based compensation has decreased due to the majority of our outstanding stock options becoming fully vested.
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Gray Television Inc. has a market cap of $131 million; its shares were traded at around $2.55 with and P/S ratio of 0.6. GTN is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Revenue. Total revenue increased $10.6 million, or 16%, to $75.6 million in the 2010 three-month period due primarily to increased local, national, internet and political advertising revenues, retransmission consent revenue, production and other revenue and consulting revenue. Local advertising revenues increased approximately $2.6 million, or 6%, to $45.9 million. National advertising revenues increased approximately $1.4 million, or 11%, to $13.8 million. Internet advertising revenues increased $0.4 million, or 15%, to $3.1 million. Local, national and internet advertising revenue increased due to increased spending by advertisers in an improving economic environment. Advertising revenue categories by customer type, excluding political advertising, demonstratingBroadcast expenses. Broadcast expenses (before depreciation, amortization and gain on disposal of assets) increased $0.9 million, or 2%, to $46.1 million in the 2010 three-month period, due primarily to an increase in compensation expense of $1.2 million and national sales representation expense of $0.3 million, partially offset by a decrease in bad debt expense of $0.4 million and internet related expenses of $0.3 million. Compensation expense increased primarily due to increases in sales incentive compensation of $0.6 million due to the increase in advertising revenue discussed above and an increase in pension expense of $0.4 million. As of June 30, 2010 and 2009, we employed 2,176 and 2,216 total employees, respectively, in our broadcast operations. Since December 31, 2007, we have decreased the total number of employees in our broadcast operations by 249 persons, a decrease of 10.3%. National sales representation expense is equal to a certain percentage of our national sales revenue (including certain political advertising revenue) and increases as this revenue increases. Bad debt expense decreased primarily due to an improvement in the quality of our accounts receivable balances. We attribute this to an improving economy and an increased focus on collections. Internet related expenses decreased primarily due to the use of a new text alert service provider at a lower cost.
Corporate and administrative expenses. Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets) increased $0.2 million, or 7%, to $3.8 million in the 2010 three-month period. The increase was due primarily to an increase in compensation expense of $0.7 million partially offset by a decrease in consulting expense of $0.2 million and a decrease in legal expense of $0.2 million. The increase in compensation expense was due primarily to the payment of certain bonuses to certain executive officers. No bonus payments had been made to these individuals in 2009. The total bonus payments aggregated $1.05 million. This increase in compensation expense was partially offset by a decrease in non-cash stock-based compensation expense of $0.3 million. We recorded non-cash stock-based compensation expense during the three-month periods ended June 30, 2010 and 2009 of $62,000 and $345,000, respectively. Non-cash stock based compensation has decreased due to the majority of our outstanding stock options becoming fully vested. Consulting expense decreased due to the expiration, on December 31, 2009, of a consulting agreement with our former Chairman and reduced income tax consulting. Legal expense decreased due to a decrease in the number of retransmission consent revenue contracts being negotiated in the current period compared to the comparable period of the prior year.
Revenue. Total revenue increased $19.7 million, or 16%, to $146.1 million in the 2010 six-month period due primarily to increased local, national, internet and political advertising revenue, retransmission consent revenue, production and other revenue and consulting revenue. These increases were partially offset by decreased network compensation revenue. Local advertising revenue increased approximately $6.8 million, or 8%, to $89.4 million. National advertising revenue increased approximately $2.5 million, or 10%, to $27.7 million. Internet advertising revenue increased $0.9 million, or 17%, to $6.2 million. Local, national and internet advertising revenue increased due to increased spending by advertisers in an improving economic environment. Advertising revenue categories by customer type, excluding political advertising, demonstrating significant improvement during the six-month period ended June 30, 2010 compared to the six-month period ended June 30, 2009 were: automotive, increasing 45%; financial and insurance services, increasing 18%; medical services, increasing 15%; and home improvement, increasing 9%. Revenue categories reflecting period over period declines were: paid programming, decreasing 20%; communications, decreasing 18%; and restaurants, decreasing 7%. Net advertising revenue associated with the broadcast of the 2010 Super Bowl on our seventeen CBS-affiliated stations approximated $860,000 which was an increase from our approximately $750,000 of Super Bowl revenues earned in 2009 on our ten NBC-affiliated stations. In addition, results in the 2010 six-month period benefited from approximately $2.8 million of net revenues earned from the broadcast of the 2010 Winter Olympic Games on our NBC-affiliated stations. There was no corresponding broadcast of Olympic Games during the 2009 six-month period. Political advertising revenue increased $6.4 million, or 329%, to $8.4 million, reflecting increased advertising from political candidates during the on year of the two-year political advertising cycle. Retransmission consent revenue increased $1.7 million, or 23%, to $9.3 million due to the improved terms of our retransmission contracts compared to those in effect during the 2009 six-month period. Production and other revenue increased $0.3 million, or 9%, to $3.8 million. We earned consulting revenue of $1.1 million from our agreement with Young Broadcasting, Inc.
Broadcast expenses. Broadcast expenses (before depreciation, amortization and gain on disposal of assets, net) increased $2.8 million, or 3%, to $93.7 million in the 2010 six-month period, due primarily to increases in compensation expense of $2.5 million and national sales representation expense of $0.5 million partially offset by decreases in electricity expense of $0.4 million and bad debt expense of $0.3 million. Compensation expense increased primarily due to increases in sales incentive compensation and pension expense partially offset by a decrease in healthcare expense. Sales incentive compensation increased $1.2 million due to the increase in advertising revenue discussed above. Pension expense increased $0.7 million. Healthcare expense decreased $0.4 million due to lower healthcare claims. National sales representation expense is equal to a certain percentage of our national sales revenue (including certain political advertising revenue) and increases as this revenue increases. Bad debt expense decreased primarily due to an improvement in the quality of our accounts receivable balances. We attribute this to an improving economy and an increased focus on collections. Electricity expenses decreased due to the discontinuance of our analog broadcasts.
Corporate and administrative expenses. Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets) decreased $0.9 million, or 12%, to $6.8 million for the 2010 six-month period. The decrease was due primarily to a decrease in consulting expense of $0.3 million and a decrease in legal expense of $0.5 million partially offset by an increase in compensation expense of $0.2 million. Consulting expense decreased due to the expiration, on December 31, 2009, of a consulting agreement with our former Chairman, and reduced income tax consulting. Legal expense decreased due to a decrease in the number of retransmission consent revenue contracts being negotiated in the current period compared to the comparable period of the prior year. The increase in compensation expense was due primarily to the payment of certain bonuses to certain executive officers. No bonus payments had been made to these individuals in 2009. The total bonus payments aggregated $1.05 million. This increase in compensation expense was partially offset by a decrease in non-cash stock-based compensation expense of $0.5 million and a decrease in severance expense of $0.1 million. We recorded non-cash stock-based compensation expense during the six-month periods ended June 30, 2010 and 2009 of $217,000 and $698,000, respectively. Non-cash stock based compensation has decreased due to the majority of our outstanding stock options becoming fully vested.
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