GTN - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Gray Television Inc.

First Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. Instructions] [Operator

like Howell, call go Chairman now speaker to ahead. turn Hilton today, and to would over the your I CEO. Please

Hilton Howell

Thank morning operator much you and so everyone. good

CEO I'm of all for earnings joining to mentioned, the call. to morning you As this XXXX Gray, I want of Howell, operator and our Chairman us Hilton thank and QX

Today, country. all over we the are all virtually present spread and

and Pat our with me Financial Officer, are LaPlatney; Co-CEO, our line and Development Chief the Ryan. On Kevin Jim President Latek; Chief Officer, and Legal our

to welcome We on Officer, Q&A the also that have Bob he some Smith, today not some if us This session, color able our call, this Chief and of Operating I'd is be you like Bob. joined provide may time during first the before. and he has to to interesting

begin provide. will We that with morning will disclaimer a Kevin this

Kevin? So

Kevin Latek

operating forward-looking subject could and may Thank results future among differ other good important this statements you, Hilton in the as described various uncertainties. and from future forward-looking call Those factors. everyone. Certain result in of a in statements the risks regarding, a discussed number of results. matters statements include Actual morning those things, to are

company the Such uses its company website with today's factors earnings The these statements. Gray been undertakes address update information. forward-looking of company's website set release. no and as included most in key have recent filed The SEC is reports forth the in obligation www.gray.tv. source to a

These are flow, replace cash are discussion cash cash supplements valuation to adjusted analysis public GAAP less in broadcast broadcast company. in particular, assist be the free as on flow leverage their and meant and measurements, Included certain not and the operating expenses, cash will of but to ratios. EBITDA our of non-GAAP measures, provided a metrics financial call corporate flow, flow,

statements. well non-GAAP GAAP financial reported in our reconciliations measures as financial Included release website our measures in on are the to our as earnings of the

will I the Hilton. now And turn to call

Hilton Howell

to certain as have Well, you in I'm Certainly, year-end our then. begin. and hit. felt as you, Kevin. then coronavirus call for we began our this could has year since that changed earnings Thank February late on strong it ever hoped much optimism

be efforts stations As companies, and of shared a more employees, of staff proud entire our not our and their leadership the could I services production and our company, team. corporate

policy went moved of work programming, across numerous business keep and community double the and down the news, our employees, up on and adopted local to ramped We protect protocols into a up out our way drum quickly company, already dramatically our deep local remote other to service.

and they Our expected. advertisers, with stayed historic had but large, many us by faced more than headwinds, have

in the increases offsetting you to As same centered advertising was decline in revenue we to largely more with saw core quarter today, retransmission up the time, revenue, advertising of which we than during revenue, quarter. the the in due the month political At and reduce expenses ended slightly March. managed

and benefit to want due cuts. to furloughs, I to not layoffs due note, However, due to not not

first the cash before issued the we net in all onset measures roughly income that year, three In the the the lower flow of the coronavirus of were EBITDA, had from with increased of quarter our and broadcast end end, last pandemic. guidance all and line

fully was $XXX $X.XX was income Net revenue particular, of to per million first attributable In or from diluted XXXX. $XX million, quarter million share. $XX or shareholders X% increasing the common

or increasing $XXX $XX or was increasing million $XXX the Broadcast $XX XX% Adjusted million, cash first XX% quarter million, was quarter of from the from XXXX. of XXXX. flow first EBITDA million

Business month slowed considerably in continued in it the and April. March of

with our bonds we to have strengthen environment strong that tough this used teams sales customers. best Our the

to later on appear of many and to customers hear visibility clouds and began from new many, state. all that Still, exceptionally the May. as the about call. from variability market in you all our constrained, bring will given clearing planned month to is buys of to state or be uncertainty we more entered Some The and of even the market

very, if next in to expect our this for tough a regard the ride very year, rest remains position as to strong situation patch. quarters. And we enhanced the liquidity to position out of the undergo with We're liquidity our changing we even the remain three

carrying turn turning forward year performance. in we rest to So, with the will to and And now Kevin. a it the look decent of over forward I

Pat LaPlatney

Yes. problem. to I'm Pat. it take here. going Hilton, No from It's Actually,

Hilton Howell

I'm sorry.

Pat LaPlatney

No. Thanks good and morning everyone.

to in. February, close political The flat first our compared and quarter January prior In advertising the as core out to was significant year rolled started well. revenue

March, the public come which the gas in to the a as well slowdown the due of in oil course, we across health the significant and country business saw in in activity we Of as some slowdowns states operate. emergency economic

revenue, advertising was higher our strong our For ad ad core to down about political political about year. that first compared revenue plus revenue core our of revenue, to the is year, quarter quarter, ad total X%. X% revenue this finished last by Due the the

much our that more comprises group Raycom this while stations. current impacted Sports, RTM television companies, smaller, Raycom. the are and Recall production significantly video Studios, by The crisis Tupelo than

performances. video public public around of and suspension the RTM concerts evergreen to Raycom generally the Tupelo, other business live dried March. production with content. produce sports, live however, Sports and especially produces Needless up in say, companies' cancellation largely content events, and primarily sports,

of be in a we orders portions than the To bigger be stay-at-home of Like on impact significant will impact economy state relaxation the everyone, April we're that of optimistic successful. cautiously in shutdown March. gradual had saw candid, the the

later businesses so, production from and the our advertising improve in second quarter and demand businesses consumers beyond. and could If pent-up

need and see just everyone however, else. wait to will, like We

serving as that recognize to of though important degrees It's lockdowns. under television are varying markets stations well and alive, our local are their communities

presented Our stations the severe by challenges crisis health unfortunate springtime rose weather. public both and to the

to cancel. clients Our tended have with worked had preserve sales managers and account to buys clients executives our that

message than ever, on open busier was sellers training cored our this unique development actively and in products, and efforts that Premion. coaching businesses digital out that our teams local business Sales team to environment, communities, get remained to

their thanking their own spots, or responders brands services first otherwise sale. promoting burnishing Our clients for their than guys new goods and rather sold

continued clients Our XXX XXX throughout this sales professionals in March than over in written new new crisis and with more clients new bring April. to business in added

All of this great effort helped even us that preserve have revenues declined would more. otherwise

visitors Gray their or early April, residents orders site apply allowed businesses enable jobs. remained place delivery, Directories stations through and the business find to also new for In open for even launched directories which to online pickup interactive online coupons directly and obtain to hours.

for And as of online Gray's XX,XXX night, markets. more By XX,XXX free, across April, we the joined of end all threshold. than the crossed business last the local actually businesses directories, local

never Meanwhile, our departments stations' have news busier. been

equivalent the been lasted For April, for many, hurricane weeks March hours. than that of matter, major a that covering and rather have career

well March live pardon In newscasts for coverage -- me, scheduled and as of hall town our additionally regularly conferences April, stations several in new fundraisers hundred additional home, lessons and local added and telethons, specialist press meetings. as hours and at children

news the worth reports noting that our source. has stations more in need ensure from most trusted information also got network their hours the and April It's broadcasted to they want special and additional community than March local X,XXX of

and nightly Early newscast evening numbers of our April into the material from and ratings that afternoon, saw year. ratings the over local indicate most in double well increases prior agencies March digits

XX%, period. number to stations to and the the stations most and even the incredible XX% added two truly best do market one some of viewership. cases all viewers, strong seem it's viewership increases Depending increases time While over and the see the unusual ago number or in more newscast, in XXX% year on with not

of work once loyal the as stuck franchise consumers groups That's viewers value Not as well the these current school. large really local abates. people return of around when all all our to younger viewers of summer arrives going to We've or not will crisis who watch and to established news local news previously. disappear our when

Our over XXXX, digital also page huge platforms XX% usage same all a increase last April year. billion the X.X gains period views recently. We had January experienced between and across

really February page The year-over-year in just XX% over soared set and views high increases XXXX. crisis, previous a our X.XX with of were March, hitting in increase but in January before billion, COVID-XX they the significant January

million were million set just than XX% we around January. higher past our record March, XXX users again that XXX nearly and figures had this sessions, previous In

and weather also apps set users news, records OTT Our for in March.

from weeks. health help Beyond events, public from sales news, to and concerts gamut and telethons by and on-air and a efforts to challenges musical one the online few to lasting using local other These and hour organizations. support resources stations to to their time economic banks April relief responded television our and March ran and fundraisers food in

the always just local in humbled to right roughly of for report months. do All their raise to million are efforts helped communities. collective these are We efforts a couple thing our that $XX.X

has smart and the Supporting viewers investment started future. optimistic long-term for our public a local the businesses, country this to We're corner now on health crisis. charities, turn always is that

With the to Kevin. that, I call turn

Kevin Latek

you, Thank Pat.

I X,XXX how we the protected and so tremendous informed, very as of the far. are a essential most have We only crisis our whom but and individuals proud future. the essential as employer are handled of for community to to also during just minutes their has Pat not want service owe relayed. We stations that provided spend that keeping about a Therefore, of the to employees, our prepared much an communities highlighting few company crisis to are us,

on, nonessential business adopted our for for locations. ban employees We mandatory we travel, who those and ended health Early imposed work-from-home safely visitors all so. could screening protocols protocols essentially entering do new

employees, the nor employees, time reduce care, not did other to furlough salary health we delay employees' reduce that or suspend, reduce announced that We off levels, we need benefits hourly XXX(k). lay contributions off, will to or anticipate paid compensation

continued requirements the salaried, as within for part-time to work the rules We self-quarantine out hourly workspaces adopted a employees coronavirus. full-time, field. as who new well benefit for We that and due pay employees in ensures and cannot appropriate physical hourly where adopted distancing

provided telehealth and hand a masks waived fees. telemedicine and lots all certain had face of caps relaxed and charges and lots health thermometers, and locations. for We We options, insurance sanitizers benefit

turned identify each location. some efforts physical that the individually at to back and they to need employees working order with begin transitioning to to toward will our Thankfully, station office make other and work that have changes now in

as follow and starting that June soon begin facilities hopeful to remote bring the their Xst, portion others our workers as thereafter. with in weeks of back to We're some a will

a and be normal. may some version complicated long to road of back It

Television keep great they comfortable retains loyalty our employees, We Gray of proactively that that ensure have necessary employees that took protect to to us. steps doing provided company are, the them this the on and focused our however, work

say to to we the did faith just crisis these those Turning by like health are to our the public have good The timing. MVPDs. conducted We're all with concluding retransmission, pleased negotiations, quietly, negotiations, not parties. large been very close of in very respectfully that renewals now impact two outcome negotiations, of all simply and

we covering group of renewals, stations In We the round to again partners. negotiations value roughly cable quarter, our of satellite our can we MVPD will leading of most XXX our renewal platforms. fourth of the retrans look and demonstrate next begin forward television on so

In macro early is situation terms subs, our has impacted to the it too how know us of for counts. subscriber

are of hand, sports and On negatively the economic we concerned may the loss levels. of impact contraction the subscription one

On remarkable hand, tuning are TV that we viewers stations other rates. into the know local at

this popular. and attention assume that in for it will bundle programming reasonable the competition pay-TV the for we to with more less disposable offer seems environment, be With information less popular and income, not the and

As accounts for the quarters. handle receive usual, current next sub will reports actual have in two we a we the period subscriber on when better

Turning to in this political release advertising our morning. revenue

occurred the political we million. shake XXXX year Quite of political we willingness saw donate voters full interest potential guide occurred maintained of believe You last $XXX advertising $XXX that reduce donors to has in months nor year's anything to of the that to million this nothing simply, election. two in has the our to

aware in anticipated To election issue believe governors, the earlier their interest this much more we will how political mayors changes have and relevant year's year. voters for we just The than that changed, many how who and their daily up. lives. is candidates are can senators that and stack could contrary, impact ever than this are has their leaders set higher Voters and be

persuadable persuading likely All means earlier television larger we getting vote, is on political best year. this far broadcast than advertisers both and likely a Because anticipated year. voters and will out very political of that would of remain we bullish ad of for have the medium by revenue have pool this voters this to voters

rely case, at and that such deployed. distancing door-to-door vaccine gaining sporting political canvassing county fairs able with social and on until reaching working not Moreover, and voters to be be In could many the traditional a crowds events. campaigns of rallies, is as attention, us will widely ways

should, be want these obvious political advertising for political pacing in ad will actually therefore, win dispensable sure, slowed March who more Television to buying few different the of bit and be be a candidates even campaigns advertising than reasons. XXXX. To for a anticipated.

We to in ad make of political signs, than activity packs fourth including super months, up the see in recent for quarter remaining the candidates, and in lost markets parties, of plenty years. even an probably will significant that convince in share time recent us numerous with political greater revenue materializing campaigns

Ryan. now call to you I the Thank for Jim your turn time.

James Ryan

you, everyone. Thank Kevin. morning, Good

filed today Our a little a will deal later of great earnings release that information. and provide the be XX-Q

on combined we no with that and late occurred collectively basis today's starting are, in historical longer moving XXXX dispositions results a immaterial, we and reporting as-reported acquisitions presenting that forward, on also were basis. an You'll release, so individually note the because are

Given that in with March, the we are dramatic began pleased our results. events QX

As EBITDA delivery. revenue Hilton mentioned earlier, were a we was had expenses wanted, lighter for also than allowing lower, little solid while

hand of ratio times. the cash ratio December expected, in declining from sequentially times, leverage net as LAQA X.XX the million X.XX was Our of $XXX on

During on million. QX, hand we by increased our $XX cash

$XXX cash revolver very So strong in million, with hand an a of liquidity of on undrawn million the $XXX plus position. we're

cash will do -- this each I'm amounts we that at quarter significant not the full -- expect we and continue time, at XXXX. we of of for to free Moreover, this during XXXX do that expect of year generate we we time, sorry, will

one good Given low as we just pandemic the are leverage no to believe and generation, our position broadcast country. liquidity the all global emerge position, strong free in local cash strongest and very weather XXXX, as the we are we until in maturities relatively we today debt a are companies of experiencing

issuing the earlier, QX. year guidance mentioned and As for all not given previous COVID-XX, full we have are around uncertainty withdrawn our guidance formal

we XXXX remain $XXX million. bullish expectation to political, with of as on our However, million the just Kevin $XXX mentioned,

in is That all certainly sale peers, of with our about QX. in very are said, ad experiencing significant limited. revenue more QX, to core I know of we And and declines visibility know understandably as you want our

cautiously core the are to states lift We environment stay-at-home that the begin optimistic restrictions, improve. ad as will

QX retransmission our estimate with at ad core that our cautioning limited, visibility situation each ad month very the the the believe will fluid sequential and over we again, to decline other broadcast today, but prior quarter, will increase least of that is of revenue is and that in year. revenue, As revenue show revenue XX%, for appearing We improvement. political QX

With is to QX XX% as net the in retransmission these about in forecasts, about political, same revenues the comprise addition about and which would core total, total of -- also in revenue. retransmission XX% revenue the amount

everyone We providing QX potential in some guidance. how these so current system. kind formal whether will again, clear forecast realize, as of predictions our as forecasts internal guidance. be forecasts however, formal point, our on and are unfold, do To and figures not eager we're is internal based as a data We not but regard QX for about

with can are cautiously to all severe direction observers optimistic hold Nevertheless, If about Naturally, revenue the we for, declines XX% have do core not work QX year-over-year, about we is revenue many our as close the clients. we'll forecast. would those which of predicted. be through as our down they mitigate advertising

of in the encouraged we termination are permit, stay-at-home We relaxation conditions by most operate, determination the of the by the states orders. or which

their of have in orders that -- XX% states X. any June have in will roughly by opened our not operating of be June states will currently The operate that We tomorrow, stations that stations our of lift in stations do states past Xst. balance operating XX% have As up. effect in orders

the will expenses We that aggregate and dollars, for QX general currently have anticipate seasonality in in of of corporate in millions in single our the the for be those part The reported QX we our companies range broadcast as production reflecting QX. businesses. will expenses

liquidity items to key you few A update on.

reflecting of full months. $XXX previous LIBOR significant million for last year is over the our decline versus million, $XXX forecast current forecast the Our few interest cash in

estimated Our of taxes estimate versus a cash aggregate previous providing million, versus currently and forecast $XX expenditures $XX previous $XX million $XX are million are million at savings million our our currently estimated capital $XX an of at in cash. of

I'll turn to the back call Hilton. you. Thank

Hilton Howell

Thank you, Jim.

stateside Our ability every few people and last it other world seems heads Considering been virtually many company, shocks of over historic the subject above our in limitations like extent right to questioned to water. everyday on the business the now, the keep has lockdowns our months. life,

awful an lot than we've done better Well, that.

established -- owning high-quality and stations our television demonstrated ongoing and institutions local stations importance broadcast of the first we Our lean quarter operating company. the results local importance a of

country comfortable We lives some reopen, have well Television's Through course time the will return, will it and remain fully best ahead. of to doubt pace we beyond, return convinced will days Gray no and all and year. business more this that a that during the are familiar

time, at for line we you open this Operator, questions. the ask that

Operator

Thank question-and-answer Instructions] be will session. you. [Operator conducting we this a time, At

Your line first question of comes Kyle Stephens. open. line from your the is Kyle, of Evans

Kyle Evans

can that know core but taking XX%, retrans political back Jim, Hi, is off I XQ want not you I give revenue them say XX%, and my you just was, right? total guide, you as of gave of percent numbers for to really is I But bounce thanks what And quickly. questions. the them heard or a X% this again. you for

James Ryan

Correct.

Kyle Evans

it's but thoughts know hard right more bit Okay. I'm net detail know at margins, you just sure. And could little at prior than CHB I looking retrans back just looking for retrans and to looking of on kind longer the lower I'm a have, I the make I will net And to And now. years. go wanted margins for that. and say you But I'm where any term? do

James Ryan

we margins over You time. thought are correct. decline will that We've said repeatedly the

the a margin can year can or see that on as said to extent, over the some all more, net the and well repeatedly not we forward. have has are to that net has math do you -- focus point. been percentage although we've the You and reflecting the to about key comp reverse that in QX, always expected and maximize on our the worry increases the dollars And again, dollars going in for

Kyle Evans

on what national Got commentary are local differences out any it. some seeing maybe or you? state that regional jumping core Maybe and you're and versus between at

James Ryan

I is in Local basis versus by don't see there. and huge maybe to There's a so XX difference a national. big better from local anywhere month on depending little a bit a points quarter. on the whole five the difference not percentage

really no actually oil in bit as than patch tremendous any there's than remarks. are jumps in Certainly, opening they're others. pattern. say we I wouldn't not states, the -- anything and out it State-by-state, that But a that, some taking other mentioned little we harder

Kyle Evans

Okay.

Lastly, more past? cycle. percent there as any pricing that will when the to total I the said a Kevin concern lower of And as somehow we've get and in minimum think on that sell-through seen is the in rates prior the that, that versus impacts I follow Thanks. these a fourth that. dollars that behind reasoning lower here, political expects political missed rates he mute quarter

James Ryan

back-weighted is fourth for quarter. There a into potential more

more It have with season. obviously, will in it's slid. going to primaries -- that traditional our conditions, because, is current several think campaign be part it's sense be I

are -- bit, little can Bob seeing speak to this and We a too.

seeing campaign already season. We nice fall the for buys space coming in are

to that the all so and political Remember, to demand not go, difference if significant supply is only money expect, think rates the have it's rate. pure finite be revenue a as is far in soft that going the of coming we heavy we make demand. amount a As supply. And there going is we on

accordingly, pricing base will where be regardless up the So, the -- be it will the -- business will pricing go is. of

Kyle Evans

you. Thank Great.

Operator

Steven, of line is open. next with Steven your Wells Cahall Fargo. from line Your comes question the

Steven Cahall

sounds Thanks. quarter. it Jim, on you'll positive facility so haven't and credit cash flow free you drawn the be like each

mean, to tap you that So won't right highlighted the at expectation that is all you in need facility now? your release. I

to your feel after it? savings, trying the think all you for just what So, cash need is like

with And any quick it, just you if follow-up. you that us of be lenders? have you requirements might did covenant have remind you having might conversations or can any a And to I've use

James Ryan

Yes.

Okay.

said, need look of base is kind visibility obviously, look on we whatsoever revolver. out see limited. we As out as no But case, -- as we a the to we draw

don't out to We are going down I'm of continue sheet sense going think I drawing that to to see the need. But I monitor that. of don't cash balance the

we probably would cases, model envision can't revolver. case to we again, downside where need a As draw various the we

lien on when with current steps There times revolver. is of test at It's a one the times. Xst. an X.XX. end we LX X.XX the basis. first on The we the is maintenance the at That January test X.X ran calculation quarter, down associated covenant to And were

don't even So, draw any if going don't issue revolver. And we see I to with revolver. need covenant, the we to the even draw maintenance to think the were we're

we're again, from -- we're standpoint. position So, a very liquidity a good in

Steven Cahall

Hilton, then with that you here sorry I'm one I put bit. for discussions said little And you, engaged the and Tegna on parties. Great. with to a four is M&A it spot have

industry? an for can M&A for little you maybe outlook us the bit a So, give of

less think there's company. controlled is Gray there to I out that a a And because amenable perception it's approaches

spot, was So, wondering just on if just to but the at again, that comment theme you industry could on sorry I you put all.

Hilton Howell

standpoint, M&A, on candidly, with we Gray's grow through I regard desirable environment the to Whether continue would not Steven, like an in industry large transactions even Well, process. an really to think that be we're from open right question. company trying or is now in to plan

singles accelerate perhaps lot a couple doubles operations risen of a of and the up. lot of with last months, come But there the issues of will, have in some that to and think, are I for

us to M&A. grow I so expect And with to continue

that made I a to the for large Gray family open being to on value very it different different to position many structures regard With is company we but the and with have are our controlled board. company having shareholder to calls sale, a clear the that not least, company grow add will many or continue it, at across

there going There forward an invest a because that quarter-to-quarter, that. essential invest it its and than lose think to for to the have the going is is to I carry to long-term. is in apply stability quality more We're let of nothing stability, to that's company

And York I've it a we curse little had and this had sheets the continue the hope blessing period Stock the with New we pattern. TV one of and since taken a company Exchange to two-decade And of station have to the to that being pink bit north of time.

are TV other many and so We But there beyond the to we that station just with look if venues think you stations, growth. alternatives there that are lead different portfolio, TV other can for have growth. to things regard just

whether grow rolled that continue is to digital our is to our Pat's monetize whether hits, ability footprint, is that to comments, think begin they get you X.X, I that and billion if out, to we're ATSC that listen getting As it when remarkable. X.X

businesses while production returns is and the Our growth shut down, than And sooner the be company I rather company other to returning assets as those well. regard to and with later. return, companies, our will good to hope will good sports sports

thing avenues said hotspot. no have quarters me Gray. So, does all I've a and quarters of we same the way years. and growth And think and that years to open we put in for in

Steven Cahall

answer. you. Great Thank

Hilton Howell

Thank you.

Operator

your Research. John, Wolfe Your line next John from is with line question Janedis open. comes the of

John Janedis

about to a you in talked they'll sourced? the clients be couple to those clients? us what Seems new Pat March Thanks written think circumstances, were under And number just going the that I me. for sure. some A like color guys. and big One, ongoing how pretty on extent give Can for back April.

cost didn't you're there include a that separately, or us rate about the to run you for furloughs. headcount And then where going And talk savings? Can talked think is then you the forward? about savings to finding

Pat LaPlatney

Yes.

-- tell it's The line that the and that times. question I you non-pandemic of can is I would it's clients. new So, take it. were proud we it can a on big John, in -- number, with I Pat.

new a different out to that's There a of actually reach and lines number were other So, and what had that of want groups thing. of and sort advertisers. lot hope number. of actually and of pretty type sort is a good churches fair a of It We added prayer thing. of messages air spiritual to significant up types

of home improvement we in saw like that. -- for they a a Then jobs do honey putting lot new their been we of were lot clients. people wanted that so of sitting home, some had of off sort A improvement they've home felt to while, those dew

saw that time. long for a some dealers TV hadn't been on We auto

That's hope. And we'll of so, will them. keeping of certainly a we keep those our clients? a think We have good lot chance

-- question, second And or the over -- guess I Jim it second you handle for Kevin, I think turn your I'll to, do want to that one?

James Ryan

Yes.

couple expenses of As far coming a things. guidance, of a or as under combination the expense reductions the in

certainly off hiring. there was there's because or While anybody been, QX the circumstances, virtually of -- laying new or weren't furloughing we QX, no

So it. part that of was

happen little of come as as faster We tempo thinking going for quickly we're not out generally our goes. in and tends plans the year, forecast heavy far the a to operational QX, as to expenses box that with

of on hard receivable accordingly. was We accounts reserves it. down allowance have have were turns than our higher January to piece bad -- early quarter, we for had the we The on another favorable to able and would our year, it that worked part and the end seen liked debts. some it take February, of of At we the was

well difference favorable of some this So, morning. that seeing you're results that the the produced was as

John Janedis

Thanks. Great. maybe big-- one And

James Ryan

Entertainment for also, all once intents mean, And and obviously, the travel's pandemic is nonexistent. hit, mentioned we nonexistent purposes. I earlier, as

bit little but does every -- Some things it huge like that, not dollars, up. adds

John Janedis

up. negotiating distributors the If the Okay. thinking acceleration aggressive? and it and picture, about actually And just it attrition to be guys networks? change Big from between does retrans? dynamic you here, were Gray longer-term that less there's better maybe one how relates quick Would an parties subscriber follow as if are all

Kevin Latek

John, direction on the as counts, of I said call. what the sub I don't the know

couple of view last be I way rest, deemed months will what foreseeable have they think an way the years have at of least our were last I the -- the we is the the are the and they over stations. we which exactly our aggressive the of think few future, is negotiations value

terms what possible of And the network it's necessarily bring is That's always everything conversations side don't else how way that table faith good relative the benefit know our to and to other their prime in negotiate the with have to than mutually kind I to impacts us. this we the been. come And relative And other and up viewership and the on about the we to cost. lowest try dial. are we beneficial.

We'll much main in ratings be happening really about answer on we to because some more stronger really the to don't won't I'm how and -- don't our negotiations. know points these not subs. to -- know, I that clearly I know don't question, thrust, the sure what's dominance answer don't we know I for how but which time. making is

John Janedis

All right. Thank you.

Hilton Howell

Hilton. can me add Let This is just thing? -- one I

Just the this this cloud over thrown dark country. whole our of and sort sort that lining has of to the coronavirus silver industry

the local to strategy grow that to television and think it I continue of broadcasting seeking the in and country. has then invest in validated companies highest business quality Gray the acquire

month of dominance never down, next been to new in the in proves markets. when I our shut for clients that industries and on before, think clients And had the simply local are up strength airwaves XXX our first that businesses in the closed us their for in XXX time -- and those new mean, I period doors the pick

from Pat's to numbers, the to in then if and And increases back then you to categories. of those increased gone comments, XXX% go different all viewership, have XX% it's stunning

well. that, think that augurs I

with that I lead Gray think share there versus regard think kind it may a this of to upon this different being charge, that retransmission think, national based kind I numbers be, be and absolutely should and these of needs to consent, is outstanding. our a I proof, Because calculation just affiliate. market

the than validation could have a of I out. to we think that built of lay company able not what better been have we

well. as company repoint out because is and you, And for to so our then for a that just I industry lining to want silver our there

about bullish future. the I'm So,

Operator

of Jim, line comes is open. next the Your with your from question Jim Goss Barrington line Research.

James Goss

what and a ad Hilton, demand as at some And outset of have just of with the take go open pandemic, But the up you with increased because home. viewership it viewership. get economies but didn't you'll saying. you're now to reversal of you much wondered, of trend the in -- advantage because as so might that the reduced won't of line pricing. probably lose And be They Thanks. I the the

are able spend. open an of of have up ad of pace recovery? and the that the of of But available out demand How funds local working get to some recovery maybe that see the do the you'll to the to advertisers terms some the to that like -- have in shape extent the opportunity you dynamic and

Hilton Howell

One personally. have is I else -- believe, recession put -- think, been is that's let happens that through and on I the recovery. the advertising through been station when anyone opinions I I'll strongest dramatic this that fastest have their own third has it, thing on the I here but always really

I think viewing to here to the especially and then we that people ads. proven right, what community the -- our done turn local on have numbers regard and has television, with that

good stations. that showrooms. stuff they us TV financial, their think Because they've and legal, as products, -- all to a off it's regard very up still I advertising, With give going move to back I moved have everything, get actually their go think come can a our and automobile lot there to to we that to the going forward. they're position of place that's got

will it pricing. regard us think I to So, help with

news. it to tripled their and to demand. anchors disgusting We are instead, down retreat regard the we have it that thing of going homes. to broadcasting we through, our markets because in us late home, cast. our face news immediately think doubled of the didn't from because we were put in our I I relate that able then almost with We in to they and down. night do help We at this were And were invested. will people think all We added

think XX-some the our in question. through your connection that business And to of that augur been there's I for -- pandemic the the success answered So, I medium it's mean, this long-term. I hope our of markets, over also soapbox. well we're on is a course going and has I established just

James Goss

get the reasons was dollars will in those back been higher interest it into and prices? also who advertisers back? they'll partly, pulled think placing Or wondering, to paying for and position has market various of do back -- you though, come the some ads be I damaged of and those harder do your some

Hilton Howell

damaged we think not been I do one iota. have

of Officers Haverty that own of and XXX trying come with our -- they're we've They the on The get some in this and in and markets, advertise of be when -- think eyeballs, gotten XX that's us. people of excess adjourned our The in Directors. Board the stores going to Financial Chief can serves sure of open that where Board I Furniture their our seen have people back they're I'm Board. to back yesterday. it's

pitch to will we and that ability data And to make a I Board. have better that sell have think executives better across our the sales account

So, think pricing. keep I going the we're to

James Goss

a that space consideration office greater developing maybe requirements other to demonstration might Is think, that But -- remotely run addressing for physical tends of any been and a sustainable? that the And of of extent. out in can any people form. the in maybe tight area is in that's one Okay. every coming things revaluation work ship Gray or Jim. I way, to shape savings there a one -- be cost

James Ryan

But are simply the well. working if to to now, be in actually we're even going there's doing significant more think to I more circumstances of and whatever don't probably about any because cost be some we the we basic still be -- continue I it think seems stay and to savings working remotely it cost seems relatively dispersed run same.

plant. physical We're will the think we As we it or lots on beginning by location some start And mean. the dependent that think to our each are on That's dealing of mentioned literally start through some staffs, to across -- early just are of just to beginning portion back with highly our that employees. in the and country what location. now through Kevin's the all think transition to in variables size to of how we're -- locations remarks, of now

if to call, our be would we bit have can -- There update like progress And next as to everybody that to continue little and project. buildings may don't our costs things help on as distancing, a on be that those to modifications that. cost social do of significant. on some But work that we with expect associated that we right we we report through we'll now,

James Goss

one you had sort -- environment for thing. other have like in things duopolies major affiliate Okay. And of things potential maybe any market interest last the this that any in? of or relief might Kevin, Washington create does for an major

Kevin Latek

I early major we couple to of the that think tell. push And be too a little will expect FCC it's overarching are election actions. taking that a the especially months to from an tough it's means fact an any

James Goss

Okay. Thanks very much.

Operator

question Your with line Dan, Dan comes line next your of Benchmark. Kurnos from open. is the

Dan Kurnos

companies why optimism other maybe gives can back if then Jim, what talked to of core the booking continue about? contributing think of talk has the I some outside an maybe, further, and if once sort just to down up restart things how been you get just don't talked Most get on April Thanks. stuff plants And that's you pin mention Hilton what maybe about. better? high-level But We've about in. heard running, OEM know that of came trends, morning. I Good explicitly you

on of then Kevin, comes sort any kind reaffirmed of good buckets in the change the is political you the gave you You overall way color. in? there side, And think your guidance. in And that

air ballot But incredibly we've the time, up due sort outlook presidential has fund to which same Or down been is bit any given just makes kind raising lower heard in that? is now there stuff a heavy maybe the but right still concern the coming that of level? little is of general the for free relatively

Kevin Latek

has today. ads Trump for days now the raise -- TV. $X.XX you've And candidate were in sorry, President's and ago, President for to seen placing trillion seeing ads is right now Remember, on no is years the articles, -- X ahead the Trump more ads actually the and cash we're President campaign President The money. there

we'll lot perhaps intentions part years that think reelection. different this see He when he ago. may slipping there ran than in I because running a And is very a That's was be away. his for more four fear

is generated XX the days, rallies would and if in helping have mentioned, didn't last crisis, House him I've he as that he's a Instead, of XX the in doing done not press. we this the have not rallies free And lot COVID probably necessarily would now. and podium White have been right

is for vote think advertising Biden define I them the be important to So, and get to going out. to

presidential from So, we're certainly him. expecting spending

to So, nothing that has be it's happened that would lighter. going suggest

we'll as not I I less. that think said, think -- all more this I at levels, environment spending suggests see

James Ryan

-- So, on the we down But XX% it to looking was it of go sequentialness sequential said, improvement. whole at sequential currently, QX, to the least said think based pacing, the it's as we question on for appears we quarter. be to

down April May is assume, XX%. was obviously, you better. more than looking So, can

quarter. like today, of best month looking the as June, the is And of

and on cautiously So, trend getting -- it's see will that it optimistic looks we it's line, we'll encouraging that like we're, -- again, better. how

Operator

line from John open. question is next John, of Media. your the comes with line JK Your Kornreich

John Kornreich

Yes, hi Jim.

you've Just retrans this and a much when? past. bit is can you humor renewal on me and that reiterate for the said How already year and in some things up

James Ryan

jump of Kevin, in, to you want terms in subs?

Kevin Latek

subs about year. of renewal up Yes, the XX% this for are

this We at have of December them are or up are at major end in March more that rest still of end up less. negotiating. deal year, XX, one that was the and of we The

John Kornreich

year? rest the the end and of now the at major One

James Ryan

Correct. Yes.

John Kornreich

low quarter was looking annualized now in way pretty your for XXX. side, the XXX, first but-- much And the Is A about on that it's bit the retrans the little year?

James Ryan

basis, a it would being up be think mentioned Kevin No, end again, than of that. full would bit it year little Because, I up -- on deal end for March. was at there a that the a higher

doesn't that a go new obviously, So, grid. to rate

The year first three years the negotiated months were ago. at three rates this of

beginning there April step-up there's So, would a or will beginning retroactive -- X. to contract, step-up be be with a that

little a up nine bit the the next move number will that months. over So

John Kornreich

unusual what million? in And the quarter $XXX first Okay. was

James Ryan

I don't in first anything think there really was unusual quarter.

John Kornreich

retrans expected the quarter? first was down along in net all going you to So, that your be

James Ryan

we think but number for number close the expense what and would came guided thought see and Yes, also the what QX, pretty and the said much when be. guide I exactly it to pretty was go I have we back gross we in to

So, I muted -- so a yes, have expected we QX. would

John Kornreich

simple, be will Are just will how up? to for net be retrans just very up. a Forget year, that willing say about you the much,

Kevin Latek

be going down be is Tell Are down to to XX%. me sub our X%? they going

John Kornreich

X% X%. to They'll down be

Kevin Latek

was That -- the the subs. contracts our rhetorical question. fixed impacts don't know regardless of of half fees -- mean, I because that sub are the And don't direction of count. I I John, a net.

why we're So any in indirectly. directly making not release that's guidance the or

John Kornreich

net down retrans surprised quarter. Okay. I the was that XX% actually was in the first

Kevin Latek

contract Recall, every network year the January all contracts up into Xst last and grids. steps was of then rate -- new on rolling

James Ryan

agreements in on in the reverse repeatedly side XXXX said that we've that years the XXXX. part affiliation And tough year because a us for renewed of was

So now a X. a getting January rate as we're effect full increase effective well XX-month as

always going many be to always reverse tough in we've for said So, be years, this a to this year going us. -- was for was

John Kornreich

cycle XX% And that that into when could side carries negotiate settled. XXXX reverse year. reverse you in has already next been And

James Ryan

reprice X January of a Yes. next base right. that our on with next agreements be for subs another XX% basically able sub picture year. many step-up Well, those repricing. at the roughly much there It's to this year will end you're too. We'd be But in of year, all better growth

John Kornreich

in you, quarter of second XXXX revenues Okay. will quarter one the up you second Are be I got an willing versus easy Jim. to XXXX? of for say the

James Ryan

Second stick quarter that to out neck for willing I'm XXXX. to there I'm Yes, one. willing my bet. of

in this that's that reasonably point a at safe I to make think time. assumption

John Kornreich

Thanks of help. I it. your appreciate really

Operator

comes line open. question Market. of Kupinski Noble the from is with next Capital line Michael, Your your Michael

Michael Kupinski

questions. have a a have just quick other I your are you was wondering, to in just I couple how stations markets? stations of you. Thank relative do your the or sense of have performing

have like out had a rankings your to in local you've to whether your reach And get of trying actions best I'm clients to or just taken your station sense markets? particular

James Ryan

Maybe take to that? Bob, you want do

Robert Smith

as candidly, stations of producing that. well. markets revenue Happy our of It's and performance number along one do to have means Bob know, that Smith, COO. our competition. lot as monitor political you Sure. we a We with the Quite --

of comfortable pretty XXX% share lion's -- seeing that. dollars but the we're that we're of in not the most markets probably our very of them, So, to close

talked take to political to owners to in few Secondly, general world we're their ad of our talked markets. seven involved. The just do agency temperature. involved. clients. the big we in outreach -- I've a our biggest so the biggest gets owners, doing clients I've GSN gets ad -- just this some manager and agency week

throughout in And so that a we're lot the superstars thorough, business on get company. a we some to, our few have the pretty relationships there's regard think, of local in and new And and air. I strong markets, why also that's able been been we've

So, we're competitive in say that. good I would a position,

Michael Kupinski

for way? interest level changed any leverage just was M&A. on your Okay. post your pandemic, thank this then has comments I in your given debt comfort wondering, in on pandemic this you And

James Ryan

February, back at that end the we year Well, in X.XX. call the -- our was said quarter up indicated of had would in year-end we our thought leverage We we in end the threes. the somewhere

full the Now obviously, obvious all reasons. we've withdrawn guidance year for

-- may quarter-to-quarter. the lower we a we of same the quarter, the leverage be it I in somewhere think by the when is time, I hits fluctuate in little year. political the -- lower fours. But bit the leverage But is still think as end in fours bit fourth little move a at might probably the somewhere It

would -- think be to feel space assuming good where a the the I even And the by lower. among think "normal," are year time of we period moving moving over end of they overall peer I leverage XXXX, and we'd XXXX and I -- is thinking in be our in pretty lowest about ahead think range. we currently the then --

of we like we've we over and the codes XXXX. currently ZIP got leverage. ZIP think in end now to the the heading XXXX in also code with -- -- But the flexibility like So, we're then to I next some we'll and be

Michael Kupinski

think willing as end that of go willing about you're high pandemic, Has the range, forward what to? you. to going the leverage about acquisitions Got go your not you post to you're changed? And What thoughts any to?

James Ryan

set into large careful and that about And has fours to half if you to always a last and a certainly and might I into pandemic. group big, rule the the right? and We've the done deals, industry and trajectory run I the peer the be three, five you that the years, maybe how who lows size a done five arbitrary going before little just bit of been of and think timing highs depending times. of for deals, think mean, over on of little four kind wash with several then over a going the the people we've And have deal, it, repeat thumb threes.

current what XXXX back more If much to then you normal, going the before would would through I lead be need and would hit, forward, understand a environment what I be is. comfortable pretty that think pandemic probably thought one like everybody clearly the future what environment conclusion. XXXX, to think range get really? XXXX We to it's the and

leverage the different than bit new more If you slightly conservative up standpoint. is a old normal the normal, might then post-pandemic at end little

next we see impossible to where now, comfortable heading of where other to right the XX than with XX think ourselves are kind and we're say I we it's over very months.

Michael Kupinski

that. you Appreciate very Thank Great. much it. for

Operator

line Wells final Hebert of Davis your open. your Davis, comes with is Fargo. question the Gentlemen, line from

Davis Hebert

last your answer. with ask I'm answer are you a that no be Thank going I the With guess thank these as agreements some Hi MVPDs? and/or no, you. networks the the question, I to think you triggers I any lower that's just renegotiate to think live And but everyone. But sports, you going curious, the deals, of in do to payments there for rebates one. conversation? for so leverage was is one just

Kevin Latek

to not The the to agreement. enter respective no. are negotiated with is or the affiliates associations short Davis, answer affiliate agreements network to it's the enter Remember sports and and then Kevin. recommendation network this, presented between the their

agreement country, share which basically in rata total a negotiated pay pro And all a so you you for amount the DMA have of based affiliates on form the the population.

You sports your network you're a agreements. don't individual when over doing affiliation deals with are have sports The negotiation separate. an

no is So, I trigger. there anticipate -- don't

NBC even going NBC, payments to And two year, the Olympic you years. every structured. though Olympics. with every example, For way the pay Olympics fee are get e That's are we were

but to especially XXXX, don't in But is our networks, I at this understanding, under largely leagues pay If are that the paying that the of see play. for it are state get the -- near-term a refunds regardless any as from seems network, then the leagues relief, required networks We'll since of there leads contracts. open the point, to still conversation. it their will the the

Davis Hebert

Great. Thank you.

Operator

for question-and-answer remarks. over I our session. will Howell to call the now concludes turn closing back Hilton This

Hilton Howell

come we through these. Well, thank questions. operator, that much, for will your insightful very this It live Thank in, morning. time times everyone, interesting is for but you very and thanks, you your we

we is feeling began, times from personal than when I even was a when through much stronger we My emerge will know that these lot strong was come it it will it this it faster, and started. and company

and next we thank will your to for time So, quarter. you you talk

Operator

call. you this gentlemen, participating. Thank and concludes conference Ladies today's for

You may now disconnect.

Gray Television (GTN) 9 May 202020 Q1 Earnings call transcript