Gray is anticipating a big political revenue upside, and lift from retransmission fees from the TV stations it gets in its cash $442.5 million acquisition of the Schurz Communications’ broadcast holdings.
There’s no near-term expirations in either network or affiliation agreements with the television stations it’s acquiring, according to Gray SVP Kevin Laytek.
Asked whether the deal takes Gray out of the M&A market for a while, Gray President/CEO Hilton Howell told analysts: “We want to manage our company in a prudent manner.” It sounds as if the FCC will put transactions “on hiatus” for a period of time because of the incentive auction, he said, and Gray will use that time “to de-lever the company.”
“The 2016 political as spend will can bring us down by at least a full point, which would get us back to where we were before we made all these acquisitions” before the March 31st debt offering, according to Howell.
On a “pro forma” basis (that is, including the financial results of all Schurz stations plus the financial results of all transactions previously completed and/or announced by Gray as if they had been completed on Jan. 1, 2014, including anticipated “synergies,” Gray believes its pro forma 2012 net political revenue would have increased to approximately $140 million.
“We still think 2016 in general will be better than 2012 because of the open seat for the presidency,” said Howell, referring to projected TV advertising.
