Gray Would Consider Selling Spectrum at the Right Price, Prather Says
Gray TV would have to look at selling its spectrum in an auction should one be set up, President Bob Prather told analysts during the broadcaster’s quarterly earnings teleconference Friday. “If an auction happened out there and there was a real viable market, and we thought selling the spectrum was more valuable than doing what we're doing with television, then we'd have to look at it.” Prather said he doesn’t expect there to be an auction any time soon.
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Ultimately, “it would boil down to a question of dollars,” Prather said. Gray uses much of its digital spectrum to operate multicast networks, many of them major broadcast network affiliates. “We've got 40 digital channels on the air and they're doing real well,” Prather said. “We never say no, but we'd have to have a real attractive offer to want to sell any of our spectrum."
Discussing the mergers and acquisitions environment for TV stations, Prather said he doesn’t expect to see many transactions in the near future. “I think the M&A market is still going to be challenged for a while,” he said. Gray is probably not a seller in the current market, he said. “My impression is the multiples just aren’t attractive enough to sell anything right now.” For now, private-equity buyers seems to be waiting for prices to drop even lower, Prather said.
Most TV station groups are paying down debt, not borrowing more money to acquire new stations, Prather said. “Everyone is trying to get their balance sheet in better shape after what we all went through in 2009."
Gray’s news operations are getting more involved with social media, Prather said. “We've got to embrace it, wrap our arms around it make sure we're seen as being on the cutting edge as far as our viewers are concerned.” Major news stories often break first on sites like Twitter and Facebook, and Gray’s stations need to be there too, he said. That won’t take away from Gray’s commitment to local evening newscasts, he said. “Our basic mission is to make sure we put on the best local newscast as we can in every town we're in,” he said. “As long as we can do that, as I've always said, we'll be technology proof."
Gray and NBC recently extended their affiliation agreement for three months, Prather said. The old agreement, which the companies are still operating under, was set to expire in January, he said. “I know they are still working on a plan to come up with a proxy-type deal for handling retrans negotiations of affiliates.” The network doesn’t seem ready to present that plan to affiliates yet, he said. “We don’t really have any of the details.
Q4 sales at Gray TV fell 26 percent from a year earlier to $84.6 million on lower political ad sales. Net income dropped 65 percent to $7.5 million on lower sales.