Gray Reports Record Operating Results

Staff Report From Georgia CEO

Wednesday, February 28th, 2018

Gray Television, Inc. announces record results of operations for the fourth quarter and full year ended December 31, 2017, including record revenue and net income.

Gray's Chairman and Chief Executive Officer Hilton Howell declared, "We are extremely pleased by all that we have accomplished in 2017 and look forward to an even more successful 2018." In particular, several important measures of performance stood out:

  • our total revenue for the year ended December 31, 2017 was a new record, increasing by approximately $70.3 million, or 9%, to $882.7 million compared to 2016;

  • our combined local and national advertising revenue increased by approximately $20.9 million, or 16%, in the fourth quarter of 2017 compared to the fourth quarter of 2016. For all of 2017, our combined local and national advertising revenue increased $68.4 million, or 14%, compared to 2016;

  • our fourth quarter of 2017 political advertising revenue was $7.5 million, significantly exceeding our guidance;

  • our fourth quarter of 2017 broadcast operating expense was $150.7 million and was near the low end of our guidance;

  • our fourth quarter of 2017 corporate and administrative expense was $7.1 million, which was below our guidance;

  • our fully diluted net income per share for the fourth quarter and year ended December 31, 2017 was  $2.13 and $3.55, respectively;

  • as of December 31, 2017, our Total Leverage Ratio, Net of all Cash (as defined below) improved to 4.16 times, on a trailing eight-quarter basis and our cash balance increased to $462.4 million;

  • our net income of $165.6 million for the fourth quarter of 2017 was our highest net income for any fourth quarter in our history. Our Broadcast Cash Flow was $85.9 million for the fourth quarter of 2017. Our Free Cash Flow was $40.4 million for the fourth quarter of 2017;

  • included in our net income for the fourth quarter of 2017 was a net income tax benefit of $134.4 million, resulting primarily from the enactment of the Tax Cuts and Jobs Act of 2017 (the "TCJA"); and

  • in December 2017, we completed an underwritten public offering of 17.25 million shares of our common stock at a price to the public of $14.50 per share. The net proceeds of the offering, after discounts and expenses, were approximately $238.9 million.

 

Selected Operating Data on As-Reported Basis (unaudited):

           
                   
 

Three Months Ended December 31,

 

2017

 

2016

 

% Change
2017 to
2016

 

2015

 

% Change
2017 to
2015

 

(dollars in thousands)

Revenue (less agency commissions):

                 

Total

$     233,609

 

$   237,619

 

(2)%

 

$   169,487

 

38 %

Political

$         7,464

 

$     48,519

 

(85)%

 

$       9,213

 

(19)%

                   

Operating expenses (1):

                 

Broadcast

$     150,670

 

$   128,511

 

17 %

 

$   101,969

 

48 %

Corporate and administrative

$         7,105

 

$       8,922

 

(20)%

 

$     11,030

 

(36)%

                   

Net income

$     165,570

 

$     35,834

 

362 %

 

$     14,987

 

1005 %

                   

Non-GAAP Cash Flow (2):

                 

Broadcast Cash Flow

$       85,864

 

$   109,469

 

(22)%

 

$     67,849

 

27 %

Broadcast Cash Flow Less

                 

Cash Corporate Expenses

$       79,938

 

$   101,515

 

(21)%

 

$     57,609

 

39 %

Free Cash Flow

$       40,383

 

$     68,486

 

(41)%

 

$     28,996

 

39 %

                   
 

Year Ended December 31,

 

2017

 

2016

 

% Change
2017 to
2016

 

2015

 

% Change
2017 to
2015

 

(dollars in thousands)

Revenue (less agency commissions):

                 

Total

$     882,728

 

$   812,465

 

9 %

 

$   597,356

 

48 %

Political

$       16,498

 

$     90,095

 

(82)%

 

$     17,163

 

(4)%

                   

Operating expenses (1):

                 

Broadcast

$     557,116

 

$   475,131

 

17 %

 

$   374,182

 

49 %

Corporate and administrative

$       31,541

 

$     40,347

 

(22)%

 

$     34,343

 

(8)%

                   

Net income

$     261,952

 

$     62,273

 

321 %

 

$     39,301

 

567 %

                   

Non-GAAP Cash Flow (2):

                 

Broadcast Cash Flow

$     329,503

 

$   338,801

 

(3)%

 

$   224,484

 

47 %

Broadcast Cash Flow Less

                 

Cash Corporate Expenses

$     302,369

 

$   302,332

 

0 %

 

$   193,261

 

56 %

Free Cash Flow

$     171,005

 

$   148,126

 

15 %

 

$     93,984

 

82 %

                   

(1) Excludes depreciation, amortization, and loss (gain) on disposal of assets.

           

(2) Non-GAAP terms and related reconciliations to net income are included below.

       

 

 

Selected Operating Data on Combined Historical Basis (unaudited):

 
                   
 

Three Months Ended December 31,

 

2017

 

2016

 

% Change
2017 to
2016

 

2015

 

% Change
2017 to
2015

         
         
 

(dollars in thousands)

Revenue (less agency commissions):

                 

Total

$     233,609

 

$   275,529

 

(15)%

 

$   224,708

 

4 %

Political

$         7,464

 

$     63,369

 

(88)%

 

$     12,088

 

(38)%

                   

Operating expenses (1):

                 

Broadcast

$     150,670

 

$   146,465

 

3 %

 

$   138,817

 

9 %

Corporate and administrative

$         7,105

 

$       8,922

 

(20)%

 

$     11,030

 

(36)%

                   

Non-GAAP Cash Flow (2):

                 

Broadcast Cash Flow

$       85,831

 

$   129,968

 

(34)%

 

$     91,501

 

(6)%

Broadcast Cash Flow Less

                 

Cash Corporate Expenses

$       79,905

 

$   122,014

 

(35)%

 

$     81,261

 

(2)%

Operating Cash Flow as Defined in

                 

our Senior Credit Agreement

$       77,384

 

$   122,758

 

(37)%

 

$     81,794

 

(5)%

Free Cash Flow

$       40,453

 

$     87,872

 

(54)%

 

$     50,089

 

(19)%

                   
 

Year Ended December 31,

 

2017

 

2016

 

% Change
2017 to
2016

 

2015

 

% Change
2017 to
2015

         
         
 

(dollars in thousands)

Revenue (less agency commissions):

                 

Total

$     895,081

 

$   946,001

 

(5)%

 

$   821,599

 

9 %

Political

$       16,539

 

$   117,538

 

(86)%

 

$     21,934

 

(25)%

                   

Operating expenses (1):

                 

Broadcast

$     570,131

 

$   553,118

 

3 %

 

$   524,285

 

9 %

Corporate and administrative

$       31,541

 

$     40,347

 

(22)%

 

$     34,343

 

(8)%

                   

Non-GAAP Cash Flow (2):

                 

Broadcast Cash Flow

$     331,874

 

$   400,877

 

(17)%

 

$   325,963

 

2 %

Broadcast Cash Flow Less

                 

Cash Corporate Expenses

$     304,740

 

$   364,408

 

(16)%

 

$   294,740

 

3 %

Operating Cash Flow as Defined in

                 

our Senior Credit Agreement

$     302,257

 

$   369,967

 

(18)%

 

$   300,014

 

1 %

Free Cash Flow

$     173,772

 

$   213,526

 

(19)%

 

$   173,748

 

0 %

                   

(1) Excludes depreciation, amortization, and loss (gain) on disposal of assets.

           

(2) Non-GAAP terms and related reconciliations to net income are included below.

       

 

Results of Operations for the Fourth Quarter of 2017 on As-Reported Basis:

Revenue (Less Agency Commissions).

The table below presents our revenue (less agency commissions) by type for the fourth quarter of 2017 and 2016 (dollars in thousands):

   

Three Months Ended December 31,

   

2017

 

2016

 

Amount

 

Percent

       

Percent

     

Percent

 

Increase

 

Increase

   

Amount 

 

of Total

 

Amount 

 

of Total 

 

(Decrease)

 

(Decrease)

Revenue (less agency commissions):

                       

Local (including internet/digital/mobile)

 

$     120,714

 

51.7%

 

$    107,083

 

45.1%

 

$     13,631

 

13 %

National

 

31,995

 

13.7%

 

24,776

 

10.4%

 

7,219

 

29 %

Political

 

7,464

 

3.2%

 

48,519

 

20.4%

 

(41,055)

 

(85)%

Retransmission consent

 

69,509

 

29.8%

 

51,965

 

21.9%

 

17,544

 

34 %

Other

 

3,927

 

1.6%

 

5,276

 

2.2%

 

(1,349)

 

(26)%

Total

 

$     233,609

 

100.0%

 

$    237,619

 

100.0%

 

$     (4,010)

 

(2)%

 

The 2017 Acquisitions and 2016 Acquisitions (each as defined below) collectively accounted for approximately $64.4 million of our total revenue in the fourth quarter of 2017, and the 2016 Acquisitions accounted for approximately $42.5 million of our total revenue in the fourth quarter of 2016.

Excluding the revenue contributed by the 2017 Acquisitions and 2016 Acquisitions, our total revenue decreased by $25.8 million in the fourth quarter of 2017 as compared to the fourth quarter of 2016. This was primarily the result of a decrease in political advertising revenue of approximately $34.5 million due to 2017 being the "off-year" of the two-year election cycle. This decrease was partially offset by increases in national advertising revenue of $1.8 million and retransmission consent revenue of approximately $7.9 million, primarily due to higher retransmission consent rates.

Broadcast Operating Expenses.

Broadcast operating expenses (before depreciation, amortization and gain or loss on disposal of assets) increased $22.2 million, or 17%, to $150.7 million for the fourth quarter of 2017 compared to the fourth quarter of 2016. The 2017 Acquisitions and 2016 Acquisitions collectively accounted for approximately $40.5 million of our broadcast operating expenses in the fourth quarter of 2017, and the 2016 Acquisitions accounted for approximately $22.0 million of our broadcast operating expenses in the fourth quarter of 2016. Including the impact of the 2017 Acquisitions and 2016 Acquisitions, total retransmission expense increased $9.3 million, or 35%, to $35.6 million in the fourth quarter of 2017 compared to the fourth quarter of 2016, consistent with increases in retransmission consent revenue.

Excluding the impact of the 2017 Acquisitions and 2016 Acquisitions, in the fourth quarter of 2017:

  • Total non-compensation expenses increased $1.8 million, or 3%, primarily due to retransmission expense (reverse network compensation) increases of $3.6 million, partially offset by decreases in professional fees of $1.2 million.

  • Total compensation expenses increased $1.8 million, or 3%. Non-cash share-based compensation expenses were $2.8 million and $0.3 million in the fourth quarters of 2017 and 2016, respectively.

Corporate and Administrative Operating Expenses.

Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) decreased $1.8 million, or 20%, to $7.1 million in the fourth quarter of 2017 as compared to the fourth quarter of 2016. This decrease reflects the following:

  • Non-compensation expenses decreased $1.0 million, or 24%, in the fourth quarter of 2017 due primarily to decreases of $0.7 million in legal and other professional fees related to the acquisitions completed in 2017 compared to those completed in 2016.

  • Compensation expenses decreased $0.8 million, or 17%, in the fourth quarter of 2017 due primarily to decreases in incentive compensation. Non-cash share-based compensation expenses were $1.2 million in the fourth quarter of 2017 compared to $1.0 million in the fourth quarter of 2016.

Taxes.

During the fourth quarter of 2017, we made aggregate federal and state income tax payments of $0.8 million. We did not make any federal or state income tax payments in the fourth quarter of 2016. The TCJA, that was signed into law on December 22, 2017, reduced the value of our deferred tax liabilities, with a credit to earnings for a reduction of those liabilities. Accordingly, we recorded a tax benefit of $134.4 million in the fourth quarter of 2017, compared to a tax expense of $24.3 million in the fourth quarter of 2016. In addition, the TCJA is expected to materially affect our income tax obligations in 2018 and subsequent years. Among other things, the new law should result in a positive effect on our net earnings and earnings per share. It will also limit or eliminate certain deductions, to which we have been entitled in past years, likely increasing our federal and state income tax payment obligations beginning in 2018.

Results of Operations for the Fourth Quarter of 2017 on Combined Historical Basis:

Revenue (Less Agency Commissions).

On a Combined Historical Basis, total revenue decreased $41.9 million, or 15%, to $233.6 million in the fourth quarter of 2017 as compared to the fourth quarter of 2016. The changes in Combined Historical Basis revenue were approximately as follows:

  • Local advertising revenue (including internet/digital/mobile) was unchanged.

  • National advertising revenue increased $2.5 million, or 8%, to $32.0 million.

  • Political advertising revenue decreased $55.9 million, or 88%, to $7.5 million.

  • Retransmission consent revenue increased $11.5 million, or 20%, to $69.5 million.

  • Other revenue increased $0.1 million, or 2%, to $3.9 million.

Broadcast Operating Expenses.

On a Combined Historical Basis, broadcast operating expenses (before depreciation, amortization and gain or loss on disposal of assets) increased $4.2 million, or 3%, to $150.7 million in the fourth quarter of 2017 as compared to the fourth quarter of 2016. The net increase was primarily the result of:

  • Retransmission expense (reverse network compensation) increased $6.0 million, or 20%, to $35.6 million, consistent with increases in retransmission consent revenue.

  • Compensation expense decreased by approximately $0.5 million, or 1%, to $76.9 million.

Results of Operations for the Year Ended December 31, 2017 on As-Reported Basis:

Revenue (Less Agency Commissions). 

The table below presents our revenue (less agency commissions) by type for the years ended December 31, 2017 and 2016, respectively (dollars in thousands):

   

Year Ended December 31,

   

2017

 

2016

 

Amount

 

Percent

       

Percent

     

Percent

 

Increase

 

Increase

   

Amount 

 

of Total

 

Amount 

 

of Total 

 

(Decrease)

 

(Decrease)

Revenue (less agency commissions):

                       

Local (including internet/digital/mobile)

 

$      451,261

 

51.1%

 

$    403,336

 

49.6%

 

$     47,925

 

12 %

National

 

118,817

 

13.5%

 

98,351

 

12.1%

 

20,466

 

21 %

Political

 

16,498

 

1.9%

 

90,095

 

11.1%

 

(73,597)

 

(82)%

Retransmission consent

 

276,603

 

31.3%

 

200,879

 

24.7%

 

75,724

 

38 %

Other

 

19,549

 

2.2%

 

19,804

 

2.5%

 

(255)

 

(1)%

Total

 

$      882,728

 

100.0%

 

$    812,465

 

100.0%

 

$     70,263

 

9 %

 

The 2017 Acquisitions and 2016 Acquisitions collectively accounted for approximately $232.2 million of our total revenue in the year ended December 31, 2017, and the 2016 Acquisitions accounted for approximately $130.4 million of our total revenue in the year ended December 31, 2016.

Excluding the revenue contributed by the 2017 Acquisitions and 2016 Acquisitions, our total revenue decreased by $31.6 million. This was primarily the result of a decrease in political advertising revenue of approximately $63.4 million, due to 2017 being the "off-year" of the two-year election cycle. This decrease was partially offset by an increase in retransmission consent revenue of approximately $36.8 million primarily due to higher retransmission consent rates.

Broadcast Operating Expenses.

Broadcast operating expenses (before depreciation, amortization and gain or loss on disposal of assets) increased $82.0 million, or 17%, to $557.1 million for the year ended December 31, 2017 compared to the year ended December 31, 2016. The 2017 Acquisitions and 2016 Acquisitions collectively accounted for approximately $135.6 million of our broadcast operating expenses in the year ended December 31, 2017, and the 2016 Acquisitions accounted for approximately $74.6 million of our broadcast operating expenses for the year ended December 31, 2016. Including the impact of the 2017 Acquisitions and 2016 Acquisitions, total retransmission expense increased $38.7 million, or 40%, to $136.3 million in the year ended December 31, 2017 compared to the year ended December 31, 2016, consistent with increases in retransmission consent revenue.

Excluding the impact of the 2017 Acquisitions and the 2016 Acquisitions, in the year ended December 31, 2017:

  • Non-compensation expenses increased by $20.3 million, or 9%, primarily due to retransmission expense (reverse network compensation) increases of $19.3 million and professional fee increases of $2.7 million.

  • Compensation expenses increased $0.7 million, or less than 1%.

Corporate and Administrative Operating Expenses.

Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) decreased $8.8 million, or 22%, to $31.5 million for the year ended December 31, 2017 compared to the year ended December 31, 2016. This decrease reflects in part the following:

  • Non-compensation expense decreased $7.3 million, or 31%, due primarily to decreases of $8.5 million of legal and other professional fees related to the acquisitions completed in 2017 compared to those completed in 2016.

  • Compensation expenses decreased $1.5 million, or 9%, primarily as a result of decreases in incentive compensation. Non-cash share-based compensation expenses were $4.4 million in the year ended December 31, 2017 compared to $3.9 million in the year ended December 31, 2016.

Gain or Loss on Disposal of Assets, net.

We recorded a gain on disposal of assets of $74.2 million in the year ended December 31, 2017 and a loss on disposal of assets of $0.3 million in the year ended December 31, 2016. On May 30, 2017, we tendered two of our broadcast licenses and made other modifications to our broadcast spectrum related to our participation in the FCC's reverse auction for broadcast spectrum. Proceeds from this auction, which we received on August 7, 2017, were $90.8 million while the combined cost of the assets disposed of was $13.1 million. Due to planning in connection with this transaction and our recently completed acquisitions, we have been able to defer any related income tax obligations on a long-term basis.

Loss from Early Extinguishment of Debt.

In the year ended December 31, 2017, we recorded a loss from early extinguishment of debt of approximately $2.9 million, or approximately $1.7 million after tax, related to the amendment and restatement of our senior credit facility. In the year ended December 31, 2016, we recorded a loss from early extinguishment of debt of approximately $32.0 million, or approximately $19.5 million after tax, related to the tender offer and redemption of our 7½% senior notes due 2020.

Taxes.

During the year ended December 31, 2017, we made aggregate federal and state income tax payments totaling $2.0 million compared to $14.6 million for the year ended December 31, 2016. Primarily as a result of the enactment of the TCJA, in the year ended December 31, 2017 we recorded a tax benefit of $68.7 million, compared a tax provision of $43.4 million in the year ended December 31, 2016.

Results of Operations for the Year Ended December 31, 2017 on Combined Historical Basis:

Revenue (Less Agency Commissions).

On a Combined Historical Basis, revenue decreased $50.9 million, or 5%, to $895.1 million for the year ended December 31, 2017 compared to the year ended December 31, 2016. The changes in Combined Historical Basis revenue were approximately as follows:

  • Local advertising revenue (including internet/digital/mobile) decreased $6.0 million, or 1%, to $459.6 million.

  • National advertising revenue increased $2.6 million, or 2%, to $122.1 million.

  • Political advertising revenue decreased $101.0 million, or 86%, to $16.5 million.

  • Retransmission consent revenue increased $53.3 million, or 24%, to $279.8 million.

  • Other revenue increased $0.1 million, or less than 1%, to $17.1 million.

Local and national advertising revenue decreased $3.4 million, or 1%, in part, as a result of the impact of the broadcast of the 2017 Super Bowl on our FOX-affiliated stations generating approximately $0.6 million of local and national advertising revenue, compared to $2.1 million that we earned from the broadcast of the 2016 Super Bowl on our CBS-affiliated stations, and the lack of revenue from Olympic Games in 2017 compared with $8.2 million of revenue from the Olympic Games in 2016.

Broadcast Operating Expenses.

On a Combined Historical Basis, broadcast operating expenses (before depreciation, amortization and gain or loss on disposal of assets) increased $17.0 million, or 3%, to $570.1 million for the year ended December 31, 2017 compared to the year ended December 31, 2016. This increase reflects, in part:

  • Retransmission expense (reverse network compensation) increased $26.9 million, or 24%, to $138.8 million, consistent with increases in retransmission consent revenue.

  • Syndicated programming and licensing expenses decreased approximately $1.7 million, or 7%, to $22.3 million.

  • Compensation expense decreased approximately $4.7 million, or 2%, to $284.4 million.

Detailed table of operating results on As-Reported Basis:

Gray Television, Inc.

Selected Operating Data (Unaudited)

(in thousands except for net income per share data)

           
 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

               
 

2017

 

2016

 

2017

 

2016

               

Revenue (less agency commissions)

$ 233,609

 

$ 237,619

 

$ 882,728

 

$ 812,465

Operating expenses before depreciation, 

             

amortization and (gain) loss on disposal 

             

of assets, net:

             

Broadcast

150,670

 

128,511

 

557,116

 

475,131

Corporate and administrative

7,105

 

8,922

 

31,541

 

40,347

Depreciation

13,418

 

11,686

 

51,973

 

45,923

Amortization of intangible assets

6,388

 

4,231

 

25,072

 

16,596

 (Gain) loss  on disposal of assets, net

939

 

395

 

(74,200)

 

329

Operating expenses

178,520

 

153,745

 

591,502

 

578,326

Operating income

55,089

 

83,874

 

291,226

 

234,139

Other income (expense):

             

Miscellaneous income, net

126

 

35

 

162

 

775

Interest expense

(24,070)

 

(23,766)

 

(95,259)

 

(97,236)

Loss from early extinguishment of debt

-

 

-

 

(2,851)

 

(31,987)

Income before income tax

31,145

 

60,143

 

193,278

 

105,691

Income tax (benefit) expense

(134,425)

 

24,309

 

(68,674)

 

43,418

Net income

$ 165,570

 

$   35,834

 

$ 261,952

 

$   62,273

               

Basic per share information:

             

Net income

$      2.15

 

$      0.50

 

$      3.59

 

$      0.87

Weighted-average shares outstanding

76,869

 

71,845

 

73,061

 

71,848

               

Diluted per share information:

             

Net income

$      2.13

 

$      0.49

 

$      3.55

 

$      0.86

Weighted-average shares outstanding

77,826

 

72,889

 

73,836

 

72,764

               

Political advertising revenue

             

(less agency commissions)

$     7,464

 

$   48,519

 

$   16,498

 

$   90,095

               

Revenue related to Olympic broadcasts 

             

(less agency commissions)

$           -

 

$           -

 

$           -

 

$     8,192

 

Other Financial Data:

 

December 31, 2017

 

December 31, 2016

 

(in thousands)

       

Cash

$                   462,399

 

$                  325,189

Long-term debt including current portion

$                1,837,428

 

$               1,756,747

Borrowing availability under our senior credit facility

$                   100,000

 

$                    60,000

       
 

Year Ended December 31,

 

2017

 

2016

 

(in thousands)

       

Net cash provided by operating activities

$                   180,015

 

$                  210,085

Net cash used in investing activities

(349,799)

 

(479,334)

Net cash provided by financing activities

306,994

 

497,120

Net increase in cash

$                   137,210

 

$                  227,871

 

Guidance for the Quarter Ending March 31, 2018:  

Based on our current forecasts for the quarter ending March 31, 2018 (the "first quarter of 2018"), we anticipate changes from the quarter ended March 31, 2017 (the "first quarter of 2017") as outlined below. Our estimates for the first quarter of 2018 include approximately $9.8 million of revenues and $6.8 million of broadcast operating expenses estimated to be contributed by the stations acquired after the first quarter of 2017.

   

Low End

 

% Change

 

High End

 

% Change

   
   

Guidance for

 

From

 

Guidance for

 

From

 

As-Reported

   

the First

 

As-Reported

 

the First

 

As-Reported

 

First

   

Quarter of

 

First Quarter of

 

Quarter of

 

First Quarter of

 

Quarter of

Selected operating data:

 

2018

 

2017

 

2018

 

2017

 

2017

   

(dollars in thousands)

OPERATING REVENUE:

                   

Revenue (less agency commissions)

 

$   223,000

 

10 %

 

$   228,000

 

12 %

 

$  203,461

                     

OPERATING EXPENSES:

                   

(before depreciation, amortization and

                 

loss (gain) on disposals of assets):

                   

Broadcast

 

$   152,000

 

14 %

 

$   156,000

 

17 %

 

$  133,471

Corporate and administrative

 

$      8,750

 

14 %

 

$      9,500

 

23 %

 

$      7,709

                     

OTHER SELECTED DATA:

                   

Political advertising revenue

                   

(less agency commissions)

 

$      5,000

 

279 %

 

$      5,500

 

316 %

 

$      1,321

Comments on First Quarter 2018 Guidance: 

We are currently negotiating two large MVPD agreement renewals and, while we cannot assure the outcome of the negotiations, we currently anticipate that the renewals will be retroactive to January 1, 2018.

Revenue.

Based on our current forecasts for the first quarter of 2018, we anticipate changes from the first quarter of 2017 as outlined below:

  • We believe our first quarter of 2018 local advertising revenue (including internet/digital/mobile) will increase by 1% to 2%.

  • We expect our first quarter of 2018 national advertising revenue will change by -3% to +1%.

  • We believe our first quarter of 2018 political advertising revenue will range between approximately $5.0 to $5.5 million, reflecting 2018 being an on-year of the political advertising revenue cycle.

  • We believe our first quarter of 2018 retransmission consent revenue will range between $85 million and $87.5 million, an increase of 26% to 29%.

For the first quarter of 2018, we anticipate our revenue will reflect a $13.2 million incremental increase from the 2017 Acquisitions.

Included in our forecast of local and national advertising revenue above, we anticipate that the revenue from the broadcast of the 2018 Super Bowl on our NBC-affiliated stations will be approximately $2.3 million, compared to $0.6 million that we earned from the broadcast of the 2017 Super Bowl on our FOX-affiliated stations. Our portfolio of NBC-affiliated stations is much larger and these NBC-affiliated stations serve larger television markets than our portfolio of FOX-affiliated stations.  In addition, we anticipate that our revenue from the broadcast of the Winter Olympic Games on our NBC-affiliated stations will approximate $5.0 million to $5.8 million; there were no Olympic broadcasts in the first quarter of 2017.

Broadcast Operating Expenses (before depreciation, amortization and loss (gain) on disposal of assets).

For the first quarter of 2018, we anticipate our broadcast operating expenses will reflect a $8.4 million incremental increase from the 2017 Acquisitions, as well as the anticipated increases in payroll and related employee benefits. Included in our first quarter 2018 broadcast operating expenses are network programming fees currently estimated to range between $42.5 million and $43.7 million, compared to $32.3 million in the first quarter of 2017. Non-cash stock based compensation expenses expected to be included in broadcast operating expenses are $1.6 million in the first quarter of 2018 compared to $0.3 million in the first quarter of 2017.

Corporate and Administrative Operating Expenses (before depreciation, amortization and loss (gain) on disposal of assets).

For the first quarter of 2018, we anticipate our corporate and administrative operating expenses will increase to within a range of approximately $8.8 million to $9.5 million, reflecting an anticipated increase from the first quarter of 2017 of approximately $1.1 million to $1.8 million as a result of routine compensation increases and higher legal and other professional fees in 2018 related to potential acquisitions. Non-cash stock based compensation expenses expected to be included in expenses are $1.0 million in the first quarter of 2018, unchanged from the first quarter of 2017.