Gray Posts Loss After Buying Stations

May 9, 2006  •  Post A Comment

Gray Television reported a first-quarter loss of $3.4 million Tuesday, compared with a profit last year, as the acquisition of two television stations countered an increase in advertising sales.

The recent purchases of WSAZ-TV in Charleston-Huntington, W. Va., and WNDU-TV in South Bend, Ind., led to a 22 percent spike in operating expenses in the quarter, the Atlanta-based company said today in a statement. Gray, which owns 36 TV stations, said local and political advertising sales rose last quarter, helping to boost revenue 17 percent to $68.2 million.

The increase in operating expenses this quarter resulted from Gray’s plan to add digital channels, the company said. New digital channels accounted for 65 percent of the increase in the company’s revenue. The company is striking affiliation agreements with Fox, The CW and MyNetworkTV for the 25 digital channels it plans to have by the end of the year.

On a per-share basis, Gray’s loss was 7 cents, compared with profit of a penny a year ago. Net income a year ago was $1.3 million.

Political advertising spending rose sixfold to $1.8 million, which contributed to a 19 percent rise in local advertising. National advertising grew 13 percent in the quarter.

Costs associated with the recent acquisition of WSAZ and WNDU, and the launches of new digital stations increased 21 percent to $57.2 million. Excluding the station purchases and launches, expenses rose 7 percent, mainly due to employee compensation and a slight rise in programming costs.