Gray suffered a loss of $10.7 million versus a $3.1 million profit a year ago.
Gray operates 36 stations, preferably in mid-size markets with state capitals or major universities, such as Topeka, Kansas or Lexington, Ky. The company is set to begin managing seven more stations as part of a deal with bankers who are taking control of Young Broadcasting, which has filed for bankruptcy.
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The arrangement still needs approval by the FCC. But Gray would receive a $2.2 million annual management fee through 2012, plus various performance incentives -- and a small percentage of a sale price if the stations are sold for more than $250 million.
Gray COO Bob Prather said the deal brings "a lot of upside and virtually no downside." (Gray's contract could be terminated if it fails to meet certain specified goals.)
The Young stations include the ABC affiliates in Nashville, Albany, N.Y. and Richmond, Va. Nashville, the 29th-largest DMA, will be the largest market Gray will have a presence in.
"They're good stations; we hope we can make them better," Prather said. Both he and Howell spoke on a conference call to discuss second-quarter results.
Total Gray revenues in the second quarter were $65 million, a 17% drop versus a year ago. Not accounting for the political dollars Gray garnered a year ago in a federal election year, the decline ebbs slightly to 15%.