Compensation Pushback: Gray Challenges Networks
A top executive at Gray Television said he thinks networks are ultimately aiming to collect 50% of what station groups pull in from cable and other operators, but his company intends to push
“We feel very strongly that they don’t deserve that number ,and we think we’ve got good evidence that we bring viewers to them and not vice versa. So we’re still going to negotiate hard on it,” said COO Bob Prather on an investor call Wednesday.
Gray continues to negotiate with NBC on an affiliation deal that will include reverse compensation, allowing the network to grab some of the dollars Gray gets in retrans consent payments. Gray’s deals with ABC and CBS don’t expire until after 2013. It’s done a small deal with Fox.
Prather did say Gray has a strong relationship with networks and aims to maintain it, but much of its revenue (50%) comes from the local news it produces.
Gray, which has at least eight stations affiliated with ABC, CBS and NBC mostly in small markets, reported a huge bump in revenue (34%) in the third quarter to $102.9 million, fueled by political and Olympic dollars for a combined $23.3 million.
Local and national advertising (the company gets more than 70% from local) were both up 4%, with the auto category up 25% and restaurants declining 13%. The company continues to have a consulting deal with Young Broadcasting, which brought in about $600,000 and will expire at the end of the year.
At $50.7 million, the company said broadcast cash flow set a record for the third quarter, significantly topping 2010, which did not include an Olympics or presidential election.