Gray Media Inc (GTN.A) 2003 Q2 法說會逐字稿

Welcome to the Gray Television second quarter 2003 earnings conference call. Your host for today will be Bob Prather, President. Mr. Prather, please go-ahead sir.

Thank you very much operator. I want to welcome everyone to the Gray Television second quarter conference call. If you called looking for Vincent Young, you've dialed the wrong number. So, we are going to talk about Gray Television today and we're pleased with our results for the second quarter. We were on our guidance. We are ahead of last year with the comparisons on the political we feel very good about. We feel very good about our expense control we've had during the year and we continue to have. So Jim will go into more detail on the numbers.

I do think we owe a little bit of an apology to all our investors. For the first time since we bought control of Gray back in '94, we've had to change the format on our earnings release. Jim will go to more detail on that. This is some new SEC reporting guidelines, which are just, I think, going to be confusing but nevertheless, it's something we've got to live with and we are trying -- we always pride ourselves on having very informative, detailed numbers for investors and we want to continue that, but if there's any confusion, don't hesitate to ask questions or to call Jim or I later and we will try to straighten it out.

A couple of things that we are happy with. On HD, we have 23 stations broadcasting on HDTV at the present time. The balance of the stations will be on the air by the end of the year. So we feel very good about our progress on HD. We're actually a little ahead of schedule right now getting all our stations up and going on HD.

Something we're very proud of, we fully integrated the Benedek Stations Holding Group stations into Gray now. We feel like it was a very smooth process. We feel very, very good about the stations, about our managers and about how it fits in with our philosophy of being news leaders in the towns we are in, so we feel very, very good about it. We basically are saving a little over 4 million a year in overhead by doing this integration, which will be showing up in the years ahead. We have been holding our expenses very much in line for the year. We basically started out with a zero budget increase and I think on our actual operating budget, we will be hitting that for the balance of the year, so we feel very good about that.

We just recently moved our newspaper operations into a new facility in Gwinnett County outside of Atlanta, which we think will be much more efficient and productive. We have made an excellent lease deal and we're very happy about the continued growth and progress of our newspaper group.

We did refinance our 8 year senior notes in June, brought our rate down to 2.25 over LIBOR. It was 2.75, so it saves us close brighter to 2 million a year on 375 million of those notes.

We're in the process now of negotiating with King World, some renewals further out on Oprah. Oprah just announced she's going out to 2008 now. She previously said she was going to retire in 2006, so we are hoping to -- most of our stations have Oprah, we are working on a group deal there that hopefully, will help save us some money on Oprah going forward also.

Deregulation, something near and dear to all our hearts, as you know is still a little bit up in the air because of Congress and because they have set down September 4th as the date the new rules will actually go into effect, so they will be lifting the freeze on applications later this month. We have not seen anything in the duopoly area that was even slightly appealing to us at the present time price-wise so -- and I think as I mentioned before on this call, there's going to be more mistakes made probably than there are successes early on in the duopoly so we are hoping to sit back and learn from other people's mistakes. If the right opportunity comes along in one of our markets that we can do a deal at the right price, we are definitely looking, but just have not seen anything that appeals to us at this time.

We feel good about the rest of the year. Jim has got some guidance that we published that we have a lot of political to overcome although we do feel very good about the balance of the year. I might mention, we track our lead categories. Most of our categories of advertising are up this year. We basically, out of our top 10, we only have 3 that are down. Automotive continues to be strong. Communications has been very strong. Restaurants have been strong-- excuse me, furniture appliances and electronics have been strong.

Restaurant has been so so and entertainment has been strong, so we have had some pretty nice increases in our local business we feel very good good about. National has been spotty in different areas which is kind of par for the cost for national. That's why we like our dependence on local business. We hope to continue that. Our ratings are very good in May in virtually all of our markets. Most of our managers feel very very good about the upcoming book and feel like they are going to have a strong book in the fall also.

We feel good about the rest of the year and obviously next year, we are looking forward to the Presidential election, Olympics on NBC and 15 CBS stations with the Super Bowl in January, so next year obviously, could be a real boom year for us.

At this point I want to turn it over to Jim Ryan, who is our Chief Financial Officer, and let Jim go into more detail on the numbers and we will open it up for questions after Jim.

Thanks Bob. Hi, everybody. As Bob mentioned in the beginning, we did change the format of the published release this quarter to try to further comply with the spirit of regulation G, which you probably have been hearing about a little bit at other calls. I'll have some comments on some other numbers that you are probably used to seeing and also there's additional information published on our website or will be available on our website to kind of answer some questions that I know you probably already have and I will get to some of that in a minute.

As Bob said, I think we're very pleased with the quarter and the six months year-to-date. Certainly, it's within our expectation. The quarter was within guidance and we're pleased with the way the year has been shaping up so far.

I am going to keep my comments focused on 2003 compared to the pro forma results for 2002 where we combine the historical results of the pre-acquisition period. I think it's probably the only thing anybody is interested in, so I will again, keep my comments to pro forma comparisons.

For the quarter, total revenue was 76.6 million and was up about 2 percent. We're very pleased with that given we were back pedaling (ph) on political. Broadcast revenue was up 2 percent. We had very good growth in mobile. It was up 5 quarter over quarter on a pro forma basis and actually, national came on a little bit stronger than we had first -- would have first guessed and it showed growth of plus 7 percent. Those national and local numbers do exclude political, so it's just a pure nonpolitical local and national, but for the quarter, local again was up 5 percent in television and national was up 7.

Revenue, as we mentioned in the first quarter was a little stronger than we had anticipated. Again, we've got some kind of unusual off year Governors races in Mississippi and Kentucky plus some local municipal type races up in Wisconsin and again, the political activity in the quarter was more than we had anticipated and ended up at about 1.5 million but that compares to the 2.9 million from second quarter last year, so we still had 1.4 million of political that didn't return but overall total revenues were up so we're very pleased with that.

The broadcast expenses were flat on the quarter and as we have said before as well, we think that will be flat to down for the whole year by the time we finish out the year and our publishing operations were fairly consistent with results from last year.

For the six months, again our total revenue was up in television, our revenue was up about one percent, local being up 3 percent excluding political and national being up 4 percent excluding political so obviously, the strength of the second quarter helped make up for some ground in a little bit of a slow start in the first quarter. Political revenue for the six months was 2.3 million compared to $3.8 million pro forma results for last year. So there was still 1.5 million of political that didn't return but our total television revenues were up and as we mentioned in the first quarter call, you got to keep in mind that in the first three months of the year of 2002, we had on a pro forma basis, about 2.2 million worth of revenues associated with the Olympic telecast last year. Obviously, there is not a similar event this year, so all in all, we feel very good about where we tracked in our broadcast operations for the first six months of the year. And again publishing was up about two percent and its retail operations, retail advertising and publishing was actually up a pretty healthy 5 percent.

A couple of quick comments on third quarter TV pacing. This would be as of last Thursday August 8 when we do our weekly reports but for the entire third quarter, as of last week, again excluding political, our pace was plus 3 percent. We are 85 percent of goal for the entire quarter. Local was pacing a healthy plus 4 at this point and national is in plus territory at about 1 percent although it's actually come up a little bit in the last couple of weeks, so we think maybe the national side is picking back up a little bit.

Political revenue in third quarter, we expect is going to be pretty light. It looks like we've got about 400,000 gross dollars on the books right now versus a budget of about 200,000 but that's going to be well, well below the 6.5 million of political -- net political that was in the third quarter of 2002 on a pro forma basis.

Focusing on the balance sheet a little bit, total debt was 656.4 million. Cash on hand was about 14.8 million at the end of June and that was, keep in mind we had basically a $13 million sub-note interest, semi-annual sub-note interest payment due in June so we used some other cash on hand to pay for that. We have no borrowings currently on our 75 million revolving credit facilities so that line to date has been completely unused. Our leverage ratio was at 5.67 times, which is actually down a little bit from the beginning of the year.

Total assets on the balance sheet were nearly 1.3 billion. We still had (technical difficulty) series C preferred stock outstanding. We have approximately 50.6 million shares of common stock currently outstanding.

Capital expenditures for the quarter in total were about 3.9 million and about 1.5 of that was DTV related CAPEX. Year-to-date, CAPEX is about 7.6 million and our DTV component of that number is 3.5 so far year-to-date and that DTV number will (technical difficulty) as the year progresses as we finish off several more stations before the end of the year.

I often get the question, so I will try to head it off to begin with; cash taxes for the quarter were 200,000. Year-to-date, it's about 1.2 million and I don't see that number increasing the rest of this year. We contributed in company stock about 330,000 to the 401(k) plan so that is a noncash charge in the second quarter and noncash charges for the 401(k) plan year-to-date are about 1.2 million. As I said in the first quarter call, I expect total 401(k) noncash (ph) to be about 2 million by the end of the year. Program amortization versus payments were nearly identical for the quarter. Amortization was 2.7 million and payments were 3 million and on a year-to-date basis, the numbers are identical at 5.4 million and I don't see a big difference, there will not be a big difference between film payments and film amortization during the entire course of the year.

The guidance we published in the release again, the format is a little bit different but that's trying to keep in the spirit of regulation G; we think total third quarter revenues are going to be somewhere between 72 and 73 million. The broadcast revenue is between 59 and 60 million compared to 63 million third quarter pro forma last year but again keep in mind there is about 5.8 million of political not returning, so we think where we will end up for the third quarter this year is doing very well versus the large political number from last year. Publishing, we expect to be flat to about -- up 2 percent in revenues during the course of the third quarter.

As I mentioned earlier, kind of looking ahead for the whole year, cash taxes in total will be about 1.2 million. Our program payments and or program amortization for the whole year will be right around 11 million and our 401(k) noncash charges for the stock we contribute for the 401(k) plan for the whole year will total about $2 million.

Again, trying to answer some obvious questions, I'm sure some people are going to ask what happened to our terms media (ph) cash flow that we have been reporting for long time and or the term operating cash flow. Again, it's a little difficult to use non-GAAP measures in a formal earnings release, but certainly, we have those numbers and have calculated them consistently with prior period. Our trailing 12 months, what we now call adjusted media cash flow which is what we used to call operating cash flow, so it basically means that corporate overhead has been included in arriving at the final number, but trailing 12 months number is 113.2 million. Again, given our debt levels has produced a leverage ratio of 5.67 times which is down from the 573 that we were at the end of the year.

Our media cash flow for broadcasting was up both for the quarter and year-to-date. The quarter was up about 5 percent and year-to-date, we were up about 2 percent so again, given the political that didn't return from last year plus the Olympic events last year that we didn't have this year, we're very pleased to say that on both a second quarter basis and a year-to-date basis, our media cash flow in broadcasting and for that matter in publishing, in the quarter --was in the six months is both in positive territory so we're very pleased with our results.

On our website, our full reconciliation of our non-GAAP measures media cash flow and adjusted media cash flow and you can easily access those reconciliations and get all kinds of detail if you're interested by going to the tab on our website, financial reports and then go to the subheading that says non-GAAP financial statement reconciliations and if that information hasn't already been posted yet this morning, it will be posting very shortly and will be certainly readily available by early this afternoon and I believe it's already been posted.

At this point, I will turn it back to Bob.

Thanks Jim. Jason, at this time, let's open it up for questions.

Mark Nabby (ph).

Thanks very much. Good job on the detailed information so thanks for all that. I want to get a better sense if you've also done on your web site talk about the broadcast detail. You've done a good job in the past, I just want to know if it's there as well, related to the different segments, whether it's local, national, political or network compensation. Is that on there Jim?

No, but I would happy to make some comments about what was up and what wasn't on a pro forma basis. As I said earlier, for the three months, local was up 5 percent, national was up 7 percent. Obviously, our political was down. The net political difference was about -1.3 million. Our network revenue was flat and our production and other for the 3 months is down a little bit as well. For the six months, local and these are all net numbers by the way, local was plus 3, national was plus 4, our network was essentially flat, the political was up -- or I'm sorry, the political was down about 1.5 million year-over-year. So that --

Perfect, I got the information. Also, could we talk a little bit about corporate overhead? You guys have done a good job of basically streamlining costs, cut costs and you expect this to be about $1.5 million in the third quarter. Is that a decent run rate going forward or do we expect even further cost cuts to occur?

I think there might be a little opportunity into '04 to trim that down a little bit more. Some of the costs to date, year-to-date, are still transitional related costs as we shift and combine and the main overhead numbers from the acquisition have already been trimmed out but there are some transitional costs that have taken us -- taking a little bit longer in time and a few more dollars than we would have anticipated but I think that number is likely to come down a little bit further as we get into next year.

Okay. Also, just one last thing. Either for you or Bob, just talking about pacing data. Can you talk about how the months have progressed so far? What you're seeing for example on some of other companies? They're saying are things ex political, slowly getting better month by month. Are you seeing that trend in your markets and also maybe just commenting on how your markets are performing relative to the industry.

I will let Bob handle the relative to the industry. More specifically to how we see the quarter breaking down, it's a little mixed and actually, the pattern is not terribly dissimilar to what we saw in the first quarter and second quarter. It looks like and again, this excludes any political and is done on a pro forma basis to last year. As I said the overall quarter was pacing up about 3 percent as of last week with local up 4 and national up 1. July looks like it came in about plus 5, with local being plus 8 and national basically flat. August right now, looks flat and that's -- that would be -- it appears to be the weakest month of the quarter and we saw the same thing for whatever reason in Q1 and Q2 that the middle month of the quarter seemed to be less robust than the other two months so right now, August is pacing more or less flat, local is about plus one and national is about flat although we did see see some late activity in July pickup and it may very well be the case that later in August, we see a little pickup as well. September right now is plus 3 with local being plus one and national would actually be plus 5 right now so it's a little bit of a mixture. I think local will come along in September as we get closer to the month.

You're basically seeing national starting to pickup?

We're seeing that a little bit Mark. I think, as we talked about before, national seems to kind of jump around a good bit. I think the guys in New York and Chicago decide they are going to our dollars into a certain area for whatever reason in the towns the size we are in and sometimes, we've got good national going in some areas and other areas, it gets pulled out and you can see the difference. Here again, we, day in and day out, go to the bank on our local business and we feel our local business has been consistent and will continue to be consistent for the rest of the year and we think we are right at the top of the business, as far as our basic ad growth for the rest of the year.

Great, thanks very much.

Thanks.

Grant Jordan (ph).

Yes, a couple of detail questions. How much was cash interest in the quarter? And what is CAPEX budget for the year, for '03?

Cash interest for the quarter, bear with me half a second.

No problem.

The answer is, in reverse, there is about 450,000 of deferred charges that run through the interest expense line. Everything else is cash interest.

And you had a sub-note payment during the quarter right?

Yes but that was a semi-annual just shy of 13 million. That would have been reflected through the work -- the interest accrual line.

Right okay. And CAPEX for the year?

CAPEX for the year, we are taking those numbers up a little bit more from where we were earlier in the year. I think our DTV CAPEX is going to be 13 to 13.5 this year, but the good news is that some of that is dollars shifting from '04 into '03 since we are actually running probably a little bit quicker on our schedule. The DTV in '04 is probably around 8.7. As we said in the first quarter call, we were buying land and power not far from our current Tallahassee television station. That transaction is $2 million and actually, we closed that last week so that will add to the total and as Bob mentioned, we relocated our Gwinnett paper to larger facilities in Gwinnett County and also are in the process of moving our printing production facility from Rockdale County up to Gwinnett county for the Atlanta papers. That's part of another million so when we are all said and done, including DTV -- this may end up being a little on the highside. We may end up in the 22 to 23 million range of CAPEX this year. I think the numbers for next year will end up being either in the same range we have done talking about or actually may be a little bit lower since as I said some of this is DTV cost shifting from one year to the other.

Great, thanks.

Drew Marcus (ph).

Actually this is Will Himmons (ph) stepping in for Drew. A couple of quick questions. One, if you could give us an idea of what political was in 4Q '02? And two, if we could expect a similar tax rate going forward throughout the remainder of the year? Thanks.

I didn't quite catch that, which political number do you want? 2002 was 25 million roughly for the year.

For the year? For the year? Okay.

That's what you wanted, right?

I'm sorry?

That's what you're asking?

For 4Q '02, what it was in the quarter if you guys had that number?

Fourth quarter '02 pro forma political was about 10.3 million.

Okay great. And the tax rate, we can expect a similar tax rate going forward for the remainder of the year?

I'm sorry. I misspoke. Let me clarify that. I read the wrong column and I apologize. Pro forma Q4 political in 2002 for the quarter only was about 15 million. The total political as Bob said for the year pro forma was 25.3 million. And yes, the tax rate for the year shouldn't change. As I said we paid in cash taxes about 1.2 million. We don't expect anything further. As we file our state returns next month, we actually might be able to recover a couple of those dollars and a little bit of that has already paid as estimate so cash taxes, I don't expect going up at all. I don't expect any further payments the rest of the year.

Okay and book to taxes would remain about the same rate, the 38.6 I think it was in the quarter?

Yes.

Great, thank you.

Victor Miller.

Good morning. Two quick things. By the way, thanks for telling us earlier this wasn't the Young call. I was going to ask you how KRON was doing.

(laughter)

So I am thankful for that. First thing on the waiver, the waiver process on the duopolies in smaller and midsize markets seem to be pretty open with the UHF, adding news, competitive advantage so it looks like you won't be shut out in a lot of your markets in trying to look at that. I am interested in your comment saying you're going to other people make mistakes but you think that you also have some opportunities there that maybe we didn't expect given the waiver process. Can you talk about how you are going to be looking at adding duopolies in the markets where you thought you wouldn't be able to given the waiver criteria. And then a quick update please, if you would, on management, the revenue opportunities you have seen and cost opportunities you're seeing incrementally to the merger with the station holdings? Thanks.

Thanks Victor. We are looking in most of our markets where it might make sense. As I mentioned, the problem we are seeing is people have very unrealistic notions of what properties are worth. The deals that have been proposed to us, prices have just been -- I don't want to use the term outrageous and start from there, but it's nothing close to something that we felt would make sense for us to put together. But we are continuing to look and I think some of these things will get more realistic if nobody takes the bait on these deals, which I haven't seen any of them signed up so far.

So I think that -- I do agree with you, the waiver process, and Bob Bisers (ph) our general counsel in Washington tells me that he has been spending a lot of time with the FCC and with finding out exactly what -- how the waiver process is going to work and it does seem to be that they are going to be open to listening to proposals where you can show you're trying to bring more news into a market or trying to bring more community involvement into a market where there may be a station that is doing nothing but showing old movies or something like that. So I think that is something, the water will get tested fairly quickly on once the rules take final effects next month. So we are going to be looking at that area but as I said right now, we do not have anything on the plate.

As far as management, we're very very happy with the structure, the way we've our six regional Vice Presidents set up now. We've got three great regional VP General Managers and three old Benedek people who are -- at various stations under them. We feel very good about it. As I mentioned earlier, I think we're going to save over 4 million a year in overhead going forward. We do think there is some more savings like Jim mentioned that we are identifying. In the months ahead, we will start budgeting for next year pretty soon and we hope to identify more savings and we're going to continue to keep a pretty tight rein on expenses and make sure that we are watching the expense side of the ledger going forward. But we feel very, very good about the integration of the Benedek acquisition and the Reno (ph) which is doing great by the way, so we are very happy with those deals we made last year and they are one of the rare cases where they are even better than we thought they were.

Jim, can you just remind us what is your NOL position right now? And thank you very much.

Our NOLS in total are roughly 100- federal NOLS are roughly 190 million. As I said before, I don't envision being a federal taxpayer until maybe '06 and that presumes a static steady-state model so we're in good shape there with NOLS and it'll be a while yet before we start paying federal taxes.

Thanks.

Lee Westerfield (ph).

Thank you very much, good morning gentlemen. I have three questions if I may. First if you can update us with regard to tower damage in one location coincident with collapse at one of their (inaudible) facilities, if you could update us on that? Secondly, if there's any change at all in your current recent thinking about your paging (ph) business either strategically or otherwise? And the final question may seen like a nuance point but when you're speaking about your pacings into the September and forward, you were speaking about pacings as of last Thursday. I want to be sure that I understood that clearly, meaning you would not a year ago have gotten into the more difficult period of political buying I assume?

Okay. I'll take those first two and I will let Jim answer the pacing. We did have a storm damage I think it was July 4 weekend. Our tower in Rockford, Illinois was blown down by major --- I think it was 115 mile an hour wind storm. We had insurance on the tower. We had a deductible obviously, but we are in the process of rebuilding the tower right now. We are actually on the air on cable and a temporary antenna on the Fox tower there, so we're recovering 90 percent plus of the market. We're covered by business interruption insurance if we have any problem with any advertisers, but we are in the process of rebuilding the tower and actually hopefully going to build a little bigger and stronger tower so we can lease some space on it to some other carriers.

We also in the same weekend, the Hurst Argyle (ph) tower in Omaha was actually blown down by a storm, hit our tower on the way down and did some damage, not significant, up around the 1000 foot level. It's being repaired right now. Hurst has been very very cooperative and helpful and they told us they are fully responsible obviously, but we are in the process of repairing that damage. It doesn't look like there's any interruption there, as far as business goes, so we feel like we are very fortunate there and also very fortunate in Rockford to get back on the air very quickly. We were back on the cable within six hours and within a week, we were back up broadcasting over the air TV for Rockford, so it was a bad weekend, but it turned out to be overall as far as economically, not bad for us but certainly disruptive and we had a lot of people working a lot of hours around the clock to get Rockford especially, to get us back up and running so we feel very good about our situation there.

Your second question Lee was -- hello?

Sorry, it was about your paging business.

Oh paging. We get asked that frequently. As I have told people before, it is not a core business for us. We have been very happy with the management there. We continue to have very good positive cash flow. We aren't spending any money on the business as far as very little capital needs and we just hope to continue to have positive cash flow into the future. We don't see much chance of selling it for a decent price where we could replace that cash flow or pay down enough debt to replace the cash flow and like I said, we're very very happy with Bob Shermatt (ph) and our management team there. It's -- ideally if we could get a good price for it, we would sell it but we do not see that happening and we are very happy to continue to get a good cash flow out of it for several years in the future. Jim, I will let you answer the pacing question.

The reference to last week Lee was just that we run -- we get that reported once a week and I was just referring to our latest numbers from last week.

Fair enough. The particular question then is a year ago, at least most television operators booked their political advertising during August and during September, obviously during October as well. In other words, not much booked in advance so the pacing comparison really becomes stiffer generally in August and September and I think the same is true for you. But I wanted to make sure I understood.

Yes, the political grows -- you're right. The political numbers we ultimately go against get increasingly larger, August, September and October.

Fair enough. I assumed so and I appreciate the help in understanding that.

Thanks Lee.

John Kornright (ph).

Just a few quick questions. One, I was surprised corporate overhead was up 7 percent. As a matter of fact, I was surprised it was up at all on a pro forma basis. I though that was one of the areas where you get operating leverage with the down corporate overhead. Second, talk about trends in Knoxville, (inaudible) the relative standing. Are you closing the gap at all versus the Gannet (ph) station and just for clarification for everybody on the call, I think you're doing a little apples and oranges when you talk about political. Isn't your political -- when you give political numbers, that's gross, isn't it and you are reporting in net?

I will take the political question first, John. Whenever we speak of a pacing number, it is a gross number simply because that is the easiest way for our sales systems to produce the pacing results. However, whenever we report numbers for financial purposes, we are always talking about a net basis --

When you talk about 25 or 26 million in political, that's gross, right?

No, that's net.

Oh, okay. Okay. Knoxville and corporate overhead?

Jim, do you want to take the corporate overhead and I will take the Knoxville?

John, there are a couple of things going through the corporate overhead that make the numbers look a little bit larger. One is we talked about in the first quarter call, there were some -- in the first quarter there were some catch up bonus charges that went through. It's really a non-recurring event so that will go away and as I said earlier, we are getting -- some of the cost is a little bit of what I would describe as transitional issues with the acquisition and the closing of the Chicago office and it's things like getting final year tax returns for predecessor ownership filed and we made a conscious decision to use the accountants that had been doing those returns before. We, Gray does its own returns in-house but we just didn't have the capability of doing both sets simultaneously, but it's little things like that that I think will -- they add up a little bit but once we get through this year, it settles itself down.

John, I will assure you that you will be happy with the corporate overhead figures for the year and going forward.

Can you talk about Knoxville?

Knoxville, Knoxville is a great example of the strength of our company on one hand and also, to use the phrase if it was easy everybody would be doing it. Having 23 number one stations out of 29, we like being the top dog. In Knoxville, we're not the top dog and it's very hard to move up -- we are number two overall in the ratings there. We're still number three in news. As you know, we started out from scratch in 1997 with a news product there. We've had a couple of fits and starts. I would say right now our news product is excellent. We've had some ratings increases. We've still not broken through to be number two in news.

The number one station there WBIR is a Gannet owned station that's very well-managed. They haven't stumbled very much along the way. So, we're making progress. We've doubled the cash flow in that station over the last couple of years. And we think we've got a great management team there but it is a slow long process to take a number three station that had no news, make it a full 21 hour a week news station and try to move it up into a strong number two and challenge number one and like I said, that's the good news for us in the rest of our markets where we are a strong number one, but it's our biggest upside. As I said, we think we are going to continue to grow there and what we thought was a 5 year project is probably a 10 year project, just to be very honest about it.

Last question, I forgot to mention, your newspaper trends are very flat. Any reason to think they won't continue very flat?

That's a good question. I would say we've still got good growth in Gwinnett going forward. We think we've got good growth in Rockdale because we've gone into Newton County, which is an adjacent county where we see good growth and it is a much bigger county. Had a weekly there we're competing with that we feel like we are doing a good job on. Albany is definitely a challenge from a growth standpoint. The market there seems to be a little bit stymied as far as growth goes and it continues to be tough. But we've got a great management team and we are going to have a good year in publishing and they are already talking about having a much better year next year so.

I will tell you that just in Gwinnett for example, classified want ads have come back strong recently and there are indications they will be strong for the rest of the year which is a good sign for us and for everybody if the want ads start -- the classifieds and help wanted ads start going up again. But our newspaper group is very very well-managed as you know and we feel very good about it and we think it's got good growth potential ahead.

Thanks.

Thanks John.

Mr. Prather, there are no further questions at this time sir.

Thank you operator. I want to thank everyone for participating today. I will tell you the same thing I have always said, don't hesitate to call Jim or I, either one, if you have got any other questions. I know the new format may create some questions, so please don't hesitate to call and we will try to go through as Jim mentioned, there is more detailed numbers available on the web site that will explain some of this stuff. We're looking forward to the rest of the year, feel good about it and we look forward to talking to you again at the end of the third quarter. Thanks everybody.