Gray Media Inc (GTN.A) 2003 Q4 法說會逐字稿

Good morning and welcome to the fourth quarter 2003 earnings results conference call for March 8, 2004. Your host for today will be Bob Prather, President of Gray Television. Mr. Prather, please go ahead.

Thank you very much. Welcome, everybody to our fourth quarter year-end 2003 conference call. We had a very good year in 2003. We're very pleased with our results. In a nonpolitical year, we thought we really had a great year. We were right at the top of our industry as far as our peer group goes with our revenues, our cash flow, our free cash flow, our margins were at the top of the industry. Our corporate overhead, I think is the lowest in the industry. We still have 22 stations number one in their markets, sign on to sign off and number one in news which I am very, very proud of and we continue to strive to be number one in all of our markets. But we're very, very pleased with the results of our continued leadership in the news area.

During 2003, a few things, we completely integrated all the Benedek stations in Reno and a great organization and I'm happy to say that both of these acquisitions are better than we thought they were. Both the stations, the city, and the management we got. We did close the Benedek headquarters eight months ahead of plan. Saving roughly $4 million a year in corporate overhead. Moody's raised our bond rating to B-1 from B-2 which we are very proud of.

We actually, we refinanced our bank debt with interest rate lowered to 2.5, from 2.5 to 2.25 over LIBOR. Saving us almost $2 million a year in interest. We think we've achieved efficiency in operations in some of the Benedek stations, and the Gray stations working together, probably $2 million a year going forward this year and next year. We leased and moved into a new building for our newspaper in Gwinnett County which we're very, very proud of. We kept our expenses pretty much flat again, basically our expenses at this point are lower than they were in 1998, which we're very, very proud of.

We signed a deal during the year to be paid by Direct TV and EchoStar for satellite local carriers in all our television markets, I think they're up and running in eight or nine of our markets and on track, hopefully to be up in all of them by the end of this year or early next year.

One interesting thing, we did a very valuable settlement with the IRS. They had close to a $20 million claim against us in cash. And we're challenging $180 million of tax loss carry-forwards. We were able to settle that with the IRS by paying no cash. We gave up $14 million in losses, which will eventually cost us some money down the road, probably $5.86 million of future taxes, and we are also getting $1 million refund.

We renewed our King World deal with Oprah, Wheel of Fortune and Jeopardy for 18 stations. An excellent deal with them. We're very, very happy with that. And overall, it looks like 2004 is starting off very strong. So far, we are ahead of budget for January and February and March is looking good. Most of our managers feel very, very positive about this year. Both with and without political, we had CBS had the Super Bowl, 15 stations, and that was a good day for us. And we're looking forward to the Olympics coming up with our NBC stations in August. So we feel like we're going to have a very, very good year.

At this point, I would like to turn it over to Jim Ryan and let Jim go into more detail about the numbers and then we will open it up for questions at the end. Jim?

Thanks, Bob. Good morning to everybody. Just as a reminder, the reconciliations for any non-GAAP terms, which are used to seeing media cash flow and our "adjusted media cash flow" which used to be called operating cash flow, those reconciliations will be posted to our web site today, so everybody can get those details as necessary.

As Bob said, we think it was a great 2003. Considering it was an off-political year. Talking a little bit on the first quarter and I will keep my comments focused against pro forma numbers because of the impact of the acquisitions in 2002, but we're very pleased that in the fourth quarter, broadcast revenue, local was up 9%, national was up a healthy 6%. Now, obviously we had some very, very large political numbers to go against from last year.

Our political in '04 actually was higher than we had anticipated, $2.3 million, but that compares to $15.1 for a very healthy 2002 political number. So all in all, we're very pleased with broadcast revenue results going against some very strong political in '02. And operating expenses for broadcasting, we're a couple percentage points below the prior year, we're pleased to see that. Publishing had a good quarter as well.

Looking to the full 12 months results, again, we are very pleased. The baseline growth in our broadcast revenues, our local was up for the full year about 5% on a pro forma basis. National up 4%. As you will recall, we had said all along, all year, we would be very happy to see solid single digit growth this year. Especially given some of the uncertainties and a little bit of the sluggishness that was in the first part of the year, so we were very pleased that we basically hit the targets for the year.

Our political in 2003 was a little bit stronger than we had anticipated. Mississippi and Kentucky, off-year governor's races, ended up pushing the total political number for the year to $5.7 million. Of course, that would compare against $25.4 million from '02. But with the growth in local and national, that was about $10.8 million that that grew, excluding the political. So net impact, as we were able to replace about 55% of the political from a record-setting political year, and we think given the volume of political last year, we're pretty pleased with that.

As another reminder, keep in mind that the '02 pro forma results had about $2.2 million worth of Olympic revenue that obviously we didn't have a shot at in 2003. For the full year, broadcast expenses were slightly down, about 1%. Again, we're very pleased to be able to keep the expenses in control. And publishing ended up the year with revenue moving up about 2%. Retail was healthy, with a 5% increase for the year. Circulation, classifieds were about flat.

I'm going to shift my comments to first quarter and, of course, we've published very detailed guidance in the earnings release with our guidance for first quarter. To translate that guidance a little bit, because I think I probably -- I've already been told I should have put in a comparative column to '03 and we'll start doing that second quarter, but the broadcast revenue guidance would equate to about a 12-14% increase quarter over quarter.

Overall net revenue increased for the entire consolidated company would be plus 10 to plus 12. We think it is a very strong quarter for us and we're very pleased. Operating expenses, overall, would be up 2% to maybe 4% on the high side, which is not necessarily indicative of the entire year. That translates into EBITDA growth in broadcast of about a solid middle 20% increases, somewhere between 24 and maybe closer to 28. And an overall increase, even after including corporate overhead, an overall increase of EBITDA on our first quarter guidance of 22-24%. We are very, very pleased with what we've seen in the quarter so far.

Let me talk about our pacings to date. As of last Friday, and these comments are going to exclude political, this is just local and national business, without political. Our total pace as of last Friday for first quarter was up 9% in television. We were already at 101% of budget and going north of that. Local pace has been very strong at plus 11. National has been a very healthy plus 6. January, we were up plus 7 overall. Plus 6 on local. Plus 8 nationally.

February, with the Super Bowl, we were up plus 14 in total, plus 16 in local, plus 9 in national. The Super Bowl provided us about $650,000 of revenue for a couple of hours on a Sunday afternoon or Sunday evening, so we were very pleased with our February. March is pacing at plus 8 which is a very healthy rate. Local is still up double digit around 11%. And national is up a couple of percentage points.

Our political for the first quarter is also done very well, slightly better than expected. We're looking to be probably close to $2.5 million, maybe a little bit more. That compares to $740,000 for first quarter '03. And compared to about $908,000 for first quarter '02 on a pro forma basis. So the political got off to a good start. And we're pleased to see that.

The very, very early pacings for April and May also look encouraging. And we don't usually talk about things that far out. But given that they look encouraging, we're going to make some comments. Again, as of last Friday, excluding political, April was up 16% in total, May was pacing up 17%. We have about 50% of the budgets booked for those two months already. So we are encouraged by the way early second quarter is shaping up as well. And it looks like the Presidential race has begun to heat up with some early initial dollars being placed by both major candidates. Not a lot yet, but it looks like the spending on both sides of the aisle for the fall is going to start earlier than at least we would have first guessed so that is hopefully a good sign for political spending for the entire year.

Real quick on the balance sheet, at the end of the year, we had $655.9 million of debt. $11.9 million of cash. Our leverage ratio was 6.06. And we had said we -- before, we thought we would be just a tad over six and ended up right about where we expected it and that will rapidly come down as we move through 2004. Trailing cash flow to get to the leveraged number was about 106.2.

Shares outstanding at the end of the year were 49.8. As of March 1, we had an even 50 million shares outstanding. Capex for the total year ended up being about 22.3 million, of which our digital costs were about 12.3 million. And regular Capex was about 10%. Cash taxes for the year was just under $500,000. We picked up some refunds from some state taxes late in the year. To bring the net number in at about $500,000 in cash taxes. As we've talked before, we will not be a federal taxpayer for several years yet.

Our contributions to our 401(k) plan, our noncash, and that was about $2.5 million, and our program payments ran about $11 million, and our program amortization expense ran about $11.1 million. So again, we're very pleased with the way fourth quarter, as well as full-year 2003 shaped up. And we are very, very encouraged and pleased with the first quarter that we're seeing so far in early second quarter.

At this point I will turn it back to Bob.

Jim, thanks a lot. Operator, at this time we would like to open it up for questions for the listeners.

Thank you. We will now begin the question-and-answer session. To place yourself into the question queue, please press star one on your touch-tone phone. If you are using a speaker phone, please pick up your handset and then press star one. If your question has already been asked and you would like to withdraw your question, you may press star two. Once again, if you have any questions please press star one. Your first question comes from Mark Naby, please state your company name.

Hey, guys it is Mark Naby with Merrill Lynch. I just wanted to ask two questions. One, are you seeing what states exactly is Bush going after, on his political campaign spend here? The first question. The second one, or Jim, could you talk about categories where you're starting to see strength? Obviously, you've had some very healthy numbers. What is going on with respect to auto spending, obviously people are talking about that. And also maybe talk a little about just HDTV and maybe types of arrangements you will work with on the satellite TV front or just really on the cable side.

Mark, from your question on political, we're definitely getting some political money in Wisconsin. We got three stations there. And then Rockford is on the state line, although we haven't been seen anything from Rockford yet. But that's the main state where we're seeing Bush money so far. We've been asked for avails in other areas but he's definitely going to be spending money in Wisconsin. I think they think that is one of the key states, I guess, both sides really want and must be up in the air. I will let Jim answer the other questions.

Mark, first off, for 2003, in talking about the categories, whether it is fourth quarter alone or looking at the whole year, auto was relatively healthy, up about 5% for the year. It represents about -- for the year, about 27-28% of total business. The other major categories were all again pretty healthy. We saw a very sizable increase in communications during the year, in part I think it is the portable cell rolling into the top 100, along with, just in general, share wars among the big cell providers, that was up about -- year over year, about 25% and it accounts for about 5% of our total revenues. Entertainment was up about 9% for us for the year. Medical, dental, about 6%.

The only place we really saw any kind of softness was in the department discount, the discount department category. That was down for us for the year about 14%. But that was obviously well offset by the increases in automotive, communications, entertainment, basically, what we saw in '03, we think is relatively broad-based. What we're seeing in early '04 is not dissimilar to what we've seen in '03 so far. Auto is up in Q1, still tracking about 26-ish percent of total. Communications is up very strong again as well year over year.

Jim, can you give us magnitude? I mean do you mind?

In communication --

And auto as well.

Well, quarter over quarter, it is up about $400,000, and it is representing about 6% of the total. Financial, dollars are not up, the dollars are about $200,000, but it represents a double-digit increase year over year. Again, medical, dental, categories, dollars are not big, but it is a double-digit increase. And again, continuing as we saw in all year '03, and the only real weakness we're seeing so far is in the department discount store that's still trailing behind at about the same rate it was in '03. And entertainment is down a little, but I think that is mostly just timing of releases, and the dollars are not huge, so it is more of just what was out there to advertise in Q1.

And we had asked before, the question related to, what are you seeing in the marketplace with respect to HDTV, the rollout of that, with respect to satellite, I know you have a very good relationship with EchoStar and Direct TV, what have you heard there as far as their desires to do it, and also, utilize your HDTV services?

Jim, I will take it. First of all, we've got all but two stations broadcasting right now in HDTV. I think everybody in our industry is still behind the curve from a standpoint nobody can figure out how we're going to get HD off a dime and really get it where it is the dominant median that people are watching. And I think I heard some comments at a conference recently that the speaker was saying that he thought that it would be in 2007, HD sets should be about 30% of the market. And at that point, they kind of consider that a tipping point for other technologies in passing, and you go from 30% to 80 or 90% pretty quick after that. So I think we've all just got to -- we spent a lot of money and the whole industry has and we've just got to be pushing -- the industry needs to all get on the same page, the networks, the manufacturers, the affiliates, the FCC, and make sure that we're doing everything we can do to get the rollout. I think HD is going to be a big plus for us in the future with multi-casting and some of the other things we can do. So we're excited about it. But it is going slower than I ever thought it would.

I do think the satellite, on the second issue, Mark, is that satellite with the local signals, we think satellite is going to be a boom to us because of our dominant use franchise in most of these markets. We think satellite growth can really take off in a lot of our markets once they get the local news available. And we're pushing Direct and EchoStar and they're working as hard as they can to get us into local markets as fast as possible. We think this is going to be a big plus for us in the years ahead.

Great. Thanks, Bob.

Thanks, Mark.

Your next question comes from Bishop Sheen. Please state your company name.

It is Wachovia. Hey, Bob, hi, Jim.

How are you?

I'm good. A couple of questions. Let me billboard them for you. A comment on corporate overhead. It looks like that you overspent your guidance this quarter. And I was just wondering what drew that. And also, on Q1 guidance, I don't have -- using the exact numbers from Q1 '03, that shouldn't be materially different, if you have pro forma changed them, if looked like publishing, if I took the middle ground it looks like publishing cash flow is going to be down something like 7.5%. And paging cash flow way down and I was just --

Bishop, publishing will not be down. Actually it will be up nicely and that's probably -- I mean obviously the guidance is published in ranges and there's some optics in there, but --

Okay.

Publishing EBITDA will be up consistently, and paging is such a minor part of the whole Company.

It is sort of fallen off the map this time. Okay. And I will go back and revisit that and get to you if I have any questions. The refund that you expect, when do you think that will come into your --

We expect -- we currently anticipate to receive that IRS refund before the end of this quarter, although, it is at the mercy, not the mercy, but it may slip to early second quarter. But it will be relatively soon.

Okay. And then just going back to the political again, and I know you talked about it, it seems to be coming early, the budgets have been released, do you have any feeling as to whether it is going to zap the strength from the usual back end of political spending? Where do you think it is going to end up this year?

Bishop, look, those guys are going to spend every dime they take in, and they're not going to change history. I mean, they all realize that the key days are the weeks right up before the actual election, so I just think it is a function of they all have raised incredible amounts of money, I mean you got cases like Senator Shelby over in Alabama who has raised close to $14 million, doesn't even have an opponent yet. You got other guys out there with similar kind of things. And they're going to spend some of that money no matter what. But I don't think the basic political spending is going to change much.

I just think you're going to -- the real key for us is what states in the Presidential race are considered battle ground states. The one negative we've got is, we've got less Senate races, less governor races than we had in 2002 and we just got to hope that we get a chunk of this Presidential money, and that a lot of what is so-called local races, the races for Congress, and races in the local offices are going to be strong, which I think they will.

So it sounds like you're not ready to say that you can't equal or come close to the record amounts of political outspend.

Oh, I think we will. I think we will.

You think you will make what you --?

There's been so much more money raised and they're going to spend it and we're going to get our share plus some like we always do.

Okay. All right. Thank you, Robert.

Bishop, just one other quick comment on your corporate expense comment. It kind of is what it is, but I am reasonably confident that it is probably, on a relative basis, the lowest in the industry. So there is a lot of bang for the buck around here.

Great. All right. We'll take it at that. Also, can you tell us what the cash interest expense was for Q4? And for the year? If you have that handy.

I don't have Q4 handy, but just a minute I do have the year. It was --

Divide it by four to get the quarter, basically.

Yeah.

About $41.4 million was the cash component for the year.

Okay. Thank you.

And I think on a high side number, that is probably looking more like $40 million, and again, that would be my -- my expectation would be a high side number but it would be look like $40 million for 2004.

All right. Thank you, Jim.

Thanks, Bishop.

Your next question comes from Jim boil. Please state your company name.

Wachovia. Good morning.

Hey, Jim.

What sort of changes, if any, does your sales force see in demand or pricing or earlier inventory sell-through in the Q1/Q2 time period, versus the second half of '03?

Most of our managers, Jim, in talking to them over the last few weeks, feel like that we're getting pretty much across the board of positive signs. I mean, nobody has said one particular category is jumping out way ahead. I think in talking to our managers they all just feel very positive, much more so than they did last year about ad spending in the towns we're in, and I'm not even talking about political. I'm talking about just basic every day ad spending. It has been pretty much across the board, feelings of positive growth for this year.

Are you getting higher rates than six months ago?

We always try to raise our rates in political years. Obviously, supply and demand drives that up. But we're lucky, we're the number one in most of these towns and we emphasized to our managers to be the price leader all the time. Don't let the ad buyers be price shoppers with us. We've got the most people watching our broadcast and we want to get the highest price for it. And that's something all our managers know that is a constant refrain of mine when I'm talking to them.

Okay. If Gray could potentially do a duopoly in one of its mid-sized markets later on, once the Philadelphia courts agree to perhaps mid-market duopolies, what might be the range of margin expansion simply from potential cost savings, excluding any revenue improvement, might it be more than, or less than 500 bips, would you estimate? All else being equal.

Jim, that is a tough one. You and I have talked in the past about duopoly. I've got mixed feelings about it. I think the rules that came down aren't that favorable to how we like to operate. We would have loved to have been able to buy some number four Fox's in some of the markets. Some of the other networks operate so different from the way we do, and most of them aren't performing very well, frankly. We don't consider ourselves turn-around guys. We consider ourselves turn-up guys. We like to buy good properties and make them better. And we're just going to be very, very careful in looking at duopolies, I hope we can find something that makes sense for us but we're going to be very careful.

Presuming let's say you could buy a number four Fox via an FCC proposed waiver along the lines of what they suggested. Is the cost savings minimal? Or is it significant?

Again, I think, we don't know until we get into it. Different people do things different ways. My feeling is, if you could do it right you could eliminate obviously a lot of the back room overhead, but I still think you probably need separate sales force. You've got to have somebody that is -- we would want to put a separate newscast on the air because we feel like that's important. I think it would be a considerable of savings, if you could buy a Fox that was performing pretty well, I think you could clearly get rid of most of their overhead, and hopefully, you could do some package selling for ads where you maybe could get some revenue boost. But we've looked pretty hard at it. Like I said we just haven't seen anything that made sense for us so far and I don't want to get tangled up with the FCC until all that gets solved anyway, so we are going to keep looking and keep our powder dry, and, hopefully we will find something that will work down the road.

Thank you.

Thanks, Jim.

Your next question comes from Shawn Butson. Please state your company name.

Thanks. Legg Mason. Good morning, guys.

Good morning, Sean.

Hey, a couple of things, I guess first off, do you happen to have the pro forma political revenue numbers from fourth quarter '99 and first quarter 2000?

Jim, do you have them?

I don't have -- Sean, no, at least not immediately available. I would have to dig. I don't think I even have 2000 by quarter.

Okay.

We probably got some total year numbers, but I don't think we went to that level in developing pro formas after the '02 acquisition.

Okay. Yeah, I mean it sounds like political is coming in pretty nicely. Certainly versus '02. I'm just curious whether it is coming in ahead of four years ago as well. So maybe we can talk about that later.

And then secondly, based on the pacings that you've given, it sounds like national is starting to turn the corner. Clearly, national is pretty weak in '03. Would you say after you try and normalize for Iraq, and the Super Bowl, and any number of other things that national is getting better by itself?

It seems to feel better, like I said, I think our -- local is such a strong component of our business, national is -- we will take all the national we can get at the right price, but one of the things that came up recently, talking about General Motors announcing they were going to cut back, I've talked to several of our managers and most of them said that that kind of advertising, we don't even take, because it is so cheap, we usually let the other guys in the market have it. We like the local dealers and the co-op money but most of the national political ads are pretty cheap, and we don't take them day in and day out, unless we can get our price for them.

So I think national seems to be feeling better. Obviously, auto is a big part of it. General Motors is the biggest advertiser by far. And if they're cutting back some, it will hurt some, but here again, like I said, I think we've been fortunate to not feel much of that because of our position in the markets we're in.

Great. And then just lastly, I was writing furiously to keep up with you earlier, can you just run through the February, March pacings again, in terms of what the numbers were?

Jim, you want to give him that?

Recapping January, excluding political, again, this is excluding political, January was plus seven. February was plus 14. And March is currently looking at about plus 8.

Plus 8. Okay. Thanks a lot.

Thanks, Sean.

Your next question comes from Brett Felcoph [ph]. Please state your company name.

Hi, actually it is Brian Warner. I have a few questions.

Okay.

Could you talk, industry-wide, are you seeing any more movement in terms of stations for sale, more interested buyers willing to pay higher price, sort of industry-wide? And as a little bit of a follow-on, in terms of what strategically looks the best to Gray, can you give us a sketch of what that my be? I mean are you sort of particularly interested in any network affiliations better than others?

I will answer the first question. I don't see much available. The old supply and demand I think is kicking in because there's a lot of money chasing a fairly few number of deals and I think prices have been relatively high. Our criteria has stayed the same since we got involved with Gray. We like number one stations, our strong number two, we like the big three networks, because of their news emphasis.

We like growing tons with good demographics, university town, state Capitols, and not exclusively but, obviously we like those kind of towns, and that's been our criteria and we like to be able to buy them at reasonable prices, and have good management come along with it. And strategically, we would love to find another Benedek deal or similar deal like that. Or single station deals that fit our criteria. And we're always looking, but haven't seen much available out there, frankly.

Thank you. Just a -- I'm sorry.

Yeah, go ahead.

Just a small follow-on, can you give us your capital spending budget for the year? And to the extent you have any visibility on next year, and if you can break it down digital in that?

We're looking, depending on -- one of the things I think we talked about earlier, we're planning to build a new station building in Tallahassee, Florida, on some land we bought last year, and if we get that building, we probably won't finish it this year, but somewhere between $15 and $20 million counting the building, of which about half, a little over is still HD that we're paying for that we actually installed 12 months ago, we will be paying under our payment plan with Harris, we will be paying for it this year.

Thank you.

Thank you.

Your next question comes from Harvey Sandler. Please state your company name.

Sandler Capital Management.

Hey, Harvey.

Hi. From what you can determine from other publicly held companies, how does your revenue growth in both '03 and first quarter '04 rank?

Harvey, I think, based on what we've seen from other reporters of public companies, we're right at the very top, if not the top of the list. We watch what all these guys are reporting and there's some very good competitors out there. And when I say competitors, we're not necessarily head-to-head with them, but companies that are in the same business, that I admire the management of Liam and Hurst, Argyle and Belo a lot of companies like that, that we kind of like to benchmark ourselves against and based on what I've seen, we're right at the very top of the industry in revenues, our cash flow, our free cash flow, most of the metrics that you like to judge a company by. And we're very proud of that.

And I will give the credit where the credit is due. We got a great group of general managers who I think are the best in the business, and we let them run their own stations from a day-to-day operating standpoint, and they do a great job for us.

Thank you.

Thanks, Harvey.

Your next question comes from Drew Marcus. Please state your company name.

Deutsche Bank. Good morning, gentlemen.

Hi, Drew, how are you?

Bob, if were you to prioritize your use of free cash, as your generating it here, is it increasing dividends, share repurchase, debt pay-down, or acquisitions, could you prioritize those four for me?

We did raise the dividends, Drew, 50%, for the first quarter, but fortunately, we're going to have a lot of free cash flow this year. We feel very, very good about it. I would say that we want to make sure that our debt to cash flow is in the low five's or even the high fours, which I think it will be by the end of the year no matter what we do pretty much based on our budgets and like I said, we're ahead of budget right now.

Our debt, fortunately, our bank notes are very cheap money. We hate to pay that off if we don't have to. Our bonds probably are too expensive to buy in. Which is good for the guys that hold the bonds, but not necessarily so good for us, as far as the buyer. And if we could find the right acquisitions, we would like to use some of our free cash flow, although my goal would be to buy them at a good price and get good cash flow so it wouldn't change your debt to cash flow ratios very much. So it is going to be a great problem to have.

One of the things we are considering, frankly, and we won't decide this until late in the year, is maybe looking at some capital expenditures that might make sense. I'm not talking about big dollars, but, doing some digital upgrades and things that we might need in some of our bigger stations. As a way to, like I said, our job is -- as Warren Buffet says, top management's job is to allocate capital and hire the right people and I feel very strongly that's what we've got to do this year.

We're going to have a very fortunate problem to have and I think we've spent a lot of time thinking about it already and we're going to be spending a lot of time looking and thinking in this year ahead on exactly what is the best way to spend that free cash flow. But it is a good question and it is something we're -- it is at the top of our list of priorities. Like I said, I guess at the moment, if we could find -- we're going to pay down some debt one way or the other, I'm sure, but if we could find some good acquisitions that made sense, we would look at that. But here again, we're going to be very disciplined about making sure they fit our criteria and we can get them at reasonable prices.

Great. Thank you very much. Thanks, Drew.

Your next question comes from Ross Eberman. Please state your company name.

How are you gentlemen? Haden Brothers. Jim, just two quick questions. Did you make any comments on what you think the political revenue was going to be for '04?

Jim?

We haven't specifically. Although Bob did comment in response to an earlier question, that he thought based on how the year had started out, that we had a reasonable opportunity to meet the record year of 2002, and I'm not going to counter that statement.

What was that in '02, if I may ask? I don't recall.

$25 million and change. $25.4, I believe.

Okay. And how much of that actually hit the operating line of the $25 million?

I'm not sure if I understand your question. Other than political revenue almost always comes through -- that 25 was net revenue. So the agency commissions were already deducted out of that. The only costs over and above for us on that is the commission paid to the national sales rep, because virtually all political goes through national sales representative firms, and that commission rate, the average is probably 6%. So almost all of it goes to the bottom line.

Gotcha. Okay. And just one last question. The corporate overhead, the $2.3 million for the quarter; is that a pretty good running rate?

Yeah --

For '04 on a quarterly basis?

We're going to see whether we like it or not. As everybody else is seeing, I'm sure, we're going to see increased costs for audit fees, increased costs to comply with Sarbanes-Oxley, and especially in 2004, Sarbanes-Oxley's rule 404, and so I think that is probably not an unreasonable run rate. And again, I will go back to the comment I made with Bishop, that I still think if you compare our dollar expenditure there to industry peers, we're doing an awful lot for not a whole lot of dollars.

Okay. Thanks.

Thank you very much.

Once again, if there are any more question, please press star one. There are no further questions at this time.

Thank you very much, operator. I want to thank everybody for participating in the call today. We feel very, very good about the year we had in 2003. And feel even better about 2004. We appreciate all you guys' support. As I mention every time, Jim and I are easy to find. Don't hesitate to call us, either one directly, we answer our own phone, if you got a question or need any other information, and we will look forward to talking to you at the end of the first quarter. So, operator, that will -- you will tell them about the replay details. Thank you.

Thank you. This concludes today's call. To listen to today's call, you may dial 1-888-509-0081. Once again to hear today's call you may call 1-888-1509-0081. Please disconnect your lines and have a wonderful day.