Gray Media Inc (GTN.A) 2008 Q1 法說會逐字稿

Good day, everyone, and welcome to the Gray Television's first quarter earnings release conference call. Today's call is being recorded.

For opening remarks and introductions I would like to turn the call over to Mr. Prather. Please go ahead, sir.

Thank you very much. Welcome, everybody, to the Gray Television first quarter earnings call. I think we all know we are living in some pretty interesting times these days. I guess we have got overall basically mostly good news. We finished at the top end of our guidance for first quarter. Our guidance wasn't fantastic, but we did do what we said we were going to do. We are feeling real good about the economy for most of the rest of the year, especially in the second half. We think the political is going to be all-time record spending. I think the presidential's coming in a little slower than it did in 2004, but I think that was a unique situation and obviously this year is unique with the democratic primary still being contested. But the good news is we have got big stations in Kentucky and West Virginia and we are hoping the two democrats will continue to spend money in those two states.

We were a little ahead of budget for the first quarter in political. Second quarter may be a little behind, but we normally get between 85% and 88% of our political in third and fourth quarter. That's been our historical average over the years. So we are expecting some big numbers coming in in the second and third, third and fourth quarters. Also we are looking forward to the Olympics. Five of our biggest stations are NBCs and the Olympics within China should be big for us. I think we did $3.5 million in the last Olympics and we hope we can do better than that this time. We should be able to.

But, we got 284 days until the digital transition. I think this is fantastic for our industry. I think it is great for Gray Television. I think it is going be great for the consumer, viewers and the advertisers. I wish it was here tomorrow. I think it may be a little bumpy the week or so during the transition, but I think we will get through that pretty quickly. I don't know if most of you saw, but Wilmington, North Carolina has been picked as a test market and they're going to try to test going full digital there in September of this year, I believe it is. I think -- here again, I think this is going to be great for our industry in the long run. And I think it will be very good for us. We are in a great position with our 40 digital channels on the air already. So we are looking forward to going full digital.

We -- second quarter I think we are going to be doing okay. We have got our guidance out and here again not much growth, but that's just the nature of the economy these days and -- especially national advertising continues to be challenged all over the country, it looked like. We are part of that. I think the good news for us is that we're in most of our markets are feeling the -- the housing slump less than the rest of the country. Here again our idea of going after state capitals and university towns, I think, is paying off. I think most of our economies are stronger than national average. So, I think we will fare well, especially if this housing market continues to be gloomy going forward. But we are watching our expenses very closely. We actually initiated early in January some cuts from our budgets and we think we are probably saving $5 million plus in employment costs over a 12 month period and probably similar costs like that throughout the Company.

We are looking at doing more hubbing. We have completed all our traffic hubbing and we are looking at expanding our master control hubbing. We are expanding our accounting hubbing in our Tallahassee operations. So we are doing all these things which I think will make us more efficient in the coming months and the years ahead.

We are looking forward to, like I said, a huge political second half of the year. I think we are in great position to break our all-time record there and I think we should without any trouble. I think you are going to see both in the presidential and in a lot of the senate and house races a tremendous amount of money being spent. I think we will be a big beneficiary of that.

On a personal note I have been buying Gray stock. I hate to see this stock down this low. I will tell you right now I have got 90% of my net worth in Gray stock. So I haven't been faring too well lately but I have 100% faith in the strength of our Company. I bought shares as early as last week and I have bought shares a month ago, and every time I buy them I think I am stealing at the price I am paying. So I guess I will just keep stealing them on down. But I think our stock is way undervalued, as are most of the television stocks right now. I think our whole industry has been unfairly painted with the old media brush, and I think we just got to all get out there and show the world that we are going to be in business and profitable and growing for a long time in the future.

I think our digital strategy is one of the things that's going to help us there. We are continuing to go grow our digital. Our digital is very, very profitable. We have deliberately cut our margins some this year because we insist that all our stations hire a digital only sales person. So every station we have has a digital only -- at least one person that's only job is to sale our new media product. We think this is going to pay off with big dividends in the years ahead. As I said, our digital revenues continue to grow and our digital profits continue to grow.

So we think this is an area that -- here again, we feel like we want to be the number one news source in the towns we are in and I think we all realize we live in a three screen world today. We got a TV screen, a computer screen and a mobile screen. We want to make sure that we are the number one source for local news, weather, sports and events in our market. So this is something we are going to continue to work on and continue to -- we think, we'll continue to grow at a much faster rate than anything else we are doing.

At this point I am going to turn it over to Jim Ryan, our Chief Financial Officer, and let him go through some of the numbers and then we will open it up for questions. Jim.

Thanks, Bob. Good morning everybody. I will keep my comments relatively brief. Bob certainly covered all of the highlights. First quarter our total net revenues were up about 2% on the increase in political, which we had expected. Also we had relatively strong growth in our internet, which Bob alluded to a minute ago too, and we are pleased to see the internet growth. Like a lot of people in the industry, we did see softness in core, local and national. Local was down about 2%. National down about 4%. A lot of that really reflects, I think, the general economic tone right now. We also saw from a category standpoint, similar to other people that have already reported, softness in auto. Our auto was down about 6%. Also softness in telco. Restaurants were down. Furniture was down a little. We did have some bright spots though; our entertainment, medical and supermarkets were up. Our financial category was actually flat year-over-year. And so were the packaged goods department store categories.

Operating expenses came in basically where we had expected, up slightly at about 2%, as Bob mentioned. We have initiated some staffing reductions in the Company that on a full 12 month basis would conservatively save us $5 million, about half of that will flow through the rest of this year and we will pick up the full value of that in '09.

he guidance we have already put out for second quarter. On the high side we think we can be up a little. Political is coming in pretty well. We have seen a lot of activity in the last few weeks in North Carolina and Indiana. Both of those stations were earning about $600,000 each in the democratic primary, which was actually good, we were pleased to see that. Certainly, West Virginia and Kentucky are now in play too. So we are looking for that to be relatively strong for the next couple of weeks.

Turning quickly to a couple of comments on the balance sheet. Total debt at the end of the quarter was $922.7 million. We had cash of $15.3 million, which was basically consistent to where we ended up at the end of '07. Leverage on a trailing eight quarter basis was approximately eight times. CapEx was very modest in Q1 at $2.9 million. I expect it to be modest again in Q2 and ramp up a little bit as we get late in the year and match the CapEx with the political dollars.

We had -- for those that usually ask, cash taxes were a negligible $46,000, so that is not an issue. On a total year basis, it is about $1 million for us this year. Bob, with that I will turn it back to you.

Jim, thanks a lot. Moderator, if you will open it up for questions, we will take questions now.

(OPERATOR INSTRUCTIONS) We will take our first question from Victor Miller with Bear Stearns. Please go ahead.

Morning. Thanks for taking the questions.

Hey, Vic.

Good morning, Bob, how are you.

I'm fine.

Jim, actually start with you and just -- obviously '08 was supposed to be a fairly significant banner year, even on the core side, the industry everyone thought would be plus eight, be fantastic for cash flow and great for, and great for debt reduction this year. So, it seems like in general '08 has been a little bit disappointing. I guess as you look into '09, which could be a typical hammock year, how are you just looking at the balance sheet and how do you -- how are you going to try to address the balance sheet and just try to increase the amount of free cash flow, would you look at asset sales, et cetera as you try to delever? Secondly, Bob, just talk about the auto business in general and lastly, give us a sense of why you are so confident in the ability to generate the record political. Have you seen any markets where you can compare what you saw in '04 versus what you are seeing in '08? Thanks very much, bye.

Vic, let me answer you first. I will start out with the political and I'll give you an example. We were a little nervous first quarter about political because of Florida and Michigan where all of a sudden there's no democratic primaries, and we have got two of our real, real strong political stations in those markets. I think we had budgeted $600,000, $700,000 or more in those two markets and I think we got $40,000. But out of the blue comes a supreme court race in Wisconsin and we get over $800,000 in in March. In a supreme court race in Wisconsin, of all things. And what I think you are seeing is there's just -- you know better than anybody because you keep a close eye on the national picture. There's been more money raised than ever before, I mean by a factor of about double I think.

I think all the 527s are sitting on the sideline until they know for sure who the two candidates are going to be. That money was coming in real early in '04, as you well remember. We are seeing none of that yet. But I think that money, once the democrats decide on their candidate, republicans obviously know who theirs is, but there's none of that money being spent that we know of or very little yet. And just based on the amount of money that has been raised and based on history, I just think it is going be a blowout year in the second half of the year. I don't see anything that would stop that.

On the auto side, it is the same old story. Our local auto is still basically good. It is down a little bit, but the national continues to be very, very soft, jumps all over the place. We actually are doing well in some markets with the national auto and others it is just bottoming out completely.

So, I think the auto guys are struggling to figure out where to spend their money, how to spend their money and just how much money they have to spend. They are all hurting bad, as you well know. I saw the other day Toyota is expecting a down year this year. When you have got an industry that has got roughly 25% of its revenue coming from an industry that basically you can probably call sick right now, it is going to create some problems for everybody. Jim, I will let you answer the balance sheet question.

Vic, first of all kind of looking ahead to the end of this year, I think even though the first part has been relatively slow in core with political, and certainly we will get a little pick up in Q3 with Olympics in the core, I still think we on a trailing 12 basis have an opportunity to have a leverage ratio on a key 12 basis somewhere in the middle five and on a eight quarter basis that would translate to something in the middle sixes. So I think we can still make good progress on leverage reduction between now and the end of the year, especially given all that political is cash in advance and it is basically slated to go directly to -- directly to debt reduction.

Looking ahead to '09 a little bit, kind of in the big picture, I think our off year in '09 is going to be less of a trough for us than historically for three major reasons. First of all, as you know, a reasonable number of our retrans agreements come up late this year, basically at the end of this year. So we will be negotiating for retrans consent basically, and those will be '09 dollars. So that will be a new revenue stream to us and we are very encouraged by the apparent success that other people in the industry have been having with either first and/or second round negotiations on that front. We are a couple of quarters away from having our opportunity.

Secondly, as Bob mentioned, we have spent a lot of time first part of this year trimming our cost structures. We will -- I think that better positions us in '09. I don't want to commit to an exact number, but I think right now our '09 total expenses are going to be under our total expenses for '07.

And thirdly, as part of the expense number, we do get an automatic pickup starting in February of next year. It is somewhere between $2 million and $3 million of operating expense, but all of those analog transmitters are going to get turned off and there's an immediate savings on the power bill. So I think we are -- we are certainly focused on the leverage. As we've said repeatedly we want to work it down. We think we are in a good position at the end of the year to be bringing it down, and '09, given the things I have mentioned, will be a better off year for us than we have had historically.

Thanks, Jim.

Vic, one other thing, too, that will help us in '09. We are going to have the Super Bowl on NBC, which has been several years. We have got five of our biggest strongest stations are NBC stations. So, just to give you an example, this year in '08, we have got five digital Foxes so we didn't have a whole lot of Super Bowl revenue, whereas on CBS we have, I think, $700,000 or $800,000 last year. So NBC ought to be a big January, February for us on the Super Bowl. So I think 2009 -- my only concern, and you and I have talked about it before, is just what kind of disruption, just the actual transition in the middle of February and whether -- I am hoping it won't be much and I am hoping these test markets will shake out anything they need be doing ahead of time to make sure they don't have a lot of problems when people go dark.

Thanks.

Thanks, Vic.

We will take our next question from Marci Ryvicker with Wachovia. Please go ahead.

Thanks. I have a couple of questions. The first is are the staff cuts that you did in the first quarter done or did they continue into the second quarter, and where did the cuts come from for the most part?

I will take that, Marci. They were in part first quarter, in part second, it is a phased in approach. We didn't have any black Fridays so to speak. They are -- I would say, they're across the board, involving virtually all of our stations. We asked all of our managers to go back and they were very diligent in this and look at what they -- looked at their staffing and tried to do it in an intelligent way within each station. It wasn't just a broad mandate of X out of this department or that department, or X in total. We tried to go about it a smart way. We still have some of the best operating margins in the business and we don't want to -- while we need to cut and be efficient and more efficient, we want to do it in a smart way. About half the number paid is coming through attrition. The other half, as far as sheer bodies, was coming from out right terminations. By the end of second quarter virtually all of that would be done.

Okay. And then you mentioned in the press release two different types of internet sales. Talk about how the direct internet sales are going to be a lot stronger in terms of growth. And can you just talk about the two different internet sales and why that would be?

Again, as we have said before, our direct internet sales is right on the website. It is either the sale for video pre-rolls, it is the sale for the banner. It's the sale for the sponsorship of a content position. It is whatever -- whatever we sale directly in cyberspace we call direct. We have another component which is much smaller which is a related time sale where a client of ours is buying airtime to specifically promote or cross-promote or -- round-trip traffic, depending on how the client wants to work the campaign, that they're using on air to drive -- to drive web and vice versa. So, that is, that piece is what we call internet related and when we talk about total internet we combined the two. We think the real long-term growth potential in the internet is the -- is the outright direct and that that will grow faster than a -- than a time sale supporting the web.

Okay. One last question for you Jim. Now that you are breaking out retrans, is the retrans line just cash?

Yes.

Okay. Thank you.

It is just cash.

Thanks, Marci.

We will take our next question from Brian Broadbent with Highland Capital. Please go ahead.

Hi, guys. Just a first question is on the political. Can you kind of compare and contrast '04, '06, '08 where we are at and specifically on the soft money. What did you do in '04 and kind of -- what do you think is a reasonable assumption for '08?

Brian, I'll take that. First of all, we didn't break out soft, but I do -- as I mentioned to Vic, we did have a good bit of 527 money early. In the first quarter of '04, for example, we got 8% of our political, we got $3.5 million. The first quarter of this year we got 5% for a little over $3 million. So, here again I think the soft money is sitting on the sidelines right now. I don't think these guys, until they know exactly who the candidates are, want to start really spend a lot of money, but I think they're all sitting there and they are all piling up money waiting to spend it. Here again I think third and fourth quarter we are going to see a lot of that money pouring in. But in general, like I said, the political we actually finished up a little ahead of our budget for first quarter, just because the Wisconsin thing came and then because of the extended democratic, we are actually -- we got some real good money in Indiana and in North Carolina, which we normally wouldn't have gotten, most likely. So we are looking here again -- like I told Vic, I think we are going have a record year and I think it is going be a banner year for political spending in general.

And then on the Olympics, do you see any money being pulled out of the second quarter on the national and kind of saved up for the Olympics?

I haven't seen anybody or heard anybody talking about that. I wouldn't think so. But that's an interesting question. I haven't heard anybody talking like that. So I don't think that necessarily is going on. I think the Olympics are -- I mean they're a big deal, but in the scheme of things they're not huge. So it is not like they're -- it is not like political where it just totally dominates the airways in September, October.

And can you explain why the retrans dropped from the fourth quarter to the first quarter?

Jim, that's a good question. I don't know the answer to that. Jim, do you know?

I think it was just -- in part I think first of all the first quarter number's a pretty good run rate. I would have to go back and look at fourth quarter and see, Brian. To be honest I don't have a real good explanation. The dollars involved were not very large though, if I recall. I would need to go back and look at that.

All right.

We also -- keep in mind we broke everything out for the first, fourth quarter. So we -- just need to go back and look at that a little.

Got it.

Brian, I will tell you we have done -- we have done one deal this year for a small number of systems that we are very happy with, and based on that we are planning a real Company-wide strategy to -- to be ready to really negotiate hard with these guys later in the year to make sure we get what we feel like is our fair share of the retrans dollars. With so many strong stations that we have got out there, here again, I think we are going to be -- be in good shape to really do some -- do some real good things on the retrans front. But we are going be working hard on it. We obviously know it is important to us as a Company and it is important that -- like I said, that we get paid our fair share.

Brian, I think, going back to the question about Q4 and Q1, part of it -- and again I have to go back and look, but we did do some truing up in Q4 on our satellite agreements. Just by -- mechanically we are getting paid in arrears by the time they do the calculations and send the cash. I think we were picking that up more on a pure cash basis and realized actually we needed to set up a little bit of receivable to true up -- true it up to a pure GAAP number. I think that could have been part of it.

Okay. And was there any severance in SG&A? And then also on the cost savings what, if any, can be added back to EBITDA for covenant calculations?

The overall severance on the reduction is going to be -- it is not very large. It is between $600,000, $700,000. And that's basically flowing in Q1 and Q2. And that is because of its size it really doesn't have -- it doesn't constitute a special add back under the credit facility.

And the cost savings don't either?

No.

Okay. And then can you give us an update on the money market funds that are disclosed in the Q, and how much cash you have gotten, and when you expect to get the rest?

Yes. The Columbia Fund is also in the K. We had some money late last year invest in a -- in the Columbia Fund. We currently have about $4.1 million left to go. We have collected the best part of $3 million out of the original balance and the mark to market has been relatively small. We took a charge in Q1 of about $70,000 to $80,000. Since the fund is in a liquidation state, fund management is a little careful in giving out a detailed timeline on distributions. I am sure you can appreciate that from their perspective. Our general sense is that a good portion of that will be -- should be collectible, distributed to us in the second half of this year. There may be 20% of the number left that won't be distributed until '09. I don't currently expect that we probably will see a lot of that -- those distributions in Q2. I think the fund is indicating that it is a -- more of a second half of the year event on the distribution timeline that they're currently looking at.

And then on your cash balance. So you have your cash balance and then the Columbia Fund on top of that. Is that correct?

For what?

So you put a cash balance in the Q.

That's right. The cash balance of $15.3 million is real -- is real cash in the bank. The Columbia Fund is now classified as a marketable security. And as I said, we expect to collect the majority of that money some time in the second half of the year.

Okay. Thanks a lot.

Thanks, Brian.

(OPERATOR INSTRUCTIONS). We will take your next question from Jim Goss, Barrington Research. Please go ahead.

Thanks, good morning, guys.

Hi, Jim.

Several questions. One regarding the revenue guidance you gave for the second quarter, which is flat to down 2% relative to the up 2% in the first quarter. What are the local and national assumptions that are going into that? Maybe start off with that.

Jim, I think the -- the local assumption is that we think local may be flat to down a little in Q2. Nationally we think it will be a little softer in -- a little softer than maybe even than in first quarter. Probably in the minus six to seven range. Although I will say that it is -- visibility on is a little tough. Our auto in April relative to the first three months of the year seemed to improve a little -- very slightly, but improve a little. So, very, very cautious. I am hoping that we will end up doing a little bit better than -- certainly that the low side of the guidance is being overly conservative, I guess is one way to phrase it.

Okay. And a comment I think Bob just made about the political, about 5% coming in the first quarter. That's implying you are still holding to the $60 million plus full year sort of notion.

Yes.

I presume. And I was wondering how does that -- how do you think that breaks down into the third and fourth quarters given that the Olympic money would fall in the third quarter? Does it skew that up a little more than I might be assuming right now?

Just give you an example, Jim. In 2004 we got 79% of our political in the third and fourth quarter. In 2006 we got 85% of our political in the third and fourth quarter, and this year we are estimating we are going to get about 88% in the third and fourth quarter.

And between the third and fourth, does the third get a little more than --

No, the third is around 35%, fourth quarter 53%. And that's pretty historical there too.

Okay. And --

We actually got 60% in the fourth quarter of '06 and I think we had -- I think we had about five or six days in November which really helped. When you have got -- ideally when it is the Tuesday in November falls later, as late as the seventh, you have got more days in November and you get heavier then.

So we have an earlier election this year.

It is a little bit earlier this year.

The retrans pattern, when are the -- can you talk about the percentage of your station groups that are to be renegotiated at either in certain quarters or certain years over the next couple of years?

We basically will have around 60% of our subscribers coming up December 31 this year. Which is -- we have got roughly 4.5 million total. That will give you an idea. We have got some -- we will be negotiating with Comcast, Time Warner, Charter, a lot of the big guys, and then we have obviously got a lot of small -- we have got a lot of small cable operators in there too.

Okay. Are you dabbling with mobile content yet, trying to figure out what will work in a cell phone platform?

We are doing great in our cell phones. We have our websites available, along with video streaming available and all am-text messaging in all of our marks. We are doing extremely well. Our page views are just exploding there. We are getting good advertising where people are just basically sponsoring the cell phone access to the website. So we are very, very pleased with our website -- with our cell phone strategy.

Okay. And probably lastly, what are the covenants right now, do they step down? And I think Victor asked about asset sales. I don't think you got back to that. Are you willing to consider certain things since I think that is a factor -- maybe a non-fundamental earnings factor that's weighing on the stock?

Jim, do you want to answer that?

Jim, the covenant does step down at June 30 to 775. We are very focused on that. We know where we need to be. We intend to be there. We are actively working on that in a prudent manner. As far as the end of the year, the covenant steps down again to 725. With the weight of the political in the second half of the year, that is -- we don't see any issues there at all.

Do you think you need a certain bigger margin of safety to give investors more comfort, especially since next year even if you have a -- a better than average year that some of these numbers might -- would likely reverse themselves just because of the way the -- the cycles work?

Well, keep in mind the covenant is on a trailing eight quarter basis. So first of all, we will have the benefit of the second half of this year's political going forward for quite some time. Also, I mean certainly I would think that '09 in general should be a better year than in '07. I would certainly be expecting that the economy would be picking up as you move farther into either late '08 or into '09. So again, I think our '09 year is not as -- the dip in '09 is not as pronounced as in prior years historically. The 725 covenant --

We will be -- we will have plenty of cushion there, Jim.

And that doesn't step down further in '09?

It steps down to seven at the end of '09. And again I think we are comfortable with that.

All right. Thanks very much.

Thanks, Jim.

We will take our next question from Larry Schumacher with Oppenheimer, please go ahead.

Hi there, guys. On behalf of Harvey, I have a couple of questions. And I am sorry if they're repeats because I missed a little of the call. What do you think political revenues will be in '04 -- will be this year versus '04, '06.

Larry, we are thinking -- we are budgeting right now right close to $60 million. We think we will achieve that or better hopefully. That versus it was -- in '06 it was $42.7 million and in '04 on a pro forma basis --

Core number pro forma was approximately $52 million or $53 million.

In '06?

Yes.

No, '04.

'04 was $52 million, $53 million on a pro forma.

Right. And '06?

'06 was $42.7 million.

So a nice move up.

Yes. Well, from '04 it is about a 15% increase, and I think we can easily achieve that.

And generally, why is local revenue so weak?

I think the economy has got a big main thing to do with it, frankly. I don't think anybody anticipated what was going to happen. This housing market, I think, is obviously hit a lot harder than anybody thought it would. And I think that in turn has affected the -- the real estate has affected the auto markets. I think you are just seeing a lot of -- kind of a domino effect on the economy because of what's happening to real estate, where you have got a huge number of foreclosures going on, you have got a huge number of people that are struggling to pay their house payments and not lose their houses and all of those things I think are -- are having an impact on the economy right now.

Okay. And finally, I know a couple of people have asked this, I heard pieces of it. Retransmission agreements.

Yes.

They start renewing when?

December 31 is when we have got, I think, roughly 55%, 60% of our subs come up for renewal. And we will be actively negotiating with all of those guys in the fourth quarter of this year to start January 1 with a new deal.

So that should be net positive going forward?

We definitely think it will be very positive, yes. We think we will -- we think we are going to achieve some significant retrans payments going forward.

And lastly, is there still a buyback in place? Has that been used up? Is it --

There is a buyback. We are not buying any shares right now because we think it is more important to pay down our debt. We plan to use 100% of our free cash flow second half of the year to pay down debt. And as Jim mentioned, based on our political forecast and what we think we are going to do, we should be on a trailing 12 month in the low fives debt to cash flow, and in the mid sixes on a trailing eight quarter. So we think we will -- our balance sheet would be in much better shape and we will have -- we are going to be very tight on capital spending next year. Probably will do some local HD, but other than that and just some maintenance but -- fortunately, all of the digital transition will be behind us and we will be -- we won't feel it necessary to have a huge amount of capital expenditures in the next year or so.

Okay. I appreciate it. Good luck. Thank you.

Thanks, Larry.

We will take our next question from Dan Wright with the Daily News Record. Please go ahead.

Good morning, guys. Can you give me some revenue numbers for a specific station and how it compares with the same period last year?

We don't normally break out specific stations. Where are you from, by the way?

I was interested in WHSV in Harrisonburg, Virginia.

We normally don't give out specific numbers on stations. I can tell you that station is doing very well and it is one of our -- one of our top performing stations.

Okay. Thanks.

Thank you.

(OPERATOR INSTRUCTIONS). We will go next to [David Tisher with Loews]. Please go ahead.

Thank you. Bob, good morning to you.

How are you?

And Jim. The question I have is given that you stated many times that the -- you believe the stock is undervalued, you put your money where your mouth is, the industry is being perceived negatively by the investment community, I am just curious as to given your track -- long track record managing the stations whether or not there's any possibility of having some of the pools of money that are out there, be they private equity shops or firms that are specialized in the media industry in the past, have approached you about either looking to come in and help you acquire some stations that may be undervalued outside of your network to be able to grow or help you with some strategic approach to be able to enhance the value of the -- of the stock?

That's a good question. We've got -- fortunately, we have got a lot of good friends in the investment community. We from time to time do hear guys interested in teaming up with us. We frankly have pretty much -- you know our history, we like to buy when nobody else is buying. And right now I think price is up, until fairly recently have been way too high for us. There has been several deals done in the last 12 months I thought at extremely high multiples, and I think that we have been concentrating on making sure we run our businesses efficiently as we can in a challenging economic climate. That's something we definitely would look at in the future. If we saw stations that fit our profile, they were number one stations in good markets and we thought we had some operating upside to them, we would definitely consider a partnership or a sidecar type arrangement with private equity guys. And like I said, we have had talks with guys like that in the past. So that is something that is on our radar but it is not anything that's up front and central right now.

Okay. Thanks a lot.

Thanks, Dave.

Gentlemen, at this time there are no further questions. Mr. Prather, I will turn the conference back over to you for closing comments.

Thank you very much. I want to thank everybody for joining us today. I promise you one thing, we are going to be working hard to make sure that we turn this into a great year. As I said, I think the second half of the year everybody in our industry is going have a smile on their face -- and because of political, I think the economy going to pick up too. I think we are hopefully getting near the bottom of this housing crunch and we will start seeing some positives. As we get close to the election, I think people start usually feeling better about things. But we will be concentrating on making sure we keep our expenses as tight as we can and looking for more ways to be more efficient. And, as I said, hoping to have a great second half with the Olympics and political coming up. I always say Jim and I answer our own phones and we are always available. Anybody that needs to call us can call any time. I look forward to talking to you at the end of our second quarter. Thank you, everybody.

Ladies and gentlemen, this will conclude the Gray Television's first quarter earnings release conference call. We thank you for your participation and you may disconnect at this time.