Gray Media Inc (GTN.A) 2013 Q1 法說會逐字稿

Good day, everyone, and welcome to the Gray Television first quarter 2013 earnings release conference call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Hilton Howell. Please go ahead, sir.

Thank you very much, operator, and good morning, everyone. Welcome to the first quarter 2013 Gray Television earnings call. We appreciate your time, your attendance and your support of our Company. As usual, I will have a few brief comments and will be followed by Bob Prather, our Chief Operating Officer; and then Jim Ryan, our Chief Financial Officer, will add his thoughts to our this quarter's results. Questions will follow.

We are off to a very good start for 2013 and have reported a very solid quarter. We beat our high-end guidance on revenue, reporting $78.2 million in revenue for the quarter compared to $80.1 million during a political year in 2012. That represents a 3% or $1.9 million decrease. The decrease was entirely driven by a drop in political revenue from $4.3 million from the last year's quarter to $600,000 this quarter. Of our five largest local and national advertising categories -- automotive, medical, restaurants, communications and furniture and appliances -- automotive has increased by 12%, medical has decreased by 8%, restaurants decreased by 2%, communications decreased by 8% and furniture and appliances have increased by 5%. For the quarter, we reported net income of $870,000 or $0.02 per share compared to net income of $2.2 million or $0.04 per share last year.

I would like also to use this opportunity to publicly welcome Michael Spiesman to our Company. Almost everyone in the broadcast industry knows Michael and we are so pleased that he brings his expertise in national advertising to Gray Television. All of us believe that he will be able to represent the Company as a compelling advertising buy because Gray's local television meets -- is a media property that represents an excellent opportunity for our national advertising customers. We believe that he will be able to even more effectively represent our Company to the national advertisers by being part of our Company.

I also want to take a special moment to recognize the traumatic loss from the explosion in West, Texas and how it has impacted so many of our viewers in that community. Our thoughts and our prayers go out to all those who have suffered due to this horrific explosion and the many personal tragedies it has created. In West, for those of you who don't know, over 350 homes were destroyed or damaged, 15 people were killed, 12 of which were first responders, and the explosion created a crater 90 feet in diameter and 10 feet deep. It destroyed a building that had a concrete foundation 3 feet thick and tossed concrete up to 150 yards away.

Our coverage of this catastrophe was superb. Bob Bunch and his entire team at KWTX in Waco, Texas, my hometown, should be complimented on their superb wall-to-wall coverages. Their professionalism, dedication and love of community represent the highest standards in the broadcast industry and in all of our local media properties.

Of note, in addition to our dominant viewership in the community, our website received 1.9 million page views and 260,000 video views. We received a 16% growth in Facebook fans, 61% of which came from mobile viewers, and a 21% growth in Twitter followers.

So many people were involved in our efforts that I cannot publicly thank them all. But for those investors, including myself, on this call this morning, it is this kind of coverage provided by KWTX that makes our investment in Gray Television of continuing value.

With that, let me turn it over to Bob for his comments.

Thanks, Hilton. I want to welcome everybody, tell you we had the good quarter. I think we are all a little bit -- after having such a great year last year, a little bit nervous about what this year was going to bring. But it started out strong and our GMs are telling me their markets are looking good for the second quarter and beyond. So, while I think the economy is still fragile, I think people realize the value of advertising in today's world.

I always use a quote, a lot of times, that Confucius said about May you live in interesting times. I think we're living in some very, very interesting times. Back in 2009, we had about six investment banks come in and advise us and everybody in the television broadcasting business to file bankruptcy some time in the next 12 months. And then in 2010, the same six came back and advised us to sell stock. So what's going on today doesn't surprise me. I think it's a reaffirmation that TV has been a good business and will be a good business. A lot of merger and acquisition activity going on.

We look at a lot of these things. Really, so far we haven't found a deal that is compelling enough that it fits our criteria and compelling enough that we felt we could buy at the right price to make it accretive for us. I think all of you know our number one priority has been paying down debt, which we want to continue to do. But if the right deal came along at the right price, I think you know we have been willing to move on those kinds of things in the past. But our number one priority -- we'll continue to get our balance sheet in better shape and to make ourselves a much more efficient and productive company going forward.

On that note, we are continuing with our automation projects. We are doing -- most of our stations in our larger markets will have automation in this year. We will have virtually all our local HD done except in a couple of very small markets, and they will be finished up early next year. So we think we will be in a position over the next few years to be top of the market in efficiency in news gathering. We are still doing a lot in the mobile area as far as news gathering with our TVU units, which are backpack multi-task journalism units. Our Chief Technology Officer, Jim Ocon, has come up with an idea which we've gotten approved and patented that will allow us to do what's called hotspots in our local markets where we can actually do the Internet, live Internet without having to go through the phone companies, which will be a tremendous savings for us of operating expenses in the years ahead.

But all these things -- we are trying to stay at the very cutting edge of technology without jumping off the ledge, so to speak. We are very careful about trying these out in selected markets; and when they work, then we roll them out pretty fast. But so far it has been working great for us and we want to continue to be the number one news source in the towns we are in and continue to be the technology leader in the towns we're in and make sure we are out there doing the right thing for these communities, both from the news coverage side and from the news technology side.

So I know the viewers don't really care what's going on in the back room, but I think they do care about getting the fastest, most efficient news in their markets. And I tell everybody, all our managers, nowadays, our competition is any of you people walking down the street with an iPhone that takes a video and puts it up on YouTube 30 seconds later, and suddenly you are the breaking news in that town. So we are embracing Twitter. We are embracing Facebook. We are embracing Pinterest, all these social media that people really have embraced worldwide and we are trying to make sure that we are in the same camp they are as far as our news gathering and our relationship with our communities and our communication with the people in our towns. So I think this will continue to be important. . I think Hilton mention Waco. I think Bob Bunch and his team out there did an incredible job. We were on the air 28 hours of uninterrupted coverage, and I think we clearly are the station in town for people to watch that wanted to know what was going on, on that horrible tragedy that happened outside of Waco and West, Texas.

I think this year, the rest of the year, I think is going to be a good year. We will continue the path we're on right now. As I said, we always keep an open mind, looking at the possible additions to the Company. But in the meantime, our number one priority is going to be continue to strengthen our balance sheet.

At this point, I will turn it over to Jim Ryan and he can go over some numbers for you. Jim?

Thanks, Bob. Good morning, everyone. I will focus my comments primarily on the balance sheet because I think between Hilton and Bob they covered the highlights of operating results for the first quarter, which again we were very pleased with.

From a balance sheet perspective, total debt at the end of the quarter was $835 million. We had $20 million of cash on the balance sheet as well. Our trailing eight-quarter average cash flow as defined in our credit facility -- again, it's a two-year average definition in the credit facility -- was $136.5 million., which put our leverage ratio under the credit facility at 5.97 against the covenant of 7.75. Certainly, as Bob said, the first priority will be to continue to reduce debt with free cash flow generation this year, so that average leverage ratio will be coming down during the course of the year.

Our CapEx for the quarter was $6.4 million. We had $81,000 in cash taxes, $2.9 million in syndicated program payments and $2.8 million of program amortization.

Turning briefly to the guidance for second quarter, again, as Bob had indicated, we feel very good about the quarter and where it is going. We see core growth local, national, ex-political, of course, but in a very healthy 7% range, which we are very, very pleased about. We will also see continuing growth of the retrans number, basically because of the addition of some additional channels as well as normal price increases in the retrans. As we have talked before, we do have a large contract coming up for repricing, about 1 million subscribers at the end of October, and we are looking forward to stepping that up to current market rates, and we have another 1 million subscribers on a different contract that will be repriced at the end of this year as well. So we will have a significant step up in the retrans as we head into early 2014.

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

Thanks, Jim. Operator, we are ready for questions at this time.

(Operator instructions) Aaron Watts, Deutsche Bank.

I just want to start out with a question -- obviously, it feels like, based on your guidance, the momentum in your core advertising continues to be quite good. And if I think about, for instance, what we heard last night from CBS, and I know you have a bunch of CBS affiliates, so they are not seeing as good a performance. Can you maybe just talk about some of the variances there, if you think that's big market versus smaller market or what else might be going on that's allowing you to outperform?

I think it's probably a combination of things. Network advertising is really -- we're almost disconnected from it. It sounds crazy, but I think you all have seen our presentations in the past where our number one stations have stayed number one year in and year out, even when the network that they represented was even as low as number 3, including CBS was a poor number 3 back 10, 12 years ago. And all of our CBS stations maintained their number one status at the time.

So I think there's a lot of -- I'm trying to think of the right word -- experimentation, I guess. I've used that term before with these advertisers on so many different ways they can advertise now that -- and the big guys all want to try big things. And so sometimes they move money out of TV and put it in something else or it gets moved around. I think everybody has been a little nervous about the upfront this year not looking quite as strong.

But on the local level, our business and stays strong. And when we refer to the term national business, it's a little bit of a misnomer. What national business means to a local broadcaster is it means the advertising was not bought in our market. In other words, if a national advertiser buys what we call a national ad, they may only be buying in two or three of our stations or five or 10, rarely ever all our stations. But we call that national advertising because the buyer came from somewhere outside of our market.

So the same way with what we call a regional ad, where we've got -- like, for example, a lot of the fast food groups have regional ad groups where their ads may be bought in Chicago, for example, for all the Midwest. We term that under national, regional and not local, even though it may only be in 8 or 10 of our markets.

So the network business and our business is a lot different, I guess, is what I'm trying to say. While we pay attention to it and we want our networks to be doing good and it helps us that CBS has the number one ratings right now, it's not a drastic effect on us day in and day out. I hope I didn't get too long.

Yes. No, that makes sense. And just one follow-up, I'm curious, within your station portfolio group, are you seeing variances between the different affiliations, so CBS versus your NBC affiliates, for instance, just based on some of the network viewership trends right now? Or is that also less impactful?

Here again, I think NBC, probably because they have been so weak in a lot of these areas, other than Monday night with The Voice, they have hurt us some in the past because they are some of our bigger markets. They are in Omaha and Madison, in Charleston, Huntington, some of our bigger markets. The 10 o'clock lead-in being weak has hurt our 11 o'clock news; I don't think there's any doubt of that. The Leno disastrous experiment back a couple of years ago hurt us then. But here, again, if we've got a strong affiliate of the market and the market itself is doing fine, usually our affiliate is going to be doing fine, even if the prime time ratings are hurting.

One of the areas that we do see -- NBC's morning stuff is -- we haven't seen it affect us drastically yet, but that makes me nervous because that has been so strong for so long that I don't want those guys to slip off the perch there. And Good Morning America has given them a run for their money and then actually hit them a couple of times, but that's a key element for NBC. And I think morning, as we've talked about before, is becoming more and more important in the TV business. Our morning news gets better every year, our ratings get better and we want to make sure we've got a good lead-in and then a follow-up afterward, coming out of whatever morning show NBC, ABC and CBS have.

And one last question from me -- you talked about the M&A going on and how you haven't participated to date. Do you feel like, as other groups get larger, that you will be at a disadvantage negotiating distribution agreements, programming agreements and such, if you don't participate and get larger scale?

That's a good question, Aaron. I would say I think we are big enough to have enough clout, and as long as we keep our strong stations with strong ratings in these markets, the syndicators want to be on our air. We have Wheel and Jeopardy! in 22 markets and we have had them for over 30 years and they continue to be leading syndicated programming for us. And we just renewed for another, I think, two or three years at very good prices.

So I think the strength of our local stations give us an edge there. And look, being bigger, like these AT&T commercials -- maybe been bigger is better. But we want to get better and bigger if we grow. So we would like to, like I said, maintain our discipline on the kind of stations we buy and maintain our discipline as far as how we run them. So I think that's more important than being big just to be big.

Look, David Smith is a friend of mine, an extremely smart guy. I'm proud of what he's doing. I think it's good for the industry. I give David -- he knows I clap for him every time he does something, and he has really been a leader. He was a leader in the retrans effort back several years ago and he has obviously got a good thing going now, and I'm all for him continuing to grow and continuing to build his business. But we've always had a different game plan. You can have two different game plans and both of them be good.

But we keep a close eye on him. And like I said, if we see a deal that really makes sense for us and we can justify it under our current mantra of we want to make sure we get our balance sheet in better order, we will take a hard look at it.

Thanks for taking the questions.

Marci Ryvicker, Wells Fargo.

The first question I have is that your second quarter seems to be accelerating in core advertising. I'm just curious as to -- it's being by certain categories and some that were down in the first quarter have turned positive, or any color you can give us on why your second quarter is so strong.

Jim, do you want to take that one?

Marci, in part we have thought all along that the year would start relatively slowly and then start to pick up as the year goes on. And, certainly, one of the things to keep in mind with us is that as we go farther and farther into the year, there was an awful lot of political spots sold last year, and certainly the political buyers are not there this year but will still be selling spots. So, obviously, local and national absorb some of that, which is obviously a good thing.

I think the trend line on category so far of what we are seeing in second quarter is not extremely dissimilar from first. Auto was strong in first quarter. It's continuing to be very strong. We are seeing an uptick in the communications category, at least as far as current pacing goes, from first quarter. And I think some of that is just some, whether they were MVPDs that to air buys in our markets or other telco companies, I think that's just some dollars shifting as people work their own marketing plans and strategies. And certainly, because of that, quarter to quarter you could get some volatility there.

Other things are generally consistent. So all in all, the second quarter is good, and certainly we think the second half of the year ought to be pretty good too.

So you anticipate acceleration throughout the year? Is that what your underlying commentary is referring to?

Well, we would expect a pretty good third quarter. It's a little bit farther out to say exactly how good, certainly a very strong second quarter. I think third quarter naturally is a little weaker for everybody in the business. So there will be some of that, just the natural cycle of the dollar spends slows up during the summer a little bit. And I think fourth quarter, if the year tracks like we would expect, and certainly the economy continues along at about the current pace or improves slightly, the fourth quarter would show some more acceleration, too, over second a little bit more. But some of that is just going to be, again, replacing political dollars with core local and national dollars. We'll be replacing some of the political dollars with core local national dollars.

Okay. And CBS has been one of the networks talking about when one of the potential responses to Aereo is taking broadcast model and pretty much going straight to cable. How do you feel about this hostility? And will it happen, number one? And, number two, what do you think it would do to the TV station business model?

Marci, we've talked -- Jim and I have talked about that a lot. First of all, I think part of it is just some posturing for the lawsuit. Number two, I think it would be very difficult because of -- I'll use three elements. Number one, the NFL; they have got a nine-year deal, and the NFL definitely does not want to go off broadcast TV. Number two would be NCAA Final Four, same situation. And then number three is Congress. I'm not sure if Congress is ready to give away a free broadcast model. And so all those things enter. And then there are a lot of companies signing agreements right now with CBS for 5 years, 6 years, 7 years in affiliation deals, and are they going to just abrogate those? I don't think so.

So I know Aereo has got all these guys spooked and it's winding its way through the courts right now. I don't think anybody knows the ultimate outcome, but I think we need to be figuring out a way to make sure our audience wants to keep us where we are. And I don't think, at the end of the day, any industry can fight technology that's coming. I think we need to figure out a way -- we are content providers and we've got to figure out a way to make sure we get the content to our viewers, however they want it. And I think we've got to embrace all these areas.

So I think it would be very difficult for these guys to do that. I'm not saying it's impossible, but I think Congress at some point is going to have something to say about this because I think, even though we are only probably talking about 10% of the population now, that 10% of the elderly and the poor and a lot of people in those categories that I don't think Congress wants to offend. That's my answer to the CBS and the FOX issues ongoing.

And also, at the end of the day, we are very important to them with our local news. You've seen our presentations before. We have two or three times as many viewers on our local news as they do. We bring viewers to them, and not vice versa. So we are important to them in the markets we are in. We are not a huge factor, obviously, nationally, but in the markets we are in, we are a very important factor to all our networks.

Thank you.

Larry Schnurmacher, Morgan Stanley.

Congratulations and stuff; the stock has been doing great. On one of the reviews I see, Capital IQ has a couple of estimates. I'm not sure where they get those estimates from. But they are saying that your guidance is a little light, according to what they have as estimates of $87.5 million for -- I guess that's revenue. And you guys are guiding to $84.7 million, $85.7 million. Where do they get those estimates? And was that your stuff or is that light or is that just their --

I have no idea where they get their estimates. You would have to ask them, but I think, again, if you go back and look and see where core local, core national is up a very healthy 7% range, maybe little bit more than that, I would consider that to be a very healthy growth rate for core business, especially in an off political year.

I agree. I was just curious if (multiple speakers) --

And you've followed us for a very, very long time. You know that, if anything, we try to be a little conservative in our guidance because the last thing we -- we've tried very hard over the years not to try to overpromise and under deliver. And I think our track record has said that we are usually in range or slightly above range, but we are pretty good about delivering on what we say we can deliver. And if we can do a little better, we certainly go for it and push it all that we can.

Also just -- I might have missed this -- did you say anything about resolving anymore, paying down any more debt or anything along those lines?

Well, again, most of the free cash flow this year that we will generate, and really a lot of that generation is because of natural cash use and timing of interest payments and stuff, will happen more towards the back of the year, but the first priority with the free cash flow this year would be to reduce debt.

Okay. Great, have a good day, guys.

Barry Lucas, Gabelli & Co.

Just really two items, Bob. Just coming back to the M&A front and with the understanding that debt reduction is job number one this year, but how would you prioritize the perfect deal for Gray in this environment where some of these stations are coming to market? So is it affiliation specific, is it geography specific, or is it all a matter of price?

I think it's boiling down to -- we've had the same criteria for 20 years now, Barry. We like to find, number one or a strong number two stations in what we consider good markets, big four affiliates, ideally. And we have had a bias to CBS, usually because CBS has some strong news operations in local markets and we want to have a strong news operation. We are not looking for turnarounds. I've always said we like turn-up situations where we think we can come in and make a good thing better. And we have been able to do that pretty successfully over the years.

And obviously, in today's world, I think here again he wanted to be accretive, if possible. I guess if it was neutral it would be okay. But we don't want to have our debt to cash flow ratio jump up with an acquisition. So that may sound impossible to find, but we have found them in the past and I think we will find them again in the future.

Great, thank you. And if we could just touch on the other use of cash and capped spending, it's a non-political year, so your free cash is down a bit. Where do you think CapEx is this year? And with some of those big projects winding down, 2014 and 2015, where do you think that CapEx number stays or goes?

We are actually moving into the two new buildings this year that we had -- one of them was under construction for part of last year and this year. The other one we bought but we are actually doing some renovation. And we are doing this for two reasons. One, we just need a new building. But, as I think I've talked about before, we are going from much bigger space down to much smaller buildings. We think they are going to be much more -- all of them will be automated, networked, very energy efficient, trying to come up with what we call a prototype of the station of the future.

So we're spending a little extra money doing that. I think if you -- and then we've got a couple of these what we call small add-on acquisitions. We bought the station out in the North Platte, which is market 209, and we are having a CBS affiliation there. We bought a small station in Dothan, Alabama where we are going to have an NBC along with our CBS there.

All those added together are around $22 million. But like I said, probably $4 million or $5 million of that would be involved in those buildings and acquisitions. I would say our normal CapEx for a year like this would be $15 million. In a political year, next year, probably to wrap up everything we need to do -- and frankly, we've got a couple of older facilities out there we would still like to look at possibly, if these buildings weren't as good as we think, doing the same thing because we have got some valuable real estate we think we could sell off now that the market is better and actually pay for the buildings and the new equipment with the real estate we sold from the old property.

So those are the kinds of things we're looking at, but I would say $20 million in a political year, $15 million in a normal off year, for the next two or three years, is probably reasonable for us to look at, probably no more than that.

Great, thanks very much, Bob.

(Operator instructions) David Hebert, Wells Fargo Securities.

I just wanted to ask a question about auto, up nicely in Q1. It sounds like it's a pretty big driver of your revenue guidance this year. I know the notion is to look at SAR and unit sales and talk about the growth we are expecting to see from the industry. But maybe if you could drill down a little bit into the micro level, what's going on at the local to dealer level from their comfort level in spending versus the OEMs and then foreign versus domestic?

I would say local dealers are feeling really good right now, and I think it really boils down to two key things. If you go back to 2009, really at the end of 2008, 2009 and 2010 and even 2011, part of 2011, the amount of cars being built and now cars being sold is almost 50% under historical levels. So there has been a huge pent-up demand.

The other thing that happened in 2009 in 2010 was financing virtually dried up for auto, for a point there, and so people just couldn't get financing that was decent to buy a car.

Both of those things have turned around. They are producing a lot more. They are up to I think it's going to be 15 million, 16 million cars this year. And the financing rates are incredibly cheap right now. And then the other thing that is incredibly is leasing is back strong. Leasing virtually disappeared in 2009 and 2010.

All these things are just -- it's manna from heaven for the average local dealer. And I think they are all trying to -- I think the biggest problem I've actually heard is them getting product. Most of the real strong dealers, the biggest complaint they got right now is getting product. So I think you are going to see the auto continue to be very strong. I think it would take a drastic something happening in the economy, the macro, that none of us could foresee right now to slow down the auto business.

Okay, that's a good answer. And then a different topic, Intel talking about rolling out a pay-TV service to compete with cable and others. Have you had any discussions with them, or do you feel like that's a positive for the industry?

Until we see what it is, here again, I think I had said earlier, I think we've got to consider ourselves content providers. We've got to consider ourselves the number one, I'll use the term again, local news source in the markets we are in. And we've got to convince the people who live in those markets, if they want to get local news, we are the place to come. We'll use any technology we need to get it to them. And I think that's the key for us as a Company is that we've got to be flexible in the way we look at how we deliver the product.

Think about it. Three years ago we weren't doing any tablets or desktop or mobile. We're doing all that now and doing a good job of it. And I think live mobile is around the corner. Again, hopefully -- and I think you are going to see more ways for us to -- we can -- people can get TV through the Xbox now and through all kinds of other devices. So I think Intel -- I don't know, I think they have been pretty quiet about exactly what they are going to do. But if there's a way for us to utilize it to get content to markets, we will utilize it.

Great. And then a question for Jim -- cash taxes for the quarter? And I apologize if you already gave it.

Yes, it was de minimis; it was $81,000.

Alright, thank you very much.

Larry Haverty.

You took care of my auto question, so I'll ask the same thing, more or less, in retail. Do you see any change in the mode of your retail customers indicating that they might be feeling better or worse?

You know, Larry, that's a good question. I would say retailers are nervous. I would use that term. I think business is okay for them right now, but I think most of them are nervous. I think this showrooming stuff scares them to death. I think they are all looking -- I think the penny debacle has scared retailers that are thinking about trying something different.

So I would say retailers are nervous. We haven't seen a drastic drop from retailers, but the people I talk to in that business, they are nervous about a lot of things going on in their industry that they don't feel like they've really got any control over.

Tell them to spend some time with their auto friends.

Yes, yes, exactly, yes. Well, the worm turns, as they say, so I think they need to be patient. (multiple speakers) Look, if you read about Bed Bath & Beyond and the guys that really know what they are doing out there, they are cooking along pretty good right now. So I think you just got to have -- you've got to be good at what you do to survive in today's world.

Amen, thanks, Bob.

Patrick Fitzgerald, Robert W. Baird.

I wanted to ask you about the non-presidential year in 2014. Given the emergence of super PACs' political spending, how should we think about that compared to 2010 and 2012?

Our off years have been going up every year. I'm not sure if they are going to this year. We had a real strong -- we had a record off year in 2011. I think there's not as many races out there this time. We are seeing issue money coming in, in some markets, already. In Florida, we've seen it. We've seen it in Wisconsin. So there is -- the off years get better every year. I don't know if this will be a record year late 2011 was or not. Right now, we are not budgeting that, but we have been surprised in the past.

And what about 2014? I know it's a long ways from then, but --

You know what I think, here again, I think the Republicans are still licking their wounds. I think they want to get mad and get even get somebody elected President. I'm sure the Democrats feel strong about how the demographics are working in their favor. But both sides have proved they can raise tremendous amounts of money in today's world. And if they raise the money, they are going to spend it. So I see no reason not to do better than we did in 2012, and 2014, frankly.

Could I add one thing to Bob's comments on the political front? We saw one thing in 2012 broadly and certainly in all of our markets, and that was the President came to market with advertising very, very early, probably historically early in the cycle and established a very firm imprint, as the final results showed, in terms of finding himself and finding his opponent. When we used to look at political cycles, both off year and on presidential cycle times, there was a relatively short window with a limited amount of inventory that was available for an advertiser in the political space to buy.

I think 2012 changed all of that and I think that the whole political year is now open in terms of advertising and there's going to be a whole lot more money coming forward because everybody in that endeavor knows that they've got to get on the air and they've got to establish things early. So I think it's enormously bullish for broadcasters and enormously bullish for Gray Television in all of our years.

Great, thanks for the color. And just in terms of pricing for super PAC versus candidates, could you talk about what you've learned, how that is different and what you've learned that can help you going forward about how to adjust your rates?

Well, you know, super PACs, we can charge them anything we want to. We charge them whatever the maximum rate at our stations are for that particular time slot. Most of the candidates also pay a fairly high rate because they want a guaranteed time slot. And we normally keep those guaranteed time slots -- we don't discount them, rarely ever, because most of our news is strong anyway. So I think our managers did a great job of managing the race over the years, especially. And I think we will continue to do that, but we are very conscious that rates are -- that we've got strong stations that are in demand in political years and we want to make sure we get the absolute top dollar we can for our product.

So were the rates that you charge for super PAC advertisers like in terms of a percentage, 10% more than what you charge the actual candidate advertisers?

You know, I don't think anybody in our Company has figured that out. Like I said, we charge the super PAC whatever we feel is a top rate that we can get in a time period they want to be. And like I said, the candidates -- if they want guarantees, they are paying the same thing also. And most candidates won't guarantee time slots. They want to be in our 5, 6 o'clock news or 11 o'clock news or whatever, or special programming during the day if they have some show they really -- and Wheel and Jeopardy! actually get some pretty good ad money.

So I don't think there's that much difference in what the super PACs are paying than what anybody else. One thing the super PACs a lot of times do is they come in at the last minute and want to spend money. And we probably -- like any business, we probably charge them more at that point, if they want to get on the air at the last minute.

But in general, look, we want to please all our customers and we want to make sure we're doing the right thing. And it's really the same -- this boils down to supply and demand. There's a tremendous demand for those time slots and our news in these markets. A typical number one station in our markets, we'll get two thirds of the TV ad spending in that market. So we are very conscious of watching our rates, keeping our inventory so we can have inventory available and these guys want it. It's a very meticulous process, and our GMs over the years have done an excellent job. I think that's why we've been the number one group in the country in the percentage of political advertising, really since the 1990s.

All right, great, thanks for the color. Keep up the good work.

(Operator instructions). At this time, we have no further questions in the queue. I'll turn it back over to our presenters for any additional or closing remarks.

Thanks, everybody, for joining us. As you all know, you can catch us any time on the phone. We look forward to talking to you at the end of our second quarter. And thanks, everybody, for your support. Goodbye.

That does conclude the conference for today. Thank you for your participation. You may now disconnect.