Gray Media Inc (GTN.A) 2013 Q2 法說會逐字稿

Good day and welcome to the Gray Television second-quarter 2013 earnings release conference call.

Today's teleconference is being recorded.

At this time I would like turn the conference over to Hilton Howell, President and Chief Executive Officer. Please go ahead.

Thank you, operator, and thank all of you for joining us for lunch this afternoon and welcome to our Q2 presentation for Gray Television.

As is usual, I will be making a few brief comments followed by Jim Ryan, our Senior Vice President and our Chief Financial Officer, and then by Kevin Latek, our Senior Vice President for Business Affairs. As usual we will take questions at the conclusion of our comments.

Overall, we are very pleased with our operating results for the second quarter of 2013. Our revenue excluding political remains strong and our expenses remained in check. Our total net revenue decreased $10.4 million or 11% to $84.3 million for the second quarter of 2013, compared to the second quarter of 2012.

As all of you know, comparisons between odd number and even numbered years are very challenging due to the highly cyclical nature of political advertising revenues of which Gray receives more than its fair share. Overall, Gray Television had another excellent quarter. Our total net revenue of $84.3 million is the highest level in our Company's history with the sole exception of the politically fueled second quarter of 2012. We previously hit a high watermark for the second quarter in 2011 when we reported $76.2 million in revenue. In other words, this quarter's revenue is an impressive 10.6% higher than our previous nonpolitical record set in the second quarter of 2011.

It is important to appreciate that we generated 10.6% higher revenue with essentially the same stations and markets that we owned in the second quarter of 2011. Our core business remains strong and continued to grow in a second quarter. Local and national advertising revenue and retransmission consent revenue increased due to increased spending by our advertisers in a slowly improving economic environment. Fully 8 of our 11 core advertiser categories were up year-over-year, and three categories were up by double-digit percentages. Two categories were essentially flat while only one category decreased meaningfully from last year. Retransmission consent revenue increased again primarily due to increased subscriber counts and rates.

Turning to non-core revenue, everyone on this call and everyone who follows our industry understands that political advertising revenue is highly cyclical and most of you know that Gray earns a relatively higher percentage of political revenue than most if not all other public traded television groups. Moreover, last year saw record amounts of candidate and issue advertising placed much earlier than before in the presidential and other campaigns.

In contrast, we see very few campaigns occurring this year in our markets, and political revenue has largely evaporated as result. All of this makes year-over-year comparisons very difficult for a company like Gray with strong stations in key markets. In particular, political revenue for the second quarter of 2013 decreased $11.6 million from the same period of last year. The lack of this political revenue largely explains the decrease of $10.4 million in total revenue between second quarter last year and the second quarter this year.

Let me turn briefly from revenue to cash flow. For the second quarter of 2013 we reported $32.3 million dollars in broadcast cash flow and $28.3 million in broadcast cash flow less corporate expenses. This morning's earnings release explained that, again, due primarily to the absence of political revenue the second quarter's results represent a decrease from the cash flow reported in a second quarter last year. What I think is equally, if not more important, is the comparison of the second-quarter 2013 cash flow to the corresponding period in the last off cycle year.

Our broadcasting cash flow this quarter represented a healthy 21% increase over broadcast cash flow in the second quarter of 2011. Even better, broadcast cash flow less corporate expenses increased an impressive 22% over the same quarter of 2011. My final note on finances concerns our earnings.

This morning we reported earnings per share of $0.09 per share during the second quarter. These results represent a tremendous improvement over our last odd year second-quarter earnings when we reported just $0.01 in per-share earnings. This achievement is even more impressive when you consider that we increased earnings per share from $0.01 to $0.09 with essentially the same stations and the exact same markets that we had in a second quarter of 2011.

We are very pleased with our performance in this off cycle second quarter. In other news, as all of you know, in late June Bob Prather, our long serving President, resigned, our Board accepted his resignation and appointed me as President. Shortly thereafter we announced a new management structure that we believe will enable us to continue to grow Gray Television in efficient and prudent ways. I like to personally thank Bob for his years of service to Gray Television and to wish him absolutely the best in his future endeavors.

I'm also very pleased to report that on August 2 we announced that we had entered into several agreements that will result in our first-ever Shared Services agreement. In particular, Gray agreed to purchase the tangible assets of ABC affiliate KJCT in Grand Junction, Colorado from the News Press and Gazette Company.

The newly formed Company called Excalibur broadcasting, which is owned by former regional Vice President of Gray Television, will purchase the FCC license, programming agreements and other assets of the station. The transactions are obviously subject to FCC approval, and we anticipate the closing will occur in the fourth quarter of this year. After closings, Gray we are able to provide certain services to Excalibur through our local NBC affiliate in Grand Junction, KKCO.

Finally, I want to highlight that on Tuesday of this week we received the final payment from Young Broadcasting under our now expired management agreement. The payment totaled $7.1 million. In accordance with GAAP, we will recognize this payment as revenue in the quarter ending September 30, 2013.

This brings my formal comments to a close, and I will turn it over to our Chief Financial Officer, Jim Ryan. Jim?

Thank you, Hilton. Good day everybody.

Talking about the quarter first again, we were happy with core revenue, local was up 5%, national was up 5%. Internet was down slightly, which was a bit of a disappointment to us, and it's something we will be focusing on as the year progresses. As Hilton already mentioned, retransmission was up $1.1 million and 13.5%. Auto was up 8.5% in the quarter. It represented about 24% of our air time buy. Legal was up 15%, Communications up 13%, home improvement 11%, supermarkets nearly 7%, furniture, department stores, entertainment all up between 4% and 5%.

The only softness we continue to see, and it is been a trend for the last several quarters, is finance and insurance was down 9%. Medical was almost flat just down 1%, and restaurants were essentially flat. And as Hilton already mentioned, broadcast cash flow less cash corporate expenses Q2 '13 to Q2 '11, so it is off year to off year, is up 22%. On the six-month numbers, again, we are pleased with overall local national core revenue. It was up 3.5%, local up 3%, national actually in Q2 up a little bit more at 4%. Again, Retrans is running at about 13%, 14% increase, $2.3 million for the first six months.

Auto for the first half of year has been up 10% and, again, the trends that I just discussed for second-quarter are very similar for the six-months; legal, supermarkets, all up double digits; department stores, 7%; furniture and appliances 5%; home improvement, entertainment, commissions all up lower single digits, as well, with just finance again continuing to show a negative trend; medical also a slight negative trend.

Our guidance in the earnings release, again, calls for strong core growth of about 5% to 6% in Q3. We are up against very tough comps in Q3, going against the $5.1 million of Olympic related revenue in Q3 last year. That's going to probably dampen our national a little bit in Q3. We expect it to be down slightly maybe about 2%. Again, strong continuing growth in retransmission, all in all, a very strong Q3, and, as Hilton mentioned a minute ago, we will be booking the $7.1 million of the final incentive fee payment that came in from Young this week.

Turning to the balance sheet, our debt to trailing eight quarter average cash flow ratio was 5.84 against the 7.75 covenant. Our first lien ratio was at 3.69. Really the debt had not changed, we are still $835 million total debt.

$535 million of the term loans are outstanding, and we have $300 million of ARS, unsecured notes outstanding. Cash at the end of the quarter was at $23.4 million. Our CapEx for the quarter was $6 million with a year-to-date number of about $12.5 million. Cash taxes for the quarter was just over $400,000 in year end, six months year-to-date just at $500,000. As we have talked about many times we don't see ourselves being a [big] cash taxpayer any anytime in the near future. Program payments were $2.8 million for the quarter, $5.7 million for the six months, and that basically tracked the same for program amortization as well. Reverse comp to various networks was $1.8 million in the quarter and for 6 months it is $3.7 million.

At this point I will turn it over to Kevin.

Thank you, Jim.

My name is Kevin Latek. This the first earnings call that I've joined, and I promise I'll be brief. Hilton asked me to highlight a few of our milestones from the second quarter 2013 and the past several weeks. As this quarter began we launched the KSNB TV in Lincoln, Nebraska. It's a full power television station. We're operating as a duopoly with our CBS stations in Lincoln. KSNB has been branded as Central Nebraska News. It broadcasts news in high definition, and we've already secured carriage in essentially all the homes in the market.

In early June we constructed and began operating WRGX, first NBC affiliate for the Dothan market. This new station is run on a duopoly with our existing Dothan CBS station, WTBY. We are proud of our team in Dothan for constructing this new station high definition in less than four months and getting it cleared on every major cable and satellite system by the end of July, which is truly record time.

June also brought number of wildfires to Colorado where as you know we have stations in both Colorado Springs and Grand Junction. Colorado Springs, our CBS affiliate KKTV, worked tirelessly around-the-clock. They were on the air continuously for 100 hours to cover the Black Forest fire. This fire sadly killed two people and destroyed even more homes than last year's Waldo Canyon fire, which at the time was the most destructive wildfire in Colorado history.

On the other side of the state, our NBC affiliate KKCO in Grand Junction had its hands full covering numerous simultaneous wildfires on the western slopes of Colorado. We are very proud of the superb work that our dedicated reporters, videographers, producers and others demonstrate in Colorado and all of our markets when their communities most need them.

Finally, our team in Lincoln, Nebraska which literally just finished launching -- constructing and launching KSNB is now finishing up an effort to construct and launch another new station, which is KNPL in the market of North Platte in the western side of Nebraska. KNPL will be the first CBS affiliate for this market. For decades viewers in this underserved market have been able to receive our programming out of Lincoln and Grand Island, but by early September, our new station KNPL will launch as a standalone operation with its own local news, weather and sales force. This will allow us to create a statewide news and information network.

These are all opportunities that we have discovered over the last few months and worked very hard to launch them. We though they were worthy of mentioning here on this phone call.

So with that, I will turn the discussion back to Hilton.

Great, thank you. Thank you, Kevin and Jim both. And at this time operator, we'd like to open up the call for any questions anyone may have.

Absolutely.

(Operator Instructions)

Aaron Watts, DB.

A couple questions from me. I guess first just a clarifier, Jim, on your outlook for the third quarter your local up 5% to 6% ex-political and national up around 2%, that is despite the lost Olympic revenue, correct? That's baked in there?

That's correct. That's baked in, and actually in national we expect to be down slightly because of the tough comps created by the olympic revenue from last Q3.

Okay.

And then secondly, can you just remind us the near-term landscape in terms of your affiliation renewals and then on the other side of the coin, any large MSO's or satellite distributors that you have coming up for new subscriber deals?

Yes, let me take the MVPD first. We have 1 million subscribers coming up at the end of October for re-pricing and an additional 1 million subscribers coming up at the end -- in December of '13, at the end of this year as well for renewal and re-pricing. And then at the end of next year -- at the end of 2014, we have approximately 4.5 million subscribers that will also be on -- at renewal and up for re-pricing as well.

As far as affiliations go, we did our deal with NBC last year. Our ABC affiliations are up at the end of this year which will work well with the 2 million subs we get to re-price by the end of this year. And then our CBS affiliations are up at the end of '14 which will work nicely with the re-pricing of, as I said, about 4.5 million subs at the end of '14.

Great.

And Jim, your total subscriber number right now?

It is about 6.5 million.

Okay. Got it.

And then the last one I had just maybe more big picture for Hilton. Just as you've seen some of the big transactions that have taken place, consolidation plays in the space, I know you have picked up a couple stations here and there, but as you see those larger transactions happen, Gray hasn't been a participant. How do you think about Gray a year from now, two years from now? Do you feel like Gray will participate on a larger scale in consolidation as a buyer, potentially a seller -- just curious your thoughts on your strategic future?

Sure, Aaron, I'm delighted to answer that question.

I think that Gray Television has really a vital and integral role to play in the consolidation of this industry. As you saw, we really have the first opportunity that we have had as a Company through the foundation of Excalibur and the acquisition of the station in Grand Junction to really expand our duopoly footprint. As you could tell also from Kevin's comments, we expanded a lot from the [novo] stations that we have opened in our markets. I think that there is a great deal of opportunity for us to pick off stations that fit our profile. I think there's been from a lot of players and certainly a lot of press discussion about scale. Certainly I understand that from everyone's perspective, but everyone sort of talks up their own book.

The way I look at scale in this business is very simple. I mean it scale within our markets and Gray, I think, over the last 20 years has built a remarkable portfolio of stations with or without duopolies. We have a dominant share in every market that we play in. And consequently, in any negotiation with any -- with any MVPD, with anyone, we are going to be in a very strong position. So scale is something I think it is critical, but everyone sort of looks at it from a different standpoint. I will say in terms of acquisitions, we have looked at things, and in all of the earnings calls since '08 that I have participated in, the mantra from us is that the Company was in a delevering mode, and we still are.

But there are certain stations and there are certain groups that are perfect fits with the Gray Television portfolio. And we will make every effort we can in a reasonable and prudent fashion and in a fiscally sound fashion to add those type of stations that we think of as Gray TV type stations to the portfolio of this Company. I also think quite candidly there's a lot of family-owned businesses and family owned television stations that are looking for someone that shares our corporate culture that is similar to theirs with regard to our commitment to local news coverage, with regard to our commitment to our communities, with regard to our commitment to what we are doing in terms of creating really valuable content that goes in those markets. And so I think that Gray as a company has a long road ahead of it in terms of being able to add those type stations to our portfolio. Now I will say, our Company, you ask about potential sales -- really there's been a tremendous amount of speculations about acquisitions, us being sold -- everything else. First I want to say the Company is simply not for sale.

But let it be known that I'm certainly aware that a lot of people would love to buy us. I'm not and would not say absolutely never, but from where we stand today, we have a long road ahead where we can grow and expand and increase the shareholder value of all of our shareholders, and that is what our duty is, that's what our fiduciary duty is, and that is what we plan to do. I do think that you are going to see us, we have nothing we are working on. There's no contracts, but if you get around the business much, I think it is fair to say that we have been in contact with every principle, with every group of almost every size in one level or another. There are a wide variety of different permutations that we are looking at, and who knows what the future is going to be. Our plans are to staying independent but that doesn't necessarily preclude almost anything, because there's a large number of ways to structure transactions to make sure that we enhance the shareholder value of the Gray Television shareholders.

Does that answer your question, Aaron?

Very helpful, thank you for your thoughts.

Marci Ryvicker, Wells Fargo.

I want to dig into a little bit on core trends. Curious as to how the months trended in the second quarter and how they are trending in the third quarter, specifically September just because we heard from a small-market billboard operator who said that September is soft from a couple of movement of some national contracts. I know your comping against the Olympics. Is there anything you could talk about there? And then the second question have retransmission consent negotiations gotten tougher over the last couple months, and do you think the Time Warner Cable CBS dispute is going to weigh in at all when you go up to negotiate?

Jim, you want to --

Marci, I will take the trend question first.

Overall, Q2 was a little bit mixed. April and May, where April able is about 4.5% up, this is ex-political, not -- let's make it clear it is ex-political. May, we actually had a strong May up about 6.5%. June came in at about 5%, but actually it would be fair to say June actually slowed up on us as we got into June which was a little bit of a surprise to us. What we saw there was auto being very strong in the first part of the quarter and in June it tapered off to a mid-single digit. Looking ahead through third quarter, obviously we've got really tough comps in August because of Olympics.

September is right now pacing slightly down to about flat. It is a little early to tell, but we think all in all local will do well in September. Again, it is a little -- the actual amount in that we've already got booked for September is actually only about 60%, so it's -- we've got a ways to go yet. It seems to be tracking okay, though. Auto, though, does at least for us look a little bit slower, definitely slower in Q3 than it has been the first two quarters of the year.

Marci, let me just address just a little bit, and then Kevin I'd like for you to follow-up behind me as well. Because as some of you guys may or may not know, Kevin in his private practice led our retransmission negotiations on behalf of Gray a couple of years ago. But let me just say with regard to the CBS Time Warner controversy. As it stands today we are the largest CBS affiliate, and we very much stand behind CBS in its effort to get a fair payment stream for the quality programming that they put out. Are those negotiations going to be tougher in the future? I think the headlines clearly indicate that's going to be the case. To date, Gray has never had to take, at least to my memory, any of our stations off the air to reach any sort of agreement with any of our cable operators, and I hope that that stays true in the future.

But I think that the negotiations may be tough in the future, and I think we're going to have to be steeled and prepared for them, because I think everyone has to -- the viewing audience that we bring to each of those markets is enormous and it is tremendously large, and our Company needs to receive payment for it as do our network partners. So we want to stand lock step with CBS in the negotiations. Clearly I'd be delighted to be the beneficiary of anything that Les Moonves and his CBS team do, because they are really the best in the business in a lot of ways. But our Company is prepared, because I don't think any of our cable operators can simply do on a local basis without our television stations. I don't think there's a chance of that happening. Kevin, do you want to follow-up from there?

I think Hilton hit all the high points here. The Time Warner dispute is with CBS is almost a repeat of what we seem to see a lot. I think CBS had an interesting fact in one of its releases that this is the first time in history that CBS has been dropped from any cable system, while Time Warner has dropped more than 50 channels in the last five years. So I think the negotiations have always been tough with certain operators. I don't think they are going to get any easier as broadcasters continue to seek fair compensation for the programming that we are delivering and the eyeballs that we are bringing to the table. For Gray in particular, it is going back to Hilton's comment earlier regarding scale. We have over the last 20 years consciously built a company with the strongest brand in its market and that we think helps us with our negotiations with all vendors and employees and talent.

In terms of Retrans, while we may not have a coverage at 30% of the country in any local market, it would be extremely difficult to operate a MVPD without the leading newscast and without the best programming, the leading weathermen, et cetera. That's the way that we have focused on scale, and that's a business that Gray has built. So I was very -- I enjoyed doing the Retrans for Gray before I came here. I'm sure that our next conversations are not going to be a walk in the park, but I suspect that Gray in our good relationships with the MVPDs will result in improved Retrans contracts without the public rhetoric that sometimes has to accompany these negotiations.

I appreciate that.

I just have one follow-up ago do anticipate any change in regulations around retransmission consent, or what are your views there?

No. Short answer.

Thank you very much.

David Hebert, Wells Fargo.

Back to your comment on leverage. I just wanted to get a sense for if anything is changed as far as your target. I know Bob had historically talked about you guys would get below five times and then sort of look at shareholder returns or -- and/or M&A, has that notion changed at all?

No. The notion and the goal has not changed, Davis, but I will say that there -- our industry has changed in the last 12 months. So we have had targets out there that we were planning to hit, but things are moving very quickly in the broadcast space, and I think it would be inappropriate for us not to pay attention to that change. Acquisitions that we make, for instance, Grand Junction, that is clearly going to be a deleveraging acquisition for us across the Board as you look at it. Everything that we have done in terms of the [de novo] stations that Kevin referenced and then actually three or four more new stations that we haven't talked about that much were immediately accretive to our cash flow. And, in fact, in some of our meetings with investment bankers around some of you may have been on the phone right now -- a statistic that I did not know, our Company post re-financing in October brings a larger percentage of its cash flow to the bottom line than any other publicly traded comparable that people have been able to track.

What I think that that means as -- assuming the economy remains stable and improving, that we will be able to de-lever in a continually aggressive way, while at the same time looking at potential acquisitions that fit us. I think in terms of acquisitions you need to know that we are not interested in numbers for the sheer sake of numbers. We are interested in stations that deliver what our stations deliver. There's only a handful of those left in the country. We are not going to ignore those opportunities, but we are going to make sure that those opportunities, if we succeed in that transaction, are helpful in our effort to get to goal that Bob had mentioned to you, because personally, the way I run every business and -- my rules are simple. It's solvency, profitability and growth.

And so I very much want to have, a solid and comfortable balance sheet, and I do want to be able to return in time to paying dividends to our shareholders. But there are certain times in the world when one needs to step out, and so we are looking aggressively at partners and at deals. And we will make sure that we do our absolute best to keep that leverage in line in terms of all of those acquisitions or potential ones, because I have nothing here to share with you with regard to anything we are looking at.

Does that answer your question at all, Davis?

Absolutely. That's very helpful.

Then on the mobile TV front. I know with the Time Warner Cable and CBS negotiations that Aereo has been but the forefront, as maybe or maybe not the point of leverage. But whether Aereo is legal or not is another conversation, but do you feel like the presence of Aereo has resulted in a sense of urgency around a mobile TV effort for the industry? And where does Gray stand on that?

Let me say that and then I'd then I'd like both Jim and Kevin to join in as they see fit. I certainly hope so. My standpoint is that our industry needs to get itself moving on mobile television. And I don't think there needs to be any inter-fraternity thoughts about this because mobile is the way the world -- it isn't moving. It is there. So my standpoint is, if we are not there now, then that's a problem. So we need to move, and if Aereo is an impetus to our industry broadly to move towards that, then I applaud it.

Because Gray has been, I think, almost unique among its market sized companies as a true pioneer. In many instances this is because of Jim Ocon, who is the head of our technology, who has pushed so hard. Because we've been out there on every front. As you know we had the announcement about Syncback and what was going on there earlier in this year. But we have looked at every different thing and tried to do really progressive things and forward thinking things, and so we are there with regard to mobile. If Aereo is an impetus for everyone else, then that something good that comes out of Aereo, despite its illegality.

Kevin or Jim, do you have anything to add?

I will address the context you may know Gray Television put four stations up in the mobile DTV platform a number of years ago. We --two CBS, two NBC, it was literally a test. We constructed -- spent a $2 million constructing mobile DTV platforms at these stations, smaller markets to help the networks, help our partners, help other broadcasters and ourself figure out how does it work, and how well does it work, and what we need to improve? Gray has been -- Gray was not part of the Pearl Group, we participated in some of the mobile 500, but we did not sign up with either technical standard, and we have experimented with this now for number of years. And I think Bob's original vision was we will step up to the plate, spend the money, get our station -- get some stations up and the rest of broadcast industry will meet us at the altar. It didn't entirely work out that way for a couple reasons.

What we have sort of shifting our focus now to Syncback. Syncback, as you probably know is an Internet delivery protocol so you can receive a TV station on mobile devices; iPads, tablets, mobile phones. It is geocoded so that you see only stations within the market, and it is initially authenticated so the station only streams the content it has the rights to stream. We were approached by some networks about this. A lot of broadcasters were talking about this a little while ago and even some syndicators have asked about it. So earlier this year we signed up two of our markets for an internal test. Syncback technology worked extremely well. We rolled it out to a couple more stations. It worked just as well there. So we then polled all of our stations and asked if anyone else would like to roll out with Syncback, and actually every one of our GMs raise their hands and said, yes. And some called to say how can I get to the front of the list?

We have rolled out Syncback now at all of our stations and technologies there. We are currently streaming in a closed environment. In the next couple weeks we will be able to lift the veil on that and launch all the stations commercially. At that point we will be streaming to the viewers in the local markets only. I would say our local content, fair amount of syndicated content and at this point none of the network content. I'm hopeful that we will see that very soon. Obviously, we need to be sure that network content is behind the TV Everywhere laws so we are not giving our content away for free.

So those discussions are now in the works. You probably know Neilsen is rating the Syncback viewership, so I think all the pieces are here. Since we announced the day of the CBS affiliate meeting in May that we would be launching all of our stations on Syncback, we have personally gotten a lot of phone calls from other broadcasters who have asked us about our experience and are joining us. So I think there's -- mobile is certainly in everyone's mind. I think Aereo is part of the impetus. Syncback seems to be working well and gaining a lot of traction, and it seems that that's probably going to be a solution in the near-term for mobile delivery. Whether the broadcast mobile platform works or not, is something we are still very interested in, and we are still committed to seeing through to the end. But at this point Syncback does seem to have the lead as a solution for broadcasters.

Thank you, guys. That's really interesting to see how it plays out. Appreciate the color.

Thank you. (Operator Instructions)

Barry Lucas, Gabelli and Company.

Just kind of a nuts and bolts question for Jim. It looks like you pretty much over delivered on the expense comp in 2Q, but a fairly sizable ramp in Q3 and just wondering Jim, how much of that is -- might be attributable to the launch of the new stations and/or the JSA agreement?

The JSA really we wouldn't expect anything or any significant activity there in Q3. That will be a Q4 event. Those additional stations we've been building out in both Nebraska and then North Platte, that's part of the ramp-up is people come online to support those operations in Q3. That's part of the uptick a little bit.

And Dothan as well where we've also added a new NBC in Dothan last couple --

Thank you, Kevin.

And if those stations weren't in the mix any sense of what -- (multiple speakers).

I don't have an exact number on that. Those additional channels and stations aren't taking a huge amount of people. North Platte is probably the most aggressive one and even there we are talking a staff of probably under 20 people, maybe closer to 12, someplace in there. I'd -- out of the up 5%, 6% in the guidance I think there's 1% or 2% in that, and the rest is just kind of core.

Great. Thanks.

One other thing maybe if Hilton wants to polish up the crystal ball and look out towards 2014 political. You did a great job in '12, no doubt about that and over delivered there. How do you see '14 shaping up as a non-presidential year?

Hilton, if I can jump in just a ahead of you for a second, just to be clear to make it easy then you can frame it a little bit more. But '14 obviously is a non-presidential year, Barry, like you said. By my last count we've got 15 Senate seats open in '14. Obviously there will be house seats. Also '14 governorships and some of those Senate seats and governors are going to be open seats, so we would expect them to be somewhat contested. And to put it again to give a little bit of historical perspective, 2010 would have been the last off year non-presidential, and we came in at $57.6 million. So Hilton, whatever your thoughts are for '14?

Thank you.

Well, Barry, I think there's number of lessons that we can take out of the last Presidential election as sort of common investors in the broadcast business and whatever political party you may be affiliate of, President Obama established a precedent that I think is stunning, brilliantly successful, and hugely in the benefit of television station operators, especially those operators like Gray Television who deliver dominant news in a dominant position in the DMA's of their choice -- of their service. What we saw was Presidential money coming in from the Obama campaign in May that ran consistently all through the summer right up until the general election. I think there was a lot of speculation that the Romney campaign was going to deliver a knockout blow in the last six weeks, and the truth of it is, that's not -- it doesn't work that way any longer. Early voting starts much earlier than it ever has before in market after market, and people's minds can be quickly identified. And so I think going forward I think two things are happening or going to happen all in the benefit of our industry.

First, I think the window is going to expand dramatically for political advertising in 2014. And if the political parties -- and they have the ability to raise that money, and so I think it is going to be there. I think that you have a highly partisan environment right now where both parties are going to be battling to either keep or take the Senate. The entire House of Representatives it going to be up. Jim gave an excellent analysis of the number of Senate seats, all the House seats obviously and the governorships that are open in our states of business which is hugely beneficial to us. And so I think that it is going to be a fantastic political year. I really do. I hope that answers your question. If you want to follow-up on that I'd be happy to --

No, that's great, Hilton. Thanks for the color.

David Hebert, Wells Fargo.

Thanks for taking the follow up.

Just want to ask a quick question on a sort of refinancing opportunity you might have given the strength of the bank debt market right now?

When we refinanced last October the term loans came with a soft call at 101 for the first 12 months. So obviously that will be coming off in October. I think that's something that obviously when we get to October, the call is off, and if the leverage loan market is still very strong, it will probably be something we would look at. It is all obviously going to be rate dependent when we get a few months down the road.

Okay, great. Thanks.

Thank you.

(Operator Instructions)

And I'm showing that we have no further questions at this time.

All right. Well, I just want to take a moment to thank everyone for your attendance this afternoon, sharing your lunch with us. I really sincerely appreciate your support of Gray Television and the support of our shareholders. We look at the future as exceptionally bright for this Company and look forward to it with great anticipation. Thank you, and we will talk to you next quarter.

This concludes our conference. You may disconnect any time. Have a wonderful day.