Gray revenues at $10.6 million

Atlanta :Gray Television, Inc. has announced results from operations for the three-month period (the “second quarter”) and six-month period ended June 30, 2010 as compared to the three-month and six-month periods ended June 30, 2009.

Total revenue increased $10.6 million, or 16%, to $75.6 million for the three-month period ended June 30, 2010 compared to the three-month period ended June 30, 2009 reflecting increases in local, national, internet and political advertising revenue, retransmission consent revenue, production and other revenue and consulting revenue.
Local, national and internet advertising revenue increased due to increased spending by advertisers in an improving economic environment. Political advertising revenues increased due to increased advertising from political candidates and special interest groups. Retransmission revenue increased due to the improved terms of our retransmission contracts compared to those in effect during the three-month period ended June 30, 2009. We continued to earn consulting revenue from our agreement with Young Broadcasting, Inc.

Advertising revenue categories by customer type, excluding political advertising, demonstrating significant improvement during the three-month period ended June 30, 2010 compared to the three-month period ended June 30, 2009 were: automotive, increasing 48%; medical services, increasing 14%; financial and insurance services, increasing 13%; and home improvement, increasing 12%. Revenue categories reflecting period over period declines were: communications, decreasing 19%; paid programming, decreasing 19%; and restaurants, decreasing 11%.

Broadcast expenses (before depreciation, amortization and gain on disposal of assets) increased $0.9 million, or 2%, to $46.1 million. The increase was due primarily to an increase in compensation expense of $1.2 million and national sales representation expense of $0.3 million, partially offset by a decrease in bad debt expense of $0.4 million and internet related expenses of $0.3 million.

Compensation expense increased primarily due to increases in sales incentive compensation of $0.6 million due to the increase in advertising revenue discussed above and an increase in pension expense of $0.4 million. As of June 30, 2010 and 2009, we employed 2,176 and 2,216 employees, respectively, in our broadcast operations.

Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets) increased $0.2 million, or 7%, to $3.8 million. The increase was due primarily to an increase in compensation expense of $0.7 million, partially offset by a decrease in consulting expense of $0.2 million and a decrease in legal expense of $0.2 million. The increase in compensation expense was due primarily to the payment of bonuses to certain officers totaling $1.05 million, partially offset by a decrease in non-cash stock-based compensation expense of $0.3 million. No similar bonuses were paid in the comparable period of the prior year.

Total revenue increased $19.7 million, or 16%, to $146.1 million for the six-months ended June 30, 2010 compared to the six-months ended June 30, 2009, reflecting increases in local, national, internet and political advertising revenue and retransmission consent revenue, production and other revenue and consulting revenue. Local, national and internet advertising revenue increased due to increased spending by advertisers in an improving economic environment.

Political advertising revenues increased due to increased advertising from political candidates and special interest groups. Net advertising revenue associated with the broadcast of the 2010 Super Bowl on our seventeen CBS-affiliated stations approximated $860,000 which was an increase from our approximate $750,000 of Super Bowl revenues earned in 2009 on our ten NBC-affiliated stations. In addition, results in the six-month period ended June 30, 2010 benefited from approximately $2.8 million of net revenues earned from the broadcast of the 2010 Winter Olympic Games on our NBC-affiliated stations. There was no corresponding broadcast of Olympic Games during the six-month period ended June 30, 2009. Retransmission revenue increased due to the improved terms of our retransmission contracts compared to those in effect during the six-month period ended June 30, 2009. We continued to earn consulting revenue from our agreement with Young Broadcasting, Inc.

Advertising revenue categories by customer type, excluding political advertising, demonstrating significant improvement during the six-month period ended June 30, 2010 compared to the six-month period ended June 30, 2009 were: automotive, increasing 45%; financial and insurance services, increasing 18%; medical services, increasing 15%; and home improvement, increasing 9%. Revenue categories reflecting period over period declines were: paid programming, decreasing 20%; communications, decreasing 18%; and restaurants, decreasing 7%.

Broadcast expenses (before depreciation, amortization and gain on disposal of assets) increased $2.8 million, or 3%, to $93.7 million. This increase was primarily due to increases in compensation expense of $2.5 million and national sales representation expense of $0.5 million, partially offset by decreases in electricity expense of $0.4 million and bad debt expense of $0.3 million. Compensation expense increased primarily due to increases in sales incentive compensation and pension expense partially offset by a decrease in healthcare expense.

Sales incentive compensation increased $1.2 million due to the increase in advertising revenue discussed above. Pension expense increased $0.7 million. Healthcare expense decreased $0.4 million due to lower healthcare claims. National sales representation expense is equal to a certain percentage of our national sales revenue (including certain political advertising revenue) and increases as this revenue increases. Bad debt expense decreased primarily due to an improvement in the quality of our accounts receivable balances. We attribute this to an improving economy and an increased focus on collections. Electricity expenses decreased due to the discontinuance of our analog broadcasts.

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