Grey Television Inc. (NYSE: GTN)
Grey Television’s stock rose more than 14% yesterday on heavy volume after announcing that it has reached agreement to acquire all of the radio and television stations of Schurz Communications for $442.5 million. The deal increases Grey’s reach to 49 television markets in 28 states and includes the number one ranked station in 39 of those markets.
CEO Comments
“Today is a momentous day in Gray’s 118-year history,” said Hilton H. Howell, Jr., Gray’s President and CEO. “Through the Schurz transaction, we will significantly expand the quality of our portfolio of leading television stations. We welcome more dedicated reporters, account executives, and technologists to our growing family. Quite simply, Gray’s existing stations will make the Schurz stations stronger, while the Schurz stations will make our existing stations better.” prnewswire
Financials
Grey recently announced record breaking operating results for the six months ended June 30, 2015. Revenue for the period was $276.8 million representing a 39% increase over the six-month period ended June 30, 2014. Net income for the six-month period ended June 30, 2015, was $17.7 million, which was also the highest for any first six-months in company history. The company also achieved record broadcast cash flow of $104 million for the six-month period.
Looking forward, the Schurz acquisition is expected to close by the end of 2015 and will be immediately accretive to the company’s top and bottom lines. Grey executives noted that on a pro forma basis, assuming that the Schurz and other acquisitions had been completed by January 1, 2014, net revenue for that year would have been $774 million. This compares to reported revenue of $508 million. Grey’s strategy of acquiring high quality, cash positive media assets is succeeding on all levels. Yahoo Finance
GTN Technical Analysis
Prior to yesterday, the recent stock price decline of GTN can be attributed to the overall selloff in the markets. Not surprisingly, as the market found a bottom, GTN stabilized and consolidated in the $10.70 – $11.00 range, which has been a key price level since November 2104. Also not surprisingly, the gap up and surge today was stopped at long term support/resistance level of $13.50ish.
On a shorter timeframe, price stayed above VWAP all day. This is significant as institutions control 97% of the float and their traders are rewarded for buys and sells relative to VWAP. Bottom line, institutions liked GTN today. For me the trigger for a long is $13.50 bids getting hit with volume. If I go long, I will expect some resistance at $14.30 and again at $15.55. On the risk management side, I would get nervous around $13 and set a hard stop at $12.90. The price action over the next few days will indicate whether or not GTN is being accumulated and is on a path for all time highs. Short of more news, I would expect this stock to act with the general market.
Company Profile
Gray Television, Inc. is a television broadcast company headquartered in Atlanta, Georgia, that owns and operates television stations and leading digital assets in markets throughout the United States. Upon the consummation of all announced transactions (including announced divestitures), we will own and/or operate television stations in 49 television markets that broadcast nearly 200 program streams including 35 channels affiliated with the CBS Network, 25 channels affiliated with the NBC Network, 19 channels affiliated with the ABC Network and 13 channels affiliated with the FOX Network. We will then own the number-one ranked television station in 39 of those 49 markets and the number-one or number-two ranked television station operations in 48 of those 49 markets. At that time, our stations will reach approximately 9.3 percent of total United States television households. We also are acquiring the leading radio station groups in three markets. prnewswire
