Gray Media, Inc. (GTN) Q4 2013 Earnings Report, Transcript and Summary

Good day, and welcome to Gray Television's Fourth Quarter and Year End 2013 Earnings Release Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Hilton Howell, President and Chief Executive Officer. Please go ahead.

Thank you so much Katie. Good morning. Thank you so much for being here for joining us on this conference for your interest in our company and for your interest in our industry. I will be making a few brief comments and then these comments will be followed by Jim Ryan, our Senior Vice President and our Chief Financial Officer; and Kevin Latek, our Senior Vice President of Business Affairs. Following that, we will answer any questions that you may have. In many ways, 2013 was a defining year for Gray Television. We restructured and we focused on management team. We rebranded our company and launched a new corporate Web site, better communicate our story and our culture. We repositioned our balance sheet and issued 375 million of new senior notes, filling up our senior debt capacity to grow the company. We partnered with Excalibur Broadcasting to look at transactions in our consolidated industry, and thereafter returned to growing the company. In October of this year, 2013, with Excalibur we purchased KJCT, ABC, CW and Telemundo affiliate in Grand Junction, Colorado from the News-Press Gazette Company. Later that month, we acquired 99% of the equity in Yellowstone Television with four TV stations in Cheyenne, Wyoming, Scottsbluff, Nebraska, Casper, Wyoming and Laredo, Texas. In November, we announced the pending acquisition of Hoak Media, adding 12 market-leading TV stations in six markets. Concurrently, with our Hoak announcement, Excalibur announced the acquisition of Prime Cities Broadcasting's Fox stations in Minot-Bismarck, North Dakota. Thereafter, we agreed to acquire the CW affiliate from Lockwood Broadcasting in Charleston, West Virginia, and brought the year to a close with the announcement that we were acquiring KEVN-TV, a Fox affiliate in Rapid City, South Dakota. Pro-forma of all acquisitions, Gray will operate the leading media news provider in…

Thank you, Hilton. Just kind of briefly recap; starting with first quarter again, we were pleased, core revenue in the quarter, local was up 13, national up seven. All categories except furniture and appliances were up and even furniture and appliances was basically flat, it was down less than 1%. Our expenses came in at expectations, and again as Hilton mentioned before, comparing to the last off-year, we had a strong broadcast cash flow and operating cash flow compared to the last political off-year, 2011. The stations we acquired, which would be the three Yellowstone Stations and the KJCT SSA are both in basically for two months in the quarter. Net revenue combined for those stations are only accounted for about 2.4 million of the total results we reported. And its operating expenses in the aggregate were about 1.3 million. So, we are very pleased with the cash flow of 1.1 it generated, but again, as we've talked before those are relatively small markets and they were only in for part of the quarter. Turning to the whole year, again, we are very pleased with the results in core revenue with local up six, national up three. Again, all categories were up except for medical, which was down a little over 1% than restaurant, which is essentially flat with about three tenths of a percent decline. Our broadcast operating expenses for the year were within our expectations, only up about 2% year-over-year. And again it was a record setting broadcast cash flow and operating cash flow numbers when compared to the last off political year. Turning briefly to our guidance for Q1, we are pleased with the start of the year. The Winter Olympics for us, which generated about 3.8 million, which is up from the 3 million of the…

Thank you, Hilton. Thank you, Jim. Recent press reports indicate that the FCC may soon adopt new rule regarding sales agreements in TV stations in the market. Well, it's not entirely clear what the FCC will do. The reports indicate that the FCC will not prohibit such JSAs, simply imposed some allocations on the amount of joint ad sales between the station. In our pending transactions with Hoak Media, Prime Cities, Dish TV, there are existing JSAs in place that will create two more. We propose to continue to JSAs and expand the JSAs, because we believe that those rankings that comes from the local community that deserves. We hope that the FCC in reviewing our applications for the pending acquisitions will treat Gray like any other companies using JSAs in many TV markets. It gives us adequate opportunity to comply with whatever new rule the FCC adopts. We do not see the FCC rule change is materially impacting our approval at the FCC, or our timing on the closing of the Hoak and other transactions. We have been working with the FCC to obtain necessary approval. We will continue to do so. As Hilton mentioned, we did clear the Department of Justice last week. We've also cleared the FCC public comment period without any objection. But this time I can't give you a target based approval of the transaction. We do believe we are close. Once a new FCC rule is adopted, we will review our existing agreements, determine how best to ensure that we are in compliance to span all those changes to our agreement. They also include seeking away with the FCC. We are prepared to do that compliance. The bottom line is that the FCC rule change, it requires some actions on our part. Do not believe that we are seeing an important process; however, we will have a major impact on our existing operations or pending acquisitions hopefully. I'll turn the call back to Hilton. We have connection issue with Hilton. Operator?

I'm still here.

So, that concludes my remark. I'll turn it back to Hilton at this time.

Operator, we will open the call for questions.

(Operator Instructions) We will take our first question from Marci Ryvicker with Wells Fargo.

Thanks. I have a couple. I just want to make sure I understand with Hoak, all you need is FCC approval, final approval. Is that all you need to get that done?

Yes, that's correct.

Okay. And then Kevin, you talked about sort of proving that the JSAs are necessary for the local communities. What data can you provide to the FCC that could prove that these stations are necessary?

Marci, what we will provide the FCC? I think it's going to turn on what (indiscernible). In the cases where we have, we have one JSA currently. So, we have a very short operating history with JSA. In that market we did explained to the FCC staff, we met with them that we -- they are taking two stations that were big stations and made them better, and their programming spend, their offerings book for advertisers and has invested considerably in the operations. And I think in the small markets like Grand Junction, which is marked at 185, the JSAs and SSAs make the economics more compelling and give us an incentive to invest further in those markets. So, we can point to what we have done in the past, the existing Hoak JSAs, and the two kind of create give some more expectations for both investing and improving output from the advertiser's standpoint and from a viewer's standpoint.

What percent of revenue or ad revenue do you sell on behalf the JSAs?

Under single JSA that we had so far, the sidecar that does turn the lead (indiscernible) KJCT and Excalibur also employs the accounting section for KJCT and they sell their own time. We coordinate everything through shared services agreement through the same building and offices show how the back office functions. So, I'd say Excalibur people are selling Excalibur's time.

Okay. And then just in general, have the M&A discussions in the industry slowed at all given all this regulatory noise around JSA's [methods] (ph)?

Marci, this is Hilton. I don't think so. I think they still continue to suppose all -- I think people are waiting to see kind of what the final rules are on the 31st of March.

Okay. And then Jim, I have one question for you. You talked about some of the M&A expenses and some of the one-time expenses for the Q1 guide. Was there anything in expenses for the fourth quarter, like anything related to the transactions or any one-time items that maybe we should exclude, so we could find kind of a core EBITDA?

In the corporate line in the fourth quarter there was $1 million at least of M&A expense as well.

And that's it?

Yeah. There was also some in corporate line, again some incentive compensation, which given the year performance drove up the overall comp numbers a little bit. And I think that might be somewhat of a one-time only type of event. I will give you a feel for that magnitude.

Okay. Well, there is lot of questions I have. So, you can come back to me later. And thank you all so much for answering the questions.

All right. Thank you, Marci.

We will take our next question from Lance Vitanza with CRT Capital Group.

Thanks, guys. It looks like you had a pretty strong quarter on the core, revenue growth certainly seem to accelerate from Q3. And it looks like even a little bit better in Q1. And I'm wondering what's behind all the strengths there? If there is any particular, is it the market is overall improving? Are you guys kind of taking some share? Could you just talk a little bit about that please?

I'll comment. And I'll let Jim and Kevin comment as they see fit. I think in general we are beginning to see an overall improving economy in a lot of areas. Also think that our stations are performing quite well. We just finished last week. One of our most significant GSO meetings and we have our account executives that are out and filling our stations at a strong pace. The morale of our company has never been this high as it is today. I think its better showing in terms of what we are doing on the street everyday, because at the end of the day you got to have the product, we have it. And then you have to have people who enthused to sell it, we have that too. So, I think it's a combination of things. Jim and Kevin, do you want to add anything to that?

One other point I would add to what Hilton said is that, through the micro level, we have been working on operations across the company. And one of the recent developments in the last year was the launch of new network affiliate in a number of our markets. We had more market -- short markets that we are missing affiliation and we invested last year. We look forward to acquire some dark station, build them on HD, programming especially affiliations with CBS, NBC and those are ramping up now. So, I think from the investments that we've made in the past, as Hilton mentioned, a lot of small things that add up to and improve morale and by giving our first general sales manager meeting in a decade that was for the last week. And we are really working on the stuff that we don't issue press releases on that are that do make a difference at the market level.

Okay. And then, one other question if I could, which is that, if I look at the broadcast cash flow last corporate line, it looks like adjusting for maybe some M&A fees, it looks like you are flat sort of over 2011 despite a fairly substantial increase in revenue. So, I'm just wondering is that just really a function of increased reversed re-trends or are there other sort of big picture themes that are impacting the margins?

The biggest impact over '11 would be the increase in reverse comp. And actually in '13, we paid total of 7.6 million in reverse comp for the year, and it was 2.1 for the quarter. That's probably the single largest driver on the expense side after as you said the M&A, and obviously the acquisitions brought in some additional expenses, but also some additional revenues, I already talked 1.1 million of additional cash flow that generated in the end once we have them. Following up on the other question on OTO for corporate again, in Q4 it was about $1 million of M&A type expense. And then there was what I would probably characterize is at $800,000 of what could be -- I think would be fair to consider to be kind of OTO incentive compensation to certain individuals.

We will take our next question from Davis Hebert with Wells Fargo Securities.

Good morning, everyone. Thanks for taking the questions. Jim, I just want to focus in on the 7.29 leverage point I think you gave. Could you provide …

That's a T12. That's a trailing 12 months. Yes, that was a T12 on our trailing eight quarter, which is the covenant we are tested against under our senior facility. We were at 5.67 against the covenant of 7.75.

Okay. All right, thank you. And any thoughts about a year end leverage target? I know probably the timing of the close of these acquisitions may factor in. But is that anything you are willing to provide?

I take in general. And again the timing of the acquisition closing to have some impact although under the covenants through our pro-forma rights for the full period whether it's 12 months or eight quarters depending on whether you are looking to the indenture or looking to the senior credit facility. But in broad terms, I think we are at the end of '14 -- and maybe we are a little conservative, but we are back in that 560 range, right about where we are today in a trailing eight quarter basis and go 567. So, maybe a little bit higher, maybe it's a little bit lower, and in political, stronger, and most likely maybe potentially a little conservative on our political estimates. In coming November we will know one way or the other. But if political is a little stronger, we will be a little lower as well. So, call it mid five-ish range. And again timing on things with have some bearing on just how much free cash we can have access to these between now and the end of the year.

Okay, that's helpful. And then on the funding side, could you just walk us through what remains left to be funded, I guess is a factoring in the sales of Nexstar admission etcetera?

Yeah, in round numbers, it's about 330 million. That includes all the pending acquisitions. And that assumes we don't use any existing cash for that. And that would be after the next year. The Hoak, the primary transaction with Hoak, our funding need is approximately 300 million after the Nexstar buys the two stations that they are buying.

Okay, that's helpful. And then, last question. Just curious if you are having any internal discussions or external discussions with your network partners around some of this over-the-top providers. Verizon is talking increasingly about Dish's recent deal with Disney. Just curious that if the industry, the broadcast industry significantly is talking about how to participate in that?

This is Kevin. It's fair to say that we are engaged with each of the networks pretty regularly on all of these issues over-the-top, retransmission, quality of programming, it's very much in relationship and world is interested in moving forward on mobile over-the-top etcetera as they are. We are all trying to find common ground. I don't think Gray has the magic silver bullet or any network does, but we are actively trying to find the right balance, the right fit makes sense for us to broadcast affiliates.

Okay. Thanks for all the color. I appreciate it.

We will take our next question from Avi Steiner with J.P. Morgan.

Thanks for the question, just one quick follow up on leverage and I apologize, maybe I missed it. Can you give me the pro-forma number at the end of '13 as all acquisitions and dispositions were closed. Do you have that, Jim?

Yeah. Under our senior credit facility, our pro-forma operating cash flow number was 147 million.

And you have with the pro-forma debt balance would be against that?

When you say pro-forma, I am only pro-forming for the closed acquisitions. I am not pro-forming for any pending acquisitions.

Do you have the pending acquisition number, because if everything was closed at the end of '13 and again if not, I can follow-up afterwards.

Well, we just said …

I know you gave a 14 number. I want to make sure.

Yeah. We said where funding needs to close the pending were about 330 and we had 837 at the end of the year. So, on round numbers that puts us about 1 billion 170, give or take a little. On pro-forma after closes for that number, we haven't discussed in detail what the pro-forma '13 numbers are with the pending. But I mean I think it's fair to say on a blended basis, we are probably on a two-year blended basis of approaching a $500 million revenue company. And I'll call it again in very, very round terms a high hundreds, millions to maybe about a 200 million average operating cash flow company on a two-year blended basis.

That is helpful. And then, if I get one more in kind of the bigger picture in nature and I appreciate all the comments around JSAs and SSAs. Can you guys comment on the FCC rules around joint negotiations with respect to retrans, and maybe the proposal that is out on the agenda just around network non-duplication and what that could possibly mean with respect to retrans going forward?

Sure. This is Kevin. We have experienced a fairly limited experience with joint negotiations. We have, again our first SSA began in the fourth quarter of last year. And in our agent retrans contracts, the major MVPDs require that they get consent from us for any station that is operating pursuing to an SSA. So, it's not optional for us. Going forward, if Excalibur, another (indiscernible) SSA with Gray negotiated, we trend on their own -- we would expect that they would define revenue negotiating retrans. In fact, we don't anticipate negotiating retrans for Excalibur. We are acquiring stations that have network programming and good local programming. I think they will stand up in retrans marketplace as well as our stations. So, we don't see any impact on the joint negotiation on us. And likewise, our network non-duplication, that's not particularly a concern for us either.

Okay, thanks gentlemen.

We will take our next question from Howard Rosencrans with VA.

Yes. Hi, thank you. In light of what is transpiring with the FCC, and obviously we don't know what trend they'll be on the 31st or subsequently, but how do you feel like it changes particularly in regard to retrans potentially or I guess less of a shared agreement, but how do you feel like it impacts the M&A environment going forward, or your interest in pursuing it yourselves?

Well, this is Hilton, let me start with that. If you look at the portfolio that Gray Television currently owns of our TV stations, we have historically and then throughout the course of this last year when we returned to M&A are focused on dominant stations, number one and number two in the markets. And those stations stand on their own. And so, with regard to what we have and where we'll be going, the rules and regulations have very little impact. Our acquisition strategy and the whole [don't know] (ph) behind what Gray Television does is to have predominant news station in the markets that it serves. And so, we have never built it around putting the number four, number five TV station together and then making them better. We always look to get the top one. So, a lot of those issues will not slow our M&A efforts, because we will continue to look for stations that kind of have that profile that we've had traditionally in our company. And so, that makes us different than most of the other large, not all, but most of the other broadcast companies that are public. And so, it will not slow us down with regard to M&A, because we'll still be looking for stations and station groups that share our corporate DNA and our commitment to our local communities. And so, I don't think it will slow us down, but it will do for other companies, really I have no idea. That's how I see it, Howard.

Okay. That's great color. Thank you for that. Just to tag on to that, is it possible that the environment for the type of top Tier stations, if this was to transpire would become sharply more competitive?

I actually think it will sort of be to Gray Television's benefit.

And that would be because …

We're a natural home for those television stations, because we share an operating philosophy. And I think that the overall economic trends in our industry, regardless of what the FCC is doing still compel consolidation in the industry. And so, what's happening is they want to trim their sails based on where the winds are coming, and that makes complete sense. But in terms of where Gray is going, our direction has never changed or wavered. And we are not in the way of the regulations that the FCC is putting out because we have not built our M&A strategy around that philosophy. And so, other people may have to deal and adjust to that. We won't.

One quickie last up, what percentage would you say, just ballpark of your pro-forma revenues are in this sort of shared category that's now being attacked and would you say that …

On a pro-forma basis, because it's really almost inconsequential, which we reported this morning, but on a pro-forma basis, it's substantially less than 5% of revenue.

And the margin associated with that, would that be a 100% margin or dramatically different from the margin you get or not?

I don't know what the exact margin on that revenue was. We will have that number in time, but we just haven't had -- we are not part of it yet, and so I don't really have a pro-forma number for that.

Okay. Thank you. I will get back in queue. Thank you so much.

Okay.

We will take our next question from Jim Goss with Barrington Research.

Thanks. A few about retrans and reverse comp, the reverse comp negotiations to this point have been of what nature? How would you describe it? Were they looking for some percentage of retrans or were they doing more or like -- CBS has indicated where they were determining a value without their signal head and then it's up to you to do the best deal and you do better or worse. How would you describe it to this point?

Jim, each -- I'm sorry, go ahead, Hilton.

Just go ahead, Jim.

Jim, each -- right now, we are paying to ABC, NBC and Fox. We have not had any discussions yet with CBS, so we don't know what CBS' approach is. But of the three we've done, it would be fair to say each of them takes a slightly different approach, but based on our experience to-date, and we have been very consistent about this over many calls. At the end of the day, the math is kind of working out to be a 50/50 split of the gross retrans number.

Okay. And is there an accounting requirement that you take in retrans as revenue and put the reverse comp in the expense category, or should they be sort of contra revenue so that it separates the louder, actually [too loud] (ph)?

No, I think it's pretty much industry standard, at least from I've seen the major public company's report, everybody is reporting the reverse comp as an expense, because the networks are one way or the other characterizing that as a programming fee. So therefore, it is a programming expense.

Okay. And then to the extent that your reverse comp is fairly smaller at this point, and if these patterns go out, do the math and figure out about what that number should be, can you talk about the case of inclusion you expect for those reverse comp numbers into the press basis? How fast -- is it a two or three-year process, shorter or longer or what are you thinking …

When you get to reverse comp with a network, again, I think you are basically at a 50/50 split for all intents and purposes out of the box. There maybe some variances early on, but they're not significant. Again, our ABC agreements have started this year. As expected, NBC is in full force, Fox is in full force. The only agreements we have loved to come up as we've been very clear about many times in the past that most of our CBS are up for renewal at the end of this year. So, we will begin paying reverse comp to CBS in January of '15.

Okay. And then, one last separate question. As you look at acquisition targets, are there markets where the Spanish language stations might have particular appeal? And would you pursue those or would that not be part of the mix?

This is Hilton. Let me address that. This past year '13 was the first time that Gray expanded into the Telemundo markets, and we jumped into proceeds with the acquisition of the Laredo, Texas operations. And so far, we've been very pleased with what we've seen. We are very new to it, but I think that it is a dynamic market. It's clearly a growing market. And our company is interested in anything that's growing. We can return value to our shareholders now. And so, we are brand new, but we are looking and if we have an opportunity we will certainly be interested.

Okay. Thank you very much.

We will take our next question from Erin (indiscernible) with Sidoti & Company.

Hi, most of the questions have been asked, I just kind of have one follow-up for you, Jim. When you gave the local and national core pacing for first quarter, does that number, is that a same station number from last year, does that include the stations that closed in fourth quarter?

No, it would include the stations that closed in fourth quarter, although again because of their size, they're not impacting the overall numbers for sharing by any large extent. As we talked about in the release, in the guidance section, the first quarter revenue for the acquired stations is only about 3.7 million out of the 91 million to 92 million we were expecting. So, it's not going to move the needle very much at all.

Okay, great. And then just one question for you Kevin, last quarter you kind of talked a little bit about the mobile TV update, how it's kind of rolling out to all the markets. Anything, any traction there that you've seen in the past few months or kind of where your hopes and expectations for mobile TV rollout is?

Thanks, that's a fair question. Unfortunately, there is not a lot to report right now. Global is still -- we all realize our future, but at this point our mobile employment has been hampered by the inability to include the network programming and those conversations obviously are pretty far along, and each network is taking different approach. As we get -- I think we have high hopes for mobile audience and mobile business once we add the network content. It would have to be authenticated as well through the TV everywhere paradigm. At this point, we do not have any network content on our mobile streams (indiscernible) or otherwise. So, we're seeing some traction and we are promoting it. And we are happy to see some folks watching our local and a lot of our syndicated content on a mobile basis, but the network content is really going to provide that adoption.

Okay, great. Thanks.

We will take our next question from Barry Lucas of Gabelli & Company.

Thanks and good morning, a couple of little questions, and maybe one bigger one. On the retrans side, are there any watch contracts are coming up in '14 that would materially affect '15 or more or less just annualize roughly the …

Virtually all the rest of our contracts come at the end of this year. Jim, will follow-up on that.

We renewed two large MVPDs at the end of last year, but everything else, albeit they are large, mid size and small MVPD retrans agreements expired at the end of this year.

And roughly, what percentage of your households would that represent?

Roughly …

Rough numbers is about 4.5 million or so subs.

Okay. Guidance provides a lot of detail, but any color you could offer on categories, in particular as you think about the way our inventory is expanding, one would hope that those guys are going to have to start putting a little bit more in the way of marketing dollars against, I'd say, inventory increases?

Actually very year-to-date through February, I mean auto was up roughly 10%. So, I mean that certainly looks like a healthy number to me, and it was -- you know February obviously is probably little stronger than January, but I think Olympics was playing -- had something to do with that a little, but overall solid so far, and the only thing, we're seeing some softness in year-to-date would be in the restaurant category and department stores and all supermarkets are not big dollars, they are also soft, but I suspect especially with the department stores and the restaurant category, a lot has to be with the weather. And people would just agree to go out (indiscernible).

Okay, thanks, Jim. And would you care to handicap the political outlook on numbers about 58 million the last non-presidential year of 86 million in '12 …

We are still -- right, on a same station basis, and we're still being consistent that we think we should be able to with the number of races and the number of open senate seats, we are comfortable that we will beat 2010 number of 58, starting to get up around that record shattering 86 million that had 25 or 30 million of presidential money involved in that. That might be a bit of -- that would be more challenging for us, but we certainly have the capability and capacity. And we've never ever turned down a political order, I don't think. We will be happy to take everything we can get. And so, we're looking for very strong non-presidential political year for us, and we generally try to be little conservative in political as you know the 50% of whatever number we get won't show up until October. So, we are -- our own assumptions maybe end up being a tad conservative, but we'd rather be that, and overly optimistic and end up disappointed.

Okay. Last one from me, a little bit bigger picture as well, I've listened to a lot of discussions about the spectrum auction and participation and your need for spectrum for the major metropolitan areas. How do you view the auction? What do you think the shape will be? And are you likely to be a participant?

Well, Gray is not going to be participating in the auction. If you take a look in our 10-K, we have a fabulous category about how fantastically well the company has utilized, not only for our shareholders' benefit, but for those community benefit, our spectrum and our markets. And so, we don't intend to participate in the auction at all. I know a lot of the demand for spectrum space is in the larger markets. Of course we don't really play in those markets. So, we can't speak to that. But with regard to our company, we want to keep our spectrum.

Great, thanks very much, Hilton.

All right.

We will take our next question from Colin Wilson-Murphy with Bowery Investments.

Thank you very much. My questions have been answered.

We will go next to Matthew Dodson with Jay West LLC.

Yes. Can you just talk a little bit about national and your local, I think in the guide you gave that local is going to be at about 10% on the same-store and national is about, roughly about 2%. Can you talk a little bit about kind of what you are seeing in national and do you expect that to reaccelerate as the year goes on?

We would expect it is consistent I think with prior results over last several years. We would expect lower growth rates out of national for the year. We think it probably will pickup a little bit although as you get into our fourth quarter when political comes in very, very strong. National tends to be the first thing that gets displaced. National in first quarter has been a little soft. Again, maybe somewhat weather-related when they tend to be more bigger -- the retail chains and the fast food franchises, in which we are definitely seeing some softness in. So, we are not necessarily surprised given the weather conditions the first couple of months of the year. We think it will pick back up a little bit, but certainly expect much stronger growth during the course of the year out of our local than national.

Okay. And then, can you talk on the retrans, you gave guide that it will be up 67% Q1-over-Q1? Can you talk a little bit about each? Did you receive all the benefit -- will you receive all the benefit in Q1 from the repricing? And is that 60 plus percent kind of growth how we should think about retrans revenues for the year, or can you give us any help there?

I think kind of to get the big picture, you could take the Q1 number and annualize it, and you are going to get in the ballpark of what we expect for the year. So, wherever we repriced at the end of last year on those two big agreements, I mean that pricing is uniform throughout this year. So, we obviously, in our Q1 we're saying is in ballpark numbers about 16 million. And you can kind of just roll that forward there is a little bit of variance quarter-to-quarter because of very, very small amount of that overall revenue numbers tied to some guaranteed airtime buys. But those dollars are not large, but they tend to be a little lumpy because it's really up to the MVPD, the place -- given their own marketing plans for the year.

Got it. And then could you just talk a little bit, so you have 2/3rds of your retrans repricing at the end of this year. Can you help us at all to think about maybe how grossly underpriced that 2/3rds is? And I'm sure you don't want to …

The 2/3rds that we'll reprice at the end of this year were all prices for market at the end of 2011. So, while the market rates certainly have gone up over the last few years, it's we're expecting a significant step-up but it is not going to be as dramatic as the two contracts we repriced at the end of 2013. Both of those contracts were very old. And we're not part of the 2011 pricing repricing. So, that the step-up on those was much more dramatic than what we would be expecting at the end of this year. But we do expect significant increases and obviously that significant -- that will significantly advance our retrans revenue number in 50.

Got it. And then the last question, I guess relative to acquisitions, if your stock gets cheaper than acquisitions, I mean, it seems like it's pretty cheap on free cash flow basis, but we've had buyback stock as opposed to make acquisitions or do you think it's just better to buy acquisition?

Well, this is Hilton. And I hope we could reverse that with regard to our stock price. And we intend to do all we can because I do think that the company is very under priced. And but I do think that we're in a unique window right now, where the industry is consolidating. And I think we have a relatively unique role to play in that process. And so unless things change more dramatically than we anticipate from a 2014, we'll probably stay on-track. We will not be purchasing things for the pure sake of purchasing them, but we will be looking at sort of the unique value propositions that an individual station or station groups bring to the overall value of Gray Television. So, we're going to be looking and talking and probably won't be doing the dramatic stuff -- in the immediate future.

Got it. And just the last question, you alluded to this to a question earlier, but you seem to express that you thought if the FCC rules going into place, it might benefit you from an acquisition standpoint. Would you be willing to give us any more information or expound on that?

Well, I wish I could but I don't have any information to share with you. And really the essence to the point I was making, that we'll relatively -- really almost dramatically not affected by what the FCC has done with regard to almost any of our existing station. And in terms of our M&A strategy; those agreements are not key to what we're attempting to do. And so I think that's where our advantage comes from.

Got it. Thank you so much for your time.

(Operator Instructions) We'll go next -- we will take a follow-up from Howard Rosencrans with VA.

Hi, Howard.

All of my questions have been addressed. Thank you so much.

All right.

And at this time, there are no additional questions in the queue. I'd like to turn it back over to our speakers for any additional or closing remarks.

Thank you so very much, operator. And I want to thank each and every one of you for being on the call this morning. These are exciting and interesting times for our company and for our industry. And we're very bullish in 2014 and look forward to talking to you at the end of Q1 to give you our final results. Thank you and we'll talk soon. Bye-bye.

That concludes today's conference. We appreciate your participation.