Please standby, we about to begin. Good day and welcome to the Gray Television’s Third Quarter 2015 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Hilton Howell, President and Chief Executive Officer. Please go ahead..

Thank you, good morning everyone, thank you operator. Welcome to the third quarter earnings call for Gray Television. This quarter end year has been a time of great achievement for your company of which we trust you are justifiably proud.

For the quarter end year Gray achieved record revenue of a 151.1 million and 427.9 million respectively, also for the quarter our free cash flow was $0.22 per share and for the year $0.96 per share or 15.6 million and 65 million respectively.

Net income with $0.09 per share for the quarter and $0.36 per share for the year, significantly this quarter's results contained special charges relating to our previously announced termination of our national sales agreements and various cost related to our quarters and pending acquisitions.

Without those onetime costs our net income per share would have been $0.18 for the quarter and $0.45 for the year to date. Since October 1, 2013, we have completed 16 acquisition transactions which collectively had added 30 televisions stations in 18 markets to our operations.

Last quarter we completed five transactions that added 6 new stations to our operations. [Coastal Television] the CBS in Mid-Odessa, KMVT, the CBS and KSVT, the FOX and Twin Falls, Idaho, the FOX affiliate in Wausau, Wisconsin which we have re-christened as WZAW named after one of our legendary employees in that market.

And that now broadcast together with our CBS affiliate WSAW in Wausau. WAGM-TV the CBS/FOX [indiscernible] and KVTV, the CBS affiliate in Laredo, Texas which is now broadcasting with our other network affiliated broadcast in the Laredo market. Then on September 1st of this year we announced the acquisition of KCRG in Cedar Rapids, Iowa.

This ABC affiliate is an absolute job and we are formerly closed on it as on November 1st just a couple of days ago. I would like to welcome the associates the viewers and all of the rust of being participant to KCRG to the Gray family.

Soon there often on September 14th we announce the cap to our year so far the acquisition the broadcast access of Schurz Communications, adding seven superb and big unique stations to our growing company, while it is distinctly premature I also want to publicly welcome the Schurz associates, viewers and communities to Gray Television.

At the conclusion of the Schurz acquisition so that is that all we have pendent currently. Gray will broadcast in 50 television markets and broadcast over 175 programs streams to viewers from Alaska to Maine and Texas to Wisconsin.

Most importantly as 2016 approaches quickly Gray has significant broadcasting asset in almost every battleground state in the country that are simply must buy stations if any politician hooks to carry that respective state.

Consequently we have enormous optimism about next year and the acquisitions that we have made this year and to the last couple of years have only enhanced our strategic position. We also wants to stop and take a moment to thank TV news Jet for selecting Gray as it's station growth of the year.

We were quite surprised but very happy for the recognition. The entire team of which is due to the hard working men and women who make what we predefine here in each of our markets that's compelling dealing. Because without them not a single deal, transaction were paired on shifting decision would have been possible.

We also announce yesterday that we had reached agreements to divest at the time of the closing of the Schurz transaction all regular assets we picked up in that deal. We are very pleased with the quality of they are saying to be new owners of these radio stations.

We believe that we got a very fair price for them and we have continued to sit to our playbook of being a pure play television broadcaster with dominant, news centered, community focus stations nationwide. With that I'll bring my formal comments to a close and turn it over to Kevin Latek. Kevin..

Thank you, Hilton. With my time today I'm going to address three most frequently asked questions from our investors over the past several weeks. First how is the Schurz transaction proceeding. A short answer very well.

Within about the first 72 hours after announcing the Schurz acquisition Gray insurers filed our HSR application with [Indiscernible] adjustment filed all of our numerous FCC applications and had our first sit down meetings with the DOJ and with the FCC.

For the next two weeks we began quickly included an option to divest Schurz's South Bend station and our Wichita station both of which will be completed as you know as swaps with St. Clair and Lockwood that will bring two more Gray stations to our portfolio.

Before we could even ink those deals and announce them we also managed to reach agreements that divest certain assets of Schurz radio Rapid City television station and separately to acquire KYES the local my network affiliate in Anchorage that we view as a natural complement to very strong local MBC affiliate that we are acquiring [Indiscernible].

As Hilton just mentioned yesterday we announced the sale of the Schurz radio station to three excellent local and family owned companies who will provide great leadership to those fine stations. Meanwhile we have continued extensive and productive discussions with both the DOJ and the FCC.

So today just seven weeks after we announced the Schurz transaction we have made tremendous progress toward a pending regulatory approval. Consequently we are able to reaffirm our original guidance by growing very close to Schurz transaction as well as all related transactions before the end of the first quarter of 2016.

[Indiscernible] mentioned over the week and we close the final steps of our acquisition KCRG and completed divestiture of our various online [Indiscernible] consequently the only pending transactions at this time and those we have announced back in after the Schurz specialties and report key.

Our second list popular question likely is will Gray participate in the FCCs spectrum auction. The answer is yes but to a limited extent. We have discussed on prior calls and at recent investment conferences that we do not expect the FCCs spectrum auction will present meaningful financial opportunities for Gray.

This is because we have few stations with markets with strong spectrum demands and even those stations that our markets with spectrum demand and to high higher enterprise values and the expected clearing price with our market.

When we announce the Schurz transaction we disclosed that we intended to play one of the Schurz television efficiency for the auction. Typically WAGT and [Indiscernible] Georgia appears to have a high spectrum value for the auction, we are able to move its programming settings to our existing stations in that market.

Thus placing the station into the option just takes with them. Last month the FCC released opening bid prices for every television station in the country. None of the opening bid prices are higher than we anticipated and much higher in some case.

We still believe that the auction will now present meaningful opportunities for Gray outside of WAGT and Augusta. Nevertheless we are taking a close look at our options in the handful market.

If it appears to the auction could wait to significant proceeds beyond WAGT we will not hesitate to pursue those opportunities by filling an appropriate option application with the FCC by December deadline. Finally our third most offered question currently is why as Gray building a national rev firm. And the answer is we're not.

On August 31st we announce that we have notify the two national adds wells web firm to our decision to determinate that we all have our web agreements to the end of this year.

We recorded the special charges actually $1 million in the third quarter reflecting anticipated determination fees which will be paid in monthly installments both in the 2016 [Indiscernible] first half of 2017.

We also announced that we anticipate that expense savings due to determination of the national advertising with that contracts that have increased personal trend will be in the range of $8 million to $9 million 2016 with net savings continuing years or after.

Since that release you will also range determination to the national sales reputation chip that all of the televisions stations that we will acquire from Schurz and [Indiscernible] and each case is effected at the, and at the closing or January 1st whichever is later.

Our decision to terminate the web firms is not a reflection of this the levels of service under the current agreement. By that we simply came to the conclusion after full year of analysis that the quality of our stations combined with our new scale creates an opening for us and to our national sales directly.

We are not building a rep firm to replace or compete with the existing firm. Under our new approach all but two of our stations will deal directly with our national advertising clients and agencies. Precisely as all of our stations now deal directly with local clients and agencies.

We've hired two former reps to [Indiscernible] our station activities, we may hire a few additional account reps right across our stations and that's about it. We will not open the step office is in the trade Chicago or in a Los Angles.

We have a great ability in building a new office in Manhattan we simply do not believe that those expenses are necessary to accomplish our job are effective. Importantly roughly one part of our stations already handle national sales directly.

Including as we acquire KCRG and [Indiscernible] which like many of Gray's existing stations have had not had a national rep for several years.

These stations have certainly held their own in national buys, we therefore can reiterate today that we expect that our new strategy on national sales will have a marginally positive impact on national advertising revenues in 2016 and beyond.

But those are our most frequently asked questions I'm sure there are some additional ones I want to say to [Indiscernible] This concludes my remarks and I turn the call over to Jim Ryan. Thank you..

Well. Thank you Kevin and good morning everyone As Hilton and Kevin have said we are very pleased with the results for our Q3 and your year-to-date Q3.

I'm going to focus most of my comments on what we call the combined historical results where we took Gray's actual results and combined them with the historical results of the acquisitions that we've been doing both in 2015 and 2014 to have the most comparable data available for you.

We are very pleased with our combined historical revenue it is for the third quarter actually as notable in 2015 been a non-political year is actually a little bit ahead by about 2% of the comparable quarter into 2014 political year and we have the same thing going on in year-to-date results with the non-political year been about 6% ahead of the political year and this is the first time that we can recall that we've been able to do that in a non-political year going to get some political year.

As both Hilton and Kevin commented we did make the final closing on our Cedar Rapids, station on November 1st but as you may recall we actually started to pre-closing element effective as of September 1st so Cedar Rapids are was in our numbers for the month of September on an as reported basis and it had a couple of million dollars of revenue about a million dollars expense in a little bit over million dollars of cash flow and we were delighted at its performance in September and look forward for a very good fourth quarter in early part of next year specially with the Iowa political city.

Q3 net revenue again we were very pleased with the results, local was up 9% and national was up 10% that was in line with the high side of the guidance we had issued and our political was stronger than we had expected a 4.9 million we continue to see good trends in fourth quarter political more spending and we had expected we think that's the good sign for 2016 in general.

On the operating expense side combined to historical for Q3 we were up 18% by about little over 15 million we've going to get as we've talked about many times over the past several lines call.

Our reverse comp to our networks was up about $11.8 million we did take the onetime omni charge to make the national were up agreements that Kevin discussed and that was a 6.1 million charge in the quarter and as we've said as we announced that we expect to save more than that run rate next year over and above that $6 million charge.

Most notably our payroll and benefits cost were flat quarter-over-quarter and if you exclude the reverse comp that's increasing both because the gross comp is increasing as well as CBS being paid for the first time this year. Our actual core what we call core base cost are down about 2.5 million and we are very pleased with that.

Year to date again local was up 6 we are very pleased, National was up 4, Political were 8.5 million again which is higher than we expected and we are very pleased to see that and again on the cost side where we were up about the 31 million for the nine months ended, the reverse comp is actually up 34 million are again if you exclude the onetime charge for the National up -- total National up termination our core nine month run rate it is actually down about 9.5 million and we were proud of the work we have been able to on the core expenses.

We are pleased with the category trends in Q3 and turning now to guidance for Q4, we are pleased with what we are seeing overall, again focusing on the combined historical guidance for Q4, we think local will up be healthy 3% to 5%, National is going to be down a little bit that is we think somehow reflective of a little softness in Chrysler, [Dodge] but actually the rest of the rest of the trend line for fourth quarter is looking pretty good and on a combine local-national basis for fourth quarter.

We are currently about 87% of last year's final with two months left to go selling in the quarters, so we feel very good about our directionality in Q4 and obviously our Political again is tracking a little bit higher than we expected and probably has the ability to hopefully coming in all bit strongly even when what are guidance is suggested.

And obliviously with the nine months numbers in our guidance for Q4, what at it is implying as that we accept.

Again on a four year basis for combine historical results with 2015 local would be up somewhere around 5% over 2014 and our full year national would should be up somewhere in the 2% to 3%, so all in all we think 2015 on a non-political year has been very solid, we are very pleased with what we have seen so far and we are going Q4 and again we are pleased with a political trends in Q4 as well.

Turning to the balance sheet a little bit are leverage is calculated under our senior credit facility as is define in the senior credit facility with 5.15 times and as we said in the body of our release if you actually netted all the cash on our balance sheet off, we actually are trailing a quarter leverage ratios about 4.9 times.

Senior leverage as defined in the credit agreement was about 2.6 times. CapEx during the quarter was just shy of 7 million just over 15 million year to date and we think we will finish the year somewhere between 20 million and 25 million.

Cash tax is still within expectation with a de minimis amount in Q3, we are still expecting somewhere between 1.5 million and 2.5 million for the year. Full year combined historical for programming payments is tracking at about $15 million to $16 million and the amortization is in the [same as it was].

We are very pleased with where we have seen our retransmission revenue growing to and -- we know that detail is in the body of the release. At this point, Hilton I’ll turn it back to you..

Alright, great. Thank you, Jim. Operator, we would like to open up the line for any questions any may have..

[Operator instruction]. And our first question will come from Aaron Watts with Deutsche Bank..

Jim, one quick housekeeping question to make sure I am understanding right, the 6 million charge for the national sales effort and the 3.8 million of expenses tied to your M&A activity, most of those depress the EBITDA on the quarter, is that correct?.

Yes and both of those amounts were not included in our original guidance that we issued in conjunctions with our 2Q call.

Both of those events occurred afterwards and when we issued our press release about the red firm termination we did spot light that 6.1 million at that point in time but we are still even whether you include them or exclude them we are still very pleased with what came out in the quarter..

Got it , okay perfect.

And then secondly just on the advertising environment, as we think about the cadence from 2Q you saw an acceleration into 3Q, a little bit less of a growth rate as you moved in to fourth quarter with what you seeing there, can you maybe just talk about what's driving the ebbs and flows and then also maybe a comment on auto which I think was down in the second quarter on a combined basis but you saw nice pop in the third and maybe how that’s trending into the fourth?.

Yes, again we are very pleased with the pop as in third in auto, we don’t necessarily have a full explanation for that but it's -- we are very happy to be the recipients for that in Q3, I think it maybe just how the ebb and flow of markets get targeted from quarter to quarter by the auto industry. Fourth quarter auto right now appears to be okay.

As I said the only thing we seeing a little softness is that [indiscernible] and that is looking to us like just some routing rotation between our size markets and dollars looking like it's maybe going to other markets during the fourth quarter.

In general we see fourth quarter is healthy with the core combined in the, call it 4% to 5% zip code so it's maybe a little bit less of the growth part of many Q3 but we saying frankly we just had an outstanding Q3.

We are very happy with what we generally seeing in Q4 and think it's a good finish to the year accounted on whether those -- on the combine historically the core local-national is going to come out in a healthy growth rate year-over-year and we are happy with that..

Our next question will come from Marci Ryvicker with Wells Fargo Securities..

Thanks.

Two questions, you mentioned, well we know political came in that has been expected in the third quarter so I guess the first question is where those specific market to the broad base and if you have a little bit like just fourth quarter guidance, I think you said to Jim is a big conservative? And then secondly on your portfolio into M&A plans, is it correct to assume you're sort of on the side line at this point and tell us still is integrated or is there a situation where you can consider raising equity at the right time came along? Thank you..

Marci I’ll take the first part of your question on political.

Certainly we benefited with Cedar Rapids in for the month of September and that had -- they contributed probably call its $400,000 to $500,000 of the political number and certainly we will benefits from Cedar Rapids in Q4 and obviously with IO Power Techs in -- through ramp in a quickly, I think that’s the market we are -- we probably had the most potential to -- have some pleasant surprises but as we have discuss many times, protecting political is nearly impossible because you never really know what the dim dollars are and what you order as an political in a firm that makes [indiscernible] so we also picked up that hour and kicked that issue with the governors raise and the rest of that I would say is scheduled around a little bit nothing in early a couple of markets we have a some early spend for 60, very early spend not huge dollars but again inclusion that the directly -- spending a few dollars we run there for 60 already..

Let me-- Marci this Hilton, and let me begin and maybe Kevin will follow up on our portfolio and our M&A strategy.

The first I want to tell you is that we are defiantly not the side lines, we have no acquisition targets that are currently imminent but we are looking at, but if you look in our track record over the course of this year and really previous two years, u know that we move very, very quick and in a very disciplined way and so what you would see from us is similar to what you have seen in the past but opportunities in this current environment come up unexpectedly and we don't have anything imminent, we sure wouldn't want to be characterized as being on the side lines.

That been said with regard to your question about the issuance of the equity, we obviously went to the markets at the end of March and did raise equity and the company has no current plans to do that.

As things stand, we think 2016 is going to pretty much dramatically be [lever Gray television] all by itself, so we don’t have any plans currently to go to the equity markets.

I really am quite positive about our prospects of closing the Schurz transaction in a very prompt fashion and I think the radio divestitures that we announced yesterday, we help getting along in that process and so we are still out there looking.

Kevin you want to follow up with that?.

I want to just add a little color. This year our transaction with the stations in a debt [that when falls first kind of in] Cedar Rapids.

I’ll move very quickly, the longest of those station acquisitions, the time without an NDA, the time we signed purchase counter was two weeks and I don’t think anybody has a track record of moving that quickly let alone doing it on the all four acquisitions this year but that ensures it all move very quickly given the size of that transaction.

And my point is that while we have nothing eminent today and the [Indiscernible] tomorrow with an excellent target that we would very much like to pursue and we could move quickly if there is an agreement on price.

But the way we think about this as we have we think in a pattern here what number one TB stations and mid-size small markets our work through us but they works to the market and now there is a lot of good things will like a [Indiscernible] as we look at where we are in the cycle this is probably not a bad time if the right opportunity came along and it had an accretive and otherwise a good terms transaction now maybe the time to pursue that and that means putting up your leverage ratio up just a little bit, now is the time to do that as we go into a big political year as opposed to say a year from now.

Again just emphasize there is nothing eminent, we are not looking for any more or transaction, we are really focused almost seven days a week on pushing shares over the finish line and the political transactions over to finish line after then anyone as [Indiscernible] but we could get the right thing came along at the right price at with someone be interested in having that conversation..

Our next question will come from Lance Vitanza with CRT Capital Group..

Hi. Thanks guys I have the few questions if I can. The first on the same station revenue growth the core revenue growth really strong up 9%, 10% local national respectively.

Did we acquired stations augment or detract from that performance I understands that stations but if we think about the trends and what you've acquired versus what you've been running for a period of time can we join decision there?.

I think if they are about they are doing well and there is heavily it gets down to in any given year one particular market will tend to do a little bit better than another and they will all trade back and forth a little bit and the portfolio of this 50 stations but I don’t think there is any big difference between the acquired stations and the legacy stations.

The acquired stations in some cases might be certainly or up a little bit, would be up naturally in re-trans because of being able to apply after acquired clauses but if you just look in and thinking about local and national again it's going to be more due to with the individual characteristics of that market in this year versus last year than any broad trend?.

Got you. On the political side and I did hear the comments regarding Q3 and Q4 but we've been looking forward to 2016 for a few years now.

Do you think expectations might have got and bit ahead of themselves especially considering the democrats [Indiscernible] annoying that [Indiscernible] will got any kind of the primary sight?.

We still have strong expectations for 2016 before we perform for it for Schurz the 2012 political was about a 141 million where we've said many times that our general expectation is '16 should be better it will be better than '12 from the political stand point I think even if there is even in the one side if there is a strong candidate so that the democratic primaries are somewhat muted certainly the republic and primaries has got a ways to go yet given the debts of their field and have been flow some of their candidate I would think and in general the real heavy spending doesn’t comment until well after the primaries are done and the general election is on and we have said repeatedly that which historically and we don’t know why and obviously '16 could be a little different.

But historically in every political cycle we've seen so far at least half of the political spend of the years goes up to the fourth quarter. So the real money comes out when it's down to the two candidates of each party..

Great. And then just on the re-trends run if I take the 17.5 million of incremental gross re-trends you reported on the same station bases. Actually to track out the 11.8 million increase in reverse comp I get a $5.7 million increase in net re-trends as it were to about a 33% margin.

Is that the right way to think about the flow through on incremental growth re-trends going forward?.

No because the numbers that I think your numbers are approximately right.

Let's go back to map I think the answer would be no but as those are that those combined historical are simply adding the result the historical results of the various acquisitions the real one way at a go forward basis is going to be better than that as we apply are after required clauses and again we are comfortable over '15, '16, '17 at least that are net even after Schurz is fully rolled in and everything is applied there that not retrains probably running right around a 50-50 split..

Next we take a question from David Aber from Wells Fargo Securities..

Just on the retrains, appreciate the commentary on net, but is there anything you could give us on how do model 2016 retrains on the growth side and how many subscribers you are renewing next year?.

Prior to Schurz we have less than a million subscribers renewing at the end of this year and we have got about 3.5 millions subscribers renewing at the end of '16 going into '17, now again those subscriber counts are roughly a $10.2 million total subscriber base and that is prior to Schurz and on page 15 of our September investor presentation that’s out on our website we again pre-Schurz we have rolled out '15, '16 and '17 both gross estimated reverse component in that numbers.

So we will see a little bump next year with a few subscribers we have got to replace this year and we will obviously see some normal accelerators within our existing agreements but the next opportunity is to take a nice step in the gross number and as well as net number would be 60 going in to 70..

Okay thank you.

And then digit was down slightly on a pro forma basis, just curious how that’s looking for the fourth quarter and I know you talked about the spin sort of a regrouping year, so do you anticipate having some momentum heading into 2016 on the internet side?.

I think as we go through '16, things will improve, I think it will be a year that kind of ramps rather than just jumps right out of the gate which kind of makes sense, fourth trend, I would expect it to be a somewhat soft but we have said this year was a regrouping year and kind of refocusing and so we are not surprise with what we have seen and I think '16 all will pick up this, the year goes along..

Okay thank you and then last question your 7.5% bonds in our [call go], just curious if you foresee a refinancing opportunities at some point and kind of a follow up to that question, given your increasing size and that potential refi opportunity just curious how important it is to you to have moody perhaps upgrade your rating?.

Well certainly we would also wipe like as an upgrade so with that is -- that’s going to be up to moody I think the bond investment community is always wait a little bit past that and we have traditionally price ingratiate a more align with S&P has on another.

That being said we will be thoughtful on a bond called I think a lot will depend on what the market is doing and just how attractive the NPV is on a new rate, that while we are on a first call period, that's a pretty expensive call for us.

So I think we will be thoughtful and opportunistic I guess is how I’ll characterize that and is a practical matter, while maybe the market might present a great opportunity for us again when we have to be very thoughtful.

I think we are at more on client to get Schurz of clause then in and then start thinking how they are about, what we will do with bonds, then try to do something very, very quickly..

[Operator Instructions]. Our next question comes from Jim Goss with Barrington Research..

Thank you. You have probably noted that you are on broadcast and I believe what the D.C.

Bureau and I am wondering if there is any meaning to that right now besides the [flag] in the ground and given that this a political season, this is the opportunity to create added meaning for that and maybe you can discuss those options and what potential financial impact you might have from that presence?.

Kevin I’ll take that. Since we announced our launch of our D.C. Bureau over to year [indiscernible] has launched its D.C. Bureau as well so it's no longer the only pure play broadcaster with a Bureau [indiscernible] our folks are doing already.

Bureau exist to provide content to our local stations that are not available otherwise and [indiscernible] as a Bureau.

The news director in the market contacts the DC Bureau and write down this personally registration around the [Indiscernible] etcetera were doing that it helps the local product and within the local product has a benefit in lot of minds there is no [Indiscernible] attached to this is not a very specific investment for us all but it is certainly have in its ratio profile with the politicians and we think the providing a better service to the local communities and I can't give you the direct measure of what that means to us but we do think it is and they are positive to us.

In terms of political revenue we've not made any type being covered [Indiscernible] that were providing and but we've made in [Indiscernible] but if you think that's a general matter in the whole ways and it's available to help them but they will have only and they were positive station of us and they may have another station that we can compete with.

Well that translates to changes in the political ad volume by their agencies their campaigns this impacts I doubt it but [Indiscernible] so I think the bottom line is that bureau was an inexpensive [indiscernible] for us to have a unique focus on content, that's the way we think of it..

And Kevin is there an ability to create an [indiscernible] aspect by maybe involving some affiliates.

There are some other stations net on by Gray that are in other markets they you may want to partner with?.

That is a good session. We thought about that.

Wwe would want to be selective in that we don’t think in stations kind of same body news cast and operations whatwe have are not already owned by one of our market competitors so that's a specially just our process if nor potential user base at this time we are still focusing in find step up to cover the increase base stations we want this year and we need to make sure we have the right talent in place suburb stations before we think about adding talent in infrastructure for additional stations so I don’t see a lot of potential customers out there for it and at this point I can't I don't think we are going to have much time due to higher before '16 enough people to cover all of our stations as well as some additional station that we don’t in that but I think possible but probably not until after '16 seen that we have folks should be on the road a lot this facility have a full staff we focused on the Gray stations not on [Indiscernible].

Okay, alright.

And just one other thing Jim you and I were conversation or discussing the sort of the convergence of Olympics and political next August at least in terms of your NBC affiliates and I think you had indicated that the convergence of those two actually could maybe increase your political opportunities rather than sort of displace them and I wondered if you might talk about the supply demand pricing impact of those two elements coming along and how that might play in either in your own NBC affiliates or the non-NBC affiliates?.

Well with regard to the NBC affiliates there are certainly that opportunity if the Olympics are marquee programming's so we would normally be pricing that inventory out on a premium basis and then if you if indeed there are political advertisers that are interested in getting into that marquee programming and those probably fairly extensive viewership that certainly can drive the pricing on political as well we've mentioned this before but all party money, all political action committee money is fairly up priced and supply in demand, so if you just got a super pack that really wants to be in a certain program at a certain time and if there is the pricing can go up dramatically and in very short order, so there is certainly that potential it will be a terrific problem to have and now how that actually plays out next year will have to wait until after August and after the Olympics are over, but it certainly a possibility that can you give us a little boost on August with our political that also being said which is on a so much inventory we have available and associates and with Olympic so but it could be a high class problem to have next summer.

Normally Olympic dollars as far as the stealing dollars from other stations in the market yes there could be a little of that in that buyers will deliberately budget it in Olympic years some dollars to be on the Olympics so that may cause some shifting of dollars a little bit from quarter-to-quarter and then third quarter of next year with the Olympics it could be very well again when we have NBCs we'll be doing very well and we feel a shifting away from the CBSs and ABCs at the same point in time, a little bit of that depends on the obviously we have got a portfolio of very strong stations so if the Olympics is on a week NBC in a market while there is heavy affect it's not preannounced as if the NBC was a strong number one like many of RMBCs..

And next we will take a question from Leo Kulp with RBC Capital Markets..

I think Jim you mentioned that you are normalize core expenses ex-reverse count for gain couple of percent in the quarter, can you try little color around what have been a drivers there and then we are looking out at the 2016, how should we think about overall expense growth?.

In the quarter again combine historical, I think the biggest driver of the core expenses being down would be a the basically payroll of cost for quarter-over-quarter was flat and we are down on a year-to-date basis a little about almost $2 million so that helps a lot in managing the overall number.

We also saw some natural savings in professional services this quarter over last year.

We were involved in converting many of our stations to our WideOrbit Traffic System which is our -- is the traffic system we use and we were going through an extensive implementation training phase all throughout last year that’s certainly well in balance for legacy stations and the acquisitions we made in '14 and '13 and we obviously have a little bit of that going on in some cases for the '15 acquisitions but picked up some grounds [indiscernible] that is well..

Our next question will come from Dennis Leibowitz with Act II Partners..

Thanks, you had mentioned I think in the past perform of that free cash flow per share on average for 2013-2014 was a $1.93, you talked about I think 35 million free cash flow on average for the Schurz stations, if you subtract the cost of debt income up was 217 per share free cash flow on average for '15-'16 without any growth next year, is my math correct?.

You did a lot of [indiscernible] so what I was said even we have said several times in earlier calls as well in presentation we have been making, we certainly expect the free cash flow per share in '16 to be better than '14 and -- you say '15 timeframe or you out '16-'17?.

Well I thought the figure you gave was '13-'14 do I am talking about '15-'16..

Yes, so again we would very much said that '15 is better than '13 and then we certainly expect '16 to be better than '14..

I am not sure if Schurz as well?.

Yes..

Our next question will come from Barry Lucas with Gabelli & Company..

Thank you and good morning and thanks for to Dennis for providing a good opening.

Hilton, we talked a little bit about this perform a new kind enough to address the free cash flow for the quarter and year to date so on a comeback to capital allocation return a cash to share holders, it seem to be hitting on at least eight cylinders today, so what goes in to your thinking about returning cash, is it that the M&A is priority that you have cover instead or a little too restrictive or what should we looking for down the road in terms of those return of cash to shareholders?.

I think my answer is similar to what it was last quarter but I’ll try to reallocate. I do think that the cores in a short term is continuing to grow the footprint of Gray Television.

The industry is consolidating very, very , very quickly and so if you have to ask me what is our first providing, I would say that will be as a shareholder with most of mine net [indiscernible] in this company.

I would very much personally and professionally like to see us how not just to buyback but it do have attacks to our common shares, I don’t think that time is imminent not next six to nine months. But I can see when we get our leverage down and we see what our political release is going to be in 2016 then we have that opportunity to do that.

But once we do it we want to make sure that we are very, very cautious. I think that we have demonstrated to the market that we tried to have delivered exactly what we said we were going to do.

And when we access the public markets in March there were some skepticism about our ability to grow our our portfolio but we knew that we have that ability one way or another and that's allowed us to really do fantastic things in 2015.

So I guess the way of saying it is which heard of capital to shareholders and [Indiscernible] there is something that I would definitely recommend at some point through our Board of Directors who would always take the final decision makers there.

But I think that the most eminent and top core agent is continuing to grow we need to get through this option so we cannot help things go and taken a assessment at that time. Got your answered [Indiscernible].

[Operator Instructions] And I'd now like to take our next question from John Huh with Wells Fargo Securities..

Hey guys thanks for taking the questions.

Jim can you just clarify with onetime costs are embedded into the Q4 sense I'm little confused by the way they were in the release and how much stock based comp is included in the corporate guide?.

Okay first of all the onetime cost and those would be in the corporate numbers is -- right now we think we would probably have about 3.5 million of a continuing deal cost in Q4 either associated with the cleanup of the deals we've already done this year or continuing to move the Schurz transaction forward through the regulatory process.

Yes and again we think we've clearly said we think when peers would be closed by the end of first quarter in 2016. If Schurz and we should be fortunate enough to have a close essentially at the end of 2015 we would then pick up probably $5 million to $7 million more of final deal cost, a lot of that is just M&A fees and final closing legal fees.

But that five to seven that is mentioned in the guidance is only if Schurz should happen to close in Q4 and it is not currently in the guide of the numbers that we've said in the chart of approximately nine to 10 if that same set of dollars if we don’t close in Q4 will probably feel into would obviously feel into Q1.

Does that answer that question John..

Yes perfect that's very helpful. And then how much stock based comp is in the corporate guidance..

Probably about 800,000 real quick looking at..

Operator any other questions? I don’t get any response here to my question. So my assumption is that there are no further questions, and so I just want to take this opportunity to thank each and every one of you for attending our earnings call and for your questions.

We look forward to bringing our Schurz transaction to an end and I'm really looking forward to all of the opportunity that 2016 is going to present to us. Thank you for being here and we'll talk to you next quarter..