Executives at Gray Media have affirmed a broad plan to cut back on certain operational-related expenses, a strategy that involves consolidating some of its business units and laying off workers.

The affirmation was made on a conference call with investors Friday, the same day that Gray Media reported earning $930 million in revenue during its third financial quarter (Q3) of the year.

Broadcast operating expenses were around $14 million during Q3, on the lower end of the company’s projection earlier this year — and executives are hoping the additional cuts will help save it even more money.

“We launched a major effort in August to review spending across the company and to find ways to streamline operations without cutting back on the mission to serve our communities,” Pat LaPlatney, Gray Media’s co-CEO, said on Friday.

Those ways involved not filling certain vacancies within Gray’s various business units, consolidating offices and newsrooms, and laying off an unspecified number of workers over the past few weeks. Pink slips were being handed out as recently as last week, according to two sources who spoke with The Desk on background. It marked a rare instance in which Gray utilized layoffs to reign in costs.

“Every individual, who is directly affected [by the layoffs], has played an important role in the success of our company,” LaPlatney consoled. “These actions are personally difficult for everyone at Gray and particularly painful for those impacted by the job restructurings. They are, however, looking for the company to operate more efficiently for the long-term benefit of all other employees and the communities that depend on us.”

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Despite the consolidation and job losses, executives said they were still committed to producing “local newscasts with local journalists and local meteorologists in all of our existing local news markets, including small markets.” But in some of those small markets, news segments and weather forecasts will be produced by journalists and meteorologists at another Gray-owned outlet, though the company is making efforts to ensure the outsourced production occurs at a nearby sister-station, instead of a centralized content hub. (Other broadcasters have taken a similar approach over the past few years, including Paramount’s CBS and Sinclair.)

The strategy of streamlining its various business units should save Gray Media around $60 million annually, LaPlatney said. The company is still evaluating its capital expenditure needs for next year, which suggests further consolidation and job losses could be on the horizon.

Ad Buyers ‘Held Onto Their Money’

Like other media companies, Gray Media has been impacted by ongoing softness in the traditional advertising space as more budgets are reallocated toward digital platforms like connected TV.

This year’s political cycle proved to be something of a mixed bag for Gray Media: On the one hand, political campaigns and causes were happy to spend their money advertising in battleground states where Gray operates, with the company bringing in $173 million in political advertising during Q3 and projecting it will have earned between $495 million and $500 million from that segment of the business by the end of the year.

Political advertising crowded out some local and national ad buyers, executives affirmed. Some brands also thought twice about running their spots, for a number of different reasons.

“People held on to their money, either not to be on the air during the onslaught of political ads or not really understanding what the economic outlook would be depending on which party prevailed the elections,” Hilton Howell, Gray’s Chairman and co-CEO, told investors Friday.

Howell said there were some early signs that things would improve in Q4, but that certain advertising segments like automotive and telecommunications continue to be weak.

“We’re cautiously optimistic, but we would expect most of those categories to improve for the remainder of fourth quarter, then pick up next year,” Howell said.

The company’s Q3 political and core advertising segments were also impacted by two hurricanes that impacted Florida and several other southern states between late September and early October, which caused nearly all of Gray’s owned or operated stations in the markets affected by severe weather to offer uninterrupted news coverage.

While the coverage served the public’s interest and likely saved lives, it also meant those Gray TV stations did not air commercials. The timing of Hurricane Milton, which struck Florida in mid-October, is affecting Gray’s Q4 advertising revenue as well, and the company adjusted its forecast guidance accordingly.

Asked by an investor to estimate how much money Gray lost from political advertising that didn’t air because of the hurricanes, Hilton said it was “a few million (dollars).”

Cable Churn Slowing

Advertising was not the only area that impacted Gray’s revenue: The company’s distribution fees from cable and satellite companies was also lower during Q3 compared to last year, with Gray collecting $369 million from the carriage of its local TV stations on pay TV platforms. The figure was down 2 percent.

Like other broadcasters, the income Gray collects from cable and satellite fees are tied to the number of subscribers those platforms have. As pay TV companies experience higher churn — or “cord cutting” — distribution fees are depressed. Major companies like Comcast, Charter and Altice USA continued to shed cable TV subscribers during Q3, despite high-profile events like the start of the National Football League’s (NFL) season, which companies could reliably count on to attract cable subscribers until a few years ago.

While cable and satellite companies continue to post subscriber losses, they’re not nearly as staggering as they were a few years ago. Over the past few months, broadcasters like Gray have expressed optimism that cable losses had peaked, and that they could recoup some of their lost distribution revenue by charging cable companies the difference when their contracts are up for renewal.

Kevin Latek, Gray’s Chief Legal and Development Officer, said it was widely believed that peak would occur earlier this year, based on subscriber loss trends, but “it seems that we now have folks kind of coalescing on the idea that it’s probably later this year, maybe next year, we see the sub declines…slowing.”

“We are certainly optimistic…that we have seen kind of the worst of it now, and we’re going to move forward in a world where the sub declines are muted,” Latek said, adding that recent earnings reports from Comcast and Charter — while still reflecting subscriber losses — were “hopeful signs…that mabye their sub losses have stabilized.”