Gray Television Q1 2025 Earnings Report

Gray Television EPS Results

• Actual EPS: -$0.23
• Consensus EPS: -$0.49
• Beat/Miss: Beat by +$0.26
• One Year Ago EPS: $0.79

Gray Television Revenue Results

• Actual Revenue: $782.00 million
• Expected Revenue: $772.71 million
• Beat/Miss: Beat by +$9.29 million
• YoY Revenue Growth: -5.00%

Gray Television Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 1:00PM ET

Gray Television (NYSE:GTN), a television broadcasting company, owns and/or operates television stations and digital assets in the United States. It also broadcasts secondary digital channels affiliated to ABC, CBS, NBC, and FOX, as well as various other networks and program services, including CW Plus Network, MY Network, the MeTV Network, Circle, Telemundo, THE365, and Outlaw; and local news/weather channels in various markets. It owns and operates television stations and digital assets that serve television markets in the United States. The company was formerly known as Gray Communications Systems, Inc. and changed its name to Gray Television, Inc. in August 2002. Gray Television, Inc. was founded in 1891 and is headquartered in Atlanta, Georgia.

Gray Television Q1 2025 Earnings Call Transcript

Key Takeaways

• Gray Media delivered Q1 2025 revenue of $782 million, beating the high end of guidance by 1% while keeping operating expenses 1% below the low end, resulting in a $9 million net loss and $160 million adjusted EBITDA.
• Political advertising was a major bright spot, generating $13 million in Q1 vs. guidance of $2–4 million, driven by competitive races in Wisconsin, Florida, and special elections.
• The company reduced indebtedness by $17 million in the quarter, lowered its secured leverage to 2.92× and total leverage to 5.48×, and extended and upsized its accounts receivable securitization facility by $100 million to boost liquidity above $1 billion.
• Assembly Studios in Atlanta reached roughly 75–80% occupancy with notable productions like CBS’s “Beyond the Gates” seeing strong ratings, and further development partnerships expected later in 2025.
• Management expressed optimism over a more favorable regulatory environment in Washington, paving the way for potential swaps, duopolies and strategic M&A to drive long-term growth and further deleveraging.

Presentation

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Gray Media Q1 Earnings Call. And without further ado, I will now turn the program over to our Chairman Hilton Howell Jr.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Thank you, operator. Good afternoon, everyone. As operator mentioned, this is Hilton Howell, Chairman and CEO of Gray Media. I want to thank all of you for joining our first quarter twenty twenty five earnings call. With me here in Atlanta as usual are all of our executive officers, Pat Laplatney, our President and Co CEO Sandy Breland, our Chief Operating Officer Kevin Latek our Chief Legal and Development Officer and last but not least Jeff Geniak our Chief Financial Officer.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

And also as usual we will begin with a disclaimer that Kevin will provide.

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

Thank you Hilton and good afternoon everyone. Today, we filed with the SEC on Form eight ks our earnings release and an updated investor slides. Later today, we will file with the SEC our quarterly report on Form 10 Q. These materials will all be available on our website, which is www.graymedia.com. Included on the call may be a discussion of non GAAP financial measures, in particular adjusted EBITDA, leverage ratio denominator and certain leverage ratios.

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

These metrics are not meant to replace GAAP measurements, but are provided as supplements to assist the public in its analysis and valuation of our company. Further discussions and reconciliations of the company's non GAAP financial measures to comparable GAAP financial measures can be found on our website. All statements and comments made by management during this conference call other than statements of historical fact should be deemed forward looking statements. These forward looking statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward looking statements as a result of various important factors that are contained in our most recent filings with the SEC.

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

We undertake no obligation to update or revise any forward looking statements whether as a result of new information, future events, or otherwise. And I'll turn the call back

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

to Hilton.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Thank you, Kevin. Today, we are very happy to announce that our results for the first quarter of twenty twenty five finished much better than our guidance on both revenues and expenses. Total revenue in the first quarter of twenty twenty five was $782,000,000 a decrease of 5% from the first quarter of twenty twenty four and one percent above the high end of our guidance for the quarter. Total operating expenses before depreciation, amortization and gain on disposal of assets in the first quarter of twenty twenty five were 1% below the low end of our previously announced guidance.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Net loss was $9,000,000 in the first quarter of twenty twenty five compared to net income of $88,000,000 in the first quarter of twenty twenty four. Adjusted EBITDA was 160,000,000 in the first quarter of twenty twenty five, a decrease of 19% from the first quarter of twenty twenty four. Recall that last year's first quarter included the $110,000,000 gain on the sale of our interest in BMI, the very strong Super Bowl results across our large CBS station portfolio and an extra billing day during leap year. Political advertising was obviously lower than the first quarter of twenty twenty four, yet first quarter twenty twenty five political finished well above our expectations for an off cycle year. In addition to these operating results, we continue to make progress in strengthening our balance sheet the quarter.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

During the first quarter, we continue to prove our commitment to deliver by reducing our outstanding indebtedness by an additional $17,000,000 We finished the first quarter with a lower leverage ratio as defined in our senior credit agreement from where we began the year. And we will continue to use our free cash to reduce our leverage respectively. On 03/31/2025, we announced the extension and increase in size of our accounts receivable securitization facility along with an increase in the size of our revolver. This enhanced liquidity allows us to continue executing on our deleveraging plan. I am particularly proud of the support that we have received from so many of our commercial banking partners and their confidence in our future.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

As noted in our press release this morning, our Board of Directors declared the usual $08 per share quarterly dividend. By now everyone is aware of the new regulatory tone coming from Washington. Like always, the Board will consider capital allocations each quarter in light of opportunities to deploy capital for growth. Operationally, we continue to enhance our local content offerings in the first quarter of twenty twenty five. We continue to enter into new sports rights agreements to bring more local sports back to our local stations.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

In just two years since announcing our innovative deal with the Phoenix Suns and Mercury, we now have our own local and regional sports deals covering nearly 80% of all of our markets. These broadcasts are of course in addition to the professional sports provided by our network partners. The combination of our premier local news franchises with local sports make our local stations even more relevant and more valuable than ever. Our stations and our people continue to receive national recognition for their outstanding journalistic efforts. We recently announced a host of awards across our group.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

WANF in Atlanta and WBU Media in New Orleans both received nominations for the forty sixth annual news and documentary Emmy awards in outstanding regional news stories. Investigative category, WIBW in Topeka, Kansas won the prestigious service to America award for small market television for their campaign, hear me, see me, highlighting mental health issues. WA and F in Atlanta, WAVE, WABE in Louisville, and Investigate TV Gray's national investigative unit all received national headliner awards. And lastly, our very own Sandy Breeland sitting to the right of me right here was named the 2025 John F. Hogan distinguished award winner by the Radio Television Digital News Association for her her unwavering dedication to journalism and freedom of the press.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

The momentum at Assembly Studios also continued in the first quarter of twenty twenty, twenty five. The new CBS soap opera called Beyond the Gates, which debuted in February, has seen strong ratings and and created a buzz not only on-site at Assembly, but across our large portfolio of CBS network stations. We are thrilled, absolutely thrilled to be hosting many of our high profile movie and streaming productions at Assembly Studios and are constantly working to bring more productions to our sound stages. Outside of the Assembly Studio gates we are working with other companies who are actively investing their time and their money to bring to life other parts of our Assembly Atlanta development. We expect to have more announcements about these exciting plans later in 2025.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

As we have said repeatedly, we have seen tremendous interest from potential development partners who could contribute their financial resource and development expertise to accelerate value creation at Assembly Atlanta. We've had a very busy start to 2025, and we are excited about the expanding avenues to enhance the value of all of our businesses. At this time, I'd like to ask Matt to address our operations.

[Pat LaPlatney, President and Co-CEO at Gray Television]

Thank you, Nolan. On our fourth quarter call, we spoke about the cautious tone among our advertisers, especially within the automotive category. The daily developments regarding trade and tariffs have continued to foster uncertainty among advertisers and hindered our ability to forecast as we've done in recent years. Yet despite this backdrop, we're pleased with our first quarter results. As expected, our core advertising revenue for the first quarter of twenty twenty five finished down 8% versus the first quarter of twenty twenty four and right in the middle of our guidance range.

[Pat LaPlatney, President and Co-CEO at Gray Television]

Remember, about half of our decline in core or nine million is attributable to the Super Bowl airing on our 33 Fox channels in 2025 compared to our 54 CBS affiliates in 2024. On the positive side, our FOX channels were up 50% versus the prior FOX Super Bowl with $9,000,000 of core ad revenue in 2025. From a category perspective, automotive came in as expected down to high single digits. For the second quarter, auto is still tracking down high single digits as we continue to see the uncertain macroeconomic conditions impacting advertiser confidence. We think continued high interest rates also weighing automotive demand.

[Pat LaPlatney, President and Co-CEO at Gray Television]

Other categories linked to consumer discretionary spending like restaurants and department stores were soft, while more essential categories like education and financial services performed better. From client conversations, we also believe that some categories saw a beat the tariff effect, including automotive. There were a few bright spots. Legal was up a couple of points and has grown to a low double digit category for us. We have a dedicated team focused on the travel and tourism vertical, but while a smaller category grew nicely on a year over year basis and continues to trend higher.

[Pat LaPlatney, President and Co-CEO at Gray Television]

Digital was again up double digits, which is encouraging. Finally, our new local direct business grew slightly in the first quarter of twenty twenty five. Given the economic uncertainty, we're very pleased that our multimedia sales teams are continuing to grow our new advertiser base. A very bright spot in the first quarter of twenty twenty five was political ad revenue. Our guide for the first quarter of twenty twenty five was 2,000,000 to $4,000,000 while our actual results came in at 13,000,000 Most of this revenue was generated in the competitive Supreme Court race in Wisconsin, where our stations cover most of the state.

[Pat LaPlatney, President and Co-CEO at Gray Television]

We saw meaningful spending in the Panhandle Of Florida in the race for Matt Gaetz former congressional seat. We also benefited from a few special elections in the first quarter. And finally, we are seeing the political ad buys now for primaries that are a year away and in one case for a general election that's eighteen months away. Killam touched on our sports efforts with 80% of our footprint now carrying local sports that equates to 90 of our television stations. We're very excited to watch that part of our business grow.

[Pat LaPlatney, President and Co-CEO at Gray Television]

Providing guidance for the second quarter of twenty twenty five or for the year in the current environment is particularly challenging. Based on current conditions, we're guiding second quarter core ad revenue to be down mid single digits. The NCAA Final Four and Championship Game on CBS provided about a $5,000,000 benefit in early April. Across categories in second quarter, we're seeing a mixed bag with some categories like automotive and restaurants pacing lower and some pockets of strength still in legal consumer goods and entertainment. Jeff will now address the key financial developments.

[Jeff Gignac, Executive VP & CFO at Gray Television]

Thank you, Pat. As Hilton mentioned earlier, reducing leverage remains our top capital allocation priority and we made more progress in the first quarter. We finished the quarter at 2.92 times secured leverage and five point 5.48x total leverage, each as defined in our senior credit agreement. We're optimistic that the more relaxed regulatory environment that has been discussed extensively the last few months could present opportunities to accelerate our deleveraging efforts through M and A later this year. Going forward, we and the Board will continue to evaluate our capital allocation priorities in light of our financial position, capital needs, and other appropriate factors each quarter.

[Jeff Gignac, Executive VP & CFO at Gray Television]

On March 31, we increased our AR securitization facility funding availability by $100,000,000 to a total of $400,000,000 and extended the maturity to 03/31/2028. Pricing on the AR facility increased slightly by 15 basis points to SOFR plus 125. And at the same time, we increased our revolver availability by $20,000,000 to a total of $700,000,000 Together, these facilities provide access to over $1,000,000,000 of availability, which we can use to address any challenges or opportunities that present themselves. Historically, first quarter is the lowest cash generation quarter of the year. Nonetheless, we were able to reduce the principal amount of our outstanding indebtedness by $17,000,000 through a combination of par repayments and open market activities.

[Jeff Gignac, Executive VP & CFO at Gray Television]

At quarter end, we had $240,000,000 remaining on our debt repurchase authorization and we will continue to be nimble and thoughtful as to when, where and how we deploy our liquidity to utilize this authorization. As previously reported, starting in April of this year, we believe we are now exceeding the $60,000,000 annualized run rate of cost savings from last fall's cost containment initiatives. We expect to see the benefits of those actions as we move through 2025. And recall that there's very little, if any of that benefit reflected in our current leverage ratio calculations as outlined in our senior credit agreement. In fact, our first quarter twenty twenty five total operating expenses decreased versus first quarter of twenty twenty four despite some normal inflationary type growth working in the opposite direction.

[Jeff Gignac, Executive VP & CFO at Gray Television]

And our Q2 guide is that expenses will remain below inflationary levels. It's the first time since the COVID slowdown that we posted lower first quarter broadcasting operating expenses than we had in the prior comparative year period. First quarter of twenty twenty five was also the fifth consecutive quarter in which our network affiliation fees did not exceed the levels of such fees in the comparative prior year quarter. This concludes my remarks and I'll now turn the call back over to Hilton.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Thank you, John. In closing our formal remarks, Gray is continuing to take necessary actions to make the investments needed to meet the challenges and seize the opportunities in our ever changing industry. Our strong station portfolio provides incredible value to our advertising clients. We continue to enhance our balance sheet and financial flexibility, and our team is making creative and smart investments to expand and engage with our audiences. Perhaps most importantly, we are energized by the possibility that the government may at last allow local broadcasters to compete on a more level playing field with all of our competitors.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

We thank everyone for joining the call today. And so operator, at this time we ask that you open the line for questions for any of us.

[Operator]

Absolutely. Seeing several already in queue, first up, we have Dan Kurnos.

[Daniel Kurnos, Equity Research Analyst at The Benchmark Company LLC]

Great. Afternoon. Maybe, we'll start, Hilton, Jeff, obviously, everybody's talking about dereg right now. I think we heard the word flexibility about 15 times in the prepared remarks. How creative could you guys get if you saw something attractive?

[Daniel Kurnos, Equity Research Analyst at The Benchmark Company LLC]

What are the most attractive options to you in market if that were to change getting bigger? Would you have to sell anything? Maybe just I'll open it there and then I'll ask a follow-up.

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

I think actually everyone is talking about the new pope. I don't think they're talking about great certain things.

[Daniel Kurnos, Equity Research Analyst at The Benchmark Company LLC]

You mean the new pope, Donald Trump pope, Kevin?

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

It wasn't me, so you're lucky. We're looking at lots of things, Dan, as is everybody else, and we're looking for our smoke signals from Washington on what may be allowed, and we're getting some good white smoke signals that the environment will be much better, allow us to probably enter into swaps to create new duopolies or improve our strategic position, but we'll have to wait and see those.

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

As you talked about, those are pretty complicated. We'll need government, we need waivers or new rules to facilitate some transactions, but we're actively pursuing everything and I think our peers are all doing the same thing.

[Daniel Kurnos, Equity Research Analyst at The Benchmark Company LLC]

Can I ask you Kevin, I mean, I think, you know, Perry kind of addressed this earlier with the Simington op ed piece, but you guys distinctly are in sort of the public lens as it were as you go into your reverse negotiations, your affiliate negotiations in the back half of this year with your fixed fee partners? I mean, don't think anyone takes that number necessarily seriously, but it is a clear shot at the networks. Does it have any impact bearing on the outcome or your view as you address your affiliate negotiations?

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

We're not going to comment on Simonton's piece, we'll leave that for other folks to do. What we would say is that we are encouraged by comments from the Chairman, from Commissioner Simonton, and from others about the importance of local news and local broadcasters. It's a refreshing change of tone, and we think it bodes well for the future.

[Daniel Kurnos, Equity Research Analyst at The Benchmark Company LLC]

Okay, I mean, are my questions. I'll just say one last thing, Jeff, well done on the expense side. It looks like it's pacing much better than anticipated. So kudos on that front. Thanks guys.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Thank you.

[Operator]

Right. Next up we have Aaron Watts.

[Aaron Watts, Managing Director, Media, Entertainment, Cable, & Satellite Credit Analyst at Deutsche Bank]

Hi everyone. Thanks for having me on. Two questions. First, just a follow-up on industry consolidation. On the end market opportunities that you may explore, can you remind us what type of margin lift you get from creating a new duopoly or improving your presence in any given market?

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

Yes, Aaron, think we've talked about this, it seems like 100 times in the last year. In our experience of creating lots of duopolies over the last twelve years, there is no number you can put on it. I appreciate other folks have been able to do that. We have bought from small family publishers, we bought from private equity, we bought Fox affiliate, and we bought Big three affiliates. We bought in large markets, we bought in small markets.

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

And the margin improvement varies quickly based on what we are buying, in what kind of market. The strength of our station and the strength of the other station. So we're not in our experience of having a number of duopolies across our company, I think we're somewhere, I think we have a few dozen of them. I would say that the margin improvement varies from a little to quite a lot, But we're not we don't see how we don't see a precise range of certain number of basis points, because the variability is all over the place. And we are not shopping in just one type of duopoly.

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

We would like to see duopolies in many markets, and some of our best opportunities will be at both ends of the spectrum. So we're looking to grow the company, delever through these transactions, improve the company's profile for the long term. We're not going be focused on just trying to achieve a certain basis point uplift or we'll walk away.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Aaron, this is Shelton.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Let me add one thing to that. No matter what we would do with regard to end market consolidation, it does a couple of things. It's inherently universally positive in terms of saving money, but it also gives us because we are so focused on the delivery of local news, local content, local sports. You know, you gotta give the audiences something to view. It'll the consolidation allows us to compete with the really huge tech giants that are actually taking about 80% of the local ad market.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

And so consolidation is an all in all positive for the entirety of the broadcast business and we're very excited. I think Kevin is hesitant because every deal is different and every market's different. And that's one of the things we love about this business. But from our standpoint, it allows us to do our core business, which is reporting local news, providing now in the last two years, local sports and community involvement and connection.

[Aaron Watts, Managing Director, Media, Entertainment, Cable, & Satellite Credit Analyst at Deutsche Bank]

Yeah. That makes sense. Thanks for that, Hilton. And if I could ask just one more on the advertising side. As you sit today, are you seeing actual cancellations?

[Aaron Watts, Managing Director, Media, Entertainment, Cable, & Satellite Credit Analyst at Deutsche Bank]

Or is it more just a hesitancy to book or delaying ad buys? And aside from lapping political crowd out that you had last year and the second half of this year, any reason for optimism in key core verticals that they can start to gain momentum as you roll into the back half of this year?

[Pat LaPlatney, President and Co-CEO at Gray Television]

Yes. So Aaron, it's Pat. On the first question, it's the latter. So we're not seeing cancellations. We are seeing some hesitancy, but it's not in any way overwhelming.

[Pat LaPlatney, President and Co-CEO at Gray Television]

And in regard to the second half of the year, you looked at the services categories as we talked about, so legal, health, home improvement, those categories are now upwards of a third of our business and they are sort of less impacted by the tariffs. So I think that's some reason for optimism. But the reality is there's just so much uncertainty out there, it's really hard to forecast. I would say if there is a single category that has upside, I think it's political. We saw it in the first quarter, we're going see some of it in second quarter.

[Pat LaPlatney, President and Co-CEO at Gray Television]

As we noted in our remarks, we're seeing some money for races that are a year eighteen months out right now. And breaking news here, we just saw some more this morning in the state of Georgia, which we frankly didn't anticipate. So I'm not sitting here to tell you I'm not ready to tell you that we're going do as well in second quarter political as we didn't first, but we're pleasantly surprised with what's going on right now in political. Aaron, Pat referenced this in his remarks, despite the uncertainty and headwinds we did grow our new local direct business in first quarter. And that's really a credit to our strong sales teams and our training team that you've heard us talk so often about.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Well, and Aaron this is Hilton. Let me add one more thing to this too. Today is kind of a propitious day in a lot of ways. But, you know, the president announced a a trade deal with United Kingdom, and I think that is the beginning of the reestablishment that is to hopefully, of stability with regard to, you know, your all your guys markets and our ad market because so many of our many of our clients are pulling back because they really don't know what the cost of goods sold of their products are right now. And that makes everyone a little nervous to take an ad out and price, you know, what they're gonna do for a new Chevy.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Alright? So I I think today is a great day. And I think by the time we're at this call in a quarter from now, we're gonna have a lot more clarity.

[Aaron Watts, Managing Director, Media, Entertainment, Cable, & Satellite Credit Analyst at Deutsche Bank]

Yep. Makes sense. Okay. Thanks so much.

[Pat LaPlatney, President and Co-CEO at Gray Television]

Sure.

[Operator]

Alright. Next up we have Patrick Scholl. But before I turn it over to Patrick, I just wanted to remind participants you can press star one on your telephone keypad for questions. That is star one to join the question queue. And with that Patrick Scholl your line is now open.

[Patrick Sholl, Vice President at Barrington Research Associates]

Hi, thank you.

[Patrick Sholl, Vice President at Barrington Research Associates]

Circling back on political. Can you maybe talk about to me if the puts and takes between the 2026 cycle and the twenty twenty two midterms that we should think about or if you have any like overarching thoughts on the cycle?

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Let me just say this.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

All we know is what we know, right? So what we saw at the last midterm, we didn't get anywhere near the kind of ad buys that we're seeing this time around. Whether or not that's going to continue, you know, we don't know. I mean, it's political is the world's worst category to predict. But when we were here four years ago at the last midterm, we didn't have these big orders and they're coming in daily.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Depends on the market. But across our portfolio, we're getting political ad buys left and right and big ones.

[Patrick Sholl, Vice President at Barrington Research Associates]

Okay. Thank you. Then maybe just on the affiliate reverse comp negotiations coming up this year. Just how should we think about those? Like, when we feel like some of the subscriber trends for the MVPDs starting to at least moderate with some of that in part being influenced by the the, access to the, network streaming services perhaps influencing some of that.

[Patrick Sholl, Vice President at Barrington Research Associates]

So how should we think about that affecting some of these reverse comp negotiations?

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

Pat, it's one of the talking points in a conversation. We discussed the value we bring, they discuss the value they bring, we discuss our concerns with exclusivity and investments in their DTC products, and they discuss their concerns with us, and it's all just part of us, you know, it's just part of the conversation. So those conversations are ongoing and making progress, but, you know, there's a lot of things to discuss that's you've hit on one of the topics that is discussed.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

We're very hopeful that we will renew with all of our network affiliate partners. You know, it's just we got a lot of them up this year and so there's a lot of open questions. But we are very hopeful that we will get it renewed and that hopefully it can be a win win for both the networks and for the affiliate partners.

[Patrick Sholl, Vice President at Barrington Research Associates]

Thank you.

[Operator]

All right. Next up we have Craig Huber.

[Craig Huber, Equity Research Analyst at Huber Research Partners]

Thank you. I want to ask about Assembly, Atlanta Assembly. Just can you just give us a little more flavor here on how things are going to sign up new tenants, etcetera? I mean, I think you spent, what, upwards maybe $600,000,000 on this. When do you think you're going start to get a proper return on this?

[Craig Huber, Equity Research Analyst at Huber Research Partners]

Talk me through how you're thinking. And I know it's a tough environment, but just talk me through when you think you might get sort of a turn off this quarter.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

I

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

think rolling through as we speak actually. We probably have somewhere near eight, maybe nine productions that are actively shooting at assembly. It's roughly between 21, we're guessing this, 104,600 folks on the lot. It's really exciting as I mentioned last quarter. Two of the shows that are shot at assembly are airing on our CBS portfolio and our NBC portfolios.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Those would be I mentioned in my opening comments beyond the gates on CBS, a new daytime soap opera, which we're extremely proud of. And then also pretty very excited about is Grossmont Garden Society that airs on our NBC affiliates across the country. And that's in addition to a tremendous number of productions that are being shot that'll be going to streaming or to theaters and, you know, and and all the rest. It was very clear in terms of what we were going to do that we had to get the film production business up and maturing. And while the studios have been open for a year, honestly, the truth of it is, Craig, it was last August when all the strikes kind of came to, you know a sort of final fruition, before we even got anything in to get going because while we had a long term lease with our partner NBCUniversal, you know the strikes just slowed down everything in Hollywood nationwide.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

And so we haven't really been operating for a year. And so also in my opening comments, we haven't added 80 acres that is going to be opening up for us. One of the places that we know will be out there that we will be monetizing at the very beginning of 2026, hopefully with the World Cup, is our band shell and the park that's out there because we'll be hosting watching parties for the World Cup for the Atlanta audiences here in the city. And, of course, Atlanta is one of the semi final host cities. And then there's a tremendous number of other opportunities that we have to, you know, fully invest and and produce the income, on on that $600,000,000.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Because you gotta remember, that number includes, you know, the purchase of all the land, not not just studio portion. If we had prorated it out and said, alright, this is the 50 acres and this is the revenue we're getting out of the amount of the studios, that's one return. There's a lot of returns that are going to be arriving as we finish out what we're doing in what I call phase two. But we're going to be very slow about that. We don't feel any rush and sometimes we think these decisions that some real estate folks do is a little bit precipitous.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

And so we're going to be cautious and make sure we're doing the right thing. I think you're going be impressed with what you hear through the

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

course of this year.

[Jeff Gignac, Executive VP & CFO at Gray Television]

Yeah. Craig, it's Jeff. If I could just address it from a financial point of view. So in terms of getting the rest of the studios leased up, there are the the number of inquiries are plentiful.

[Jeff Gignac, Executive VP & CFO at Gray Television]

You know, we we don't wanna announce anything specific until we have a signed lease. On an operational basis, it is contributing. You know, obviously, we'd like it to be higher, but it's contributing at this point. And you can see in our guide, both for first quarter and this quarter, that on a net basis, we think that it will be zero additional capital investment. There's some returns coming as we transition some of some parts of the public use to the government where, there's some rebate money that comes in from that.

[Jeff Gignac, Executive VP & CFO at Gray Television]

So on a net basis, we think it's capital neutral this year. And, you know, every time we sign a new lease, it's real estate, so it's a high contribution on each additional lease that we get signed.

[Craig Huber, Equity Research Analyst at Huber Research Partners]

I appreciate that. Maybe can you maybe give us a sense of what percentage of the of the square footage is is leased out at this point, if you're willing?

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

It's about I mean, think we're offering about a 75% to 80% occupancy rate. We have another 20% that we can, you know, fully fill up. I don't know what's going to happen. I mean the president made tweets on Sunday about foreign tariffs. But, you know, the requests that we have are legion.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

And so we're taking them step by step.

[Craig Huber, Equity Research Analyst at Huber Research Partners]

Okay. I appreciate that. Thank you, guys.

[Operator]

All right. Next up we have Alan Gould.

[Alan Gould, Managing Director at Loop Capital]

Thanks for taking my question. First for Kevin, how much of an impact would allowing Gray to directly negotiate with the virtual MVPDs have on your net retrans revenue? And then I have a follow-up after that.

[Kevin Latek, Chief Legal and Development Officer at Gray Television]

It would be, I would say this, the delta between what we charge a traditional MVPD and what we get paid from the networks on the virtuals is significant. I'm not sure if the law changed today that we would have the ability to tomorrow renegotiate those virtual agreements at the higher rate without also paying some more to the networks. So I don't know what this sort of net impact would be. The gross impact would be significant.

[Alan Gould, Managing Director at Loop Capital]

Okay. And then a follow-up on the LN assembly. I'm just curious. It's been in production for it's been operational for about a year. You say you're 75%, eighty % booked up.

[Alan Gould, Managing Director at Loop Capital]

I'm just wondering why the guide for production companies revenue is basically flat year over year.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

We don't really update it based until we get signed leases. So

[Jeff Gignac, Executive VP & CFO at Gray Television]

Yeah. There's so production companies is the studio is the studio properties as well as some other production companies, Raycom and Tupelo Media. And so so when we compare where we're at until we have, you know, signed new business on either one of those, we're projecting you can see what the guide is on a year over year basis.

[Alan Gould, Managing Director at Loop Capital]

Okay. Thank you.

[Jeff Gignac, Executive VP & CFO at Gray Television]

Yes.

[Operator]

All right. Next up, we have Steven Cahill.

[Steven Cahill, Analyst at Wells Fargo]

Thank you. So you talked about your, I think, biggest kind of deregulation opportunity is looking at swaps and duopolies. I'm just wondering if you're also open to something that's more strategic. I realize it would have to be equity based given that with the balance sheet, you're probably not going to be paying cash for anything sizable. But are you open to finding opportunities, especially if it includes a lot of duopolies that are more structured on an equity basis?

[Steven Cahill, Analyst at Wells Fargo]

That's the first. And then second, Jeff, just wondering with the increased capacity you have under the RCF and the accounts receivable, how much between that and free cash flow do you think you can do in debt repurchases this year, especially if you continue to see debt at attractive prices in the market?

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

Stephen, let me just begin a little bit. When we started our second big round of M and A, we actually did a lot of deals. The first one really was the whole transaction that we started with a higher leverage ratio and we had deleveraging transactions that helped to delever the trends. So I think there's a lot of potential opportunities for us to do strategic transactions with a variety of different sort of structures. So we're looking at all kinds of things.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

I think the first sort of opportunities would likely be if we can find a way to get them to the finish line would be swaps because that's just assets for assets. But those are always hard to get done. But we're moving aggressively on all fronts.

[Jeff Gignac, Executive VP & CFO at Gray Television]

Yes, Stephen. And I think there's a little bit of interrelation between the two questions. I mean, can do some of the smaller we could do some of the smaller transactions. There's a plentiful number of opportunities out there to look at. And if there's something that's strategically important to us, I wouldn't rule us out as a cash buyer on some of that in addition to, as Hilton said, guiding principle for us is potentially using m and a to delever, and, you know, you can that can be a combination of of for the right transaction, it could be a combination of things.

[Jeff Gignac, Executive VP & CFO at Gray Television]

So in terms of, you know, where we go directly with the extra proceeds, I think it's wherever we can get the most bang for the buck. This morning, it appears that a lot of people beat us to market on being able to go buy back debt. So so, yeah, we'll look. We'll see where things settle out, and we have the liquidity. We are obviously managing the capital the capital structure, I think, in a in a very judicious way and we'll continue to do so and be mindful of near term maturities relative to longer term opportunities to capture larger discounts.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

And, Steven, it all it it all goes back to every deal is different. Right? Because there's different synergies with each different transaction.

[Steven Cahill, Analyst at Wells Fargo]

Thank you.

[Operator]

All right. Seeing only one question left in queue. I'll remind participants, you can press star one on your telephone keypad if you would like to join the queue. With the final one in queue so far, David Hamburger, your line is now open.

[David Hamburger, Analyst at Morgan Stanley]

Hi, thank you very much. I have two questions. One is a follow-up to the last question. But first, the cost cutting effort, I believe, Kevin, you had mentioned that you've realized $60,000,000 or at least you have see visibility to the $60,000,000 in reduction of costs. I wonder if you could just elaborate, it looks like costs were down normally in the first quarter.

[David Hamburger, Analyst at Morgan Stanley]

It looks like second quarter not down very much. When start to see that kind of in the station expense line item? And then is there an opportunity to drive costs down even further than that?

[Jeff Gignac, Executive VP & CFO at Gray Television]

Yes. It's Jeff, David. I'll take it and others can weigh in as well. So yeah, so what we have taken all of the actions that made up the 60,000,000 that we announced. So, you know, when we say we have achieved or even exceeded that 60,000,000 number, that's everything we identified has been implemented.

[Jeff Gignac, Executive VP & CFO at Gray Television]

So now you will see it flow into the numbers. I would say some of the some of the cost items are not perfectly linear. And we said at the beginning of this exercise that the goal here was to get expenses ideally to be negative, but also at a minimum get below inflationary levels. And so our guide for second quarter is below inflationary levels. We're continuing to evaluate it every day.

[Jeff Gignac, Executive VP & CFO at Gray Television]

And if there's other things that we see that are out there, there is a sense of, know, everybody understands the importance of it as we run the business and especially with the top line trends. So we're not stopping just because we, quote, unquote, achieved the number. We will see that flow through prospectively as we move through the year, but not plans at this point where there will be a second round of announcements of any wide ranging things. Mean, will be continuing to optimize the business, frankly, being good stewards of the business and thinking about how we manage it over time.

[David Hamburger, Analyst at Morgan Stanley]

And then I guess just with corporate expenses, it looked like it was up a little bit year over year. Is there anything kind of notable there particularly?

[Jeff Gignac, Executive VP & CFO at Gray Television]

I wouldn't say anything that's notable. I mean, can bounce around a little bit. They're not always things aren't always perfectly linear. So nothing really notable. It could be a couple of million can bounce around throughout the year.

[David Hamburger, Analyst at Morgan Stanley]

And then just finally on the AR securitization, it looks like you drew on the $100,000,000 in the quarter, the cash balance for the company is up to $210,000,000 So it looks like notwithstanding the $17,000,000 of debt you reduced, the vast majority of that sitting on the balance sheet. Is there anything near term for which you require kind of more elevated cash balance on the balance sheet?

[Jeff Gignac, Executive VP & CFO at Gray Television]

No. Well, look, the AR facility is also a revolving facility. So it's a very nice source of inexpensive liquidity for us. You've seen what we've done in open market and par repayments of debt. We do have some we have some smaller maturities later regular amortization stuff later this year and a small maturity next year.

[Jeff Gignac, Executive VP & CFO at Gray Television]

And then we'll see where things are at in terms of where to deploy it next, whether it's more open market repurchases or some of it gets used along the way if we identify interesting tuck in type acquisitions. But to more directly answer the question, we don't need $200,000,000 of cash sitting on the balance sheet. And if not, we're going to we can either pay down the AR facility or deploy it elsewhere as we see opportunity.

[David Hamburger, Analyst at Morgan Stanley]

Okay. Thank you very much.

[Hilton H. Howell Jr, Chairman & CEO at Gray Television]

All right. Well, thank you operator and thank you everyone for joining us this afternoon. I know you guys had a lot to listen to because I know there's been calls sort of on the hour every hour today. We really appreciate you spending time with us and we look forward to talking to you next quarter.

[Operator]

And with that ladies and gentlemen, this does conclude your call. You may now disconnect your lines and thank you again for joining us today.

Participants

Executives

• Hilton H. Howell Jr, Chairman & CEO
• Kevin Latek, Chief Legal and Development Officer
• Pat LaPlatney, President and Co-CEO
• Jeff Gignac, Executive VP & CFO

Analysts

• Daniel Kurnos, Equity Research Analyst at The Benchmark Company LLC
• Aaron Watts, Managing Director, Media, Entertainment, Cable, & Satellite Credit Analyst at Deutsche Bank
• Patrick Sholl, Vice President at Barrington Research Associates
• Craig Huber, Equity Research Analyst at Huber Research Partners
• Alan Gould, Managing Director at Loop Capital
• Steven Cahill, Analyst at Wells Fargo
• David Hamburger, Analyst at Morgan Stanley