Gray Media Q2 Earnings Call Highlights

Key Points

• Second-quarter revenue rose 9% to $839 million, beating the high end of guidance by roughly $9 million, while adjusted EBITDA reached $214 million. Results benefited from stronger-than-expected political advertising and recent acquisitions.
• Political advertising generated $83 million in Q2, above the company’s $60 million–$70 million forecast, with management expecting $165 million–$185 million in Q3. Gray plans to direct essentially all incremental political cash flow toward debt reduction.
• Core advertising remained weak, declining 1% year over year on a reported basis, though digital revenue grew 12% and retransmission revenue reached $150 million. Gray reduced its 2026 capital-expenditure outlook to $120 million–$130 million and continued debt reduction through note repurchases and a new $250 million repurchase authorization.

Gray Media NYSE: GTN reported second-quarter 2026 revenue of $839 million, up 9% from a year earlier and about $9 million above the high end of its adjusted guidance range, as political advertising outperformed expectations and recently completed acquisitions contributed to results.

Net income attributable to stockholders was $21 million, while adjusted EBITDA totaled $214 million. Chairman and CEO Hilton Howell said the quarter included the impact of three acquisitions and a station swap with E.W. Scripps that closed during the period.

Political advertising exceeds expectations

Political revenue reached $83 million in the second quarter, exceeding Gray's guidance of $60 million to $70 million. The total included $3 million from stations acquired during the quarter. The company said second-quarter political revenue compared with $47 million in the 2024 presidential-election cycle and $90 million in the comparable quarter of the 2022 midterm cycle.

For the third quarter, Gray expects political revenue of $165 million to $185 million. President and Co-CEO Pat LaPlatney said political spending is typically weighted toward the back half of the quarter, with September historically accounting for roughly half of quarterly political revenue.

Gray said its station footprint covers all 12 U.S. Senate races, all 11 gubernatorial races and 29 House races considered competitive by The Cook Political Report at the time of the call. Management cited primary spending in several states, including Tennessee, Kansas, Florida, Michigan, Arkansas, Wisconsin, Connecticut and Hawaii, as well as early general-election spending in Senate contests in Maine, Ohio, Iowa, Alaska and Michigan.

Howell said the company intends to direct essentially all incremental political advertising cash flow toward debt reduction.

Core advertising remains soft, while digital grows

Core advertising revenue declined 1% from a year earlier on a reported basis during the second quarter. Adjusted for the second-quarter acquisitions, core advertising would have declined in the mid-single digits, consistent with Gray's guidance. LaPlatney estimated that political advertising crowd-out accounted for about one percentage point of the core-advertising decline, while FIFA World Cup programming provided a tailwind.

Gaming advertising remained strong and continued to show strength entering the third quarter, according to management. Communications services, including health and insurance, and consumer-related categories were softer. Automotive advertising declined 2% to 3% on a same-station basis in the second quarter but was pacing slightly higher in the third quarter.

Digital revenue increased 12% year over year in the second quarter, while new local direct business rose 5%. Gray expects third-quarter core advertising to be flat year over year on an as-reported basis, including acquired stations. Excluding acquisitions, management expects a mid-single-digit decline, citing both political crowd-out and broader softness in core advertising demand.

Acquisitions and retransmission revenue support leverage plan

Gray closed transactions during the first half that added four new markets, 14 stations in existing markets and included the swap of three markets with Scripps. The company also completed acquisitions of the non-licensed assets of American Spirit Media and WHPM, a Fox affiliate in Hattiesburg, Mississippi, on July 1 through local management agreements. Gray expects to close the licensed assets of those transactions during the fourth quarter.

Net retransmission revenue was $150 million in the second quarter, including a $6 million contribution from the acquisitions completed during the period. The result exceeded the company’s adjusted guidance range despite a blackout with one of Gray's largest distributors that ended May 1. Howell said Gray has no further retransmission negotiations scheduled for the rest of 2026.

Chief Financial Officer Jeff Gignac said Gray expects low-single-digit organic growth in net retransmission revenue, supplemented by acquired-station contributions. He said net retransmission margins should remain slightly above 40%, in line with the first and second quarters, and that total net retransmission dollars should begin to increase as acquired properties are integrated.

As of June 30, Gray reported a consolidated first-lien net leverage ratio of 2.55 times, a consolidated secured net leverage ratio of 3.71 times and a consolidated total net leverage ratio of 5.73 times. Gignac said the total leverage ratio was down from 5.94 times in the first quarter.

Debt actions and spending outlook

During and after the quarter, Gray took several balance-sheet actions. The company issued $70 million of 7.25% first-lien notes due 2033 on June 30. It used $30 million of proceeds to repurchase $50 million of liquidation preference on its Series A preferred equity and used the remaining proceeds to fund the July 1 transaction closings.

On July 21, Gray repurchased $100 million of its 10.5% first-lien notes and $20 million of its 5.38% unsecured notes. The board also reauthorized up to $250 million of open-market debt repurchases. Gray ended the second quarter with more than $900 million in liquidity.

The company lowered its full-year 2026 capital-expenditure outlook to $120 million to $130 million from a prior estimate of $140 million. It also reduced its full-year tax guidance to $80 million to $100 million.

Beyond its television operations, Gray highlighted an agreement with the Atlanta Hawks running through the 2028-29 season. The deal will bring 70 to 75 Hawks regular-season games and more than 200 hours of programming to WANF and Peachtree Sports Network. Gray’s Raycom Sports unit will produce the non-national Hawks games.

About Gray Media (NYSE:GTN)

Gray Media NYSE: GTN is a U.S.-based broadcasting and digital media company that owns and operates a portfolio of local television stations and associated digital platforms. The company's core business centers on delivering local news, sports and entertainment programming through its network-affiliated broadcast outlets. In addition to traditional over-the-air distribution, Gray Media supports multi-platform video streaming and on-demand services for audiences across its markets.

Gray Media's television stations carry network programming from major national broadcasters, including ABC, CBS, NBC, Fox and The CW, and often feature locally produced news and public affairs content.

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