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    GTN
    Earnings call· Jun 2026(Q2 FY26)

    GRAY MEDIA Q2 FY26 earnings call GTN

    Aug 7, 2026 Source

    Executive summary

    Gray Media Q2 FY26 — Strong Political Revenue and Strategic Acquisitions Drive Deleveraging

    Gray Media delivered strong Q2 FY26 results, driven by robust political advertising and strategic acquisitions that exceeded revenue guidance. The company is actively deleveraging, utilizing political cash flows and opportunistic debt repurchases, while integrating new assets and expanding local sports content. Management anticipates continued political strength and operational efficiencies despite ongoing macroeconomic turbulence impacting core advertising.

    Highlights

    5

    • Total revenue of $839 million exceeded adjusted guidance by $9 million and increased 9% year-over-year.

    • Political revenue reached $83 million, significantly above guidance of $60 million to $70 million, trending ahead of prior election cycles.

    • Net retransmission revenue was $150 million, above guidance, with all contracts in place until 2027.

    • Digital momentum continued with 12% year-over-year growth in Q2, complemented by a 5% increase in new local direct business.

    • Successfully closed 3 acquisitions and a swap, adding 4 new markets and 14 stations, and redeemed $50 million of preferred equity and repurchased $120 million of debt.

    Concerns

    4

    • Core advertising revenue was down mid-single digits on an adjusted basis in Q2, with some softness unrelated to political crowd out.

    • Corporate expenses included elevated transaction costs, impacting overall profitability.

    • Automotive vertical was down 2-3% on a same-station basis in Q2, though pacing up slightly in Q3.

    • Some consumer-facing categories like restaurants, supermarkets, and services are seeing softer demand.

    Guidance & targets

    6
    CategoryTargetConfidence
    Political revenue
    $60 million to $70 million
    high materiality
    High
    Political revenue
    $165 million to $185 million
    high materiality
    High
    Core advertising
    flat year-over-year performance
    medium materiality
    Medium
    Company-wide CapEx estimate
    $120 million to $130 million
    medium materiality
    High
    Full year tax guide
    $80 million to $100 million
    medium materiality
    High
    EBITDA
    up slightly
    high materiality
    Medium

    Operational metrics

    31
    Total revenue growth
    9%YoY
    Q2 FY26

    Total revenue increased 9% on a year-over-year basis, exceeding the high end of adjusted guidance by $9 million.

    Political revenue from 2026 acquisitions
    $3 million
    Q2 FY26

    Contribution to total political revenue.

    Political revenue
    $47 million
    Q2 FY24

    Comparison to previous election cycle.

    Political revenue
    $90 million
    Q2 FY22

    Comparison to previous non-presidential election cycle.

    Edward Murrow Awards
    93up from 81 last year
    2026

    Reflects journalistic excellence and commitment to local news.

    Series A preferred equity redeemed
    $50 million
    post-Q2 FY26

    Reduces total capital obligations and lowers fixed charges.

    Debt repurchased (private transaction)
    $120 million
    post-Q2 FY26

    Transaction on July 21, subsequent to quarter end, lowered interest expense without increasing quantum of debt.

    Debt repurchase authorization
    $250 million
    open-ended

    Board reauthorized purchase of debt in the open market.

    Core advertising revenue
    down mid-single digits
    Q2 FY26

    Reported down 1% on an as-reported basis, but adjusted for acquisitions would have been down mid-single digits.

    Core advertising decline from political crowd out
    1 point
    Q2 FY26

    Estimated impact on core advertising.

    Digital momentum growth
    12%YoY
    Q2 FY26

    Healthy year-over-year growth, remaining strong into Q3.

    New local direct business increase
    5%
    Q2 FY26

    Complemented digital momentum.

    Automotive vertical performance
    down 2% to 3%vs Q2 FY25
    Q2 FY26

    Finished Q2 down, but pacing up slightly in Q3.

    Automotive vertical pacing
    up slightly
    Q3 FY26

    Encouraging trend for the third quarter.

    Consolidated first lien net leverage ratio
    2.55x
    June 30, 2026

    Under amended senior credit agreement.

    Consolidated secured net leverage ratio
    3.71x
    June 30, 2026

    Under amended senior credit agreement.

    Consolidated total net leverage ratio
    5.73x
    June 30, 2026

    Under amended senior credit agreement.

    Consolidated total net leverage ratio
    5.94x
    Q1 FY26

    Prior quarter comparison.

    Consolidated total net leverage ratio (pro forma)
    5.76x
    Q1 FY26

    Had acquisitions closed in Q1 FY26.

    Add-on notes issued
    $70 million
    June 30, 2026

    Issued at par in a privately negotiated transaction.

    Proceeds used for preferred equity repurchase
    $30 million
    June 30, 2026

    Utilized from $70 million add-on notes to repurchase $50 million liquidation preference of Series A preferred equity.

    Proceeds used for acquisition closings
    $40 million
    July 1, 2026

    Remaining proceeds from $70 million add-on notes used to fund July 1 acquisition closings.

    Net retransmission margin
    a little above 40%
    Q1-Q2 FY26

    Expected to hold in this range, even with WANF transition and contract changes.

    Net retransmission organic growth
    low single-digit
    ongoing

    Expected organic growth, plus acquisitions, to accelerate total net retransmission revenue.

    Full year tax guide
    $80 million to $100 million
    FY26

    Revised full year 2026 tax guidance.

    Capital allocation priority
    to further reduce debt
    ongoing

    Top priority for incremental political cash flows.

    Leverage ratio denominator add-back
    $72 million
    current

    This number is $144 million divided by 2, representing an add-back in the leverage calculation.

    Interest expense
    $440 million
    FY26

    Current full year guide for 2026.

    Potential interest expense reduction
    $30+ million
    future

    Expected through some refinancing activities, driving down cost of debt.

    Securitization facility borrowing base
    above $400 million
    current

    Made up of receivables; expected to dip temporarily with prepaid political revenue but recover by year-end.

    Senator Warnock's spending
    $240 million
    election cycle

    Cited as an example of high political spending in a state where Gray has full market presence.

    Industry KPIs

    6
    MetricValueDetails
    Total revenue$839 millionUSD
    Adjusted EBITDA$214 millionUSD
    CAPEX capital program$120 million to $130 millionUSD
    Total operating expenses$569 millionUSD
    Content title performance70 to 75games
    Cash marketable securities$900 millionUSD

    Product announcements

    3
    ProductTypeDetails
    Atlanta Hawks gamesexpansion
    CBS soap opera at Assembly Atlantaupdate
    Quickplay platform transitionmilestone

    Deals & partnerships

    7
    Allen Media GroupAcquisition of stations in 7 markets.

    Part of transactions closed in Q2 2026.

    Block CommunicationsAcquisition of stations in 3 markets.

    Part of transactions closed in Q2 2026.

    E.W. ScrippsStation swap.

    Part of transactions closed in Q2 2026, swapped 3 markets to Scripps.

    SagamoreHillAcquisition of stations in 2 markets.

    Part of transactions closed in Q2 2026.

    American Spirit MediaAcquisition of non-licensed assets.

    Acquired non-licensed assets on July 1, which had been under a shared service agreement for over a decade. License assets expected to close in Q4 2026.

    WHPMAcquisition of Fox affiliate in Hattiesburg, Mississippi.

    Acquired on July 1. License assets expected to close in Q4 2026.

    Atlanta HawksAgreement to broadcast Atlanta Hawks regular season games.through the 2028-29 season

    Brings 70-75 regular season games and over 200 hours of program information to WANF and Peachtree Sports networks, produced by Raycom Sports.

    Risks & headwinds

    4
    Macroeconomic turbulenceNear-term

    Core advertising down mid-single digits (adjusted) in Q2 FY26; some consumer-facing categories seeing softer demand.

    Mitigation: Leveraging newly acquired stations, focusing on efficiency, and expecting political revenue to offset.

    Political crowd outQ3 and Q4 FY26

    1 point decline in core advertising in Q2 FY26.

    Mitigation: Offset by strong political advertising revenue, which has higher margins.

    Attorney general scrutinyOngoing

    Not quantified, but noted as a 'unique and unprecedented third regulatory structure'.

    Mitigation: Working to explain the benefits of TV station consolidation to attorney generals.

    Production pipeline slowness at Assembly AtlantaNear-term

    Not quantified, but noted as 'slowness to the production of films'.

    Mitigation: Attributing to industry-wide issues stemming from prior strikes and overexpansion; expecting 90% occupancy for the remainder of the year.

    What to watch in Q3 FY26

    5

    Q3 Core Advertising Performance

    Next quarter (Q3 FY26 results)
    CurrentDown mid-single digits (adjusted Q2), pacing flat (as-reported Q3 guide)
    TargetStable or improving trend, especially in automotive and consumer categories.

    Why it matters

    Core advertising performance is a key indicator of economic health and company's ability to offset political crowd out and macro headwinds🌐.

    While global economic factors and political crowd out introduced near-term caution for core advertising, we are leveraging our newly acquired 2026 stations to project stable Q3 core advertising, flat year-over-year performance on an as-reported basis.

    Q&A highlights

    7

    Confirming net retrans dollars accelerate into 2027 with M&A, and understanding Q3 margin dip.

    Jeff Gignac confirmed acceleration into 2027, driven by low single-digit organic growth plus acquisitions. He noted Q3 will lap the WANF transition and margins should hold "a little above 40%".

    “So the margin should be holding in the range that we've been -- that we've seen in first and second quarter, a little above 40%. And when you project that out for the rest of the year and with the additional stations coming online from the acquisitions and as those come into the number, you'll see the total dollars start to ramp.”

    asked by Steven Cahall (Wells Fargo) · answered by Jeff Gignac (Executives)

    2 min read7 chapters

    Detailed Narrative

    01

    Acquisition Integration & Portfolio Expansion

    Gray Media successfully integrated 3 acquisitions and a swap in Q2 2026, adding 4 new markets and 14 stations, while swapping 3 markets. Post-quarter, it acquired non-licensed assets of American Spirit Media and WHPM, with license assets expected to close in Q4 2026. These transactions are expected to contribute to deleveraging and operational synergies, with the third quarter guide including all closed transactions.

    02

    Deleveraging Strategy

    The company is prioritizing debt reduction, committing incremental political cash flows to further reduce debt. It redeemed $50 million of Series A preferred equity and repurchased $120 million of debt in private transactions. The Board reauthorized the purchase of up to $250 million of debt in the open market, aiming to lower interest expense by potentially $30+ million and extend maturities, accelerating deleveraging.

    03

    Political Advertising Strength

    Political revenue significantly exceeded expectations, reaching $83 million in Q2, well above the $60 million-$70 million guidance. This performance is trending ahead of both the 2024 presidential year ($47 million) and the 2022 non-presidential year ($90 million). The company's footprint is strategically exposed to key battleground states, with strong primary and early general election spending, and high confidence for robust spending due to substantial party funds.

    04

    Core Advertising Headwinds

    Core advertising was down mid-single digits on an adjusted basis in Q2, with a 1-point decline attributed to political crowd out and some softness in consumer-facing categories like restaurants and supermarkets. The automotive vertical, while down 2-3% in Q2, is pacing up slightly in Q3, showing encouraging signs of recovery. Management noted the turbulent macroeconomic environment as a primary factor for the softness.

    05

    Local Sports & Content Expansion

    Gray Media is strategically expanding its local professional sports portfolio, highlighted by a new agreement with the Atlanta Hawks through the 2028-29 season, bringing 70-75 games and over 200 hours of programming to its local affiliate WANF and Peachtree Sports networks. Raycom Sports will produce these games, leveraging existing expertise from the Atlanta Braves partnership. The CBS soap opera at Assembly Atlanta was renewed for two additional seasons, ensuring continued studio activity.

    06

    Technology & AI Adoption

    The digital team completed the transition of all digital video streams to the Quickplay platform powered by Google Cloud, with CTV and mobile applications to follow over the next quarter. The company is using AI as an efficiency tool across editorial, sales, and marketing, focusing on enhancing toolsets for employees while maintaining human oversight for published content, rolling it out cautiously and wisely.

    07

    Spectrum Monetization & Regulatory Environment

    Management sees potential for spectrum reallocation and monetization in the medium term, driven by FCC Chairman Carr's focus and the broadcast industry's transition to ATSC 3.0. This could accelerate the 3.0 transition, provide a GPS backup system, and align with national security interests. The recent FCC rule updates are viewed positively for enabling TV station consolidation, though attorney general scrutiny remains a unique regulatory challenge🌐.

    AI-generated summary of the company’s earnings call. Not investment advice.