Gray Media (GTN) Q2 FY26 earnings call: guidance and Q&A

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)

Asking if 2027 EBITDA is expected to be higher than 2025, considering M&A, costs, and core softness.

Jeff Gignac stated EBITDA is expected to be "up slightly" in 2027 compared to 2025, assuming full integration of acquisitions and a stable macro environment, though Pat LaPlatney cautioned on macro uncertainty.

“Yes, I think we will see it up slightly. But when you look out into '27, we'll be -- we'll have integrated all the acquisitions. We'll be on a run rate there.”

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

How Gray Media views the medium-term spectrum opportunity given Chairman Carr's focus and ATSC 3.0 transition.

Kevin Latek explained that strong demand for spectrum and the ATSC 3.0 transition could align for another spectrum reallocation and auction in the medium term. This would accelerate 3.0 adoption and provide a GPS backup, benefiting broadcasters and national security.

“If we have a -- if there is a strong push in demand for the spectrum, which seems to be increasingly likely, and we have this new technology that allows us to repack more easily. again, the starts to come on in the medium term, there could be some spectrum reallocation with another auction for broadcasters.”

asked by Steven Cahall (Wells Fargo) · answered by Kevin Latek (Executives)

How the FCC's updated rules change the M&A landscape for Gray and the industry, considering the Nexstar court case.

Hilton Howell praised the FCC for updating "crazy" outdated rules. He affirmed Gray is "open for business" but short-term focus is debt reduction. He highlighted the unique challenge of attorney general scrutiny and emphasized consolidation's role in sustaining local newsrooms, citing Gray's Edward R. Murrow awards.

“I will tell you this, if we had not consolidated over the last 30 years, you wouldn't have 91 Edward R Murrow awards emanating out of our newsrooms and 83 last year.”

asked by Daniel Kurnos (StoneX) · answered by Hilton Howell (Executives)

Seeking directional optimism on political revenue given the "robust" commentary and pacing ahead of 2024.

Hilton Howell expressed high confidence due to substantial party funds, noting that both Democratic and Republican candidates have significant money to deploy. Kevin Latek added that the current election cycle's dynamics, including fewer primary fizzles and high numbers of competitive races where Gray is strong, make them "cautiously pretty optimistic."

“I think that's really where you need to look if the fundraising is robust, the spending is going to be robust. And so I have a high degree of confidence.”

asked by Daniel Kurnos (StoneX) · answered by Hilton Howell (Executives)

How Gray is using AI and its approach to cost management compared to peers.

Pat LaPlatney stated Gray uses AI as an efficiency tool in editorial, sales, and marketing, providing better toolsets for employees while ensuring human review. Hilton Howell emphasized Gray's lean operations and commitment to its people as its most important asset, noting they continuously look for efficiency.

“But we're using AI as an efficiency tool and making our people -- giving our people better tool sets. That's the way we look at it philosophically.”

asked by Craig Huber (Huber Research Partners) · answered by Patrick LaPlatney (Executives)

How the $400 million securitization facility's borrowing base is affected when political revenue (prepaid) steps down in Q1, potentially forcing paydown.

Jeff Gignac explained that the borrowing base, made of receivables, will dip temporarily when prepaid political revenue replaces commercial terms. He noted the borrowing base is currently above $400 million and expects it to recover to full capacity by year-end, even with a temporary monthly dip.

“So when you replace commercial dollars where there are terms for payment with dollars coming in before the ad runs, the borrowing base will dip... I would expect by the end of the year, we should be back to the full capacity.”

asked by Goshi Sri (Singular Research) · answered by Jeff Gignac (Executives)