By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
Panelists agree that Gray Media (GTN) faces significant headwinds, including secular cord-cutting, macroeconomic volatility, and high leverage. They differ on the extent to which recent M&A and political advertising can offset these pressures.
Risk: Continued mid-single-digit erosion of core ad revenue and high total net leverage (5.94x).
Opportunity: Potential benefits from expanded scale (180+ markets) and political advertising in Q2.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
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Thursday, May 7, 2026 at 11:00 a.m. ET
- Chairman and Chief Executive Officer — Hilton Hatchett Howell
- President and Co-Chief Executive Officer — Donald Patrick LaPlatney
- Chief Operating Officer — Sandy Breland
- Chief Legal and Development Officer — Kevin P. Latek
- Chief Financial Officer — Jeffrey R. Gignac
Alan Steven Gould: Thank you, Tina, and welcome, everybody. Joining us today on Gray's call are Hilton Hatchett Howell, our Chairman and CEO; Donald Patrick LaPlatney, our President and Co-CEO; Sandy Breland, our Chief Operating Officer; Kevin P. Latek, our Chief Legal and Development Officer; and Jeffrey R. Gignac, our Chief Financial Officer. Today, we filed with the SEC on Form 8-K our first quarter earnings release and updated investor presentation, and later today, we will file with the SEC our Quarterly Report on Form 10-Q. These materials are all available on our website graymedia.com. Included on the call may be a discussion of non-GAAP financial measures, and in particular, Adjusted EBITDA, leverage ratio denominator, net retransmission revenue, and certain net leverage ratios.
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 reconciliation of the company's non-GAAP financial measures to comparable GAAP financial measures can be found in the latest investor presentation 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.
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. It is now my pleasure to introduce Gray's Executive Chairman and CEO, Hilton Hatchett Howell.
Hilton Hatchett Howell: Thank you, Alan. Today, we are very pleased to announce solid results for our first quarter of 2026, with core advertising above our previously issued guidance, political revenue at the high end of our guidance range, and total revenue at the high end of our guidance, even factoring in a recently resolved DISH dispute with one of our MVPDs. Total revenue in the first quarter of 2026 was $768 million, at the high end of our guidance for the quarter. Total operating expenses before depreciation, amortization, impairment, and gain or loss on disposal of assets in the first quarter of 2026 were $622 million, which was $7 million below the comparable period last year.
Notably, within these results, our broadcasting expenses continued to decline and were down by $22 million in Q1 2026 as compared to Q1 2025. Net loss attributable to common stockholders was $330 thousand for the first quarter of 2026. Adjusted EBITDA was $154 million in Q1 2026. Political advertising revenue was $30 million, at the high end of our guidance, and compares to $26 million in 2022, the last midterm cycle. As you all hopefully saw by now, on Friday, Gray and DISH resolved the first extended distribution blackout, amazingly, in our company's history. It was a rough negotiation for both sides, and we very much regret how local viewers and advertisers were impacted by the impasse.
In the end, we reached a new multi-year agreement that was consistent with our internal expectations. We thank our viewers, our advertisers, and our team for their patience as we navigated that uncharted territory for Gray Media, Inc. Since the beginning of the year, we have successfully negotiated retransmission consent agreement renewals with three of our largest traditional MVPDs representing approximately 39% of our traditional MVPD footprint. We also expanded important MVPD agreements with two of our virtual MVPDs involving a number of our independent stations that carry professional sports. We have no further retransmission negotiations for the remainder of 2026. In addition to these operating results in the first quarter, we acquired WBBJ in Jackson, Tennessee, from Bahakel.
We recently completed the acquisition of TV stations in 10 markets from Allen Media Group, and just yesterday evening, we closed on our acquisition of stations in three markets from Block Communications. We currently anticipate closing our remaining transactions with E.W. Scripps and Sagamore Hill in the next few weeks. Finally, turning to Assembly, we were delighted to learn that CBS renewed its successful daytime soap Beyond the Gates for two additional seasons. Seasons 1 and 2 will film at Assembly, and we anticipate leasing additional studio production space. In February, Tennis Channel and TGL announced that it will host all 52 tennis matches for its 2026 season in our 30 thousand square foot soundstage within Assembly Studios.
The setup will also have a live audience of up to 500 people, and we will broadcast some of the key matches on WANF and Peachtree Sports in Atlanta, Georgia. To make further progress on future development at Assembly. Looking forward, we are excited to have the upcoming FIFA World Cup games on both our 33 FOX channels and our 47 Telemundo affiliates. We are optimistic that, as the largest owner of top-rated local television stations and a footprint covering most of the competitive races, we will again capitalize on a strong midterm political cycle. I will now turn the call over to Donald Patrick LaPlatney to address our operations. Thank you, Hilton.
Donald Patrick LaPlatney: First quarter core advertising revenue was stronger than our guidance and was reported to be approximately flat in the first quarter of 2026 compared to 2025. We finished the quarter up 2% with the boost from the Winter Olympics. As we move into second quarter, we are seeing some softness in core. It appears that the situation in the Middle East and resulting volatility in oil prices is having an effect, causing advertisers to delay their commitments, which limits our visibility. Some of the softness in core is due to the NCAA Final Four rotating away from CBS. Recall last year, we earned $5 million of revenue in April as the largest CBS affiliate group.
Let us talk about categories for a minute. We saw strength in gaming, a trend that continued into Q2. Within services, legal, insurance, and financial were strong. Automotive finished the first quarter down just slightly compared to 2025, which is encouraging. Some of the consumer-focused categories experienced weakness, consumer goods and discount department stores in particular. Digital continued its healthy growth in first quarter, up high-teens versus 2025, and our new local direct business growth rate accelerated to 15% over the same period in 2025. Our sales teams continue to perform well against stiff competition for local advertising in a challenging market. Political ad revenue exceeded our expectations in 2026.
Our guide for 2026 was $25 million to $30 million, and our actual results came in at the high end, right at $30 million. This compares to $26 million in 2022, which is the most recent midterm cycle. We saw strong spending in Texas, Maine, Virginia, Georgia, and Michigan. We currently anticipate political revenue for Q2 will be in the range of $60 million to $70 million. As I mentioned earlier, we are seeing some softness caused by economic uncertainty as we progress through the second quarter. Our second quarter 2026 guidance is for core ad revenue to be down mid-single digits versus second quarter of 2025. Some of the consumer-focused categories are the most affected.
We continue to expand our focus on sports programming. This year, 19 Major League Baseball teams will play in our 16 broadcast sports networks, in addition to 13 NBA teams, 8 NHL teams, 6 WNBA teams, and numerous NCAA and minor league baseball teams. I am also proud to note that our RYCOM Sports division has partnered with the Atlanta Braves as their live production team for BravesVision, producing all non-national games, including 25 games on WANF here in Atlanta and across the Southeast on our broadcast sports networks. Our digital team has completed the transition of all of our digital apps and websites to the Quickplay platform in a remarkably short window.
This personalized streaming platform will revolutionize how our viewers find and connect with our content. We believe that we have now built an incredibly strong foundation for continued digital audience and advertising growth. Jeffrey R. Gignac will now address the key financial developments.
Jeffrey R. Gignac: Thanks, Pat. In the first quarter of 2026, our broadcasting station operating expenses, excluding network affiliation fees, were up 4% compared to 2025. This was partially due to timing of certain expenses, as was noted in last quarter's call, along with normal inflationary increases. We are continuing our focus on smart cost management, and we are investing in our team and making sure they have the best tools available to efficiently and effectively compete in the marketplace. You will also notice that we are guiding Q2 2026 broadcasting expenses to be down 3% at the midpoint versus 2025.
Corporate expenses were above our guidance range due primarily to legal costs associated with completing our M&A regulatory approvals, and as you can see from our guide, corporate is expected to normalize as we complete the additional transactions. Net retrans revenue was down $4 million in first quarter 2026 versus 2025. We did not anticipate the now-resolved distribution dispute when we provided our first quarter guide. I want to focus on that for a second. There are two things to point out in the Q2 2026 net retransmission guide. First, now that we have negotiated all MVPD renewals scheduled for 2026, and we know the impact of the blackout on second quarter, those elements are reflected.
Secondly, we now incorporate the four stations acquired in first quarter, but none of the stations that we have acquired since the end of first quarter, into our guide. We currently expect first quarter 2026 net retransmission revenue to be in the same zip code as the quarter that just ended, implying low single-digit growth in net retransmission revenue. Remember that the blackout impacted the full month of April, versus only 21 days in March. And importantly, with all of our renewals now negotiated, we have clear line of sight to growth in net retransmission revenue for full year 2026, even before adjusting for the impact of any of the acquisitions. Turning to the balance sheet for a minute.
We finished first quarter with over $1 billion in liquidity. Our leverage metrics at 03/31/2026 were 2.56x consolidated first-lien net leverage ratio, 3.79x consolidated secured net leverage ratio, and 5.94x consolidated total net leverage ratio, each using the calculation in our amended senior credit agreement. These ratios include the pro forma impact of the four station acquisitions we completed as of 03/31/2026. With the closing of the Allen seven-market transaction and yesterday's closing on the Block Communications transaction, we will begin to see the estimated quarter turn of delevering flow into our ratios. It is also worth noting that after we closed the acquisition yesterday, our revolver was undrawn.
There was approximately an $850 million working capital swing during first quarter related to the payment of accrued interest. On March 31, we completed an amendment to our senior credit agreement to align the document with the covenants under our secured notes and to incorporate current market standards. We pursued this to give us better access to the market as we evaluate potential refinancing opportunities. Immediately after we closed that, on April 2, we fully repaid the $10 million balance on the Term Loan F that was scheduled to mature in 2029. As we progress through 2026, we are gaining visibility on deleveraging during the year. We are closing, and we will begin integrating, our M&A transactions.
Our net retrans revenue is set to grow compared to 2025. Political advertising is ramping. And finally, refinancing to reduce interest expense could further improve our cash flow during 2026. Couple of housekeeping items. First quarter 2026 CapEx was $19 million versus $15 million in 2025. Both periods now include Assembly Atlanta. We are maintaining our $140 million company-wide CapEx estimate for 2026, although we expect that to be back-end weighted as we align the spending with the expected cash inflow from political advertising. Our full-year tax guide came down by $25 million to a range of $90 million to $110 million. That concludes my remarks, and I will now turn the call back over to Hilton Hatchett Howell.
Hilton Hatchett Howell: Thanks, Jeff. In closing, first quarter was very busy, and we have already accomplished numerous objectives in Q2 which will have long-term benefits for Gray Media, Inc. We will continue to take actions to enhance value for our advertisers, our investors, and for the communities we serve. We thank everyone for joining the call today. Tina, at this time, we would like to ask that you open up the line for questions.
Operator: As a reminder, to ask a question, simply press star 1 on your telephone keypad. We do ask that you limit questions to one and one follow-up. Our first question comes from the line of Steven Lee Cahall with Wells Fargo. Please go ahead.
Steven Lee Cahall: First, just a question on your regulatory outlook. I think the last time we spoke, you were encouraged by generally what was happening in Washington, but maybe things were moving a bit slowly in terms of getting transactions approved like the Scripps swaps and some of the Allen Media stations. It looks like, post Nexstar–TEGNA getting approved, the wheels are turning much faster. So I am wondering if you now feel like the regulatory process is something that you understand under this administration, if it is moving at a pace that is conducive to additional transactions.
And as you think about potential strategic transactions, I was wondering just how you factor in state AG regulatory risk and if that is different from prior. And then, Jeff, thank you for the retrans outlook for 2026. Any sense of what that might have looked like had you not had the blackout? Is that a point or two addition, or is it not so big now that reverse maybe is a bit more variable than it used to be? And, also, as we think about retrans pro forma for the deals you have done, would that have added or could that still add a point or two as well? Thanks.
**Kevin P. Late
Four leading AI models discuss this article
"Gray Media's reliance on cyclical political spending and sports production to offset structural core advertising declines leaves the balance sheet dangerously exposed to economic volatility."
Gray Media (GTN) is navigating a complex transition. While management highlights 'solid' results and successful MVPD renewals, the underlying reality is a company heavily levered (5.94x total net leverage) and reliant on political tailwinds to mask core advertising softness. The pivot toward sports production and Assembly Studios is a strategic attempt to diversify, but it remains capital-intensive. The resolution of the DISH blackout is a relief, yet the mid-single-digit decline in Q2 core ad revenue suggests that macroeconomic headwinds—specifically oil price volatility and consumer weakness—are biting harder than the company’s optimistic political outlook implies. Investors should be wary of the 'political cycle' narrative; it is a temporary sugar high for a business model facing structural long-term cord-cutting pressures.
If Gray successfully leverages its massive local footprint to dominate regional sports broadcasting and captures an outsized share of midterm political spending, the current valuation could significantly re-rate as deleveraging accelerates.
"Completed/pending M&A plus H2 political ramp should delever GTN to <5x total net leverage by YE26, enabling refinancing and FCF upside."
GTN delivered Q1 revenue of $768M (high-end guidance) and Adjusted EBITDA of $154M, with core ads flat YoY (+2% ex-Olympics) and political at $30M (vs. $26M in 2022 midterms). M&A spree (WBBJ, Allen 10 markets, Block 3 markets closed; Scripps/Sagamore pending) adds scale, with pro forma deleveraging to ~3.5x secured net leverage post-deals. Q2 political guide $60-70M signals midterm ramp, retrans growth visibility post-DISH resolution and renewals (39% footprint). Digital +high-teens, sports expansion (MLB/NBA/NHL), Assembly Studios leasing upside. Risks: Q2 core ads down mid-single digits on economic/oil volatility, consumer weakness. Still, $1B+ liquidity, revolver undrawn supports execution.
Q2 core ad softness from Middle East tensions and consumer pullback could deepen if recession hits, while M&A integration risks and post-midterm political cliff (historically ~80% of cycle revenue in H2) erode gains. Heavy CapEx ($140M FY) and tax guide cut to $90-110M strain FCF amid TV sector cord-cutting.
"GTN is executing tactically (M&A, cost control, political upside) but faces structural headwinds (core ad softness, elevated leverage, cyclical revenue mix) that make 2026 a prove-it year, not a recovery story."
GTN's Q1 2026 shows operational discipline—core ad revenue beat guidance, political revenue hit $30M (vs. $26M in 2022), and Adjusted EBITDA of $154M is solid. The DISH blackout resolution and completed M&A (Allen, Block) signal management execution. However, the 5.94x total net leverage ratio is elevated, and management's Q2 guidance for core ad revenue 'down mid-single digits' reveals underlying softness. Digital growth (high-teens) and sports expansion are real, but they don't offset macro headwinds: Middle East uncertainty, consumer category weakness, and the fact that political revenue—a Q2 tailwind—is inherently cyclical and non-repeating.
GTN's leverage is manageable if retrans growth materializes and M&A synergies hit; the company has $1B+ liquidity and is refinancing at better terms. Political revenue of $60–70M in Q2 could drive a meaningful delever narrative through 2026, making the current leverage ratio a temporary trough, not a structural problem.
"GTN faces near-term core ad softness and integration risk from aggressive acquisitions, making its deleveraging path and free cash flow fragile if political upside underdelivers or regulatory/timing delays persist."
Gray Media’s Q1 highlighted solid top-line momentum (revenue $768M; Adj. EBITDA $154M) and a clear push into M&A with multiple acquisitionsclosed, plus liquidity >$1B and leverage around the mid-3x on secured debt. The near-term tailwinds include political advertising (Q2 guide $60–$70M) and sports/digital initiatives, plus a back-half: line-of-sight to deleveraging as acquisitions flow through. But the core story remains cyclical: core ad revenueGuidance for Q2 down mid-single digits vs 2025, a still-fragile retransmission landscape, and significant integration/capital allocation risk from recent and pending deals. If macroad demand softens further or deal integration overshoots, free cash flow and deleveraging could underwhelm.
Bull cases exist: accelerating M&A synergies and a robust political cycle could catalyze FCF and debt paydown faster than guidance implies, particularly if retransmission renewals stick and digital gains compound. However, these depend on timing and execution rather than fundamentals.
"Gray’s reliance on political cycles and M&A synergies masks the fundamental, irreversible decline of linear television advertising."
Claude and Grok are focusing too heavily on the political sugar high and retrans growth, ignoring the secular decay of the linear bundle. Even with $1B liquidity, Gray’s 5.94x leverage is a ticking clock if core ad revenue continues to erode mid-single digits. The 'synergy' narrative is a classic trap; integration costs for Allen and Block will likely cannibalize the FCF needed for deleveraging. This isn't a turnaround; it's a desperate race against cord-cutting velocity.
"Pro forma secured leverage at 3.5x post-M&A makes deleveraging feasible, countering the total leverage alarmism amid scale benefits."
Gemini fixates on total net leverage at 5.94x while ignoring Grok's pro forma secured net leverage dropping to ~3.5x post-M&A closes— a material distinction that enables faster deleveraging if Q2 political ($60-70M) flows through. Secular cord-cutting is real, but expanded scale (180+ markets) enhances local pricing power, offsetting ad softness more than you allow. Liquidity ($1B+) absorbs integration hiccups.
"Secured leverage looks better on paper, but liquidity adequacy and debt maturity timing are the real deleveraging constraints, not political revenue or M&A synergies."
Grok's secured net leverage distinction (5.94x total vs. ~3.5x secured post-M&A) is mathematically valid but obscures a harder question: does $1B liquidity actually absorb integration risk, or does it get consumed by CapEx ($140M FY) and refinancing maturities? Nobody's flagged the debt maturity wall. If Q2 political disappoints or M&A synergies slip 6–12 months, that liquidity evaporates fast. The 'scale offsets ad softness' thesis needs a number: how much pricing power does 180 markets actually unlock against a 3–5% annual cord-cut rate?
"Total net leverage of 5.94x and looming debt maturities create a material risk that liquidity may be burned by CapEx/refinancing, delaying meaningful deleveraging beyond H2 2026."
Responding to Grok: I’d challenge the reliance on pro forma secured leverage (~3.5x) while ignoring the 5.94x total net leverage as the headline risk. Liquidity can be burned by CapEx and refinancing maturities, and a debt-maturity wall compounds risk if Q2 political revenue underwhelms. Until deleveraging accelerates meaningfully post-close and beyond H2 2026, the scenario Grok outlines may overstate safety.
Panelists agree that Gray Media (GTN) faces significant headwinds, including secular cord-cutting, macroeconomic volatility, and high leverage. They differ on the extent to which recent M&A and political advertising can offset these pressures.
Potential benefits from expanded scale (180+ markets) and political advertising in Q2.
Continued mid-single-digit erosion of core ad revenue and high total net leverage (5.94x).