Summary of Gray Media's Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: $839 million, exceeding guidance by $9 million and up 9% year-over-year.

Political Revenue: $83 million, significantly above guidance of $60-$70 million, with $3 million from acquisitions.

Net Retransmission Revenue: $150 million, surpassing guidance; included a $6 million contribution from acquisitions.

Net Income: $21 million for the quarter.

Adjusted EBITDA: $214 million.

Broadcast Expenses: $569 million, in line with guidance and up $6 million year-over-year.

Leverage Ratios:

Consolidated first lien net leverage ratio: 2.55x

Consolidated secured net leverage ratio: 3.71x

Consolidated total net leverage ratio: 5.73x

2Strategic Updates and Business Highlights

Acquisitions: Successful integration of three acquisitions and a swap with Scripps during the quarter, adding 14 stations and 4 new markets.

Political Advertising: Strong positioning in key battleground states, with expectations for robust political revenue in Q3 ($165-$185 million).

Local Sports Expansion: New agreement with the Atlanta Hawks to broadcast games, enhancing local sports portfolio.

Digital Growth: Digital revenue grew 12% year-over-year, with a 5% increase in new local direct business.

Technological Advancements: Transition to the Quickplay platform for digital video streams, enhancing viewer engagement.

3Forward Guidance and Outlook

Q3 Expectations: Core advertising revenue expected to be flat year-over-year on an as-reported basis, with mid-single-digit declines when adjusted for acquisitions.

Political Revenue Outlook: Anticipated strong political spending in Q3 and Q4, with confidence in surpassing previous election cycles.

CapEx Guidance: Lowered to $120-$130 million from $140 million for the full year 2026.

4Bad News, Challenges, or Points of Concern

Core Advertising Softness: Core advertising revenue down 1% year-over-year, with mid-single-digit declines expected when adjusted for acquisitions; impacted by political crowd out and softness in certain categories (e.g., automotive, consumer services).

Economic Uncertainty: Ongoing macroeconomic challenges affecting advertising spend, particularly in the automotive sector.

Transaction Costs: Elevated corporate expenses due to transaction costs related to acquisitions.

5Notable Q&A Insights

Net Retransmission Margins: Expected to hold steady, with slight growth projected into 2027 due to acquisitions and synergies.

Political Revenue Dynamics: Management expressed cautious optimism about political revenue, citing strong fundraising by both major parties.

Spectrum Opportunities: Discussion on potential future spectrum auctions and the impact of FCC regulatory changes on the industry.

AI Utilization: Gray Media is cautiously integrating AI to improve efficiency while maintaining human oversight in content production.

Production Facilities: High occupancy rates at Assembly Atlanta, indicating strong demand for production services amid industry shifts. Overall, Gray Media reported a strong Q2 2026 performance, driven by successful acquisitions and robust political advertising, while navigating challenges in core advertising and economic uncertainty. The outlook remains positive, particularly for political revenue in the upcoming quarters.