Summary of Gray Media's Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: $839 million, exceeding the high end of adjusted 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 recent acquisitions.

Net Retransmission Revenue: $150 million, above guidance, benefiting from the resolution of a blackout with a major distributor.

Net Income: $21 million for the quarter.

Adjusted EBITDA: $214 million.

Broadcast Expenses: $569 million, in line with guidance and up $6 million from the previous year.

Leverage Ratios: Consolidated total net leverage ratio at 5.73x, improved from 5.94x in Q1 2026.

2Strategic Updates and Business Highlights

Acquisitions: Completed multiple acquisitions, adding 14 stations and 4 new markets. Recent acquisitions include American Spirit Media and WHPM, expected to close by Q4 2026.

Political Advertising: Strong outlook for Q3 political revenue estimated between $165 million to $185 million, with significant exposure to competitive Senate and gubernatorial races.

Digital Growth: Digital revenue grew by 12% year-over-year, indicating strong momentum.

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

Technology Transition: Successful transition of digital video streams to the Quickplay platform, aiming to improve viewer engagement.

3Forward Guidance and Outlook

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

Political Revenue: Anticipated to be robust, with significant spending expected in key races.

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

4Bad News, Challenges, or Points of Concern

Core Advertising Weakness: Core advertising revenue showed a decline of 1%, with expectations of mid-single-digit declines in Q3 when adjusted for acquisitions, indicating potential softness in certain sectors.

Macroeconomic Factors: The advertising market is experiencing turbulence due to economic uncertainties, impacting various sectors, particularly automotive and consumer services.

Political Crowd Out: Concerns regarding political crowding out affecting core advertising revenue, particularly in Q4 2024.

5Notable Q&A Insights

Net Retransmission Revenue: Expected to grow into 2027, with a stable margin projected around 40%.

Political Advertising Outlook: Management expressed confidence in robust political spending, supported by strong fundraising from both major parties.

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

AI Utilization: AI is being integrated cautiously to enhance efficiency across various business areas, while maintaining human oversight.

Operational Efficiency: Management emphasized a lean operational model, focusing on maintaining staff while optimizing costs. Overall, Gray Media reported strong financial results in Q2 2026, driven by political advertising and strategic acquisitions, while navigating challenges in core advertising and macroeconomic pressures. The outlook remains positive, particularly for political revenue in the upcoming quarters.