Gray Media, Inc. Q4 FY2024 earnings call

• Launched Grosse Pointe Garden Society on NBC and Beyond the Gates on CBS from Assembly Studios. - Secured Atlanta Braves preseason and regular season games on Gray's TV stations. - Reduced debt by $520 million in 2024, refinanced debt, and lowered capital spending. - Enhanced local content, renewed ABC affiliation, and Investigate TV and local news live expanded distribution. - Assembly Studios success aided sales, with expectations of more studio leasing announcements. - Political ad revenue was strong, but core ad revenue had softness in late 2024 and early 2025 due to political/economic uncertainty. - Acquired Pro Sports rights, including Memphis Grizzlies.

In the fourth quarter of 2024, Gray Media achieved total revenue of $1 billion, a 21% increase from Q4 2023. Net income attributable to common stockholders was $156 million, contrasting with a net loss of $22 million in Q4 2023. Adjusted EBITDA was $402 million, up 86% primarily due to political advertising revenue. The company reduced its principal debt by $520 million in 2024, exceeding the $0.5 billion goal. They renewed their ABC network affiliation for four years, enhanced local content offerings, and secured sports rights such as the Atlanta Braves games and a Memphis Grizzlies deal, with expectations of local sports in 75 - 80 markets by the end of Q1 2025. Revenue contribution from political advertising was significant, and local content expansions across broadcast, digital, and mobile platforms also played a role.

• Core advertising revenue is expected to be down 7% - 8% in Q1 2025 compared to Q1 2024, driven by political/economic uncertainty, Super Bowl impact, and Leap Day. Excluding these, it's down 3.3% - 4.6%. - Expect cost efficiencies to flow through, with hope to keep expense growth below inflation. - Anticipate the 2026 political cycle to provide significant cash, sufficient to address the 2027 bond maturity.

• Regulatory constraints harming local broadcasters compared to tech giants. - Economic uncertainty affecting automobile advertising. - Uncertainty in network affiliation renewals and retransmission consent sub declines.

Q: On core advertising softness and potential growth, A: Pat and Hilton said yes, encouraged by Q2 pacing, and the automobile sector will recover as uncertainty settles.

Q: On Q1 expenses and cost efficiencies, A: Jeff said 2/3 - 75% of efficiencies flow through in Q1, and expenses are managed to be below inflation.

Q: On Assembly Atlanta and ROI, A: Hilton said studios are 70% occupied, with potential for growth in partnerships and ROI expected to ramp up.

Q: On deregulation and M&A, A: Kevin and Hilton discussed opportunities in swaps and acquisitions, but no specific guidance was given.

Q: On retrans sub declines, A: Kevin said expecting the rate of sub declines to slow but no full year guidance.

Q: On leverage and M&A, A: Jeff said it will take a few years to get to 4x leverage, with opportunities in swaps and acquisitions.