Gray Media, Inc. Q2 FY2025 earnings call

Financial Results: Second quarter results better than original guidance, revenue $772M (-7% y-o-y, +1% above original high end), net loss $56M vs net income $22M in 2024Q2, adjusted EBITDA $169M (-25% y-o-y). ### M&A Activity: Active in past weeks, including reopening TV industry M&A market with FCC waiver, 5-market no-cash swap with Scripps, acquisitions from Sagamore Hill, Block Communications, and Allen Media, adding net 6 new markets. ### Balance Sheet: Reduced outstanding indebtedness by $22M in second quarter, finished with first lien leverage ratio 2.99x and total leverage ratio 5.6x; completed senior secured second lien notes and first lien notes issuances. ### Operational Highlights: Enhanced local content offerings, local and regional professional sports deals cover nearly 80% of markets, 81 regional Edward R. Murrow Awards for journalism, renewed CBS affiliation agreement, momentum at Assembly Studios with CBS soap opera extended for second season.

Total revenue in the second quarter was $772 million, a decrease of 7% from the second quarter of 2024 and 1% above the high end of original guidance. Adjusted EBITDA was $169 million in the second quarter, a decrease of 25% from the second quarter of 2024. Political advertising in the second quarter of 2025 finished well above expectation. Revenue contribution: Total revenue at $772M, adjusted EBITDA at $169M.

Third Quarter Guidance: Core ad revenue expected to be down low to mid-single digits; factoring in 2024 Olympics NBC uplift of $20M ($4M political), Q3 guide flat to slightly up; digital revenue expected to be up low double digits in Q3 with continuation of political spending; third quarter core ad revenue down low to mid-single digits, automotive and restaurants facing lower, but legal, consumer goods and entertainment have pockets of strength.

Forward-looking statements subject to risks and uncertainties where actual results could differ; regulatory approvals needed for M&A transactions could pose hurdles; market conditions and changes in advertising trends could impact revenue.

Q: Dan Kurnos asked about future M&A opportunities and buyers' multiples on acquisitions.

A: Hilton said they're always listening but focus is on getting current deals approved by FCC; Kevin noted Gray has announced several deals recently and focus is on executing those.

Q: Steven Cahall inquired about quarter turn improving leverage and impact of WANF on Q3 retrans revenue guide.

A: Jeff said they don't comment beyond total leverage ratio reduction inclusive of funding and synergies; Jeff also said P&L at WANF will shift more in favor of advertising affecting retrans revenue guide.

Q: Craig Huber asked about CBS Atlanta station switch.

A: Kevin explained the situation started in mid-1990s with Paramount and CBS, Gray stepped up and felt right time to take station independent now; Hilton emphasized no problem with CBS and they're excited for WANF's future.

Q: Alan Gould asked about acquisition size factor and timetable for synergies.

A: Hilton said leverage decreases happen almost upon closing; Jeff said synergies are realized fairly quickly after closing transactions.

Q: Eli Lapp asked about acquisition size factor and synergy timetable.

A: Hilton said leverage decreases near closing; Jeff said synergies realized fairly quickly after closing.

Q: Avi Steiner asked if acquisitions from Block and Allen Media were competitive auctions.

A: Kevin said they're under NDAs with sellers and can't comment on sellers' processes, but relationships with counterparties helped.

Q: David Hamburger asked about third quarter retransmission and network affiliate fees decline.

A: Pat said there's impact from WANF and it's part of a multiyear effort to create sustainable model, ongoing effort.