Gray Media targets entry into 6 new markets and 11 new duopolies while strengthening balance sheet

Earnings Call Insights: Gray Media, Inc. (GTN) Q3 2025

MANAGEMENT VIEW

* CEO Hilton Howell reported that third quarter 2025 results compared favorably to guidance, with total revenue at $749 million, the high end of guidance, and total operating expenses before depreciation and amortization at $592 million, which was $17 million below the low end of guidance. Howell highlighted "net loss attributable to common stockholders was $23 million in the third quarter of 2025" and "adjusted EBITDA was $162 million in the third quarter of 2025." He announced political advertising revenue reached $8 million, above expectations for an off-cycle year. Howell stated, "third quarter saw a significant acceleration of mergers and acquisition activity as we look to identify and negotiate accretive transactions that strengthen our business and our balance sheet." The company anticipates entering 6 new markets by acquiring top-ranked local news stations and plans to create 11 new Big Four full duopolies.
* Howell announced a new partnership with Google Cloud powered by Quickplay to enhance content discovery, with the new streaming structure set to roll out in all Gray markets in January next year. He also noted the renewal of the FOX affiliation agreement for 27 markets and the transition of Atlanta’s WANF station to independence, which added over 25.5 hours of local programming.
* President and Co-CEO Patrick LaPlatney said, "Q3 continued the theme we've been describing throughout '25, with advertisers remaining somewhat cautious due to the macro environment." He observed that "core activity strengthen[ed] more than we had projected back in August," finishing on the high side of guidance. LaPlatney provided an ad category breakdown, stating automotive was down high single digits, legal services continued double-digit growth, and financial services rose by high single digits. Digital and local direct business also showed growth.
* CFO Jeff Gignac detailed, "we finished the third quarter with over $900 million in liquidity and $232 million in availability on our open market repurchase authorization." He stated, "station level operating expenses, excluding network affiliation fees, were actually down $8 million or 2% compared to third quarter of '24." Gignac explained that network affiliation expenses declined by 9%, while retransmission consent revenue declined by 6%. He reduced expected CapEx for 2025 by $15 million to a new range of $70 million to $75 million.

OUTLOOK

* Management guided fourth quarter 2025 core ad revenue to be up low single digits, with October finishing up low double digits. November and December are pacing up slightly. The guide for full year cash taxes remains at $39 million, with no further cash tax payments expected in 2025. CapEx guidance was lowered to $70 million to $75 million.
* LaPlatney expressed, "we are very, very optimistic about 2026. we have some early Q1 numbers that are encouraging, in fact, very encouraging."

FINANCIAL RESULTS

* Revenue for the third quarter of 2025 was $749 million. Net loss attributable to common stockholders was $23 million. Adjusted EBITDA totaled $162 million. Political ad revenue reached $8 million. Operating expenses before depreciation and amortization were $592 million.
* Gignac reported a first lien leverage ratio of 2.72x, secured leverage ratio of 3.66x (including new second lien), and total leverage ratio of 5.77x as of 9/30/25.
* Gignac highlighted, "station level operating expenses, excluding network affiliation fees, were actually down $8 million or 2% compared to third quarter of '24."

Q&A

* Daniel Kurnos, The Benchmark Company: Asked about net retrans run rate for 2026. Gignac responded, "it's too early to give a guide for full year, but there's really this flattening that's occurring in front of us and look, ideally, it can turn positive, and we're hopeful, but the big input there is some declines, and we don't know those."
* Aaron Watts, Deutsche Bank: Inquired about core advertising outlook for 2026. LaPlatney answered, "we are very, very optimistic about 2026. we have some early Q1 numbers that are encouraging, in fact, very encouraging."
* Patrick Sholl, Barrington Research: Asked about advertiser reception to Atlanta's WANF rebrand. COO Sandy Breland said, "We've had really good reception to what we're doing in Atlanta. We added 25 hours of local news and sports and viewers are responding. We're seeing gains in mornings and key demos and in prime access."
* Craig Huber, Huber Research: Asked about Assembly Atlanta ROI and lease commitments. Howell noted, "within 12 to 24 months, I think it will be the biggest cash flowing operation we've got in the company." Gignac added, "it's around $650 million of net investment thus far."
* Steven Cahall, Wells Fargo: Asked about M&A strategy. Latek replied, "we are laser-focused on the deals that we announced in the third quarter. The government being shut for so long has clearly delayed our efforts to work on that approval process and transition."
* Gengxuan Qiu, Barclays: Questioned political revenue differences. Latek explained, "the second half of this year, we just -- we did not see up until this week, we've not seen as robust spending on races that we have seen in prior off years," but expressed optimism for future political spend.
* Avi Steiner, JPMorgan: Asked about the YouTube TV carriage dispute. LaPlatney replied, "the situation with our ABC stations going off YouTube is frustrating. Obviously, we prefer to have a voice in the MVPD negotiations for our stations. We don't."

SENTIMENT ANALYSIS

* Analysts pressed for clarity on future run rates, political ad spending, and M&A strategy, reflecting a neutral tone with some slight optimism as management discussed positive early numbers for 2026 and operational improvements.
* Management maintained a confident tone in prepared remarks, using phrases like "we are very, very optimistic about 2026" and "I think it will be the biggest cash flowing operation we've got in the company," while also acknowledging uncertainties in retransmission and political cycles. In Q&A, management was generally forthcoming but hedged on future specifics, using language such as "it's too early to give a guide" and "we hope..." compared to a more assertive tone in prepared remarks.
* Compared to the previous quarter, the tone shifted from a focus on ongoing integration of recent transactions and cautious optimism toward a more actionable outlook, particularly regarding 2026 and operational momentum.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter places greater emphasis on M&A execution and integration, with explicit mention of entering 6 new markets, creating 11 new duopolies, and balance sheet strengthening through refinancing and expense controls. The previous quarter focused more on M&A announcements and the initial phase of debt reduction.
* Guidance language evolved from cautious and focused on cost control in Q2 to more positive in Q3, with management emphasizing "optimism about 2026" and stronger recent ad trends.
* Key metrics indicate a sequential drop in revenue but improvement in expense management and adjusted EBITDA stabilization. Analyst questions in both quarters centered on the pace and integration of M&A, advertising trends, and leverage, but the current call saw increased focus on political ad cycles and digital strategies.
* Management confidence appears to have grown, reflecting successful cost containment and a clearer path to integrating acquisitions and monetizing new assets.

RISKS AND CONCERNS

* Management highlighted continued advertiser caution due to macroeconomic conditions.
* Gignac noted the uncertainty in retransmission revenue, emphasizing "flattening" trends but cautioning that "we don't know those" future outcomes.
* The YouTube TV carriage dispute was cited as an uncontrollable risk affecting affiliate revenue.
* Political ad revenue volatility remains a concern, with management attributing recent shortfalls to lower fundraising but expressing optimism for upcoming cycles.
* The company faces delays in M&A approvals due to government shutdowns, which may impact integration timelines.

FINAL TAKEAWAY

Gray Media reported strong expense management and met or exceeded its financial guidance for Q3 2025, supported by a significant acceleration in M&A activity and strategic initiatives like the Google Cloud streaming partnership. Management remains optimistic about 2026, highlighting positive early trends in advertising and the potential for robust political ad cycles. The company continues to focus on strengthening its balance sheet, integrating new markets, and driving operational efficiencies, while monitoring uncertainties in retransmission revenue, political ad spend, and regulatory approval timelines for pending acquisitions.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/gtn/earnings/transcripts]

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