Gray Media (GTN) Q2 Revenue Falls 6.5%

Gray Media (GTN -0.24%), a major owner and operator of local television stations across the United States, released its second quarter 2025 earnings on August 8, 2025. The report showed GAAP revenue of $772 million, which fell within the company’s most recent guidance range. However, profitability fell short of expectations, with GAAP net loss widening to $69 million. The company faced sharp declines in political advertising revenue, which decreased by 81% compared to Q2 2024, and recognized a significant non-cash impairment related to the loss of a key network affiliate during the quarter. Despite these setbacks, the quarter reflected steadiness in core operations and proactive management of costs and the company’s balance sheet.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.

Gray Media’s Business and Recent Focus

Gray Media operates a broad portfolio of local television stations, serving 113 television markets and reaching approximately 37% of U.S. TV households. It holds the top audience share in 78 markets, and a first or second place ranking in 99 markets, giving it leverage to attract strong advertising and retransmission agreements. The company focuses heavily on local news and community coverage, making it a key player for advertisers needing reliable local reach.

Recently, Gray Media has concentrated on several strategic areas: maintaining leadership in core markets, diversifying revenue streams across core and political advertising plus retransmission fees, and making selective acquisitions and station swaps. It is also working to grow its digital footprint, with ongoing investments in digital content and advanced advertising solutions. The critical success factors remain market penetration, network affiliate relationships, successful regulatory navigation, and shrewd cost and balance-sheet management.

Second Quarter Highlights: Financial Performance and Key Developments

Overall GAAP revenue came in just above consensus expectations, even as it declined relative to the prior year. Core advertising revenue, which covers local and regional commercials sold by Gray’s TV stations, slipped 3 percent. Retransmission consent revenue, which is payment from cable and satellite operators for distributing Gray’s channels, was nearly flat year on year. Political advertising, however, dropped steeply, as the company anticipated, given 2025 is a non-election cycle -- that category fell by 81 percent to $9 million, substantially reducing overall profitability.

Adjusted EBITDA fell nearly 25 percent year over year. This drop traces mainly to the pronounced pullback in cyclical political advertising. At the bottom line, net loss attributable to common stockholders was $69 million. The shortfall was amplified by a $28 million non-cash impairment loss recorded in Atlanta after the company’s WANF station lost its CBS network affiliation. This event is significant because affiliate contracts, especially with CBS, NBC, FOX, and ABC, underpin much of the broadcaster's revenue, and their loss can create long-term headwinds in major markets.

The company moved forward with a series of strategic transactions. It completed asset swaps with E.W. Scripps, acquiring two stations in Michigan and Louisiana while divesting properties in Colorado and Idaho, in a transaction announced on July 7, 2025. Additional deals with Sagamore Hill Broadcasting for smaller stations, and the $80 million purchase of stations from Block Communications, add to its station count and geographic diversity. Gray says these moves will help improve operational efficiency and reduce its leverage ratio, a key financial risk measure showing how much debt the company is carrying compared to its earnings. As of Q2 2025, Gray's leverage ratio, as defined in its Senior Credit Agreement, was 5.60 to 1.00.

Operationally, Gray Media’s cost management was evident in the period. Broadcasting expenses remained flat. Corporate and administrative costs decreased 11 percent, supporting cash preservation. The company made progress on debt reduction, paying down $22 million in principal, and closed large refinancing transactions in July to push out maturity dates on existing debt and add liquidity. As of June 30, 2025, cash stood at $199 million, with borrowing capacity of $692 million under the $700 million revolving credit facility. Its first lien leverage ratio was 2.99x, comfortably below covenant ceilings.

Material events included the Atlanta impairment and some ongoing portfolio optimization efforts. Though management continues to monitor and operate under Federal Communications Commission regulations affecting station ownership and affiliation deals. Gray Media paid a quarterly dividend of $0.08 per share during the quarter, unchanged from the prior period.

Digital operations, including Gray Digital Media (a digital advertising agency), continued to see investment. However, separate revenue or margin figures for digital units were not provided, limiting visibility into the pace or success of that transformation. The company maintains a strategic focus on digital content and NextGen TV (an upgraded broadcast standard that delivers enhanced video and interactive features), but did not break out related operating results in this release.

Outlook and What Comes Next

Gray Media provided guidance for the next quarter. Management projects total revenue between $735 million and $750 million for Q3 2025 (GAAP), down about 20 to 23 percent versus the period in 2024, when Olympic advertising provided a significant boost. Political advertising will remain muted at $6 million to $7 million without an election driving demand. Retransmission consent revenue is also forecast to decline.

For the year ending December 31, 2025, the company forecasts interest expense of around $460 million, capital investment (excluding a major Atlanta studio project) between $85 million and $90 million for FY2025, and income tax payments, net of refunds, were $39 million for the six months ended June 30, 2025. As in the period, leadership expects to finalize additional strategic station acquisitions and swaps in the fourth quarter, subject to regulatory approval. No significant tax payments are planned for the rest of the year, and as of June 30, 2025, cash stood at $199 million. Aside from dividend and leverage trends, investors may want to monitor future affiliate negotiations and digital segment progress, as risks and opportunities in these areas remain present.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.