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Gray Media, Inc. misses on earnings expectations. Reported EPS is $-0.34 EPS, expectations were $-0.32.

Operator: Thank you. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Gray Media, Inc. First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. To ask a question, simply press star 1 on your telephone keypad. To withdraw your question, press star 1 again. It is now my pleasure to turn the call over to Alan Steven Gould, Vice President of Investor Relations. Thank you. You may begin.

Alan Steven Gould: Thank you, Tina, and welcome, everybody. Joining us today on Gray’s call are Hilton Hatchett Howell, our Chairman and CEO; Donald Patrick LaPlatney, our President and Co-CEO; Sandy Breland, our Chief Operating Officer; Kevin P. Latek, our Chief Legal and Development Officer; and Jeffrey R. Gignac, our Chief Financial Officer. Today, we filed with the SEC on Form 8-K our first quarter earnings release and updated investor presentation, and later today, we will file with the SEC our Quarterly Report on Form 10-Q. These materials are all available on our website graymedia.com. Included on the call may be a discussion of non-GAAP financial measures, and in particular, Adjusted EBITDA, leverage ratio denominator, net retransmission revenue, and certain net leverage ratios.

These metrics are not meant to replace GAAP measurements but are provided as supplements to assist the public in its analysis and valuation of our company. Further discussions and reconciliation of the company’s non-GAAP financial measures to comparable GAAP financial measures can be found in the latest investor presentation on our website. All statements and comments made by management during this conference call, other than statements of historical fact, should be deemed forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties. Actual results in the future could differ from those described in the forward-looking statements as a result of various important factors that are contained in our most recent filings with the SEC.

We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. It is now my pleasure to introduce Gray’s Executive Chairman and CEO, Hilton Hatchett Howell.

Hilton Hatchett Howell: Thank you, Alan. Today, we are very pleased to announce solid results for our first quarter of 2026, with core advertising above our previously issued guidance, political revenue at the high end of our guidance range, and total revenue at the high end of our guidance, even factoring in a recently resolved DISH dispute with one of our MVPDs. Total revenue in the first quarter of 2026 was $768 million, at the high end of our guidance for the quarter. Total operating expenses before depreciation, amortization, impairment, and gain or loss on disposal of assets in the first quarter of 2026 were $622 million, which was $7 million below the comparable period last year. Notably, within these results, our broadcasting expenses continued to decline and were down by $22 million in Q1 2026 as compared to Q1 2025.

Net loss attributable to common stockholders was $330 thousand for the first quarter of 2026. Adjusted EBITDA was $154 million in Q1 2026. Political advertising revenue was $30 million, at the high end of our guidance, and compares to $26 million in 2022, the last midterm cycle. As you all hopefully saw by now, on Friday, Gray and DISH resolved the first extended distribution blackout, amazingly, in our company’s history. It was a rough negotiation for both sides, and we very much regret how local viewers and advertisers were impacted by the impasse. In the end, we reached a new multi-year agreement that was consistent with our internal expectations. We thank our viewers, our advertisers, and our team for their patience as we navigated that uncharted territory for Gray Media, Inc.

Since the beginning of the year, we have successfully negotiated retransmission consent agreement renewals with three of our largest traditional MVPDs representing approximately 39% of our traditional MVPD footprint. We also expanded important MVPD agreements with two of our virtual MVPDs involving a number of our independent stations that carry professional sports. We have no further retransmission negotiations for the remainder of 2026. In addition to these operating results in the first quarter, we acquired WBBJ in Jackson, Tennessee, from Bahakel. We recently completed the acquisition of TV stations in 10 markets from Allen Media Group, and just yesterday evening, we closed on our acquisition of stations in three markets from Block Communications.

We currently anticipate closing our remaining transactions with E.W. Scripps and Sagamore Hill in the next few weeks. Finally, turning to Assembly, we were delighted to learn that CBS renewed its successful daytime soap Beyond the Gates for two additional seasons. Seasons 1 and 2 will film at Assembly, and we anticipate leasing additional studio production space. In February, Tennis Channel and TGL announced that it will host all 52 tennis matches for its 2026 season in our 30 thousand square foot soundstage within Assembly Studios. The setup will also have a live audience of up to 500 people, and we will broadcast some of the key matches on WANF and Peachtree Sports in Atlanta, Georgia. To make further progress on future development at Assembly.

Looking forward, we are excited to have the upcoming FIFA World Cup games on both our 33 FOX channels and our 47 Telemundo affiliates. We are optimistic that, as the largest owner of top-rated local television stations and a footprint covering most of the competitive races, we will again capitalize on a strong midterm political cycle. I will now turn the call over to Donald Patrick LaPlatney to address our operations. Thank you, Hilton.

Donald Patrick LaPlatney: First quarter core advertising revenue was stronger than our guidance and was reported to be approximately flat in the first quarter of 2026 compared to 2025. We finished the quarter up 2% with the boost from the Winter Olympics. As we move into second quarter, we are seeing some softness in core. It appears that the situation in the Middle East and resulting volatility in oil prices is having an effect, causing advertisers to delay their commitments, which limits our visibility. Some of the softness in core is due to the NCAA Final Four rotating away from CBS. Recall last year, we earned $5 million of revenue in April as the largest CBS affiliate group. Let us talk about categories for a minute. We saw strength in gaming, a trend that continued into Q2.

Within services, legal, insurance, and financial were strong. Automotive finished the first quarter down just slightly compared to 2025, which is encouraging. Some of the consumer-focused categories experienced weakness, consumer goods and discount department stores in particular. Digital continued its healthy growth in first quarter, up high-teens versus 2025, and our new local direct business growth rate accelerated to 15% over the same period in 2025. Our sales teams continue to perform well against stiff competition for local advertising in a challenging market. Political ad revenue exceeded our expectations in 2026. Our guide for 2026 was $25 million to $30 million, and our actual results came in at the high end, right at $30 million. This compares to $26 million in 2022, which is the most recent midterm cycle.

We saw strong spending in Texas, Maine, Virginia, Georgia, and Michigan. We currently anticipate political revenue for Q2 will be in the range of $60 million to $70 million. As I mentioned earlier, we are seeing some softness caused by economic uncertainty as we progress through the second quarter. Our second quarter 2026 guidance is for core ad revenue to be down mid-single digits versus second quarter of 2025. Some of the consumer-focused categories are the most affected. We continue to expand our focus on sports programming. This year, 19 Major League Baseball teams will play in our 16 broadcast sports networks, in addition to 13 NBA teams, 8 NHL teams, 6 WNBA teams, and numerous NCAA and minor league baseball teams. I am also proud to note that our RYCOM Sports division has partnered with the Atlanta Braves as their live production team for BravesVision, producing all non-national games, including 25 games on WANF here in Atlanta and across the Southeast on our broadcast sports networks.

Our digital team has completed the transition of all of our digital apps and websites to the Quickplay platform in a remarkably short window. This personalized streaming platform will revolutionize how our viewers find and connect with our content. We believe that we have now built an incredibly strong foundation for continued digital audience and advertising growth. Jeffrey R. Gignac will now address the key financial developments.

Jeffrey R. Gignac: Thanks, Pat. In the first quarter of 2026, our broadcasting station operating expenses, excluding network affiliation fees, were up 4% compared to 2025. This was partially due to timing of certain expenses, as was noted in last quarter’s call, along with normal inflationary increases. We are continuing our focus on smart cost management, and we are investing in our team and making sure they have the best tools available to efficiently and effectively compete in the marketplace. You will also notice that we are guiding Q2 2026 broadcasting expenses to be down 3% at the midpoint versus 2025. Corporate expenses were above our guidance range due primarily to legal costs associated with completing our M&A regulatory approvals, and as you can see from our guide, corporate is expected to normalize as we complete the additional transactions.

Net retrans revenue was down $4 million in first quarter 2026 versus 2025. We did not anticipate the now-resolved distribution dispute when we provided our first quarter guide. I want to focus on that for a second. There are two things to point out in the Q2 2026 net retransmission guide. First, now that we have negotiated all MVPD renewals scheduled for 2026, and we know the impact of the blackout on second quarter, those elements are reflected. Secondly, we now incorporate the four stations acquired in first quarter, but none of the stations that we have acquired since the end of first quarter, into our guide. We currently expect first quarter 2026 net retransmission revenue to be in the same zip code as the quarter that just ended, implying low single-digit growth in net retransmission revenue.

Remember that the blackout impacted the full month of April, versus only 21 days in March. And importantly, with all of our renewals now negotiated, we have clear line of sight to growth in net retransmission revenue for full year 2026, even before adjusting for the impact of any of the acquisitions. Turning to the balance sheet for a minute. We finished first quarter with over $1 billion in liquidity. Our leverage metrics at 03/31/2026 were 2.56x consolidated first-lien net leverage ratio, 3.79x consolidated secured net leverage ratio, and 5.94x consolidated total net leverage ratio, each using the calculation in our amended senior credit agreement. These ratios include the pro forma impact of the four station acquisitions we completed as of 03/31/2026.

With the closing of the Allen seven-market transaction and yesterday’s closing on the Block Communications transaction, we will begin to see the estimated quarter turn of delevering flow into our ratios. It is also worth noting that after we closed the acquisition yesterday, our revolver was undrawn. There was approximately an $850 million working capital swing during first quarter related to the payment of accrued interest. On March 31, we completed an amendment to our senior credit agreement to align the document with the covenants under our secured notes and to incorporate current market standards. We pursued this to give us better access to the market as we evaluate potential refinancing opportunities. Immediately after we closed that, on April 2, we fully repaid the $10 million balance on the Term Loan F that was scheduled to mature in 2029.

As we progress through 2026, we are gaining visibility on deleveraging during the year. We are closing, and we will begin integrating, our M&A transactions. Our net retrans revenue is set to grow compared to 2025. Political advertising is ramping. And finally, refinancing to reduce interest expense could further improve our cash flow during 2026. Couple of housekeeping items. First quarter 2026 CapEx was $19 million versus $15 million in 2025. Both periods now include Assembly Atlanta. We are maintaining our $140 million company-wide CapEx estimate for 2026, although we expect that to be back-end weighted as we align the spending with the expected cash inflow from political advertising. Our full-year tax guide came down by $25 million to a range of $90 million to $110 million.

That concludes my remarks, and I will now turn the call back over to Hilton Hatchett Howell.

Hilton Hatchett Howell: Thanks, Jeff. In closing, first quarter was very busy, and we have already accomplished numerous objectives in Q2 which will have long-term benefits for Gray Media, Inc. We will continue to take actions to enhance value for our advertisers, our investors, and for the communities we serve. We thank everyone for joining the call today. Tina, at this time, we would like to ask that you open up the line for questions.

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Operator: As a reminder, to ask a question, simply press star 1 on your telephone keypad. We do ask that you limit questions to one and one follow-up. Our first question comes from the line of Steven Lee Cahall with Wells Fargo. Please go ahead.

Steven Lee Cahall: First, just a question on your regulatory outlook. I think the last time we spoke, you were encouraged by generally what was happening in Washington, but maybe things were moving a bit slowly in terms of getting transactions approved like the Scripps swaps and some of the Allen Media stations. It looks like, post Nexstar–TEGNA getting approved, the wheels are turning much faster. So I am wondering if you now feel like the regulatory process is something that you understand under this administration, if it is moving at a pace that is conducive to additional transactions. And as you think about potential strategic transactions, I was wondering just how you factor in state AG regulatory risk and if that is different from prior.

And then, Jeff, thank you for the retrans outlook for 2026. Any sense of what that might have looked like had you not had the blackout? Is that a point or two addition, or is it not so big now that reverse maybe is a bit more variable than it used to be? And, also, as we think about retrans pro forma for the deals you have done, would that have added or could that still add a point or two as well? Thanks.

Kevin P. Latek: Hey, Steven. We announced, as you alluded to, five deals last summer over the course of a couple weeks, and promptly filed those with the SEC and the DOJ, and those transactions are only now coming out of the regulatory agencies. We had to file them with DOJ as well, and our DOJ process pushed our transactions behind the Nexstar transaction and necessitated a very intensive document production and review. I would say a far more intense DOJ review of those transactions than anything we saw in Meredith, Quincy, Schurz, or Hoak under prior administrations. The Department of Justice cleared those transactions just in the last, I think, roughly two or three weeks or so. The FCC, consistent with past practice, has waited for DOJ to resolve its reviews before it acted.

So that is why we are seeing these now. It would appear to us on the outside that the FCC and DOJ in particular have received a number of broadcast transactions since last summer—from us and from other broadcasters, some large, some small, some gaining headlines, some not—and that through those reviews, especially of the mega deal and then our little deals, they have really come to understand the competitive situation that we face. As a result, I think they are more comfortable with the transactions probably than they were a year ago. So we are encouraged that we are now seeing the DOJ, after submitting millions of documents at great expense to us, really seems to understand our industry far better than it has probably ever, and that is supportive.

We do think that it facilitates the industry—not just us, the industry—continuing to do M&A. For Gray, again, as we have said many times, we are looking at strategic deleveraging transactions, and there are some things we are looking at and some things we maybe look at at a different time. On your last question on that, we have not previously considered state AG theories on antitrust. Without commenting on any current litigation, we are definitely mindful of what is happening, and we are evaluating our opportunities through the lens of potential additional uncertainty under new and novel theories being advanced by some attorney generals in various states. We are working through it, but obviously, we have not announced any other transactions in a number of months.

As we evaluate the new FCC and DOJ understanding of our industry and this new uncertainty, we will make decisions accordingly on what might be actionable in this environment versus what might not have been as actionable a year ago. Does that answer the questions?

Steven Lee Cahall: That does. Thank you, Kevin.

Jeffrey R. Gignac: Okay, great. Thanks. And I guess, let me comment, Steven, on the net retrans question. I will not comment about the specific impact or what it would have been from any individual contract. We always think about it as a portfolio on both sides. For the full year, though, we are thinking of inflationary-type organic growth in net retrans even with the blackout. It is really a continuation of the trend that started in fourth quarter where we were getting back to growing net retrans. But on top of that, there is net retrans that is acquired that will start to flow in on top of that.

Operator: And our next question comes from the line of Daniel Louis Kurnos with Stifel. Please go ahead.

Daniel Louis Kurnos: Yeah, thanks. Jeff, just to put a finer point on that response to Steve’s question—notwithstanding the blackout, which we all knew was coming, so it should not be a surprise to folks, other than that it happened—it seems like the net retrans guide is actually raised, and that is before the transactions, given the commentary you gave us last quarter. So is that an assumption on better underlying subs? Better underlying terms? Just any thoughts you can give us there. And then one for Hilton—one of my favorite subjects, political—and I know they are going to tell you to be careful with what you say, Hilton, because it is too early, and it never benefits anybody to get over their skis. But your 2Q guide is very, very strong. So any way you can help us think through how you are thinking about this political season would be fantastic. Thank you.

Jeffrey R. Gignac: Let me just address the retrans since we are on that topic, so that in the transcript it is all together. The short answer to your question, Dan, is yes. It is better sub trends. It is us achieving our objectives on market and getting to market rates as we renew contracts. It is everything together. Look, the blackout is unfortunate, but that is part of the business, and we reached something, as Hilton said, that was mutually beneficial in a long-term agreement there. I will kick it over on the political question to Kevin or Hilton.

Kevin P. Latek: I will refrain from using adjectives to describe this. We have said a couple of times we are pretty encouraged, and we have exposure to all but one of the competitive governor and senate races this year. One thing I would mention is a couple years ago, in 2022, we had a number of intraparty very expensive contests that brought a lot of primary money to us. What we discovered at the end of the year is that a lot of the money raised and spent in 2022 was essentially pulled forward to these primaries, and once those primaries were over, the candidates who won did not have any money, and the super PACs were kind of tired of spending on those races, and those campaigns kind of died after the primary. That was something we had not seen before.

This time around, there are two or three pretty high-profile senate primaries, one of which essentially ended the other day in Maine. So we are down to two pretty expensive senate primaries—Texas, where we have a number of stations but definitely not a huge presence relative to the 45 media markets there, and then Michigan, where we have a decent presence but we are not in two or three of the markets there. So we have some exposure to those. The impression is that while a lot of money is being spent in those competitive primaries, the map is just different from 2022, where so much money was pulled into second quarter for those primaries. You have seen all the articles on the hundreds of millions of dollars that the PACs and super PACs are sitting on.

The candidates have raised, and frankly, have not even allocated yet. One of the senate parties’ super PACs has started reserving time; the other has barely started reserving time. It seems this is going to be a cycle where the money is being deployed more towards general elections and not second quarter primaries. So we still feel very good about this year. I would say recent events and fundraising numbers and successes are pointing to a very engaged electorate, and as we said many times a year ago, the House might have been a potential jump off the downspin of the Senate, and now the House is very much in play. Even the headline in the Washington Post this morning says Dems are feeling they have a real shot now with taking the Senate. You never would have seen that six months ago.

Obviously, that may change, but the more people are engaged and think there is a potential change of control, the more motivated they are to raise money and campaign and work the doors and work the phones and vote. We think this is going to be a very, very engaged campaign season, and we have a very good portfolio of number one TV stations in the right markets to capitalize on that.

Hilton Hatchett Howell: Did that answer your question, Dan, or are you looking for an adjective? I will take an adjective, if I can get one. Kevin is sitting here kicking me under the table, but suffice it to say—it is going to be extraordinarily strong. What those numbers are going to be, we have learned our lesson. We do not know. But I think it is easy to check our markets, our position, and where the races are, and we do think that we are exceptionally well positioned, the way Kevin so wisely articulated our markets and operations.

Daniel Louis Kurnos: Got it. Thanks, everybody. I appreciate it.

Operator: As a reminder, please limit questions to one and one follow-up. Our next question comes from the line of Aaron Watts with Deutsche Bank. Please go ahead.

Aaron Watts: Hey, guys. Thanks for having me on. Apologies in advance, but one more on retrans. You had described an unprecedented new demand as being at the core of the programming dispute you recently resolved. Is it safe to say you were able to back that demand down? And what risk do you see that other distributors bring that type of a demand to the table in the future?

Kevin P. Latek: Aaron, understandably, you have asked what was the detail. We do not comment on specifics in our negotiations. I would say I started doing retrans in 1997, did it pretty much full-time for a decade and a half before coming here, and obviously Gray has done a few retrans negotiations over the last fourteen years I have been here. I did retrans for Comcast and some cable companies in a prior job and a whole bunch for broadcasters. We have seen a ton of retrans contracts through our sixty-some-odd transactions since I came to Gray. I have never seen a provision like the one that was thrown at us as a non-negotiable line in the sand—take it or leave it—as we saw here. It is not something that we were prepared then, or ever, to do.

I do not expect other MVPDs will expect to exert control over a broadcast company any more than we would expect to do a deal where we would try to control the operations of another company. The bottom line is it was bizarre. It was incredibly unprecedented in a lot of very deep professional experience, and so we were willing to take the extraordinary step of Gray breaking its long history of never having a major retrans dispute. It clearly was pretty existential for us. We resolved it. The terms were resolved in ways that we felt comfortable with, and that is, unfortunately, all I really can say on terms that are subject to confidentiality that we expect DISH to respect and we will respect. I think it was a one-off. I am not expecting other people, on either side, to ask for a level of control over another company that no one will be willing to give.

So let us just leave it at that.

Aaron Watts: That is helpful. I appreciate your view on that. And then just one for Jeff. We can see your continued work on the expense side in the first half of this year. How should we be thinking about costs in the second half? Are you lapping any initiatives that will flatten things out, or is the first half expense base a fair baseline for the remainder of the year? Any help would be appreciated.

Jeffrey R. Gignac: Yeah. We talked about this a little bit on our first quarter call, Aaron. We did align company-wide raise dates for all nonunion employees to January 1 so that we can manage things better and budget better. Everybody had their own individual anniversary date prior to this, so you can imagine when you have got 5 thousand employees, it is a lot just to keep track of, and this was fair to everybody. That pulled forward some increases in what is our largest expense item. That will average out throughout the year. So the back half—I would not say the first half is necessarily a perfect proxy for the back half. The back half should be, on a comparable basis, getting to a more normalized, inflationary-type rate. We also will have, in the back half of the year, as we report, all the acquired station expenses rolling in. That is the other piece of it here. But they come in under normal SEC reporting as they close.

Operator: And your next question comes from the line of Patrick Sholl with Barrington Research. Please go ahead.

Patrick Sholl: Hi. Good morning. Just on your advertising guidance, is there any amount of crowd-out from the World Cup, just it being on—drawing advertiser interest to different stations?

Donald Patrick LaPlatney: No. The World Cup is a net benefit. There is no question. If you mean preemptions of other programming by the World Cup, there is really no sort of net negative. The World Cup is a positive.

Patrick Sholl: Okay. And then with the MVPDs including access to the network streaming services, have you seen that have any sort of impact on local programming viewership?

Sandy Breland: Modestly, if any. Our local programming viewership is still extremely strong when you look at our local newscasts, what we are doing on the linear side and, frankly, the streaming side as well. Our local newscasts continue to perform very well. The streaming is totally additive, and if you go back and look at the net viewership across all the different platforms we are on now, that has grown over the last few years and has not diminished.

Hilton Hatchett Howell: Pat mentioned this often, but Pat mentioned that FIFA was a positive and not a negative. I really think that our sort of unique degree of NBC exposure to the Telemundo portfolio—we have 47 affiliates; we are the largest affiliate group outside of the major markets that NBC has—and we think it is going to be really, really strong in Spanish-language. We are also very excited about FIFA on our 33 FOX stations in English, obviously. It is going to have a big impact on us, we believe, and having stations in two host cities—in Atlanta and Kansas City—is very beneficial for us.

Patrick Sholl: Thank you.

Hilton Hatchett Howell: Thanks, Ian.

Operator: Your next question comes from the line of Gengxuan Qiu with Barclays. Please go ahead.

Gengxuan Qiu: Hey, guys. Thanks for taking my question. I just had a clarification on the guidance for the net retrans distribution. Is there any true-up or catch-up payments that we should think about that were negotiated as part of the resolution? And then, on your comments on organic low single-digit growth in net retrans for the full year, does that take into account any kind of changes from the pending closing of Charter and Cox?

Jeffrey R. Gignac: So, Shanna, everything is factored into the guide. Again, I do not want to comment about any specific aspect of the contract—contracts plural, really. There were multiple contracts that were negotiated during the quarter. On your second question, we have factored in our own estimate of when that closes into the guide. I am not going to handicap exactly when that closes, but we are aware of that, and it is factored into what we have put out in the comments about inflationary-type growth for the full year.

Operator: Okay. Great. Thank you. Your next question comes from the line of Craig Huber with Huber Research Partners. Please go ahead.

Craig Anthony Huber: Great. Thank you. Can you just comment, if you would, where you think the FCC is right now on this 39% TV station ownership cap? I mean, they obviously did the TEGNA deal. They approved it underneath a waiver as opposed to first getting rid of the 39% ownership cap or lifting it. Where do you think we are on the timing of maybe getting rid of that? It has been long overdue, obviously. Thank you. And my other question: the use of AI at your company and your TV stations. Can you just quickly go through with us the benefits in terms of enhancing your services, but also on the efficiency side of things at your station level?

Kevin P. Latek: Hey, this is Kevin. To be honest, we have no idea on the timing, and it is just not something we follow. Gray is at 25% under the cap. There is nothing that we could imagine doing in the near-to-medium term that would require the cap to be raised for Gray, so it is just not, frankly, an issue that we follow. I would point you to one of the broadcasters who is close to the cap and lobbying on that issue. We are not; it is irrelevant to Gray.

Sandy Breland: On AI, it has really been a multiplier of sorts for our teams—primarily time saving and increasing productivity on both the sales and the news side. It allows us to free up our people on the content side to create more original, sticky content, and on the sales side, it allows us to spend more time on client relationships and growing business, using AI for things like accelerated pipelines for new business and prospecting. It is really a multiplier, amplifying and giving our people more time to focus on the things that we really need them to focus on.

Operator: Once again, to ask a question—And with no further questions in queue, I will now turn the call back over to Mr. Hilton Hatchett Howell for closing remarks.

Hilton Hatchett Howell: Well, thank you very much, operator, and I want to thank everyone for joining us this morning. We are very pleased with our results that we have reported and really look forward to talking to you at the conclusion of next quarter. Thank you.

Operator: Thank you again for joining us today. This does conclude today’s conference call. You may now disconnect.

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