10-Q: Gray Media Reports Q1 2026 Results, Sees Revenue Dip

Gray Media, Inc. reported a decrease in total revenue for the first quarter of 2026 compared to the prior year, driven by lower retransmission consent revenue, despite increases in core and political advertising.

Summary

• Gray Media, Inc. reported total revenue of $768 million for the three months ended March 31, 2026, a 2% decrease from $782 million in the same period of 2025.
• The decrease in revenue was primarily due to a $40 million reduction in retransmission consent revenue, partially offset by increases in core advertising ($8 million) and political advertising ($17 million).
• Operating expenses decreased by 4% to $555 million, mainly due to lower retransmission expenses, though production company expenses and corporate/administrative expenses increased.
• Net loss for the quarter was $20 million, compared to a net loss of $9 million in the prior year's first quarter.
• The company completed two acquisitions in the first quarter of 2026: WBBJ-TV for $25 million and three stations from Allen Media Group for $56 million.
• Subsequent to the quarter, Gray Media acquired additional stations from Allen Media Group for $115 million (closed May 1, 2026) and from Block Communications for $80 million (closed May 6, 2026).
• As of March 31, 2026, the company had $259 million in cash and cash equivalents, with $745 million in borrowing availability under its revolving credit facility.
• The company's first lien net leverage ratio was 2.56x, secured net leverage ratio was 3.79x, and total net leverage ratio was 5.94x.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as slightly negative due to the overall revenue decline and increased net loss, despite positive contributions from political and core advertising and strategic acquisitions.

Positives

• Core advertising revenue increased by $8 million, driven by strong performance from Super Bowl and Winter Olympics broadcasts.
• Political advertising revenue saw a significant increase of $17 million due to the election cycle.
• Production company revenue increased by $2 million, or 7%.
• Broadcasting expenses decreased by $22 million, or 4%, primarily due to reductions in retransmission expenses.
• The company has $745 million in borrowing availability under its revolving credit facility, providing strong liquidity.
• The company was in compliance with all required covenants under its debt obligations as of March 31, 2026.
• Subsequent to the quarter, the company completed significant acquisitions, expanding its market presence.

Negatives

• Total revenue decreased by $14 million, or 2%, to $768 million.
• Retransmission consent revenue decreased by $40 million due to subscription declines, station status changes, and a temporary distribution dispute.
• Net loss attributable to common stockholders was $33 million, compared to $22 million in the prior year.
• Corporate and administrative expenses increased by $7 million due to acquisition-related professional fees.
• Production company operating expenses increased by $8 million, primarily due to increased property taxes at Assembly Atlanta.
• Net cash provided by operating activities significantly decreased to $1 million from $132 million in the prior year.

Risks

• The company's broadcast advertising revenues are affected by seasonal factors, including political spending, which is heaviest in the fourth quarter of election years.
• A material portion of non-political broadcast advertising revenue comes from the services sector (financial, legal, medical) and the automotive industry, which could be impacted by economic downturns.
• A distribution dispute with a satellite television company in early March 2026 temporarily removed stations from its platform, impacting retransmission revenue.
• The company is subject to legal actions and claims that arise in the normal course of business, which could materially affect financial position.
• Future acquisitions are subject to regulatory approvals and other customary approvals, with no assurance they will close on contemplated timelines or at all.
• The company's debt obligations contain covenants that, if breached, could have a material adverse impact.

Future Outlook

The company anticipates that its cash on hand, future cash generated from operations, borrowings under its credit facility, and potentially external financing will be sufficient to fund debt service obligations, capital expenditures, and acquisition-related obligations for the next twelve months and the foreseeable future. Routine capital expenditures are expected to be approximately $120 million for the remainder of 2026.

Management Comments

• The company's first quarter 2026 benefited from the broadcasts of the recently concluded Winter Olympics across its NBC affiliated channels, generating approximately $15 million of revenue.
• The company's Super Bowl advertising revenue on its NBC channels increased to $10 million in 2026.
• The company's dispute with the satellite television company was resolved on May 1, 2026.
• The company believes its completed and pending acquisitions further its commitment to pursuing strategic transactions in a prudent manner.

Industry Context

StockSavvy.ai notes that Gray Media's performance in Q1 2026 reflects typical industry dynamics, with political advertising providing a significant boost in an election year, while retransmission revenue faces pressure from subscriber trends and disputes with distributors. The company's strategic acquisitions align with industry consolidation trends.

Comparison to Industry Standards

• The increase in political advertising revenue aligns with typical patterns observed in the broadcast industry during election years.
• The decline in retransmission consent revenue is consistent with broader industry challenges related to cord-cutting and negotiations with distributors.
• The company's strategic acquisitions of television stations are in line with ongoing consolidation within the local broadcast media sector, where larger groups seek to achieve economies of scale and expand market reach.

Legal Proceedings

• As of the date of filing, there have been no additional material legal proceedings or material developments in legal proceedings disclosed in Part I, Item 3, of the 2025 Form 10-K.

Stakeholder Impact

• Shareholders may be impacted by the increased net loss and decreased operating cash flow, although strategic acquisitions could offer long-term growth potential.
• Employees may be affected by increased corporate and administrative expenses related to acquisitions, and potential integration efforts.
• Creditors are subject to the company's debt covenants, which were in compliance as of the reporting date, but ongoing leverage ratios remain a consideration.

Next Steps

• Finalize accounting for the Allen 7 and BCI station acquisitions.
• Continue to monitor operating expenses and seek reduction opportunities.
• Fund debt service obligations, estimated capital expenditures, and acquisition-related obligations.
• Anticipate making income tax payments within a range of $90 million to $110 million during the remainder of 2026.

Key Dates

Recommendation

The company's revenue decline and increased net loss are concerning, but the strong performance in political and core advertising, coupled with strategic acquisitions and ample liquidity, suggest a stable outlook. The resolution of the distribution dispute is also a positive. A 'hold' recommendation is appropriate given the mixed results and ongoing integration of recent acquisitions.

Keywords

Gray Media, Form 10-Q, Quarterly Report, Broadcasting, Television Stations, Advertising Revenue, Retransmission Consent, Acquisitions, Financial Statements, SEC Filing