Gray Media, Inc. Q1 FY2024 earnings call

• TV stations core advertising revenues grew 4% in Q1 2024, with growth in categories like Automobile and National.
• Adjusted EBITDA increased 21% to $197 million from Q1 2023.
• Prepaid $50 million of term loans on April 1 for debt reduction.
• Core advertising revenues in Q1 2024 were higher pro forma than Q1 2019, and guiding to beat 2019 full-year core revenue pro forma for 2024 despite political displacement.
• Political advertising revenue expected strong later in 2024, with Q2 2024 political revenue guiding 55%-72% higher than Q2 2020 pro forma.
• Assembly Studios construction nearly complete, with NBCU leasing two-thirds, contributing revenues.
• Local news operations recognized with DuPont Columbia Awards, and Investigate TV-Plus renewed for second season with Spanish version launched in 26 Telemundo markets.
• Successful return of professional sports to broadcast stations, including NBA and WNBA games, driving audience and advertiser growth.
• NEXTGEN TV deployment ahead of HDTV and DTV transition, with over 10.3 million sets sold and 75% of US TV households reaching NEXTGEN signal.

Gray Television's TV stations core advertising business saw a 4% growth in Q1 2024. Adjusted EBITDA was $197 million, an increase of 21% from Q1 2023. Net income attributable to common shareholders was $75 million or $0.79 per diluted share. Retransmission revenues and network affiliation fees were largely stable. Core advertising revenues in Q1 2024 were higher pro forma than Q1 2019, and the company is guiding to beat 2019 full-year core revenue pro forma for 2024.

• Reaffirmed core ad revenue guidance of approximately $1.6 billion for 2024.
• Reaffirmed retransmission revenue guidance of $1.5 billion for 2024.
• Reduced broadcast operating expense guide for 2024 to approximately $2.3 billion from $2.4 billion.
• Board authorized spending up to $250 million of liquidity for debt repurchases.

• Uncertainties in forward-looking statements due to factors like political advertising dynamics, macroeconomic conditions, and impacts of cord cutting/virtual MVPDs on retransmission revenues.
• Initial misunderstanding of the Sports JV impact, with confusion around broadcast vs. cable distribution models.

Q: Daniel Kurnos asked about sustainability of core advertising growth and reasons for outperformance.

A: Pat LaPlatney and Sandy Breland discussed diverse advertiser basket, investment in training, new local direct business growth, and strong content.

Q: Aaron Watts asked about core advertising themes and optimism despite macro uncertainties.

A: Pat LaPlatney and Sandy Breland talked about diverse categories, sales organization strength, and scale.

Q: Craig Huber asked about Assembly Atlanta revenues and monetization of NEXTGEN TV.

A: Hilton Howell and Pat LaPlatney provided updates on Assembly Atlanta and NEXTGEN TV monetization.

Q: James Goss asked about misunderstanding of Sports JV impact.

A: Jeff Gignac and Kevin Latek explained the confusion around broadcast vs. cable distribution models.

Q: John Kornreich asked about leverage and retrans guidance.

A: Jim Ryan and Kevin Latek discussed leverage and retrans revenue stability.

Q: Davis Hebert asked about retrans decline and sports streaming.

A: Kevin Latek and Pat LaPlatney talked about retrans exposure and sports broadcast feedback.

Q: Michael Kupinski asked about agency business.

A: Pat LaPlatney and Sandy Breland discussed local direct vs. agency business