Gray Media, Inc. Q2 FY2024 earnings call

• Gray's local news stations and production companies performed well, with stations receiving awards. - Expanded content and reach with live broadcast of Harlem Globetrotters game, new networks like Rock Entertainment Sports and Palmetto Sports & Entertainment. - Successfully refinanced $2 billion of debt maturities to 2029 and increased revolving credit facility to $680 million. - IATSE and Teamsters unions ratified new collective bargaining agreements averting a Hollywood strike, with Gray signing first long-term studio lease at Assembly Atlanta. - Continuing to manage costs, with further reductions in broadcast OpEx, corporate/admin expenses, and capital expenses.

Total revenue in the second quarter was $826 million, an increase of 2% from the second quarter of 2023. Net income was $22 million in the second quarter compared to $4 million in the second quarter of 2023. Adjusted EBITDA was $225 million, essentially unchanged from the second quarter last year. Core advertising revenue in the second quarter was $373 million, slightly below the low end of the guidance range. Political advertising revenue in the second quarter was $47 million. The company lowered its full revenue guide for core ad revenue by $75 million and retransmission revenue by $25 million. Digital businesses continued to grow audience and revenues with double-digit growth in digital advertisers and total digital revenue.

• Lowered full-year core ad revenue guide by $75 million and retransmission revenue by $25 million. - Anticipate core ad revenue to be flat to low single-digit growth in Q3 2024. - Lowered full-year core revenue guide to $1.525 billion. - Lowered broadcast OpEx and corporate/admin expenses guidance by an additional $20 million and capital expense range by approximately $20 million.

• Political revenue displacement impacting core advertising. - Subscriber churn affecting retransmission revenue. - Uncertainties in network affiliation negotiations affecting costs.

Q: Daniel Kurnos asked about political revenue and network renewals.

A: Kevin Latek said they're optimistic on political but not giving a guide, and Kevin mentioned network renewals are up for the next 18 months as per the investor deck.

Q: James Goss asked about local sports partnerships.

A: Sandy Breland said they're interested in more local sports partnerships, working with several NBA teams and hope to have exciting news soon.

Q: Craig Huber asked about core ad revenue tailing off in June.

A: Pat LaPlatney said it was primarily driven by auto, with auto down mid-single-digits in Q3 but seeing an uptick, and Sandy Breland added on new local direct growth.

Q: Avi Steiner asked about political revenue post-Biden step down.

A: Pat LaPlatney said it's hard to quantify but very bullish on political for the year.

Q: Steven Cahall asked about leverage and assembly EBITDA.

A: Jeff Gignac said leverage should improve by year-end depending on political cash flow, and assembly EBITDA guide remains at 105.

Q: Mike Kerrane asked about political impact on core guidance.

A: Kevin Latek said it's hard to put a specific number on displacement but core guide is still up vs 2023.

Q: David Hamburger asked about distribution revenue and network renewals.

A: Kevin Latek said retrans declines should slow, and they'll negotiate network fees more appropriately.

Q: Unidentified Analyst asked about debt refinancing term.

A: Jeff Gignac said they evaluated market and put in place terms to address 2026 maturities.

Q: Craig Huber asked about Assembly Atlanta cost and P&L impact.

A: Hilton Howell said first quarter next year should see meaningful return, and Jeff Gignac said final cost was $571 million.

Q: Mike Kerrane asked about bond repurchase authorization.

A: Jeff Gignac said they'll be guided by market and opportunistic with bond repurchases.