Gray Television ((GTN)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Gray Television Balances Near-Term Headwinds With Strategic Progress
Gray Television’s latest earnings call struck a cautiously optimistic tone as management balanced short-term pressure with clear evidence of operational progress. Revenue and Adjusted EBITDA landed at the high end of guidance, digital and political advertising showed strong momentum, and liquidity topped $1 billion. Yet soft core advertising, higher leverage, and timing-related expense spikes tempered the otherwise constructive outlook.
Revenue at High End of Guidance
Gray Television reported first-quarter 2026 revenue of $768 million, landing at the high end of its outlook and signaling solid execution in a mixed ad market. Adjusted EBITDA reached $154 million while the net loss attributable to common stockholders was a minimal $330,000, underscoring resilient profitability despite macro and category-specific pressures.
Operating Expense Improvement
Total operating expenses before depreciation and related items came in at $622 million, about $7 million lower than in the prior-year quarter, reflecting early benefits from cost discipline. Broadcasting expenses decreased by $22 million year over year, giving the company some breathing room as it navigates softer core advertising trends and a more volatile economic backdrop.
Political Advertising Strength
Political advertising again emerged as a key earnings driver, generating $30 million in Q1 2026 and hitting the upper end of guidance while surpassing the comparable 2022 midterm period. Management expects political revenue to accelerate with Q2 guidance of $60 million to $70 million, positioning Gray to capitalize on the intensifying election cycle as the year progresses.
Digital and Local Direct Growth
Digital revenue increased at a high-teens percentage rate versus 2025, highlighting ongoing success in translating audience reach into online monetization. New local direct business rose 15% year over year, suggesting that Gray’s sales teams are increasingly effective in shifting advertisers toward higher-margin digital products and diversified local campaigns.
Retransmission Negotiation Progress & Blackout Resolution
The company resolved an extended distribution blackout with DISH and locked in retransmission consent renewals with three of its largest traditional distributors covering roughly 39% of its pay-TV footprint. With no further retrans talks scheduled for 2026, management now sees a clear line of sight to net retransmission revenue growth for the full year following the blackout-driven pullback.
M&A, Portfolio Expansion and Liquidity
Gray continued to reshape its station portfolio, closing the purchase of WBBJ and acquiring station groups from Allen Media and Block Communications covering 10 plus 3 markets, with remaining deals nearing completion. The company ended Q1 with more than $1 billion of liquidity and a fully undrawn revolver, providing notable financial flexibility to integrate acquisitions and weather cyclical swings.
Studio and Sports Content Wins
Assembly Studios notched multiple wins as CBS renewed the series “Beyond the Gates” for two additional seasons and the Tennis Channel’s new league will stage 52 matches on its soundstage. Additional upside is expected from distribution of the FIFA World Cup across dozens of FOX and Telemundo affiliates and a new role for RYCOM as production partner for BravesVision, enhancing Gray’s content and sports footprint.
Balance Sheet Actions to Support Flexibility
To bolster its capital structure, Gray amended its senior credit agreement to align covenants with its secured notes and repaid a $10 million term loan, steps that support future financial flexibility. Management expects about a quarter-turn of deleveraging as recent station acquisitions contribute earnings, which should flow into lower leverage ratios over the coming quarters.
Core Advertising Softness and Q2 Guidance
Core advertising is expected to remain under pressure, with management guiding Q2 2026 core ad revenue down mid-single digits versus the prior year. Executives cited uncertainty linked to Middle East-related economic volatility and the rotation of the NCAA Final Four away from CBS, which had provided an estimated $5 million benefit in last year’s April results.
Net Retransmission Revenue Impacted by Blackout
Net retransmission revenue declined by $4 million in Q1 2026 compared with 2025, reflecting the impact of the now-resolved DISH blackout and weighing on short-term profitability. The blackout extended through April and clouded Q2 visibility, but management still expects low single-digit growth in net retransmission revenue for the full year as normal payments resume.
Near-Term Expense Pressures
Despite broader cost reductions, broadcasting station operating expenses excluding network affiliation fees rose 4% year over year in Q1 due to timing and inflation. Corporate expenses ran above expectations largely because of legal and regulatory costs tied to M&A, adding temporary pressure that management portrays as non-recurring in nature.
High Leverage Metrics and Working Capital Swing
Leverage metrics remained elevated at quarter end, with total net leverage sitting near 5.94 times under the amended credit agreement, including recent acquisitions. A roughly $850 million working capital swing linked to accrued interest payments in Q1 distorted near-term leverage optics, though management argues underlying trends should improve as cash flows build.
Small GAAP Net Loss
Operating progress did not fully translate to the bottom line, as the company posted a small GAAP net loss of $330,000 attributable to common stockholders. While modest, the loss underscores the thin margin for error in a quarter marked by blackout-driven revenue drag, soft core advertising, and higher corporate spending tied to strategic initiatives.
Category-Level Weakness
The advertising environment showed uneven demand by category, with consumer goods and discount department stores described as weak during the quarter and into early Q2. Automotive ended Q1 slightly down compared with 2025, adding to management’s caution around near-term visibility even as political and digital segments provide partial offsets.
CapEx and Timing of Expense Recognition
Capital expenditures rose to $19 million in Q1 from $15 million a year earlier, driven in part by ongoing investment in Assembly Atlanta and other strategic projects. Gray also advanced salary increases to the start of the year, contributing to front-loaded expense recognition, while reiterating its full-year CapEx target of $140 million, which is expected to be weighted toward later quarters.
Forward-Looking Guidance and Outlook
Looking ahead, Gray expects Q2 core advertising to decline mid-single digits year over year even as political revenue climbs to between $60 million and $70 million, up from $30 million in Q1. Management reaffirmed full-year plans for low single-digit net retransmission growth, $140 million of back-end weighted CapEx, lower full-year tax expense, and leverage improvement as recent and pending acquisitions mature.
Gray Television’s call paints a picture of a broadcaster leaning on political and digital growth to offset cyclical softness in core advertising and the aftereffects of a retrans blackout. Strong liquidity, disciplined cost control, and active portfolio management underpin a generally constructive outlook, though elevated leverage and near-term ad weakness will remain key watchpoints for investors in the coming quarters.