Gray Media (GTN) Q3 2026 earnings review
Gray sets an election ad record, but debt stays high
Election spending gave Gray Media a record political quarter, while the advertising its stations sell every year keeps shrinking. Political advertising brought in $198 million, the most ever for a third quarter. Chief executive Hilton Howell now expects $630-640 million for the full year. Without political money and the stations bought this year, revenue fell about 4% by our math.
| Revenue from stations owned a year ago, excluding political | -4% from a year ago, by our math |
|---|---|
| Political advertising revenue | $198M $173M in the same quarter of 2024 |
| Debt net of cash | $5.67B $5.44B at the start of the year |
| Full-year political outlook | $630-640M $497M in 2024 |
⚖️ Verdict: 🟢 Bullish
The story got better because Gray pushed its largest debt deadlines out to 2030, past the quiet year after the election. The bad news: debt net of cash is higher than in January, because the political cash went into stations, and underlying advertising fell about 6%.
The question now is whether Gray can keep cutting debt in 2027 without an election to pay for it. Either lower interest and rising distributor fees cover the lost political money, or leverage climbs again as it did after 2024. The December leverage ratio and the first-quarter outlook in February will tell.
🐂 Bull Case
Election Ads Set a Record for Gray
Candidates buy airtime on Gray Media's stations in election years, and this one is the biggest yet. Political advertising brought in $198 million in the quarter, against $173 million in the same quarter of the last election year.
Kevin Latek, chief legal and development officer, said money left Georgia and North Carolina for Iowa, Alaska, Maine and Nebraska, where Gray leads the state. Chief executive Hilton Howell said the election showed "a hell of a lot more swing states and competitive states" in Gray's footprint.
- Full-year outlook: $630-640 million, about 28% above 2024
- Political revenue per TV household: $13.45, from $10.83 in 2024, per Latek
- From acquired stations: $4 million this quarter, $16 million for the year
Political money arrives in advance, and Gray directs it at debt. By our math, $619 million from the old footprint still beats the 2020 record. But Latek's account says the money followed close races, which may move again by 2028.
What to watch: fourth-quarter political revenue in February, which the outlook puts at $319-329 million against $250 million two years ago. Inside that range would be Gray's strongest fourth quarter ever.
Pay-TV Fees Grow Again Without the Acquisitions
Cable and satellite companies pay Gray to carry its stations. What is left after network fees, net retransmission revenue, is growing again after falling through most of 2025.
Gray collected 14% more this quarter than a year ago. Acquired stations added $9 million of it, so the old footprint grew about 7% by our math. The comparison was soft, because Atlanta's WANF left CBS in August 2025.
The release still cites "continued subscriber declines", and distributor fees from the old stations fell about 5% by our math. But Gray's rates stay fixed until 2027, when contracts covering 61% of subscribers come up.
What to watch: fourth-quarter net retransmission revenue against the $152-155 million outlook. Growth inside it would leave the 2027 renewals, not subscriber losses, as this stream's test.
Gray Pushed Its Big Debt Deadlines Past 2028
Until August, Gray's two largest debts came due soon after the next election: a term loan in 2028 and its most expensive notes in 2029. Refinancing them in a year without election money was the main balance-sheet risk.
Since then Gray has borrowed new money due in 2030 and 2034 and repaid most of the old loan and most of the old notes. The revolving credit line now runs to 2030 as well.
- Term loan due 2028: $150 million left, from $739 million
- 10.5% notes due 2029: $200 million left, from $1.1 billion in January
- New debt: $750 million of 7.5% notes due 2034 and a $675 million term loan due 2030, for about $65 million of fees
This changes the case because no large maturity now falls before the 2028 election has paid in. The price was a $40 million loss on retiring debt early this quarter; Howell expects the saving to reach at least $40 million a year.
What to watch: the 2027 interest outlook in February. By our math a figure at or below $410 million would show the saving Howell described reaching the income statement.
🐻 Bear Case
Debt Ends the Year Near Where It Started
Gray calls debt reduction its priority, and the election year brought the cash. Yet net debt reached $5.67 billion in September, from $5.44 billion in December, about what Gray paid for stations.
Finance chief Jeff Gignac plans to cut $175-200 million of debt with fourth-quarter political cash. By our math that leaves roughly $5.5 billion, above January's level.
- Covenant leverage: 5.70 times, from 5.80 in December, on a bigger denominator, not less debt
- Acquired stations: $66 million of revenue, $52 million of costs, a 21% margin by our math, against Gray's 33%
- Operating profit before depreciation, excluding one-offs: $319 million, below the $338 million of the same quarter in 2024
The denominator includes savings Gray expects but has not booked: $161 million, from $144 million in June. Gignac said the company is "probably 75%-80% of the way there in getting those into our run rate". Yet it grew this quarter, and acquired stations earn thinner margins than Gray.
What to watch: the total net leverage ratio at December 31, due in February. Above 5.5 times would mean the acquisitions absorbed the cash Gignac meant for debt.
Regular Advertising Fell 6% Without the Bought Stations
Core advertising is what businesses pay Gray outside election campaigns, and it must carry 2027. The release reports it up 1%, but acquired stations supplied $24 million of it. Without them, by our math, the old footprint fell about 6%.
The filing blames "macro-economic softness" and campaigns crowding out normal advertisers. Co-chief executive Pat LaPlatney said gambling was strong, while communications, health and insurance were soft. The fourth-quarter outlook, down low-to-mid single digits as reported, implies the old footprint down roughly 10% by our math if acquisitions repeat this quarter's contribution.
What to watch: the first-quarter core advertising outlook in February. LaPlatney said "our current pacing in Q1 is positive" on a same-station basis. But that quarter laps about $26 million of Olympics and Super Bowl revenue by our math.
Risks this quarter didn't answer
Four standing concerns got no new number this quarter. Most of them concern the year after the election, when political money stops and ordinary revenue alone must carry the debt.
- 2027 without an election: about $635 million of political revenue falls away; Gignac counts $40-50 million of lower interest and preferred dividends against it, and the positive first-quarter pacing LaPlatney cited is early.
- Assembly Atlanta studio: the production segment broke even this quarter and lost $6 million over nine months; no update on the land ventures promised for 2026.
- Pension plan closure: the plan terminated on October 1, and the filing says the settlement charge is still under evaluation.
- State attorneys general: no comment this quarter on whether they will challenge further in-market station combinations.
👓 Other Themes
Congress Changes Hands, Gray Keeps Buying Stations
Howell told analysts he does not expect "a significant change from the FCC". He will wait until January to hear from "the Democratic majority in both the Senate and the House". Then he will argue to either party that combining stations keeps newsrooms open. His example is Louisville, where WDRB and WAVE now share one newsroom of "more than 100 journalists", said chief operating officer Sandy Breland.
Pro Sports in 90 Markets, Mostly Short Deals
Gray now carries local professional sports in 90 of its markets, LaPlatney said, after adding the Hornets, Blues, Timberwolves, Cavaliers and Magic. Asked how many contracts run several years, he said "A small percentage are multi-year", because leagues are negotiating national deals that will shape local ones. Digital revenue grew 12%, and the move of Gray's video apps to the Quickplay platform stays on track.
💲 Other KPIs
Cash from operations minus capital spending rose to $187 million from $112 million a year ago. The third quarter alone produced $99 million by our math, against an outflow a year earlier, as prepaid political advertising arrived. Working capital still absorbed $109 million over nine months, mostly a drop in accrued interest and a rise in prepaid taxes.
Station running costs, the pay and overhead of the local stations, took 39.1 cents of every revenue dollar, down from 43.8 a year ago. Political revenue carries almost no extra cost, so the share fell even though the dollar amount rose, acquired stations included. In dollars, station costs reached $380 million. Network fees fell to 22.2% of revenue from 28.6%.
Cash that customers paid before their ads aired nearly tripled from $20 million in December. Almost all of it is political deposits, which rose to $44 million from $7 million. Political advertisers pay in advance, so this balance shows fourth-quarter political revenue already in hand at the end of September.
🔮 Guidance
New. The plan has regular advertising falling again in the fourth quarter, even with the acquired stations included. By our math the middle of the range is about $378 million. Without the acquisitions that is roughly 10% below last year. Management attributes the drop to campaigns taking the airtime; the first-quarter outlook in February will show whether demand returns once they leave.
New. The plan puts fourth-quarter political revenue at $319-329 million, about 30% above the last presidential-year fourth quarter. Election day fell on November 3, so Gray had booked almost all of it before reporting. The company has beaten its own political range in every quarter of this cycle, by 17% on average by our math.
New. The outlook calls for about $1.13 billion in the fourth quarter, up 42% from a year ago. The full-year range means a fifth more revenue than in 2025. By our math revenue other than political would grow about 3% in the fourth quarter, all of it from acquired stations. Gray has beaten the middle of its quarterly revenue range in two of the last three quarters.
Unchanged in direction, now with numbers. The fourth-quarter range means about 15% growth from a year ago, in line with this quarter. The full-year figure matches the $595 million of 2023, which Howell called the company's high. Gignac said the stream should accelerate into 2027 because all distributor contracts are in place until then.
New. Station costs rise about 14% from a year ago in the fourth quarter, faster than the 10% increase this quarter. Gray does not break down the increase, though the ASM and WHPM stations it operates under management agreements are now included. LaPlatney said the costs of acquired stations should fall materially from this quarter's level as integration proceeds.
New. Corporate overhead rises to $35-40 million in the fourth quarter, from $28 million a year ago. Deal-related professional fees drive the increase; they ran to $12 million over nine months. For the year the range means about $145 million, up from $113 million last year.
Raised. This year's interest bill is $10 million higher than the August plan, even though the refinancing replaced the most expensive notes with cheaper ones. Gray gave no reason in the release. Howell expects at least $40 million less next year. The filing estimates $430 million of interest payments over the next twelve months.
Cut by $2 million. This non-cash charge spreads past loan fees over the life of the debt. It falls because Gray retired the related notes early and wrote off the remaining balance inside the $40 million loss on early extinguishment.
Unchanged. Gray pays 8% a year on $600 million of preferred shares. The figure sits $2 million below the original plan after a June buyback. Gray paid $30 million for $50 million of face value. Gignac said that saves $4 million a year.
Unchanged at $0.08 a share each quarter, about $33 million a year. Gray keeps paying it alongside the preferred dividend while it calls debt reduction the priority.
Cut for the second time, from $140 million in February. Gignac said a couple of station construction projects moved into 2027, so Gray deferred the spending rather than saving it. Nine-month spending was $71 million, which leaves about $44 million for the fourth quarter at the middle of the range.
Cut for the third time this year, from $105-125 million in February. Gray paid $60 million over nine months, so the range leaves about $20 million for the fourth quarter, which matches the figure in the filing.
❓ Key Questions
Why does this year's interest bill rise to $450 million?
Gray swapped its most expensive notes for cheaper ones and promises $40 million of savings next year. Yet it raised this year's interest outlook by $10 million without explanation. The answer shows whether old and new debt overlapped or something else is the cause.
How much of the $161 million add-back is real yet?
The covenant leverage ratio rests on a profit denominator with $161 million of pro forma adjustments, up from $144 million in June. Gignac says synergies are 75-80% in the run rate; the quarter's reported numbers should show which part is already booked.
What will closing the pension plan cost?
The plan terminated on October 1, with a group annuity purchase planned for 2028. The filing says the settlement charge is still under evaluation; a cash top-up would compete with debt reduction in the political-free year.
What did Gray pay for the acquired stations' earnings?
The 2026 deals cost about $330 million in total, and the stations run at a thinner margin than the group before synergies. Without purchase multiples or a target margin, nobody outside the company can check the deleveraging the deals promise.
Where do the Assembly Atlanta land deals stand?
Management promised joint ventures on the studio land throughout 2026. Gray has announced none, the production segment only broke even this quarter, and nobody on the call asked.