Gray Media, Inc. (GTN): A Case for Undervaluation Amid Strategic Reinvention and Industry Tailwinds

The Numbers Tell a Contrarian Story

Gray Media, Inc. (NYSE: GTN) has faced headwinds in Q2 2025, with total revenue declining 7% year-over-year to $772 million, driven by an 81% drop in political advertising revenue to $9 million and a 3% decline in core advertising revenue to $361 million, according to its second-quarter results. Adjusted EBITDA fell 25% to $169 million, and the company reported a net loss of $69 million compared to a $9 million profit in Q2 2024, as discussed on the Q2 earnings call. However, these figures mask a compelling narrative of strategic reinvention and undervaluation.

Strategic Debt Reduction and M&A Activity

Gray has taken decisive steps to strengthen its balance sheet, reducing outstanding debt by $22 million and executing $1.675 billion in debt refinancing. Simultaneously, the company has pursued aggressive M&A, including a five-market swap with E.W. Scripps, acquisitions from Sagamore Hill Broadcasting, and the $80 million purchase of Block Communications stations, as detailed in its StockAnalysis profile. These transactions are expected to reduce Gray's leverage ratio by 0.25x and create 11 new duopolies, which are immediately cash flow accretive, according to public comps.

Valuation Metrics Suggest Undervaluation

Gray's current valuation appears disconnected from its fundamentals. As of October 2025, the company trades at an EV/EBITDA multiple of 4.87x, significantly below the broadcasting industry average of 5.2x–10.1x for 2025. Its price-to-earnings (PE) ratio of 3.70x, per its stock quote, also lags behind peers like TEGNA (5.65x) and E.W. Scripps (3.33x), as shown in its PE ratio history, despite a trailing twelve-month (TTM) EBITDA margin of 24.1% reported in the StockAnalysis profile. This discrepancy suggests the market is underappreciating Gray's strategic initiatives and long-term growth potential.

Industry Tailwinds and Market Share Expansion

The broadcasting sector is undergoing a transformative shift, with the global television broadcasting market projected to grow at a 6.1% CAGR, reaching $737.28 billion by 2030, according to a market report. Gray's recent acquisitions, which added six new markets and expanded its duopoly portfolio, position it to capitalize on this growth. The company's focus on retransmission consent revenue (down 1% to $369 million in Q2 2025, per its second-quarter results) and its pivot toward digital platforms align with industry trends, including the rise of over-the-top (OTT) streaming and 5G-driven content delivery highlighted in industry statistics.

Risks and Mitigants

While Gray faces near-term revenue pressures-particularly in core advertising due to the absence of 2024 Olympic Games revenue and softer sector spending, as discussed on the Q2 earnings call-its debt reduction and M&A-driven leverage improvements provide a buffer. The company's enterprise valuation of $6.7 billion (per the StockAnalysis profile) also reflects a discount to its peers, given its robust cash flow generation and asset base.

Conclusion: A Buy for Long-Term Investors

Gray Media's undervaluation is evident when comparing its EV/EBITDA and PE ratios to industry benchmarks. While short-term challenges persist, the company's strategic acquisitions, debt discipline, and alignment with industry growth trends (e.g., OTT expansion, 5G adoption) position it for a re-rating. For investors with a 3–5 year horizon, GTN offers an attractive entry point in a sector poised for structural growth.