Gray Media's Q2 2025: M&A Plans, CBS Switch Impact, and Regulatory Contradictions Unveiled

M&A activity and regulatory environment, impact of CBS affiliation switch, M&A activity and synergies, regulatory environment and M&A strategy, retransmission consent revenue and network affiliate fees are the key contradictions discussed in Gray Media's latest 2025Q2 earnings call.



Revenue and Expense Performance:
- Gray Media reported total revenue of $772 million for Q2 2025, which is a 7% decrease compared to the same quarter in the previous year, but 1% above the high end of their original guidance.
- Additionally, their total operating expenses were slightly below the low end of their original guidance.
- The decrease in revenue was largely due to lower political advertising compared to the previous year.

M&A Activity and Market Expansion:
- The company announced several acquisitions, including stations from Allen Media for a total of $171 million, which will add 10 markets to their portfolio.
- These acquisitions are part of Gray Media's strategy to create 11 new Big 4 full powered duopolies, enhancing their market presence and local news offerings.
- The primary motivation behind these acquisitions was to improve local market presence and leverage sales and sports strategies for enhanced local communities and public interest.

Debt Reduction and Capital Structure:
- Gray Media reduced their outstanding indebtedness by an additional $22 million in Q2 2025 and finished the quarter with a first lien leverage ratio of 2.99x and a leverage ratio of 5.6x.
- In July, they completed an offering of $900 million of senior secured second lien notes, securing access to balance sheet and internally generated capital for debt reduction and deleveraging M&A.
- These actions were part of Gray Media's top capital allocation priority to reduce debt and improve their leverage ratios.

Political Advertising Surprise:
- Political advertising revenue in Q2 2025 exceeded expectations, reaching $9 million compared to the guided range of $2 million to $3 million.
- This performance was attributed to higher spending from issue advertisers supporting the President's legislative priorities and state-level races in Arizona, Georgia, and Virginia.