Gray Media Q2 2026 Earnings: Political Advertising Drives Profit Recovery

Gray Media (NYSE: GTN) reported Q2 2026 revenue of $839 million, up 9% from $772 million, while diluted EPS attributable to common stockholders improved to $0.21 from a loss of $0.71. Political advertising and higher net retransmission revenue were the main growth engines, helping net income swing to $14 million from a $56 million loss and adjusted EBITDA rise 27%. However, core advertising remained soft, and first-half operating cash flow declined despite the earnings improvement.

Core earnings data

Acquisitions completed during the first half contributed $41 million to quarterly revenue. Political advertising increased by $74 million year over year—more than Gray’s total revenue increase of $67 million—while core advertising and gross retransmission revenue declined.

Operating income rose faster than revenue because total operating expenses increased by only about 2%. Diluted EPS also included a capital-structure accounting benefit: a $20 million deemed contribution from the preferred-stock repurchase increased income attributable to common stockholders, partly offset by $13 million of preferred dividends.

Adjusted EBITDA is a non-GAAP measure. The operating margin shown above is calculated from Gray’s reported revenue and operating income.

Business and segment performance

Growth was concentrated in election-related advertising and production companies. The 2026 acquisitions contributed $15 million of core advertising, $3 million of political advertising, and $23 million of retransmission consent revenue during the quarter.

Political advertising reached $83 million, above the $47 million recorded in Q2 2024 but below the $90 million generated in Q2 2022. Core advertising declined despite the contribution from acquired stations, indicating that reported results continued to face pressure outside election spending.

Gross retransmission consent revenue fell because of subscriber declines, one station’s transition to independent status, and a distribution dispute that was resolved during the quarter. Net retransmission revenue nevertheless increased because network affiliation fees declined 10% to $209 million from $233 million. Management said net retransmission revenue also returned to year-over-year growth excluding acquisitions, despite a blackout that lasted until May 1.

Earnings improved, but first-half cash conversion weakened

Broadcasting expense increased only 1% to $569 million, even though the 2026 acquisitions added $30 million of expense. Within that total, station expenses rose 9%, while lower network affiliation fees provided an offset. Corporate and administrative expense increased 48% to $37 million, exceeding the $35 million high end of guidance, primarily because transaction-related expense rose to $7 million from $1 million.

Cash flow figures are available for the six months ended June 30 rather than Q2 alone. First-half operating cash flow declined to $124 million from $163 million, even as the net loss narrowed to $6 million from $65 million. A much smaller cash contribution from accounts receivable and a $43 million use of cash related to income tax receivables or prepayments contributed to the weaker cash conversion.

Gray spent $264 million on television acquisitions and $36 million on capital expenditures during the first half. Cash consequently fell to $176 million from $368 million at the end of 2025. Debt principal increased to $5.867 billion from $5.810 billion, while debt principal less cash rose to $5.691 billion from $5.442 billion.

The consolidated total net leverage ratio was 5.73 times at June 30, compared with a maximum permitted incurrence ratio of 7.00 times. Gray also had $745 million available under its revolving credit facility, while its $400 million accounts receivable securitization facility was fully drawn. The board subsequently authorized up to $250 million of liquidity for potential debt repurchases through the end of 2027, with no minimum repurchase requirement.

Earnings guidance

For Q3 2026, Gray expects political advertising and acquired stations to drive a substantial increase in reported revenue. Core advertising, however, is expected to remain approximately flat year over year on an as-reported basis, while both broadcasting and corporate expenses are projected to rise.

Expense guidance excludes depreciation, amortization, and losses on asset disposals. The outlook includes estimated results from stations fully acquired as of August 7, as well as the American Spirit Media and WHPM stations. Gray separately expects 2026 interest expense of $440 million and capital expenditures of $120 million to $130 million; these figures are supplemental guidance rather than full-year revenue or EPS forecasts.

Risks investors should watch

• Core advertising pressure: Q2 core advertising declined despite acquired-station contributions, and Q3 guidance calls for no reported year-over-year growth.
• Dependence on political advertising: Election spending was the largest source of Q2 revenue growth and is central to the Q3 outlook, making results sensitive to the timing and scale of campaign spending.
• Retransmission headwinds: Subscriber declines and station or distribution changes reduced gross retransmission revenue, even though lower affiliation fees protected the net result.
• Leverage and interest costs: Quarterly interest expense was $117 million, close to Q2 operating income of $136 million. Lower cash and weaker first-half operating cash flow also reduced the cushion against a sizable debt balance.
• Acquisition and regulatory execution: Transaction costs pushed corporate expense above guidance, while the remaining American Spirit Media and WHPM assets still require regulatory approval.

Summary

Gray Media’s Q2 profit recovery was driven primarily by election advertising, acquisition contributions, and lower network affiliation fees, while core advertising remained under pressure. Operating leverage improved, but the decline in first-half cash flow and higher debt net of cash keep balance-sheet execution important. Q3 results will depend heavily on whether political advertising reaches the company’s range while acquired stations are integrated without further expense pressure.