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GRAY TELEVISION INC (GTN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $1.045B, up 21% year-over-year, with expenses coming in 2% below the low end of guidance; diluted EPS was $1.59 and Adjusted EBITDA reached $402M, driven by $250M of political advertising .
  • Management highlighted better-than-guided revenue and expense outcomes and reduced principal debt by $520M in 2024; year-end First Lien leverage was 2.97x and total leverage 5.49x (net of $135M cash) .
  • Q1 2025 guidance: core advertising down 7–8% YoY due to Super Bowl airing on fewer GTN FOX markets vs last year’s CBS footprint and one less selling day (Leap Day); excluding those, core is guided down 3–5% (cost actions tracking to ~$60M annual run-rate) .
  • Potential stock reaction catalysts: accelerating local sports carriage footprint (Braves, Grizzlies, additional MLB/NBA/NHL simulcasts) and signs of regulatory relief (affiliate economics and NextGen TV) alongside continued deleveraging discipline .

What Went Well and What Went Wrong

What Went Well

  • “Our results for the fourth quarter finished better than our guidance on both revenues and expenses,” with total revenue +21% YoY and operating expenses (pre-D&A and asset disposals) 2% below guidance low end .
  • Debt reduction and leverage improvement: $520M principal repaid in 2024; First Lien leverage 2.97x and total leverage 5.49x at year end; $250M authorization remains for open market debt repurchases .
  • Affiliate economics improving: ABC renewals to 2028 and first-ever YoY decrease in network affiliation fees in 2024, which management expects to continue or accelerate .

What Went Wrong

  • Core advertising declined 8% YoY in Q4 due to political displacement, and autos remain cautious amid tariff uncertainty and higher rates; core ad softness expected to carry into Q1 (down 7–8%) .
  • Retransmission consent dipped modestly (–1% YoY in Q4), with MVPD subs still declining, though management sees signs of moderation; full-year retrans fell 3% .
  • Production companies revenue was flat vs 2022 in Q4 and impacted by industry strikes and slower ramp, with utilization ~70% and staged bookings still building toward higher occupancy .

Financial Results

Income Statement Snapshot (Quarterly progression)

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Billions)$0.826 $0.950 $1.045
Operating Income ($USD Millions)$152 $250 $325
Net Income Attributable to Common ($USD Millions)$9 $83 $156
Diluted EPS ($)$0.09 $0.86 $1.59
Adjusted EBITDA ($USD Millions)$225 $338 $402

Segment/Category Revenue (Quarterly progression)

Category ($USD Millions)Q2 2024Q3 2024Q4 2024
Core Advertising$373 $365 $380
Political Advertising$47 $173 $250
Retransmission Consent$371 $369 $361
Production Companies$18 $26 $37
Other$17 $17 $17
Total Revenue$826 $950 $1,045

Year-over-Year (Q4 2024 vs Q4 2023)

MetricQ4 2023Q4 2024YoY Change
Total Revenue ($USD Millions)$864 $1,045 +21%
Core Advertising ($USD Millions)$415 $380 –8%
Political Advertising ($USD Millions)$33 $250 +658%
Retransmission ($USD Millions)$365 $361 –1%
Adjusted EBITDA ($USD Millions)$216 $402 +86%
Diluted EPS ($)($0.24) $1.59 N/M

KPIs and Balance Sheet

KPIQ3 2024Q4 2024
First Lien Leverage Ratio (x)3.00x (net of $69M cash) 2.97x (net of $135M cash)
Total Leverage Ratio (x)5.67x 5.49x
Cash ($USD Millions)$69 $135
Long-term Debt, net of deferred financing costs ($USD Millions)$5,893 $5,621
Revolver Availability ($USD Millions)$674 $674

Note: Consensus estimates from S&P Global for Q4 2024 were unavailable at time of analysis due to data access limits.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core Advertising (YoY)Q1 2025N/ADown ~7–8% YoY; excl. Super Bowl & Leap Day: down 3–5%New disclosure
Super Bowl RevenueQ1 2025N/A$9M on FOX channels (vs $18M on CBS in 2024; $6M on FOX in 2023)Informational
Operating Expense Run-Rate SavingsQ1 2025~$60M annualized (announced Nov 2024) Achieve or exceed $60M run-rate in Q1 2025Maintained/Executing
Interest Expense (excl. amortization)FY 2024 vs FY 2025FY 2024: ~$470M FY 2025: ~$450MLowered
Total Capex (excl. Assembly)FY 2024 vs FY 2025FY 2024: $100M FY 2025: $85–$90MLowered
Assembly Atlanta Capex (net of reimbursements)FY 2024 vs FY 2025FY 2024: $35M FY 2025: $0Lowered
Income Tax Payments (net of refunds)FY 2024 vs FY 2025FY 2024: $133M FY 2025: $80–$100MLowered
Dividend (Common)Ongoing$0.08/share quarterly (Nov 2024) $0.08/share declared Feb 27, 2025 (on call)Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Core Ad Demand & AutosQ2: Core soft; cost controls; Q3: core up 1% YoY but hurricane impacts; political displacement anticipated Auto advertisers cautious amid tariff and rate uncertainty; Q1 core down 7–8% YoY, improving through quarter Soft near-term, stabilizing into Q2
Political AdvertisingQ2: Early strong; Q3: $173M; FY $495–$500M guided Q4: $250M; FY 2024 actual $497M, highest among peers on total/per TV HH basis (company estimate) Very strong cycle; sets stage for 2026
Retrans & AffiliatesQ2/Q3: retrans trend pressured by MVPD subs; ABC affiliate renewals First-ever YoY decrease in network affiliate fees in 2024; expect further decline; rebalancing with CBS/FOX/NBC renewals in 2025 Improving affiliate economics
Local Sports RightsQ2/Q3: growing footprint (Suns; regional packages) Expanded: Braves preseason/regular season; Grizzlies; Royals, Blues, Hornets; broader halo effect on ad clients Accelerating expansion and monetization
Regulatory/NextGen TVQ3: Washington focus; MVPD control on vMVPDs Push for market rule relaxation; NextGen TV progress needed; optimism for 2025 regulatory environment Potential medium-term tailwind
Cost ContainmentQ2/Q3: announced ~$60M annualized run-rate 2/3 to 3/4 of savings flowing through Q1; aim to keep expense growth below inflation, potentially negative Executing and expanding initiatives

Management Commentary

  • “We are very happy to announce that our results for the fourth quarter finished better than our guidance on both revenues and expenses.” — Hilton Howell, CEO .
  • “We booked the first ever year-over-year decrease in network affiliation fees in 2024, which we anticipate will continue and even accelerate.” — Jeff Gignac, CFO .
  • “Excluding Super Bowl and Leap Day, our core advertising revenue guide for the first quarter 2025 is down 3% to 5%.” — Pat LaPlatney, Co-CEO .
  • “We reduced our principal balance by $520 million during 2024… and continue to have our $250 million authorization available for further open market repurchases.” — Jeff Gignac, CFO .
  • “We anticipate having local sports product in 75 to 80 Gray markets by the end of the first quarter.” — Pat LaPlatney, Co-CEO .

Q&A Highlights

  • Core advertising trajectory: Management expects potential full-year growth in core as challenged categories improve; near-term softness led by autos given tariff/price uncertainty .
  • Expense outlook: ~67–75% of $60M savings flows in Q1; ongoing initiatives to keep expense growth below inflation and possibly turn negative .
  • Retrans and affiliate economics: Not providing full-year retrans guidance pending CBS/FOX/NBC renewals; 2024 saw first YoY decrease in network fees, with further declines anticipated .
  • Assembly Atlanta ROI: ~70% stage occupancy; bookings building post-strikes; plans to monetize remaining acreage via partnerships with minimal balance sheet impact .
  • Debt management: Targeting manageable 2027 maturity (~$528M) via liquidity, revolver, or market access; opportunistic repurchases guided by market pricing .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS and Revenue was unavailable due to access limits at time of analysis; therefore, beat/miss vs Wall Street could not be formally assessed. Values would typically be retrieved from S&P Global; unavailable at this time.
  • Implication: With actual revenue ($1.045B) and diluted EPS ($1.59) both strong and expenses below guidance, expectations for near-term estimate revisions likely focus on Q1 2025 core trajectory (down 7–8% reported, but improving intra-quarter) and lower FY 2025 interest/capex/tax guidance .

Key Takeaways for Investors

  • Q4 outperformed guidance on both revenue and expenses; political advertising drove outsized EBITDA and EPS, while cost actions provided incremental support .
  • Deleveraging remains the primary capital allocation priority; $520M principal reduction in 2024, lower leverage, and $250M authorization for opportunistic debt repurchases offer ongoing interest savings and flexibility .
  • Near-term core advertising is pressured (autos, Super Bowl footprint shift, Leap Day); management sees improvement through Q1 and more encouraging Q2 pacing; watch for stabilization and category recovery .
  • Affiliate economics turning favorable: first YoY decline in network fees with renewals (ABC extended; CBS/FOX/NBC upcoming); retrans declines may moderate as MVPD trends improve at the margin .
  • Local sports is an expanding growth lever with a demonstrated halo effect on broader station ad demand; footprint likely to reach 75–80 markets, supporting audience and monetization .
  • 2025 outlook benefits from lower interest expense ($450M), reduced capex ($85–$90M; $0 for Assembly net), and lower cash taxes ($80–$100M), which should aid free cash flow and deleveraging cadence .
  • Regulatory tailwinds (market rule relaxation, NextGen TV momentum, affiliate distribution on vMVPDs) could improve industry structure and station economics over the medium term .