Gray Television(US:GTN)2026-02-26 18:14Revenue Performance - Total revenue for Gray Media decreased by $549 million, or 15%, to $3.1 billion in 2025 compared to 2024[193] - Core advertising revenue decreased by $38 million, primarily due to macroeconomic softness, with $9 million generated from Super Bowl broadcasts in 2025 compared to $18 million in 2024[194] - Political advertising revenue plummeted by $455 million, or 92%, in 2025 compared to 2024, reflecting the off-year of the election cycle[194] - Retransmission consent revenue decreased by $53 million, or 4%, in 2025 due to a station ceasing its network affiliation and a decrease in subscribers[194] Expenses - Broadcasting expenses decreased by $78 million, or 3%, to $2.2 billion in 2025[193] - Corporate and administrative expenses increased by $9 million to $113 million in 2025, driven by higher professional services costs related to pending business combinations[196] - Interest expense decreased by $11 million, or 2%, to $474 million in 2025, attributed to a reduction in outstanding debt balance despite an increased average interest rate[202] Taxation - The effective income tax rate increased to 25% in 2025 from 24% in 2024, influenced by various nondeductible expenses and state taxes[205] Debt and Liquidity Management - Gray Media amended its Senior Credit Agreement to increase availability under its Revolving Credit Facility by $70 million to $750 million, extending the term to December 1, 2028[208] - The company issued $1.15 billion in aggregate principal amount of 9.625% Senior Secured Second Lien Notes due 2032 to enhance liquidity and manage debt obligations[208] - The company issued $775 million in 7.25% senior secured first lien notes due 2033, with proceeds allocated to repay $630 million of the 2021 Term Loan, $80 million of the 2024 Term Loan, and $50 million under the Revolving Credit Facility[209] - As of December 31, 2025, the company estimates approximately $450 million in debt interest payments over the next twelve months, with sufficient liquidity expected to meet these obligations[214] - The First Lien Leverage Ratio as of December 31, 2025, was 2.43, below the maximum permitted incurrence of 3.5 to 1.00[221] - The company had a total outstanding principal secured by a first lien of $2,649 million, resulting in a First Lien Adjusted Total Indebtedness of $2,281 million after accounting for cash[221] - Long-term debt, including the current portion, was $5,744 million as of December 31, 2025, up from $5,621 million in 2024[210] - As of December 31, 2025, the principal outstanding of the company's long-term debt was $5.8 billion, compared to $5.7 billion as of December 31, 2024[262] - The fair value of the company's long-term debt was $5.5 billion as of December 31, 2025, up from $4.6 billion in 2024[262] Cash Flow - Net cash provided by operating activities decreased by $462 million to $289 million in 2025, primarily due to a $460 million decrease in net income and an $89 million decrease in cash provided by changes in working capital[211] - Net cash used in investing activities increased by $35 million to $63 million in 2025, mainly due to a decrease in cash proceeds from the sale of investments and other assets[212] - Net cash provided by financing activities was $7 million in 2025, a significant improvement from cash used of $609 million in 2024, with $123 million in net proceeds from principal borrowings[213] Capital Expenditures and Investments - Capital expenditures are expected to be approximately $140 million during 2026, including significant projects at Assembly Atlanta[231] - Gross capital expenditures related to Assembly Atlanta were $34 million in 2025, with cash reimbursements of $33 million received for infrastructure projects[232] - The company acquired WBBJ-TV for total consideration of $25 million on January 1, 2026[236] - Cash proceeds of $10 million were received from the sale of the investment in FreeTV, Inc., with potential additional consideration of up to $6 million[237] Asset Valuation - The recorded value of broadcast licenses was $5.3 billion and goodwill was $2.6 billion as of December 31, 2025[251] - An impairment charge of $2 million was recorded for one broadcast license in 2025, while the fair values of other licenses exceeded their carrying values[248] Inflation and Operating Expenses - The company expects to incur moderate inflation in operating expenses, which may adversely affect future operating results[239] Interest Rate Management - The Securitization Facility allows for up to $400 million in liquidity, with amounts outstanding totaling $400 million as of December 31, 2025[240] - The company entered into interest rate caps on February 23, 2023, limiting the annual interest on variable rate debt to a maximum one-month SOFR rate of 5 percent, plus the Applicable Margin[260] - Aggregate fees paid for the interest rate caps amounted to approximately $34 million as of December 31, 2025[260] - The majority of the company's outstanding debt bore interest at a fixed rate as of December 31, 2025, reducing exposure to potential interest rate increases[261] - The company aims to manage current and forecasted interest rate risk while maintaining financial flexibility and solvency[263] - The company is focused on proactively managing its cost of capital to enhance shareholder value and maintain a competitive advantage[263] - The interest rate caps were amended on June 25, 2024, and during 2025, to align the notional amount with outstanding indebtedness[260] - The company currently has no interest rate or other derivative instruments in place following the expiration of the Rate Caps on December 31, 2025[260] Compliance and Governance - The company is committed to complying with covenant requirements in its financing agreements[263]