Gray Media Q2 revenue falls 7%, but beats estimates

Overview

• Gray Media Q2 revenue falls 7% yr/yr, but beats analysts' expectations

• Net loss attributable to common stockholders of $69 mln due to cyclical decrease in political advertising revenue

• Adjusted EBITDA declines, impacted by reduced political advertising revenue

Outlook

• Company expects Q3 core advertising revenue to decline due to effects of Olympics in year-ago period

• Gray forecasts Q3 political advertising revenue at $6 mln to $7 mln

• Company anticipates full-year interest expense of $460 mln

• Gray sees full-year capital expenditures excluding Assembly Atlanta at $85 mln to $90 mln

Result Drivers

• POLITICAL ADVERTISING - Revenue decreased by 81% due to the off-year in the political advertising cycle

• NETWORK AFFILIATION LOSS - Non-cash impairment of $28 mln due to non-renewal of CBS network affiliation at WANF station

• COST OPTIMIZATION - Efforts to optimize cost structure and improve local content offerings, particularly in sports broadcasting

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 3 "strong buy" or "buy", 2 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the broadcasting peer group is "hold."

• Wall Street's median 12-month price target for Gray Media Inc is $6.00, about 31% above its August 7 closing price of $4.14

• The stock recently traded at 4 times the next 12-month earnings vs. a P/E of 8 three months ago

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