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GRAY MEDIA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions)

See notes to condensed consolidated financial statements.

GRAY MEDIA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except for share data)

See notes to condensed consolidated financial statements.

GRAY MEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except for per share data)

See notes to condensed consolidated financial statements.

GRAY MEDIA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

(in millions)

See notes to condensed consolidated financial statements.

GRAY MEDIA, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

(in millions, except for number of shares)

See notes to condensed consolidated financial statements.

GRAY MEDIA, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 

(in millions) 

See notes to condensed consolidated financial statements.

GRAY MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Common stock equivalents for restricted shares

Weighted-average shares outstanding-diluted

Adjustment to fair value of interest rate caps

Income tax benefit

Accumulated other comprehensive loss

Buildings and improvements

Equipment

Construction in progress

Accumulated depreciation

Total property and equipment, net

Maintenance, repairs and minor replacements are charged to operations as incurred; major replacements and betterments are capitalized. The cost of any assets divested, sold or retired and the related accumulated depreciation are removed from the accounts at the time of disposition, and any resulting gain or loss is reflected in income or expense for the period.

We incurred costs to build public infrastructure within the Assembly Atlanta project. Pursuant to our Purchase and Sale Agreement with the Doraville Community Improvement District (the “CID”), we receive cash reimbursements for the transfer of specific infrastructure projects to the CID and for other construction costs previously incurred. We received cash proceeds from the CID totaling $ million and $ million during the six month periods ended June 30, 2025 and 2024, respectively.

The following tables provide additional information related to loss on disposal of assets, net included in our condensed consolidated statements of operations and purchases of property and equipment included in our condensed consolidated statements of cash flows (in millions):

Net book value of assets disposed

Discount - Securitization Facility

Total

Purchase of property and equipment:

Recurring purchases - operations

Assembly Atlanta development

Total

Under the Securitization Facility, the SPV sells to the Purchasers certain receivables, including all rights, title, and interest in the related receivables (“Sold Receivables”). The parties intend that the conveyance of accounts receivables to the Purchasers, for the ratable benefit of the Purchasers, will constitute a purchase and sale of receivables and not a pledge for security. The SPV has guaranteed to each Purchaser the prompt payment of Sold Receivables, and to secure the prompt payment and performance of such guaranteed obligations, the SPV has granted a security interest to the Purchasers in all assets of the SPV. In our capacity as servicer under the Securitization Facility, we are responsible for administering and collecting receivables and have made customary representations, warranties, covenants and indemnities. We do not record a servicing asset or liability since the estimated fair value of the servicing of the receivables approximates the servicing income. We also provided a performance guarantee for the benefit of the Purchasers.

The Securitization Facility is subject to interest charges at the adjusted one-month Secured Overnight Financing Rate (“SOFR”) plus a margin (-point basis) on the amount of the outstanding facility. The SPV was required to pay an upfront fee and a commitment fee in connection with the Securitization Facility. The SPV is a separate legal entity with its own separate creditors who will be entitled to access the SPV’s assets before the assets become available to us. As a result, the SPV’s assets are not available to pay our creditors or any of our subsidiaries, although collections from the receivables in excess of any amounts required to repay the Purchasers under the Securitization Facility and other creditors of the SPV may be remitted to us.

The proceeds of the Securitization Facility are classified as operating activities in our Consolidated Statement of Cash Flows. Cash received from collections of Sold Receivables is used by the SPV to fund additional purchases of receivables on a revolving basis or to return all or any portion of outstanding capital of the Purchasers. Subsequent collections on the pledged receivables, which have not been sold, will be classified as operating cash flows at the time of collection.

The amount sold to the Purchasers was $ million and $ million at June 30, 2025 and December 31, 2024, respectively, which was derecognized from the respective Consolidated Balance Sheets. As collateral against sold receivables, the SPV maintains a certain level of unsold receivables, which was $ million and $ million at June 30, 2025 and December 31, 2024, respectively. Total receivables sold under the Securitization Facility were $ million and $ million in the six-months ended June 30, 2025 and 2024, respectively.

The following table provides a roll-forward of the allowance for credit losses. The allowance is deducted from the amortized cost basis of accounts receivable in our condensed consolidated balance sheets (in millions):

Provision for credit losses

Amounts written off

Ending balance

The following table presents our deferred revenue by type (in millions):

Other deposit liabilities

Total deferred revenue

Disaggregation of Revenue. Revenue from our production companies segment, is generated through our direct sales channel. Revenue from our broadcast and other segment, is generated through both our direct and advertising agency intermediary sales channels. The following table presents our revenue from contracts with customers disaggregated by type of service and sales channel (in millions):

Political

Total advertising

Retransmission consent

Production companies

Other

Total revenue

Sales channel:

Direct

Advertising agency intermediary

Total revenue

2024 Term Loan (matures June 4, 2029)

Senior secured first lien notes:

2029 Notes (matures July 15, 2029)

Senior unsecured notes:

2026 Notes (matures July 15, 2026)

2027 Notes (matures May 15, 2027)

2030 Notes (matures October 15, 2030)

2031 Notes (matures November 15, 2031)

Total outstanding principal, including current portion

Unamortized deferred loan costs - Senior Credit Facility

Unamortized deferred loan costs - 2027 Notes

Unamortized deferred loan costs - 2029 Notes

Unamortized deferred loan costs - 2030 Notes

Unamortized deferred loan costs - 2031 Notes

Less current portion

Long-term debt, less current portion and deferred financing costs

Revolving Credit Facility:

Revolving Credit Facility commitment

Undrawn outstanding letters of credit

Borrowing availability under Revolving Credit Facility

Revolving Credit Facility. On March 31, 2025, we entered into a fourth amendment (the “Fourth Amendment”) of our Senior Credit Agreement. The Fourth Amendment, among other things, increases the aggregate commitments under the Revolving Credit Facility (the “Revolving Credit Facility”) by $ million, resulting in aggregate commitments under the Revolving Credit Facility of $ million. Borrowings under the Revolving Credit Facility bear interest, at our option, at either the SOFR rate or the Base Rate, in each case, plus an applicable margin. The costs associated with the amendment were not material.

Because of their relationship to the interest rate caps, described below, borrowings under the 2021 Term Loan and 2019 Term Loan bear interest at the 1-month SOFR rate, plus applicable margin. As of June 30, 2025, the interest rate on the balance outstanding under the 2024 Term Loan and the 2021Term Loan were % and %, respectively.

Interest Rate Caps. On February 23, 2023, we entered into two interest rate caps pursuant to an International Swaps and Derivatives Association Master Agreement (the “ISDA Master Agreement”) with two counterparties, Wells Fargo Bank, NA and Truist Bank, respectively. On May 30, 2025, we amended the notional amount of the interest rate caps in order to better match the outstanding amounts of the related outstanding indebtedness. At June 30, 2025 and December 31, 2024, the caps had a combined notional value of approximately $ billion and mature on December 31, 2025. The interest rate caps protect us against adverse fluctuations in interest rates by reducing our exposure to variability in cash flows on a portion of our variable-rate debt. The interest rate caps are designated as cash flow hedges of our risk of changes in our cash flows attributable to changes in 1-month SOFR on our outstanding variable-rate debt in accordance with ASC 815. We elected to apply the optional expedient in ASC 848, Reference Rate Reform, that enabled us to consider the amended swaps a continuation of the existing contracts. As a result, the transition did not have an impact on our hedge accounting or a material impact to our financial statements.

The interest rate caps, as amended, effectively limit the annual interest charged on our 2021 Term Loan and our 2024 Term Loan to a maximum of 1-month Adjusted Term SOFR of 4.96% and 5.047%. We are required to pay aggregate fees in connection with the interest rate caps of approximately $ million that is due and payable at maturity on December 31, 2025. On the initial designation date, we recognized an asset and corresponding liability for the deferred premium payable equal to $34 million. The asset is amortized into interest expense straight-line over the term of the hedging relationship. At June 30, 2025 and December 31, 2024, the recorded value of the asset was $ million and $ million, net of accumulated amortization, respectively. At June 30, 2025 and December 31, 2024, the fair value of the derivative liability was $ million and $ million, respectively. We present the deferred premium, the asset, and the fair value of the derivative, net within other accrued expenses in our condensed consolidated balance sheets.

The ISDA Master Agreement, together with its related schedules, contain customary representations, warranties and covenants. The interest rate caps were not entered into for speculative trading purposes. Changes in the fair value of the interest rate caps are reported as a component of other comprehensive income. Actual gains and losses are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and are presented in the same income statement line item as the earnings effect of the hedged transaction. Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness are recognized currently in earnings and are presented in the same line of the income statement for the hedged item. We recognized $ million of amortization expense for the asset during each of the six months ended June 30, 2025 and 2024, which is included as a component of cash flows from operating activities in our condensed consolidated statements of cash flows. Cash flows received from the counterparties pursuant to the interest rate caps are included as components of cash flows from financing activities in our condensed consolidated statements of cash flows. During the six months ended June 30, 2025, we did not receive a refund of interest under the rate caps. During the six months ended June 30, 2025 we did not receive any amounts under the interest rate caps. During the six months ended June 30, 2024, we received $ million of cash payments from the counterparties that we reclassified as reductions of interest expense from the interest rate caps in our condensed consolidated statements of operations.

For all of our interest bearing obligations, we made interest payments of approximately $ million and $ million during the six-months ended June 30, 2025 and 2024, respectively. During the six-months ended June 30, 2025 and 2024, we capitalized $ million and $ million of interest payments, respectively, related to the Assembly Atlanta project.

As of June 30, 2025, the aggregate minimum principal maturities of our long-term debt for the remainder of 2025 and the succeeding 5 years were as follows (in millions):

2026

2027

2028

2029

2030

Thereafter

Total

As of June 30, 2025, there were no significant restrictions on the ability of our subsidiaries to distribute cash to us or to the guarantor subsidiaries. The 2019 Senior Credit Agreement contains affirmative and restrictive covenants with which we must comply. The 2026 Notes, the 2027 Notes, the 2029 Notes, the 2030 Notes and the 2031 Notes also include covenants with which we must comply. As of June 30, 2025 and December 31, 2024, we were in compliance with all required covenants under all our debt obligations.

The fair value of our interest rate caps are based on observable estimates provided by the counterparties and, as such, are classified within Level 2 of the fair value hierarchy. At June 30, 2025, the fair value of the interest caps was a liability of $ million, and is recorded within other accrued expenses in our condensed consolidated balance sheets. At December 31, 2024, the fair value of the interest caps was a liability of $ million, and was recorded within other long-term liabilities in our condensed consolidated balance sheets.

Our common stock and Class A common stock are entitled to receive cash dividends if declared, on an equal per-share basis. The Board of Directors declared a quarterly cash dividend of $ per share on our common stock and Class A common stock to shareholders of record on March 14, 2025, June 13, 2025, March 15, 2024 and June 14, 2024, payable on March 31, 2025, June 30, 2025, March 28, 2024 and June 28, 2024, respectively. The total dividends declared and paid during the six-months ended June 30, 2025 and 2024 was $ million and $ million, respectively.

Under our various employee benefit plans, we may, at our discretion, issue authorized and unissued shares, or previously issued shares held in treasury, of our Class A common stock or common stock. As of June 30, 2025, we had reserved million shares and million shares of our common stock and Class A common stock, respectively, for future issuance under various employee benefit plans.

During the six-month period ended June 30, 2025, we contributed $ million in matching cash contributions to the 401(k) plan. Based upon employee participation as of June 30, 2025, during the remainder of 2025, we expect to contribute $ million of matching cash contributions to this plan.

Income tax benefit at our statutory rate associated with stock-based compensation

Stock-based compensation expense, net

All shares of common stock and Class A common stock underlying outstanding restricted stock units and performance awards are counted as issued at target levels under the 2022 EICP for purposes of determining the number of shares available for future issuance.

A summary of restricted common stock and Class A common stock activity for the six-month periods ended June 30, 2025 and 2024, respectively, is as follows:

Granted (1)

Vested

Forfeited

Outstanding - end of period (1)

Restricted stock - Class A common:

Outstanding - beginning of period (1)

Granted (1)

Vested

Outstanding - end of period (1)

Restricted stock units - common stock:

Outstanding - beginning of period

Granted

Vested

Forfeited

Outstanding - end of period

(1)         For awards subject to future performance conditions, amounts assume target performance.

Cash flow movements related to our lease activities are included in other assets and accounts payable and other liabilities as presented in net cash provided by operating activities in our condensed consolidated statement of cash flows for the six-months ended June 30, 2025 and 2024.

As of June 30, 2025, the weighted-average remaining term of our operating leases was approximately years. The weighted-average discount rate used to calculate the values associated with our operating leases was %. The table below describes the nature of our lease expense and classification of operating lease expense recognized in the three and six-months ended June 30, 2025 and 2024, respectively (in millions):

Short-term lease expense

Total lease expense

The maturities of operating lease liabilities as of June 30, 2025, for the remainder of 2025 and the succeeding five years were as follows (in millions):

2026

2027

2028

2029

Thereafter

Total lease payments

Less: Imputed interest

Present value of lease liabilities

As a Lessor. We lease or sublease our owned or leased production facilities, land, towers and office space through operating leases with third parties. Payments received associated with these leases consist of fixed and variable payments. Fixed payments are received for the rental of space including fixed rate rent escalations over the applicable term of the lease agreements. Variable payments are received for short-term rental of space, variable rent escalations and reimbursement of operating costs related to the asset leased or subleased.

We recognize revenue from fixed payments on a straight-line basis over the applicable term of the lease agreements, whose lives range between one and years. The excess of straight-line revenue recognized over the fixed payments received is recorded as deferred rent receivable in other assets on our condensed consolidated balance sheets. The deferred rent receivable balance was $ million and $ million as of June 30, 2025 and December 31, 2024, respectively. We recognize revenue from variable payments each period as earned.

Cash flow activities related to our lease activities for assets we lease to third parties are included in other assets and accounts receivable as presented in net cash provided by operating activities in our condensed consolidated statement of cash flows.

The following table describes the nature of our lease revenue and classification of operating lease revenue recognized in the three and six-months ended June 30, 2025 and 2024 (in millions):

Variable lease revenue

Total operating lease revenue

The following table presents our future minimum rental receipts for non-cancelable leases and subleases as of June 30, 2025 (in millions):

2026

2027

2028

2029

Thereafter

Total lease receipts

Broadcast licenses

Finite-lived intangible assets

Total intangible assets net of accumulated amortization

A summary of changes in our goodwill and other intangible assets, on a net basis, for the six-months ended June 30, 2025 is as follows (in millions):

Goodwill

Intangible assets subject to amortization:

Network affiliation agreements

Other finite lived intangible assets

Total intangibles

Amortization expense for the six-months ended June 30, 2025 and 2024 was $ million and $ million, respectively. Based on the current amount of intangible assets subject to amortization, we expect that amortization expense for the remainder of 2025 will be approximately $ million, and, for the succeeding five years, amortization expense will be approximately as follows: 2026, $ million; 2027, $ million; 2028, $ million; 2029, $ million; and 2030, $ million. If and when acquisitions and dispositions occur in the future, actual amounts may vary materially from these estimates.

.

Effective income tax rate

We estimate our differences between taxable income or loss and recorded income or loss on an annual basis. Our tax provision for each quarter is based upon these full year projections, which are revised each reporting period. These projections incorporate estimates of permanent differences between U.S. GAAP income or loss and taxable income or loss, state income taxes and adjustments to our liability for unrecognized tax benefits to adjust our statutory federal income tax rate of % to our effective income tax rate. For the 2025 six-month period, these estimates increased or decreased our statutory federal income tax benefit rate of % as a result of permanent differences that resulted in a decrease of %, state income taxes that resulted in a decrease of 3%, and discrete items that resulted in a decrease of 4%. For the six-months ended June 30, 2024, these estimates increased or decreased our statutory federal income tax rate of % as a result of state income taxes that resulted in an increase of %, permanent differences that resulted in an increase of 1% and changes to our reserves that resulted in a decrease of 2%.

During the six-months ended June 30, 2025, we made $ million of federal and state income tax payments, net of refunds. As of June 30, 2025, we have an aggregate of approximately $ million of various state operating loss carryforwards, of which we expect that approximately $ million will not be utilized due to section 382 limitations and those that will expire prior to utilization. After applying our state effective tax rate, this amount is included in our valuation allowance for deferred tax assets.

Less:⁽¹⁾

Payroll and employee benefits

Network affiliation fees

Programming

Depreciation and amortization

Impairment of intangible assets

Other segment items⁽²⁾

Segment operating income (loss)

Other income (expense):

Miscellaneous income, net

Interest expense

Gain on early extinguishment of debt

Loss before income tax

Capital expenditures (excluding business combinations)

Goodwill

Investments in broadcasting and technology companies

Total assets

For the six months ended June 30, 2024:

Revenue (less agency commissions)

Less:⁽¹⁾

Payroll and employee benefits

Network affiliation fees

Programming

Depreciation and amortization

Other segment items⁽²⁾

Segment operating income (loss)

Other income (expense):

Miscellaneous income, net

Interest expense

Loss on early extinguishment of debt

Income before income tax

Capital expenditures (excluding business combinations)

Investments in broadcasting and technology companies

Total assets

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. Intersegment expenses are included within the amounts shown.

(2) Other segment items for each reportable segment includes (gain) loss on disposal of assets, professional services expense, repairs and maintenance expense, occupancy expense (including property tax expense), and certain overhead expenses.

On August 1, 2025, we announced that we reached an agreement with BCI to acquire its television stations for $ million. The transaction includes WDRB (FOX) and WBKI (CW) in Louisville, Kentucky (DMA 49), where Gray owns WAVE (NBC). The transaction also includes WAND (NBC) in the Springfield-Champaign-Decatur, Illinois, market (DMA 92), and WLIO (NBC) and associated low power television stations in Lima, Ohio (DMA 190).

On August 8, 2025, we announced that we reached an agreement with AMG to acquire AMG’s television stations in ten markets for $ million, as follows:

We anticipate closing the transactions with Scripps, SGH, BCI and AMG in the fourth quarter of this year following receipt of regulatory approvals, including certain waivers, and other customary approvals.

Refinancing activities. On July 18, 2025, we issued $ million in aggregate principal amount of % Senior Secured Second Lien Notes due 2032 (the “2032 Notes”) pursuant to an indenture, dated as of July 18, 2025, between us, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent (the “2032 Notes Indenture”). The 2032 Notes were issued at par. Interest in the 2032 Notes accrues from July 18, 2025, and is payable semiannually, on January 15 and July 15 of each year, beginning on January 15, 2026.

The net proceeds from the 2032 Notes together with $ million borrowed under our Revolving Credit Facility, were used to repurchase all $ million of face value of our outstanding % 2027 Notes; to repay $ million of our 2024 Term Loan under the Senior Credit Agreement; and pay transaction expenses incurred in connection with the offering.

The 2032 Notes and related guarantees are our senior secured second lien obligations. The 2032 Notes:

On July 18, 2025, we entered into an amendment to the Senior Credit Agreement (the “Fifth Amendment” and as amended, including by the Fifth Amendment, the “Fifth Amended Senior Credit Agreement”), dated as of December 1, 2021. The Fifth Amendment, among other things, provided for an increase in the Revolving Credit Facility by $ million, resulting in aggregate commitments under the Revolving Credit Facility of $ million and an extension of the term of the commitments under the Revolving Credit Facility to December 31, 2028.

On July 25, 2025, we issued $ million in aggregate principal amount of % Senior Secured First Lien Notes due 2033 (the “2033 Notes”) pursuant to an indenture, dated as of July 25, 2025, between us, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent (the “2033 Notes Indenture”). The 2033 Notes were issued at par. Interest in the 2033 Notes accrues from July 25, 2025, and is payable semiannually, on February 15 and August 15 of each year, beginning on February 15, 2026.

The net proceeds from the 2033 Notes were used to repay the following amounts under our Senior Credit Agreement, $ million of our 2021 Term Loan; $ million of our 2024 Term Loan; all $ million outstanding under our Revolving Credit Facility and pay transaction expenses incurred in connection with the offering.

The 2033 Notes and related guarantees are our senior secured first lien obligations. The 2033 Notes:

As a result of each of these refinancing subsequent events, we expect to record a loss on early extinguishment of debt in the third quarter of 2025. The amount of this loss is not presently determinable.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

Introduction. The following discussion and analysis of the financial condition and results of operations of Gray Media, Inc. and its consolidated subsidiaries (except as the context otherwise provides, “Gray Media,” “Gray,” the “Company,” “we,” “us” or “our”) should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included elsewhere herein, as well as with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) filed with the SEC.

Business Overview. We are a multimedia company headquartered in Atlanta, Georgia. We are the nation’s largest owner of top-rated local television stations and digital assets serving 113 television markets that collectively reach approximately 37 percent of US television households. The portfolio includes 78 markets with the top-rated television station and 99 markets with the first and/or second highest rated television station, as well as the largest Telemundo Affiliate group with 44 markets. We also own Gray Digital Media, a full-service digital agency offering national and local clients digital marketing strategies with the most advanced digital products and services. Our additional media properties include video production companies Raycom Sports, Tupelo Media Group, and PowerNation Studios, and studio production facilities Assembly Atlanta and Third Rail Studios. 

Our operating revenues are derived primarily from broadcast and internet advertising, retransmission consent fees and, to a lesser extent, other sources such as production of television and event programming, television commercials, production studio rentals, tower rentals and management fees. For the six-months ended June 30, 2025 and 2024, we generated revenue of $1.6 billion in each period.

Revenues, Operations, Cyclicality and Seasonality. Broadcasting advertising is sold for placement generally preceding or following a television station’s network programming and within local and syndicated programming. Broadcasting advertising is sold in time increments and is priced primarily on the basis of a program’s popularity among the specific audience an advertiser desires to reach. In addition, broadcasting advertising rates are affected by the number of advertisers competing for the available time, the size and demographic makeup of the market served by the station and the availability of alternative advertising media in the market area. Broadcasting advertising rates are generally the highest during the most desirable viewing hours, with corresponding reductions during other hours. The ratings of a local station affiliated with a major network can be affected by ratings of network programming. Most advertising contracts are short-term, and generally run only for a few weeks.

We also sell internet advertising on our stations’ websites and mobile apps. These advertisements may be sold as banner advertisements, video advertisements and other types of advertisements or sponsorships.

Our broadcasting and internet advertising revenues are affected by several factors that we consider to be seasonal in nature. These factors include:

We derived a material portion of our non-political broadcast advertising revenue from advertisers in a limited number of industries, particularly the services sector, comprising financial, legal and medical advertisers, and the automotive industry. The services sector has become an increasingly important source of advertising revenue over the past few years. During the six-months ended June 30, 2025 and 2024 approximately 25% and 23%, respectively, of our broadcast advertising revenue (excluding political advertising revenue) was obtained from advertising sales to the services sector. During the six-months ended June 30, 2025 and 2024 approximately 15% and 18%, respectively, of our broadcast advertising revenue (excluding political advertising revenue) was obtained from advertising sales to automotive customers. Revenue from these industries may represent a higher percentage of total revenue in odd-numbered years due to, among other things, the increased availability of advertising time, as a result of such years being the “off year” of the two-year election cycle.

Our primary broadcasting operating expenses are employee compensation, related benefits and programming costs. In addition, the broadcasting operations incur overhead expenses, such as maintenance, supplies, insurance, rent and utilities. A large portion of the operating expenses of our broadcasting operations is fixed. We continue to monitor our operating expenses and seek opportunities to reduce them where possible.

Please see our “Results of Operations” and “Liquidity and Capital Resources” sections below for further discussion of our operating results.

Revenue

Set forth below are the principal types of revenue, less agency commissions, earned by us for the periods indicated and the percentage contribution of each type of revenue to our total revenue (dollars in millions):

Results of Operations

Three-Months Ended June 30, 2025 (“the 2025 three-month period”) Compared to Three-Months Ended June 30, 2024 (“the 2024 three-month period”)

Revenue. Total revenue decreased by $54 million or 7%, in the 2025 three-month period. During the 2025 three-month period:

Broadcasting Expenses. Broadcasting expenses (before depreciation, amortization and gain or loss on disposal of assets) decreased by $2 million, or less than 1%, to $563 million in the 2025 three-month period. During the 2025 three-month period:

Production Company Expenses. Production company operating expenses increased by $6 million or 43% in the 2025 three-month period compared to the 2024 three-month period due to increases in property taxes and professional services.

Corporate and Administrative Expenses. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) decreased by $3 million or 11% to $25 million, in the 2025 three-month period due primarily to decreases in promotional expenses, compared to the 2024 three-month period. Non-cash stock-based compensation expenses were $5 million in each of the 2025 and 2024 three-month periods.

Depreciation. Depreciation of property and equipment totaled $32 million for the 2025 three-month period and $36 million for the 2024 three-month period. Depreciation decreased primarily due to assets becoming fully depreciated.

Amortization. Amortization of intangible assets totaled $28 million in the 2025 three-month period and $32 million in the 2024 three-month period. The decrease in amortization expense was the result of finite-lived intangible assets becoming fully amortized and the impairment of certain finite-lived intangible assets related to the changes to the newtork affiliation at one station.

Impairment of intangible assets. During the 2025 three-month period, we recorded a non-cash impairment charge of $28 million related to the changes to the network affiliation at one station.

Gain on Disposal of Assets, Net. Gain on disposal of assets was $6 million in the 2025 three-month period, primarily due to a gain on the sale of easements and assignment of leases at some of our television broadcast tower sites in the 2025 three-month period. In the 2024 three-month period we reported a gain of $1 million.

Interest Expense. Interest expense decreased by $1 million to $117 million for the 2025 three-month period compared to $118 million in the 2024 three-month period primarily due to decreases in our outstanding debt and interest rates on our floating rate Senior Credit Agreement, partially offset by increased interest expenses on our 2029 Notes.

Income Tax Expense. During the 2025 and 2024 three-month periods, we recognized income tax expense of $21 million and $7 million, respectively. For the 2025 three-month period and the 2024 three-month period, our effective income tax rate was (60%) in the 2025 three-month period and 24% in the 2024 three-month period. We estimate our differences between taxable income or loss and recorded income or loss on an annual basis. Our tax provision for each quarter is based upon these full-year projections which are revised each reporting period. These projections incorporate estimates of permanent differences between U.S. GAAP income or loss and taxable income or loss, state income taxes and adjustments to our liability for unrecognized tax benefits. For the 2025 three-month period, these estimates increased or decreased our statutory federal income tax benefit rate of 21% as a result of permanent differences that resulted in a decrease of 67% and state income taxes that resulted in a decrease of 14%.         

Six-months Ended June 30, 2025 (“the 2025 six-month period”) Compared to Six-months Ended June 30, 2024 (“the 2024 six-month period”)

Revenue. Total revenue decreased by $95 million, or 6% in the 2025 six-month period. During the 2025 six-month period:

Broadcasting Expenses. Broadcasting expenses (before depreciation, amortization and gain or loss on disposal of assets) decreased by $8 million, or 1%, to $1.1 billion in the 2025 six-month period. During the 2025 six-month period:

Production Company Expenses. Production company operating expenses (before depreciation, amortization and gain or loss on disposal of assets) were $40 million in the 2025 six-month period, an increase of $5 million compared to $35 million in the 2024 six-month period primarily due to increases in property taxes.

Corporate and Administrative Expenses. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) were $57 million and $56 million in the 2025 and 2024 six-month periods, respectively. Non-cash stock-based compensation expenses increased to $12 million in the 2025 six-month period compared to $9 million in the 2024 six-month period.

Depreciation. Depreciation of property and equipment totaled $66 million for the 2025 six-month period and $72 million for the 2024 six-month period. Depreciation decreased primarily due to assets becoming fully depreciated.

Amortization. Amortization of intangible assets totaled $57 million in the 2025 six-month period and $63 million in the 2024 six-month period. The decrease in amortization expense was the result of finite-lived intangible assets becoming fully amortized and the impairment of certain finite-lived intangible assets related to the changes to the newtork affiliation at one station.

Impairment of intangible assets. During the 2025 three-month period, we recorded a non-cash impairment charge of $28 million related to the changes to the network affiliation at one station.

Gain on Disposal of Assets, Net. We recognized a gain on disposal of assets of $8 million in the 2025 six-month period primarily due to on the sale of easements and assignment of leases at some of our television broadcast tower sites, and $1 million in the 2024 six-month period,.

Miscellaneous Income, Net. On February 8, 2024, we recorded a gain of $110 million from the sale of our investment in BMI.

Interest Expense. Interest expense increased by $2 million to $235 million for the 2025 six-month period compared to $233 million in the 2024 six-month period. This increase was primarily attributable to a combination of factors including: decreases in the outstanding balance and interest rates on our floating rate Senior Credit Agreement in the 2025 six-month period compared to the 2024 six-month period; offset by the increase in the balance outstanding and interest rates on our notes. Our average outstanding total long-term debt balance was $5.7 billion and $6.2 billion during the 2025 and 2024 six-month periods, respectively. Our average total interest rate was 7.4% and 6.8% during the 2025 and 2024 six-month periods, respectively.

Gain on Early Extinguishment of debt. During the 2025 six-month period, we reported a gain on early extinguishment of debt of $1 million as a result of the repurchase of a portion of our outstanding debt in the open market at a discount.

Income Tax Expense. During the 2025 six-month period, we recognized income tax expense of $6 million. During the 2024 six-month period, we recognized income tax expense of $38 million. For the 2025 six-month period and the 2024 six-month period, our effective income tax rate was (10%) and 26%, respectively. We estimate our differences between taxable income or loss and recorded income or loss on an annual basis. Our tax provision for each quarter is based upon these full-year projections which are revised each reporting period. These projections incorporate estimates of permanent differences between U.S. GAAP income or loss and taxable income or loss, state income taxes and adjustments to our liability for unrecognized tax benefits. For the 2025 six-month period, these estimates increased or decreased our statutory federal income tax benefit rate of 21% to our effective income tax rate as a result of permanent differences resulted in a decrease of 24%, state income taxes that resulted in a decrease of 3%, and discrete items resulted in a decrease of 4%.

Liquidity and Capital Resources

General. The following table presents data that we believe is helpful in evaluating our liquidity and capital resources (in millions):

Net Cash Provided By (Used in) Operating, Investing and Financing Activities. Net cash provided by operating activities was $163 million in the 2025 six-month period compared to $86 million in the 2024 six-month period, a net increase of $77 million. The increase was primarily the net result of changes in working capital accounts that provided cash of $159 million, of which $100 million represented the increase in accounts receivable sold under our Securitization Facility in the 2025 six-month period. While our net income decreased by $175 million, this decrease was partially offset by increased non-cash adjustments of $94 million.

Net cash used in investing activities was $14 million in the 2025 six-month period compared to net cash provided by investing activities of $50 million for the 2024 six-month period. The net decrease was largely due the proceeds received from the sale of our investment in BMI in the 2024 six-month period.

Net cash used in financing activities was $85 million in the 2025 six-month period compared to net cash used in financing activities of $82 million in the 2024 six-month period. During each period, we used $26 million of cash to pay dividends to holders of our preferred stock. During 2025 and 2024 six-month periods, we used $16 million and $16 million, respectively, to pay dividends to holders of our common stock.

Liquidity. Based on our debt outstanding and interest rates as of June 30, 2025, we estimate that we will make approximately $458 million in debt interest payments over the twelve months immediately following June 30, 2025.

Although our cash flows from operations are subject to a number of risks and uncertainties, we anticipate that our cash on hand, future cash expected to be generated from operations, borrowings from time to time under the Senior Credit Agreement (or any such other credit facility as may be in place at the appropriate time) and, potentially, external equity or debt financing, will be sufficient to fund any debt service obligations, estimated capital expenditures and acquisition-related obligations for the next twelve months and the forseeable future. Any potential equity or debt financing would depend upon, among other things, the costs and availability of such financing at the appropriate time. We also believe that our future cash expected to be generated from operations and borrowing availability under the Senior Credit Agreement (or any such other credit facility) will be sufficient to fund our future capital expenditures and long-term debt service obligations for the next twelve months and theforseeable future.

Collateral, Covenants and Restrictions of our credit agreements. Our obligations under the Senior Credit Agreement and the 2029 Notes are secured by substantially all of our consolidated assets, excluding real estate. In addition, substantially all of our subsidiaries are joint and several guarantors of, and our ownership interests in those subsidiaries are pledged to collateralize, our obligations under the Senior Credit Agreement. Gray Media, Inc. is a holding company, and has no material independent assets or operations. For all applicable periods, the 2026 Notes, 2027 Notes, 2030 Notes and 2031 Notes have been fully and unconditionally guaranteed, on a joint and several, senior unsecured basis, by substantially all of Gray Media, Inc.’s subsidiaries. Any subsidiaries of Gray Media, Inc. that do not guarantee the 2026 Notes, 2027 Notes, 2030 Notes and 2031 Notes are not material or are designated as unrestricted under the Senior Credit Agreement. As of June 30, 2025, there were no significant restrictions on the ability of Gray Media, Inc.'s subsidiaries to distribute cash to Gray or to the guarantor subsidiaries.

The Senior Credit Agreement contains affirmative and restrictive covenants with which we must comply, including: (a) limitations on additional indebtedness, (b) limitations on liens, (c) limitations on the sale of assets, (d) limitations on guarantees, (e) limitations on investments and acquisitions, (f) limitations on the payment of dividends and share repurchases, (g) limitations on mergers and (h) maintenance of the First Lien Leverage Ratio while any amount is outstanding under the Revolving Credit Facility, as well as other customary covenants for credit facilities of this type. The 2026 Notes, 2027 Notes, 2029 Notes, 2030 Notes and 2031 Notes include covenants with which we must comply which are typical for financing transactions of their nature. As of June 30, 2025 and December 31, 2024, we were in compliance with all required covenants under all of our debt obligations.”

In addition to results prepared in accordance with U.S. GAAP, “Leverage Ratio Denominator” is a metric that management uses to calculate our compliance with our financial covenants in our indebtedness agreements. This metric is calculated as specified in our Senior Credit Agreement and is a significant measure that represents the denominator of a formula used to calculate compliance with material financial covenants within the Senior Credit Agreement that govern our ability to incur indebtedness, incur liens, make investments and make restricted payments, among other limitations usual and customary for credit agreements of this type. Accordingly, management believes this metric is a very material metric to our debt and equity investors.

Leverage Ratio Denominator gives effect to the revenue and broadcast expenses of all completed acquisitions and divestitures as if they had been acquired or divested, respectively, on July 1, 2023. It also gives effect to certain operating synergies expected from the acquisitions and related financings, and adds back professional fees incurred in completing the acquisitions. Certain of the financial information related to the acquisitions, if applicable, has been derived from, and adjusted based on, unaudited, un-reviewed financial information prepared by other entities, which Gray cannot independently verify. We cannot assure you that such financial information would not be materially different if such information were audited or reviewed and no assurances can be provided as to the accuracy of such information, or that our actual results would not differ materially from this financial information if the acquisitions had been completed on the stated date. In addition, the presentation of Leverage Ratio Denominator as determined in the Senior Credit Agreement and the adjustments to such information, including expected synergies, if applicable, resulting from such transactions, may not comply with U.S. GAAP or the requirements for pro forma financial information under Regulation S-X under the Securities Act of 1933. Leverage Ratio Denominator, as determined in the Senior Credit Agreement, represents an average amount for the preceding eight quarters then ended.

Our “Adjusted Total Indebtedness”, “First Lien Adjusted Total Indebtedness” and “Secured Adjusted Total Indebtedness”, in each case “Net of All Cash”, represents the amount of outstanding principal of our long-term debt, plus certain other obligations as defined in our Senior Credit Agreement, less all cash (excluding restricted cash) for the applicable amount of indebtedness.

Blow is a calculation of our “Leverage Ratio”, “First Lien Leverage Ratio” and “Secured Leverage Ratio” as defined in our Senior Credit Agreement as of June 30, 2025:

(1) At any time any amounts are outstanding under our revolving credit facility, our maximum First Lien Leverage Ratio cannot exceed 4.25 to 1.00.

Debt. As of June 30, 2025, long-term debt consisted of obligations under our Senior Credit Agreement, the $2 million in aggregate principal amount outstanding under our 2026 Notes, the $528 million in aggregate principal amount outstanding of our 2027 Notes, the $1.25 billion in aggregate principal amount of our 2029 Notes, the $790 million in aggregate principal amount outstanding of our 2030 Notes and the $1.2 billion outstanding of our 2031 Notes. As of June 30, 2025, the Senior Credit Agreement provided total commitments of $2.6 billion, consisting of a $1.4 billion term loan facility, a $493 million term loan facility and $692 million available under our Revolving Credit Facility, net of $8 million of undrawn letters of credit. We were in compliance with the covenants in these debt agreements at June 30, 2025.

Repurchase of Debt. On May 6, 2024, our Board of Directors authorized us to use up to $250 million of available liquidity to repurchase our outstanding indebtedness. On November 20, 2024, our Board of Directors replenished and extended the repurchase authorization through December 31, 2025. The extent of such repurchases, including the amount and timing of any repurchases, will depend on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. This repurchase program does not require us to repurchase a minimum amount of debt, and it may be modified, suspended or terminated at any time without prior notice. We currently have approximately $232 million of availability to repurchase our outstanding indebtedness remaining under this authorization.

Subsequent Refinancing Activities. On July 18, 2025, we issued the 2032 Notes. The net proceeds from the 2032 Notes together with $50 million borrowed under our Revolving Credit Facility, were used to repurchase all $528 million of our 2027 Notes, to repay $403 million of our 2024 Term Loan under the Senior Credit Agreement and pay transaction expenses incurred in connection with the offering. Also on July 18, 2025, we amended our Revolving Credit Facility to increase commitments by $50 million, resulting in aggregate commitments under the Revolving Credit Facility of $750 million and an extension of the term of the commitments under the Revolving Credit Facility to December 31, 2028.

On July 25, 2025, we issued the 2033 Notes. The net proceeds from the 2033 Notes were used to repay the following amounts under our Senior Credit Agreement: $630 million of our 2021 Term Loan; $80 million of our 2024 Term Loan; all $50 million of our Revolving Credit Facility; and pay transaction expenses incurred in connection with the offering.

Acquisitions and Divestitures. Subsequent to the end of the second quarter, we entered into and announced separate agreements involving television station acquisitions and divestitures with Scripps, SGH, BCI, and AMG. In addition to advancing strategic goals for our television station operations, we anticipate that upon closing all of these transactions they will contribute to our efforts to reduce the company’s Leverage Ratio as defined in our Senior Credit Agreement.

On July 7, 2025, we announced that we had entered into agreements with Scripps to swap television stations across five mid-sized and small markets. The transaction involves the acquisition by Gray of WSYM (Fox) in Lansing, Michigan (DMA 113), and KATC (ABC) in Lafayette, Louisiana (DMA 125), and the sale by Gray of KKTV (CBS) in Colorado Springs, Colorado (DMA 86), KKCO (NBC) and low power station KJCT-LP (ABC) in Grand Junction, Colorado (DMA 187), and KMVT (CBS) and low power station KSVT-LD (Fox) in Twin Falls, Idaho (DMA 189). The swap involves the even exchange of comparable assets, and, as such, neither company will pay cash consideration to the other.

On July 31, 2025, we announced that we reached an agreement with SGH to acquire SGH’s WLTZ (NBC) in Columbus, Georgia (DMA 127) and KJTV (FOX) in Lubbock, Texas (DMA 140) for a total purchase price of less than $2 million. For the past several years, Gray has provided back-office services to both stations through WTVM (ABC) in Columbus and KCBD (NBC) in Lubbock, respectively.

On August 1, 2025, we announced that we reached an agreement with BCI to acquire its television stations for $80 million. The transaction includes WDRB (FOX) and WBKI (CW) in Louisville, Kentucky (DMA 49), where Gray owns WAVE (NBC). The transaction also includes WAND (NBC) in the Springfield-Champaign-Decatur, Illinois, market (DMA 92), and WLIO (NBC) and associated low power television stations in Lima, Ohio (DMA 190).

On August 8, 2025, we announced that we reached an agreement with AMG to acquire AMG’s television stations in ten markets for $171 million, as follows:

We anticipate closing the transactions with Scripps, SGH, BCI, and AMG in the fourth quarter of this year following receipt of regulatory approvals, including certain waivers, and other customary approvals.

Capital Expenditures. Including capital expenditures related to our Assembly Atlanta project, we currently expect that our routine capital expenditures will be in a range of approximately $40 million to $45 million for the remainder of 2025. We incurred costs to build public infrastructure within the Assembly Atlanta project. Pursuant to our Purchase and Sale Agreement with the Doraville Community Improvement District (the “CID”), we receive cash reimbursements for the transfer of specific infrastructure projects to the CID and for other construction costs previously incurred. Consistent with previous practice, we anticipate transferring certain public infrastructure at Assembly Atlanta to the CID for which we anticipate receiving proceeds during 2025. We received reimbursements totaling $5 million in the 2025 six-month period and we expect reimbursements of approximately $20 million during the remainder of 2025, and that our capital expenditures in 2025 will approximate the reimbursements we expect to receive. We can give no assurances of the actual proceeds to be received in the future from the CID, nor the timing of any such proceeds.

Other. We file a consolidated federal income tax return and such state and local tax returns as are required. During the 2025 three and six-month period, we made $39 million of federal or state income tax payments. While we continue to evaluate the impact of recent income tax legislation, we currently expect that for the remainder of 2025, we will not be required to make any material income tax payments. As of June 30, 2025, we have an aggregate of approximately $252 million of various state operating loss carryforwards, of which we expect that approximately $173 million will not be utilized due to section 382 limitations and those that will expire prior to utilization. After applying our state effective tax rate, this amount is included in our valuation allowance for deferred tax assets.

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act, which changes existing U.S. tax laws, including extending or making permanent certain provisions of the Tax Cuts and Jobs Act and, easing the interest expense limitation rules of Section 163(j), in addition to other changes. The Company anticipates an impact to income taxes payable and deferred tax assets and liabilities in the period of enactment. The Company continues to evaluate the impact the new legislation will have on the consolidated financial statements.

During the 2025 six-month period, we did not make a contribution to our defined benefit pension plan. During the remainder of 2025, we do not expect to contribute to this pension plan.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments and estimations that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. We consider our accounting policies relating to intangible assets and income taxes to be critical policies that require judgments or estimations in their application where variances in those judgments or estimations could make a significant difference to future reported results. These critical accounting policies and estimates are more fully discussed in our 2024 Form 10-K.

Cautionary Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains and incorporates by reference “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements are all statements other than those of historical fact. When used in this annual report, the words “believes,” “expects,” “anticipates,” “estimates,” “will,” “may,” “should” and similar words and expressions are generally intended to identify forward-looking statements. These forward-looking statements reflect our then-current expectations and are based upon data available to us at the time the statements are made. Forward-looking statements may relate to, among other things, the economy in general, our strategies, expected results of operations, general and industry-specific economic conditions, future pension plan contributions, future capital expenditures, future proceeds from Assembly Atlanta CID infrastructure related payments and land sales, future income tax payments, future payments of interest and principal on our long-term debt, future interest expenses under our Securitization Facility, future interest expense under our interest rate caps, assumptions underlying various estimates and estimates of future obligations and commitments, and should be considered in context with the various other disclosures made by us about our business. Readers are cautioned that any forward-looking statements, including those regarding the intent, belief or current expectations of our management, are not guarantees of future performance, results or events and involve significant risks and uncertainties, and that actual results and events may differ materially from those contained in the forward-looking statements as a result of various factors including, but not limited to, those listed in Item 1A. of our Annual Report and the other factors described from time to time in our SEC filings. The forward-looking statements included in this quarterly report are made only as of the date hereof. We undertake no obligation to update such forward-looking statements to reflect subsequent events or circumstances.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We believe that the market risk of our financial instruments as of June 30, 2025 has not materially changed since December 31, 2024. Our market risk profile on December 31, 2024 is disclosed in our 2024 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this Quarterly Report, an evaluation was carried out under the supervision and with the participation of management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the CEO and CFO have concluded that our controls and procedures were effective as of June 30, 2025.

Changes in Internal Control Over Financial Reporting. There have been no changes in the Company’s internal control over financial reporting during the six-months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As of the date of this filing, there have been no additional material legal proceedings or material developments in the legal proceedings disclosed in Part 1, Item 3, of our Annual Report on Form 10-K for the year ended December 31, 2024. For more information, see Note 9. “Commitments and Contingencies” within the accompanying condensed consolidated financial statements.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors that affect our business and financial results that are discussed in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. There have been no material changes to such risk factors.

Item 6. Exhibits

The following exhibits are filed as part of this Quarterly Report: