Gray Media Group, Inc. (NYSE: GMG) announced a significant year-over-year increase in its financial results for the third quarter of 2024. Chairman and CEO Hilton Howell highlighted an 18% increase in total revenue at $950 million and a turnaround from a net loss to a net profit of $83 million. The company’s adjusted EBITDA jumped 61% to $338 million, and core advertising revenue rose slightly. Despite some challenges, Gray Media is implementing cost-cutting strategies and capitalizing on new media rights deals to improve its broadcast portfolio.
Key Points
- Total revenue for Q3 2024 reached $950 million, an increase of 18% compared to the same quarter of the previous year.
- Net income attributable to shareholders was $83 million, compared to a net loss of $53 million in Q3 2023.
- Adjusted EBITDA increased significantly by 61% to $338 million.
- Core advertising revenue increased 1% to $365 million, with political advertising revenue of $173 million.
- The cost-cutting measures are expected to reduce operating expenses by $60 million per year.
- Gray Media has secured a media rights deal with the New Orleans Pelicans, strengthening its sports broadcasting reach.
Company Outlook
- Capex and operating expenses for the full year 2024 are expected to be significantly lower than initially forecast.
- The company plans to reduce its total net debt by approximately $500 million in 2024.
- Gray Media is preparing for a deregulated FCC environment that could make M&A activity easier.
- The company targets a long-term net debt-to-EBITDA ratio of less than four.
Negative points
- Political ad revenue was slightly lower than expected, particularly for Senate races.
- Q3 showed weakness in the automotive and communications sectors.
- Core advertising is expected to decline 10% in Q4 due to political clutter and the move of SEC football to CBS.
Positive points
- New local direct activities increased by almost 14%.
- The company’s 5 p.m. newscasts averaged 4.4 million viewers, outpacing top cable news shows.
- Debt reduction efforts are on track, with debt levels reduced to 3.0 and 5.67 times respectively.
Disappointments
- Political ad revenue from some races fell short of expectations.
- Impact of SEC football moving to CBS affects Q4 revenue.
Highlights from the Q&A session
- The impact of recent hurricanes on political revenues has been minimal.
- The decline in subscribers for retransmission fees is expected to stabilize, which will have a positive impact on growth.
- Executives are open to M&A opportunities if the ownership cap is lifted.
- Discussions about reverse offset spending are ongoing, with an expected intensification as contract expiration dates approach.
Gray Media’s third quarter performance reflects a company that is not only growing revenue and reversing prior losses, but also strategically positioning itself for future challenges and opportunities. By focusing on local and digital advertising growth, cost-cutting measures and debt reduction, Gray Media seeks to strengthen its financial position and competitive advantage in the broadcast industry. The company’s leaders remain confident in their operational strategies and are prepared to adapt to the evolving media landscape.
Perspectives InvestingPro
Gray Media Group’s recent financial performance aligns with several key insights from InvestingPro. The company’s Q3 2024 results, which showed a significant increase in revenue and a return to profitability, are reflected in InvestingPro’s data and guidance.
According to data from InvestingPro, Gray Media Group has a market capitalization of $405.33 million and generated revenue of $3,316 million over the trailing twelve months through Q2 2024. Company Profitability is confirmed by an InvestingPro advisory indicating that it has been profitable over the last twelve months, which is consistent with the net profit of $83 million reported in Q3 2024.
Interestingly, Gray Media Group offers a significant dividend yield of 7.48%, according to data from InvestingPro. This aligns with InvestingPro advice highlighting that the company pays a significant dividend to shareholders, which could be attractive to income-focused investors despite recent share price volatility.
For investors looking for a more comprehensive analysis, InvestingPro offers 11 additional tips for Gray Media Group, providing a deeper understanding of the company’s financial health and market position.
