Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

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:

	●	Spending by political candidates, political parties and special interest groups increases during the even-numbered "on-year" of the two-year election cycle. This political advertising spending typically is heaviest during the fourth quarter of such years;
	●	Broadcast advertising revenue is generally highest in the second and fourth quarters each year. This seasonality results partly from increases in advertising in the spring and in the period leading up to, and including, the holiday season;
	●	Core advertising revenue on our NBC-affiliated stations increases in certain years as a result of broadcasts of the Olympic Games; and
	●	Because our stations and markets are not evenly divided among the Big Four broadcast networks, our core advertising revenue can fluctuate between years related to which network broadcasts the Super Bowl.

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):

		Three Months Ended June 30,																Six Months Ended June 30,
		2025								2024								2025								2024
						Percent								Percent								Percent								Percent
		Amount				of Total				Amount				of Total				Amount				of Total				Amount				of Total
Revenue:
Core advertising		$	361				47	%		$	373				45	%		$	705				45	%		$	745				45	%
Political			9				1	%			47				6	%			22				1	%			74				4	%
Retransmission consent			369				48	%			371				45	%			748				48	%			752				46	%
Production companies			18				2	%			18				2	%			45				3	%			42				3	%
Other			15				2	%			17				2	%			34				3	%			36				2	%
Total		$	772				100	%		$	826				100	%		$	1,554				100	%		$	1,649				100	%

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:

●

Core advertising revenue decreased by $12 million or 3%;

●

Consistent with 2025 being the "off-year" of the two-year election cycle, political advertising revenue decreased by $38 million or 81%;

●

Retransmission consent revenue decreased by $2 million or 1%, due to a decrease in subscribers, offset, in part, by an increase in rates; and

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:

●

Broadcasting payroll and related benefits expenses decreased by $4 million as a result of decreases in staffing consistent with cost control actions taken in 2024, and incentive compensation consistent with decreased revenue.

●

Broadcasting non-payroll expenses increased by $1 million primarily due to increases in sports programming expenses and software license expenses, offset by reductions in bank service charges.

●

Broadcasting non-cash stock-based compensation expense was not material in each of the 2025 and 2024 three-month periods.

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:

●

Core advertising revenue decreased by $40 million or 5% due primarily to macro-economic softness. In addition, our advertising revenue of $9 million from the broadcast of the Super Bowl on our 33 FOX channels in the 2025 six-month period, compared to an aggregate of $18 million of advertising revenue relating to the broadcast of the Super Bowl on our 54 CBS channels during the 2024 six-month period. We were very pleased that our Super Bowl advertising revenue on our FOX channels increased to $9 million in 2025, compared to $6 million on our FOX channels in 2023. Our Core advertising revenue was also negatively impacted by one less selling day due to Leap Day, which we estimate impacted core revenue by $4 million.

●

Political advertising revenue decreased by $52 million or 70% resulting primarily from 2025 being the "off-year" of the two-year political advertising cycle;

●

Retransmission consent revenue decreased by $4 million or 1% due to a decrease in subscribers, offset, in part, by an increase in rates; and

●

Production company revenue increased by $3 million or 7% due to the start-up of our operations at Assembly Atlanta offset, in part, by decreases in revenue at our event production businesses.

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:

●

Broadcasting payroll and related benefits expenses decreased by $15 million as a result of decreases in staffing consistent with cost control actions taken in 2024, and incentive compensation consistent with decreased revenue.

●

Broadcasting non-payroll expenses increased by $7 million primarily due to increases in sports programming expenses and software license expenses, offset by reductions in bank service charges.

●

Broadcast non-cash stock-based compensation expense was $1 million and $3 million in the 2025 and 2024 six-month periods, respectively.

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):

		Six Months Ended June 30,
		2025				2024
Net cash provided by operating activities		$	163			$	86
Net cash (used in) provided by investing activities			(14	)			50
Net cash used in financing activities			(85	)			(82	)
Net increase in cash		$	64			$	54
		As of
		June 30, 2025				December 31, 2024
Cash		$	199			$	135
Long-term debt, including current portion, less deferred financing costs		$	5,590			$	5,621
Series A Perpetual Preferred Stock		$	650			$	650
Revolving Credit Facility:
Revolving Credit Facility commitment		$	700			$	680
Undrawn outstanding letters of credit			(8	)			(6	)
Borrowing availability under Revolving Credit Facility		$	692			$	674

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:

		Eight Quarters Ended
		June 30, 2025
		(in millions)
Net income		$	261
Adjustments to reconcile from net income to Leverage Ratio
Denominator as defined in our Senior Credit Agreement:
Depreciation			286
Amortization of intangible assets			278
Non-cash stock-based compensation			45
Non-cash 401(k) expense			10
Loss on disposal of assets, net			7
Gain on disposal of investment, not in the ordinary course			(110	)
Interest expense			948
Gain on early extinguishment of debt			(35	)
Income tax expense			122
Impairment of investments, goodwill and other intangible assets			58
Amortization of program broadcast rights			125
Payments for program broadcast rights			(59	)
Pension gain			(4	)
Contributions to pension plans			(4	)
Adjustments for unrestricted subsidiaries			21
Adjustments for stations acquired or divested, financings and expected synergies during the eight quarter period			(1	)
Transaction Related Expenses			1
Total eight quarters ended June 30, 2025		$	1,949
Leverage Ratio Denominator (total eight quarters ended June 30, 2025, divided by 2)		$	975

		June 30, 2025
		(dollars in millions)
Total outstanding principal, including current portion		$	5,651
Letters of credit outstanding			8
Cash			(199	)
Adjusted Total Indebtedness		$	5,460
Leverage Ratio (maximum permitted incurrence is 7.00 to 1.00)			5.60
Total outstanding principal secured by a first lien		$	3,112
Cash			(199	)
First Lien Adjusted Total Indebtedness		$	2,913
First Lien Leverage Ratio (maximum permitted incurrence is 4.00 to 1.00) (1)			2.99
Total outstanding principal secured by a lien		$	3,112
Cash			(199	)
Secured Adjusted Total Indebtedness		$	2,913
Secured Leverage Ratio (maximum permitted incurrence is 5.50 to 1.00)			2.99

(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:

DMA	MARKET	STATION
75	Huntsville, AL	WAAY (ABC)
90	Paducah-Cape Girardeau-Harrisburg	WSIL (ABC)
109	Evansville, IN	WEVV (CBS/FOX)
110	Ft. Wayne, IN	WFFT (FOX)
121	Montgomery, AL	WCOV (FOX)
124	Lafayette, LA	KADN (FOX/NBC)
134	Columbus-Tupelo, MS	WTVA (ABC/NBC)
137	Rockford, IL	WREX (NBC)
159	Terre Haute, IN	WTHI (CBS/FOX)
189	West Lafayette, IN	WLFI (CBS)

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.