# Gray Media, Inc: Form 10-Q for the period ended Sep 30, 2023

- Company: [Gray Media, Inc](/companies/gtn.md) (CIK 43196)
- Form: 10-Q
- Filed: 2023-11-08
- Accepted by EDGAR: Nov 8, 2023, 12:56 ET
- Period: 2023-09-30
- Accession: 0001437749-23-030854
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/43196/000143774923030854/gtn20230930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/43196/000143774923030854/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $803.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $2.42bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $84.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $270.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $3.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | −$3.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$40.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$67.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.57 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$1.15 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.57 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$1.15 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 93,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 92,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $565.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $288.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $22.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $21.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $495.0m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $10.73bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $414.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $8.08bn | us-gaap:Liabilities |
| Long-term debt | at 2023-09-30 | $6.17bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $15.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $2.00bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,605 characters.

### Executive Overview

*Introduction*. The following discussion and analysis of the financial condition and results of operations of Gray Television, Inc. and its consolidated subsidiaries (except as the context otherwise provides, “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, 2022 (the “2022 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 in the United States. Our television stations serve 113 television markets that collectively reach approximately 36 percent of US television households. This portfolio includes 80 markets with the top-rated television station and 102 markets with the first and/or second highest rated television station. We also own video program companies Raycom Sports, Tupelo Media Group, PowerNation Studios, as well as the studio production facilities Assembly Atlanta and Third Rail Studios.

Our operating revenues are derived primarily from broadcasting and internet advertising, retransmission consent fees and, to a lesser extent, other sources such as production of television and event programming, television commercials, tower rentals and management fees. For the nine-months ended September 30, 2023 and 2022, we generated revenue of $2.4 billion and $2.6 billion, respectively.

*Revenues, Operations, Cyclicality and Seasonality.* Broadcast advertising is sold for placement generally preceding or following a television station’s network programming and within local and syndicated programming. Broadcast 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, broadcast 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. Broadcast 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 broadcast 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 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 local and national 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 nine-months ended September 30, 2023 and 2022, approximately 26% and 28%, respectively, of our broadcast advertising revenue (excluding political advertising revenue) was obtained from advertising sales to the services sector. During the nine-months ended September 30, 2023 and 2022 approximately 20% and 16%, 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 lower percentage of total revenue in even-numbered years due to, among other things, the decreased availability of advertising time, as a result of such years being the “on-year” of the two-year election cycle.

While our total revenues have increased in recent years as a result of our acquisitions, our revenue remains under pressure from the impact on the advertising market as a result of the COVID-19 global pandemic and from the internet as a competitor for advertising spending. We have been taking steps to mitigate the impacts of COVID-19 and we continue to enhance and market our internet websites in an effort to generate additional revenue. Our aggregate internet revenue is derived from both advertising and sponsorship opportunities directly on our websites.

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.

*Production Company Operations*. The Assembly Studios portion of our Assembly Atlanta project commenced operations in the third quarter of 2023. The studio operations are managed under an operating agreement with NBCUniversal Media, LLC (“NBCU”) through which NBCU will lease and operate the new state-of-the-art studio facilities.

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):

| Revenue: | Three Months Ended September 30, 2023 Amount | Percent of Total | 2022 Amount | Percent of Total | Nine Months Ended September 30, 2023 Amount | Percent of Total | 2022 Amount | Percent of Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Core advertising | $363 | 45% | $359 | 39% | $1,099 | 45% | $1,090 | 42% |
| Political | 26 | 3% | 144 | 16% | 46 | 2% | 260 | 10% |
| Retransmission consent | 378 | 47% | 368 | 40% | 1,167 | 48% | 1,143 | 44% |
| Production companies | 20 | 2% | 20 | 2% | 54 | 2% | 56 | 2% |
| Other | 16 | 3% | 18 | 3% | 51 | 3% | 55 | 2% |
| Total | $803 | 100% | $909 | 100% | $2,417 | 100% | $2,604 | 100% |

### Results of Operations

***Three-Months Ended September 30, 2023 (“the 2023 three-month period”) Compared to Three-Months Ended September 30, 2022 (“the 2022 three-month period”)***

*Revenue.* Total revenue decreased $106 million, or 12%, to $803 million in the 2023 three-month period. During the 2023 three-month period, due primarily to the cyclical decrease in political advertising revenue:

- Core advertising revenue increased by $4 million or 1%;
- Retransmission consent revenue increased by $10 million or 3%, due to an increase in rates, offset, in part, by a decrease in subscribers; and
- Political advertising revenue decreased by $118 million.

*Broadcasting Expenses*. Broadcasting expenses (before depreciation, amortization and gain or loss on disposal of assets) increased $20 million, or 4%, to $557 million in the 2023 three-month period. During the 2023 three-month period:

- Payroll broadcasting expenses increased by $10 million as a result of routine increases in compensation.
- Non-payroll broadcasting expenses increased by $10 million, primarily as a result of increased retransmission expense, consistent with increased retransmission revenue.
- Broadcast non-cash stock-based compensation expense was approximately $1 million in each of the 2023 and 2022 three-month periods.

*Production company expenses*. Production company operating expenses (before depreciation, amortization, impairment and gain or loss on disposal of assets) were $18 million in the 2023 three-month period, an increase of $2 million compared to the 2022 three-month period.

*Corporate and Administrative Expenses*. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) decreased by $4 million, or 15%, to $23 million. During the 2023 three-month period compensation expense decreased by $2 million and professional services decreased by $1 million. Non-cash stock-based compensation expenses were $4 million in each of the 2023 and 2022 three-month periods.

*Depreciation.* Depreciation of property and equipment totaled $36 million and $33 million in the 2023 three-month period and the 2022 three-month period, respectively. Depreciation increased primarily due to the addition of depreciable assets.

*Amortization*. Amortization of intangible assets totaled $48 million and $52 million in the 2023 three-month period and the 2022 three-month period, respectively. Amortization decreased primarily due to finite-lived intangible assets becoming fully amortized.

*Impairment of Goodwill and Other Intangible Assets*. Several years ago, our Raycom Sports subsidiary sublicensed certain ACC football and basketball games from ESPN to Fox Sports that were assumed by Diamond upon its acquisition of Fox Sports. In March 2023, Diamond sought bankruptcy protection. On July 7, 2023, the bankruptcy court granted the request of Diamond (supported by us) for the early rejection, and therefore the termination, of the ACC sports rights agreements. On July 13, 2023, The CW announced that it had entered into an agreement with Raycom Sports for a similar package of sports rights related to the ACC games that had been included in the now-terminated agreement with Diamond. Concurrently, Raycom Sports and ESPN modified their license agreement to correspond with the terms of The CW sublicense agreement. The new agreements mitigate a portion of the losses caused by Diamond’s rejection of its ACC sports rights agreement with Raycom Sports. As a result of the bankruptcy filings and these new July 2023 agreements, our production companies segment recorded a non-cash charge of $43 million, for impairment of goodwill and other intangible assets.

*Miscellaneous Expense, Net*. Miscellaneous expense, net totaled $10 million and $1 million in the 2023 three-month period and the 2022 three-month period, respectively. Miscellaneous expense increased primarily due the write-off of an investment in the 2023 three-month period.

*Interest Expense*. Interest expense increased $17 million, or 18%, to $111 million for the 2023 three-month period compared to the 2022 three-month period. This increase was primarily attributable to the increase in average interest rates on our outstanding debt, net of the impact of our pre-payment of our outstanding 2017 Term Loan balance. The average interest rate on all of our outstanding debt increased to 6.6% in the 2023 three-month period compared to 5.3% in the 2022 three-month period. Our average outstanding debt balance was $6.3 billion and $6.7 billion during the 2023 and 2022 three-month periods, respectively.

*Income Tax Expense.* We recognized income tax expense of $3 million and $42 million in the 2023 and 2022 three-month periods, respectively. Our effective income tax rates were (8%) and 28% in the 2023 and 2022 three-month periods, respectively. We estimate our differences between taxable income or loss and recorded income or loss on an annual basis. Our tax provision for each interim period is based upon these full year projections that 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 2023 three-month period, these estimates increased our statutory Federal income tax rate of 21% to our effective income tax rate of (8%) as follows: state income taxes added 1% and permanent differences between our U.S. GAAP income and taxable income resulted in a reduction of 12% and discrete items resulted in a reduction of 18%.

***Nine-Months Ended September 30, 2023 (“the 2023 nine-month period”) Compared to Nine-Months Ended September 30, 2022 (“the 2022 nine-month period”)***

*Revenue.* Total revenue decreased $187 million, or 7%, to $2.4 billion in the 2023 nine-month period from the 2022 nine-month period. During the 2023 nine-month period, due primarily to the cyclical decrease in political advertising revenue:

- Core advertising revenue increased by $9 million or 1%, despite core advertising revenue from the broadcast of the 2023 Super Bowl on our 27 FOX-affiliated stations was approximately $6 million, compared to $13 million that we earned from the broadcast of the 2022 Super Bowl and the Winter Olympics on our 56 NBC-affiliated stations;
- Retransmission consent revenue increased by $24 million or 2% due to an increase in rates, offset, in part, by a decrease in subscribers; and
- Political advertising revenue decreased by $214 million.

*Broadcasting Expenses*. Broadcasting expenses (before depreciation, amortization and gain or loss on disposal of assets) increased $69 million, to $1.7 billion. During the 2023 nine-month period:

- Payroll broadcasting expenses increased by $35 million as a result of routine increases in compensation.
- Non-payroll broadcasting expenses increased by $34 million primarily due to an increase in retransmission expense of $27 million.
- Broadcast non-cash stock-based compensation expense was $4 million and $3 million in the 2023 and 2022 nine-month periods, respectively.

*Production Company Expenses*. Production company expenses (before depreciation, amortization, impairment and gain or loss on disposal of assets) increased by approximately $32 million in the 2023 nine-month period to $88 million, compared to $56 million in the 2022 nine-month period. Production company operating expenses included $17 million allowance for credit losses related to the bankruptcy of Diamond, a counterparty in contracts with us and $18 million to settle litigation related to the Assembly Atlanta project.

*Corporate and Administrative Expenses*. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) decreased by $1 million, to $79 million in the 2023 nine-month period compared to the 2022 nine-month period. These decreases were primarily the result of decreases in professional services costs. Non-cash stock-based compensation expenses decreased to $11 million in the 2023 nine-month period compared to $14 million in the 2022 nine-month period.

*Depreciation.* Depreciation of property and equipment totaled $106 million and $96 million in the 2023 nine-month period and the 2022 nine-month period, respectively. Depreciation increased primarily due to the addition of depreciable assets.

*Amortization*. Amortization of intangible assets totaled $147 million and $156 million in the 2023 nine-month period and the 2022 nine-month period, respectively. Amortization decreased primarily due to finite-lived intangible assets becoming fully amortized.

*Impairment of Goodwill and Other Intangible Assets*. Several years ago, our Raycom Sports subsidiary sublicensed certain ACC football and basketball games from ESPN to Fox Sports that were assumed by Diamond upon its acquisition of Fox Sports. In March 2023, Diamond sought bankruptcy protection. On July 7, 2023, the bankruptcy court granted the request of Diamond (supported by us) for the early rejection, and therefore the termination, of the ACC sports rights agreements. On July 13, 2023, The CW announced that it had entered into an agreement with Raycom Sports for a similar package of sports rights related to the ACC games that had been included in the now-terminated agreement with Diamond. Concurrently, Raycom Sports and ESPN modified their license agreement to correspond with the terms of The CW sublicense agreement. The new agreements mitigate a portion of the losses caused by Diamond’s rejection of its ACC sports rights agreement with Raycom Sports. As a result of the bankruptcy filings and these new July 2023 agreements, our production companies segment recorded a non-cash charge of $43 million, for impairment of goodwill and other intangible assets.

*Loss (Gain) on Disposals of Assets, Net.* We recognized a loss on disposal of assets of $20 million in the 2023 nine month period compared to a gain on disposal of assets of $6 million in the 2022 nine-month period, primarily related to the sale of television station KNIN in the Boise, Idaho market, in which we recognized a loss of $14 million in the 2023 nine-month period.

*Miscellaneous Expense, Net*. Miscellaneous expense, net totaled $13 million and $3 million in the 2023 nine-month period and the 2022 nine-month period, respectively. Miscellaneous expense increased primarily due the write-off of an investment in the 2023 nine-month period.

*Interest Expense*. Interest expense increased $70 million, or 28%, to $324 million for the 2023 nine-month period compared to the 2022 nine-month period. This increase was primarily attributable to the increase in average interest rates on our outstanding debt, net of the impact of our pre-payment of our outstanding 2017 Term Loan balance. The average interest rate on all of our outstanding debt increased to 6.5% in the 2023 nine-month period compared to 4.8% in the 2022 nine-month period. Our average outstanding debt balance was $6.3 billion and $6.8 billion during the 2023 and 2022 nine-month periods, respectively.

*Income Tax (Benefit) Expense.* We recognized an income tax benefit of $3 million and an income tax expense of $101 million in the 2023 and 2022 nine-month periods, respectively. Our effective income tax rates were 4% and 27% in the 2023 and 2022 nine-month periods, respectively. We estimate our differences between taxable income or loss and recorded income or loss on an annual basis. Our tax provision for each interim period is based upon these full year projections that 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 2023 nine-month period, these estimates increased our statutory federal income tax rate of 21% to our effective income tax rate of 4% as follows: state income taxes added 3%, permanent differences between our U.S. GAAP income and taxable income reduced our rate by 7% and discrete items further reduced our rate by 13%.

### Liquidity and Capital Resources

### General

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

|  | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $565 | $596 |
| Net cash used in investing activities | (259) | (362) |
| Net cash used in financing activities | (346) | (279) |
| Decrease in cash | $(40) | $(45) |

|  | As of September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Cash | $21 | $61 |
| Long-term debt, including current portion, less deferred financing costs | $6,186 | $6,455 |
| Series A Perpetual Preferred Stock | $650 | $650 |
| Borrowing availability under Revolving Credit Facility | $469 | $496 |

28

*Net Cash Provided By (Used In) Operating, Investing and Financing Activities.* Net cash provided by operating activities was $565 million in the 2023 nine-month period compared to $596 million in the 2022 nine-month period. The decrease of $31 million was primarily due to a decrease in net income of $336 million offset, in part, by an increase in cash provided from changes in working capital of $273 million and an increase in non-cash impairment charges of $51 million. The change in working capital resulted primarily from the sale of accounts receivable under our Securitization Facility. The impairment charges in the 2023 nine-month period were primarily due to our $43 million impairment of goodwill and other intangible assets related to the Diamond bankruptcy’s effect on the value of our Raycom Sports subsidiary with the remaining portion of the impairment charge resulting from the write-down of an investment.

Net cash used in investing activities was $259 million in the 2023 nine-month period compared to net cash used in investing activities of $362 million for the 2022 nine-month period. The decrease in the amount used was largely due to cash received from a quasi-governmental authority in the 2023 nine-month period related to infrastructure components of construction on the Assembly Atlanta project. In addition, in the 2022 nine-month period we used $53 million to acquire television station WKTB-TV and to acquire several FCC licenses.

Net cash used in financing activities was approximately $346 million in the 2023 nine-month period compared to net cash used in financing activities of $279 million in the 2022 nine-month period. During each period we used $39 million of cash to pay dividends to holders of our preferred stock. During 2023 and 2022 nine-month periods, we used $22 million and $23 million, respectively, to pay dividends to holders of our common stock. In the 2023 nine-month period, we used a net amount of $281 million, for pre-payments and required principal reductions of our long-term debt. In the 2022 nine-month period we used $161 million of cash for principal reductions of our long-term debt. Also, in the 2022 nine-month period, we used $50 million to repurchase shares of our common stock on the open market.

*Liquidity.* Based on our debt outstanding as of September 30, 2023, we estimate that we will make approximately $426 million in debt interest payments over the twelve months immediately following September 30, 2023.

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 2019 Senior Credit Facility (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 2019 Senior Credit Facility (or any such other credit facility) will be sufficient to fund our future capital expenditures and long-term debt service obligations until at least January 2, 2026, which is the maturity date of the 2019 Term Loan under the 2019 Senior Credit Facility.

*Debt*. As of September 30, 2023, long-term debt consisted of obligations under our 2019 Senior Credit Facility, our $700 million in aggregate principal amount of senior notes due 2026, our $750 million in aggregate principal amount of senior notes due 2027, our $800 million in aggregate principal amount of senior notes due 2030 and our $1.3 billion in aggregate principal amount of senior notes due 2031. As of September 30, 2023, the 2019 Senior Credit Facility provided total commitments of $3.2 billion, consisting of a $1.2 billion term loan facility, a $1.5 billion term loan facility, $25 million outstanding under our Revolving Credit Facility and $469 million available under our revolving credit facility. We were in compliance with the covenants in these debt agreements at September 30, 2023.

Excluding capital expenditures related to Assembly Atlanta, we currently expect that our routine capital expenditures will be in a range of approximately $35 million to $40 million for the remainder of 2023. In addition, we currently expect that our Assembly Atlanta capital expenditures will likely be more than offset by proceeds from Assembly Atlanta property sales and CID incentive payments for the remainder of 2023. More specifically, we currently expect that our Assembly Atlanta construction expenditures will be in a range of $20 million to $25 million, offset by the combined proceeds from Assembly Atlanta property sales and CID incentive payments that we expect will also be in a range of $85 million to $90 million for the remainder 2023. We can give no assurances of the actual proceeds to be received in the future from property sales and incentive payments, nor the timing of any such proceeds.

*Completed Transaction.* On May 1, 2023, we completed the transaction with Marquee Broadcasting, Inc. (“Marquee”) through which we sold television station KNIN (FOX) in the Boise, Idaho market (DMA 102) for $6 million, and purchased television station WPGA (MeTV) in the Macon, Georgia market (DMA 126) for $6 million. As a result, Gray’s television station portfolio now includes 102 markets with the first and/or second highest rated television station. The disposal of television station KNIN resulted in a loss of approximately $14 million in the 2023 nine-month period.

*Other.* We file a consolidated federal income tax return and such state and local tax returns as are required. During the 2023 nine-month period, we made $43 million of federal or state income tax payments. During the remainder of 2023, we anticipate making income tax payments (excluding refunds) within a range of $5 million to $9 million. As of September 30, 2023, we have an aggregate of approximately $344 million of various state operating loss carryforwards, of which we expect that approximately $217 million will be utilized.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020, and permits net operating loss (“NOL”) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. During 2020, we carried back certain net operating losses resulting in refunds of federal and state income taxes of $21 million, excluding interest, that are currently outstanding.

During the 2023 nine-month period, we contributed $4 million to our defined benefit pension plan.

*Off-Balance Sheet Arrangements.* On February 23, 2023, we, certain of our subsidiaries and a wholly-owned special purpose subsidiary (the “SPV”), entered into a three-year $300 million revolving accounts receivable securitization facility (the “Securitization Facility”) with Wells Fargo Bank, N.A., as administrative agent, for the purpose of providing additional liquidity in order to repay indebtedness under the Senior Credit Facility. The Securitization Facility permits the SPV to draw up to a total of $300 million, subject to the outstanding amount of the receivables pool and other factors. The Securitization Facility is subject to interest charges, at the one-month SOFR rate plus 100 basis points on the amount of the outstanding facility. The SPV is also required to pay an upfront fee and a commitment fee in connection with the Securitization Facility. Other than as described above, there have been no material changes with respect to our off-balance sheet arrangements from those presented in our 2022 Form 10-K.

### 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 2022 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.

## Market risk

As filed, 218 characters.

We believe that the market risk of our financial instruments as of September 30, 2023 has not materially changed since December 31, 2022. Our market risk profile on December 31, 2022 is disclosed in our 2022 Form 10-K.

## Controls and procedures

As filed, 919 characters.

*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 September 30, 2023.

*Changes in Internal Control Over Financial Reporting.* There have been no changes in the Company’s internal control over financial reporting during the nine-months ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 665 characters.

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, 2022. 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.

Filed Nov 8, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-030854. Last ingested by Listed: Nov 6, 2026, 13:37 ET. No prices; not investment advice.