UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark one)
| | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|
| For the quarterly period ended |
| | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|
| For the transition period from _________ to _________ . |
Commission file number
| Gray Television, Inc. |
| (Exact name of registrant as specified in its charter) |
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
| | | |
| (Address of principal executive offices) | (Zip code) |
| ( |
| (Registrant's telephone number, including area code) |
| Not Applicable |
| (Former name, former address and former fiscal year, if changed since last report.) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each Class | Trading Symbol(s) | Name of each exchange on which registered |
| | | |
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Accelerated filer | ☐ | |
| Non-accelerated filer ☐ | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
| Common Stock (No Par Value) | Class A Common Stock (No Par Value) | |
| | |
INDEX
GRAY TELEVISION, INC.
| PART I. |
FINANCIAL INFORMATION |
PAGE |
||
| Item 1. |
Financial Statements |
|||
| Condensed consolidated balance sheets (Unaudited) - September 30, 2023 and December 31, 2022 |
3 |
|||
| Condensed consolidated statements of operations (Unaudited) - three-months and nine-months ended September 30, 2023 and 2022 |
5 |
|||
| Condensed consolidated statements of comprehensive (loss) income (Unaudited) – three-months and nine-months ended September 30, 2023 and 2022 |
6 |
|||
| Condensed consolidated statements of stockholders' equity (Unaudited) – three-month periods ended March 31, June 30, and September 30, 2023 and 2022 |
7 |
|||
| Condensed consolidated statements of cash flows (Unaudited) - nine-months ended September 30, 2023 and 2022 |
9 |
|||
| Notes to condensed consolidated financial statements (Unaudited) |
10 |
|||
| Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
24 |
||
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
31 |
||
| Item 4. |
|
Controls and Procedures |
31 |
|
| PART II. |
OTHER INFORMATION |
|||
| Item 1A. |
Risk Factors |
31 |
||
| Item 5. |
Other Information |
31 |
||
| Item 6. |
Exhibits |
32 |
||
| SIGNATURES |
33 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
| GRAY TELEVISION, INC. |
|||
| CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||
| (in millions) |
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, less allowance for credit losses of $ and $, respectively | ||||||||
| Current portion of program broadcast rights, net | ||||||||
| Income tax refund receivable | ||||||||
| Prepaid income taxes | ||||||||
| Prepaid and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating leases right of use asset | ||||||||
| Broadcast licenses | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Investments in broadcasting, production and technology companies | ||||||||
| Deferred pension asset | ||||||||
| Other | ||||||||
| Total assets | $ | $ | ||||||
See notes to condensed consolidated financial statements.
| GRAY TELEVISION, INC. |
|||
| CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||
| (in millions, except for share data) |
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Liabilities and stockholders’ equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Employee compensation and benefits | ||||||||
| Accrued interest | ||||||||
| Accrued network programming fees | ||||||||
| Other accrued expenses | ||||||||
| Federal and state income taxes | ||||||||
| Current portion of program broadcast obligations | ||||||||
| Deferred revenue | ||||||||
| Dividends payable | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of long-term debt | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, less current portion and deferred financing costs | ||||||||
| Program broadcast obligations, less current portion | ||||||||
| Deferred income taxes | ||||||||
| Operating lease liabilities, less current portion | ||||||||
| Other | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Series A Perpetual Preferred Stock, par value; cumulative; redeemable; designated shares, issued and outstanding shares, at each date and $ aggregate liquidation value, at each date | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, par value; authorized shares, issued shares and shares, respectively outstanding shares and shares, respectively | ||||||||
| Class A common stock, par value; authorized shares, issued shares and shares, respectively outstanding shares and shares, respectively | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss, net of income tax benefit | ( | ) | ( | ) | ||||
| Treasury stock at cost, common stock, shares and shares, respectively | ( | ) | ( | ) | ||||
| Treasury stock at cost, class A common stock, shares and shares, respectively | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See notes to condensed consolidated financial statements.
| GRAY TELEVISION, INC. |
|||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||
| (in millions, except for per share data) |
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Revenue (less agency commissions): |
||||||||||||||||
| Broadcasting |
$ | $ | $ | $ | ||||||||||||
| Production companies |
||||||||||||||||
| Total revenue (less agency commissions) |
||||||||||||||||
| Operating expenses before depreciation, amortization, impairment and loss (gain) on disposal of assets, net: |
||||||||||||||||
| Broadcasting |
||||||||||||||||
| Production companies |
||||||||||||||||
| Corporate and administrative |
||||||||||||||||
| Depreciation |
||||||||||||||||
| Amortization of intangible assets |
||||||||||||||||
| Impairment of goodwill and other intangible assets |
||||||||||||||||
| (Gain) loss on disposal of assets, net |
( |
) | ( |
) | ( |
) | ||||||||||
| Operating expenses |
||||||||||||||||
| Operating income |
||||||||||||||||
| Other expense: |
||||||||||||||||
| Miscellaneous expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss from early extinguishment of debt |
( |
) | ||||||||||||||
| (Loss) income before income taxes |
( |
) | ( |
) | ||||||||||||
| Income tax expense (benefit) |
( |
) | ||||||||||||||
| Net (loss) income |
( |
) | ( |
) | ||||||||||||
| Preferred stock dividends |
||||||||||||||||
| Net (loss) income attributable to common stockholders |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Basic per share information: |
||||||||||||||||
| Net (loss) income attributable to common stockholders |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Weighted-average shares outstanding |
||||||||||||||||
| Diluted per share information: |
||||||||||||||||
| Net (loss) income attributable to common stockholders |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Weighted-average shares outstanding |
||||||||||||||||
| . | ||||||||||||||||
| Dividends declared per common share |
$ | $ | $ | $ | ||||||||||||
See notes to condensed consolidated financial statements.
| GRAY TELEVISION, INC. |
|||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) |
|||||||
| (in millions) |
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Other comprehensive (loss): |
||||||||||||||||
| Adjustment - fair value of interest rate caps |
( |
) | ( |
) | ||||||||||||
| Income tax benefit |
( |
) | ( |
) | ||||||||||||
| Other comprehensive loss, net |
( |
) | ( |
) | ||||||||||||
| Comprehensive (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
See notes to condensed consolidated financial statements.
| GRAY TELEVISION, INC. |
|||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) |
|||||||||||
| (in millions, except for number of shares) |
| Accumulated |
||||||||||||||||||||||||||||||||||||||||||||
| Class A |
Class A |
Common |
Other |
|||||||||||||||||||||||||||||||||||||||||
| Common Stock |
Common Stock |
Retained |
Treasury Stock |
Treasury Stock |
Comprehensive |
|||||||||||||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Earnings |
Shares |
Amount |
Shares |
Amount |
Loss |
Total |
||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
| Net income |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Common stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock: |
||||||||||||||||||||||||||||||||||||||||||||
| 401(k) Plan |
||||||||||||||||||||||||||||||||||||||||||||
| 2017 Equity and Incentive |
||||||||||||||||||||||||||||||||||||||||||||
| Compensation Plan: |
||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock awards |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Restricted stock unit awards |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
| Net income |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Common stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock: |
||||||||||||||||||||||||||||||||||||||||||||
| 2017 Equity and Incentive |
||||||||||||||||||||||||||||||||||||||||||||
| Compensation Plan: |
||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock awards |
( |
) | ||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
| Net income |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Common stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
See notes to condensed consolidated financial statements.
| GRAY TELEVISION, INC. |
|||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) |
|||||||||||||||||||||
| (in millions, except for number of shares) |
| Accumulated |
||||||||||||||||||||||||||||||||||||||||||||
| Class A |
Class A |
Common |
Other |
|||||||||||||||||||||||||||||||||||||||||
| Common Stock |
Common Stock |
Retained |
Treasury Stock |
Treasury Stock |
Comprehensive |
|||||||||||||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Earnings |
Shares |
Amount |
Shares |
Amount |
Loss |
Total |
||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Preferred stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Common stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of interest rate cap, net of tax |
- | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock: |
||||||||||||||||||||||||||||||||||||||||||||
| 401(k) Plan |
||||||||||||||||||||||||||||||||||||||||||||
| 2017 Equity and Incentive |
||||||||||||||||||||||||||||||||||||||||||||
| Compensation Plan: |
||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock awards |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Restricted stock unit awards |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
| Net income |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Common stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of interest rate cap, net of tax |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock: |
||||||||||||||||||||||||||||||||||||||||||||
| 2017 Equity and Incentive |
||||||||||||||||||||||||||||||||||||||||||||
| Compensation Plan: |
||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock awards |
( |
) | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Preferred stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Common stock dividends |
- | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Adjustment to fair value of interest rate cap, net of tax |
- | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation |
- | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||
See notes to condensed consolidated financial statements.
| GRAY TELEVISION, INC. |
|||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|||
| (in millions) |
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash provided by | ||||||||
| Operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of deferred loan costs | ||||||||
| Amortization of stock-based compensation | ||||||||
| Amortization of program broadcast rights | ||||||||
| Payments on program broadcast obligations | ( | ) | ( | ) | ||||
| Deferred income taxes | ( | ) | ( | ) | ||||
| Loss (gain) on disposal of assets, net | ( | ) | ||||||
| Loss from early extinguishment of debt | ||||||||
| Impairment of investments | ||||||||
| Impairment of goodwill and other intangible assets | ||||||||
| Other | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ||||||||
| Income taxes receivable or prepaid | ( | ) | ||||||
| Other current assets | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Employee compensation, benefits and pension cost | ( | ) | ( | ) | ||||
| Accrued network fees and other expenses | ||||||||
| Accrued interest | ||||||||
| Income taxes payable | ( | ) | ( | ) | ||||
| Deferred revenue | ||||||||
| Net cash provided by operating activities | ||||||||
| Investing activities: | ||||||||
| Acquisitions of businesses and broadcast licenses, net of cash acquired | ( | ) | ( | ) | ||||
| Proceeds from sale of television stations | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from Repack reimbursement (Note 1) | ||||||||
| Proceeds from asset sales | ||||||||
| Reimbursement of development costs | ||||||||
| Investments in broadcast, production and technology companies | ( | ) | ( | ) | ||||
| Other | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Proceeds from borrowings on long-term debt | ||||||||
| Repayments of borrowings on long-term debt | ( | ) | ( | ) | ||||
| Repurchase of common stock | ( | ) | ||||||
| Payments of common stock dividends | ( | ) | ( | ) | ||||
| Payments of preferred stock dividends | ( | ) | ( | ) | ||||
| Payments of taxes related to net share settlement of equity awards | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
See notes to condensed consolidated financial statements.
GRAY TELEVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
| 1. | Basis of Presentation |
The accompanying condensed consolidated balance sheet of Gray Television, Inc. (and its consolidated subsidiaries, except as the context otherwise provides,“Gray,” the “Company,” “we,” “us,” and “our”) as of December 31, 2022, which was derived from the Company’s audited financial statements as of December 31, 2022, and our accompanying unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine-month periods ended September 30, 2023 and 2022, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. We manage our business on the basis of
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
Investments in Broadcasting, Production and Technology Companies. We have investments in several television, production and technology companies. We account for all material investments in which we have significant influence over the investee under the equity method of accounting. Upon initial investment, we record equity method investments at cost. The amounts initially recognized are subsequently adjusted for our appropriate share of the net earnings or losses of the investee. We record any investee losses up to the carrying amount of the investment plus advances and loans made to the investee, and any financial guarantees made on behalf of the investee. We recognize our share in earnings and losses of the investee as miscellaneous expense, net in our consolidated statements of operations. Investments are also increased by contributions made to and decreased by the distributions from the investee. We evaluate equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired.
Investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control or do not exert significant influence, are carried at cost less impairments, if any, plus or minus changes in observable prices for those investments. Gains or losses resulting from changes in the carrying value of these investments are included as miscellaneous expense, net in our consolidated statements of operations. These investments are reported together as a non-current asset on our consolidated balance sheets.
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our actual results could differ materially from these estimated amounts. Our most significant estimates are our allowance for credit losses in receivables, valuation of goodwill and intangible assets, amortization of program rights and intangible assets, pension costs, income taxes, employee medical insurance claims, useful lives of property and equipment and contingencies.
Earnings Per Share. We compute basic earnings per share by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the relevant period. The weighted-average number of common shares outstanding does not include restricted shares. These shares, although classified as issued and outstanding, are considered contingently returnable until the restrictions lapse and, in accordance with U.S. GAAP, are not included in the basic earnings per share calculation until the shares vest. Diluted earnings per share is computed by including all potentially dilutive common shares, including restricted shares, in the diluted weighted-average shares outstanding calculation, unless their inclusion would be antidilutive.
The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding for the three and nine-month periods ended September 30, 2023 and 2022, respectively (in millions):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Weighted-average shares outstanding-basic | ||||||||||||||||
| Common stock equivalents for stock options and restricted stock | ||||||||||||||||
| Weighted-average shares outstanding-diluted | ||||||||||||||||
Accumulated Other Comprehensive Loss. Our accumulated other comprehensive loss balances as of September 30, 2023 and December 31, 2022, consist of adjustments to our pension liability, the fair value of our interest rate caps and the related income tax effects. Our comprehensive income for the nine-month periods ended September 30, 2023 and 2022 consisted of the adjustment of the fair value of our interest rate caps, net of tax, and net income. As of September 30, 2023 and December 31, 2022 the balances were as follows (in millions):
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Accumulated balances of items included in accumulated other comprehensive loss: | ||||||||
| Adjustment to pension liability | $ | ( | ) | $ | ( | ) | ||
| Adjustment to fair value of interest rate caps | ( | ) | ||||||
| Income tax benefit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | $ | ( | ) | $ | ( | ) | ||
Property and Equipment. Property and equipment are carried at cost, or in the case of acquired businesses, at fair value. Depreciation is computed principally by the straight-line method. The following table lists the components of property and equipment by major category (dollars in millions):
| Estimated | |||||||||||||
| September 30, | December 31, | Useful Lives | |||||||||||
| 2023 | 2022 | (in years) | |||||||||||
| Property and equipment, net: | |||||||||||||
| Land | $ | $ | |||||||||||
| Buildings and improvements | to | ||||||||||||
| Equipment | to | ||||||||||||
| 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.
In April 2017, the Federal Communications Commission (“FCC”) began the process of requiring certain television stations to change channels and/or modify their transmission facilities (“Repack”). The majority of our costs associated with Repack qualify for capitalization, rather than expense. Upon receipt of funds reimbursing us for our Repack costs, we record those proceeds as a component of our (gain) loss on disposal of assets, net.
The following tables provide additional information related to (loss) gain 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):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Loss) gain on disposal of assets, net: | ||||||||||||||||
| Proceeds from sale of fixed assets | $ | $ | $ | $ | ||||||||||||
| Proceeds from FCC - Repack | ||||||||||||||||
| Net book value of assets disposed | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-cash loss on divestitures | ( | ) | ||||||||||||||
| Securitization Facility | ||||||||||||||||
| Other | ||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ||||||||||
| Purchase of property and equipment: | ||||||||||||||||
| Recurring purchases - operations | $ | $ | ||||||||||||||
| Assembly Atlanta project | ||||||||||||||||
| Repack | ||||||||||||||||
| Total | $ | $ | ||||||||||||||
Accounts Receivable and Allowance for Credit Losses. We record accounts receivable from sales and service transactions in our condensed consolidated balance sheets at amortized cost adjusted for any write-offs and net of allowance for credit losses. We are exposed to credit risk primarily through sales of broadcast and digital advertising with a variety of direct and agency-based advertising customers, retransmission consent agreements with multichannel video program distributors and program production sales and services.
Our allowance for credit losses is an estimate of expected losses over the remaining contractual life of our receivables based on an ongoing analysis of collectability, historical collection experience, current economic and industry conditions and reasonable and supportable forecasts. The allowance is calculated using a historical loss rate applied to the current aging analysis. We may also apply additional allowance when warranted by specific facts and circumstances. We generally write off accounts receivable balances when the customer files for bankruptcy or when all commonly used methods of collection have been exhausted.
As of September 30, 2023, our allowance for credit losses includes a reserve of $
On February 23, 2023, we, certain of our subsidiaries and a wholly-owned special purpose subsidiary (the “SPV”), entered into a three-year $
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 one-month Secured Overnight Financing Rate (“SOFR”) plus a margin (
The proceeds of the Securitization Facility are classified as operating activities in our Condensed 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 $
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):
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for credit losses | ( | ) | ||||||
| Amounts written off | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
Recent Accounting Pronouncements. On July 26, 2023, the Securities and Exchange Commission (“SEC”) adopted new rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incidents by public companies that are subject to the reporting requirements of the Securities Exchange Act of 1934. Specifically, the new rules require current disclosure about material cybersecurity incidents. The purpose of the new rules is to require periodic disclosures about a registrant’s processes to assess, identify, and manage material cybersecurity risks, management’s role in assessing and managing material cybersecurity risks, and the board of directors’ oversight of cybersecurity risks. The amendments related to these rules became effective on September 5, 2023. The new rules will require us to provide additional disclosures in our annual report on Form 10-K and additional reporting requirements if and when a reportable incident occurs.
Implementation of ASC 848, Reference Rate Reform. On March 17, 2023, we amended the 2019 Senior Credit Facility and transitioned the variable rate on our 2019 Term Loan C from 1-month LIBOR to 1-month SOFR. We elected to apply the optional expedient in ASC 848, in connection with the amendment that enabled us to consider the amendment as a non-significant contract modification of the existing debt agreement. Additionally, for our 2021 Term Loan, we transitioned to the fallback language within the credit agreement and transitioned from 1-month LIBOR to 1-month SOFR as of March 31, 2023. As a result, the amendment to our 2019 Term Loan and fallback to SOFR in our 2021 Term Loan did not have a material impact to our financial statements.
| 2. |
Revenue |
Revenue Recognition. We recognize revenue when we have completed a specified service and effectively transferred the control of that service to a customer in return for an amount of consideration we expect to be entitled to receive. The amount of revenue recognized is determined by the amount of consideration specified in a contract with our customers. We have elected to exclude taxes assessed by a governmental authority on transactions with our customers from our revenue. Any unremitted balance is included in current liabilities on our balance sheets.
We record a deposit liability for cash deposits received from our customers that are to be applied as payment once the performance obligation arises and is satisfied. These deposits are recorded as deposit liabilities on our balance sheets. When we invoice our customers for completed performance obligations, we are unconditionally entitled to receive payment of the invoiced amounts. Therefore, we record invoiced amounts in accounts receivable on our balance sheets. We generally require amounts payable under advertising contracts with our political advertising customers to be paid for in advance. We record the receipt of this cash as a deposit liability. Once the advertisement has been broadcast, the revenue is earned, and we record the revenue and reduce the balance in this deposit liability account. We recorded $
Disaggregation of Revenue. Revenue from our production companies segment is generated through our direct sales channel. Revenue from our broadcasting 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):
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Market and service type: |
||||||||||||||||
| Advertising: |
||||||||||||||||
| Core |
$ | $ | $ | $ | ||||||||||||
| Political |
||||||||||||||||
| Total advertising |
||||||||||||||||
| Retransmission consent |
||||||||||||||||
| Production companies |
||||||||||||||||
| Other |
||||||||||||||||
| Total revenue |
$ | $ | $ | $ | ||||||||||||
| Sales channel: |
||||||||||||||||
| Direct |
$ | $ | $ | $ | ||||||||||||
| Advertising agency intermediary |
||||||||||||||||
| Total revenue |
$ | $ | $ | $ | ||||||||||||
| 3. |
Acquisition and Divestiture |
On May 1, 2023, we and Marquee Broadcasting, Inc. (“Marquee”) completed transactions in which we sold television station KNIN (FOX) in the Boise, Idaho market (DMA 102) for $
The following table summarizes the preliminary values of the assets acquired of WPGA (in millions):
| Property and equipment |
$ | |||
| Broadcast licenses |
||||
| Total |
$ |
These amounts are based upon management’s preliminary estimate of the fair values using valuation techniques including income, cost and market approaches. In determining the preliminary fair value of the acquired assets, the fair values were determined based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.
Property and equipment are recorded at their fair value and are being depreciated over their estimated useful lives ranging from
In this transaction an immaterial amount of goodwill was acquired.
The sale of television station KNIN resulted in a loss on disposal of $
| 4. | Long-term Debt |
As of September 30, 2023 and December 31, 2022, long-term debt consisted of obligations under our 2019 Senior Credit Facility (as defined below), our
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Long-term debt: | ||||||||
| 2019 Senior Credit Facility: | ||||||||
| 2017 Term Loan (matures February 7, 2024) | $ | $ | ||||||
| 2019 Term Loan (matures January 2, 2026) | ||||||||
| 2021 Term Loan (matures December 1, 2028) | ||||||||
| Revolving Credit Facility | ||||||||
| 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 - 2017 Term Loan | ( | ) | ||||||
| Unamortized deferred loan costs - 2019 Term Loan | ( | ) | ( | ) | ||||
| Unamortized deferred loan costs - 2021 Term Loan | ( | ) | ( | ) | ||||
| Unamortized deferred loan costs - 2026 Notes | ( | ) | ( | ) | ||||
| Unamortized deferred loan costs - 2027 Notes | ( | ) | ( | ) | ||||
| Unamortized deferred loan costs - 2030 Notes | ( | ) | ( | ) | ||||
| Unamortized deferred loan costs - 2031 Notes | ( | ) | ( | ) | ||||
| Unamortized premium - 2026 Notes | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term debt, less current portion and deferred financing costs | $ | $ | ||||||
| Borrowing availability under Revolving Credit Facility | $ | $ | ||||||
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. As of September 30, 2023, the interest rate on the balance outstanding under the Revolving credit facility was
Interest Rate Caps. On February 23, 2023, we entered into two interest rate caps pursuant to an International Swaps and Derivatives Association ("ISDA") Master Agreement with two counterparties, Wells Fargo Bank, NA and Truist Bank, respectively. At September 30, 2023, the caps have a combined notional value of approximately $
The interest rate caps, as amended, effectively limit the annual interest charged on our 2021 Term Loan and our 2019 Term Loan to a maximum of 1-month Term SOFR of 4.97% and 5.015%. We are required to pay aggregate fees in connection with the interest rate caps of approximately $
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 $
For all of our interest bearing obligations, we made interest payments of approximately $
As of September 30, 2023, the aggregate minimum principal maturities of our long term debt for the remainder of 2023 and the succeeding 5 years were as follows (in millions):
| Minimum Principal Maturities | ||||||||||||||||||||||||
| Year | 2019 Senior Credit Facility | 2026 Notes | 2027 Notes | 2030 Notes | 2031 Notes | Total | ||||||||||||||||||
| Remainder of 2023 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| 2024 | ||||||||||||||||||||||||
| 2025 | ||||||||||||||||||||||||
| 2026 | ||||||||||||||||||||||||
| 2027 | ||||||||||||||||||||||||
| 2028 | ||||||||||||||||||||||||
| Thereafter | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
As of September 30, 2023, there were no significant restrictions on the ability of Gray Television, Inc.'s subsidiaries to distribute cash to Gray or to the guarantor subsidiaries. The 2019 Senior Credit Facility contains affirmative and restrictive covenants with which we must comply. The 2026 Notes, the 2027 Notes, the 2030 Notes and the 2031 Notes also include covenants with which we must comply. As of September 30, 2023 and December 31, 2022, we were in compliance with all required covenants under all our debt obligations.
In the nine-months ended September 30, 2023, we paid the required principal reductions of $
| 5. |
Fair Value Measurement |
We measure certain assets and liabilities at fair value, which are classified by the FASB Codification within the fair value hierarchy as level 1, 2, or 3, on the basis of whether the measurement employs observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions and consider information about readily available market participant assumptions.
| ● |
Level 1: Quoted prices for identical instruments in active markets |
| ● |
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets |
| ● |
Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable |
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The use of different market assumptions or methodologies could have a material effect on the fair value measurement.
The carrying amounts of accounts receivable, prepaid and other current assets, accounts payable, employee compensation and benefits, accrued interest, other accrued expenses, and deferred revenue approximate fair value at both September 30, 2023 and December 31, 2022.
As of September 30, 2023 and December 31, 2022, the carrying amount of our long-term debt was $
| 6. |
Stockholders’ Equity |
We are authorized to issue
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 $
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 September 30, 2023, we had reserved
| 7. |
Retirement Plans |
The components of our net periodic pension benefit are included in miscellaneous (expense) income, net in our condensed consolidated statements of operations. During the nine-months ended September 30, 2023, the amount recorded as a benefit was not material. During the nine-months ended September 30, 2023, we contributed $
During the nine-month period ended September 30, 2023, we contributed $
| 8. |
Stock-based Compensation |
We recognize compensation expense for stock-based payment awards made to our employees, consultants and directors. The following table provides our stock-based compensation expense and related income tax benefit for the three and nine-month periods ended September 30, 2023 and 2022 (in millions):
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Stock-based compensation expense, gross |
$ | $ | $ | $ | ||||||||||||
| Income tax benefit at our statutory rate associated with share-based compensation |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Stock-based compensation expense, net |
$ | $ | $ | $ | ||||||||||||
All shares of Class A common stock and 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 Class A common stock, common stock and restricted stock units activity for the nine-month periods ended September 30, 2023 and 2022 is as follows:
| Nine Months Ended |
||||||||||||||||
| September 30, 2023 |
September 30, 2022 |
|||||||||||||||
| Weighted- |
Weighted- |
|||||||||||||||
| average |
average |
|||||||||||||||
| Grant Date |
Grant Date |
|||||||||||||||
| Number of |
Fair Value |
Number of |
Fair Value |
|||||||||||||
| Shares |
Per Share |
Shares |
Per Share |
|||||||||||||
| Restricted stock - common: |
||||||||||||||||
| Outstanding - beginning of period (1) |
$ | $ | ||||||||||||||
| Granted(1) |
$ | $ | ||||||||||||||
| Vested |
( |
) | $ | ( |
) | $ | ||||||||||
| 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.
| 9. |
Leases |
We determine if an arrangement is a lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known. Right-of-use (“ROU”) assets related to our operating lease liabilities are measured at lease commencement based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives. Our lease terms that are used in determining our operating lease liabilities at lease commencement may include options to extend or terminate the leases when it is reasonably certain that we will exercise such options. We amortize our ROU assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses. We have lease agreements with lease and non-lease components, and in such cases, we generally account for the components separately with only the lease component included in the calculation of the ROU asset and lease liability.
We have operating leases that primarily relate to certain of our facilities, data centers and vehicles. As of September 30, 2023, our operating leases substantially have remaining terms of year to
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 nine-months ended September 30, 2023.
As of September 30, 2023, the weighted-average remaining term of our operating leases was approximately
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Lease expense |
||||||||||||||||
| Operating lease expense |
$ | $ | $ | $ | ||||||||||||
| Short-term lease expense |
||||||||||||||||
| Total lease expense |
$ | $ | $ | $ | ||||||||||||
The maturities of operating lease liabilities as of September 30, 2023, for the remainder of 2023 and the succeeding years were as follows (in millions):
| Year ending December 31, |
Operating Leases |
|||
| Remainder of 2023 |
$ | |||
| 2024 |
||||
| 2025 |
||||
| 2026 |
||||
| 2027 |
||||
| Thereafter |
||||
| Total lease payments |
||||
| Less: Imputed interest |
( |
) | ||
| Present value of lease liabilities |
$ | |||
| 10. |
Commitments and Contingencies |
We are and expect to continue to be subject to legal actions, proceedings and claims that arise in the normal course of our business. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions, proceedings and claims will not materially affect our financial position, results of operations or cash flows, although legal proceedings are subject to inherent uncertainties, and unfavorable rulings or events could have a material adverse impact on our financial position, results of operations or cash flows.
| 11. |
Goodwill and Intangible Assets |
Several years ago, our Raycom Sports subsidiary sublicensed certain Atlantic Coast Conference (“ACC”) football and basketball games from ESPN to Fox Sports that were assumed by Diamond Sports Group, LLC (“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 Network (“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 $
A summary of changes in our goodwill and other intangible assets, on a net basis, for the nine-months ended September 30, 2023 is as follows (in millions):
| Net Balance at |
Acquisitions |
Net Balance at |
||||||||||||||||||
| December 31, |
And |
September 30, |
||||||||||||||||||
| 2022 |
Adjustments, Net |
Impairments |
Amortization |
2023 |
||||||||||||||||
| Broadcast licenses |
$ | $ | ( |
) | $ | - | $ | - | $ | |||||||||||
| Goodwill |
( |
) | ( |
) | - | |||||||||||||||
| Finite-lived intangible assets |
( |
) | ( |
) | ||||||||||||||||
| Total intangible assets net of accumulated amortization |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||
A summary of the changes in our goodwill, on a gross basis, for the nine-months ended September 30, 2023, is as follows (in millions):
| As of |
Acquisitions |
As of |
||||||||||||||
| December 31, |
And |
September 30, |
||||||||||||||
| 2022 |
Adjustments, Net |
Impairments |
2023 |
|||||||||||||
| Goodwill, gross |
$ | $ | ( |
) | $ | - | $ | |||||||||
| Accumulated goodwill impairment |
( |
) | - | ( |
) | ( |
) | |||||||||
| Goodwill, net |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
As of September 30, 2023 and December 31, 2022, our intangible assets and related accumulated amortization consisted of the following (in millions):
| As of September 30, 2023 |
As of December 31, 2022 |
|||||||||||||||||||||||
| Accumulated |
Accumulated |
|||||||||||||||||||||||
| Gross |
Amortization |
Net |
Gross |
Amortization |
Net |
|||||||||||||||||||
| Intangible assets not currently subject to amortization: |
||||||||||||||||||||||||
| Broadcast licenses |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Goodwill |
||||||||||||||||||||||||
| $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||
| Intangible assets subject to amortization: |
||||||||||||||||||||||||
| Network affiliation agreements |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Other finite lived intangible assets |
( |
) | ( |
) | ||||||||||||||||||||
| $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||
| Total intangibles |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
Amortization expense for the nine-month periods ended September 30, 2023 and 2022 was $
| 12. |
Income Taxes |
For the three and nine-month periods ended September 30, 2023 and 2022, our income tax expense and effective income tax rates were as follows (dollars in millions):
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||
| Income tax expense (benefit) |
$ | $ | $ | ( |
) | $ | ||||||||||
| 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
During the nine-months ended September 30, 2023, we made $
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 a refund of $
| 13. |
Segment information |
We operate in
| Production |
||||||||||||||||
| As of and for the nine months ended September 30, 2023: |
Broadcasting |
Companies |
Other |
Consolidated |
||||||||||||
| Revenue (less agency commissions) |
$ | $ | $ | $ | ||||||||||||
| Operating expenses before depreciation, amortization, impairment and loss on disposal of assets, net: |
||||||||||||||||
| Depreciation and amortization |
||||||||||||||||
| Impairment of goodwill and other intangible assets |
||||||||||||||||
| Loss on disposal of assets, net |
||||||||||||||||
| Operating expenses |
||||||||||||||||
| Operating income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| Interest expense |
$ | $ | $ | $ | ||||||||||||
| Capital expenditures (excluding business combinations) |
$ | $ | $ | $ | ||||||||||||
| Goodwill |
$ | $ | $ | $ | ||||||||||||
| Total assets |
$ | $ | $ | $ | ||||||||||||
| For the nine months ended September 30, 2022: |
||||||||||||||||
| Revenue (less agency commissions) |
$ | $ | $ | $ | ||||||||||||
| Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net: |
||||||||||||||||
| Depreciation and amortization |
||||||||||||||||
| (Gain) loss on disposal of assets, net |
( |
) | ( |
) | ||||||||||||
| Operating expenses |
||||||||||||||||
| Operating income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||
| Interest expense |
$ | $ | $ | $ | ||||||||||||
| Capital expenditures (excluding business combinations) |
$ | $ | $ | $ | ||||||||||||
| As of December 31, 2022: |
||||||||||||||||
| Goodwill |
$ | $ | $ | $ | ||||||||||||
| Total assets |
$ | $ | $ | $ | ||||||||||||
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 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):
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||||||||
| 2023 |
2022 |
2023 |
2022 |
|||||||||||||||||||||||||||||
| Percent |
Percent |
Percent |
Percent |
|||||||||||||||||||||||||||||
| Amount |
of Total |
Amount |
of Total |
Amount |
of Total |
Amount |
of Total |
|||||||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||||||
| 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 | ||||
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.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
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.
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 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.
PART II. OTHER INFORMATION
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, 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.
Item 5. Other Information
Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report:
| Exhibit Number |
Description of Document |
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| 31.1 |
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| 31.2 |
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| 32.1 |
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| 32.2 |
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| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
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| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
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| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 104 |
The cover page from Gray Television, Inc.’s Quarterly Report on Form 10-Q for the fiscal period ended September 30, 2023 has been formatted in Inline XBRL and contained in Exhibit 101. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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GRAY TELEVISION, INC. (Registrant) |
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| Date: November 8, 2023 |
By: |
/s/ James C. Ryan |
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James C. Ryan |
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Executive Vice President and Chief Financial Officer |
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EXHIBIT 31.1
CERTIFICATION
I, Hilton H. Howell, Jr., certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of Gray Television, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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Date: November 8, 2023 |
By: |
/s/ Hilton H. Howell, Jr. |
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Hilton H. Howell, Jr. |
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Executive Chairman and Chief Executive Officer |
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EXHIBIT 31.2
CERTIFICATION
I, James C. Ryan, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of Gray Television, Inc.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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Date: November 8, 2023 |
By: |
/s/ James C. Ryan |
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James C. Ryan |
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| Executive Vice President and Chief Financial Officer | |||
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying quarterly report on Form 10-Q of Gray Television, Inc. (the “Company”) for the quarterly period ended September 30, 2023 (the “Periodic Report”), the undersigned Chief Executive Officer of the Company, hereby certifies pursuant to Title 18, Section 1350 United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his individual knowledge and belief, that the Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 8, 2023
/s/ Hilton H. Howell, Jr.
Hilton H. Howell, Jr.
Executive Chairman and Chief Executive Officer
A signed original of this written statement required by Section 906 has been provided to Gray Television, Inc. and will be retained by Gray Television, Inc. and furnished to the SEC or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying quarterly report on Form 10-Q of Gray Television, Inc. (the “Company”) for the quarterly period ended September 30, 2023 (the “Periodic Report”), the undersigned Chief Financial Officer of the Company, hereby certifies pursuant to Title 18, Section 1350 United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his individual knowledge and belief, that the Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 8, 2023
/s/ James C. Ryan
James C. Ryan
Executive Vice President and Chief Financial Officer
A signed original of this written statement required by Section 906 has been provided to Gray Television, Inc. and will be retained by Gray Television, Inc. and furnished to the SEC or its staff upon request.
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Net (loss) income | $ (40) | $ 108 | $ (67) | $ 269 |
| Other comprehensive (loss): | ||||
| Adjustment - fair value of interest rate caps | (3) | 0 | (7) | 0 |
| Income tax benefit | (1) | 0 | (2) | 0 |
| Other comprehensive loss, net | (2) | 0 | (5) | 0 |
| Comprehensive (loss) income | $ (42) | $ 108 | $ (72) | $ 269 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Millions |
Restricted Stock [Member]
Common Stock [Member]
Common Class A [Member]
|
Restricted Stock [Member]
Common Stock [Member]
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Restricted Stock [Member]
Retained Earnings [Member]
|
Restricted Stock [Member]
Treasury Stock, Common [Member]
Common Class A [Member]
|
Restricted Stock [Member]
Treasury Stock, Common [Member]
|
Restricted Stock [Member]
AOCI Attributable to Parent [Member]
|
Restricted Stock [Member] |
Restricted Stock Units (RSUs) [Member]
Common Stock [Member]
Common Class A [Member]
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Restricted Stock Units (RSUs) [Member]
Common Stock [Member]
|
Restricted Stock Units (RSUs) [Member]
Retained Earnings [Member]
|
Restricted Stock Units (RSUs) [Member]
Treasury Stock, Common [Member]
Common Class A [Member]
|
Restricted Stock Units (RSUs) [Member]
Treasury Stock, Common [Member]
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Restricted Stock Units (RSUs) [Member]
AOCI Attributable to Parent [Member]
|
Restricted Stock Units (RSUs) [Member] |
Common Stock [Member]
Common Class A [Member]
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Common Stock [Member] |
Retained Earnings [Member] |
Treasury Stock, Common [Member]
Common Class A [Member]
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Treasury Stock, Common [Member] |
AOCI Attributable to Parent [Member] |
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance (in shares) at Dec. 31, 2021 | 9,424,691 | 104,286,324 | (1,998,179) | (16,747,268) | |||||||||||||||||
| Balance at Dec. 31, 2021 | $ 39 | $ 1,127 | $ 869 | $ (28) | $ (223) | $ (27) | $ 1,757 | ||||||||||||||
| Net (loss) income | 0 | 0 | 62 | 0 | 0 | 0 | 62 | ||||||||||||||
| Preferred stock dividends | 0 | 0 | (13) | 0 | 0 | 0 | (13) | ||||||||||||||
| Common stock dividends | $ 0 | $ 0 | (8) | $ 0 | $ 0 | 0 | (8) | ||||||||||||||
| 401(k) Plan (in shares) | 0 | 307,885 | 0 | 0 | |||||||||||||||||
| 401(k) Plan | $ 0 | $ 7 | 0 | $ 0 | $ 0 | 0 | 7 | ||||||||||||||
| Restricted stock awards (in shares) | 250,448 | 333,382 | (103,738) | (138,959) | 0 | 108,921 | 0 | (32,958) | |||||||||||||
| Restricted stock awards | $ 0 | $ 0 | $ 0 | $ (2) | $ (3) | $ 0 | $ (5) | $ 0 | $ 0 | $ 0 | $ 0 | $ (1) | $ 0 | $ (1) | |||||||
| Stock-based compensation | 2 | 3 | 0 | 0 | 0 | 0 | 5 | ||||||||||||||
| Restricted stock awards | $ (0) | $ (0) | (0) | $ 2 | $ 3 | (0) | 5 | $ (0) | $ (0) | (0) | $ (0) | $ 1 | (0) | 1 | |||||||
| Stock-based compensation | $ 2 | $ 3 | 0 | $ 0 | $ 0 | 0 | 5 | ||||||||||||||
| Balance (in shares) at Mar. 31, 2022 | 9,675,139 | 105,036,512 | (2,101,917) | (16,919,185) | |||||||||||||||||
| Balance at Mar. 31, 2022 | $ 41 | $ 1,137 | 910 | $ (30) | $ (227) | (27) | 1,804 | ||||||||||||||
| Balance (in shares) at Dec. 31, 2021 | 9,424,691 | 104,286,324 | (1,998,179) | (16,747,268) | |||||||||||||||||
| Balance at Dec. 31, 2021 | $ 39 | $ 1,127 | 869 | $ (28) | $ (223) | (27) | 1,757 | ||||||||||||||
| Net (loss) income | 269 | ||||||||||||||||||||
| Common stock dividends | (23) | ||||||||||||||||||||
| Balance (in shares) at Sep. 30, 2022 | 9,675,139 | 105,104,057 | (2,101,917) | (19,582,841) | |||||||||||||||||
| Balance at Sep. 30, 2022 | $ 44 | $ 1,146 | 1,076 | $ (30) | $ (277) | (27) | 1,932 | ||||||||||||||
| Balance (in shares) at Mar. 31, 2022 | 9,675,139 | 105,036,512 | (2,101,917) | (16,919,185) | |||||||||||||||||
| Balance at Mar. 31, 2022 | $ 41 | $ 1,137 | 910 | $ (30) | $ (227) | (27) | 1,804 | ||||||||||||||
| Net (loss) income | 0 | 0 | 99 | 0 | 0 | 0 | 99 | ||||||||||||||
| Preferred stock dividends | 0 | 0 | (13) | 0 | 0 | 0 | (13) | ||||||||||||||
| Common stock dividends | 0 | 0 | (8) | 0 | 0 | 0 | (8) | ||||||||||||||
| Restricted stock awards (in shares) | 0 | 67,545 | 0 | (17,463) | |||||||||||||||||
| Restricted stock awards | $ 0 | $ 0 | 0 | $ 0 | $ 0 | 0 | 0 | ||||||||||||||
| Stock-based compensation | $ 2 | $ 4 | 0 | $ 0 | $ 0 | 0 | 6 | ||||||||||||||
| Restricted stock awards | $ 0 | $ 0 | 0 | $ 0 | $ 0 | 0 | 0 | ||||||||||||||
| Repurchase of common stock (in shares) | 0 | 0 | 0 | (2,646,193) | |||||||||||||||||
| Repurchase of common stock | $ 0 | $ 0 | 0 | $ 0 | $ (50) | 0 | (50) | ||||||||||||||
| Stock-based compensation | $ 2 | $ 4 | 0 | $ 0 | $ 0 | 0 | 6 | ||||||||||||||
| Balance (in shares) at Jun. 30, 2022 | 9,675,139 | 105,104,057 | (2,101,917) | (19,582,841) | |||||||||||||||||
| Balance at Jun. 30, 2022 | $ 43 | $ 1,141 | 988 | $ (30) | $ (277) | (27) | 1,838 | ||||||||||||||
| Net (loss) income | 0 | 0 | 108 | 0 | 0 | 0 | 108 | ||||||||||||||
| Preferred stock dividends | 0 | 0 | (13) | 0 | 0 | 0 | (13) | ||||||||||||||
| Common stock dividends | 0 | 0 | (7) | 0 | 0 | 0 | (7) | ||||||||||||||
| Stock-based compensation | 1 | 5 | 0 | 0 | 0 | 0 | 6 | ||||||||||||||
| Stock-based compensation | $ 1 | $ 5 | 0 | $ 0 | $ 0 | 0 | 6 | ||||||||||||||
| Balance (in shares) at Sep. 30, 2022 | 9,675,139 | 105,104,057 | (2,101,917) | (19,582,841) | |||||||||||||||||
| Balance at Sep. 30, 2022 | $ 44 | $ 1,146 | 1,076 | $ (30) | $ (277) | (27) | 1,932 | ||||||||||||||
| Balance (in shares) at Dec. 31, 2022 | 9,675,139 | 105,104,057 | (2,130,724) | (19,636,786) | |||||||||||||||||
| Balance at Dec. 31, 2022 | $ 45 | $ 1,150 | 1,242 | $ (31) | $ (278) | (12) | 2,116 | ||||||||||||||
| Net (loss) income | 0 | 0 | (31) | 0 | 0 | 0 | (31) | ||||||||||||||
| Preferred stock dividends | 0 | 0 | (13) | 0 | 0 | 0 | (13) | ||||||||||||||
| Common stock dividends | $ 0 | $ 0 | (7) | $ 0 | $ 0 | 0 | (7) | ||||||||||||||
| 401(k) Plan (in shares) | 0 | 819,898 | 0 | 0 | |||||||||||||||||
| 401(k) Plan | $ 0 | $ 9 | 0 | $ 0 | $ 0 | 0 | 9 | ||||||||||||||
| Restricted stock awards (in shares) | 25,022 | 12,227 | (92,196) | (129,636) | 0 | 247,953 | 0 | (80,622) | |||||||||||||
| Restricted stock awards | $ 0 | $ 0 | 0 | $ (1) | $ (2) | 0 | (3) | $ 0 | $ 0 | 0 | $ 0 | $ (1) | 0 | (1) | |||||||
| Stock-based compensation | 0 | 2 | 0 | 0 | 0 | 0 | 2 | ||||||||||||||
| Restricted stock awards | $ (0) | $ (0) | (0) | $ 1 | $ 2 | (0) | 3 | $ (0) | $ (0) | $ (0) | $ (0) | $ 1 | $ (0) | $ 1 | |||||||
| Stock-based compensation | 0 | 2 | 0 | 0 | 0 | 0 | 2 | ||||||||||||||
| Adjustment to fair value of interest rate cap, net of tax | $ 0 | $ 0 | 0 | $ 0 | $ 0 | (11) | (11) | ||||||||||||||
| Balance (in shares) at Mar. 31, 2023 | 9,700,161 | 106,184,135 | (2,222,920) | (19,847,044) | |||||||||||||||||
| Balance at Mar. 31, 2023 | $ 45 | $ 1,161 | 1,191 | $ (32) | $ (281) | (23) | 2,061 | ||||||||||||||
| Balance (in shares) at Dec. 31, 2022 | 9,675,139 | 105,104,057 | (2,130,724) | (19,636,786) | |||||||||||||||||
| Balance at Dec. 31, 2022 | $ 45 | $ 1,150 | 1,242 | $ (31) | $ (278) | (12) | 2,116 | ||||||||||||||
| Net (loss) income | (67) | ||||||||||||||||||||
| Common stock dividends | (22) | ||||||||||||||||||||
| Balance (in shares) at Sep. 30, 2023 | 10,413,993 | 107,179,827 | (2,222,920) | (19,916,072) | |||||||||||||||||
| Balance at Sep. 30, 2023 | $ 46 | $ 1,172 | 1,114 | $ (32) | $ (281) | (17) | 2,002 | ||||||||||||||
| Balance (in shares) at Mar. 31, 2023 | 9,700,161 | 106,184,135 | (2,222,920) | (19,847,044) | |||||||||||||||||
| Balance at Mar. 31, 2023 | $ 45 | $ 1,161 | 1,191 | $ (32) | $ (281) | (23) | 2,061 | ||||||||||||||
| Net (loss) income | 0 | 0 | 4 | 0 | 0 | 0 | 4 | ||||||||||||||
| Preferred stock dividends | 0 | 0 | (13) | 0 | 0 | 0 | (13) | ||||||||||||||
| Common stock dividends | 0 | 0 | (7) | 0 | 0 | 0 | (7) | ||||||||||||||
| Restricted stock awards (in shares) | 713,832 | 995,692 | 0 | (69,028) | |||||||||||||||||
| Restricted stock awards | $ 0 | $ 0 | 0 | $ 0 | $ 0 | 0 | 0 | ||||||||||||||
| Stock-based compensation | 0 | 7 | 0 | 0 | 0 | 0 | 7 | ||||||||||||||
| Restricted stock awards | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||||||||
| Stock-based compensation | 0 | 7 | 0 | 0 | 0 | 0 | 7 | ||||||||||||||
| Adjustment to fair value of interest rate cap, net of tax | $ 0 | $ 0 | 0 | $ 0 | $ 0 | 8 | 8 | ||||||||||||||
| Balance (in shares) at Jun. 30, 2023 | 10,413,993 | 107,179,827 | (2,222,920) | (19,916,072) | |||||||||||||||||
| Balance at Jun. 30, 2023 | $ 45 | $ 1,168 | 1,175 | $ (32) | $ (281) | (15) | 2,060 | ||||||||||||||
| Net (loss) income | 0 | 0 | (40) | 0 | 0 | 0 | (40) | ||||||||||||||
| Preferred stock dividends | 0 | 0 | (13) | 0 | 0 | 0 | (13) | ||||||||||||||
| Common stock dividends | 0 | 0 | (8) | 0 | 0 | 0 | (8) | ||||||||||||||
| Stock-based compensation | 1 | 4 | 0 | 0 | 0 | 0 | 5 | ||||||||||||||
| Stock-based compensation | 1 | 4 | 0 | 0 | 0 | 0 | 5 | ||||||||||||||
| Adjustment to fair value of interest rate cap, net of tax | $ 0 | $ 0 | 0 | $ 0 | $ 0 | (2) | (2) | ||||||||||||||
| Balance (in shares) at Sep. 30, 2023 | 10,413,993 | 107,179,827 | (2,222,920) | (19,916,072) | |||||||||||||||||
| Balance at Sep. 30, 2023 | $ 46 | $ 1,172 | $ 1,114 | $ (32) | $ (281) | $ (17) | $ 2,002 |
Note 1 - Basis of Presentation |
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| Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] |
The accompanying condensed consolidated balance sheet of Gray Television, Inc. (and its consolidated subsidiaries, except as the context otherwise provides,“Gray,” the “Company,” “we,” “us,” and “our”) as of December 31, 2022, which was derived from the Company’s audited financial statements as of December 31, 2022, and our accompanying unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine-month periods ended September 30, 2023 and 2022, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. We manage our business on the basis of two operating segments: broadcasting and production companies. Unless otherwise indicated, all station rank, in-market share and television household data herein are derived from reports prepared by The Nielsen Company, LLC (“Nielsen”) and/or Comscore, Inc. (“Comscore”). While we believe this data to be accurate and reliable, we have not independently verified such data nor have we ascertained the underlying assumptions relied upon therein, and cannot guarantee the accuracy or completeness of such data. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). Our financial condition as of, and operating results for the three and nine-months ended September 30, 2023, are not necessarily indicative of the financial condition or results that may be expected for any future interim period or for the year ending December 31, 2023.
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.
Investments in Broadcasting, Production and Technology Companies. We have investments in several television, production and technology companies. We account for all material investments in which we have significant influence over the investee under the equity method of accounting. Upon initial investment, we record equity method investments at cost. The amounts initially recognized are subsequently adjusted for our appropriate share of the net earnings or losses of the investee. We record any investee losses up to the carrying amount of the investment plus advances and loans made to the investee, and any financial guarantees made on behalf of the investee. We recognize our share in earnings and losses of the investee as miscellaneous expense, net in our consolidated statements of operations. Investments are also increased by contributions made to and decreased by the distributions from the investee. We evaluate equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired.
Investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control or do not exert significant influence, are carried at cost less impairments, if any, plus or minus changes in observable prices for those investments. Gains or losses resulting from changes in the carrying value of these investments are included as miscellaneous expense, net in our consolidated statements of operations. These investments are reported together as a non-current asset on our consolidated balance sheets.
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our actual results could differ materially from these estimated amounts. Our most significant estimates are our allowance for credit losses in receivables, valuation of goodwill and intangible assets, amortization of program rights and intangible assets, pension costs, income taxes, employee medical insurance claims, useful lives of property and equipment and contingencies.
Earnings Per Share. We compute basic earnings per share by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the relevant period. The weighted-average number of common shares outstanding does not include restricted shares. These shares, although classified as issued and outstanding, are considered contingently returnable until the restrictions lapse and, in accordance with U.S. GAAP, are not included in the basic earnings per share calculation until the shares vest. Diluted earnings per share is computed by including all potentially dilutive common shares, including restricted shares, in the diluted weighted-average shares outstanding calculation, unless their inclusion would be antidilutive.
The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding for the three and nine-month periods ended September 30, 2023 and 2022, respectively (in millions):
Accumulated Other Comprehensive Loss. Our accumulated other comprehensive loss balances as of September 30, 2023 and December 31, 2022, consist of adjustments to our pension liability, the fair value of our interest rate caps and the related income tax effects. Our comprehensive income for the nine-month periods ended September 30, 2023 and 2022 consisted of the adjustment of the fair value of our interest rate caps, net of tax, and net income. As of September 30, 2023 and December 31, 2022 the balances were as follows (in millions):
Property and Equipment. Property and equipment are carried at cost, or in the case of acquired businesses, at fair value. Depreciation is computed principally by the straight-line method. The following table lists the components of property and equipment by major category (dollars in millions):
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.
In April 2017, the Federal Communications Commission (“FCC”) began the process of requiring certain television stations to change channels and/or modify their transmission facilities (“Repack”). The majority of our costs associated with Repack qualify for capitalization, rather than expense. Upon receipt of funds reimbursing us for our Repack costs, we record those proceeds as a component of our (gain) loss on disposal of assets, net.
The following tables provide additional information related to (loss) gain 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):
Accounts Receivable and Allowance for Credit Losses. We record accounts receivable from sales and service transactions in our condensed consolidated balance sheets at amortized cost adjusted for any write-offs and net of allowance for credit losses. We are exposed to credit risk primarily through sales of broadcast and digital advertising with a variety of direct and agency-based advertising customers, retransmission consent agreements with multichannel video program distributors and program production sales and services.
Our allowance for credit losses is an estimate of expected losses over the remaining contractual life of our receivables based on an ongoing analysis of collectability, historical collection experience, current economic and industry conditions and reasonable and supportable forecasts. The allowance is calculated using a historical loss rate applied to the current aging analysis. We may also apply additional allowance when warranted by specific facts and circumstances. We generally write off accounts receivable balances when the customer files for bankruptcy or when all commonly used methods of collection have been exhausted.
As of September 30, 2023, our allowance for credit losses includes a reserve of $17 million for the full amount owed to us by Diamond Sports Group, LLC (“Diamond”), as of that date, as a result of Diamond, a counterparty to certain contracts with us, commencing voluntary Chapter 11 bankruptcy proceedings on March 14, 2023.
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, and certain third-party financial institutions (the “Purchasers”). 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 matures on February 23, 2026, and is subject to customary termination events related to transactions of this type. The sale of receivables from the SPV is accounted for in the Company’s financial statements as a "true-sale" under Accounting Standards Codification ("ASC") Topic 860.
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 one-month Secured Overnight Financing Rate (“SOFR”) plus a margin (100 basis points) 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. Servicing fee income recognized during the nine-months ended September 30, 2023, was not material. 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 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 Condensed 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 $300 million at September 30, 2023, which was derecognized from the Condensed Consolidated Balance Sheets. As collateral against sold receivables, the SPV maintains a certain level of unsold receivables, which was $250 million at September 30, 2023. Total receivables sold under the Securitization Facility were $550 million for the quarter ended September 30, 2023. Pursuant to the Securitization Facility, we recognized a charge of $8 million in the 2023 nine-month period that represents the discount on the accounts receivable balance transferred to the SPV. This discount is included in our loss on disposal of assets in our Condensed Consolidated Statements of Operations.
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):
Recent Accounting Pronouncements. On July 26, 2023, the Securities and Exchange Commission (“SEC”) adopted new rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incidents by public companies that are subject to the reporting requirements of the Securities Exchange Act of 1934. Specifically, the new rules require current disclosure about material cybersecurity incidents. The purpose of the new rules is to require periodic disclosures about a registrant’s processes to assess, identify, and manage material cybersecurity risks, management’s role in assessing and managing material cybersecurity risks, and the board of directors’ oversight of cybersecurity risks. The amendments related to these rules became effective on September 5, 2023. The new rules will require us to provide additional disclosures in our annual report on Form 10-K and additional reporting requirements if and when a reportable incident occurs.
Implementation of ASC 848, Reference Rate Reform. On March 17, 2023, we amended the 2019 Senior Credit Facility and transitioned the variable rate on our 2019 Term Loan C from 1-month LIBOR to 1-month SOFR. We elected to apply the optional expedient in ASC 848, in connection with the amendment that enabled us to consider the amendment as a non-significant contract modification of the existing debt agreement. Additionally, for our 2021 Term Loan, we transitioned to the fallback language within the credit agreement and transitioned from 1-month LIBOR to 1-month SOFR as of March 31, 2023. As a result, the amendment to our 2019 Term Loan and fallback to SOFR in our 2021 Term Loan did not have a material impact to our financial statements.
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Note 2 - Revenue |
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| Revenue from Contract with Customer [Text Block] |
Revenue Recognition. We recognize revenue when we have completed a specified service and effectively transferred the control of that service to a customer in return for an amount of consideration we expect to be entitled to receive. The amount of revenue recognized is determined by the amount of consideration specified in a contract with our customers. We have elected to exclude taxes assessed by a governmental authority on transactions with our customers from our revenue. Any unremitted balance is included in current liabilities on our balance sheets.
We record a deposit liability for cash deposits received from our customers that are to be applied as payment once the performance obligation arises and is satisfied. These deposits are recorded as deposit liabilities on our balance sheets. When we invoice our customers for completed performance obligations, we are unconditionally entitled to receive payment of the invoiced amounts. Therefore, we record invoiced amounts in accounts receivable on our balance sheets. We generally require amounts payable under advertising contracts with our political advertising customers to be paid for in advance. We record the receipt of this cash as a deposit liability. Once the advertisement has been broadcast, the revenue is earned, and we record the revenue and reduce the balance in this deposit liability account. We recorded $12 million of revenue in the nine-months ended September 30, 2023 that was included in the deposit liability balance as of December 31, 2022. The deposit liability balance is included in deferred revenue on our condensed consolidated balance sheets. The deposit liability balance was $16 million and $12 million as of September 30, 2023 and December 31, 2022, respectively.
Disaggregation of Revenue. Revenue from our production companies segment is generated through our direct sales channel. Revenue from our broadcasting 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):
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Note 3 - Acquisition and Divestiture |
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| Mergers, Acquisitions and Dispositions Disclosures [Text Block] |
On May 1, 2023, we and Marquee Broadcasting, Inc. (“Marquee”) completed transactions in 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.
The following table summarizes the preliminary values of the assets acquired of WPGA (in millions):
These amounts are based upon management’s preliminary estimate of the fair values using valuation techniques including income, cost and market approaches. In determining the preliminary fair value of the acquired assets, the fair values were determined based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.
Property and equipment are recorded at their fair value and are being depreciated over their estimated useful lives ranging from 3 to 40 years.
In this transaction an immaterial amount of goodwill was acquired.
The sale of television station KNIN resulted in a loss on disposal of $14 million. |
Note 4 - Long-term Debt |
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| Debt Disclosure [Text Block] |
As of September 30, 2023 and December 31, 2022, long-term debt consisted of obligations under our 2019 Senior Credit Facility (as defined below), our 5.875% senior notes due 2026 (the “2026 Notes”), our 7.0% senior notes due 2027 (the “2027 Notes”), our 4.75% senior notes due 2030 (the “2030 Notes”) and our 5.375% notes due 2031 (the “2031 Notes”), as follows (in millions):
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. As of September 30, 2023, the interest rate on the balance outstanding under the Revolving credit facility was 9.5%. 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 September 30, 2023, the interest rate on the balance outstanding under the 2021 Term Loan and the 2019 Term Loan were 8.4% and 7.9%, respectively. A portion of the Revolving Credit Facility matures on January 2, 2026, with the remainder maturing on December 1, 2026.
Interest Rate Caps. On February 23, 2023, we entered into two interest rate caps pursuant to an International Swaps and Derivatives Association ("ISDA") Master Agreement with two counterparties, Wells Fargo Bank, NA and Truist Bank, respectively. At September 30, 2023, the caps have a combined notional value of approximately $2.6 billion and mature on December 31, 2025. At inception, 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. We designated the interest rate caps as cash flow hedges of our risk of changes in our cash flows attributable to changes in 1-month LIBOR above 5% on our outstanding variable-rate debt in accordance with ASC 815. On March 29, 2023, in conjunction with the amended credit facility, we transitioned the contractually specified rate on the interest rate caps from 1-month LIBOR to 1-month Term SOFR. Effective with the amended interest rate caps, we are hedging variability in cash flows related to future interest payments when SOFR exceeds the caps of 4.97% and 5.015%. We elected to apply the optional expedient in ASC 848, Reference Rate Reform, in connection with transitioning its interest rate caps from LIBOR to Term SOFR that enabled us to consider the new 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 2019 Term Loan to a maximum of 1-month Term SOFR of 4.97% and 5.015%. We are required to pay aggregate fees in connection with the interest rate caps of approximately $34 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. The recorded value of the asset was $27 million, net of accumulated amortization, at September 30, 2023. At September 30, 2023, the fair value of the derivative liability was $7 million. We present the deferred premium, the asset, and the fair value of the derivative, net within other non-current liabilities 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 $7 million of amortization expense for the asset during the nine-months ended September 30, 2023, which is included as a component of cash flows from operating activities in our condensed consolidated statement 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. Prior to the amended hedge designation date, LIBOR was less than 5%. Further, SOFR was greater than 4.97% and 5.015% from the amended designation date of the hedging relationship through September 30, 2023; therefore, we received $2 million of cash payments from the counterparties that we reclassify to reduce interest expense from the interest rate caps in our condensed consolidated statement of operations.
For all of our interest bearing obligations, we made interest payments of approximately $284 million and $212 million during the nine-months ended September 30, 2023 and 2022, respectively. During the nine-months ended September 30, 2023 and 2022, we capitalized $20 million and $4 million of interest payments, respectively, related to the Assembly Atlanta project.
As of September 30, 2023, the aggregate minimum principal maturities of our long term debt for the remainder of 2023 and the succeeding 5 years were as follows (in millions):
As of September 30, 2023, there were no significant restrictions on the ability of Gray Television, Inc.'s subsidiaries to distribute cash to Gray or to the guarantor subsidiaries. The 2019 Senior Credit Facility contains affirmative and restrictive covenants with which we must comply. The 2026 Notes, the 2027 Notes, the 2030 Notes and the 2031 Notes also include covenants with which we must comply. As of September 30, 2023 and December 31, 2022, we were in compliance with all required covenants under all our debt obligations.
In the nine-months ended September 30, 2023, we paid the required principal reductions of $11 million of our 2021 Term Loan and voluntarily pre-paid the $295 million outstanding principal balance of our 2017 Term Loan. |
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Note 5 - Fair Value Measurement |
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| Notes to Financial Statements | ||||||||||||
| Fair Value Disclosures [Text Block] |
We measure certain assets and liabilities at fair value, which are classified by the FASB Codification within the fair value hierarchy as level 1, 2, or 3, on the basis of whether the measurement employs observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions and consider information about readily available market participant assumptions.
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The use of different market assumptions or methodologies could have a material effect on the fair value measurement.
The carrying amounts of accounts receivable, prepaid and other current assets, accounts payable, employee compensation and benefits, accrued interest, other accrued expenses, and deferred revenue approximate fair value at both September 30, 2023 and December 31, 2022.
As of September 30, 2023 and December 31, 2022, the carrying amount of our long-term debt was $6.2 billion and $6.5 billion, respectively, and the fair value was $5.3 billion and $5.7 billion, respectively. The fair value of our long-term debt is based on observable estimates provided by third party financial professionals as of each date, and as such is classified within Level 2 of the fair value hierarchy. |
Note 6 - Stockholders' Equity |
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Sep. 30, 2023 | |||
| Notes to Financial Statements | |||
| Equity [Text Block] |
We are authorized to issue 245 million shares in total of all classes of stock consisting of 25 million shares of Class A common stock, 200 million shares of common stock, and 20 million shares of “blank check” preferred stock for which our Board of Directors has the authority to determine the rights, powers, limitations and restrictions. The rights of our common stock and Class A common stock are identical, except that our Class A common stock has 10 votes per share and our common stock has vote per share.
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 $0.08 per share on our common stock and Class A common stock to shareholders of record on each of March 15, June 15, and September 15, 2023 and 2022, payable on the last business day of March, June, and September, 2023 and 2022. The total common stock and Class A common stock dividends declared and paid during each of the nine-month periods ended September 30, 2023 and 2022 was $22 million and $23 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 September 30, 2023, we had reserved 7.3 million shares and 2.1 million shares of our common stock and Class A common stock, respectively, for future issuance under various employee benefit plans.
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Note 7 - Retirement Plans |
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Sep. 30, 2023 | |||
| Notes to Financial Statements | |||
| Retirement Benefits [Text Block] |
The components of our net periodic pension benefit are included in miscellaneous (expense) income, net in our condensed consolidated statements of operations. During the nine-months ended September 30, 2023, the amount recorded as a benefit was not material. During the nine-months ended September 30, 2023, we contributed $4 million to this plan.
During the nine-month period ended September 30, 2023, we contributed $20 million in matching cash contributions, and shares of our common stock valued at approximately $9 million for our 2022 discretionary profit-sharing contributions, to the 401(k) Plan. The discretionary profit-sharing contribution was recorded as an expense in 2022 and accrued as of December 31, 2022. Based upon employee participation as of September 30, 2023, during the remainder of 2023, we expect to contribute approximately $5 million of matching cash contributions to this plan. |
Note 8 - Stock-based Compensation |
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| Share-Based Payment Arrangement [Text Block] |
We recognize compensation expense for stock-based payment awards made to our employees, consultants and directors. The following table provides our stock-based compensation expense and related income tax benefit for the three and nine-month periods ended September 30, 2023 and 2022 (in millions):
All shares of Class A common stock and 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 Class A common stock, common stock and restricted stock units activity for the nine-month periods ended September 30, 2023 and 2022 is as follows:
(1) For awards subject to future performance conditions, amounts assume target performance. |
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Note 9 - Leases |
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| Leases, Lessee Disclosure [Text Block] |
We determine if an arrangement is a lease at its inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known. Right-of-use (“ROU”) assets related to our operating lease liabilities are measured at lease commencement based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives. Our lease terms that are used in determining our operating lease liabilities at lease commencement may include options to extend or terminate the leases when it is reasonably certain that we will exercise such options. We amortize our ROU assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses. We have lease agreements with lease and non-lease components, and in such cases, we generally account for the components separately with only the lease component included in the calculation of the ROU asset and lease liability.
We have operating leases that primarily relate to certain of our facilities, data centers and vehicles. As of September 30, 2023, our operating leases substantially have remaining terms of year to 99 years, some of which include options to extend and/or terminate the leases. We do not recognize lease assets and lease liabilities for any lease with an original lease term of less than one year.
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 nine-months ended September 30, 2023.
As of September 30, 2023, the weighted-average remaining term of our operating leases was approximately 9.1 years. The weighted-average discount rate used to calculate the values associated with our operating leases was 6.55%. The table below describes the nature of lease expense and classification of operating lease expense recognized in the three and nine-months ended September 30, 2023 and 2022, respectively (in millions):
The maturities of operating lease liabilities as of September 30, 2023, for the remainder of 2023 and the succeeding years were as follows (in millions):
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Note 10 - Commitments and Contingencies |
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Sep. 30, 2023 | |||
| Notes to Financial Statements | |||
| Commitments and Contingencies Disclosure [Text Block] |
We are and expect to continue to be subject to legal actions, proceedings and claims that arise in the normal course of our business. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions, proceedings and claims will not materially affect our financial position, results of operations or cash flows, although legal proceedings are subject to inherent uncertainties, and unfavorable rulings or events could have a material adverse impact on our financial position, results of operations or cash flows. |
Note 11 - Goodwill and Intangible Assets |
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| Goodwill and Intangible Assets Disclosure [Text Block] |
Several years ago, our Raycom Sports subsidiary sublicensed certain Atlantic Coast Conference (“ACC”) football and basketball games from ESPN to Fox Sports that were assumed by Diamond Sports Group, LLC (“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 Network (“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.
A summary of changes in our goodwill and other intangible assets, on a net basis, for the nine-months ended September 30, 2023 is as follows (in millions):
A summary of the changes in our goodwill, on a gross basis, for the nine-months ended September 30, 2023, is as follows (in millions):
As of September 30, 2023 and December 31, 2022, our intangible assets and related accumulated amortization consisted of the following (in millions):
Amortization expense for the nine-month periods ended September 30, 2023 and 2022 was $147 million and $156 million, respectively. Based on the intangible assets subject to amortization as of September 30, 2023, we expect that amortization expense for the remainder of 2023 would be approximately $47 million, and, for the succeeding five years, amortization expense will be approximately as follows: 2024, $125 million; 2025, $113 million; 2026, $83 million; 2027, $47 million; and 2028, $13 million. If and when acquisitions and dispositions occur in the future, actual amounts may vary materially from these estimates.
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Note 12 - Income Taxes |
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| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Text Block] |
For the three and nine-month periods ended September 30, 2023 and 2022, our income tax expense and effective income tax rates were as follows (dollars in millions):
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 21% to our effective income tax rate. For the nine-month period ended September 30, 2023, these estimates increased or decreased our statutory Federal income tax rate 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%. For the nine-month period ended September 30, 2022, these estimates increased or decreased our statutory Federal income tax rate to our effective income tax rate of 27% as follows: state income taxes added 5%, permanent differences between our U.S. GAAP income and taxable income added 1%.
During the nine-months ended September 30, 2023, we made $43 million of federal and state income tax payments, net of refunds. During the remainder of 2023, we anticipate making income tax payments (before deducting refunds) of approximately $5 million to $9 million. As of September 30, 2023, we have an aggregate of approximately million of various state operating loss carryforwards, of which we expect that approximately one-third will be utilized. We expect that approximately $217 million of these state net operating loss carryforwards 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 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 a refund of $21 million, excluding interest, that is currently outstanding.
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Note 13 - Segment Information |
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting Disclosure [Text Block] |
We operate in two business segments: broadcasting and production companies. The broadcasting segment operates television stations in local markets in the U.S. The production companies segment includes the production of television content and our productions facilities, primarily Assembly Atlanta. Costs identified as other are primarily corporate and administrative expenses. The following tables present certain financial information concerning our operating segments (in millions):
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Item 5. Other Information |
9 Months Ended |
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Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Issuer Rule 10b5-1, Material Terms [Text Block] |
Item 5. Other Information
None of the Company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's fiscal quarter ended September 30, 2023.
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Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment, Policy [Policy Text Block] | Investments in Broadcasting, Production and Technology Companies. We have investments in several television, production and technology companies. We account for all material investments in which we have significant influence over the investee under the equity method of accounting. Upon initial investment, we record equity method investments at cost. The amounts initially recognized are subsequently adjusted for our appropriate share of the net earnings or losses of the investee. We record any investee losses up to the carrying amount of the investment plus advances and loans made to the investee, and any financial guarantees made on behalf of the investee. We recognize our share in earnings and losses of the investee as miscellaneous expense, net in our consolidated statements of operations. Investments are also increased by contributions made to and decreased by the distributions from the investee. We evaluate equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired.
Investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control or do not exert significant influence, are carried at cost less impairments, if any, plus or minus changes in observable prices for those investments. Gains or losses resulting from changes in the carrying value of these investments are included as miscellaneous expense, net in our consolidated statements of operations. These investments are reported together as a non-current asset on our consolidated balance sheets.
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| Use of Estimates, Policy [Policy Text Block] | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our actual results could differ materially from these estimated amounts. Our most significant estimates are our allowance for credit losses in receivables, valuation of goodwill and intangible assets, amortization of program rights and intangible assets, pension costs, income taxes, employee medical insurance claims, useful lives of property and equipment and contingencies.
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| Earnings Per Share, Policy [Policy Text Block] | Earnings Per Share. We compute basic earnings per share by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the relevant period. The weighted-average number of common shares outstanding does not include restricted shares. These shares, although classified as issued and outstanding, are considered contingently returnable until the restrictions lapse and, in accordance with U.S. GAAP, are not included in the basic earnings per share calculation until the shares vest. Diluted earnings per share is computed by including all potentially dilutive common shares, including restricted shares, in the diluted weighted-average shares outstanding calculation, unless their inclusion would be antidilutive.
The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding for the three and nine-month periods ended September 30, 2023 and 2022, respectively (in millions):
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| Comprehensive Income, Policy [Policy Text Block] | Accumulated Other Comprehensive Loss. Our accumulated other comprehensive loss balances as of September 30, 2023 and December 31, 2022, consist of adjustments to our pension liability, the fair value of our interest rate caps and the related income tax effects. Our comprehensive income for the nine-month periods ended September 30, 2023 and 2022 consisted of the adjustment of the fair value of our interest rate caps, net of tax, and net income. As of September 30, 2023 and December 31, 2022 the balances were as follows (in millions):
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| Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment. Property and equipment are carried at cost, or in the case of acquired businesses, at fair value. Depreciation is computed principally by the straight-line method. The following table lists the components of property and equipment by major category (dollars in millions):
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.
In April 2017, the Federal Communications Commission (“FCC”) began the process of requiring certain television stations to change channels and/or modify their transmission facilities (“Repack”). The majority of our costs associated with Repack qualify for capitalization, rather than expense. Upon receipt of funds reimbursing us for our Repack costs, we record those proceeds as a component of our (gain) loss on disposal of assets, net.
The following tables provide additional information related to (loss) gain 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):
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| Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block] | Accounts Receivable and Allowance for Credit Losses. We record accounts receivable from sales and service transactions in our condensed consolidated balance sheets at amortized cost adjusted for any write-offs and net of allowance for credit losses. We are exposed to credit risk primarily through sales of broadcast and digital advertising with a variety of direct and agency-based advertising customers, retransmission consent agreements with multichannel video program distributors and program production sales and services.
Our allowance for credit losses is an estimate of expected losses over the remaining contractual life of our receivables based on an ongoing analysis of collectability, historical collection experience, current economic and industry conditions and reasonable and supportable forecasts. The allowance is calculated using a historical loss rate applied to the current aging analysis. We may also apply additional allowance when warranted by specific facts and circumstances. We generally write off accounts receivable balances when the customer files for bankruptcy or when all commonly used methods of collection have been exhausted.
As of September 30, 2023, our allowance for credit losses includes a reserve of $17 million for the full amount owed to us by Diamond Sports Group, LLC (“Diamond”), as of that date, as a result of Diamond, a counterparty to certain contracts with us, commencing voluntary Chapter 11 bankruptcy proceedings on March 14, 2023.
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, and certain third-party financial institutions (the “Purchasers”). 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 matures on February 23, 2026, and is subject to customary termination events related to transactions of this type. The sale of receivables from the SPV is accounted for in the Company’s financial statements as a "true-sale" under Accounting Standards Codification ("ASC") Topic 860.
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 one-month Secured Overnight Financing Rate (“SOFR”) plus a margin (100 basis points) 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. Servicing fee income recognized during the nine-months ended September 30, 2023, was not material. 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 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 Condensed 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 $300 million at September 30, 2023, which was derecognized from the Condensed Consolidated Balance Sheets. As collateral against sold receivables, the SPV maintains a certain level of unsold receivables, which was $250 million at September 30, 2023. Total receivables sold under the Securitization Facility were $550 million for the quarter ended September 30, 2023. Pursuant to the Securitization Facility, we recognized a charge of $8 million in the 2023 nine-month period that represents the discount on the accounts receivable balance transferred to the SPV. This discount is included in our loss on disposal of assets in our Condensed Consolidated Statements of Operations.
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):
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| New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements. On July 26, 2023, the Securities and Exchange Commission (“SEC”) adopted new rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incidents by public companies that are subject to the reporting requirements of the Securities Exchange Act of 1934. Specifically, the new rules require current disclosure about material cybersecurity incidents. The purpose of the new rules is to require periodic disclosures about a registrant’s processes to assess, identify, and manage material cybersecurity risks, management’s role in assessing and managing material cybersecurity risks, and the board of directors’ oversight of cybersecurity risks. The amendments related to these rules became effective on September 5, 2023. The new rules will require us to provide additional disclosures in our annual report on Form 10-K and additional reporting requirements if and when a reportable incident occurs.
Implementation of ASC 848, Reference Rate Reform. On March 17, 2023, we amended the 2019 Senior Credit Facility and transitioned the variable rate on our 2019 Term Loan C from 1-month LIBOR to 1-month SOFR. We elected to apply the optional expedient in ASC 848, in connection with the amendment that enabled us to consider the amendment as a non-significant contract modification of the existing debt agreement. Additionally, for our 2021 Term Loan, we transitioned to the fallback language within the credit agreement and transitioned from 1-month LIBOR to 1-month SOFR as of March 31, 2023. As a result, the amendment to our 2019 Term Loan and fallback to SOFR in our 2021 Term Loan did not have a material impact to our financial statements.
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Note 1 - Basis of Presentation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Schedule of Weighted Average Number of Shares [Table Text Block] |
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| Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] |
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| Property, Plant and Equipment [Table Text Block] |
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| Schedule of Disposal of Assets and Purchase of Property and Equipment [Table Text Block] |
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| Accounts Receivable, Allowance for Credit Loss [Table Text Block] |
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Note 2 - Revenue (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Disaggregation of Revenue [Table Text Block] |
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Note 3 - Acquisition and Divestiture (Tables) |
9 Months Ended | |||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||
| Notes Tables | ||||||||||||||||
| Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] |
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Note 4 - Long-term Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Schedule of Long-Term Debt Instruments [Table Text Block] |
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| Schedule of Maturities of Long-Term Debt [Table Text Block] |
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Note 8 - Stock-based Compensation (Tables) |
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| Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block] |
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| Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] |
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Note 9 - Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Lease, Cost [Table Text Block] |
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| Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block] |
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Note 11 - Goodwill and Intangible Assets (Tables) |
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| Schedule of Acquired Indefinite-Lived Intangible Assets by Major Class [Table Text Block] |
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| Schedule of Goodwill [Table Text Block] |
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| Schedule of Intangible Assets and Goodwill [Table Text Block] |
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Note 12 - Income Taxes (Tables) |
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| Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
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Note 13 - Segment Information (Tables) |
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| Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Note 1 - Basis of Presentation - Reconciliation of Basic to Diluted Weighted-average Shares Outstanding (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Weighted-average shares outstanding-basic (in shares) | 93 | 91 | 92 | 93 |
| Common stock equivalents for stock options and restricted stock (in shares) | 0 | 1 | 0 | 0 |
| Weighted-average shares outstanding-diluted (in shares) | 93 | 92 | 92 | 93 |
Note 1 - Basis of Presentation - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accumulated balances of items included in accumulated other comprehensive loss: | ||
| Adjustment to pension liability | $ (16) | $ (16) |
| Adjustment to fair value of interest rate caps | (7) | 0 |
| Income tax benefit | (6) | (4) |
| Accumulated other comprehensive loss | $ (17) | $ (12) |
Note 1 - Basis of Presentation - Property and Equipment (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property and equipment, gross | $ 2,371 | $ 2,156 |
| Accumulated depreciation | (761) | (690) |
| Total property and equipment, net | 1,610 | 1,466 |
| Land [Member] | ||
| Property and equipment, gross | 335 | 290 |
| Building and Building Improvements [Member] | ||
| Property and equipment, gross | $ 677 | 477 |
| Building and Building Improvements [Member] | Minimum [Member] | ||
| Estimated Useful Lives (Year) | 7 years | |
| Building and Building Improvements [Member] | Maximum [Member] | ||
| Estimated Useful Lives (Year) | 40 years | |
| Equipment [Member] | ||
| Property and equipment, gross | $ 1,041 | 1,027 |
| Equipment [Member] | Minimum [Member] | ||
| Estimated Useful Lives (Year) | 3 years | |
| Equipment [Member] | Maximum [Member] | ||
| Estimated Useful Lives (Year) | 20 years | |
| Construction in Progress [Member] | ||
| Property and equipment, gross | $ 318 | $ 362 |
Note 1 - Basis of Presentation - Disposal of Assets and Purchase of Property and Equipment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Proceeds from sale of fixed assets | $ 9 | $ 0 | $ 31 | $ 2 |
| Proceeds from FCC - Repack | 0 | (2) | 0 | (7) |
| Net book value of assets disposed | (26) | (1) | (51) | (3) |
| Non-cash loss on divestitures | 13 | 0 | (1) | 0 |
| Securitization Facility | 8 | 0 | 0 | 0 |
| Other | 2 | 0 | 1 | 0 |
| Loss (gain) on disposal of assets, net | $ (6) | $ (1) | 20 | (6) |
| Recurring purchases - operations | 78 | 118 | ||
| Assembly Atlanta project | 210 | 179 | ||
| Repack | 0 | 1 | ||
| Purchases of property and equipment | $ 288 | $ 298 | ||
Note 1 - Basis of Presentation - Allowance for Credit Losses (Details) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Beginning balance | $ 16 | $ 16 |
| Provision for credit losses | 17 | (3) |
| Amounts written off | (2) | (1) |
| Ending balance | $ 31 | $ 12 |
Note 2 - Revenue (Details Textual) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Contract with Customer, Liability, Revenue Recognized | $ 12 | |
| Deferred Revenue [Member] | ||
| Deposit Liability, Current | $ 16 | $ 12 |
Note 2 - Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Revenue | $ 803 | $ 909 | $ 2,417 | $ 2,604 |
| Sales Channel, Directly to Consumer [Member] | ||||
| Revenue | 547 | 528 | 1,664 | 1,616 |
| Sales Channel, Through Intermediary [Member] | ||||
| Revenue | 256 | 381 | 753 | 988 |
| Core Advertising [Member] | ||||
| Revenue | 363 | 359 | 1,099 | 1,090 |
| Political Advertising [Member] | ||||
| Revenue | 26 | 144 | 46 | 260 |
| Advertising [Member] | ||||
| Revenue | 389 | 503 | 1,145 | 1,350 |
| Retransmission Consent [Member] | ||||
| Revenue | 378 | 368 | 1,167 | 1,143 |
| Production Companies [Member] | ||||
| Revenue | 20 | 20 | 54 | 56 |
| Service, Other [Member] | ||||
| Revenue | $ 16 | $ 18 | $ 51 | $ 55 |
Note 3 - Acquisition and Divestiture (Details Textual) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
May 01, 2023 |
Sep. 30, 2023 |
|
| KNIN With Marquee Broadcasting Transaction [Member] | ||
| Gain (Loss) on Disposition of Business | $ 14 | |
| WPGA With Marquee Broadcasting Transaction [Member] | ||
| Business Combination, Consideration Transferred | $ 6 | |
| WPGA With Marquee Broadcasting Transaction [Member] | Minimum [Member] | ||
| Property, Plant and Equipment, Useful Life (Year) | 3 years | |
| WPGA With Marquee Broadcasting Transaction [Member] | Maximum [Member] | ||
| Property, Plant and Equipment, Useful Life (Year) | 40 years | |
| KNIN With Marquee Broadcasting Transaction [Member] | ||
| Disposal Group, Including Discontinued Operation, Consideration | $ 6 |
Note 3 - Acquisition and Divestiture - Acquisition (Details) - WPGA With Marquee Broadcasting Transaction [Member] $ in Millions |
May 01, 2023
USD ($)
|
|---|---|
| Property and equipment | $ 2 |
| Total | 6 |
| Broadcast Licenses [Member] | |
| Intangible assets | $ 4 |
Note 4 - Long-term Debt - Aggregate Minimum Principal Maturities on Long-term Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Remainder of 2023 | $ 4 | |
| 2024 | 15 | |
| 2025 | 15 | |
| 2026 | 1,930 | |
| 2027 | 765 | |
| 2028 | 1,410 | |
| Thereafter | 2,100 | |
| Total Debt | 6,239 | $ 6,520 |
| The 2019 Senior Credit Facility [Member] | ||
| Remainder of 2023 | 4 | |
| 2024 | 15 | |
| 2025 | 15 | |
| 2026 | 1,230 | |
| 2027 | 15 | |
| 2028 | 1,410 | |
| Thereafter | 0 | |
| Total Debt | 2,689 | |
| 2026 Notes [Member] | ||
| Remainder of 2023 | 0 | |
| 2024 | 0 | |
| 2025 | 0 | |
| 2026 | 700 | |
| 2027 | 0 | |
| 2028 | 0 | |
| Thereafter | 0 | |
| Total Debt | 700 | 700 |
| 2027 Notes [Member] | ||
| Remainder of 2023 | 0 | |
| 2024 | 0 | |
| 2025 | 0 | |
| 2026 | 0 | |
| 2027 | 750 | |
| 2028 | 0 | |
| Thereafter | 0 | |
| Total Debt | 750 | 750 |
| 2030 Notes [Member] | ||
| Remainder of 2023 | 0 | |
| 2024 | 0 | |
| 2025 | 0 | |
| 2026 | 0 | |
| 2027 | 0 | |
| 2028 | 0 | |
| Thereafter | 800 | |
| Total Debt | 800 | 800 |
| Notes 2031 [Member] | ||
| Remainder of 2023 | 0 | |
| 2024 | 0 | |
| 2025 | 0 | |
| 2026 | 0 | |
| 2027 | 0 | |
| 2028 | 0 | |
| Thereafter | 1,300 | |
| Total Debt | $ 1,300 | $ 1,300 |
Note 5 - Fair Value Measurement (Details Textual) - USD ($) $ in Billions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Long-Term Debt | $ 6.2 | $ 6.5 |
| Long-Term Debt, Fair Value | $ 5.3 | $ 5.7 |
Note 7 - Retirement Plans (Details Textual) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Defined Contribution Plan, Expected Contributions, Remainder of Fiscal Year | $ 5 | |
| Profit Sharing Contribution [Member] | ||
| Defined Contribution Plan, Employer Discretionary Contribution Amount | 20 | $ 9 |
| Pension Plan [Member] | Gray Pension Plan [Member] | ||
| Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year | $ 4 | |
Note 8 - Stock-based Compensation - Stock-based Compensation Expense and Related Income Tax Benefit (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Stock-based compensation expense, gross | $ 5 | $ 6 | $ 14 | $ 17 |
| Income tax benefit at our statutory rate associated with share-based compensation | (1) | (2) | (4) | (4) |
| Stock-based compensation expense, net | $ 4 | $ 4 | $ 10 | $ 13 |
Note 9 - Leases (Details Textual) |
Sep. 30, 2023 |
|---|---|
| Operating Lease, Weighted Average Remaining Lease Term (Year) | 9 years 1 month 6 days |
| Operating Lease, Weighted Average Discount Rate, Percent | 6.55% |
| Minimum [Member] | |
| Lessee, Operating Lease, Remaining Lease Term (Year) | 1 year |
| Maximum [Member] | |
| Lessee, Operating Lease, Remaining Lease Term (Year) | 99 years |
Note 9 - Leases - Lease Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Operating lease expense | $ 4 | $ 4 | $ 13 | $ 13 |
| Short-term lease expense | 1 | 1 | 4 | 2 |
| Total lease expense | $ 5 | $ 5 | $ 17 | $ 15 |
Note 9 - Leases - Maturities of Operating Lease Liabilities (Details) $ in Millions |
Sep. 30, 2023
USD ($)
|
|---|---|
| Remainder of 2023 | $ 4 |
| 2024 | 15 |
| 2025 | 14 |
| 2026 | 12 |
| 2027 | 11 |
| Thereafter | 53 |
| Total lease payments | 109 |
| Less: Imputed interest | (28) |
| Present value of lease liabilities | $ 81 |
Note 11 - Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Goodwill and Intangible Asset Impairment | $ 43 | $ 0 | $ 43 | $ 0 |
| Amortization of Intangible Assets | 147 | $ 156 | ||
| Finite-Lived Intangible Asset, Expected Amortization, Remainder of Fiscal Year | 47 | 47 | ||
| Finite-Lived Intangible Asset, Expected Amortization, Year One | 125 | 125 | ||
| Finite-Lived Intangible Asset, Expected Amortization, Year Two | 113 | 113 | ||
| Finite-Lived Intangible Asset, Expected Amortization, Year Three | 83 | 83 | ||
| Finite-Lived Intangible Asset, Expected Amortization, Year Four | 47 | 47 | ||
| Finite-Lived Intangible Asset, Expected Amortization, Year Five | $ 13 | $ 13 | ||
Note 11 - Goodwill and Intangible Assets - Changes in Goodwill and Other Intangible Assets, Net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
Dec. 30, 2022 |
|
| Broadcast licenses | $ 5,320 | $ 5,320 | $ 5,331 | |||
| Goodwill | 2,643 | 2,643 | 2,663 | $ 2,663 | ||
| Goodwill, acquisitions and adjustments | 4 | |||||
| Finite-lived intangible assets | 462 | 462 | 636 | |||
| Amortization | (147) | $ (156) | ||||
| Total intangible assets net of accumulated amortization | 8,425 | 8,425 | 8,630 | |||
| Total intangible assets net of accumulated amortization | (15) | |||||
| Impairment of goodwill and other intangible assets | 43 | $ 0 | 43 | $ 0 | ||
| Finite-Lived Intangible Assets [Member] | ||||||
| Acquisition and adjustments | 0 | |||||
| Acquisition and adjustments | 0 | |||||
| Amortization | (147) | |||||
| Finite-lived Intangible Assets [Member] | ||||||
| Finite-lived intangible assets | 27 | |||||
| Broadcast Licenses [Member] | ||||||
| Broadcast licenses | $ 5,320 | 5,320 | $ 5,331 | |||
| Acquisition and adjustments | (11) | |||||
| Goodwill | 16 | |||||
| Acquisition and adjustments | $ 11 | |||||
Note 11 - Goodwill and Intangible Assets - Summary of Changes in Goodwill (Details) - USD ($) $ in Millions |
6 Months Ended | 9 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Sep. 30, 2023 |
Dec. 30, 2022 |
|
| Goodwill, acquired | $ (4) | ||
| Goodwill, gross | 2,758 | ||
| Accumulated goodwill impairment | $ (16) | (115) | $ (99) |
| Accumulated goodwill impairment | (16) | (115) | |
| Goodwill, net | 2,663 | 2,663 | |
| Goodwill, dispositions | $ (16) | ||
| Goodwill, net | $ 2,643 |
Note 11 - Goodwill and Intangible Assets - Intangible Assets and Related Accumulated Amortization (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2022 |
|---|---|---|---|
| Goodwill, Gross | $ 2,758 | $ 2,762 | |
| Goodwill | 2,643 | $ 2,663 | $ 2,663 |
| Other intangible assets, net | 462 | 636 | |
| Total intangible assets, gross | 9,225 | 9,321 | |
| Total intangible assets, accumulated amortization | (800) | (691) | |
| Total intangible assets, net | 8,425 | 8,630 | |
| Network Affiliate [Member] | |||
| Finite-Lived Intangible Assets, Gross | 216 | 218 | |
| Finite-Lived Intangible Assets, Accumulated Amortization | (116) | (88) | |
| Other intangible assets, net | 100 | 130 | |
| Other Definite Lived Intangible Assets [Member] | |||
| Finite-Lived Intangible Assets, Gross | 992 | 1,055 | |
| Finite-Lived Intangible Assets, Accumulated Amortization | (630) | (549) | |
| Other intangible assets, net | 362 | 506 | |
| Intangible Assets Subject to Amortization [Member] | |||
| Finite-Lived Intangible Assets, Gross | 1,208 | 1,273 | |
| Finite-Lived Intangible Assets, Accumulated Amortization | (746) | (637) | |
| Other intangible assets, net | 462 | 636 | |
| Broadcast Licenses [Member] | |||
| Indefinite-lived Intangible Assets (Excluding Goodwill), Gross | 5,374 | 5,385 | |
| Indefinite-Lived Intangible Assets (Excluding Goodwill), Accumulated Amortization | (54) | (54) | |
| Indefinite-Lived Intangible Assets (Excluding Goodwill) | 5,320 | 5,331 | |
| Goodwill Not Amortizable [Member] | |||
| Goodwill, Gross | 2,643 | 2,663 | |
| Goodwill, Accumulated Amortization | 0 | 0 | |
| Goodwill | 2,643 | 2,663 | |
| Intangible Assets Not Subject to Amortization [Member] | |||
| Goodwill and Indefinite-Lived Intangible Assets, Gross | 8,017 | 8,048 | |
| Goodwill and Indefinite-lived Intangible Assets, Accumulated Amortization | (54) | (54) | |
| Goodwill and Indefinite-Lived Assets, Net | $ 7,963 | $ 7,994 |
Note 12 - Income Taxes (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|---|
Oct. 01, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2020 |
|
| Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | |||||
| Effective Income Tax Rate Reconciliation, Percent | (8.00%) | 28.00% | 4.00% | 27.00% | ||
| Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | 3.00% | 5.00% | ||||
| Effective Income Tax Rate Reconciliation, Nondeductible Expense, Percent | 7.00% | 1.00% | ||||
| Effective Income Tax Rate Reconciliation, Deduction, Other, Percent | 13.00% | |||||
| Income Taxes Paid, Net | $ 43 | |||||
| Proceeds from Income Tax Refunds | $ 21 | |||||
| State and Local Jurisdiction [Member] | ||||||
| Operating Loss Carryforwards | $ 344 | 344 | ||||
| Operating Loss Carryforwards That Will Not Be Realized | $ 217 | $ 217 | ||||
| Minimum [Member] | Forecast [Member] | ||||||
| Income Taxes Paid, Net | $ 5 | |||||
| Maximum [Member] | Forecast [Member] | ||||||
| Income Taxes Paid, Net | $ 9 | |||||
Note 12 - Income Taxes - Reconciliation of Income Tax Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Income tax expense (benefit) | $ 3 | $ 42 | $ (3) | $ 101 |
| Effective income tax rate | (8.00%) | 28.00% | 4.00% | 27.00% |
Note 13 - Segment Information (Details Textual) |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Number of Operating Segments | 2 |
Note 13 - Segment Information - Segment Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
Dec. 30, 2022 |
|
| Revenue (less agency commissions) | $ 803 | $ 909 | $ 2,417 | $ 2,604 | ||
| Operating expenses before depreciation, amortization, impairment and loss on disposal of assets, net: | 1,831 | 1,731 | ||||
| Depreciation and amortization | 253 | 252 | ||||
| Impairment of goodwill and other intangible assets | 43 | 0 | 43 | 0 | ||
| Loss on disposal of assets, net | 20 | (6) | ||||
| Operating expenses | 719 | 664 | 2,147 | 1,977 | ||
| Operating income (loss) | 84 | 245 | 270 | 627 | ||
| Interest expense | 111 | 94 | 324 | 254 | ||
| Capital expenditures (excluding business combinations) | 288 | 298 | ||||
| Goodwill | 2,643 | 2,643 | $ 2,663 | $ 2,663 | ||
| Total assets | 10,735 | 10,735 | 11,152 | |||
| Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net: | 1,831 | 1,731 | ||||
| Broadcasting, Segment [Member] | ||||||
| Revenue (less agency commissions) | 783 | 889 | 2,363 | 2,548 | ||
| Production Companies, Segment [Member] | ||||||
| Revenue (less agency commissions) | 20 | $ 20 | 54 | 56 | ||
| Operating Segments [Member] | Broadcasting, Segment [Member] | ||||||
| Revenue (less agency commissions) | 2,363 | 2,548 | ||||
| Operating expenses before depreciation, amortization, impairment and loss on disposal of assets, net: | 1,664 | 1,595 | ||||
| Depreciation and amortization | 241 | 240 | ||||
| Impairment of goodwill and other intangible assets | 0 | |||||
| Loss on disposal of assets, net | 18 | (6) | ||||
| Operating expenses | 1,923 | 1,829 | ||||
| Operating income (loss) | 440 | 719 | ||||
| Interest expense | 0 | 0 | ||||
| Capital expenditures (excluding business combinations) | 83 | 114 | ||||
| Goodwill | 2,615 | 2,615 | 2,618 | |||
| Total assets | 10,014 | 10,014 | 10,444 | |||
| Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net: | 1,664 | 1,595 | ||||
| Operating Segments [Member] | Production Companies, Segment [Member] | ||||||
| Revenue (less agency commissions) | 54 | 56 | ||||
| Operating expenses before depreciation, amortization, impairment and loss on disposal of assets, net: | 88 | 56 | ||||
| Depreciation and amortization | 9 | 10 | ||||
| Impairment of goodwill and other intangible assets | 43 | |||||
| Loss on disposal of assets, net | 2 | 0 | ||||
| Operating expenses | 142 | 66 | ||||
| Operating income (loss) | (88) | (10) | ||||
| Interest expense | 0 | 0 | ||||
| Capital expenditures (excluding business combinations) | 201 | 181 | ||||
| Goodwill | 28 | 28 | 45 | |||
| Total assets | 653 | 653 | 535 | |||
| Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net: | 88 | 56 | ||||
| Segment Reconciling Items [Member] | ||||||
| Revenue (less agency commissions) | 0 | 0 | ||||
| Operating expenses before depreciation, amortization, impairment and loss on disposal of assets, net: | 79 | 80 | ||||
| Depreciation and amortization | 3 | 2 | ||||
| Impairment of goodwill and other intangible assets | 0 | |||||
| Loss on disposal of assets, net | 0 | 0 | ||||
| Operating expenses | 82 | 82 | ||||
| Operating income (loss) | (82) | (82) | ||||
| Interest expense | 324 | 254 | ||||
| Capital expenditures (excluding business combinations) | 4 | 3 | ||||
| Goodwill | 0 | 0 | 0 | |||
| Total assets | $ 68 | 68 | $ 173 | |||
| Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net: | $ 79 | $ 80 | ||||
Item 5. Other Information (Details Textual) Pure in Thousands |
3 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Issuer Rule 10b5-1, Number of Trading Agreements Adopted or Terminated by Directors or Executive Officers | 0 |