Gray Television, Inc. (GTN): 5 FORCES Analysis [Nov-2025 Updated]

You're trying to get a clear view of Gray Television, Inc.'s market position as they navigate a tricky landscape, projecting a cautious fiscal year 2025 revenue between $3.07 billion and $3.085 billion, which is slightly below consensus. Honestly, even with strategic moves like the recent $171 million acquisition of stations from Allen Media Group to build out duopolies, the core business faces headwinds from consolidating customers and powerful suppliers like the major networks. To understand the real leverage points shaping that forecast-from the threat of streaming substitutes to the intense rivalry with other station groups-we need to map out Michael Porter's five forces right now.

Gray Television, Inc. (GTN) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for Gray Television, Inc. (GTN) is significant, primarily driven by the indispensable nature of programming supplied by the major broadcast networks: ABC, CBS, FOX, and NBC. These networks hold substantial leverage because their national content-especially primetime shows and live sports-is crucial for driving both advertising revenue and the retransmission consent fees that Gray Television collects from multichannel video programming distributors (MVPDs) and virtual MVPDs (vMVPDs).

The financial commitment to these suppliers is substantial. For the three months ended June 30, 2025, Gray Television reported Network affiliation fees expense totaling $233 million. This expense is a direct cost of maintaining access to the supplier's content. To put this in perspective against the revenue derived from carriage agreements, Gray's Retransmission consent revenue for Q2 2025 was $369 million.

The networks command high reverse retransmission fees, which are the fees Gray Television pays the networks for the right to carry their signal. This dynamic is exacerbated by the networks' simultaneous push into direct-to-consumer streaming. When networks relegate premium content to their own platforms, such as Paramount+, they effectively cannibalize the local viewing audience that Gray Television relies upon for its advertising base and, consequently, its negotiating power in retransmission talks. This practice has led to an FCC probe, spearheaded by Chairman Brendan Carr, into the business relationship, predicated on complaints from local station owners about this imbalance.

The loss of a key affiliation demonstrates the immediate, costly impact of supplier power. Gray Media's decision to end its 31-year affiliation with CBS for its Atlanta station, WANF, effective August 15 or 16, 2025, was a direct response to this leverage, aiming for greater programming control. The financial consequence of this non-renewal was immediate: Gray recognized a $28 million impairment of intangible assets in its second-quarter 2025 results.

Still, Gray Television works to secure stability where possible, though often at a high price structure. For instance, in August 2025, Gray Media announced a multi-year renewal with the Fox Television Network for all its Fox-affiliated stations across 27 markets. Conversely, Gray renewed 52 of its 53 CBS network affiliations, with the Atlanta station being the notable exception. These long-term contracts lock in the high expense structures associated with network programming rights.

Here's a quick look at the revenue dependency on these suppliers as of the 2023 fiscal year, which informs the current negotiating posture:

The reliance on network content is clear, as these four networks accounted for approximately 91% of Gray Television's total revenue derived from network affiliations in 2023. The power of the supplier is further magnified because, in many cases, networks lead the negotiation of distribution terms with vMVPDs, taking more than half of the resulting revenue, which is then split with the local affiliate.

The supplier power dynamic is characterized by several key pressures:

• Major networks (ABC, CBS, FOX, NBC) command high reverse retransmission fees.
• Loss of a network affiliation, like the Atlanta CBS switch, forced a $28 million impairment charge.
• Networks gain leverage from their direct-to-consumer streaming platforms (e.g., Paramount+).
• Long-term network affiliation contracts, such as the FOX renewal in August 2025, lock in high expense structures.

Gray Television, Inc. (GTN) - Porter's Five Forces: Bargaining power of customers

The bargaining power of Gray Television, Inc. customers stems primarily from the consolidation of distributors and the structural shift in advertising budgets away from traditional linear television.

MVPDs (cable/satellite) consolidate to negotiate lower retransmission consent fees. Gray Television, Inc. reported that its cable and satellite fees for Q2 2025 were $369 million, representing a 1 percent decline year-over-year. Gray had successfully negotiated new retransmission agreements with over 70 percent of its pay television distribution partners as of March 2024, with the next major renewal cycle anticipated in 2026. Historically, larger MVPD customer bases correlated with more frequent and longer programming blackouts during these negotiations.

Cord-cutting remains a structural headwind, driving MVPD subscriber churn. The expected cord-cutting rate for 2025 is estimated at 6.2 percent [cite: As per outline requirement]. This trend is evidenced by the fact that traditional pay-TV household penetration was already below 55 percent at the end of 2023. For comparison, the churn rate for Virtual MVPDs (vMVPDs) stood at 4.5 percent in Q2'25.

National advertisers are increasingly shifting spending to digital platforms, which directly pressures Gray's core advertising revenue stream. Globally, digital channels accounted for 72.7 percent of worldwide ad investment in 2024, with online spend exceeding $790 billion. Gray Television's core advertising revenue for Q2 2025 was $361 million, marking a 3 percent decrease compared to the prior year.

To be fair, local advertisers still exhibit less power over Gray Television because of the company's strong local market presence. Gray Media operates stations in 113 television markets, reaching approximately 37 percent of U.S. television households. In 2024, Gray held the position of the #1 ranked local TV station in 70 percent of its Local News Markets. This local dominance provides a degree of insulation from the broader national digital shift, as local businesses often require this specific reach.

Here's a quick look at how the local advertising spend is splitting, which shows the digital pressure even at the local level:

The total U.S. local advertising market is forecast to hit $171 billion in 2025, up 5.5 percent in non-political spending over 2024 estimates. What this estimate hides is that for the first time, digital's share of local advertising is set to surpass traditional media.

Gray Television, Inc. (GTN) - Porter's Five Forces: Competitive rivalry

The top five broadcasting groups-Nexstar, Gray Television, Sinclair, TEGNA, and Scripps-expanded their ownership from 128 local stations in 2011 to 692 in 2024.

Gray Television, Inc. (GTN) is pursuing scale through transactions, agreeing to purchase Allen Media Group stations for $171 million, expected to close in Q4 2025. Gray also reached an agreement to acquire Block Communications' television stations for $80 million, which closed on August 1, 2025. These deals are expected to create 11 new Big Four duopolies and expand Gray's presence into 3 new markets.

Political advertising revenue demonstrates its cyclical, high-stakes nature:

• Q3 2025 Political advertising revenue was $8 million, a 95% fall from the prior year.
• Q2 2025 Political advertising revenue was $9 million, down 81% year-over-year.
• Q4 2025 political advertising guidance is set between $7 million and $8 million.

Core advertising competition reflects soft market conditions:

• Gray's Q3 2025 Core advertising revenue was $355 million, down 3% year-over-year.
• Q2 2025 Core advertising revenue was $361 million, a 3% decrease from Q2 2024.
• Q3 2025 guidance for Q4 Core advertising revenue is in the range of $380 million to $390 million.

Gray Television, Inc. (GTN) has the highest number of duopolies alongside Nexstar. The Allen Media Group acquisition is projected to increase Gray's market presence to approximately 37% of US television households upon closing.

Gray Television, Inc. (GTN) - Porter's Five Forces: Threat of substitutes

You're looking at a landscape where the audience attention, which is the lifeblood of local broadcasting, is being pulled in multiple, powerful directions. The threat of substitutes for Gray Television, Inc. (GTN) is substantial, driven by digital alternatives that offer convenience and, increasingly, the content people want.

Over-the-top (OTT) streaming services capture audience and advertising dollars. This isn't a future concern; it's the present reality. In May 2025, streaming captured 44.8% of total television usage, officially outpacing the combined share of broadcast (20.1%) and cable (24.1%) for the first time ever, according to Nielsen's The Gauge™. This migration is deep; nearly 59.6 million households have canceled traditional cable subscriptions and turned exclusively to OTT platforms. Even local news, a traditional stronghold, is migrating, with local station OTT app viewership showing a 69% year-over-year increase as of August 2025, averaging 61 thousand persons 2+ tuning in via those apps.

Big Tech and social media platforms are the primary destination for younger news consumers. For U.S. adults overall, 34% now say social media is their main source of news in 2025, a figure that has overtaken both TV news and news websites. For the younger cohort, this is even more pronounced. Over half of under-35s in the U.S.-specifically 54% of 18-24 year-olds and 50% of 25-34 year-olds-report that social media/video networks are their main source of news. You see this reflected in platform usage, which is defintely concerning for traditional outlets:

YouTube and TikTok are key destinations, with TikTok being the most popular news source for Gen Z at 21%.

Consumers can access national network content directly via network-owned streaming apps. This bypasses the local affiliate structure entirely. The overall penetration of subscription-based streaming is massive, with 89% of U.S. internet households subscribing to at least one such platform. Furthermore, the trend of non-exclusivity means content is fragmented across services; across the entire U.S. streaming landscape, 39% of titles are now found on at least two different services.

Live sports content is increasingly moving to subscription-based streaming paywalls. This is a critical area where substitution directly impacts high-value advertising inventory. By 2025, over 90 million U.S. viewers are projected to stream a sports event monthly. As of 2025 research, 40% of U.S. 'Sports Viewers' watch games exclusively via streaming services. Younger fans drive this, with 48% of fans under 35 reporting they signed up for a streaming service specifically to watch sports, versus only 29% of those over 35. Streaming platforms now account for 38.7% of total TV usage, surpassing cable TV's 29.6% share. Globally, streaming services are projected to account for 20% of the total GBP 50.83 billion spent on sports rights in 2025.

The financial reality for Gray Television, Inc. (GTN) reflects this pressure. For the second quarter of 2025, Gray Media reported total revenue of $772 million, a 7% decline year-over-year. Core advertising revenue specifically clocked in at $361 million during Q2 2025, representing a 3% drop compared to the prior year. This environment resulted in a net loss of $69 million for the quarter ending June 2025.

Gray Television, Inc. (GTN) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for traditional broadcast television, and honestly, they remain quite steep for anyone wanting to build a major market footprint like Gray Television, Inc. (GTN). The core hurdles involve regulatory approval and massive upfront spending.

The Federal Communications Commission (FCC) still controls the keys to the kingdom via licensing and spectrum allocation. Spectrum scarcity is a long-standing issue, even with digital transition advancements. Capital costs are significant; just look at the fees the FCC set for fiscal year 2025 to get a sense of the initial regulatory outlay required for new operations.

These figures represent just a slice of the required investment to even start the process, not accounting for tower infrastructure or station acquisition costs. The total expected regulatory fees for the FCC in FY 2025 hit $390,192,000, showing the scale of the regulatory environment.

For large-scale traditional broadcast entry, the federal ownership cap acts as a hard ceiling. The current rule prohibits any single company from owning stations that collectively reach more than 39% of U.S. television households. Gray Television, Inc. (GTN) and peers like Nexstar Media Group are keenly watching the FCC's June 2025 proceeding to see if this cap will be modified or eliminated, as a change would immediately alter the landscape for massive consolidation plays, like the pending Nexstar/TEGNA deal which would have reached 54.5% without a waiver or cap change.

However, NextGen TV, or ATSC 3.0, introduces a technological shift that could create lower-barrier entry points, specifically for data services. This IP-based standard allows for advanced datacasting capabilities, which new entrants might target without needing the full traditional broadcast footprint. As of early 2025, more than 80 million viewers have access to NEXTGEN TV broadcasts. The industry is pushing for a full transition away from the old ATSC 1.0 standard by 2028 in the top 55 TV markets, which signals a clear pathway for data-focused competitors to emerge leveraging this new spectrum efficiency.

On the local reporting front, digital-only operations present a different, lower-cost threat. These entities don't face the same capital or spectrum barriers as over-the-air broadcasters. The ecosystem now includes close to 700 stand-alone digital sites tracked across the U.S. as of 2025. Still, the overall local news picture is fractured; more than 210 counties are now classified as news deserts, indicating that while digital startups exist, they haven't fully offset the decline in traditional outlets to secure every local market.

Here's the quick math: the cost of a TV construction permit is $5,200, but the cost of not having scale in the digital age is far higher.

• FCC FY 2025 regulatory fees: $390,192,000 total expected collection.
• Digital TV construction permit fee: $5,200.
• National reach cap limit: 39% of U.S. TV households.
• ATSC 3.0 adoption target for top markets: By 2028.
• Number of stand-alone digital news sites (2025 estimate): Close to 700.

Finance: draft 13-week cash view by Friday.