Broadcasting groups navigate economic uncertainty while eyeing regulatory relief

Major broadcasting companies delivered modest first-quarter results for 2025 while signaling a strategic shift toward preparing for potential regulatory changes that could transform industry economics.

Across multiple earnings calls, executives expressed unusual consensus about a possible loosening of FCC ownership restrictions that would enable consolidation, even as they reported continued advertising weakness and accelerated cost-cutting measures.

Financial performance reflects advertising challenges

The major broadcasting groups reported Q1 2025 results that generally exceeded Wall Street expectations despite continued pressure on advertising revenue. Most companies reported year-over-year declines in core advertising, with automotive remaining a challenging category.

Nexstar Media Group exceeded analysts’ expectations with an EPS of $3.37 against a forecast of $3.26. Revenue matched forecasts at $1.23 billion, though it represented a 3.9% decline year-over-year.

Gray Media posted an earnings per share of -$0.23, surpassing the forecasted -$0.43. Revenue reached $782 million, slightly above the projected $773.05 million.

Tegna exceeded expectations with an EPS of $0.37, compared to the forecasted $0.32. The company also exceeded revenue projections, reporting $680 million against a forecast of $677.48 million.

The earnings reports revealed several common threads. Broadcasting groups are grappling with macroeconomic uncertainty, declining core advertising revenue and continued concerns about subscriber churn, though some signs of moderation in subscriber losses appeared.

Advertising environment reflects economic concerns

Sinclair reported that its total media revenue met expectations while distribution revenues saw a positive year-over-year increase of $15 million. However, Rob Weisbord, COO and president of local media at Sinclair, noted that “macroeconomic and tariff-related uncertainty is creating hesitation by certain top categories.”

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This sentiment was echoed across the industry.

Michael Biard, president and COO of Nexstar, reported that advertising revenue of $460 million decreased $52 million or 10.2% over the comparable prior year quarter, primarily reflecting a $32 million decrease in political advertising as well as a 4.2% reduction in non-political advertising revenue due to advertising market softness.

Tegna’s Julie Heskett, CFO, noted, “Advertising demand remains closely tied to overall economic sentiment, and with consumer confidence softening, some advertisers are taking a more cautious wait to see approach. This may lead to near term delays in spending and ultimately impact our second quarter AMS revenue performance.”

Cost-cutting initiatives gain momentum

In response to revenue pressures, broadcast groups have intensified cost-cutting measures.

Gray’s Jeff Gignac, CFO, stated, “As previously reported, starting in April of this year, we believe we are now exceeding the $60 million annualized run rate of cost savings from last fall’s cost containment initiatives.”

Tegna reported that first quarter non-GAAP expenses finished flat year over year, with increases in programming expenses offset by cost reductions. All other expenses outside of programming finished 4% below last year, continuing the sequential improvement of structural cost reduction efforts.

E.W. Scripps highlighted margin expansion in its Networks division, where margins reached 32%, attributable to growth in connected TV revenue, a steady general market and strong sales execution as well as cost savings announced in Q4 2024. First-quarter expenses decreased 16% over Q1 2024.

Regulatory optimism takes center stage

Perhaps the most consistent theme across all earnings calls was the anticipation of regulatory relief from the Federal Communications Commission.

With Republican Commissioner Brendan Carr expected to soon have a majority at the FCC, broadcasting executives expressed optimism about the potential relaxation of ownership rules that could enable industry consolidation.

Sinclair’s Chris Ripley, president and CEO, stated, “We along with the NAB and the entire industry are hopeful that many of the woefully outdated FCC regulations that have hampered growth in the broadcast industry over the recent decades will be revisited, if not eliminated in the coming months. And we remain hopeful that most of the outdated ownership rules impacting the sector will be modified to allow sensible M&A and portfolio rationalization.”

Nexstar’s Perry Sook emphasized the importance of deregulation: “In today’s competitive landscape where big tech and big media are afforded unbridled and ubiquitous reach, current restrictions on local broadcast ownership are outdated, arbitrary, and exclusionary and no one can logically defend those rules. In my forty five plus years in the industry, I continue to believe that the prospect of meaningful broadcast ownership reform has never been better than it is today.”

Hilton Howell Jr., chairman and CEO of Gray Media, expressed similar sentiments: “We are energized by the possibility that the government may at last allow local broadcasters to compete on a more level playing field with all of our competitors.”

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Tegna’s Mike Steib referenced the building momentum for change: “We think that the deregulatory moment is coming, and it’s coming at just the right time.”

Positioning for potential M&A

The anticipation of regulatory relief has broadcasting groups positioning themselves for potential merger and acquisition activity. Many companies emphasized their financial flexibility and preparedness for strategic opportunities.

Tegna’s Heskett noted, “Given the prospects of deregulation and station M&A, we’re taking a more measured approach to share repurchases at this time. Preserving financial flexibility ensures we remain agile while staying disciplined in our capital deployment and focused on delivering long term shareholder returns.”

Scripps President and CEO Adam Symson emphasized the potential impact of deregulation: “On the local broadcast station front, we expect industry deregulation to be a tailwind for Scripps and the sector when the Federal Communications Commission revisits the outdated ownership rules that govern us today. Greater broadcaster national scale and in-market depth will power new economic growth and support our ability to serve audiences and local communities.”

The broadcasting industry faces a challenging balance between near-term economic headwinds and potentially transformative regulatory changes. Most companies are guiding to continued weakness in advertising for Q2 while maintaining optimism about longer-term prospects.

When discussing the competitive landscape, Tegna’s Steib pointed to the dominance of technology platforms: “Big tech dominates viewer consumption of every kind of media at this point, including news. So if regulators were to look at it through that lens, I would direct them to TikTok, which is now the number one source of news for Gen Z and parenthetically owned by a foreign adversary. I would direct them to YouTube, which has recently been estimated to have a valuation a number of multiples greater than the entirety of the traditional media ecosystem.”