If you have been following along this week, you hopefully know the drill by now. (If not, go back and read this one first and then this one.) We are doing this series of hypothetically matching up group owners of local television stations that we think could be interesting. Our game is based on the coming-of-age game of “Spin the Bottle.” Yesterday we suggested the bottle might be an empty Jack Daniels one.

Today, we’re classing it up by suggesting using an empty bottle of the pride and joy of Austin, Tito’s Handmade Vodka. (Not sponsored, we’re just fans of the company and its product.)

Last bit of housekeeping to ward off any legal entanglements and a potential SEC investigation (and no, that’s not from the Southeastern Conference that we are talking about.) The disclaimer is that what follows is pure speculation, based on the reading of tea leaves and listening to various sources of gossip. No actual financial advice is being given and none of your money should be invested accordingly.

Couple Number Three: Gray Media and Graham Media (There is a joke here about two GM’s meet in a bar, but we’ll save that for another time.)

Gray and Graham. Well aside from being the far-too-cute names for the offspring of a far-too-hip couple, we are talking here about a real potential union of an industry David (Graham) and Goliath (Gray) in a combination that almost seems like an afterthought but would likely make a great deal of sense for both parties.

Both Graham and Gray are owners that began life under other names and eras. Graham Media of course is the descendant of the venerable Post-Newsweek Group, which was the broadcasting arm of The Washington Post company. The Washington Post newspaper purchased its first radio station, WINX, in 1944. It then did a joint venture with CBS to run WTOP radio in 1948. The joint venture bought WOIC television, Washington’s CBS affiliate, in 1950, and that became WTOP-TV. The Post bought out CBS’s interest in the WTOP, Inc. joint venture in 1954, when the FCC at the time forced CBS to sell it’s interest.

Meanwhile, The Post outside of the WTOP joint venture, had purchased WMBR-AM/FM/TV in Jacksonville, Florida (back when local radio and television “trifectas” were commonplace.) WMBR-TV became WJXT and The Post rolled all of its broadcasting interests under the new company named “Post-Newsweek Stations” in 1961, as the newspaper had acquired Newsweek magazine.

Post-Newsweek Stations (PNS) would add stations in Miami (WPLG) in 1969 and Hartford, Connecticut (WFSB) in 1974. By 1978, the company was worried that the FCC’s dislike of cross-ownership of newspaper and television stations in the same market was going to force it to sell WTOP-TV, given the dominance of The Post in the nation’s capital. A swap was orchestrated with the owners of The Detroit Evening News to moved ownership of WTOP-TV to that paper, while Post-Newsweek Stations acquired Detroit’s WWJ-TV, which was renamed to its current WDIV.

By 1994, another deal with another newspaper family, the Hobby family that then owned The Houston Chronicle in Texas, would bring KPRC in Houston and KSAT in San Antonio into the Post-Newsweek Stations group. In 1997, PNS would spin Hartford’s WFSB to Meredith for Orlando’s WCPX, which became WKMG, in honor of legendary Post publisher Katharine Graham. After The Washington Post Company spun off Newsweek magazine in 2010 and then the namesake newspaper in 2014 to Amazon’s Jeff Bezos. With neither the Post or Newsweek owned, Post-Newsweek Stations became Graham Media Group in 2014. It’s last station purchase was in 2016, when it acquired WCWJ in Jacksonville (giving it a duopoly there) and WSLS-TV in Roanoke, Virginia from Nexstar’s acquisition of the former Media General stations.

Gray Media also began with newspaper roots, when founder James H. Gray bought The Albany Herald of Albany, Georgia, along with its WALB radio outlet. Television was added in 1954 with the launch of WALB-TV. The company would expand with the purchases of WJHG-TV in Panama City, Florida in 1960 and then KTVE in Monroe, Louisiana in 1967. The descendants of James H. Gray would accept an offer to sell Gray Communications Systems to Georgia financial and insurance businessman, J. Mack Robinson in 1992. Over the next decade, Gray began to grow its television station portfolio from a small group of Southeastern stations to a more of a national player with acquisitions in Nebraska and Wisconsin. In 2002, Robinson would become Chairman and CEO of Gray with his son-in-law Hilton Howell as Vice Chairman. That same year, Gray would buy 14 stations from Benedek Broadcasting when the latter was in bankruptcy proceedings.

Gray would add additional stations slowly over the next 15 years, until it made its major move to acquire Raycom Media in 2018 for $3.65 Billion. Raycom’s sprawling portfolio of some 142 stations in 92 markets helped make Gray the third-largest owner of television stations in the nation, trailing only Nexstar and Sinclair, after subsequent acquisitions of the Quincy Media stations and Meredith Corporation’s television group in 2021.

Which brings us to today, and the question: Why would Gray with now 180 stations in 113 markets be interested in Graham Media’s 7 television stations in 6 markets? And would Graham be willing to sell?

As we have noted here more than once, in a brave new world where the FCC actually delivers on promised deregulation of television station ownership, the size of a group owner’s portfolio will matter more than ever. Small groups, like Graham, will have a tougher time with major parts of its business such as network affiliate negotiations and declining retransmission consent revenues. Graham has first-hand experience with the shifting economics and loyalties of networks. In 2002, the CBS network took a hardball stance during affiliation negotiations with WJXT in Jacksonville, offering a deal that would end the network’s paying for carriage on WJXT and ultimately resulting in being paid by the station in a model known in the industry now as “reverse compensation.” WJXT declined the offer and announced it would become an independent local station in July of 2002. (CBS moved to then UPN-affiliated WTEV in the market, then owned by Clear Channel, now part of Cox Media’s duopoly there.) To its credit, WJXT has done well in the nation’s 41st market as “The Local Station” with a heavy local news schedule.

The Graham stations would fit well into the Gray portfolio of stations, with only Roanoke, VA being a market where both companies currently own stations. Whether the FCC would let Gray keep Graham’s WSLS-TV, an NBC affiliate, along with its current WDBJ, a CBS affiliate would depend on the retention of the current policy that has prohibited a single owner from having more than one station affiliated with the “big four” networks of ABC, CBS, FOX and NBC.

But for Gray, picking up three stations in the top 20 largest markets (Houston #6, Detroit #14, and Orlando #15) along with stations in southern markets like Jacksonville and San Antonio, would be a very attractive addition to the company’s stronghold in markets south of the Mason-Dixson line. Gray announced last week its revised financial guidance for the company’s 2nd Quarter of 2025. In that announcement it noted that that it was taking a $29 Million “non-cash impairment charge” resulting from its Atlanta station, WANF, losing its CBS affiliation in August of this year. Wait, where have we heard that kind of a story before.

On the same day, Gray announced that it was pricing a round of private offering notes at $900 Million, which would allow the company to refinance some shorter-term debt. While we are no financial analysts, that sure sounds like some cleaning up of the balance sheet to put it in a more favorable position for attractive future acquisitions.

Would Graham Media sell? Could Gray Media buy? These questions fall into our folder marked “never say never.” We’ve all seen surprising relationships start with far less certainty and end up very successful.

Our bottle keeps spinning. As Major Bowes said it best: “Round and round she goes, where she stops…nobody knows!”

We’ll be back soon with another “couple” to play our game. In the meantime, please consider taking a moment and click that subscribe link at the very top of this webpage. It is, as our accountant tells us regularly, “an aggressively priced offering”—as in it’s absolutely free. And if you are already reading this in your email, thank you! Please share with anyone you think might enjoy it.