SEC Filing | Gray Television, Inc

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gtn20200224_8k.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 27, 2020 (February 27, 2020)

Gray Television, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Georgia

(State or Other Jurisdiction of Incorporation)

001-13796		58-0285030
(Commission File Number)		(IRS Employer Identification No.)

4370 Peachtree Road, NE, Atlanta, Georgia		30319
(Address of Principal Executive Offices)		(Zip Code)

404-504-9828

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock (no par value)	GTN.A	New York Stock Exchange
common stock (no par value)	GTN	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 2.02 - Results of Operations and Financial Condition.

On February 27, 2020, Gray Television, Inc. (the “Company”) issued a press release reporting its financial results for the three months and year ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

The information set forth under this Item 2.02 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d)

Exhibits

99.1	Press release issued by Gray Television, Inc. – Financial Results, on February 27, 2020

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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 hereunto duly authorized.

	Gray Television, Inc.

February 27, 2020	By:	/s/ James C. Ryan
		Name:	James C. Ryan
		Title:	Executive Vice President and Chief Financial Officer

ex_174230.htm

Exhibit 99.1

NEWS RELEASE

Gray Reports Record Operating Results

Atlanta, Georgia – February 27, 2020. . . Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN) today announces record results of operations for the fourth quarter ended December 31, 2019.

Highlights and Recent Developments:

●

Record Fourth Quarter Results - Our revenue for the fourth quarter of 2019 was $579 million, increasing $251 million, or 77%, from the fourth quarter of 2018, marking our highest ever quarterly revenue. Our net income for the fourth quarter of 2019 was $94 million. Our Broadcast Cash Flow was $229 million, increasing $57 million, or 33%, from the fourth quarter of 2018, making it our highest ever quarterly Broadcast Cash Flow. Our Adjusted EBITDA for the fourth quarter of 2019 of $215 million significantly exceeded our expectations.

●

Record Annual Results - Our revenue for the full year 2019 was $2.1 billion, increasing $1.0 billion, or 96%, from 2018, marking our highest ever annual revenue. Our net income for 2019 was $179 million. Our Broadcast Cash Flow for the full year 2019 was $729 million, increasing $236 million, or 48%, from 2018, our highest ever annual Broadcast Cash Flow. Our Adjusted EBIDTA in 2019 was $714 million. Our Free Cash Flow for full year 2019 was $273 million, which was 4% higher than in 2018 and 59% higher than 2017, the last “off-year” of the two-year political advertising cycle. On a Combined Historical Basis (as defined herein), our Free Cash Flow for full year 2019 was $358 million, which was 19% higher than our free cash flow in 2017. Furthermore, our 2019 free cash flow significantly exceeded our previously issued guidance range of between $315 million and $325 million on this adjusted basis.

●

Political Revenue – Our political advertising revenue was $38 million for the fourth quarter of 2019 (on both an As Reported Basis and on a Combined Historical Basis), significantly exceeding our previously issued guidance of $25 million to $26 million and, for full year 2019, our political advertising revenue was $68 million. In 2017, the most recent non election year, and on a Combined Historical Basis, our political advertising revenue was $14 million in the fourth quarter of 2017 and $31 million for the full year 2017. As a result, on a Combined Historical Basis our political advertising revenue for the fourth quarter of 2019 was approximately 171% greater than that of the fourth quarter of 2017, and for the year, it was 119% greater than the full year 2017.

●

Balance Sheet – During the fourth quarter of 2019, we repurchased slightly over one million shares of our common stock on the open market at an average price of $20.86 per share, including commissions, for a total cost of approximately $21 million, under a stock repurchase authorization adopted in November, 2019. During the fourth quarter of 2019, we made voluntary pre-payments totaling $200 million on the term loan outstanding under our senior credit facility, using cash on hand, that reduced the lenders’ total loan commitment for the senior credit facility by an equal amount. As of December 31, 2019, our total leverage ratio, as defined in our senior credit facility, was 4.35 times on a trailing eight-quarter basis after netting our total cash on hand of $212 million and after giving effect to all Transaction Related Expenses (as defined below).

●	Operational Update – We have essentially completed the integration of our operations with that of our 2019 Acquisitions (as defined herein) including our acquisition of Raycom Media, Inc. Our actions have resulted in annualized synergies of at least $85 million.

●

Transaction Related Expenses and Non-Cash Stock-Based Compensation - During our fourth quarter and year to date 2019 and 2018 periods, we incurred incremental expenses (“Transaction Related Expenses”) on an As-Reported Basis that were specific to acquisitions, divestitures, and financing activities, including but not limited to legal and professional fees, severance and incentive compensation and contract termination fees. In addition, we have recorded certain non-cash stock-based compensation expenses. These expenses are summarized as follows (in millions):

	Three Months Ended				Year Ended
	December 31,				December 31,
	2019		2018		2019		2018
Transaction Related Expenses:
Broadcast	$	7	$	-	$	45	$	3
Corporate and administrative		-		2		34		8
Total Transaction Related Expenses	$	7	$	2	$	79	$	11

Total non-cash stock-based compensation	$	6	$	2	$	16	$	7

4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 F 404.261.9607 | www.gray.tv

●	Selected Statement of Operations Data – The following table presents certain operating data for the fourth quarter and year to date 2019 and 2018 periods (in millions, except for per share data):

	Three Months Ended				Year Ended
	December 31,				December 31,
	2019		2018		2019		2018
As-Reported:
Net income attributable to common stockholders	$	81	$	88	$	127	$	211
Net income attributable to common stockholders, diluted, per share	$	0.81	$	1.00	$	1.27	$	2.37
Adjusted EBITDA (1)	$	215	$	161	$	714	$	465

Excluding Transaction Related Expenses and non-cash stock-based comp:
Net income attributable to common stockholders (1)	$	91	$	91	$	198	$	224
Net income attributable to common stockholders, diluted, per share (1)	$	0.91	$	1.02	$	1.98	$	2.52

(1) See reconciliation of non-GAAP amounts to net income, included elsewhere herein.

●

Selected Guidance Data - Based on our current forecasts and expectations, which include consistent macroeconomic and industry trends, immaterial stock repurchases and immaterial business acquisitions, we currently anticipate revenue and expenses within the following approximate ranges for the quarter ended March 31, 2020 (“first quarter of 2020”) and for year ended December 31, 2020 as set forth below (in millions):

	Three Months Ended				Year Ended
	March 31, 2020				December 31, 2020
	Low		High		Low		High
	Guidance		Guidance		Guidance		Guidance

Total revenue	$	540	$	555	$	2,375	$	2,425
Political Revenue	$	35	$	40	$	250	$	275

Operating expenses before depreciation, amortization and gain on disposal of assets, net:	$	384	$	391	$	1,530	$	1,545

Free Cash Flow							$	500

Subject to the foregoing qualifications and guidance, by year-end 2020, we currently expect that our total leverage ratio will continue to decline to a range of between 3.7 and 3.8 times, on a trailing eight-quarter basis, after netting our total cash, and after giving effect to all Transaction Related Expenses. Actual results are subject to a number of risks and uncertainties and may differ materially from the current expectations.

Combined Historical Basis Information

We define “2019 Acquisitions” as the businesses acquired, and stations divested in connection with the merger with Raycom Media, Inc. (the “Raycom Merger”) completed on January 2, 2019; the acquisition of the assets of WWNY-TV (CBS) and WNYF-CD (FOX) in Watertown, New York (DMA 181) and KEYC-TV (CBS/FOX) in Mankato, Minnesota (DMA 198) from United Communications Corporation (the “United Acquisition”) completed on May 1, 2019; the acquisition of KDLT-TV (NBC), in the Sioux Falls, South Dakota market (DMA 113) from Red River Broadcasting Co., LLC on September 25, 2019; the acquisition of WVIR-TV (NBC) in the Charlottesville, Virginia market (DMA 182) from Waterman Broadcasting Corporation on October 1, 2019; and the divestiture of our legacy stations in the Charlottesville, Virginia market, WCAV-TV (CBS/FOX) and WVAW-LD (ABC), also on October 1, 2019. Including the 2019 Acquisitions, from January 1, 2017 through December 31, 2019, we completed several acquisition and divestiture transactions, including some that had a material impact on our results of operations. In order to provide more meaningful period over period comparisons, we present certain financial information below on a “Combined Historical Basis” or “CHB.” Our Combined Historical Basis presentation reflects financial results that have been compiled by adding Gray’s historical revenue, broadcast expenses and corporate and administrative expenses to the historical revenue, broadcast expenses and corporate and administrative expenses of the net stations acquired in those acquisitions, and subtracting the historical revenues and broadcast expenses of the divested stations as if all stations had been acquired or divested, respectively, on January 1, 2017, the beginning of the earliest period that CHB information is presented herein. For more information on CHB, see “Effects of Acquisitions and Divestitures on Our Results of Operations and Non-GAAP Terms” at the end of this release.

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 2 of 21

Selected Operating Data on As-Reported Basis (unaudited):

	Three Months Ended December 31,
	2019		2018		% Change 2019 to 2018			2017		% Change 2019 to 2017
	(dollars in millions)
Revenue (less agency commissions):
Broadcast	$	554	$	328		69	%	$	234		137	%
Production companies	$	25	$	-				$	-
Total revenue	$	579	$	328		77	%	$	234		147	%

Political	$	38	$	83		(54	)%	$	7		443	%

Operating expenses (1)(3):
Broadcast	$	339	$	160		112	%	$	151		125	%
Production companies	$	17	$	-				$	-
Corporate and administrative	$	21	$	11		91	%	$	7		200	%

Net income	$	94	$	88		7	%	$	166		(43	)%

Non-GAAP Cash Flow (2):
Broadcast Cash Flow (3)	$	229	$	172		33	%	$	87		163	%
Broadcast Cash Flow Less Cash Corporate Expenses (3)	$	212	$	163		30	%	$	81		162	%
Free Cash Flow	$	108	$	98		10	%	$	41		163	%

Transaction related expenses included in operating expenses (4):
Broadcast	$	7	$	-				$	1
Production companies	$	-	$	-				$	-
Corporate and administrative	$	-	$	2				$	-

	Year Ended December 31,
	2019		2018		% Change 2019 to 2018			2017		% Change 2019 to 2017
	(dollars in millions)
Revenue (less agency commissions):
Broadcast	$	2,035	$	1,084		88	%	$	883		130	%
Production companies	$	87	$	-				$	-
Total revenue	$	2,122	$	1,084		96	%	$	883		140	%

Political	$	68	$	155		(56	)%	$	16		325	%

Operating expenses (1)(3):
Broadcast	$	1,325	$	596		122	%	$	558		137	%
Production companies	$	74	$	-				$	-
Corporate and administrative	$	104	$	41		154	%	$	32		225	%

Net income	$	179	$	211		(15	)%	$	262		(32	)%

Non-GAAP Cash Flow (2):
Broadcast Cash Flow (3)	$	729	$	493		48	%	$	329		122	%
Broadcast Cash Flow Less Cash Corporate Expenses (3)	$	636	$	457		39	%	$	302		111	%
Free Cash Flow	$	273	$	263		4	%	$	171		60	%

Transaction related expenses included in operating expenses (4):
Broadcast	$	45	$	3				$	3
Production companies	$	-	$	-				$	-
Corporate and administrative	$	34	$	8				$	1

(1)	Excludes depreciation, amortization and (gain) loss on disposal of assets.

(2)	See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included herein.

(3)	Amounts in 2017 have been reclassified to give effect to the implementation of Accounting Standards Update 2017-07, Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Postretirement Benefit Cost (“ASU 2017-07”).

(4)	Transaction Related Expenses are incremental expenses incurred specific to acquisitions and divestitures, including but not limited to legal and professional fees, severance and incentive compensation and contract termination fees.

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 3 of 21

Results of Operations for the Fourth Quarter of 2019 on an As-Reported basis:

Revenue (Less Agency Commissions).

The table below presents our revenue (less agency commissions) by type for the quarters ended December 31, 2019 and 2018 (dollars in millions):

	Three Months Ended December 31,
	2019					2018					Amount			Percent
			Percent					Percent			Increase			Increase
	Amount		of Total			Amount		of Total			(Decrease)			(Decrease)
Revenue (less agency commissions):
Local (including internet/digital/mobile)	$	243		42.0	%	$	117		35.7	%	$	126			108	%
National		67		11.6	%		31		9.5	%		36			116	%
Political		38		6.6	%		83		25.3	%		(45	)		(54	)%
Retransmission consent		195		33.7	%		93		28.4	%		102			110	%
Production companies		25		4.3	%		-		0.0	%		25
Other		11		1.8	%		4		1.1	%		7			175	%
Total	$	579		100.0	%	$	328		100.0	%	$	251			77	%

Total revenue increased primarily as a result of the 2019 Acquisitions, but political advertising revenue decreased in 2019 due to 2019 being the “off-year” of the two-year election cycle. The 2019 Acquisitions accounted for $314 million of the increase in our total revenue for the fourth quarter of 2019 compared to the fourth quarter of 2018. Excluding the revenue attributable to the 2019 Acquisitions, revenue decreased by $63 million or 19% in the fourth quarter of 2019 as compared to the fourth quarter of 2018 solely as a result of decreased political advertising revenue.

Operating Expenses (before depreciation, amortization and gain or loss on disposal of assets).

Broadcast operating expenses increased $179 million, or 112%, to $339 million for the fourth quarter of 2019 compared to 2018. The 2019 Acquisitions accounted for $174 million of the increase in broadcast operating expenses for the fourth quarter of 2019. The table below presents our operating expenses (before depreciation, amortization and gain or loss on disposal of assets) for the quarters ended December 31, 2019 and 2018, respectively:

	Three Months Ended December 31,
	2019					2018					Amount			Percent
			Percent					Percent			Increase			Increase
	Amount		of Total			Amount		of Total			(Decrease)			(Decrease)
	(dollars in millions)
OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):
Broadcast:
Station expenses	$	223		65.8	%	$	117		73.1	%	$	106			91	%
Retransmission expense		107		31.6	%		43		26.9	%		64			149	%
Transaction Related Expenses		7		2.1	%		-		0.0	%		7
Non-cash stock-based compensation		2		0.5	%		-		0.0	%		2
Total broadcast expense	$	339		100.0	%	$	160		100.0	%	$	179			112	%

Production companies expense	$	17				$	-				$	17

Corporate and administrative:
Corporate expenses	$	17		81.0	%	$	7		63.6	%	$	10			143	%
Transaction Related Expenses		-		0.0	%		2		18.2	%		(2	)
Non-cash stock-based compensation		4		19.0	%		2		18.2	%		2
Total corporate and administrative expense	$	21		100.0	%	$	11		100.0	%	$	10			91	%

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 4 of 21

Results of Operations for the Year Ended December 31, 2019 on an As-Reported basis:

Revenue (Less Agency Commissions).

The table below presents our revenue (less agency commissions) by type for the years ended December 31, 2019 and 2018, respectively (dollars in millions):

	Year Ended December 31,
	2019					2018					Amount			Percent
			Percent					Percent			Increase			Increase
	Amount		of Total			Amount		of Total			(Decrease)			(Decrease)
Revenue (less agency commissions):
Local (including internet/digital/mobile)	$	898		42.3	%	$	443		40.9	%	$	455			103	%
National		229		10.8	%		114		10.5	%		115			101	%
Political		68		3.2	%		155		14.3	%		(87	)		(56	)%
Retransmission consent		796		37.5	%		355		32.7	%		441			124	%
Production companies		87		4.1	%		-		0.0	%		87
Other		44		2.1	%		17		1.6	%		27			159	%
Total	$	2,122		100.0	%	$	1,084		100.0	%	$	1,038			96	%

The stations and production companies acquired in the 2019 Acquisitions accounted for $1.1 billion of the increase in our total revenue during 2019. Excluding the revenue attributable to the 2019 Acquisitions, revenue decreased by $95 million due to decreases in political advertising revenue, resulting primarily from 2019 being an “off-year” of the two-year political advertising cycle, partially offset by increases in retransmission consent revenue resulting from increases in rates.

Operating Expenses (before depreciation, amortization and gain or loss on disposal of assets) on an As-Reported Basis.

Broadcast operating expenses increased $729 million, or 122%, to $1.3 billion for 2019 compared to $596 million in 2018. The 2019 Acquisitions accounted $713 million of the increase in broadcast operating expenses in 2019. The table below presents our operating expenses (before depreciation, amortization and gain or loss on disposal of assets) for the years ended December 31, 2019 and 2018, respectively:

	Year Ended December 31,
	2019					2018					Amount		Percent
			Percent					Percent			Increase		Increase
	Amount		of Total			Amount		of Total			(Decrease)		(Decrease)
	(dollars in millions)
OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):
Broadcast:
Station expenses	$	855		64.5	%	$	426		71.5	%	$	429		101	%
Retransmission expense		420		31.7	%		165		27.7	%		255		155	%
Transaction Related Expenses		45		3.4	%		3		0.5	%		42
Non-cash stock-based compensation		5		0.4	%		2		0.3	%		3
Total broadcast expense	$	1,325		100.0	%	$	596		100.0	%	$	729		122	%

Production companies expense	$	74				$	-				$	74

Corporate and administrative:
Corporate expenses	$	59		56.7	%	$	28		68.3	%	$	31		111	%
Transaction Related Expenses		34		32.7	%		8		19.5	%		26
Non-cash stock-based compensation		11		10.6	%		5		12.2	%		6
Total corporate and administrative expense	$	104		100.0	%	$	41		100.0	%	$	63		154	%

Taxes.

During 2019 and 2018, we made aggregate federal and state income tax payments (net of refunds) of approximately $23 million and $34 million, respectively. During 2020, we anticipate making income tax payments (net of refunds) within a range of approximately $79 million to $81 million. As of December 31, 2019, we have approximately $438 million of federal operating loss carryforwards, which expire during the years 2023 through 2037. We expect to have federal taxable income in the carryforward periods, therefore we believe that it is more likely than not that these federal operating loss carryforwards will be fully utilized. Additionally, we have an aggregate of approximately $677 million of various state operating loss carryforwards, of which we expect that approximately half will be utilized.

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 5 of 21

Detailed table of operating results on As-Reported Basis:

Gray Television, Inc.
Selected Operating Data (Unaudited)
(in millions, except for net income per share data)

	Three Months Ended						Year Ended
	December 31,						December 31,

	2019			2018			2019			2018

Revenue (less agency commissions)
Broadcasting	$	554		$	328		$	2,035		$	1,084
Production companies		25			-			87			-
Total revenue (less agency commissions)		579			328			2,122			1,084
Operating expenses before depreciation, amortization and gain on disposal of assets, net:
Broadcast		339			160			1,325			596
Production companies		17			-			74			-
Corporate and administrative		21			11			104			41
Depreciation		20			13			80			54
Amortization of intangible assets		29			5			115			21
Gain on disposal of assets, net		(27	)		(11	)		(54	)		(17	)
Operating expenses		399			178			1,644			695
Operating income		180			150			478			389
Other income (expense):
Miscellaneous income, net		-			3			4			6
Interest expense		(54	)		(32	)		(227	)		(107	)
Income before income tax		126			121			255			288
Income tax expense		32			33			76			77
Net income		94			88			179			211
Preferred stock dividends		13			-			52			-
Net income attributable to common stockholders	$	81		$	88		$	127		$	211

Basic per share information:
Net income attributable to common stockholders	$	0.82		$	1.01		$	1.28		$	2.39
Weighted-average shares outstanding		99			88			99			88

Diluted per share information:
Net income attributable to common stockholders	$	0.81		$	1.00		$	1.27		$	2.37
Weighted-average shares outstanding		100			89			100			89

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 6 of 21

Other Financial Data on an As-Reported Basis:

	December 31, 2019		December 31, 2018
	(in millions)

Cash	$	212	$	667
Restricted cash	$	-	$	752
Long-term debt, including current portion, net of deferred financing costs	$	3,697	$	2,549
Borrowing availability under our senior credit facility	$	200	$	100

	Year Ended December 31,
	2019			2018
	(in millions)

Net cash provided by operating activities	$	385		$	323
Net cash used in investing activities		(2,656	)		(47	)
Net cash provided by financing activities		1,064			681
Net (decrease) increase in cash and restricted cash	$	(1,207	)	$	957

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 7 of 21

Selected Operating Data on Combined Historical Basis (1) (unaudited):

	Three Months Ended December 31,
	2019		2018		% Change 2019 to 2018			2017		% Change 2019 to 2017
	(dollars in millions)
Revenue (less agency commissions):
Broadcast	$	554	$	625		(11	)%	$	477		16	%
Production companies	$	25	$	22		14	%	$	25		0	%
Total revenue	$	579	$	647		(11	)%	$	502		15	%

Political	$	38	$	127		(70	)%	$	14		171	%

Operating expenses (2) (3):
Broadcast	$	339	$	334		1	%	$	312		9	%
Production companies	$	17	$	16		6	%	$	18		(6	)%
Corporate and administrative	$	21	$	31		(32	)%	$	21		0	%

Non-GAAP Cash Flow (2):
Broadcast Cash Flow(3)	$	236	$	306		(23	)%	$	181		30	%
Broadcast Cash Flow Less Cash Corporate Expenses	$	221	$	279		(21	)%	$	163		36	%
Operating Cash Flow as Defined in our Senior Credit Agreement	$	221	$	307		(28	)%	$	180		23	%
Free Cash Flow	$	119	$	200		(41	)%	$	70		70	%

Transaction related expenses included in operating expenses (4):
Broadcast	$	7	$	-				$	1
Production companies	$	-	$	-				$	-
Corporate and administrative	$	1	$	8				$	-

	Year Ended December 31,
	2019		2018		% Change 2019 to 2018			2017		% Change 2019 to 2017
	(dollars in millions)
Revenue (less agency commissions):
Broadcast	$	2,044	$	2,110		(3	)%	$	1,813		13	%
Production companies	$	87	$	86		1	%	$	85		2	%
Total revenue	$	2,131	$	2,196		(3	)%	$	1,898		12	%

Political	$	68	$	235		(71	)%	$	31		119	%

Operating expenses (2) (3):
Broadcast	$	1,335	$	1,248		7	%	$	1,181		13	%
Production companies	$	74	$	74		0	%	$	71		4	%
Corporate and administrative	$	104	$	85		22	%	$	64		63	%

Non-GAAP Cash Flow (2):
Broadcast Cash Flow(3)	$	779	$	894		(13	)%	$	666		17	%
Broadcast Cash Flow Less Cash Corporate Expenses	$	687	$	822		(16	)%	$	612		12	%
Operating Cash Flow as Defined in our Senior Credit Agreement	$	718	$	914		(21	)%	$	690		4	%
Free Cash Flow	$	358	$	534		(33	)%	$	301		19	%

Transaction related expenses included in operating expenses (4):
Broadcast	$	45	$	3				$	3
Production companies	$	-	$	-				$	-
Corporate and administrative	$	34	$	14				$	1

(1)	Excludes depreciation, amortization and (gain) loss on disposal of assets.

(2)	See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included herein.

(3)	Amounts in 2017 have been reclassified to give effect to the implementation of Accounting Standards Update 2017-07, Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Postretirement Benefit Cost (“ASU 2017-07”).

(4)	Transaction Related Expenses are incremental expenses incurred specific to acquisitions and divestitures, including but not limited to legal and professional fees, severance and incentive compensation and contract termination fees.

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 8 of 21

Results of Operations for the Fourth Quarter of 2019 on the Combined Historical Basis:

	Three Months Ended December 31,
					Amount			Percent
					Increase			Increase
	2019		2018		(Decrease)			(Decrease)
	(dollars in millions)
REVENUE (less agency commissions):
Broadcast:
Local (including internet/digital/mobile)	$	243	$	244	$	(1	)		0	%
National		67		66		1			2	%
Political		38		127		(89	)		(70	)%
Retransmission consent		195		178		17			10	%
Other		11		10		1			10	%
Total Broadcast revenue		554		625		(71	)		(11	)%
Production companies revenue		25		22		3			14	%
Total revenue	$	579	$	647	$	(68	)		(11	)%

OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):
Broadcast:
Station expenses	$	223	$	243	$	(20	)		(8	)%
Retransmission expense		107		91		16			18	%
Transaction Related Expenses		7		-		7
Non-cash stock-based compensation		2		-		2
Total broadcast expense	$	339	$	334	$	5			1	%

Production companies expense	$	17	$	16	$	1			6	%

Corporate and administrative:
Corporate expenses	$	17	$	19	$	(2	)		(11	)%
Transaction Related Expenses		-		8		(8	)
Non-cash stock-based compensation		4		4		-
Total corporate and administrative expense	$	21	$	31	$	(10	)		(32	)%

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 9 of 21

Results of Operations for the Year Ended December 31, 2019 on the Combined Historical basis:

	Year Ended December 31,
					Amount			Percent
					Increase			Increase
	2019		2018		(Decrease)			(Decrease)
	(dollars in millions)
REVENUE (less agency commissions):
Broadcast:
Local (including internet/digital/mobile)	$	903	$	913	$	(10	)		(1	)%
National		230		242		(12	)		(5	)%
Political		68		235		(167	)		(71	)%
Retransmission consent		799		677		122			18	%
Other		44		43		1			2	%
Total Broadcast revenue		2,044		2,110		(66	)		(3	)%
Production companies revenue		87		86		1			1	%
Total revenue	$	2,131	$	2,196	$	(65	)		(3	)%

OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):
Broadcast:
Station expenses	$	863	$	892	$	(29	)		(3	)%
Retransmission expense		422		351		71			20	%
Transaction Related Expenses		45		3		42
Non-cash stock-based compensation		5		2		3
Total broadcast expense	$	1,335	$	1,248	$	87			7	%

Production companies expense	$	74	$	74	$	-			0	%

Corporate and administrative:
Corporate expenses	$	59	$	58	$	1			2	%
Transaction Related Expenses		34		14		20
Non-cash stock-based compensation		11		13		(2	)
Total corporate and administrative expense	$	104	$	85	$	19			22	%

Gray Television, Inc.
Earnings Release for the three-months and year ended December 31, 2019	Page 10 of 21

Guidance for the Three-Months Ending March 31, 2020:

Based on our current forecasts for the quarter ending March 31, 2020 (the “first quarter of 2020”), we anticipate changes from the quarter ended March 31, 2019 (the “first quarter of 2019”), as outlined below:

	As Reported Basis
Selected operating data:	Three Months Ending March 31,
	Low End Guidance								High End Guidance
	Low		Amount			Percentage			High		Amount			Percentage
	Guidance for		Change From			Change From			Guidance for		Change From			Change From
	the First		First			First			the First		First			First			First
	Quarter of		Quarter of			Quarter of			Quarter of		Quarter of			Quarter of			Quarter of
	2020		2019			2019			2020		2019			2019			2019
	(dollars in millions)
REVENUE (less agency commissions):
Broadcast:
Local (including internet/digital/mobile)	$	205	$	(6	)		(3	)%	$	209	$	(2	)		(1	)%	$	211
National		52		2			4	%		54		4			8	%		50
Political		35		32			1067	%		40		37			1233	%		3
Retransmission consent		213		9			4	%		215		11			5	%		204
Other		15		2			15	%		16		3			23	%		13
Total Broadcast revenue		520		39			8	%		534		53			11	%		481
Production companies revenue		20		(17	)		(46	)%		21		(16	)		(43	)%		37
Total revenue	$	540	$	22			4	%	$	555	$	37			7	%	$	518

OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):
Broadcast:
Station expenses	$	221	$	4			2	%	$	224	$	7			3	%	$	217
Retransmission expense		123		19			18	%		124		20			19	%		104
Transaction Related Expenses		-		(35	)					-		(35	)					35
Non-cash stock-based compensation		2		2						2		2						-
Total broadcast expense	$	346	$	(10	)		(3	)%	$	350	$	(6	)		(2	)%	$	356

Production companies expense	$	20	$	(15	)