In August 2018, the FASB issued ASU 2018-14,Compensation Retirement Benefits Defined Benefit Plans General (Subtopic 715-20) - Disclosure Framework Changes to the Disclosure Requirements for Defined Benefit Plans ASU 2018-14 adds, removes, and modifies disclosure requirements related to defined benefit pension and other postretirement plans. The update amends only annual disclosure requirements. Retrospective adoption of the update is required in fiscal 2022. The standard allows for early adoption, but we have not yet made a determination as to whether to early-adopt this standard. The adoption of this guidance requires a change in disclosures only and is not expected to have a material impact on our financial statements.

In February 2016, the FASB issued ASU 2016-02 – Leases (Topic 842). ASU 2016-02 superseded Topic 840, Leases, and thus superseded nearly all existing lease guidance by requiring the reclassification of lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements, which provided the option of applying the requirements of the new lease standard in the period of adoption using the modified retrospective approach with no restatement of comparative periods. We adopted the standard effective January 1, 2019, using the modified retrospective approach provided in ASU 2018-11. The transition guidance allowed for the election of a number of practical expedients. We elected the package of practical expedients and the ~~short term~~short-term lease practical expedient. The package of practical expedients allowed us to carryforward our classification of existing leases. With the election of the short-term practical expedient, we are not required to recognize on our consolidated balance sheet, the present value of leases with an initial term of twelve months or less. We also implemented internal controls and key system functionality to enable the preparation of financial information on adoption. The standard had a material impact in our consolidated balance sheets but did not have an impact in our consolidated income statements. Upon the adoption of this standard, we recorded a right of use (“ROU”) asset and a lease obligation liability of approximately~~$21~~ $21 million. In addition, upon the completion of the Raycom Merger on January 2, 2019, we implemented these standards to the leases acquired in the Raycom Merger and recorded a ROU asset and a lease obligation liability of approximately~~$52~~ $52 million for each. Please refer to Note 3 “Acquisitions and Divestitures” and Note 10 “Leases” for further information.

In January 2017, ~~February 2018,~~ the FASB issued ASU 2017-01,Business Combinations (Topic 805) – Clarifying the Definition of a Business. ASU 2017-01 adds guidance to assist entities in the determination of whether an acquisition (or disposal) represents assets or a business. The update provides a test to determine whether or not an acquisition is a business. If substantially all of the fair value of the assets acquired is concentrated in a single asset or a group of similar identifiable assets, the acquired assets do not represent a business. If this test is not met, the update provides further guidance to evaluate if the acquisition represents a business. The Company adopted the guidance on January 1, 2019. The adoption did not have an impact on our financial statements.

In February 2018, the FASB issued ASU 2018-02,Income Statement - Reporting Comprehensive Income (Topic 220) – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (“TCJA”). Consequently, the amendments eliminate the stranded tax effects resulting from the TCJA and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the TCJA, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. We have adopted this standard effective on January 1, 2019 and have recorded an adjustment of $5$5 million to increase our retained earnings and accumulated other comprehensive loss.

In ~~January 2017,~~ ~~the FASB issued ASU~~ ~~2017~~-~~01,~~~~Business Combinations~~ ~~(Topic~~ ~~805~~~~) –~~ ~~Clarifying the Definition of a Business~~~~. ASU~~ ~~2017~~-01 ~~adds guidance to assist entities in the determination of whether an acquisition (or disposal) represents assets or a business. The update provides a test to determine whether or~~ ~~not~~ ~~an acquisition is a business. If substantially all of the fair value of the assets acquired is concentrated in a single asset or a group of similar identifiable assets, the acquired assets do~~ ~~not~~ ~~represent a business. If this test is~~ ~~not~~ ~~met, the update provides further guidance to evaluate if the acquisition represents a business. The Company adopted the guidance on~~ ~~January 1, 2019.~~ ~~The adoption did~~ ~~not~~ ~~have an impact on our financial statements.~~

Certain amounts in the condensed consolidated statement of cash flows have also been reclassified to conform to the current presentation.

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 sheet.

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 in the manner stated above. These deposits are recorded as deposit liabilities on our balance sheet. 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 sheet. 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 $3 million of revenue in the ~~six~~nine months ended ~~June~~September 30, 2019 that was included in the deposit liability balance as of December 31, 2018. The deposit liability balance is included in deferred revenue on our condensed consolidated balance sheets. The deposit liability balance was $8$11 million and $3 million as of ~~June~~September 30, 2019 and December 31, 2018, respectively.

Revenue from our production companies segment is generated through our direct sales channel. Revenue from our broadcast 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):

During the ~~six~~nine-months ended ~~June~~September 30, 2019, we completed acquisition and divestiture transactions which we believe will, among other things, increase our revenues and cash flows from operating activities, and allow us to operate more efficiently and effectively by increasing our scale and could provide us with, among other things, the ability to negotiate more favorable terms in our agreements with third parties.

On January 2, 2019, we completed an acquisition of all the equity interests of Raycom Media, Inc. (“Raycom”). In connection with the acquisition of Raycom and on the same date, Gray assumed and completed Raycom’s pending acquisitions of WUPV-DT in the Richmond, VA market and KYOU-TV in the Ottumwa, IA market. To facilitate regulatory approval of the acquisition of Raycom and to satisfy the conditions placed on the acquisition by the Antitrust Division of the U.S. Department of Justice (the “DOJ”) and the FCC, we completed the divestiture of nine television stations in overlapping markets. We refer to the acquisition of Raycom, WUPV-DT and KYOU-TV and the divestiture of the stations in the nine overlapping markets collectively as the “Raycom Merger.”

We believe the completion of the Raycom Merger is a significant step in our pursuit of strategic growth through accretive acquisition opportunities. The Raycom Merger completed our transformation from a small, regional broadcaster to a leading media company with nationwide scale based on high-quality stations with exceptional talent in attractive markets. The following table lists the stations acquired and retained, net of divestitures:

The divestiture transactions included one station owned by us. On December 31, 2018, we sold the assets of WSWG-TV (DMA-152) in the Albany, Georgia television market for $8.5 million, excluding transaction related expenses to Marquee Broadcasting, Inc. and Marquee Broadcasting Georgia, Inc. In connection with the divestiture of the assets of WSWG-TV, we recorded a gain of approximately $4.8 million in the fourth quarter of 2018.

On January 2, 2019, the following stations were acquired from Raycom and their assets were immediately divested in eight markets as follows (dollars in millions):

The allocated portion of net consideration paid for the assets and liabilities divested for the stations in these eight overlap markets was approximately $234 million.

The net consideration paid to acquire Raycom consisted of $2.84 billion of cash, 11.5 million shares of our common stock, valued at $170 million (a non-cash financing transaction), and $650 million of a new series of preferred stock (a non-cash financing transaction), for a total of $3.66 billion. Please refer to Note 6 “Stockholders Equity” and Note 7 “Preferred Stock” for further information. The cash consideration paid to acquire the two stations that Raycom had previously agreed to acquire (KYOU-TV and WUPV-TV listed above) was $17 million. The following table summarizes the consideration paid related to the Raycom Merger and the amount representing the net assets acquired and liabilities assumed (in millions):

On May 1, 2019, we acquired the assets of WWNY-TV (CBS) and WNYF-CD (FOX) in Watertown, New York (DMA 178) and KEYC-TV (CBS/FOX) in Mankato, Minnesota (DMA 199) from United Communications Corporation (the “United Acquisition”) for an adjusted purchase price of $48 million of cash, excluding transaction related expenses. We began operating those stations on March 1, 2019 under a local programming and marketing agreement, which increased the total number of our markets from 91 to 93.

The following table summarizes the preliminary values of the assets acquired, liabilities assumed and resulting goodwill of the Raycom Merger and the United Acquisition together, the “2019 ~~Acquisitions,”~~Acquisitions” (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 and assumed liabilities, the fair values were determined based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. Because of the magnitude and complexity of the calculations involved and the inherent issues related to the integration of our operations, the valuation of the assets acquired, liabilities assumed and resulting goodwill of the 2019 Acquisitions are not yet final. However, we expect that any adjustments to these amounts reported in subsequent periods will not be material to our financial statements as a whole.

Accounts receivable are recorded at their fair value representing the amount we expect to collect. Gross contractual amounts receivable are approximately $2 million more than their recorded fair value.

Property and equipment are recorded at their fair value and are being depreciated over their estimated useful lives ranging from 3three years to 40 years.

Amounts related to other intangible assets represent primarily the estimated fair values of retransmission agreements of $313 million; favorable income leases of $76 million; and network affiliation agreements of $48 million. These intangible assets are being amortized over their estimated useful lives of approximately ~~4.6~~4.4 years for retransmission agreements; approximately ~~9.2~~9.0 years for favorable income leases; and approximately ~~4.2~~4.0 years for network affiliation agreements.

Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and liabilities assumed, and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, as well as future synergies that we expect to generate from each acquisition. We recorded ~~$836~~$834 million of goodwill related to stations acquired and retained in the Raycom Merger, and $3 million of goodwill related to the stations acquired in the United Acquisition. A portion of the goodwill acquired, in the amount of approximately $150 million that was deductible by Raycom will be deductible by us for income tax purposes.

The Company’s consolidated results of operations for three and ~~six~~nine-months ended ~~June~~September 30, 2019 include the results of the Raycom Merger beginning on January 2, 2019 and the United Acquisition beginning on March 1, 2019. Revenues attributable thereto and included in our consolidated statement of operations for the three and ~~six~~nine-months ended ~~June~~September 30, 2019 were ~~$264~~$274 million and ~~$545~~$819 million, respectively. Operating income attributable thereto and included in our consolidated statement of operations was ~~$53~~$63 million and ~~$49~~$112 million for the three and ~~six~~nine-months ended ~~June~~September 30, 2019, respectively.

The following table summarizes the approximate “Transaction Related Expenses” incurred in connection with the 2019 Acquisitions, during the three and ~~six~~nine-months ended ~~June~~September 30, 2019, by type and by financial statement line item (in millions):

The following table sets forth certain unaudited pro forma information for the ~~six~~nine-months ended ~~June~~September 30, 2019 and 2018 assuming that the 2019 Acquistions occurred on January 1, 2018 (in millions, except per share data):

This pro forma financial information is based on Gray’s historical results of operations and the historical results of operations of the television stations acquired, net of divestitures, included in the 2019 Acquisitions, adjusted for the effect of fair value estimates and other acquisition accounting adjustments, and is not necessarily indicative of what our results would have been had we completed the 2019 Acquisitions on January 1, 2018 or on any other historical date, nor is it reflective of our expected results of operations for any future period. The pro forma adjustments for the ~~six~~nine-months ended ~~June~~September 30, 2019 and 2018 reflect depreciation expense and amortization of finite-lived intangible assets related to the fair value of the assets acquired, transaction related expenses and the related tax effects of the adjustments. This pro forma financial information has been prepared based on estimates and assumptions that we believe are reasonable as of the date hereof, and are subject to change based on, among other things, changes in the fair value estimates or underlying assumptions.

On September 25, 2019, we acquired KDLT-TV (NBC), in the Sioux Falls, South Dakota market (DMA 115), for $32.5 million, using cash on hand (the “Sioux Falls Acquisition”). Due to the proximity of the closing date of the Sioux Falls Acquisition to the balance sheet date and the filing date of this quarterly report, we were unable to present a preliminary purchase price allocation for the acquired business. The payment of the purchase price is included in our other non-current assets at September 30, 2019. Fair value estimates of assets acquired, liabilities assumed and resulting goodwill will be based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and liabilities assumed, the fair value estimates will be based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.

As of ~~June~~September 30, 2019, long-term debt primarily consisted of obligations under our 2019 Senior Credit Facility (as defined below), our 5.125% Senior Notes due 2024 (the “2024 Notes”), our 5.875% senior notes due 2026 (the “2026 Notes”) and our 7.0% senior notes due 2027 (the “2027 Notes”). As of December 31, 2018, long-term debt primarily consisted of obligations under our 2017 Senior Credit Facility (as defined below), our 2024 Notes, our 2026 Notes and our 2027 Notes as follows (in millions):

In connection with the Raycom Merger, on January 2, 2019, we amended our senior credit facility (the “2017 Credit Facility” and, as amended, the “2019 Senior Credit Facility”) as follows: (1) we replaced our existing $100 million revolving credit facility under our prior senior credit facility with a new 5five year revolving credit facility (the “2019 Revolving Credit Facility”), the terms of which provide for up to $200 million in available borrowings and a maturity date of January 2, 2024, and (2) we incurred a $1.4 billion term loan (the “2019 Term Loan”), which matures on January 2, 2026 and (3) assumed the outstanding ~~$556~~$556.4 million term loan facility (the “2017 Initial Term Loan”) and $85 million incremental term loan (the “2017 Incremental Term Loan” and, together with the 2017 Initial Term Loan, the “2017 Term Loan”). which mature on February 7, 2024. Since the Raycom Merger was not completed by December 15, 2018, we incurred a ticking fee of $0.8 million at a rate of 1.25% of the 2019 Term Loan amount, from December 16, 2018 to January 2, 2019. In addition, we assumed $750 million of the 2027 Notes, which were issued by our special purpose, wholly-owned subsidiary on November 16, 2018. The proceeds of the 2019 Term Loan and the 2027 Notes were used to fund a portion of the cash consideration payable in the Raycom Merger.

Borrowings under the 2019 Term Loan bear interest, at our option, at either the London Interbank Offered Rate (“LIBOR”) or the Base Rate, in each case, plus an applicable margin isof 2.5% for LIBOR borrowings and 1.5% for Base Rate borrowings. As of ~~June~~September 30, 2019, the interest rate on the balance outstanding under the 2019 Term Loan was ~~4.9%~~4.8%. The 2019 Term Loan matures on January 2, 2026.

Borrowings under the 2017 Term Loan bear interest, at our option, at either the LIBOR or the Base Rate (as defined below), in each case, plus an applicable margin. Currently, the applicable margin is 2.25% for LIBOR borrowings and 1.25% for Base Rate borrowings. The applicable margin is determined quarterly based on our leverage ratio as set forth in the 2019 Senior Credit Facility (the “Leverage Ratio”). If our Leverage Ratio is less than or equal to 5.25 to 1.00, the applicable margin is 2.25% for all LIBOR borrowings and 1.25% for all Base Rate borrowings, and if the Leverage Ratio is greater than 5.25 to 1.00, the applicable margin is 2.5% for all LIBOR borrowings and 1.5% for all Base Rate borrowings. As of ~~June~~September 30, 2019, the interest rate on the balance outstanding under the 2017 Term Loan was ~~4.7%~~4.6%. The 2017 Term Loan matures on February 7, 2024.

Borrowings under the 2019 Revolving Credit Facility currently bear interest, at our option, at either LIBOR plus the applicable margin or Base Rate plus the applicable margin, in each case based on a first lien leverage ratio test as set forth in the 2019 Senior Credit Facility (the “First Lien Leverage Ratio”). Base Rate is defined as the greatest of (i) the administrative agent’s prime rate, (ii) the overnight federal funds rate plus 0.50% or (iii) LIBOR plus 1.50%. We are required to pay a commitment fee on the average daily unused portion of the 2019 Revolving Credit Facility, which may range from 0.375% to 0.50% on an annual basis, based on the First Lien Leverage Ratio. The 2019 Revolving Credit Facility matures on January 2, 2024.

We incurred $42.5 million of transaction fees and expenses related to the 2019 Senior Credit Facility. At ~~June~~September 30, 2019 these were recorded as a reduction of the balance of the outstanding debt and are amortized over the life of the 2019 Senior Credit Facility. The amortization of these fees is included in our interest expense.

As of ~~June~~September 30, 2019, the aggregate minimum principal maturities of our long term debt for the remainder of 2019 and the succeeding 5 years were as follows (in millions):

Our obligations under the 2019 Senior Credit Facility are secured by substantially all of our consolidated assets, excluding real estate. In addition, substantially all of our subsidiaries are joint and several guarantors of, and our ownership interests in those subsidiaries are pledged to collateralize, our obligations under the 2019 Senior Credit Facility. Gray Television, Inc. is a holding company, and has no material independent assets or operations. For all applicable periods, the 2024 Notes, 2026 Notes and 2027 Notes have been fully and unconditionally guaranteed, on a joint and several, senior unsecured basis, by substantially all of Gray Television, Inc.'s subsidiaries. Any subsidiaries of Gray Television, Inc. that do not guarantee the 2024 Notes, 2026 Notes and 2027 Notes are minor. As of ~~June~~September 30, 2019, there were ~~nosignificant~~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, including: (a) limitations on additional indebtedness, (b) limitations on liens, (c) limitations on the sale of assets, (d) limitations on guarantees, (e) limitations on investments and acquisitions, (f) limitations on the payment of dividends and share repurchases, (g) limitations on mergers and (h) maintenance of the First Lien Leverage Ratio while any amount is outstanding under the revolving credit facility, as well as other customary covenants for credit facilities of this type. The 2024 Notes, the 2026 Notes and the 2027 Notes include covenants with which we must comply which are typical for borrowing transactions of their nature. As of ~~June~~September 30, 2019 and December 31, 2018, we were in compliance with all required covenants under all our debt obligations.

For all of our interest bearing obligations, we made interest payments of approximately ~~$105~~$134 million and ~~$47~~$74 million during the ~~six~~nine-months ended ~~June~~September 30, 2019 and 2018, respectively. We did ~~not~~not capitalize any interest payments during the ~~six~~nine-months ended ~~June~~September 30, 2019 and 2018.

For purposes of determining a fair value measurement, we utilize market data or assumptions that market participants would use in pricing an asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized into a hierarchy that gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (“Level 1”) and the lowest priority to unobservable inputs that require assumptions to measure fair value (“Level 3”). Level 2 inputs are those that are other than quoted prices on national exchanges included within Level 1 that are observable for the asset or liability either directly or indirectly (“Level 2”).

The estimated fair value of other financial instruments is determined using market information and appropriate valuation methodologies. Interpreting market data to develop fair value estimates involves considerable judgment. The use of different market assumptions or methodologies could have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange, or the value that ultimately will be realized upon maturity or disposition.

The carrying amounts of the following instruments approximate fair value due to their short term to maturity: (i) accounts receivable, (ii) prepaid and other current assets, (iii) accounts payable, (iv) accrued employee compensation and benefits, (v) accrued interest, (vi) other accrued expenses, (vii) acquisition-related liabilities and (viii) deferred revenue.

The carrying amount of our long-term debt was $3.9 billion and $2.5 billion, respectively, and the fair value was $4.1 billion and $2.4 billion, respectively, as of ~~June~~September 30, 2019 and December 31, 2018. Fair value of our long-term debt is based on observable estimates provided by third-party financial professionals as of ~~June~~September 30, 2019 and December 31, 2018 and as such is classified within Level 2 of the fair value hierarchy.

We ~~are~~were 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 Class A common stock and ~~Class A~~our common stock are identical, except that our Class A common stock has 10 votes per share and our common stock has ~~one~~1 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. For the ~~six~~nine-months ~~ending~~ended ~~June~~September 30, 2019 and 2018, we didnotnotdeclare or pay any Class A common stock or ~~Class A~~ common stock dividends.

On January 2, 2019, we issued 11.5 million shares of our common stock at a price of $14.74 per share, the closing price for our common stock on the last trading day preceding the transaction, to certain former shareholders of Raycom as part of the total consideration paid for the Raycom Merger. We incurred transaction fees and expenses of approximately $0.1 million related to the issuance of these shares that were recorded as a reduction of the balance outstanding of our common stock in our balance sheets.

In each of March and November 2004, the Board of Directors authorized the Company to repurchase up to ~~2.0~~2 million shares of the Company's common stock and Class A common stock. In March 2006, this authorization was increased to an aggregate of ~~5.0~~5 million shares (the “2004-2006 Repurchase Authorization”). As of ~~June~~September 30, 2019, 279,200 shares ~~remain~~remained available for repurchase under this authorization, which has no expiration date. On November 6, 2016, the Board of Directors of the Company authorized the Company to purchase up to an additional $75 million of our outstanding common stock prior to December 31, 2019 (the “2016 Repurchase Authorization”). The 2016 Repurchase Authorization prohibits the Company from purchasing shares directly from the Company’s officers, directors, or the Gray Television, Inc. Capital Accumulation Plan (the “~~401k~~401 ~~Plan”~~(k) plan”). ~~As of~~During the ~~June~~nine-months ended September 30, 2019, ~~$50 million remains available to purchase~~under the 2016 Repurchase Authorization, we purchased 651,593 shares of our common stock at an average purchase price, including related brokerage commissions, of $16.37 per share, for a total cost of $11 million. As of September 30, 2019, $39 million remained available to purchase shares under the 2016 Repurchase Authorization.

The extent to which the Company repurchases any of its shares, the number of shares and the timing of any repurchases will depend on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. The Company is ~~not~~ ~~required to repurchase a minimum number of shares, and the repurchase authorizations~~ ~~may~~ ~~be modified, suspended or terminated at any time without prior notice.~~

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 common stock or Class A common stock. During the ~~six~~nine-months ended ~~June~~September 30, 2019, we issued 196,509 shares of our common stock, valued at $4 million, to the qualifying participants in our 401(k) plan for our discretionary profit sharing contribution for the year ended December 31, 2018. As of ~~June~~September 30, 2019, we had reserved ~~6,163,624~~1,503,254 shares and ~~1,503,254~~6,163,624 shares of our Class A common stock and ~~Class A~~ common stock, respectively, for future issuance under various employee benefit plans.

In connection with the Raycom Merger, on January 2, 2019, we issued 650,000 shares of our Series A Perpetual Preferred Stock, with a stated face value and liquidation value of $1,000 per share (the “Series A Preferred Stock”). Holders of shares of the Series A Preferred Stock are entitled to receive mandatory and cumulative dividends paid quarterly in cash or, at the Company’s option, paid quarterly in kind by issuance of additional shares of Series A Preferred ~~Stock (“PIK Election Dividends”).~~Stock. The per-share amount of such quarterly mandatory and cumulative dividends will be calculated by multiplying the face value by 8% per annum if the dividends are to be paid in cash or 8.5% per annum if such dividends are to be paid in additional shares of Series A Preferred ~~Stock.~~Stock (“PIK Election Dividends”). If the Company elects to pay any portion of accrued dividends with PIK Election Dividends, it will be prohibited from repurchasing, redeeming or paying dividends on any stock that is junior to the Series A Preferred Stock, through the end of that quarter and the subsequent two quarters, subject to certain exceptions.

With respect to the payment of dividends, the Series A Preferred Stock will rank senior to all classes and series of our common stock and all other equity securities designated as ranking junior to the Series A Preferred Stock, and no new issuances of common or preferred stock will rank on a parity with, nor senior to, the Series A Preferred Stock.

All or any portion of the outstanding Series A Preferred Stock may be redeemed at the Company’s option at any time, upon written notice to the holders of Series A Preferred Stock at least 30 and not more than 60 days prior to the date of such optional redemption. The per-share redemption price for Series A Preferred Stock will be equal to the sum of the liquidation value and the per-share amount of any unpaid dividends for the current quarterly dividend period, up to and including the date of redemption. Holders of shares of Series A Preferred Stock redeemed will be paid in cash.

The Series A Preferred Stock is also subject to mandatory redemption upon the occurrence of certain change of control transactions or upon the sale or other disposition of all or substantially all of our assets. The holders of Series A Preferred Stock do not have any right to exchange or convert the shares into any other securities.

In general, the holders of the Series A Preferred Stock do not have any voting rights except as set forth in the terms of the Series A Preferred Stock or as otherwise required by law, in which case, each share of Series A Preferred Stock will be entitled to one vote.

The approval of the holders of the Series A Preferred Stock, voting separately as a class, is required in order to authorize, create, issue new shares of Series A Perpetual Preferred stock (other than to pay dividends) or alter the rights of any other shares that are or would be equal to or senior to the Series A Preferred Stock, or to amend, alter or repeal the Company’s Restated Articles of Incorporation as amended from time to time if such amendment, alteration or repeal adversely affects the powers, preferences or special rights of the Series A Preferred Stock.

The Series A Preferred Stock does not have preemptive rights as to any of our other securities, or any warrants, rights, or options to acquire any of our securities.

In the event that the Company voluntarily or involuntarily liquidates, dissolves or winds up its affairs, holders of Series A Preferred Stock will be entitled to receive for each share of Series A Preferred Stock, out of the Company’s assets or proceeds thereof available for distribution to shareholders, subject to the rights of any creditors, payment in full in an amount equal to the liquidation value and the per-share amount of any unpaid dividends for the current quarterly dividend period. Holders of Series A Preferred Stock would be entitled to receive this amount before any distribution of assets or proceeds to holders of our common stock and any other stock whose rights are junior to the Series A Preferred Stock. If in any distribution described above, our assets are not sufficient to pay in full the amounts payable with respect to the outstanding shares of Series A Preferred Stock or any stock whose rights are equal to the Series A Preferred Stock, holders of the Series A Preferred Stock would share ratably in any such distribution in proportion to the full respective distributions to which they are entitled. Shareholders are not subject to further assessments on their shares of the New Preferred Stock.

The components of our net periodic pension benefit are included in miscellaneous income in our income statement. During the ~~six~~nine-months ended ~~June~~September 30, 2019, the amount recorded as a benefit was not ~~material, and we did~~ ~~not~~ ~~make a contribution to our defined benefit pension plan.~~material. During the ~~remainder of~~ nine-months ended September 30, 2019,we ~~expect to contribute~~contributed $3 million to this plan.

During the three and ~~six~~nine-month periods ended ~~June~~September 30, 2019, we contributed $3$2 million and $7$9 million, respectively, in matching contributions to our 401(k) Plan. During the remainder of 2019, we estimate that our contributions will be approximately $6$3 million to this plan, excluding discretionary profit-sharing contributions.

We recognize compensation expense for stock-based payment awards made to our employees, consultants and directors. Our current stock-based compensation plans include our 2017 Equity and Incentive Compensation Plan (the “2017 EICP”); our 2007 Long-Term Incentive Plan, as amended (the “2007 Incentive Plan”); and our Directors’ Restricted Stock Plan. The following table provides our stock-based compensation expense and related income tax benefit for the three and ~~six~~nine-month periods ended ~~June~~September 30, 2019 and 2018 (in millions):

All shares of class A common stock and ~~Class A~~ common stock underlying outstanding options, restricted stock units and performance awards are counted as issued at target levels under the 2017 EICP, the 2007 Incentive Plan and the Directors’ Restricted Stock Plan for purposes of determining the number of shares available for future issuance.

During the ~~six~~nine-months ended ~~June~~September 30, 2019, we granted under the 2017 EICP:

During the ~~six~~nine-months ended ~~June~~September 30, 2018, we granted under the 2017 EICP:

A summary of restricted class A common stock, common stock and ~~Class A common~~restricted stock units activity for the ~~six~~nine-month periods ended ~~June~~September 30, 2019 and 2018 ~~respectively,~~ is as follows:

At ~~June~~September 30, 2019 and December 31, 2018, we had outstanding options to acquire 274,746 shares of our common stock, all of which were vested and exercisable. The exercise price of all outstanding stock options is $1.99 per share. As of ~~June~~September 30, 2019 and December 31, 2018, we didnotnothave any options outstanding for our ~~Class~~class A common stock. The aggregate intrinsic value of our outstanding stock options was approximately $4 million based on the closing market price of our common stock on ~~June~~September 30, 2019.

We lease various assets with non-cancellable lease terms that range between 1one and ~~99 years.~~ninety-nine years. Many of these leases have optional renewal periods ranging between 1one and ~~20 years.~~twenty years. We define the lease term as the original lease base period plus optional renewal periods that we reasonably expect to be exercised. We do not include renewal periods exercisable more than ten years from the commencement date in the lease term as we cannot reasonably expect to exercise an option that far into the future. Some of our leases have free rent periods, tenant allowances and/or fixed or variable rent escalators. We record operating lease expense on a straight-line basis over the lease term. Operating lease expense is included in operating expenses in our statements of operations.

We lease land, buildings, transmission towers, right of way easements, and equipment through operating leases. We generally lease land for the purpose of erecting transmission towers for our broadcast operations. Our building leases consist of office space and broadcast studios. For transmission towers we do not own, we lease space for our transmission equipment on third-party towers. We lease right of ways for various purposes including ingress and egress for tower locations and guyed wire space. Our equipment leases consist of office, transmission and production equipment.

We allocate consideration paid in the contract to lease and non-lease components based upon the contract or associated invoice received if applicable. Lease components include base rent, fixed rate escalators and in-substance fixed payments associated with the leased asset. Non-lease components include common area maintenance and operating expenses associated with the leased asset. We have not elected the practical expedient to combine lease and non-lease components. As such, we only include the lease component in the calculation of right-of-use asset and lease liability. The incremental borrowing rate we use for the calculation is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term based upon our borrower risk profile.

Variable lease payments are not significant and are included in operating lease expense as a component of operating expense in our statement of operations. Variable lease payments are generally associated with ~~usage based~~usage-based leases and variable payment escalators such as consumer price index increases (CPI) incurred after the date of the adoption of ASC 842. Some of our land leases require us to pay a percentage of the revenue earned from leasing space on the towers we erect on the leased land. We included the payment level of CPI and percentage rent amounts at the time of the adoption of ASC 842 in the base rent for calculating the right-of-use asset and lease liability. CPI adjustments and percentage rent amounts that differ from the amount included in ASC 842 calculation are included in variable lease payments.

We recognize leases with an initial term of 12 months or less as short-term leases. Lease payments associated with short-term leases are expensed as incurred in our operating lease expense and are not included in our calculation of right-of-use assets or lease liabilities. Short-term leases generally consist of rentals of production or broadcast equipment for short periods of time.

Our operating lease costs, including variable lease costs, for the three and ~~six~~nine-month periods ended ~~June~~September 30, 2019 were $3$2 million and $6$9 million, respectively. Our short-term lease costs for the three~~-month period ended~~ and ~~June 30, 2019~~ ~~were~~ not~~significant and for the~~ ~~six~~nine-month period ended ~~June~~September 30, 2019 were $1 ~~million.~~million and $2 million, respectively. Cash flows from operations included cash paid for operating leases of $7$11 million in the ~~six~~nine-months ended ~~June~~September 30, 2019. Additional right of use assets recognized in the ~~six~~nine-months ended ~~June~~September 30, 2019 were not material. As of ~~June~~September 30, 2019, the weighted average remaining term of our operating leases was ~~10.5~~9.0 years. The weighted average discount rate used to calculate the values associated with our operating leases was ~~6.75%~~6.7%.

The maturities of operating lease liabilities as of ~~June~~September 30, 2019, for the remainder of 2019 and the succeeding years were as follows (in millions):

We had no material capital leases as of December 31, 2018. Our aggregate minimum lease payments under operating leases as of December 31, 2018 were as follows (in millions):

Our aggregate lease payments under operating leases as of December 31, 2018 are based on ASC 840 that was superseded upon the adoption of ASC 842 on January 1, 2019. Our maturities of operating lease liabilities as of ~~June~~September 30, 2019 was significantly higher than our aggregate lease payments under operating leases as of December 31, 2018 due primarily to our completion of the Raycom Merger on January 2, 2019.

We lease certain vehicles through a financing master lease. The weighted average remaining lease term of the vehicles under this lease is ~~2.3~~2.2 years. The interest rate for each vehicle leased is ~~4.25%~~4.0%. We recorded a right-of-use asset and lease liability of $2 million, respectively, upon the adoption of ASC 842 related to these financing leases. The right-of-use asset is recorded in other noncurrent assets in our balance sheets. The current portion of the lease liability is recorded in the balance of other accrued expenses in current liabilities and the ~~long term~~long-term portion is recorded in the balance of other liabilities in non-current liabilities in our balance sheets.

Amortization expense associated with this lease is included in amortization expense as a component of operating expense, and interest expense is included in interest expense in our statement of operations. Amortization and interest expenses were not material in the three and ~~six~~nine-months ended ~~June~~September 30, 2019. Cash paid for financing leases is included in our cash flows from financing activities and cash paid for interest on financing leases is included in our cash flow from operating activities.

For the three and ~~six~~nine-months ended ~~June~~September 30, 2019, cash paid for amounts included in measurement of liabilities for operating cash flows from finance leases and financing cash flows from finance leases as well as ROU assets obtained in exchange for lease liabilities were not material.

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.

On ~~May 1, 2018,~~ ~~we entered into an agreement to acquire KDLT-TV (NBC), in the Sioux Falls, South Dakota market (DMA~~ ~~115~~), for $32.5 million. The transaction is subject to regulatory approvals and other customary closing conditions. Pending such approvals and acquisitions, we expect that this transaction will close later in ~~2019,~~ ~~using cash on hand.~~

On ~~February 28, 2019,~~ 12~~we entered into an agreement to acquire the assets of WVIR-TV (NBC) in the Charlottesville, Virginia market (DMA~~ ~~183~~~~) from Waterman Broadcasting Corporation for $12.0 million. On~~ ~~May 31, 2019,~~ ~~we pre-paid this purchase price to the seller. Also on~~ ~~February 28, 2019,~~ ~~in order to meet regulatory requirements, we agreed to divest our stations in that market, WCAV-TV (CBS/FOX)~~. Goodwill and ~~WVAW-TV (ABC). We expect these transactions will close later in~~ ~~2019.~~

12.Intangible Assets

~~Goodwill and Intangible Assets~~

During the ~~six~~nine-months ended ~~June~~September 30, 2019, we completed the 2019 Acquisitions that included the acquisition of goodwill, broadcast licenses and finite-lived intangible assets. See Note 3 “Acquisitions and Divestitures” for more information regarding these transactions. A summary of changes in our goodwill and other intangible assets, on a net basis, for the ~~six~~nine-months ended ~~June~~September 30, 2019 is as follows (in millions):

	Net Balance at												Net Balance at		Net Balance at		Acquisitions							Net Balance at
	December 31,												June 30,		December 31,		And							September 30,
	2018		Additions		Dispositions			Impairments		Amortization			2019		2018		Adjustments, Net		Impairments		Amortization			2019

Goodwill	$	612	$	1,069	$	(229	)	$	-	$	-		$	1,452	$	612	$	837	$	-	$	-		$	1,449
Broadcast licenses		1,530		2,028		-			-		-			3,558		1,530		2,028		-		-			3,558
Finite-lived intangible assets		53		501		-			-		(57	)		497
Definite lived intangible assets																53		502		-		(86	)		469
Total intangible assets net of accumulated amortization	$	2,195	$	3,598	$	(229	)	$	-	$	(57	)	$	5,507	$	2,195	$	3,367	$	-	$	(86	)	$	5,476

A summary of the changes in our goodwill, on a gross basis, for the ~~six~~nine-months ended ~~June~~September 30, 2019, is as follows (in millions):

As of

As of

December 31,

June 30,

2018

Additions

Dispositions

Impairments

2019

Goodwill, gross
$ 711 $ 1,069 $ (229 ) $ - $ 1,551
Accumulated goodwill impairmant
(99 ) - - - (99 )
Goodwill, net
$ 612 $ 1,069 $ (229 ) $ - $ 1,452

As of

As of

December 31,
Net
September 30,

2018

Additions

Impairments

2019

Goodwill, gross
$ 711 $ 837 $ - $ 1,548
Accumulated goodwill impairmant
(99 ) - - (99 )
Goodwill, net
$ 612 $ 837 $ - $ 1,449

As of ~~June~~September 30, 2019 and December 31, 2018, our intangible assets and related accumulated amortization consisted of the following (in millions):

As of June 30, 2019

As of December 31, 2018

As of September 30, 2019

As of December 31, 2018

Accumulated

Accumulated

Accumulated

Accumulated

Gross

Amortization

Net

Gross

Amortization

Net

Gross

Amortization

Net

Gross

Amortization

Net

Intangible assets not currently subject to amortization:

Broadcast licenses
$ 3,612 $ (54 ) $ 3,558 $ 1,583 $ (53 ) $ 1,530 $ 3,612 $ (54 ) $ 3,558 $ 1,583 $ (53 ) $ 1,530
Goodwill
1,452 - 1,452 612 - 612 1,449 - 1,449 612 - 612
$ 5,064 $ (54 ) $ 5,010 $ 2,195 $ (53 ) $ 2,142 $ 5,061 $ (54 ) $ 5,007 $ 2,195 $ (53 ) $ 2,142

Intangible assets subject to amortization:

Network affiliation agreements
$ 54 $ (11 ) $ 43 $ 6 $ (6 ) $ - $ 54 $ (14 ) $ 40 $ 6 $ (6 ) $ -
Other definite lived intangible assets
596 (142 ) 454 143 (90 ) 53 596 (167 ) 429 143 (90 ) 53
$ 650 $ (153 ) $ 497 $ 149 $ (96 ) $ 53 $ 650 $ (181 ) $ 469 $ 149 $ (96 ) $ 53

Total intangibles
$ 5,714 $ (207 ) $ 5,507 $ 2,344 $ (149 ) $ 2,195 $ 5,711 $ (235 ) $ 5,476 $ 2,344 $ (149 ) $ 2,195

Amortization expense for the ~~six~~nine~~-months~~-month periods ended ~~June~~September 30, 2019 and 2018 was ~~$57~~$86 million and ~~$11~~$16 million, respectively. Based on the ~~current amount of~~ intangible assets subject to amortization as of September 30, 2019, we expect that amortization expense for the remainder of 2019 ~~will~~would be approximately ~~$56~~$28 million, and, for the succeeding five years, amortization expense will be approximately as follows: 2020, $99 million; 2021, $95 million; 2022, $91 million; 2023, $85 million; and 2024, $22 million. If and when acquisitions and dispositions occur in the future, actual amounts may vary materially from these estimates.

Impairment of goodwill and broadcast licenses

Our intangible assets are primarily comprised of broadcast licenses. There were no0 triggering events that required a test of our goodwill or intangible assets for impairment during the ~~six~~nine~~-month period~~-months ended ~~June~~September 30, ~~2019.~~2019 or 2018.

13.     Income Taxes
~~Income Taxes~~

For the three~~-month~~ and ~~six~~nine-month periods ended ~~June~~September 30, 2019 and 2018, our income tax expense and effective income tax rates were as follows (dollars in millions):

Three Months Ended

Six Months Ended

Three Months Ended

Nine Months Ended

June 30,

June 30,

September 30,

September 30,

2019

2018

2019

2018

2019

2018

2019

2018

Income tax expense
$ 18 $ 15 $ 21 $ 21 $ 23 $ 22 $ 44 $ 43
Effective income tax rate
29 % 27 % 45 % 26 % 28 % 27 % 34 % 26 %

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 ~~six~~nine~~-months~~-month period ended ~~June~~September 30, 2019, these estimates increased or decreased our statutory Federal income tax rate to our effective income tax rate of ~~45%~~34% as follows: state income taxes added 5%, permanent differences between our U.S. GAAP income and taxable income ~~resulted in an increase of 3%. Restricted stock vesting resulted in an decrease of 1%. Divestiture~~added 2% and divestiture of component 2 goodwill resulted in aan increase of ~~17%~~6%. For the ~~six~~nine~~-months~~-month period ended ~~June~~September 30, 2018, these estimates increased or decreased our statutory Federal income tax rate to our effective income tax rate of 26% as follows: state income taxes added 5%, and permanent differences between our U.S. GAAP income and taxable income added 1%~~, and a discrete share-based compensation adjustment resulted in a reduction of 1%~~.

We made income tax payments (net of refunds) of approximately $12 million and $27 million during the nine-months ended September 30, 2019 and 2018, respectively.

We have approximately ~~$770~~$776 million of federal operating loss carryforwards, that expire during the years 2021 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 ~~$858~~$837 million of various state operating loss carryforwards, of which we expect ~~that the majority~~approximately $564 million will be utilized.

14. Segment information
~~Segment information~~

The Company operates in ~~two~~2 business segments: broadcasting and production companies. The broadcasting segment operates television stations located across 93 local markets in the United States. The production companies segment includes the production of television and event content. Costs identified as other are primarily corporate and administrative expenses. The following tables present certain financial information concerning the Company’s operating segments (in millions):

Production

As of and for the six months ended June 30, 2019:

Broadcast

Companies

Other

Consolidated

Revenue (less agency commissions)
$ 980 $ 46 $ - $ 1,026
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
670 44 69 783
Depreciation and amortization
90 6 1 97
(Gain) loss on disposal of assets, net
(13 ) - - (13 )
Operating expenses
747 50 70 867
Operating income
$ 233 $ (4 ) $ (70 ) $ 159

Interest expense
$ - $ - $ 116 $ 116
Capital expenditures (excluding business combinations)
$ 39 $ - $ 5 $ 44
Goodwill
$ 1,412 $ 40 $ - $ 1,452
Total Assets
$ 6,505 $ 131 $ 365 $ 7,001

For the six months ended June 30, 2018:

Revenue (less agency commissions)
$ 477 $ - $ - $ 477
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
292 - 19 311
Depreciation and amortization
37 - 1 38
(Gain) loss on disposal of assets, net
(2 ) - - (2 )
Operating expenses
327 - 20 347
Operating income
$ 150 $ - $ (20 ) $ 130

Interest expense
$ - $ - $ 49 $ 49
Capital expenditures (excluding business combinations)
$ 20 $ - $ - $ 20

As of December 31, 2018:

Goodwill
$ 612 $ - $ - $ 612
Total Assets
$ 3,242 $ - $ 971 $ 4,213

Production

As of and for the Nine months ended September 30, 2019:

Broadcast

Companies

Other

Consolidated

Revenue (less agency commissions)
$ 1,481 $ 62 $ - $ 1,543
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
986 57 83 1,126
Depreciation and amortization
135 9 2 146
(Gain) loss on disposal of assets, net
(27 ) - - (27 )
Operating expenses
1,094 66 85 1,245
Operating income
$ 387 $ (4 ) $ (85 ) $ 298

Interest expense
$ - $ - $ 173 $ 173
Capital expenditures (excluding business combinations)
$ 69 $ - $ 4 $ 73
Goodwill
$ 1,409 $ 40 $ - $ 1,449
Total Assets
$ 6,906 $ 142 $ 56 $ 7,104

For the Nine months ended September 30, 2018:

Revenue (less agency commissions)
$ 756 $ - $ - $ 756
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
437 - 30 467
Depreciation and amortization
56 - 1 57
(Gain) loss on disposal of assets, net
(6 ) - - (6 )
Operating expenses
487 - 31 518
Operating income
$ 269 $ - $ (31 ) $ 238

Interest expense
$ - $ - $ 74 $ 74
Capital expenditures (excluding business combinations)
$ 35 $ - $ - $ 35

As of December 31, 2018:

Goodwill
$ 612 $ - $ - $ 612
Total Assets
$ 3,242 $ - $ 971 $ 4,213

15.     Subsequent Events
Acquisition and Divestiture
On October 1, 2019, we acquired the assets of WVIR-TV (NBC) in the Charlottesville, Virginia market (DMA 183) from Waterman Broadcasting Corporation for $12 million using cash on hand (the “Charlottesville Acquisition”). Also, on October 1, 2019, in order to meet regulatory requirements, we divested our legacy stations in that market, WCAV-TV (CBS/FOX) and WVAW-TV (ABC). We expect that the divestitures will result in a gain of approximately $19 million that will be reported in the fourth quarter of 2019.
Due to the proximity of the closing dates of the Sioux Falls Acquisition and Charlottsville Acquisition to the the filing date of this quarterly report, we are unable to present a preliminary purchase price allocation for the acquired businesses. Fair value estimates of assets acquired, liabilities assumed and resulting goodwill will be based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and liabilities assumed, the fair value estimates will be based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.
Pre-payment of Long-term Debt
On November 1, 2019, we made a voluntary pre-payment of $100 million of our 2019 Term Loan, using cash on hand. This pre-payment reduced the lenders’ total loan commitment for the 2019 Term Loan by an equal amount and relieved our obligation to make future quarterly principal payments until the maturity of the 2019 Term Loan.
Stock Repurchase Authorization
On November 6, 2019, the Board of Directors authorized the Company to repurchase up to $150 million of outstanding common stock (GTN) and/or Class A common stock (GTN.A) through December 31, 2022. This new authorization supersedes the 2004-2006 Repurchase Authorization and the 2016 Repurchase Authorization. The Company has not yet repurchased any shares under this new plan.
Share repurchases would be implemented through purchases made from time to time in either the open market or private transactions. The extent to which the Company repurchases any of its shares, the number of shares and the timing of any repurchases will depend on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. The Company is not required to repurchase a minimum number of shares, and the repurchase authorizations may be modified, suspended or terminated at any time without prior notice.

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, 2018 (the “2018 Form 10-K”) filed with the SEC.

Business Overview

We are a television broadcast company headquartered in Atlanta, Georgia, that is the largest owner of top-rated local television stations and digital assets in the United States. Currently, we own television stations and locally focused digital platforms in 93 television markets broadcasting over 400 separate programming streams, including approximately 150 affiliates of the Big Four TV networks. Our station portfolio reaches approximately 24% of total United States television households. We also own video program production, marketing, and digital businesses including Raycom Sports, Tupelo-Raycom, and RTM Studios, the producer of PowerNation programs and content which we refer to collectively as the “production ~~companies”.~~companies.”

Between December 2017 and November 2018, our television stations achieved the #1 ranking in overall audience in 69 of our 93 markets. In addition, our stations achieved the #1 or #2 ranking in overall audience in 87 of our 93 markets among all local television stations.

Acquisitions

On January 2, 2019, we completed the Raycom Merger. Net of station divestitures due to market overlaps, this transaction added television stations in 34 new markets. In addition to the ~~high quality~~high-quality television stations acquired as part of the Raycom Merger, we also acquired businesses that provide sports marketing and production services that we believe has resulted in us becoming a more diversified media company. The Raycom Merger completed our transformation from a small, regional broadcaster to a leading media company with nationwide scale based on high-quality stations with exceptional talent in attractive markets. By combining these two companies, we now own and operate television stations and leading digital properties in television markets from Alaska and Hawaii to Maine and Florida.

Upon consummation of the Raycom Merger, all outstanding shares of Raycom capital stock, and options and warrants to purchase Raycom capital stock, were cancelled, and all outstanding indebtedness was repaid, in exchange for aggregate consideration consisting of: (i) 11.5 million shares of the Company’s common stock then valued at $170 million, for which we filed a registration statement in January 2019, covering the resale of the shares issued; (ii) $2.84 billion in cash; and (iii) 650,000 shares of Series A Preferred Stock of the Company, with a stated face value of $1,000 per share or $650 million, issued to holders of warrants to purchase shares of Raycom. The Series A Preferred Stock accrues dividends at 8% per annum payable in cash or 8.5% per annum payable in the form of additional Series A Preferred Stock, at the election of Gray. The holders of Series A Preferred Stock are not entitled to vote on any matter submitted to the stockholders of the Company for a vote, except as required by Georgia law. Upon a liquidation of the Company, holders of the Series A Preferred Stock will be entitled to receive a liquidation preference equal to $1,000 per share plus all accrued and unpaid dividends.

On May 1, 2019, we acquired the assets of WWNY-TV (CBS) and WNYF-CD (FOX) in Watertown, New York (DMA 178) and KEYC-TV (CBS/FOX) in Mankato, Minnesota (DMA 199) from United Communications Corporation (the “United Acquisition” and, together with the Raycom Merger, the “2019 Acquisitions”) for an adjusted purchase price of $48 million, excluding transaction related expenses. We began operating those stations on March 1, 2019 under a local programming and marketing agreement and increased the total number of our markets to 93.

The 2019 Acquisitions have materially affected our operations, liquidity and capital expenditures. In addition to the effects on our balance sheet from the financing transactions described below, our results of operations and cash flows have increased substantially. We also expect that the 2019 Acquisitions will create opportunities to reduce or eliminate redundancies in our combined operations, and that these synergies will be implemented in phases over several years. Please see Note 3 “Acquisitions and Divestitures” and Note 4 “Long-term Debt” of our condensed consolidated financial statements included elsewhere herein for additional information on the Raycom Merger including on any financing transaction completed in connection therewith.
Revenues, Operations, Cyclicality and Seasonality

~~Our~~During the nine-months ending September 30, 2019, our operating revenues are derived primarily from broadcast and internet advertising and retransmission consent fees and, to a lesser extent, from other sources such as production of sporting events and related television content, tower rentals and management fees.

Broadcast advertising is sold for placement either 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. These advertisements may be sold as banner advertisements, pre-roll advertisements or video 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;

●
Local and national advertising revenue on our NBC-affiliated stations increases in even numbered years as a result of broadcasts of the Olympic Games; and

●
Because our stations and markets are not evenly divided among the Big 4 broadcast networks, our local and national advertising revenue can fluctuate between years related to which network broadcasts the Super Bowl.

Automotive advertisers have traditionally accounted for a significant portion of our revenue. For the ~~six-months~~nine- months ended ~~June~~September 30, 2019 and 2018, we derived approximately 24% and 21%, ~~in each period,~~respectively, of our total broadcast advertising revenue from customers in the automotive industry. Strong demand for our advertising inventory from political advertisers can require significant use of available inventory, which in turn can lower our advertising revenue from our non-political advertising revenue categories in the even numbered “on-year” of the two-year election cycle. These temporary declines are expected to reverse themselves in the following “off-year” of the two-year election cycle.

While our total revenues have increased in recent years as a result of our acquisitions, they have also experienced a gradual improvement as a result of improvements in general economic conditions. However, revenue remains under pressure from the internet as a competitor for advertising spending. 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.

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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

2019

2018

2019

2018

Percent

Percent

Percent

Percent

Percent

Percent

Percent

Percent

Amount

of Total

Amount

of Total

Amount

of Total

Amount

of Total

Amount

of Total

Amount

of Total

Amount

of Total

Amount

of Total

Revenue:

Local (including internet/ digital/mobile)
$ 226 44.5 % $ 113 45.1 % $ 437 42.6 % $ 219 45.8 %
Local (including internet/digital/mobile)
$ 218 42.2 % $ 106 38.0 % $ 655 42.4 % $ 325 43.0 %
National
56 11.0 % 30 11.9 % 106 10.3 % 54 11.4 % 56 10.8 % 29 10.4 % 162 10.5 % 84 11.1 %
Political
5 1.0 % 18 7.2 % 8 0.8 % 24 5.0 % 22 4.3 % 48 17.2 % 30 1.9 % 72 9.5 %
Retransmission consent
201 39.6 % 85 34.1 % 405 39.5 % 171 35.8 % 196 37.9 % 92 33.0 % 601 39.0 % 262 34.7 %
Production companies
9 1.8 % - 0.0 % 46 4.5 % - 0.0 % 16 3.1 % - 0.0 % 62 4.0 % - 0.0 %
Other
11 2.1 % 4 1.7 % 24 2.3 % 9 2.0 % 9 1.7 % 4 1.4 % 33 2.2 % 13 1.7 %
Total
$ 508 100.0 % $ 250 100.0 % $ 1,026 100.0 % $ 477 100.0 % $ 517 100.0 % $ 279 100.0 % $ 1,543 100.0 % $ 756 100.0 %

Results of Operations

Three-Months Ended ~~June~~September 30, 2019 (“the 2019 three-month period”) Compared to Three-Months Ended ~~June~~September 30, 2018 (“the 2018 three-month period”)

Revenue. Total revenue increased ~~$258~~$238 million, or ~~103%~~85%, to ~~$508~~$517 million in the 2019 three-month period from the 2018 three-month period. The 2019 Acquisitions accounted for approximately ~~$264~~$274 million of the increase in our total revenue in the 2019 three-month period compared to the 2018 three-month period. Excluding the 2019 Acquisitions, total revenue ~~increased~~decreased by $35 million primarily due to ~~increases~~a decrease of $40 million in ~~local and retransmission consent revenue. Political~~political advertising revenue ~~decreased in the~~as a result of 2019 ~~three-month period compared to the 2018 three-month period, because 2019 is~~being the “off-year” of the two-year ~~political advertising cycle.~~election cycle, partially offset by an increase in retransmission consent revenue. Excluding the 2019 Acquisitions, retransmission consent revenue increased $7 million due to increases in rates.

Broadcast Expenses. Broadcast expenses (before depreciation, amortization and gain or loss on disposal of assets) increased ~~$172~~$171 million, or ~~121%~~118%, to ~~$314~~$316 million in the 2019 three-month period ~~compared to~~from the 2018 three-month period. The 2019 Acquisitions accounted for ~~nearly all~~$165 million of the increase in these expenses in the 2019 three-month period compared to the 2018 three-month period. The ~~2019 three-month period included approximately $1 million of transaction related expenses incurred as a result of~~remaining difference represented an increase in retransmission expense, consistent with the ~~2019 Acquisitions.~~increased retransmission consent revenue. Non-cash stock based compensation included in broadcast expenses was $1$2 million in the 2019 three-month period, but was not significant in the 2018 three-month period.

Production company expenses. Production company operating expenses (before depreciation, amortization and gain or loss on disposal of assets), related to the production companies acquired in the Raycom Merger, were $9$13 million in the 2019 three-month period. Approximately half of these operating expenses were for personnel costs and half for operating costs at sporting events.

Corporate and Administrative Expenses. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets)~~, increased by $10 million, or 91%, to $21 million. Non-compensation expense~~ increased by $3 million, ~~including increases of~~or 27%, to $14 million. Non-compensation expense decreased $1 million ~~of professional fees and other Transaction Related Expenses related to the 2019 Acquisitions and $1 million of expenses for other corporate events. Compensation expense increases of $7 million,~~ primarily ~~due to $3 million of severance pay, $1 million of incentive compensation and $2 million of increases in regular salaries and wages of which a portion was~~as a result of decreases in professional fees related to acquisition activities. Professional fees related to our acquisition activities were $1 million in the 2019 ~~Acquisitions. Non-cash stock based~~three-month period. Compensation expense increased $4 million primarily as a result of increased base and incentive compensation ~~included in~~costs. We recorded corporate ~~and administrative expenses was~~non-cash stock-based amortization expense of $2 million and $1 million in the 2019 and 2018 three-month periods, respectively.

Depreciation. Depreciation of property and equipment totaled $20 million and $13 million ~~for~~in the 2019 ~~three-month period~~ and the 2018 three-month ~~period,~~periods, respectively. Depreciation increased primarily due to the addition of depreciable assets acquired as a part of the 2019 Acquisitions.

Amortization. Amortization of intangible assets ~~increased $23~~totaled $29 million ~~or 460%, to $28~~and $5 million in the 2019 ~~three-month period compared to~~and the 2018 three-month ~~period.~~periods, respectively. Amortization increased primarily due to the definite-lived intangible assets acquired as a part of the 2019 Acquisitions.

Interest Expense. Interest expense increased ~~$33~~$32 million, or ~~132%~~128%, to ~~$58~~$57 million for the 2019 three-month period compared to the 2018 three-month period. This increase was attributable to borrowings to finance the Raycom Merger, including, $1.4 billion under our 2019 Senior Credit Facility and $750 million of our 2027 Notes. The average interest rate on our total outstanding debt balance was ~~5.5%~~5.4% and ~~5.1%~~5.2% during the 2019 ~~three-month period~~ and ~~the~~ 2018 three-month ~~period,~~periods, respectively. Our average outstanding debt balance was $4.0 billion and $1.8 billion during the 2019 ~~three-month period~~ and ~~$1.9 billion during the~~ 2018 three-month ~~period.~~periods, respectively.

Income Tax E~~xpense.~~Expense. We recognized income tax expense of ~~$18~~$23 million and ~~$15~~$22 million in the 2019 ~~three-month period~~ and ~~the~~ 2018 three-month ~~period,~~periods, respectively. ~~For the 2019 three-month period and the 2018 three-month period, our~~Our effective income tax rates were ~~29%~~28% and 27%, in the 2019 and 2018 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 2019 three-month period, these estimates increased our statutory ~~federal~~Federal income tax rate of 21% to our effective income tax rate of ~~29%~~28% as follows: state income taxes added 5% and permanent differences between our U.S. GAAP income and taxable income added 3%2%.
~~Six-months~~
Nine-Months Ended ~~June~~September 30, 2019 (“the 2019 ~~six-month~~nine-month period”) Compared to ~~Six-months~~Nine-Months Ended ~~June~~September 30, 2018 (“the 2018 ~~six-month~~nine-month period”)

Revenue. Total revenue increased ~~$549~~$787 million, or ~~115%~~104%, to ~~$1.026~~$1.5 billion in the 2019 ~~six-month~~nine-month period ~~compared to~~from the 2018 ~~six-month~~nine-month period. The 2019 Acquisitions accounted for approximately ~~$545~~$819 million of the increase in our total revenue in the 2019 ~~six-month~~nine-month period compared to the 2018 ~~six-month~~nine-month period. Excluding the 2019 Acquisitions, total revenue ~~increased~~decreased by $32 million primarily due to ~~increases~~a decrease of $59 million in ~~retransmission consent revenue. Political~~political advertising revenue ~~decreased in the~~as a result of 2019 ~~six-month period compared to the 2018 six-month period, as 2019 is~~being the “off-year” of the two-year ~~political advertising cycle.~~election cycle partially offset by an increase in retransmission consent revenue. Excluding the 2019 Acquisitions, retransmission consent revenue increased $37 million due to increases in rates.

~~Local~~Excluding the 2019 Acquisitions local and national advertising revenue ~~also increased, in part, due to the $5 million of~~declined slightly, but was partially offset by revenue ~~we earned~~ from the broadcast of the 2019 Super Bowl on our CBS-affiliated stations of approximately $5 million, compared to $2 million that we earned from the broadcast of the 2018 Super Bowl on our NBC-affiliated stations. ~~This increase~~In addition, this decrease was ~~offset due to~~also partly the result of no ~~revenue from~~ Olympic ~~broadcasts~~Games taking place in 2019, compared to $6 million of revenue from the broadcast of the 2018 Winter Olympic Games on our NBC-affiliated stations.

Broadcast Expenses. Broadcast expenses (before depreciation, amortization and gain or loss ~~(gain)~~ on disposal of assets) increased ~~$378~~$549 million, or ~~129%~~126%, to ~~$670 million in the 2019 six-month period.~~$986 million. The 2019 Acquisitions accounted for nearly all of the increase in our total broadcast expenses in the 2019 ~~six-month~~nine-month period compared to the 2018 ~~six-month~~nine-month period. The remaining difference represented an increase in retransmission expense, consistent with the increased retransmission consent revenue. Broadcast expenses also included transaction related expenses including $29 million of charges for termination of certain sales representation agreements and $8$9 million of incentive compensation and severance costs each related to the 2019 Acquisitions in the 2019 ~~six-month~~nine-month period. Non-cash stock based compensation included in broadcast expenses was $1$3 million and $2 million, respectively, in ~~each of~~ the 2019 and 2018 ~~six-month~~nine-month periods.

Production Company Expenses. Production company expenses (before depreciation, amortization and loss (gain) on disposal of assets) related to the production companies acquired in the Raycom Merger, were ~~$44~~$57 million in the 2019 ~~six-month~~nine-month period. Non-compensation expenses were ~~$33~~$41 million, of which the primary components included the costs for the rights to broadcast sporting events of ~~$23~~$26 million and professional services of $5$9 million. Total compensation expenses were ~~$11~~$16 million.

Corporate and Administrative Expenses. Corporate and administrative expenses (before depreciation, amortization and gain or loss ~~(gain)~~ on disposal of assets) increased ~~$50~~by $53 million, or ~~263%~~177%, to ~~$69~~$83 million in the 2019 ~~six-month~~nine-month period compared to the 2018 ~~six-month~~nine-month period primarily as a result of transaction related expenses including ~~$23~~$24 million in professional fees related to the 2019 ~~Acquisitions and~~Acquisitions. We also incurred $10 million of incentive compensation and severance compensation related to the ~~elimination~~2019 Acquisitions. We recorded corporate non-cash stock-based amortization expense of ~~redundant positions. Non-cash stock based compensation included in corporate and administrative expenses was $4~~$7 million and $2$4 million in the 2019 and 2018 ~~six-month~~nine-month periods, respectively.

Depreciation. Depreciation of property and equipment totaled ~~$40~~$60 million and ~~$27~~$41 million ~~for~~in the 2019 ~~six-month period~~ and the 2018 ~~six-month period,~~nine-month periods, respectively. Depreciation increased primarily due to the addition of depreciable assets acquired as a part of the 2019 Acquisitions.

Amortization. Amortization of intangible assets ~~increased $46~~totaled $86 million ~~or 418%, to $57~~and $16 million in the 2019 ~~six-month period compared to~~and the 2018 ~~six-month period.~~nine-month periods, respectively. Amortization increased primarily due to the definite-lived intangible assets acquired as a part of the 2019 Acquisitions.

(Gain) Loss on Disposals of Assets, N~~et.~~Net. We reported gains on disposals of assets of ~~$13~~$27 million in the 2019 ~~six-month~~nine-month period and $2$6 million in the 2018 ~~six-month~~nine-month period. These gains were primarily related to assets disposals from the FCC Repack process.

Interest Expense. Interest expense increased ~~$67~~$99 million, or ~~137%~~134%, to ~~$116~~$173 million for the 2019 ~~six-month~~nine-month period compared to the 2018 ~~six-month~~nine-month period. This increase was attributable to borrowings to finance the Raycom Merger, including, $1.4 billion under our senior credit facility and $750 million of our 2027 Notes. The average interest rate on our total outstanding debt balance was 5.5% and ~~5.0%~~5.1% during the 2019 ~~six-month period~~ and ~~the~~ 2018 ~~six-month period,~~nine-month periods, respectively. Our average outstanding debt balance was $4.0 billion and $1.8 billion during the 2019 ~~six-month period~~ and ~~$1.9 billion in the~~ 2018 ~~six-month period.~~nine-month periods, respectively.

Income Tax E~~xpense.~~Expense. We recognized income tax expense of ~~$21~~$44 million and $43 million in ~~each of~~ the 2019 and 2018 ~~six-month periods. For the 2019 six-month period and the 2018 six-month period, our~~nine-month periods, respectively. Our effective income tax ~~rate was 45%~~rates were 34% and 26%, in the 2019 and 2018 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 2019 ~~six-month~~nine-month period, these estimates increased ~~or decreased~~ our statutory Federal income tax rate of 21% to our effective income tax rate of ~~45%~~34% as follows: state income taxes added 5%, permanent differences between our U.S. GAAP income and taxable income ~~resulted in an increase of 3%, restricted stock vesting resulted in a decrease of 1%~~added 2% and divestiture of component 2 goodwill resulted in an increase of ~~17%~~6%.
We have approximately $770 million of federal operating loss carryforwards, that expire during the years 2021 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 $858 million of various state operating loss carryforwards, of which we expect that the majority will be utilized.

Liquidity and Capital Resources

General

The following table presents data that we believe is helpful in evaluating our liquidity and capital resources (in millions):

Six Months Ended June 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Net cash provided by operating activities
$ 105 $ 98 $ 255 $ 186
Net cash used in investing activities
(2,599 ) (22 ) (2,646 ) (33 )
Net cash provided by (used in) financing activities
1,326 (27 ) 1,298 (64 )
(Decrease) increase in cash
$ (1,168 ) $ 49
Net (decrease) increase in cash
$ (1,093 ) $ 89

As of

As of

June 30, 2019

December 31, 2018

September 30, 2019

December 31, 2018

Cash
$ 251 $ 667 $ 326 $ 667
Restricted cash
$ - $ 752
Restricted Cash
$ - $ 752
Long-term debt, including current portion
$ 3,895 $ 2,549 $ 3,895 $ 2,549
Borrowing availability under Revolving Credit Facility
$ 200 $ 100 $ 200 $ 100
Net Cash Provided By ~~(Used~~(Used In) Operating, Investing and Financing Activities

Net cash provided by operating activities was ~~$105~~$255 million in the 2019 ~~six-month~~nine-month period compared ~~$98~~to $186 million in the 2018 ~~six-month period, a net~~nine-month period. The increase of ~~$7 million. During~~$69 million in the 2019 ~~six-month~~nine-month period ~~we experienced~~was the result of a $38 million decrease in net income, ~~of $35 million that was~~ offset by a ~~$49~~$66 million ~~net~~ increase in net non-cash ~~gains and~~ expenses, primarily depreciation of fixed assets and amortization of definite-lived intangible assets related to the Raycom Merger. Approximately $7$41 million of cash was ~~used~~provided by changes in net working ~~capital, also related to the Raycom Merger.~~capital.

Net cash used in investing activities was $2.6 billion in the 2019 ~~six-month~~nine-month period compared to net cash used in investing activities of ~~$22~~$33 million for the 2018 ~~six-month~~nine-month period. The increase was due to ~~an increase in~~ cash used for ~~acquisition activity, net of proceeds received from divestitures in~~ the 2019 Acquisitions in the 2019 ~~six-month~~nine-month period.

Net cash provided by financing activities was approximately $1.3 billion in the 2019 ~~six-month~~nine-month period compared to net cash used in financing activities of ~~$27~~$64 million in the 2018 ~~six-month~~nine-month period. The change to cash provided in the 2019 ~~six-month~~nine-month period, compared to cash used in the 2018 ~~six-month~~nine-month period, was due largely to financing activity for the 2019 Acquisitions. In the 2019 and 2018 ~~six-month period our primary use~~nine-month periods we used $11 million and $20 million of cash, ~~for financing activities was the~~respectively, to repurchase of ~~$20 million~~shares of our common stock.

Liquidity

~~We have~~As of September 30, 2019 we had $14 million in debt principal payments due over the next twelve months. WeOn November 1, 2019, we made a voluntary pre-payment of $100 million of our 2019 Term Loan, using cash on hand. This pre-payment reduced the lenders’ total loan commitment for the 2019 Term Loan by an equal amount and relieved our obligation to make quarterly payments of loan principal on the 2019 Term Loan. Currently we estimate that we will make approximately ~~$218~~$202 million in debt interest payments over the twelve months immediately following ~~June~~September 30, 2019.

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, preferred stock dividends and acquisition-related obligations. 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 February 7, 2024, which is the maturity date of the term loans under the 2019 Senior Credit Facility.

Capital Expenditures

In April 2017, the FCC began the process of requiring certain television stations to change channels and/or modify their transmission facilities (“Repack”). Capital expenditures, including Repack, for the 2019 and 2018 ~~six-month~~nine-month periods were ~~$44~~$73 million and ~~$20~~$35 million, respectively. Excluding Repack, our capital expenditures for the 2019 and 2018 nine months periods were ~~$14~~$38 million and ~~$10~~$16 million, respectively. Our capitalized Repack costs ~~and associated reimbursements~~ for the 2019 and 2018 ~~six-month~~nine-month periods were ~~$30~~$34 million and ~~$10~~$17 million, respectively. As of ~~June~~September 30, 2019, the amount requested from the FCC for Repack, but not yet received, was approximately ~~$13~~$8 million. Excluding Repack, we expect that our capital expenditures will be approximately ~~$80~~$35 million to $37 million during the remainder of 2019. In addition, capital expenditures for Repack during the remainder of 2019 are expected to range between approximately ~~$26~~$2 million and ~~$30~~$3 million and we anticipate being reimbursed for the majority of these Repack costs. However, reimbursement may be received in periods subsequent to those in which they were expended.

~~Pending~~Subsequent ~~Acquisitions~~Acquisition and ~~Divestitures~~Divestiture

On ~~May~~October 1, 2018, we entered into an agreement to acquire KDLT-TV (NBC), in the Sioux Falls, South Dakota market (DMA 110), for $32.5 million. The transaction is subject to regulatory approvals and other customary closing conditions. Pending such approvals and acquisitions, we expect that this transaction will close later in 2019, using cash on hand.
~~On February 28,~~ 2019, we ~~entered into an agreement to acquire~~acquired the assets of WVIR-TV (NBC) in the Charlottesville, Virginia market (DMA 183) from Waterman Broadcasting Corporation for ~~$12.0 million. On May 31, 2019 we pre-paid this purchase price to the seller.~~$12 million using cash on hand (the “Charlottesville Acquisition”). Also, on ~~February 28,~~October 1, 2019, in order to meet regulatory requirements, we ~~agreed to divest~~divested our legacy stations in that market, WCAV-TV (CBS/FOX) and WVAW-TV (ABC). We expect ~~these transactions~~that the divestiture will ~~close later~~result in a gain of approximately $19 million that will be reported in the fourth quarter of 2019.

Other

We file a consolidated federal income tax return and such state and local tax returns as are required. ~~As a result of our utilization of certain of our net operating loss carryforwards, we have begun, and expect to continue, to pay more significant amounts of income taxes.~~ We made income tax payments (net of refunds) of approximately $8$12 million and ~~$12~~$27 million in the 2019 ~~six-month period~~ and ~~the~~ 2018 ~~six-month period,~~nine-month periods, respectively. We anticipate making income tax payments (net of refunds) of approximately $3$13 million during the remainder of 2019.

We have approximately ~~$770~~$776 million ofin federal operating loss carryforwards, that expire during the years 2021 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 ~~$858~~$837 million of various state operating loss carryforwards, of which we expect ~~that the majority~~approximately $564 million will be utilized.

During the 2019 ~~six-month~~nine-month period, we ~~did not make a contribution~~contributed $3 million to our defined benefit ~~pension plan. During the remainder of 2019, we expect to contribute $3 million to this~~ pension plan.

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 2018 Form 10-K.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “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 Securities Exchange Act of 1934. Forward-looking statements are all statements other than those of historical fact. When used in this Quarterly Report, the words “believes,” “expects,” “anticipates,” “estimates,” “will,” “may,” “should” and similar words and expressions are generally intended to identify forward-looking statements. Among other things, statements that describe our expectations regarding our results of operations, general and industry-specific economic conditions, ~~future pension plan contributions,~~ income tax payments, the expected impact of acquisitions and divestitures ~~the expected closing dated for future transactions~~ and capital expenditures are forward-looking statements. Readers of this Quarterly Report 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 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 under the heading “Risk Factors” in our 2018 Form 10-K and as may be described in subsequently filed quarterly reports on Form 10-Q, as well as the other factors described from time to time in our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update such forward-looking statements to reflect subsequent events or circumstances.

IItem 3.     ~~tem 3.~~ Quantitative and Qualitative Disclosure About Market Risk

We believe that the market risk of our financial instruments as of ~~June~~September 30, 2019 has not materially changed since December 31, 2018. ~~Our~~The market risk profile onas of December 31, 2018 is disclosed in our 2018 Form 10-K.

Item 4.     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 effectiveness of our disclosure controls and procedures. Based on that evaluation, the CEO and the CFO have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or furnish under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosures. No system of controls, no matter how well designed and implemented, can provide absolute assurance that the objectives of the system of controls are met and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

During the ~~six-month~~nine-month period ended ~~June~~September 30, 2019, we implemented changes in our internal control over financial reporting in connection with the adoption of ASU 2016-02 – Leases (Topic 842). These changes included controls related to the collection of data for the amounts that we disclose in the footnotes to our financial statements. Our evaluation included controls that may have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the ~~six-month~~nine-month period ended ~~June~~September 30, 2019, we began implementing changes in our internal control over financial reporting in connection with the Raycom Merger. These changes will continue to be identified and implemented during the remainder of 2019.

PART II.OTHER INFORMATION

Item 1A.Risk Factors

Please refer to the information set out under the heading “Risk Factors” in Part I, Item 1A in our 2018 Form 10-K for a description of risk factors that we determined to be most material to our financial condition and results of operations. We do not believe there have been any material changes in these risk factors. Additional risks not currently known to us or that we do not currently consider material may also materially adversely affect our financial condition and results of operations in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~In each of March and November 2004, the Board of Directors of the Company authorized the Company to repurchase up to 2 million shares of the Company's common stock or Class A common stock. In March 2006, this authorization was increased to an aggregate of 5 million shares (the “2004-2006 Repurchase Authorization”). As of September 30, 2019, 279,200 shares remain available for repurchase under this authorization, which has no expiration date.

On November 6, 2016, the Board of Directors of the Company authorized the Company to purchase up to an additional $75 million of our outstanding common stock prior to December 31, 2019 (the “2016 Repurchase Authorization”).
The extent to which the Company repurchases any of its shares, the number of shares and the timing of any repurchases will depend on general market conditions, regulatory requirements, alternative investment opportunities and other considerations. The Company is not required to repurchase a minimum number of shares, and the repurchase authorizations may be modified, suspended or terminated at any time without prior notice.
The following table summarizes repurchases of our common stock in the three-months ended September 30, 2019, all of which were pursuant to the 2016 Repurchase Authorization:
Period

Total Number
of Shares
Purchased
(1)

Average
Price Paid
per Share
(2)

Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans

Maximum Number of
Shares (or
Approximate Dollar
Value) that May Yet
Be Purchased Under
the Plans or
Programs (3)

July 1, 2019 through July 31, 2019:
- $ 0.00 - $ 54,153,513

August 1, 2019 through August 31, 2019:
- $ 0.00 - $ 53,952,489

September 1, 2019 through September 30, 2019:
651,593 $ 16.37 651,593 $ 43,460,063

Total
651,593 $ 16.67 651,593
(1)
All shares purchased were shares of common stock.
(2)
Amount excludes brokerage commissions.
(3)
The amounts presented at each respective month-end include the aggregate of the remaining dollar value available to purchase our common stock under the 2016 Repurchase Authorization and the approximate dollar value available for repurchase of our Class A common stock or our common stock, under the 2004-2006 Repurchase Authorization.

Item 6.     Exhibits

The following exhibits are filed as part of this Quarterly Report:

Exhibit
Number

Description of Document

31.1

Rule 13(a) – 14(a) Certificate of Chief Executive Officer
31.2

Rule 13(a) – 14(a) Certificate of Chief Financial Officer
32.1

Section 1350 Certificate of Chief Executive Officer
32.2

Section 1350 Certificate of Chief Financial Officer
101.SCH

Inline XBRL Taxonomy Extension Schema Document
101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as 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.

GRAY TELEVISION, INC.
(Registrant)

Date: November 7, 2019
By:
/s/ James C. Ryan
James C. Ryan
Executive Vice President and Chief Financial Officer

~~Date: August 7, 2019~~
~~By:~~
~~/s/~~ ~~James C. Ryan~~
~~James C. Ryan~~
~~Executive Vice President and Chief Financial Officer~~

3841

Georgia		58-0285030
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		~~(I.R.S. Employer~~ Identification Number)


4370 Peachtree Road, NE, Atlanta, Georgia		30319
(Address of principal executive offices)		(Zip code)

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

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

Common Stock (No Par Value)		Class A Common Stock (No Par Value)
~~94,285,366~~93,633,773 shares outstanding as of ~~July~~ October31, 2019		6,881,192 shares outstanding as of ~~July~~ October31, 2012019


PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements

	Condensed consolidated balance sheets (Unaudited) - ~~June~~September 30, 2019 and December 31, 2018	3

	Condensed consolidated statements of operations (Unaudited) - three-months and ~~six-months~~nine-months ended ~~June~~September 30, 2019 and 2018	5

	Condensed consolidated ~~statements~~statement of stockholders' equity (Unaudited) ~~- six-months~~– three, six and nine-months ended ~~June~~September 30, 2019 and 2018	6

	Condensed consolidated statements of cash flows (Unaudited) - ~~six-months~~nine-months ended ~~June~~September 30, 2019 and 2018	7 8

	Notes to condensed consolidated financial statements (Unaudited) - September 30, 2019	8 9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2931

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3638

Item 4.	Controls and Procedures	3638

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors	3638

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3638

Item 6.	Exhibits	3740

SIGNATURES		3841

GRAY TELEVISION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions except for share data)

GRAY TELEVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions except for per share data)

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2019			2018			2019			2018			2019			2018			2019			2018

Revenue (less agency commissions)
Revenue (less agency commissions):
Broadcasting	$	499		$	250		$	980		$	477		$	501		$	279		$	1,481		$	756
Production companies		9			-			46			-			16			-			62			-
Total revenue (less agency commissions)		508			250			1,026			477			517			279			1,543			756
Operating expenses before depreciation, amortization and loss (gain) on disposal of assets, net:
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:
Broadcast		314			142			670			292			316			145			986			437
Production companies		9			-			44			-			13			-			57			-
Corporate and administrative		21			11			69			19			14			11			83			30
Depreciation		20			13			40			27			20			13			60			41
Amortization of intangible assets		28			5			57			11			29			5			86			16
Gain on disposals of assets, net		(3	)		(1	)		(13	)		(2	)
(Gain) loss on disposal of fixed assets, net														(14	)		(3	)		(27	)		(6	)
Operating expenses		389			170			867			347			378			171			1,245			518
Operating income		119			80			159			130			139			108			298			238
Other income (expense):
Miscellaneous income, net		1			1			4			1			-			-			4			2
Interest expense		(58	)		(25	)		(116	)		(49	)		(57	)		(25	)		(173	)		(74	)
Income before income taxes		62			56			47			82			82			83			129			166
Income tax expense		18			15			21			21			23			22			44			43
Net income		44			41			26			61			59			61			85			123
Preferred stock dividends		13			-			26			-			13			-			39			-
Net income attributable to common stockholders	$	31		$	41		$	-		$	61		$	46		$	61		$	46		$	123

Basic per share information:
Net income attributable to common stockholders	$	0.31		$	0.46		$	-		$	0.69		$	0.46		$	0.70		$	0.46		$	1.39
Weighted-average shares outstanding		100			88			100			88			100			88			100			88

Diluted per share information:
Net income attributable to common stockholders	$	0.31		$	0.46		$	-		$	0.68		$	0.46		$	0.69		$	0.46		$	1.38
Weighted-average shares outstanding		101			88			100			89			101			89			100			89
																				.
Dividends declared per common share	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

																										Accumulated																													Accumulated
	Class A													Class A						Common						Other						*Class A*											*Class A*						*Common*						*Other*
	Common Stock				Common Stock						Retained			Treasury Stock						Treasury Stock						Comprehensive						*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, 2017		8,349,069	$	25		88,788,664		$	902		$	162			(1,750,692	)	$	(24	)		(5,535,076	)	$	(50	)	$	(22	)	$	993

Net income		-		-		-			-			20			-			-			-			-			-			20

Issuance of common stock:
2017 Equity and Incentive Compensation Plan :
Restricted stock awards		220,080		-		318,196			-			-			(89,422	)		(1	)		(107,456	)		(2	)		-			(3	)
Restricted stock unit awards		-		-		209,500			-			-			-			-			(82,201	)		(1	)		-			(1	)

Repurchase of common stock		-		-		-			-			-			-			-			(1,551,710	)		(20	)		-			(20	)

Stock-based compensation		-		-		-			2			-			-			-			-			-			-			2

Balance at March 31, 2018		8,569,149	$	25		89,316,360		$	904		$	182			(1,840,114	)	$	(25	)		(7,276,443	)	$	(73	)	$	(22	)	$	991

Net income		-		-		-			-			41			-			-			-			-			-			41

Issuance of common stock:
2017 Equity and Incentive Compensation Plan:
Restricted stock awards		-		-		73,640			-			-			-			-			-			-			-			-

Forfeiture of restricted stock awards		-		-		(91,057	)		(1	)		-			-			-			-			-			-			(1	)

Stock-based compensation		-		1		-			1			-			-			-			-			-			-			2

Balance at June 30, 2018		8,569,149	$	26		89,298,943		$	904		$	223			(1,840,114	)	$	(25	)		(7,276,443	)	$	(73	)	$	(22	)	$	1,033
																																*Shares*		*Amount*		*Shares*		*Amount*		*Earnings*			*Shares*			*Amount*			*Shares*			*Amount*			*Loss*			*Total*

Balance at December 31, 2018		8,569,149	$	27		89,298,943		$	907		$	372			(1,840,114	)	$	(26	)		(7,276,443	)	$	(72	)	$	(21	)	$	1,187			8,569,149	$	27		89,298,943	$	907	$	372			(1,840,114	)	$	(26	)		(7,276,443	)	$	(72	)	$	(21	)	$	1,187

Net loss		-		-		-			-			(18	)		-			-			-			-			-			(18	)		-		-		-		-		(18	)		-			-			-			-			-			(18	)

Preferred stock dividends		-		-		-			-			(13	)		-			-			-			-			-			(13	)		-		-		-		-		(13	)		-			-			-			-			-			(13	)

Issuance of common stock:
Acquisitions of television businesses and licenses		-		-		11,499,945			170			-			-			-			-			-			-			170			-		-		11,499,945		170		-			-			-			-			-			-			170
401(k) Plan		-		-		196,509			4			-			-			-			-			-			-			4			-		-		196,509		4		-			-			-			-			-			-			4
2017 Equity and Incentive Compensation Plan -
Restricted stock awards		199,810		-		677,602			-			-			(47,653	)		-			(123,167	)		(3	)		-			(3	)		199,810		-		677,602		-		-			(47,653	)		-			(123,167	)		(3	)		-			(3	)

Stock-based compensation		-		-		-			2			-			-			-			-			-			-			2			-		-		-		2		-			-			-			-			-			-			2

Adoption of ASU 2018-02		-		-		-			-			2			-			-			-			-			(2	)		-			-		-		-		-		2			-			-			-			-			(2	)		-

Balance at March 31, 2019		8,768,959	$	27		101,672,999		$	1,083		$	343			(1,887,767	)	$	(26	)		(7,399,610	)	$	(75	)	$	(23	)	$	1,329			8,768,959	$	27		101,672,999	$	1,083	$	343			(1,887,767	)	$	(26	)		(7,399,610	)	$	(75	)	$	(23	)	$	1,329

Net income		-		-		-			-			44			-			-			-			-			-			44			-		-		-		-		44			-			-			-			-			-			44

Preferred stock dividends		-		-		-			-			(13	)		-			-			-			-			-			(13	)		-		-		-		-		(13	)		-			-			-			-			-			(13	)

Issuance of common stock:
2017 Equity and Incentive Compensation Plan -
Restricted stock awards		-		-		41,181			-			-			-			-			(29,204	)		-			-			-			-		-		41,181		-		-			-			-			(29,204	)		-			-			-

Stock-based compensation		-		-		-			3			-			-			-			-			-			-			3			-		-		-		3		-			-			-			-			-			-			3

Adoption of ASU 2018-02		-		-		-			-			3			-			-			-			-			(3	)		-			-		-		-		-		3			-			-			-			-			(3	)		-

Balance at June 30, 2019		8,768,959	$	27		101,714,180		$	1,086		$	377			(1,887,767	)	$	(26	)		(7,428,814	)	$	(75	)	$	(26	)	$	1,363			8,768,959	$	27		101,714,180	$	1,086	$	377			(1,887,767	)	$	(26	)		(7,428,814	)	$	(75	)	$	(26	)	$	1,363

Net income																																	-	��	-		-		-		59			-			-			-			-			-			59

Preferred stock dividends																																	-		-		-		-		(13	)		-			-			-			-			-			(13	)

Repurchase of common stock																																	-		-		-		-		-			-			-			(651,593	)		(11	)		-			(11	)
																																												��
Stock-based compensation																																	-		2		-		3		-			-			-			-			-			-			5

Balance at September 30, 2019																																	8,768,959	$	29		101,714,180	$	1,089	$	423			(1,887,767	)	$	(26	)		(8,080,407	)	$	(86	)	$	(26	)	$	1,403

GRAY TELEVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)

									Three Months Ended				Nine Months Ended
	*Three Months Ended*				*Six Months Ended*				September 30,				September 30,
	*June 30,*				*June 30,*				2019		2018		2019		2018
	*2019*		*2018*		*2019*		*2018*

Weighted-average shares outstanding-basic		100		88		100		88		100		88		100		88
Common stock equivalents for stock options and restricted shares		1		-		-		1
Common stock equivalents for stock options and restricted stock										1		1		-		1
Weighted-average shares outstanding-diluted		101		88		100		89		101		89		100		89

	*June 30,*			*December 31,*
	*2019*			*2018*

Accumulated balances of items included in accumulated other comprehensive loss:
Increase in pension liability	$	(35	)	$	(35	)
Income tax benefit		(9	)		(14	)
Accumulated other comprehensive loss	$	(26	)	$	(21	)

							*Estimated*										Estimated
	*June 30,*			*December 31,*			*Useful Lives*				*September 30,*			*December 31,*			*Useful Lives*
	*2019*			*2018*			*(in years)*				*2019*			*2018*			*(in years)*
Property and equipment:
Land	$	115		$	52						$	115		$	52
Buildings and improvements		272			166			7	to	40		278			166		7	to	40
Equipment		734			548			3	to	20		751			548		3	to	20
		1,121			766							1,144			766
Accumulated depreciation		(435	)		(403	)						(449	)		(403	)
Total property and equipment, net	$	686		$	363						$	695		$	363

		Station
DMA	Designated Market Area	Call	Network
Rank	("DMA")	Letters	Affiliation

11	Tampa-St. Petersburg (Sarasota), FL	WWSB	ABC
19	Cleveland-Akron (Canton)	WOIO	CBS
19	Cleveland-Akron (Canton)	WUAB	CW
23	Charlotte, NC	WBTV	CBS
35	Cincinnati, OH	WXIX	FOX
37	West Palm Beach-Ft. Pierce, FL	WFLX	FOX
43	Birmingham (Ann and Tusc)	WBRC	FOX
48	Louisville, KY	WAVE	NBC
50	New Orleans, LA	WVUE	FOX
51	Memphis, TN	WMC	NBC
56	Richmond- Petersburg, VA	WWBT	NBC
56	Richmond- Petersburg, VA	WUPV	CW
66	Honolulu, HI	KHNL	NBC
66	Honolulu, HI	KGMB	CBS
66	Honolulu, HI	KHBC	NBC/CBS
66	Honolulu, HI	KOGG	NBC/CBS
73	Tucson (Nogales), AZ	KOLD	CBS
74	Columbia, SC	WIS	NBC
79	Huntsville- Decatur (Florence), AL	WAFF	NBC
88	Paducah, KY/Cape Girardeau, MO/
	Harrisburg, IL	KFVS	CBS
90	Shreveport, LA	KSLA	CBS
92	Jackson, MS	WLBT	NBC
93	Savannah, GA	WTOC	CBS
94	Charleston, SC	WCSC	CBS
95	Myrtle Beach-Florence	WMBF	NBC
97	Baton Rouge, LA	WAFB	CBS
97	Baton Rouge, LA	WBXH	MY
100	Boise, ID	KNIN	FOX
103	Evansville, IN	WFIE	NBC
114	Tyler-Longview, TX	KLTV	ABC
114	Tyler-Longview, TX	KTRE	ABC
116	Montgomery, AL	WSFA	NBC
127	Columbus, GA (Opelika, AL)	WTVM	ABC
129	Wilmington, NC	WECT	NBC
131	Amarillo, TX	KFDA	CBS
131	Amarillo, TX	KEYU	TEL
142	Odessa/Midland, TX	KCWO	CW
142	Odessa/Midland, TX	KTLE	TEL
143	Lubbock, TX	KCBD	NBC
148	Wichita Falls, TX & Lawton, OK	KSWO	ABC
148	Wichita Falls, TX & Lawton, OK	KKTM	TEL
152	Albany, GA	WALB	NBC/ABC
156	Biloxi-Gulfport, MS	WLOX	ABC/CBS
168	Hattiesburg/Laurel, MS	WDAM	NBC/ABC
180	Jonesboro, AR	KAIT	ABC/NBC
200	Ottumwa, IA/Kirksville, MO	KYOU	FOX/NBC

	Total
	Cash
	Consideration		Television
Purchaser	Received		Station	Location	DMA

Lockwood Broadcasting, Inc.	$	67	WTNZ	Knoxville, TN		60
			WFXG	Augusta, GA		105
			WPGX	Panama City, FL		150
			WDFX	Dothan, AL		173

Scripps Media, Inc.		55	KXXV	Waco-Temple-Bryan, TX		89
			KRHD	Waco-Temple-Bryan, TX		89
			WTXL	Tallahassee, FL		112

TEGNA, Inc.		109	WTOL	Toledo, OH		71
			KWES	Odessa - Midland, TX		142
Total	$	231

	Minimum Principal Maturities										Minimum Principal Maturities
Year	2019 Senior Credit Facility		2024 Notes		2026 Notes		2027 Notes		Total		2019 Senior Credit Facility		2024 Notes		2026 Notes		2027 Notes		Total
Remainder of 2019	$	7	$	-	$	-	$	-	$	7	$	4	$	-	$	-	$	-	$	4
2020		14		-		-		-		14		14		-		-		-		14
2021		14		-		-		-		14		14		-		-		-		14
2022		14		-		-		-		14		14		-		-		-		14
2023		14		-		-		-		14		14		-		-		-		14
2024		609		525		-		-		1,134		609		525		-		-		1,134
Thereafter		1,316		-		700		750		2,766		1,316		-		700		750		2,766
Total	$	1,988	$	525	$	700	$	750	$	3,963	$	1,985	$	525	$	700	$	750	$	3,960

				KYOU
				and		Net
	Raycom			WUPV		Consideration

Purchase Price	$	3,660		$	17	$	3,677
Less - consideration allocated to all assets acquired and net of liabilites assumed for the Raycom overlap market stations which were also divested on January 2, 2019		(234	)		-		(234	)
Purchase consideration for assets acquired and liabilities assumed net of divestitures	$	3,426		$	17	$	3,443

	Raycom			United		Total			Raycom			United		Total
Cash	$	116		$	-	$	116		$	116		$	-	$	116
Accounts receivable, net		245			3		248			227			3		230
Program broadcast rights		12			-		12			12			-		12
Other current assets		8			-		8			26			-		26
Property and equipment		311			10		321			311			10		321
Operating lease right of use asset		52			-		52			52			-		52
Goodwill		836			3		839			834			3		837
Broadcast licenses		2,004			24		2,028			2,004			24		2,028
Other intangible assets		493			8		501			493			8		501
Other non-current assets		22			-		22			23			-		23
Accrued compensation and benefits		(29	)		-		(29	)		(29	)		-		(29	)
Program broadcast obligations		(16	)		-		(16	)		(16	)		-		(16	)
Other current liabilities		(60	)		-		(60	)		(60	)		-		(60	)
Income taxes payable		(12	)		-		(12	)		(12	)		-		(12	)
Deferred income taxes		(462	)		-		(462	)		(462	)		-		(462	)
Operating lease liabilities		(52	)		-		(52	)		(52	)		-		(52	)
Other long-term liabilities		(25	)		-		(25	)		(24	)		-		(24	)
Total	$	3,443		$	48	$	3,491		$	3,443		$	48	$	3,491

	June 30, 2019				September 30, 2019
	Three Months		Six Months		Three Months		Nine Months
	Ended		Ended		Ended		Ended
Transaction Related Expenses by type:
Legal, consulting and other professional fees	$	1	$	23	$	1	$	24
Incentive compensation and other severance costs		-		18		1		19
Termination of sales representation agreements		1		29		-		29
Total transaction related expenses	$	2	$	70	$	2	$	72

Transaction Related Expenses by financial statement line item:
Operating expenses before depreciation, amortization and loss (gain) on disposal of assets, net:
Broadcast	$	1	$	37	$	1	$	38
Corporate and administrative		1		33		1		34
Total transaction related expenses	$	2	$	70	$	2	$	72

Year ending December 31,	Operating Leases				Operating Leases
2019	$	5		2019	$	2
2020		10		2020		10
2021		9		2021		9
2022		9		2022		9
2023		9		2023		7
Thereafter		53		Thereafter		36
Total lease payments		95		Total lease payments		73
Less: Imputed interest		(28	)	Less: Imputed interest		(19	)
Present value of lease liabilties	$	67		Present value of lease liabilties	$	54

	As of										As of
	December 31,										June 30,
	2018			Additions		Dispositions			Impairments		2019

Goodwill, gross	$	711		$	1,069	$	(229	)	$	-	$	1,551
Accumulated goodwill impairmant		(99	)		-		-			-		(99	)
Goodwill, net	$	612		$	1,069	$	(229	)	$	-	$	1,452

	As of June 30, 2019							As of December 31, 2018							As of September 30, 2019							As of December 31, 2018
			Accumulated							Accumulated							Accumulated							Accumulated
	Gross		Amortization			Net		Gross		Amortization			Net		Gross		Amortization			Net		Gross		Amortization			Net
Intangible assets not currently subject to amortization:
Broadcast licenses	$	3,612	$	(54	)	$	3,558	$	1,583	$	(53	)	$	1,530	$	3,612	$	(54	)	$	3,558	$	1,583	$	(53	)	$	1,530
Goodwill		1,452		-			1,452		612		-			612		1,449		-			1,449		612		-			612
	$	5,064	$	(54	)	$	5,010	$	2,195	$	(53	)	$	2,142	$	5,061	$	(54	)	$	5,007	$	2,195	$	(53	)	$	2,142

Intangible assets subject to amortization:
Network affiliation agreements	$	54	$	(11	)	$	43	$	6	$	(6	)	$	-	$	54	$	(14	)	$	40	$	6	$	(6	)	$	-
Other definite lived intangible assets		596		(142	)		454		143		(90	)		53		596		(167	)		429		143		(90	)		53
	$	650	$	(153	)	$	497	$	149	$	(96	)	$	53	$	650	$	(181	)	$	469	$	149	$	(96	)	$	53

Total intangibles	$	5,714	$	(207	)	$	5,507	$	2,344	$	(149	)	$	2,195	$	5,711	$	(235	)	$	5,476	$	2,344	$	(149	)	$	2,195

				Production
As of and for the six months ended June 30, 2019:	Broadcast			Companies			Other			Consolidated

Revenue (less agency commissions)	$	980		$	46		$	-		$	1,026
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:		670			44			69			783
Depreciation and amortization		90			6			1			97
(Gain) loss on disposal of assets, net		(13	)		-			-			(13	)
Operating expenses		747			50			70			867
Operating income	$	233		$	(4	)	$	(70	)	$	159

Interest expense	$	-		$	-		$	116		$	116
Capital expenditures (excluding business combinations)	$	39		$	-		$	5		$	44
Goodwill	$	1,412		$	40		$	-		$	1,452
Total Assets	$	6,505		$	131		$	365		$	7,001

For the six months ended June 30, 2018:

Revenue (less agency commissions)	$	477		$	-		$	-		$	477
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:		292			-			19			311
Depreciation and amortization		37			-			1			38
(Gain) loss on disposal of assets, net		(2	)		-			-			(2	)
Operating expenses		327			-			20			347
Operating income	$	150		$	-		$	(20	)	$	130

Interest expense	$	-		$	-		$	49		$	49
Capital expenditures (excluding business combinations)	$	20		$	-		$	-		$	20

As of December 31, 2018:

Goodwill	$	612		$	-		$	-		$	612
Total Assets	$	3,242		$	-		$	971		$	4,213

				Production
As of and for the Nine months ended September 30, 2019:	Broadcast			Companies			Other			Consolidated

Revenue (less agency commissions)	$	1,481		$	62		$	-		$	1,543
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:		986			57			83			1,126
Depreciation and amortization		135			9			2			146
(Gain) loss on disposal of assets, net		(27	)		-			-			(27	)
Operating expenses		1,094			66			85			1,245
Operating income	$	387		$	(4	)	$	(85	)	$	298

Interest expense	$	-		$	-		$	173		$	173
Capital expenditures (excluding business combinations)	$	69		$	-		$	4		$	73
Goodwill	$	1,409		$	40		$	-		$	1,449
Total Assets	$	6,906		$	142		$	56		$	7,104

For the Nine months ended September 30, 2018:

Revenue (less agency commissions)	$	756		$	-		$	-		$	756
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:		437			-			30			467
Depreciation and amortization		56			-			1			57
(Gain) loss on disposal of assets, net		(6	)		-			-			(6	)
Operating expenses		487			-			31			518
Operating income	$	269		$	-		$	(31	)	$	238

Interest expense	$	-		$	-		$	74		$	74
Capital expenditures (excluding business combinations)	$	35		$	-		$	-		$	35

As of December 31, 2018:

Goodwill	$	612		$	-		$	-		$	612
Total Assets	$	3,242		$	-		$	971		$	4,213

	Three Months Ended June 30,										Six Months Ended June 30,										Three Months Ended September 30,										Nine Months Ended September 30,
	2019					2018					2019					2018					2019					2018					2019					2018
			Percent					Percent					Percent					Percent					Percent					Percent					Percent					Percent
	Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total
Revenue:
Local (including internet/ digital/mobile)	$	226		44.5	%	$	113		45.1	%	$	437		42.6	%	$	219		45.8	%
Local (including internet/digital/mobile)																					$	218		42.2	%	$	106		38.0	%	$	655		42.4	%	$	325		43.0	%
National		56		11.0	%		30		11.9	%		106		10.3	%		54		11.4	%		56		10.8	%		29		10.4	%		162		10.5	%		84		11.1	%
Political		5		1.0	%		18		7.2	%		8		0.8	%		24		5.0	%		22		4.3	%		48		17.2	%		30		1.9	%		72		9.5	%
Retransmission consent		201		39.6	%		85		34.1	%		405		39.5	%		171		35.8	%		196		37.9	%		92		33.0	%		601		39.0	%		262		34.7	%
Production companies		9		1.8	%		-		0.0	%		46		4.5	%		-		0.0	%		16		3.1	%		-		0.0	%		62		4.0	%		-		0.0	%
Other		11		2.1	%		4		1.7	%		24		2.3	%		9		2.0	%		9		1.7	%		4		1.4	%		33		2.2	%		13		1.7	%
Total	$	508		100.0	%	$	250		100.0	%	$	1,026		100.0	%	$	477		100.0	%	$	517		100.0	%	$	279		100.0	%	$	1,543		100.0	%	$	756		100.0	%

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (3)

July 1, 2019 through July 31, 2019:		-	$	0.00		-	$	54,153,513

August 1, 2019 through August 31, 2019:		-	$	0.00		-	$	53,952,489

September 1, 2019 through September 30, 2019:		651,593	$	16.37		651,593	$	43,460,063

Total		651,593	$	16.67		651,593

Exhibit Number		Description of Document

31.1		Rule 13(a) – 14(a) Certificate of Chief Executive Officer
31.2		Rule 13(a) – 14(a) Certificate of Chief Financial Officer
32.1		Section 1350 Certificate of Chief Executive Officer
32.2		Section 1350 Certificate of Chief Financial Officer
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	GRAY TELEVISION, INC. (Registrant)




Date: November 7, 2019	By:	/s/ James C. Ryan
		James C. Ryan
		Executive Vice President and Chief Financial Officer

~~Date: August 7, 2019~~	~~By:~~	~~/s/~~ ~~James C. Ryan~~
		~~James C. Ryan~~
		~~Executive Vice President and Chief Financial Officer~~