~~GRAY TELEVISION, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)~~

~~(in millions, except for number of shares)~~

Accumulated

Class A

Class A

Common

Other

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

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

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

Issuance of common stock:

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

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

Adoption of ASU 2018-02
- - - - 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

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

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

Issuance of common stock:

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

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

Adoption of ASU 2018-02
- - - - 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

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

~~See notes to condensed consolidated financial statements.~~

GRAY TELEVISION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

(in millions, except for number of shares)

																										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*			*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
Balance at December 31, 2019																																	8,768,959	$	31		101,746,860		$	1,093	$	504			(1,887,767	)	$	(26	)		(9,088,498	)	$	(107	)	$	(31	)	$	1,464

Net income			-		-		-			-			20		-			-			-			-			-			20			-		0		-			0		53			-			0			-			0			0			53

Preferred stock dividends																																	-		0		-			0		(13	)		-			0			-			0			0			(13	)

Issuance of common stock:
2017 Equity and Incentive Compensation Plan :
401(k) Plan																																	0		0		430,899			4		0			0			0			0			0			0			4
2007 Long Term Incentive Plan - stock options exercised																																	0		0		274,746			0		0			0			0			(154,935	)		(2	)		0			(2	)
2017 Equity and Incentive Compensation Plan:
Restricted stock awards			220,080		-		318,196			-			-		(89,422	)		(1	)		(107,456	)		(2	)		-			(3	)		166,814		0		248,543			0		0			0			0			(118,550	)		(2	)		0			(2	)
Restricted stock unit awards			-		-		209,500			-			-		-			-			(82,201	)		(1	)		-			(1	)
Forfeiture of restricted stock awards																																	0		0		(85,630	)		0		0			0			0			0			0			0			0

Repurchase of common stock			-		-		-			-			-		-			-			(1,551,710	)		(20	)		-			(20	)		0		0		0			0		0			0			0			(500,923	)		(6	)		0			(6	)

Stock-based compensation			-		-		-			2			-		-			-			-			-			-			2			-		0		-			4		0			-			0			-			0			0			4

Balance at March 31, 2018			8,569,149	$	25		89,316,360		$	904		$	182		(1,840,114	)	$	(25	)		(7,276,443	)	$	(73	)	$	(22	)	$	991
Balance at March 31, 2020																																	8,935,773	$	31		102,615,418		$	1,101	$	544			(1,887,767	)	$	(26	)		(9,862,906	)	$	(117	)	$	(31	)	$	1,502

Net income			-		-		-			-			41		-			-			-			-			-			41			-		0		-			0		11			-			0			-			0			0			11

Preferred stock dividends																																	-		0		-			0		(13	)		-			0			-			0			0			(13	)

Issuance of common stock:
2017 Equity and Incentive Compensation Plan :
2017 Equity and Incentive Compensation Plan:
Restricted stock awards			-		-		73,640			-			-		-			-			-			-			-			-			0		0		78,722			0		0			0			0			(17,296	)		0			0			0
Vesting of restricted stock units																																	0		0		374,500			0		0			0			0			(112,564	)		(2	)		0			(2	)

Forfeiture of restricted stock awards			-		-		(91,057	)		(1	)		-		-			-			-			-			-			(1	)
Repurchase of common stock																																	0		0		0			0		0			0			0			(3,335,255	)		(43	)		0			(43	)

Stock-based compensation			-		1		-			1			-		-			-			-			-			-			2			-		0		-			3		0			-			0			-			0			0			3

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
Balance at June 30, 2020																																	8,935,773	$	31		103,068,640		$	1,104	$	542			(1,887,767	)	$	(26	)		(13,328,021	)	$	(162	)	$	(31	)	$	1,458

Net income	��		-		-		-			-			61		-			-			-			-			-			61			-		0		-			0		122			-			0			-			0			0			122

Preferred stock dividends																																	-		0		-			0		(13	)		-			0			-			0			0			(13	)

Issuance of common stock:
2017 Equity and Incentive Compensation Plan:
Restricted stock awards																																	0		0		32,216			0		0			0			0			(10,870	)		0			0			0

Repurchase of common stock																																	0		0		0			0		0			0			0			(649,000	)		(10	)		0			(10	)

Stock-based compensation			-		-		-			2			-		-			-			-			-			-			2			-		0		-			5		0			-			0			-			0			0			5

Balance at September 30, 2018			8,569,149	$	26		89,298,943		$	906		$	284		(1,840,114	)	$	(25	)		(7,276,443	)	$	(73	)	$	(22	)	$	1,096
Balance at September 30, 2020																																	8,935,773	$	31		103,100,856		$	1,109	$	651			(1,887,767	)	$	(26	)		(13,987,891	)	$	(172	)	$	(31	)	$	1,562

See notes to condensed consolidated financial statements.

GRAY TELEVISION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS' EQUITY (Unaudited)

(in ~~millions)~~millions, except for number of shares)

Nine Months Ended

September 30,

2019

2018

Operating activities

Net income
$ 85 $ 123
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation
60 41
Amortization of intangible assets
86 16
Amortization of deferred loan costs
9 3
Amortization of restricted stock awards
10 5
Amortization of program broadcast rights
30 16
Payments on program broadcast obligations
(33 ) (16 )
Common stock contributed to 401(k)
4 -
Deferred income taxes
34 44
Gain on disposals of assets, net
(27 ) (6 )
Other
(6 ) (2 )
Changes in operating assets and liabilities:

Accounts receivable
29 (9 )
Prepaid income taxes
- 7
Other current assets
(7 ) 1
Accounts payable
2 (3 )
Employee compensation, benefits and pension cost
(6 ) (3 )
Accrued network fees and other expenses
(42 ) (1 )
Accrued interest
30 (4 )
Income taxes payable
(9 ) (34 )
Deferred revenue
6 8
Net cash provided by operating activities
255 186

Investing activities

Acquisitions of television businesses and licenses, net of cash acquired
(2,823 ) -
Proceeds from sale of television station
231 -
Purchases of property and equipment
(73 ) (35 )
Proceeds from FCC Repack (Note 1)
32 7
Proceeds from asset sales
3 -
Acquisition prepayments
(12 ) (5 )
Other
(4 ) -
Net cash used in investing activities
(2,646 ) (33 )

Financing activities

Proceeds from borrowings on long-term debt
1,400 -
Repayments of borrowings on long-term debt
(11 ) (40 )
Payments for the repurchase of common stock
(11 ) (20 )
Payment of preferred stock dividends
(26 ) -
Deferred and other loan costs
(50 ) -
Payments for taxes related to net share settlement of equity awards
(4 ) (4 )
Net cash provided by (used in) financing activities
1,298 (64 )
Net (decrease) increase in cash
(1,093 ) 89
Cash and restricted cash at beginning of period
1,419 462
Cash at end of period
$ 326 $ 551

																								Accumulated
	*Class A*											*Class A*						*Common*						*Other*
	*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, 2018		8,569,149	$	27		89,298,943	$	907	$	372			(1,840,114	)	$	(26	)		(7,276,443	)	$	(72	)	$	(21	)	$	1,187

Net loss		-		0		-		0		(18	)		-			0			-			0			0			(18	)

Preferred stock dividends		-		0		-		0		(13	)		-			0			-			0			0			(13	)

Issuance of common stock:
Acquisitions of television businesses and licenses		0		0		11,499,945		170		0			0			0			0			0			0			170
401(k) Plan		0		0		196,509		4		0			0			0			0			0			0			4
2017 Equity and Incentive Compensation Plan -
Restricted stock awards		199,810		0		677,602		0		0			(47,653	)		0			(123,167	)		(3	)		0			(3	)

Stock-based compensation		-		0		-		2		0			-			0			-			0			0			2

Adoption of ASU 2018-02		-		0		-		0		2			-			0			-			0			(2	)		0

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

Net income		-		0		-		0		44			-			0			-			0			0			44

Preferred stock dividends		-		0		-		0		(13	)		-			0			-			0			0			(13	)

Issuance of common stock:
2017 Equity and Incentive Compensation Plan -
Restricted stock awards		0		0		41,181		0		0			0			0			(29,204	)		0			0			0

Stock-based compensation		-		0		-		3		0			-			0			-			0			0			3

Adoption of ASU 2018-02		-		0		-		0		3			-			0			-			0			(3	)		0

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

Net income		-		0		-		0		59			-			0			-			0			0			59

Preferred stock dividends		-		0		-		0		(13	)		-			0			-			0			0			(13	)

Repurchase of common stock		0		0		0		0		0			0			0			(651,593	)		(11	)		0			(11	)

Stock-based compensation		-		2		-		3		0			-			0			-			0			0			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

See notes to condensed consolidated financial statements.

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

	Nine Months Ended
	September 30,
	2020			2019
Operating activities
Net income	$	186		$	85
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		69			60
Amortization of intangible assets		78			86
Amortization of deferred loan costs		9			9
Amortization of restricted stock awards		12			10
Amortization of program broadcast rights		28			30
Payments on program broadcast obligations		(29	)		(33	)
Common stock contributed to 401(k)		5			4
Deferred income taxes		41			34
Gain on disposals of fixed assets, net		(23	)		(27	)
Other		6			(6	)
Changes in operating assets and liabilities:
Accounts receivable		28			29
Prepaid income taxes		(13	)		0
Other current assets		2			(7	)
Accounts payable		68			2
Employee compensation, benefits and pension cost		(9	)		(6	)
Accrued network fees and other expenses		(1	)		(42	)
Accrued interest		7			30
Income taxes payable		(11	)		(9	)
Deferred revenue		35			6
Net cash provided by operating activities		488			255

Investing activities
Acquisitions of television businesses and licenses, net of cash acquired		(21	)		(2,823	)
Proceeds from sale of television station		0			231
Purchases of property and equipment		(70	)		(73	)
Proceeds from FCC Repack (Note 1)		19			32
Proceeds from asset sales		8			3
Acquisition prepayments		(26	)		(12	)
Investments in broadcast, production and technology companies		(38	)		(2	)
Other		(1	)		(2	)
Net cash used in investing activities		(129	)		(2,646	)

Financing activities
Proceeds from borrowings on long-term debt		0			1,400
Repayments of borrowings on long-term debt		0			(11	)
Payments for the repurchase of common stock		(59	)		(11	)
Payment of preferred stock dividends		(39	)		(26	)
Deferred and other loan costs		0			(50	)
Payments for taxes related to net share settlement of equity awards		(6	)		(4	)
Net cash provided by (used in) financing activities		(104	)		1,298
Net increase (decrease) in cash		255			(1,093	)
Cash and restricted cash at beginning of period		212			1,419
Cash at end of period	$	467		$	326

See notes to condensed consolidated financial statements.

GRAY TELEVISION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.	Basis of Presentation

The accompanying condensed consolidated balance sheet of Gray Television, Inc. (and its consolidated subsidiaries, except as the context otherwise provides,~~“Gray,~~ “Gray,” the “Company,” “we,” “us,” and “our”) as of December 31, ~~2018,~~2019, which was derived from the Company’s audited financial statements as of December 31, ~~2018,~~2019, and our accompanying unaudited condensed consolidated financial statements as of September 30, ~~2019~~2020 and for the periods ended September 30, ~~2019~~2020 and ~~2018,~~2019, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. ~~Subsequent to the Raycom Merger (as defined herein) we~~We manage our business on the basis of ~~two~~2 operating ~~segments,~~segments: broadcasting and production companies. Unless otherwise indicated, all station rank, in-market share and television household data herein are derived from reports prepared by Comscore, Inc. (“Comscore”). While we believe this data to be accurate and reliable, we have not independently verified such data nor have we ascertained the underlying assumptions relied upon therein, and cannot guarantee the accuracy or completeness of such data. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (the “~~2018~~2019 Form 10-K”). Our financial condition as of, and operating results for the three and nine~~-month period~~-months ended September 30, ~~2019~~2020, are not necessarily indicative of the financial condition or results that may be expected for any future interim period or for the year ending December 31, ~~2019.~~ 2020.~~In addition, we have changed our reporting increment for dollars from thousands to millions.~~

~~Overview~~Overview.

We are a television broadcast company headquartered in Atlanta, ~~Georgia. On~~ ~~January 2, 2019,~~ we completed the Raycom Merger (as defined herein), which 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. Upon the completion of the Raycom Merger on ~~January 2, 2019,~~ ~~we became~~Georgia, that is the largest owner of top-rated local television (“television” or “TV”) stations and digital assets in the United States. ~~Currently, we own~~Gray currently owns and/or operates television stations and leading digital properties in 9394 television markets ~~broadcasting over~~ ~~400~~ ~~separate program streams including approximately~~ ~~150~~ ~~affiliates of the ABC Network (“ABC”), the NBC Network (“NBC”), the CBS Network (“CBS”) and the FOX Network (“FOX”). We refer to these major broadcast networks~~that collectively ~~as the “Big Four” networks. Our television stations ranked~~ ~~first~~ or ~~second~~ ~~among all local television stations in~~ 87 ~~of our~~ 93 ~~markets between~~ ~~December 2017~~ ~~and~~ ~~November 2018.~~ ~~Our station portfolio reaches~~reach approximately 24% of ~~total United States~~U.S. television households. Over calendar year 2019, Gray’s stations were ranked first in 69 markets, and first and/or second in 87 markets, as calculated by Comscore’s audience measurement service. 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 our “production ~~companies”.~~companies.”

Use of ~~Estimates~~Estimates.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The business and economic uncertainty resulting from the novel coronavirus and its related disease (collectively, “COVID-19”) has made such estimates and assumptions more difficult to calculate. Our actual results could differ materially from these estimated amounts. Our most significant estimates are of our allowance for ~~doubtful accounts~~credit losses in receivables, valuation of goodwill and intangible assets, amortization of program rights and intangible assets, pension costs, income taxes, employee medical insurance claims, useful lives of property and equipment and contingencies.

Investments in Broadcasting, Production and Technology Companies. We have investments in several television, production and technology companies. None of these equity investments have readily determinable fair values. We have applied the measurement alternative as defined in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities. These investments are reported together as a non-current asset on our balance sheets.

Earnings Per ~~Share~~Share.

We compute basic earnings per share by dividing net income available to common stockholders by the weighted-average number of ~~our~~ common shares outstanding during the relevant period. The weighted-average number of common shares outstanding does not include restricted shares. These shares, although classified as issued and outstanding, are considered contingently returnable until the restrictions lapse and, in accordance with U.S. GAAP, are not included in the basic earnings per share calculation until the shares vest. Diluted earnings per share is computed by including all potentially dilutive common shares, including restricted shares and shares underlying stock options, in the diluted weighted-average shares outstanding calculation, unless their inclusion would be antidilutive.

The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding for the three and nine-month periods ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively (in millions):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2019		2018		2019		2018		2020		2019		2020		2019


Weighted-average shares outstanding-basic		100		88		100		88		95		100		97		100
Common stock equivalents for stock options and restricted stock		1		1		-		1		1		1		0		0
Weighted-average shares outstanding-diluted		101		89		100		89		96		101		97		100

Accumulated Other Comprehensive Loss

Our accumulated other comprehensive loss balances as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, consisted of adjustments to our pension liability and the related income tax effect. ~~Our comprehensive (loss) income for the~~ ~~nine~~~~-months ended~~ ~~September 30, 2019~~ ~~consisted of net income and an adjustment to the tax effect of our pension liability as a result of our adoption of Accounting Standards Update (“ASU”)~~ ~~2018~~-~~02,~~~~Income Statement - Reporting Comprehensive Income~~ ~~(Topic~~ ~~220~~~~) –~~ ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~. As of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 the balances were as follows (in millions):

September 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~~

)

	September 30,			December 31,
	2020			2019

Accumulated balances of items included in accumulated other comprehensive loss:
Increase in pension liability	$	(42	)	$	(42	)
Income tax benefit		(11	)		(11	)
Accumulated other comprehensive loss	$	(31	)	$	(31	)

Property and Equipment

. Property and equipment are carried at cost. Depreciation is computed principally by the straight-line method. The following table lists the components of property and equipment by major category (dollars in millions):

							Estimated									Estimated
	*September 30,*			*December 31,*			*Useful Lives*			*September 30,*			*December 31,*			*Useful Lives*
	*2019*			*2018*			*(in years)*			*2020*			*2019*			*(in years)*
Property and equipment:
Land	$	115		$	52					$	119		$	119
Buildings and improvements		278			166		7	to	40		305			291		7	to	40
Equipment		751			548		3	to	20		814			776		3	to	20
		1,144			766						1,238			1,186
Accumulated depreciation		(449	)		(403	)					(512	)		(461	)
Total property and equipment, net	$	695		$	363					$	726		$	725

Maintenance, repairs and minor replacements are charged to operations as incurred; major replacements and betterments are capitalized. The cost of any assets divested, sold or retired and the related accumulated depreciation are removed from the accounts at the time of disposition, and any resulting profit or loss is reflected in income or expense for the period.

In April 2017, the Federal Communications Commission (the “FCC”) began a process of reallocating the broadcast spectrum (the “Repack”). Specifically, the FCC is requiring certain television stations to change channels and/or modify their transmission facilities. The U.S. Congress passed legislation which provides the FCC with a $1.7 billion fund to reimburse all reasonable costs incurred by stations operating under a full power license and a portion of the costs incurred by stations operating under a low power license that are reassigned to new channels. Subsequent legislation in March 2018 appropriated an additional $1.0 billion for the Repack fund, of which up to $~~750.0~~750 million may be made available to reimburse the Repack costs of full power, Class A television stations and multichannel video programming distributors. Other funds are earmarked to assist low power television stations and for other transition costs. The sufficiency of the FCC’s fund to reimburse for Repack costs is dependent upon a number of factors including the amounts to be reimbursed to other industry participants for Repack costs. Therefore, we cannot predict whether the fund will be sufficient to reimburse our Repack costs to the extent authorized under the legislation. Forty-seven of our current full power stations and thirty-seven of our current low power stations are affected by the Repack. The Repack process began in the summer of 2017 and we expect that it will ~~take approximately~~conclude for nearly all of our stations by the end of ~~three~~2020. ~~years to complete.~~ The majority of our costs associated with the Repack qualify for capitalization, rather than expense. Upon receipt of funds reimbursing us for our Repack costs, we record those proceeds as a component of our (gain) loss on disposal of assets, net.

The following tables provide additional information related to gain on disposal of assets, net included in our condensed consolidated statements of operations and purchases of property and equipment included in our condensed consolidated statements of cash flows (in millions):

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30						September 30						September 30						September 30
	2019			2018			2019			2018			2020			2019			2020			2019
Gain (loss) on disposal of assets, net:
Gain (loss) on disposal of fixed assets, net:
Proceeds from sale of assets	$	-		$	-		$	3		$	-		$	7		$	0		$	8		$	3
Proceeds from FCC - Repack		15			4			32			7			5			15			19			32
Net book value of assets disposed		(1	)		(1	)		(5	)		(1	)		(2	)		(1	)		(4	)		(5	)
Other		-			-			(3	)		-			0			0			0			(3	)
Total	$	14		$	3		$	27		$	6		$	10		$	14		$	23		$	27

Purchase of property and equipment:
Recurring purchases - operations							$	38		$	16								$	51		$	38
Repack								34			17									19			34
Repack related								1			2									0			1
Total							$	73		$	35								$	70		$	73

Accounts Receivable and Allowance for ~~Doubtful Accounts~~Credit Losses. We record accounts receivable from sales and service transactions in our condensed consolidated balance sheets at amortized cost adjusted for any write-offs and net of allowance for credit losses. We are exposed to credit risk primarily through sales of broadcast and digital advertising with a variety of direct and agency-based advertising customers, retransmission consent agreements with multichannel video program distributors and program production sales and services.

Our allowance for ~~doubtful accounts~~credit losses is ~~equal to a portion~~an estimate of expected losses over the remaining contractual life of our ~~receivable balances that are~~ ~~120~~ ~~days old or older.~~receivables based on an ongoing analysis of collectability, historical collection experience, current economic and industry conditions and reasonable and supportable forecasts. The allowance is calculated using a historical loss rate applied to the current aging analysis. We may ~~provide allowances for certain receivable balances that are less than~~ ~~120~~ ~~days old~~also apply additional allowance when warranted by specific facts and circumstances. We generally ~~write-off~~write off accounts receivable balances when the customer files for bankruptcy or when all commonly used methods of collection have been exhausted.

We are closely monitoring the potential impact from COVID-19 on our business. The extent to which the COVID-19 pandemic impacts the collectability of our receivables will depend on numerous evolving factors. As such, we did not adjust our allowance for credit loss as of September 30, 2020. For further discussion of the potential impact of the COVID-19 pandemic see “Impact of COVID-19 and Related Government Restrictions on our Markets and Operations.” and Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.

The following table provides a rollforward of the allowance for credit losses. The allowance is deducted from the amortized cost basis of accounts receivable in our condensed consolidated balance sheets (in millions):

	Nine Months Ended
	September 30, 2020
Beginning balance	$	11
Provision for credit losses		2
Amounts written off		(2	)
Amounts recovered from previous write-offs		0
Ending balance	$	11

Recent Accounting ~~Pronouncements~~Pronouncements. In January 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-01,Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (ASU 2020-01). ASU 2020-01 clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. ASU 2020-01 is effective for us beginning in the first quarter of fiscal 2022, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2020-01 on our consolidated financial statements.

In ~~June 2016,~~ ~~the Financial Accounting Standards Board (“FASB”) issued ASU~~ ~~No.~~~~2016~~-~~13,~~~~Financial Instruments - Credit Losses~~ ~~(Topic~~ ~~326~~). The standard requires entities to estimate loss of financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss model differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as ~~five~~ ~~years. In~~ ~~November 2018,~~December 2019, the FASB issued ASU ~~No.~~~~2018~~2019-1912, ~~to clarify~~Income Taxes (Topic 740): Simplifying the ~~scope of the guidance in the amendments in~~ Accounting for Income Taxes (ASU ~~2016~~2019-~~13.~~12), which is intended to simplify various areas related to the accounting for income taxes and improve consistent application of Topic 740. ~~Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the~~ASU 2019-12 is effective for us beginning ofin the first ~~reporting period in which the guidance is effective. The standard is effective for~~quarter of fiscal ~~years beginning after~~ ~~December 15, 2019,~~ 2022,and ~~interim periods within those fiscal years. Early~~earlier adoption is ~~permitted for annual periods beginning after~~ ~~December 15, 2018,~~ ~~and interim periods within those fiscal years. The~~permitted. We are currently evaluating the impact of our pending adoption of ~~this guidance requires a change in disclosures related to our accounts receivable and allowance for doubtful accounts only and is~~ASU ~~not~~2019 ~~expected to have a material impact~~-12 on our ~~financial statements.~~

In ~~January 2017,~~ ~~the FASB issued ASU~~ ~~2017~~-~~04,~~~~Intangibles – Goodwill and Other~~ ~~(Topic~~ ~~350~~~~) –~~ ~~Simplifying the Test for Goodwill Impairment~~~~. ASU~~ ~~2017~~-04 ~~amends the guidance of U.S. GAAP with the intent of simplifying how an entity is required to test goodwill for impairment by eliminating Step~~ 2 ~~from the goodwill impairment test. Step~~ 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. After adoption of the standard, the annual, or interim, goodwill impairment test will be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized will ~~not~~ ~~exceed the total amount of goodwill allocated to that reporting unit. The standard is effective for fiscal years beginning after~~ ~~December 15, 2019,~~ ~~including interim periods within those fiscal years. The standard allows for early adoption, but we have~~ ~~not~~ ~~yet made a determination as to whether to early-adopt this standard. We do~~ ~~not~~ ~~expect that the adoption of this standard will have a material impact on our financial statements.~~

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~~consolidated financial statements.

Adoption of Accounting StandardS~~tandards and Reclassifications~~

In. On ~~February 2016,~~January 1, 2020, we adopted the ~~FASB issued~~amendments in ASU 2016-0213, – ~~Leases~~Financial Instruments-Credit Losses (Topic ~~842~~326).: Measurement of Credit Losses on a modified-retrospective basis with comparative periods reported in accordance with previous guidance. These amendments require the measurement of credit losses using historical experience, current conditions and reasonable and supportable forecasts. Prior to this adoption, our allowance for doubtful accounts was equal to a portion of our receivable balances that were 120 days old or older. We generally provided allowances for certain receivable balances that were less than 120 days old when warranted by specific facts and circumstances. The adoption of the amendments in ASU 2016-0213 ~~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 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 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 million for each. Please refer to Note~~ 3 ~~“Acquisitions and Divestitures” and Note~~ 10 ~~“Leases” for further information.~~

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~~material effect 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 relateaddition 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 million to increase our retained earnings and accumulated other comprehensive loss.~~

~~Certain~~accounting standards described above, certain amounts in the condensed consolidated ~~statement~~balance sheets and condensed consolidated statements of cash flows have also been reclassified to conform to the current presentation.

Revenue

Revenue Recognition

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 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$9 million of revenue in the nine months ended September 30, ~~2019~~2020 that was included in the deposit liability balance as of December 31, ~~2018.~~2019. The deposit liability balance is included in deferred revenue on our condensed consolidated balance sheets. The deposit liability balance was ~~$11~~$43 million and $3$9 million as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Disaggregation of Revenue

. 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):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Market and service type:
Advertising:
Local	$	218	$	106	$	655	$	325	$	188	$	218	$	549	$	655
National		56		29		162		84		49		56		136		162
Political		22		48		30		72		128		22		185		30
Total advertising		296		183		847		481		365		296		870		847
Retransmission consent		196		92		601		262		217		196		650		601
Production companies		16		-		62		-		11		16		32		62
Other		9		4		33		13		11		9		37		33
Total revenue	$	517	$	279	$	1,543	$	756	$	604	$	517	$	1,589	$	1,543

Sales channel:
Direct	$	306	$	139	$	946	$	407	$	316	$	306	$	948	$	946
Advertising agency intermediary		211		140		597		349		288		211		641		597
Total revenue	$	517	$	279	$	1,543	$	756	$	604	$	517	$	1,589	$	1,543

3.	Acquisitions ~~and Divestitures~~

~~During the~~On ~~nine~~~~-months ended~~ ~~September 30, 2019,~~July 31, 2020, 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.~~

~~Raycom Merger~~

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~~television station operations in the ~~Richmond, VA~~Anchorage and Juneau, Alaska television designated market areas or “DMA” (DMA 151and 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 ofDMA ~~nine~~207, ~~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:

		~~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~~

~~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):~~

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

~~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)respectively), for ~~a total of $3.66 billion. Please refer to Note~~ 6 ~~“Stockholders Equity” and Note~~ 7 ~~“Preferred Stock” for further information. The~~$19 million, using 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):

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

~~United Acquisition~~

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~~on hand (the ~~“United Acquisition”~~“Alaska Transactions”) ~~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”~~Alaska Transactions (in millions):

Raycom

United

Total

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

	Amount
Accounts receivable and other current assets	$	1
Property and equipment		5
Goodwill		2
Broadcast licenses		2
Other intangible assets		9
Total	$	19

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 three ~~years~~ 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 ~~4.4 years for retransmission agreements; approximately 9.0 years for favorable income leases; and approximately 4.0 years for network affiliation agreements.~~1 to 4 years.

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 $834 million of~~The goodwill recognized 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 wasthis acquisition is deductible ~~by Raycom will be deductible by us~~ for income tax purposes.

The Company’s consolidated results of operations for three and nine-months ended September 30, ~~2019~~2020 include the results of the ~~Raycom Merger~~Alaska Transactions beginning on ~~January 2, 2019~~August 1, 2020, ~~and the United Acquisition beginning on~~but these amounts were ~~March 1, 2019.~~ ~~Revenues attributable thereto and included in our consolidated statement of operations for the~~ ~~three~~not ~~and~~ ~~nine~~~~-months ended~~ ~~September 30, 2019~~ ~~were $274 million and $819 million, respectively. Operating income attributable thereto and included in our consolidated statement of operations was $63 million and $112 million for the~~ ~~three~~ ~~and~~ ~~nine~~~~-months ended~~ ~~September 30, 2019,~~ ~~respectively.~~

significant.

~~The following table summarizes the approximate “Transaction~~“Transaction Related Expenses” incurred in connection with the ~~2019~~ ~~Acquisitions,~~Alaska Transactions, during the three and nine-months ended September 30, ~~2019,~~2020, ~~by type and by financial statement line item (in millions):~~were less than $1 million.

September 30, 2019

Three Months

Nine Months

Ended

Ended

Transaction Related Expenses by type:

Legal, consulting and other professional fees
$ 1 $ 24
Incentive compensation and other severance costs
1 19
Termination of sales representation agreements
- 29
Total transaction related expenses
$ 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 $ 38
Corporate and administrative
1 34
Total transaction related expenses
$ 2 $ 72

~~Unaudited Pro Forma Financial Information.~~Columbus

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

Nine Months Ended

September 30,

2019

2018

Revenue (less agency commissions)
$ 1,546 $ 1,547

Net income
$ 142 $ 110

Net income attributable to common stockholders
$ 103 $ 71

Basic net income per share
$ 1.42 $ 1.25

Diluted net income per share
$ 1.42 $ 1.24

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~~ ~~nine~~~~-months ended~~ ~~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.

~~Sioux Falls~~ Acquisition

On September ~~25, 2019,~~1, 2020, we acquired ~~KDLT-TV~~certain non-license assets of WLTZ-TV (NBC), in the ~~Sioux Falls, South Dakota~~Columbus, Georgia market (DMA ~~115~~129)~~, for $32.5~~ and entered into shared services and other related agreements with SagamoreHill of Columbus GA, LLC (“SagamoreHill”) to provide news and back-office services to WLTZ-TV (the “Columbus Transactions”). We paid $22 million to SagmoreHill, using cash on ~~hand (the “Sioux Falls Acquisition”).~~hand. Due to the proximity of the closing date of the ~~Sioux Falls Acquisition~~Columbus Transactions to the balance sheet date of September 30, 2020 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.~~2020, ~~Fair~~and was included in acquisition prepayments in our statement of cash flows. The 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.

4. Long-term Debt

As of September 30, 2020 and December 31, 2019, long-term debt ~~primarily~~ consisted of obligations under our senior credit facility (the “2019 Senior Credit ~~Facility (as defined below)~~Facility”), our 5.125% Senior Notes due 2024 (the “2024 Notes”), our 5.875% ~~senior notes~~Senior Notes due 2026 (the “2026 Notes”) and our 7.0% ~~senior notes~~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):

	September 30,			December 31,			September 30,			December 31,
	2019			2018			2020			2019
Long-term debt including current portion:
2017 Term Loan	$	595		$	595		$	595		$	595
2019 Term Loan		1,390			-			1,190			1,190
2024 Notes		525			525			525			525
2026 Notes		700			700			700			700
2027 Notes		750			750			750			750
Total outstanding principal		3,960			2,570			3,760			3,760
Unamortized deferred loan costs - 2017 Term Loan		-			(9	)
Unamortized deferred loan costs - 2019 Term Loan		(45	)		-			(37	)		(44	)
Unamortized deferred loan costs - 2024 Notes		(5	)		(6	)		(4	)		(5	)
Unamortized deferred loan costs - 2026 Notes		(8	)		(8	)		(6	)		(7	)
Unamortized deferred loan costs - 2027 Notes		(11	)		(2	)		(10	)		(11	)
Unamortized premium - 2026 Notes		4			4			3			4
Long-term debt, less deferred financing costs		3,895			2,549			3,706			3,697
Less current portion		(14	)		-			0			0
Net carrying value	$	3,881		$	2,549		$	3,706		$	3,697

Borrowing availability under Revolving Credit Facility	$	200		$	100		$	200		$	200

~~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~~Borrowings under ~~our prior senior credit facility with a new~~ ~~five~~ ~~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 $556.4 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~~2017 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 of 2.5% for LIBOR borrowings and 1.5% for Base Rate borrowings.~~margin. As of September 30, ~~2019,~~2020, the interest rate on the balance outstanding under the 2019 Term Loan ~~was 4.8%.~~and the 2017 Term Loan were 2.7% and 2.4%, respectively. The 2019 Term Loan ~~matures on~~ ~~January 2, 2026.~~

~~Borrowings under~~and 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~~ ~~September 30, 2019,~~ ~~the interest rate on the balance outstanding under the~~ ~~2017~~ ~~Term Loan was 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~~mature on January 2, ~~2024.~~2026 and February 7, 2024, respectively.

~~We incurred $42.5 million of transaction fees and expenses related to the~~

~~2019~~14 ~~Senior Credit Facility. At~~ ~~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 September 30, ~~2019,~~2020, the aggregate minimum principal maturities of our long term debt for the remainder of ~~2019~~2020 and the succeeding 5 years were as follows (in millions):

	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	$	4	$	-	$	-	$	-	$	4
2020		14		-		-		-		14
Remainder of 2020											$	0	$	0	$	0	$	0	$	0
2021		14		-		-		-		14		0		0		0		0		0
2022		14		-		-		-		14		0		0		0		0		0
2023		14		-		-		-		14		0		0		0		0		0
2024		609		525		-		-		1,134		595		525		0		0		1,120
2025												0		0		0		0		0
Thereafter		1,316		-		700		750		2,766		1,190		0		700		750		2,640
Total	$	1,985	$	525	$	700	$	750	$	3,960	$	1,785	$	525	$	700	$	750	$	3,760

~~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 September 30, ~~2019,~~2020, there were 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.comply. 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.~~comply. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we were in compliance with all required covenants under all our debt obligations.

For all our interest bearing obligations, we made interest payments of approximately ~~$134~~$127 million and ~~$74~~$134 million during the nine-months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. We did nonott capitalize any interest payments during the nine-months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

On October 19, 2020, we issued $800 million in aggregate principal amount of 4.750% Senior Notes due 2030 (the "2030 Notes"), and used the net proceeds therefrom, after deducting transaction fees and estimated expenses, to redeem all of our outstanding 2024 Notes and to pay all fees and expenses in connection with the offering, including the redemption premium applicable to the 2024 Notes. We intend to use the remaining net proceeds for general corporate purposes, which could include the repayment of outstanding debt from time to time. For additional information on this transaction, see Note 14 "Subsequent Events."

5. Fair Value Measurement

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”).

Fair Value of Other Financial ~~Instruments~~Instrument

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 and the fair value of our long-term debt was ~~$3.9~~approximately $4 billion, ~~and $2.5 billion, respectively, and the fair value was $4.1 billion and $2.4 billion, respectively,~~ as of September 30, ~~2019~~2020 and December 31, ~~2018.~~2019. Fair value of our long-term debt is based on observable estimates provided by third-party financial professionals as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 and as such is classified within Level 2 of the fair value hierarchy.

6. Stockholders’ Equity

We 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 our common stock are identical, except that our Class A common stock has 10 votes per share and our common stock has 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 nine-months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we did not declare or pay any Class A common stock or 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~~On November ~~2004,~~5, 2019, ~~the~~our Board of Directors authorized the ~~Company to~~ repurchase of up to ~~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 million shares (the~~ ~~“2004~~-~~2006~~ ~~Repurchase Authorization”). As of~~ ~~September 30, 2019,~~ ~~279,200 shares 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~~$150 million of our outstanding common stock or our Class A common stock prior to December 31, ~~2019~~2022 (the “~~2016~~2019 Repurchase Authorization”). The ~~2016~~2019 Repurchase Authorization superseded all prior repurchase authorizations. The 2019 Repurchase Authorization also prohibits the Company from purchasing shares directly from the Company’s officers, directors, or the Gray Television, Inc. Capital Accumulation Plan (the “~~401~~401k~~(k) plan”~~ Plan”). ~~During~~

On December 15, 2019, we entered into an Issuer Repurchase Plan (the “2019 IRP”), under Rules 10b-18 and 10b5-1 of the Securities Exchange Act of 1934. The purpose of the ~~nine~~2019~~-months ended~~ ~~September 30, 2019,~~ ~~under~~ IRP is to facilitate the orderly repurchase of our common stock through the establishment of the parameters for repurchases of our shares. During ~~2016~~2020, ~~Repurchase Authorization,~~ we purchased ~~651,593~~905,836 shares of our common stock at an average purchase price ~~including related brokerage~~of $11.02 per share, excluding commissions, ~~of $16.37 per share,~~under the 2019 IRP, for a total cost of ~~$11 million.~~approximately $10 million, after which the 2019 IRP was terminated early in the second quarter of 2020.

Subsequent to the termination of the 2019 IRP we repurchased an additional 3,579,342 shares of our common stock, for a total cost of approximately $49 million at an average purchase price of $13.75 per share, excluding commissions. As of September 30, ~~2019,~~2020, ~~$39~~approximately $70 million ~~remained~~was available to ~~purchase~~repurchase shares of our common stock and/or Class A common stock under the ~~2016~~2019 Repurchase Authorization.

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~~ ~~nine~~~~-months ended~~As of September 30, ~~2019,~~2020, we ~~issued 196,509~~had reserved 4,776,948 shares and 1,336,440 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~~ ~~September 30, 2019,~~ ~~we had reserved 1,503,254 shares~~ and ~~6,163,624 shares of our~~ Class A ~~common stock and~~ common stock, respectively, for future issuance under various employee benefit plans.

7. ~~Preferred Stock~~

~~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. 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 (“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.~~

87. Retirement Plans

The components of our net periodic pension benefit are included in miscellaneous income in our income statement. During the nine-months ended September 30, ~~2019,~~2020, the amount recorded as a benefit was not material. During the nine-months ended September 30, ~~2019,~~2020, we contributed $3 million to this plan.

During the three and nine-month periods ended September 30, ~~2019,~~2020, we contributed $2$3 million and $9$10 million, respectively, in matching contributions to our 401(k) Plan. During the remainder of ~~2019,~~2020, we estimate that our contributions will be approximately $3 million to this plan, excluding discretionary profit-sharing contributions.

9.8. Stock-based Compensation

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 nine-month periods ended September 30, ~~2019~~2020 and ~~2018~~2019 (in millions):

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Stock-based compensation expense, gross	$	5		$	2		$	10		$	6		$	5		$	5		$	12		$	10
Forfeitures		-			-			-			(1	)		0			0			0			0
Income tax benefit at our statutory rate associated with share-based compensation		(1	)		(1	)		(3	)		(1	)		(1	)		(1	)		(3	)		(3	)
Stock-based compensation expense, net	$	4		$	1		$	7		$	4		$	4		$	4		$	9		$	7

All shares of class A common stock and 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 nine-months ended September 30, 2020, we granted under the 2017 EICP:

●

78,722 shares of restricted common stock with a grant date fair value of $11.56 to our non-employee directors that will vest on April 30, 2021;

●

83,407 shares of restricted Class A common stock with a grant date fair value per share of $19.87 to an employee, of which 27,802 shares will vest on each of January 31, 2021 and 2022 and 27,803 shares will vest on January 31, 2023;

●

83,407 shares of restricted Class A common stock with a grant date fair value per share of $19.87 to an employee, subject to the achievement of certain performance measures, which will vest on January 31, 2023;

●

207,787 shares of restricted common stock with a grant date fair value per share of $21.69 to certain employees, of which 69,262 shares will vest on each of January 31, 2021 and 2022 and 69,263 shares will vest on January 31, 2023;

●

40,756 shares of restricted common stock with a grant date fair value per share of $21.69 to an employee, subject to the achievement of certain performance measures, which will vest on January 31, 2023;

●

Restricted stock units representing 90,184 shares of our common stock, to certain employees, of which 60,052 shares will vest on March 1, 2021; and 15,066 shares will vest on each of March 1, 2022 and 2023;

●

Restricted stock units representing 3,000 shares of our common stock to an employee, which vested on June 1, 2020; and

●

32,216 shares of restricted common stock with a grant date fair value per share of $15.52 to an employee that will vest on September 1, 2021.

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

●

99,905 shares of restricted class A common stock with a grant date fair value per share of $15.36 to an employee, of which 33,302 shares ~~will vest~~vested on ~~each of~~ January 31, 2020, ~~and~~33,302 shares will vest on January 31, 2021and 33,301 shares will vest on January 31, 2022;

●

99,905 shares of restricted class A common stock with a grant date fair value per share of $15.36 to an employee, subject to the achievement of certain performance measures, which will vest on January 31, 2022;

●

340,993 shares of restricted common stock with a grant date fair value per share of $14.85 to certain employees that will vest on January 2, 2021;

●

277,048 shares of restricted common stock with a grant date fair value of $16.55 to certain employees, of which 92,349 shares ~~will vest~~vested on each of January 31, 2020, ~~and~~92,349 shares will vest on January 31, 2021and 92,350 shares will vest on January 31, 2022;

●

48,338 shares of restricted common stock with a grant date fair value per share of $16.55 to an employee, subject to the achievement of certain performance measures, which will vest on January 31, 2022; and

●

11,223 shares of restricted common stock with a grant date fair value per share of $17.83 to an employee that ~~will vest~~vested on February 15, 2020.

●

41,181 shares of restricted common stock with a grant date fair value of $22.10 to our non-employee directors that ~~will vest~~vested on April 30, 2020.

●

Restricted stock units representing 398,000 shares of our common stock with a grant date fair value of $18.21 that ~~will vest~~vested on June 1, 2020.

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

●

~~110,040 shares of restricted class A common stock with a grant date fair value per share of $12.65 to an employee, of which 36,680 shares vested on~~ ~~February 28, 2019,~~ ~~and 36,680 shares will vest on each of~~ ~~February 28, 2020~~ ~~and~~ ~~2021;~~

●

~~110,040 shares of restricted class A common stock with a grant date fair value per share of $12.65 to an employee, subject to the achievement of certain performance measures, which will vest on~~ ~~February 28, 2021;~~

●

~~318,196 shares of restricted common stock with a grant date fair value per share of $15.25 to certain employees; net of forfeitures, 131,106 shares vested on~~ ~~February 28, 2019;~~ ~~69,651 shares will vest on~~ ~~February 28, 2020;~~ ~~and 69,652 shares will vest on~~ ~~February 28, 2021;~~ ~~and~~

●

~~73,640 shares of restricted common stock to our non-employee directors, all of which will vest on~~ ~~May 31, 2019.~~

A summary of restricted class A common stock, common stock and restricted stock units activity for the nine-month periods ended September 30, ~~2019~~2020 and ~~2018~~2019 is as follows:

	Nine Months Ended										Nine Months Ended
	September 30, 2019					September 30, 2018					September 30, 2020					September 30, 2019
				Weighted-					Weighted-					Weighted-					Weighted-
				average					average					average					average
				Grant Date					Grant Date					Grant Date					Grant Date
	*Number of*			*Fair Value*		*Number of*			*Fair Value*		*Number of*			*Fair Value*		*Number of*			*Fair Value*
	*Shares*			*Per Share*		*Shares*			*Per Share*		*Shares*			*Per Share*		*Shares*			*Per Share*
Restricted stock - class A common:
Outstanding - beginning of period		407,786		$	11.82		462,632		$	10.63		449,284		$	13.55		407,786		$	11.82
Granted⁽¹⁾		199,810		$	15.36		220,080		$	12.65		166,814		$	19.87		199,810		$	15.36
Vested		(158,312	)	$	11.38		(274,926	)	$	10.48		(136,056	)	$	12.32		(158,312	)	$	11.38
Forfeited		-		$	-		-		$	-		0		$	0		0		$	0
Outstanding - end of period		449,284		$	13.55		407,786		$	11.82		480,042		$	16.10		449,284		$	13.55

Restricted stock - common:
Outstanding - beginning of period		578,894		$	13.14		503,685		$	11.14		977,547		$	15.45		578,894		$	13.14
Granted		718,783		$	16.08		391,836		$	14.63		359,481		$	18.92		718,783		$	16.08
Vested		-		$	-		(225,570	)	$	11.21		(333,865	)	$	15.35		0		$	0
Forfeited		(352,810	)	$	12.98		(91,057	)	$	13.27		(85,630	)	$	15.53		(352,810	)	$	12.98
Outstanding - end of period		944,867		$	15.44		578,894		$	13.14		917,533		$	16.84		944,867		$	15.44

Restricted stock units - common stock:
Outstanding - beginning of period		-		$	-		209,500		$	15.70		398,000		$	18.21		0		$	0
Granted		398,000		$	18.21		-		$	-		93,184		$	18.77		398,000		$	18.21
Vested		-		$	-		(209,500	)	$	15.70		(374,500	)	$	18.18		0		$	0
Forfeited		-		$	-		-		$	-		(26,500	)	$	18.21		0		$	0
Outstanding - end of period		398,000		$	18.21		-		$	-		90,184		$	18.92		398,000		$	18.21

(1) For awards subject to future performance conditions, amounts assume target performance.

At ~~September 30, 2019~~ ~~and~~ December 31, ~~2018,~~2019, we had ~~outstanding~~274,746 options to acquire ~~274,746 shares of~~ our common stock outstanding at an exercise price of $1.99 per share, all of which were vested and ~~exercisable.~~exercisable, and 0 options outstanding to acquire our Class A common stock. During the first quarter of 2020, all of the outstanding options were exercised. The ~~exercise price~~aggregate intrinsic value of ~~all outstanding stock~~the exercised options ~~is $1.99 per share.~~was approximately $3 million at the date they were exercised. As of September 30, ~~2019~~ ~~and~~ ~~December 31, 2018,~~2020, we did not have any options outstanding for our ~~class~~common stock or 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~~ ~~September 30, 2019.~~

~~10.~~9. Leases

We determine if an arrangement is a lease at its inception. Operating ~~Leases~~

lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at the lease ~~various~~commencement date in determining the present value of future payments, because the implicit rate of the lease is generally not known. Right-of-use (“ROU”) assets ~~with non-cancellable~~related to our operating lease liabilities are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease payments and less any lease incentives. Our lease terms that ~~range between~~ ~~one~~ ~~and~~are used in determining our operating lease liabilities at lease inception may ~~ninety-nine~~ ~~years. Many of these~~include options to extend or terminate the leases ~~have optional renewal periods ranging between~~ ~~one~~ ~~and~~ ~~twenty~~ ~~years. We define the lease term as the original lease base period plus optional renewal periods~~when it is reasonably certain that we ~~reasonably expect to be exercised.~~will exercise such options. We do ~~not~~ ~~include renewal periods exercisable more than~~ ~~ten~~ ~~years from the commencement date in the lease term~~amortize our ROU assets 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 generally on a straight-line basis over the lease ~~term. Operating~~term and classify both the lease ~~expense is included in~~amortization and imputed interest as operating ~~expenses in our statements of operations.~~

expenses. We have 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~~agreements with lease and non-lease components, ~~based upon~~and in such cases, we generally account for the ~~contract or associated invoice received if applicable. Lease~~ components ~~include base rent, fixed rate escalators and in-substance fixed payments associated~~separately 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 included 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 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~~

We have operating leases that primarily relate to certain of our facilities, data centers and ~~percentage rent amounts that differ from~~vehicles. As of September 30, 2020, our operating leases substantially have remaining terms of one year to 99 years, some of which include options to extend and/or terminate the ~~amount included in ASC~~leases. We do ~~842~~not ~~calculation~~recognize lease assets and lease liabilities for any lease with an original lease term of less than one year.

Cash flow movements related to our lease activities are included in ~~variable lease payments.~~

~~We recognize leases with an initial term of~~ 12 ~~months or less~~other assets and accounts payable and other liabilities as ~~short-term leases. Lease payments associated with short-term leases are expensed as incurred~~presented in net cash provided by operating activities in our ~~operating lease expense and are~~ ~~not~~ ~~included in our calculation~~condensed consolidated statement of ~~right-of-use assets or lease liabilities. Short-term leases generally consist of rentals of production or broadcast equipment~~cash flows for ~~short periods of time.~~

~~Our operating lease costs, including variable lease costs, for the~~ ~~three~~ ~~and~~ ~~nine~~~~-month periods ended~~ ~~September 30, 2019~~ ~~were $2 million and $9 million, respectively. Our short-term lease costs for the~~ ~~three~~ ~~and~~ ~~nine~~~~-month period ended~~ ~~September 30, 2019~~ ~~were $1 million and $2 million, respectively. Cash flows from operations included cash paid for operating leases of $11 million in~~ the nine-months ended September 30, ~~2019.~~ 2020.~~Additional right of use assets recognized in the~~ ~~nine~~~~-months ended~~ ~~September 30, 2019~~ ~~were~~ ~~not~~ ~~material.~~

As of September 30, ~~2019,~~2020, the ~~weighted average~~weighted-average remaining term of our operating leases was ~~9.0~~approximately 10.5 years. The ~~weighted average~~weighted-average discount rate used to calculate the values associated with our operating leases was ~~6.7%~~6.76%. The table below describes the nature of lease expense and classification of operating lease expense recognized in the three and nine-months ended September 30, 2020 and 2019, respectively (in millions):

	Three Months Ended		Nine Months Ended
	September 30, 2020		September 30, 2020
Lease expense:
Operating lease expense	$	3	$	9
Short-term lease expense		0		1
Total lease expense	$	3	$	10

The maturities of operating lease liabilities as of September 30, ~~2019,~~2020, for the remainder of ~~2019~~2020 and the succeeding years were as follows (in millions):

Year ending
December 31,

Operating Leases

2019
$ 2
2020
10
2021
9
2022
9
2023
7
Thereafter
36
Total lease payments
73
Less: Imputed interest
(19 )
Present value of lease liabilties
$ 54

~~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):~~

Year ending
December 31,

Operating Leases

2019
$ 3
2020
3
2021
3
2022
3
2023
2
Thereafter
12
Total
$ 26

~~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~~ ~~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.~~

~~Financing Leases~~

We lease certain vehicles through a financing master lease. The weighted average remaining lease term of the vehicles under this lease is 2.2 years. The interest rate for each vehicle leased is 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 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~~ ~~nine~~~~-months ended~~ ~~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~~ ~~nine~~~~-months ended~~ ~~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.~~

Year ending December 31,		Amount
2020	$	3
2021		10
2022		9
2023		8
2024		7
Thereafter		48
Total lease payments		85
Less: Imputed interest		(24	)
Present value of lease liabilties	$	61

1110. Commitments and Contingencies

~~Legal Proceedings and Claims~~

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.

Our strategy includes the pursuit of accretive acquisition and/or investment opportunities. Currently we have commitments to acquire television stations and to make investments in broadcasting, production, technology companies and other assets that total approximately $80 million. These transactions are expected to close in the fourth quarter of 2020 or early in 2021.

1211. Goodwill and Intangible Assets

During the nine-months ended September 30, ~~2019,~~2020, we completed the ~~2019~~ ~~Acquisitions~~Alaska Transactions that included the acquisition of goodwill, broadcast licenses and ~~finite-lived~~definite-lived intangible assets. See Note 3 ~~“Acquisitions and Divestitures”~~“Acquisitions” for more information regarding ~~these transactions.~~this transaction. Also during the nine-months ended September 30, 2020, we completed the acquisition of other television station operations, including, in some cases, broadcast licenses that were not material. A summary of changes in our goodwill and other intangible assets, on a net basis, for the nine-months ended September 30, ~~2019~~2020 is as follows (in millions):

	Net Balance at		Acquisitions							Net Balance at		Net Balance at		Acquisitions							Net Balance at
	December 31,		And							September 30,		December 31,		And							September 30,
	2018		Adjustments, Net		Impairments		Amortization			2019		2019		Adjustments, Net		Impairments		Amortization			2020

Goodwill	$	612	$	837	$	-	$	-		$	1,449	$	1,446	$	2	$	-	$	-		$	1,448
Broadcast licenses		1,530		2,028		-		-			3,558		3,573		4		-		-			3,577
Definite lived intangible assets		53		502		-		(86	)		469		460		9		-		(78	)		391
Total intangible assets net of accumulated amortization	$	2,195	$	3,367	$	-	$	(86	)	$	5,476	$	5,479	$	15	$	-	$	(78	)	$	5,416

A summary of the changes in our goodwill, on a gross basis, for the nine-months ended September 30, ~~2019,~~2020, is as follows (in millions):

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							As of
	December 31,			Net				September 30,
	2019			Additions		Impairments		2020

Goodwill, gross	$	1,545		$	2	$	0	$	1,547
Accumulated goodwill impairmant		(99	)		-		-		(99	)
Goodwill, net	$	1,446		$	2	$	0	$	1,448

As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, our intangible assets and related accumulated amortization consisted of the following (in millions):

	As of September 30, 2019							As of December 31, 2018							As of September 30, 2020							As of December 31, 2019
			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	$	3,631	$	(54	)	$	3,577	$	3,627	$	(54	)	$	3,573
Goodwill		1,449		-			1,449		612		-			612		1,448		0			1,448		1,446		0			1,446
	$	5,061	$	(54	)	$	5,007	$	2,195	$	(53	)	$	2,142	$	5,079	$	(54	)	$	5,025	$	5,073	$	(54	)	$	5,019

Intangible assets subject to amortization:
Network affiliation agreements	$	54	$	(14	)	$	40	$	6	$	(6	)	$	-	$	62	$	(25	)	$	37	$	56	$	(17	)	$	39
Other definite lived intangible assets		596		(167	)		429		143		(90	)		53		618		(264	)		354		615		(194	)		421
	$	650	$	(181	)	$	469	$	149	$	(96	)	$	53	$	680	$	(289	)	$	391	$	671	$	(211	)	$	460

Total intangibles	$	5,711	$	(235	)	$	5,476	$	2,344	$	(149	)	$	2,195	$	5,759	$	(343	)	$	5,416	$	5,744	$	(265	)	$	5,479

Amortization expense for the nine-month periods ended September 30, ~~2019~~2020 and ~~2018~~2019 was ~~$86~~$78 million and ~~$16~~$86 million, respectively. Based on the intangible assets subject to amortization as of September 30, ~~2019,~~2020, we expect that amortization expense for the remainder of ~~2019~~2020 would be approximately ~~$28~~$26 million, and, for the succeeding five years, amortization expense will be approximately as follows: ~~2020,~~ ~~$99 million;~~ 2021, ~~$95~~$100 million; 2022, ~~$91~~$96 million; 2023, ~~$85~~$90 million; 2024, $25 million; and ~~2024,~~2025, ~~$22~~$15 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 0 triggering events that required a test of our goodwill or intangible assets for impairment during the~~ ~~nine~~~~-months ended~~ ~~September 30, 2019~~ or ~~2018.~~

132. Income Taxes

For the three and nine-month periods ended September 30, ~~2019~~2020 and ~~2018,~~2019, our income tax expense and effective income tax rates were as follows (dollars in millions):

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Income tax expense	$	23		$	22		$	44		$	43		$	43		$	23		$	67		$	44
Effective income tax rate		28	%		27	%		34	%		26	%		26	%		28	%		26	%		34	%

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 nine-month period ended September 30, 2020, 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 4% and permanent differences between our U.S. GAAP income and taxable income added 1%. For the nine-month period ended September 30, 2019, these estimates increased or decreased our statutory Federal income tax rate to our effective income tax rate of 34% as follows: state income taxes added 5%, permanent differences between our U.S. GAAP income and taxable income added 2% and divestiture of component 2 goodwill resulted in an increase of 6%. ~~For the~~ ~~nine~~~~-month period ended~~ ~~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%.

We made income tax payments (net of refunds) of approximately ~~$12~~$50 million and ~~$27~~$12 million during the nine-months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

We have approximately ~~$776~~$438 million of federal operating loss carryforwards, that expire during the years ~~2021~~2023 through 2037. We expect to have federal taxable income in the carryforward periods, therefore we believe that ~~it is more likely than~~ ~~not~~ ~~that~~ these federal operating loss carryforwards will be fully utilized. Additionally, we have an aggregate of approximately ~~$837~~$677 million of various state operating loss carryforwards, of which we expect approximately ~~$564 million~~half will be utilized.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020, and permits net operating loss (“NOL”) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018,2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. We will continue to monitor and assess the impact the CARES Act may have on our business and financial results. We do not currently expect the CARES Act to have a material impact on our annual estimated effective tax rate.

~~14.~~13. Segment information

The Company operates in 2 business segments: broadcasting and production companies. The broadcasting segment operates television stations located across 9394 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												Production
As of and for the Nine months ended September 30, 2019:	Broadcast			Companies			Other			Consolidated
As of and for the Nine months ended September 30, 2020:													Broadcast			Companies			Other			Consolidated

Revenue (less agency commissions)	$	1,481		$	62		$	-		$	1,543		$	1,557		$	32		$	0		$	1,589
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:		986			57			83			1,126			985			32			47			1,064
Depreciation and amortization		135			9			2			146			136			9			2			147
(Gain) loss on disposal of assets, net		(27	)		-			-			(27	)		(21	)		(2	)		0			(23	)
Operating expenses		1,094			66			85			1,245			1,100			39			49			1,188
Operating income	$	387		$	(4	)	$	(85	)	$	298		$	457		$	(7	)	$	(49	)	$	401

Interest expense	$	-		$	-		$	173		$	173		$	0		$	0		$	143		$	143
Capital expenditures (excluding business combinations)	$	69		$	-		$	4		$	73		$	69		$	1		$	0		$	70
Goodwill	$	1,409		$	40		$	-		$	1,449		$	1,408		$	40		$	0		$	1,448
Total Assets	$	6,906		$	142		$	56		$	7,104		$	6,508		$	139		$	577		$	7,224

For the Nine months ended September 30, 2018:
For the Nine months ended September 30, 2019:

Revenue (less agency commissions)	$	756		$	-		$	-		$	756		$	1,481		$	62		$	0		$	1,543
Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:		437			-			30			467			986			57			83			1,126
Depreciation and amortization		56			-			1			57			135			9			2			146
(Gain) loss on disposal of assets, net		(6	)		-			-			(6	)		(27	)		0			0			(27	)
Operating expenses		487			-			31			518			1,094			66			85			1,245
Operating income	$	269		$	-		$	(31	)	$	238		$	387		$	(4	)	$	(85	)	$	298

Interest expense	$	-		$	-		$	74		$	74		$	0		$	0		$	173		$	173
Capital expenditures (excluding business combinations)	$	35		$	-		$	-		$	35		$	69		$	0		$	4		$	73

As of December 31, 2018:
As of December 31, 2019:

Goodwill	$	612		$	-		$	-		$	612		$	1,405		$	41		$	0		$	1,446
Total Assets	$	3,242		$	-		$	971		$	4,213		$	6,530		$	153		$	289		$	6,972

~~15.~~14. Subsequent Events

~~Acquisition and Divestiture~~Stock Repurchase Authorization.

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,~~4, 2020, the Board of Directors authorized the Company to repurchase up to an additional $150 million of outstanding common stock (GTN) and/or Class A common stock (GTN.A) through December 31, ~~2022.~~2023. ~~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.~~

expanded authorization. This additional authorization increases the total capacity under Gray's share repurchase program to $220 million when combined with the approximately $70 million remaining under its previous authorization. Share repurchases would be implemented through purchases made from time to time in either the open market or private ~~transactions.~~transactions in accordance with applicable securities law requirements, including Rule 10b5-1. The extent to which the ~~Company repurchases~~we repurchase any of ~~its~~our 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~~We are 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.

Issuance of and Redemption of Notes. On October 19, 2020, we issued $800 million of our 2030 Notes and used the net proceeds therefrom, after deducting transaction fees and estimated expenses, to redeem all of our outstanding 2024 Notes and to pay all fees and expenses in connection with the offering, including the redemption premium applicable to the 2024 Notes. We intend to use the remaining net proceeds for general corporate purposes, which could include the repayment of outstanding debt from time to time.

The interest rate and yield on the 2030 Notes is 4.75%. The 2030 Notes rank equally with the 2027 Notes and the 2026 Notes and the 2030 Notes mature on October 15, 2030. Interest is payable semiannually, on April 15 and October 15 of each year.

Lubbock Transactions. On October 18, 2020, Gray entered into agreements with Ramar Communications, Inc. (“Ramar”) and SagamoreHill through which Gray will acquire KLCW-TV (CW) and two low power stations in the Lubbock, Texas market (DMA 142), as well as certain non-license assets of Ramar’s KJTV-TV (FOX) and two additional low power stations, for a combined purchase price of $20 million. At the closing of these transactions, Gray will enter into a shared services agreement with SagamoreHill to provide news and back-office services to KJTV-TV and its associated low power stations. Subject to receipt of regulatory and other approvals, the parties anticipate closing these transactions in the coming months.

Sioux Falls Transactions. On November 2, 2020, Gray entered into a new network affiliation agreement with the FOX Broadcasting Network for one of its television stations in the Sioux Falls, South Dakota television market (DMA 115) market that utilize certain non-license assets that Gray acquired at the same time from Independent Communications, Inc., the former FOX affiliate for the market.

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~~2019 (the ~~“2018~~“2019 Form 10-K”) filed with the SEC.

Business ~~Overview~~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~~U.S. We currently own and/or operate television stations and ~~locally focused~~leading digital ~~platforms~~properties in 9394 television markets ~~broadcasting over 400 separate programming streams, including approximately 150 affiliates of the Big Four TV networks. Our station portfolio reaches~~that collectively reach approximately 24% of ~~total United States~~U.S. television households. During calendar year 2019, our stations were ranked first in 69 markets, and first and/or second in 87 markets, as calculated by Comscore’s audience measurement service. 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~~our “production companies.”

~~Between December 2017~~Impact of the COVID-19 Pandemic and ~~November 2018,~~Related Government Restrictions on our Markets and Operations. The impact of the COVID-19 pandemic and measures to prevent the spread of COVID-19 continue to affect our businesses in a number of ways. We have experienced a disruption in creation of content that we broadcast on our television stations ~~achieved~~and of events and programs we produce at our production companies, including the ~~#1 ranking~~cancellation of certain sports events and the shutting down of production of certain television content. The extent to which the COVID-19 pandemic continues to impact our business operations, financial results, and liquidity will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the ultimate duration and scope of the COVID-19 pandemic, the negative impact it has on global and regional economies and economic activity, changes in ~~overall audience~~advertising customers and consumer behavior, impact of governmental regulations that have been or will be imposed in 69response to the pandemic, its short and longer-term impact on the levels of consumer confidence; actions governments, businesses and individuals take in response to the pandemic; and how quickly economies recover after the COVID-19 pandemic subsides. The COVID-19 impact on the capital markets could impact our cost of borrowing.

We have continued to actively monitor the global outbreak and spread of COVID-19 and continue to take steps to mitigate the potential risks to us posed by its spread and related circumstances and impacts. We are focused on navigating these recent challenges presented by the COVID-19 pandemic through protecting the safety of our ~~93 markets. In addition,~~employees, seeking to maintain revenues, reduce expenses and delay capital expenditures. There are certain limitations on our ~~stations achieved~~ability to mitigate the ~~#1 or #2 ranking in overall audience in 87~~adverse financial impact of the pandemic, including the high fixed-cost nature of our ~~93 markets among all local television stations.~~businesses. The COVID-19 pandemic, and the related economic disruptions and uncertainty, also makes it more challenging for management to estimate future performance of our businesses, particularly over the near to medium term, and consequently the broader impact that COVID-19 could have on our business, financial condition and results of operations. See Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.

~~Acquisitions~~

~~On January 2, 2019,~~Since March 2020, most of our employees have been working from home, with only certain essential employees working on site. For employees working on site, we ~~completed~~have instituted social distancing protocols, increased the ~~Raycom Merger. Net~~level of ~~station divestitures due~~cleaning and sanitizing in those sites and undertaken other actions to ~~market overlaps, this transaction added television stations in 34 new markets. In addition~~make these sites safer. We have also substantially reduced employee travel to only essential business needs. We are generally following the ~~high-quality television stations acquired as part~~requirements and protocols published by the U.S. Centers for Disease Control and the World Health Organization, and state and local governments. We have recently begun to implement plans to re-open our offices and studios. Many of our employees have continued to work from home. As of the ~~Raycom Merger,~~date of this filing, we ~~also acquired businesses that provide sports marketing and production services that we~~do not believe ~~has resulted in us becoming a more diversified media company. The Raycom Merger completed~~those employees who continue to work from home have adversely impacted 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 shareinternal controls, financial reporting systems 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.~~operations.

Impact of Coronavirus Aid, Relief, and Economic Security Act. The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted in March 2020, in response to the COVID-19 pandemic. The CARES Act and related rules and guidelines include several significant provisions, including delaying certain payroll tax payments, mandatory transition tax payments, and estimated income tax payments that we are deferring to future periods. We do not currently expect the CARES Act to have a material impact on our financial results, including on our annual estimated effective tax rate or on our liquidity. We will continue to monitor and assess the impact the CARES Act may have on our business and financial results.

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~~Seasonality.

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~~generally 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.~~websites and mobile apps. These advertisements may be sold as banner advertisements, ~~pre-roll~~video 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~~increase in certain periods in even numbered years as a result of their broadcasts of the Olympic ~~Games;~~Games, which to some extent reduces the revenues earned by non-NBC-affiliated stations during those periods (as a result of the COVID-19 pandemic, the 2020 Olympic Games have been postponed until 2021); and

●

Because our stations and markets are not evenly divided among the Big 4Four 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~~During the ~~nine- months~~nine-months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we derived approximately ~~24%~~21% and ~~21%~~24%, 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~~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~~and improvements in general economic conditions. ~~However,~~Nevertheless, 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 September 30,										Nine Months Ended September 30,										Three Months Ended September 30,										Nine Months Ended September 30,
	2019					2018					2019					2018					2020					2019					2020					2019
			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)	$	218		42.2	%	$	106		38.0	%	$	655		42.4	%	$	325		43.0	%	$	188		31.1	%	$	218		42.2	%	$	549		34.6	%	$	655		42.4	%
National		56		10.8	%		29		10.4	%		162		10.5	%		84		11.1	%		49		8.1	%		56		10.8	%		136		8.6	%		162		10.5	%
Political		22		4.3	%		48		17.2	%		30		1.9	%		72		9.5	%		128		21.2	%		22		4.3	%		185		11.6	%		30		1.9	%
Retransmission consent		196		37.9	%		92		33.0	%		601		39.0	%		262		34.7	%		217		35.9	%		196		37.9	%		650		40.9	%		601		39.0	%
Production companies		16		3.1	%		-		0.0	%		62		4.0	%		-		0.0	%		11		1.8	%		16		3.1	%		32		2.0	%		62		4.0	%
Other		9		1.7	%		4		1.4	%		33		2.2	%		13		1.7	%		11		1.9	%		9		1.7	%		37		2.3	%		33		2.2	%
Total	$	517		100.0	%	$	279		100.0	%	$	1,543		100.0	%	$	756		100.0	%	$	604		100.0	%	$	517		100.0	%	$	1,589		100.0	%	$	1,543		100.0	%

Results of Operations

Three-Months Ended September 30, ~~2019~~2020 (“the ~~2019~~2020 three-month period”) Compared to Three-Months Ended September 30, ~~2018~~2019 (“the ~~2018~~2019 three-month period”)

Revenue. Total revenue increased ~~$238~~$87 million, or ~~85%~~17%, to ~~$517~~$604 million in the ~~2019~~2020 three-month period from the ~~2018~~2019 three-month period. ~~The 2019 Acquisitions accounted for approximately $274 million of the increase in our total~~Total revenue ~~in the 2019 three-month period compared to the 2018 three-month period. Excluding the 2019 Acquisitions, total revenue decreased by $35 million~~increased primarily due to a ~~decrease~~increase of ~~$40~~$106 million in political advertising revenue as a result of ~~2019~~2020 being the ~~“off-year”~~“on-year” of the two-year election cycle, ~~partially offset~~and by an increase in retransmission consent revenue. ~~Excluding the 2019 Acquisitions, retransmission~~Retransmission consent revenue increased $7$21 million due to increases in rates. Combined, local and national revenue decreased by $37 million in the 2020 three-month period and production company revenue decreased by $5 million. We attribute the decreases primarily to the effects of the COVID-19 pandemic, that has affected our customers and our sports and event programming.

Broadcast Expenses. Broadcast expenses (before depreciation, amortization and gain or loss on disposal of assets) increased ~~$171~~$10 million, or ~~118%~~3%, to ~~$316~~$326 million in the ~~2019~~2020 three-month period from the ~~2018~~2019 three-month period. The ~~2019 Acquisitions accounted for $165 million~~difference was the result of ~~the increase in these expenses in the 2019 three-month period compared to the 2018 three-month period. The remaining difference represented~~ an increase in retransmission expense, consistent with the increased retransmission consent ~~revenue.~~revenue, partially offset by decreases in station operating expenses. Non-cash stock based compensation included in broadcast expenses was less than $1 million in the 2020 three-month period, but was $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~~were $8 million in the ~~Raycom Merger, were~~2020 three-month period, compares to approximately $13 million in the 2019 ~~three-month~~three month period. ~~Approximately half~~The decrease was primarily due to the effects of ~~these operating expenses were for personnel costs and half for operating costs at sporting events.~~the COVID-19 pandemic.

Corporate and Administrative Expenses. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) increased by $3$1 million, or ~~27%~~7%, to ~~$14~~$15 million. Non-compensation expense ~~decreased $1 million~~increased primarily as a result of ~~decreases in~~ professional fees related to acquisition activities. Professional fees related to all of our acquisition activities were approximately $1 million in the ~~2019~~2020 three-month period. Compensation expense ~~increased $4~~decreased $1 million primarily as a result of ~~increased base and~~decreased incentive compensation costs. We recorded corporate non-cash stock-based amortization expense of $2$4 million and $1$3 million in the ~~2019~~2020 and ~~2018~~2019 three-month periods, respectively.

Depreciation. Depreciation of property and equipment totaled ~~$20~~$27 million and ~~$13~~$20 million in the ~~2019~~2020 three-month period and the ~~2018~~2019 three-month ~~periods,~~period, respectively. Depreciation increased primarily due to the addition of depreciable assets acquired ~~as a part~~in the normal course of ~~the 2019 Acquisitions.~~business.

Amortization. Amortization of intangible assets totaled ~~$29~~$26 million and $5$29 million in the ~~2019~~2020 three-month period and the ~~2018~~2019 three-month ~~periods,~~period, respectively. Amortization ~~increased~~decreased primarily due to the definite-lived intangible assets ~~acquired as a part~~becoming fully amortized.

Gainon Disposals of Assets, Net. We reported gains on disposals of assets of $10 million in the 2020 three-month period and $14 million in the 2019 ~~Acquisitions.~~three-month period. These gains were primarily related to assets disposals from the FCC Repack process.

Interest Expense. Interest expense ~~increased $32~~decreased $12 million, or ~~128%~~21%, to ~~$57~~$45 million for the ~~2019~~2020 three-month period compared to the ~~2018~~2019 three-month period. This ~~increase was attributable~~decrease in interest expense is due to ~~borrowings to finance the Raycom Merger, including, $1.4 billion under our 2019 Senior Credit Facility~~both a decrease in principal and ~~$750 million of our 2027 Notes.~~interest rates. The average interest rate, excluding amortization of deferred financing costs, on our total outstanding debt balance was ~~5.4%~~4.4% and ~~5.2%~~5.4% during the 2020 three-month period and 2019 ~~and 2018~~ three-month ~~periods,~~period, respectively. Our average outstanding debt principal balance was ~~$4.0~~$3.8 billion and ~~$1.8~~$4.0 billion during the ~~2019~~2020 and ~~2018~~2019 three-month periods, respectively.

Income Tax Expense. We recognized income tax expense of ~~$23~~$43 million and ~~$22~~$23 million in the ~~2019~~2020 and ~~2018~~2019 three-month periods, respectively. Our effective income tax rates were ~~28%~~26% and ~~27%~~28% in the ~~2019~~2020 and ~~2018~~2019 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~~2020 three-month period, these estimates increased our statutory Federal income tax rate of 21% to our effective income tax rate of ~~28%~~26% as follows: state income taxes added 5%4% and permanent differences between our U.S. GAAP income and taxable income added 2%1%.

Nine-Months Ended September 30, ~~2019~~2020 (“the ~~2019~~2020 nine-month period”) Compared to Nine-Months Ended September 30, ~~2018~~2019 (“the ~~2018~~2019 nine-month period”)

Revenue. Total revenue increased ~~$787~~$46 million, or ~~104%~~3%, to ~~$1.5~~$1.6 billion in the ~~2019~~2020 nine-month period from the ~~2018~~2019 nine-month period. ~~The 2019 Acquisitions accounted for approximately $819~~Political advertising revenue increased by $155 million, resulting primarily from 2020 being the “on-year” of the ~~increase in our total~~two-year election cycle. Retransmission consent revenue ~~in the 2019 nine-month period compared to the 2018 nine-month period. Excluding the 2019 Acquisitions, total revenue decreased~~increased by ~~$32~~$49 million ~~primarily due to a decrease of $59 million in political advertising revenue~~ as a result of ~~2019 being the “off-year” of the two-year election cycle partially offset by an increase~~increased rates in ~~retransmission consent revenue. Excluding the 2019 Acquisitions, retransmission consent revenue increased $37 million due to increases in rates.~~

~~Excluding the 2019 Acquisitions~~2020. Combined, local and national ~~advertising~~ revenue ~~declined slightly, but~~decreased by $132 million in the 2020 nine-month period and production company revenue decreased by $30 million. We attribute these decreases primarily to the effects of the COVID-19 pandemic which has affected our customers and our sports and event programming. Local and national revenue from the broadcast of the 2020 Super Bowl on our FOX-affiliated stations was ~~partially offset by revenue~~approximately $3 million, compared to $5 million that 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. In addition, this decrease was also partly the result of no Olympic 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 on disposal of assets) ~~increased $549~~decreased $1 million, ~~or 126%,~~ to ~~$986~~$985 million. ~~The 2019 Acquisitions accounted for nearly all of the increase in our total broadcast~~Compensation expenses decreased by approximately $14 million in the ~~2019 nine-month period compared to the 2018~~2020 nine-month period. ~~The remaining difference represented an increase~~Non-payroll broadcast operating expenses increased by approximately $13 million which included retransmission expense that increased by $57 million in ~~retransmission expense,~~the 2020 nine-month period consistent with the increased retransmission consent revenue. ~~Broadcast~~Transaction related expenses ~~also included~~decreased by $38 million in the 2020 nine-month period compared to the transaction related expenses ~~including $29 million of charges for termination of certain sales representation agreements and $9 million of incentive compensation and severance costs each related to the 2019 Acquisitions~~incurred in ~~the~~ 2019 nine-month period. ~~Non-cash stock based compensation included in~~We recorded broadcast ~~expenses was~~non-cash stock-based amortization expense of $4 million and $3 million ~~and $2 million, respectively,~~ in the 2020 and 2019 ~~and 2018~~ nine-month ~~periods.~~periods, respectively.

Production Company Expenses. Production company expenses (before depreciation, amortization and loss (gain) on disposal of assets) ~~related to the production companies acquired~~decreased by approximately $25 million in the ~~Raycom Merger, were~~2020 nine-month period to $32 million, compared to $57 million in the 2019 nine-month period. ~~Non-compensation~~Compensation expenses ~~were $41 million, of which the primary components included the costs for the rights to broadcast sporting events of $26~~decreased by $3 million, and ~~professional services~~non-compensation expenses decreased by $22 million in the 2020 nine-month period. These decreases were primarily due to the effects of ~~$9 million. Total compensation expenses were $16 million.~~the COVID-19 pandemic.

Corporate and Administrative Expenses. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) ~~increased~~decreased by ~~$53~~$36 million, or ~~177%~~43%, to ~~$83~~$47 million in the ~~2019~~2020 nine-month period compared to the ~~2018~~2019 nine-month ~~period primarily as~~These decreases were the result of a ~~result~~decrease of $34 million of transaction related expenses ~~including $24 million~~incurred in ~~professional fees related to~~2019 that did not re-occur in the ~~2019 Acquisitions. We also incurred $10 million of incentive compensation and severance compensation related to the 2019 Acquisitions.~~current year. We recorded corporate non-cash stock-based amortization expense of $7$8 million and $4$7 million in the ~~2019~~2020 and ~~2018~~2019 nine-month periods, respectively.

Depreciation. Depreciation of property and equipment totaled ~~$60~~$69 million and ~~$41~~$60 million in the ~~2019~~2020 nine-month period and the ~~2018~~2019 nine-month ~~periods,~~period, respectively. Depreciation increased primarily due to the addition of depreciable assets acquired ~~as a part~~in the normal course of ~~the 2019 Acquisitions.~~business.

Amortization. Amortization of intangible assets totaled ~~$86~~$78 million and ~~$16~~$86 million in the ~~2019~~2020 nine-month period and the ~~2018~~2019 nine-month ~~periods,~~period, respectively. Amortization ~~increased~~expense decreased primarily due to ~~the definite-lived~~finite-lived intangible assets ~~acquired as a part of the 2019 Acquisitions.~~becoming fully amortized.

~~(Gain) Loss~~ Gainon Disposals of Assets, Net. We reported gains on disposals of assets of $23 million in the 2020 nine-month period and $27 million in the 2019 ~~nine-month period and $6 million in the 2018~~ nine-month period. These gains were primarily related to assets disposals from the FCC Repack process.

Interest Expense. Interest expense ~~increased $99~~decreased $30 million, or ~~134%~~17%, to ~~$173~~$143 million for the ~~2019~~2020 nine-month period compared to the ~~2018~~2019 nine-month period. This ~~increase~~decrease was attributable to ~~borrowings to finance the Raycom Merger, including, $1.4 billion under our senior credit facility~~both a decrease in loan principal and ~~$750 million of our 2027 Notes. The~~interest rates.The average interest rate, excluding amortization of deferred financing costs, on our total outstanding debt balance was ~~5.5%~~4.7% and ~~5.1%~~5.5% during the ~~2019~~2020 and ~~2018~~2019 nine-month periods, respectively. Our average outstanding debt balance was ~~$4.0~~$3.8 billion and ~~$1.8~~$4.0 billion during the ~~2019~~2020 and ~~2018~~2019 nine-month periods, respectively.

Income Tax Expense. We recognized income tax expense of ~~$44~~$67 million and ~~$43~~$44 million in the ~~2019~~2020 and ~~2018~~2019 nine-month periods, respectively. Our effective income tax rates were ~~34%~~26% and ~~26%~~34% in the ~~2019~~2020 and ~~2018~~2019 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~~2020 nine-month period, these estimates increased our statutory Federal income tax rate of 21% to our effective income tax rate of ~~34%~~26% as follows: state income taxes added ~~5%,~~4% and permanent differences between our U.S. GAAP income and taxable income added ~~2% and divestiture of component 2 goodwill resulted in an increase of 6%~~1%.

Liquidity and Capital Resources

General

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

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2020			2019
Net cash provided by operating activities	$	255		$	186		$	488		$	255
Net cash used in investing activities		(2,646	)		(33	)		(129	)		(2,646	)
Net cash provided by (used in) financing activities		1,298			(64	)		(104	)		1,298
Net (decrease) increase in cash	$	(1,093	)	$	89		$	255		$	(1,093	)

	As of				As of
	September 30, 2019		December 31, 2018		September 30, 2020		December 31, 2019
Cash	$	326	$	667	$	467	$	212
Restricted Cash	$	-	$	752
Long-term debt, including current portion	$	3,895	$	2,549	$	3,706	$	3,697
Series A perpetual preferred stock					$	650	$	650
Borrowing availability under Revolving Credit Facility	$	200	$	100	$	200	$	200

Net Cash Provided By (Used In) Operating, Investing and Financing Activities

Net cash provided by operating activities was $488 million in the 2020 nine-month period compared to $255 million in the 2019 nine-month ~~period compared to $186 million in the 2018 nine-month~~ period. The increase of ~~$69~~$233 million in the ~~2019~~2020 nine-month period was the result of a ~~$38~~$101 million ~~decrease~~increase in net income, offset by a ~~$66~~$29 million increase in net non-cash expenses, primarily depreciation of fixed assets and amortization of definite-lived intangible ~~assets related to the Raycom Merger.~~assets. Approximately ~~$41~~$103 million of cash was provided by changes in net working capital.

Net cash used in investing activities was ~~$2.6 billion~~$129 million in the ~~2019~~2020 nine-month period compared to net cash used in investing activities of ~~$33 million~~$2.6 billion for the ~~2018~~2019 nine-month period. The ~~increase~~decrease in the amount used was largely due to the acquisition and divestiture activities in the 2019 nine-month period, that did not re-occur in the 2020 nine-month period.

Net cash used ~~for~~in financing activities was approximately $104 million in the 2020 nine-month period compared to net cash provided by financing activities of $1.3 billion in the 2019 ~~Acquisitions~~nine-month period. We used approximately $39 million of cash to pay dividends to holders of our preferred stock and approximately $59 million to repurchase shares of our common stock on the open market in the 2020 nine-month period. Cash provided by financing activities in the 2019 nine-month period was primarily due to the borrowings under our 2019 Term Loan to finance our acquisition activities in the 2019 nine-month period.

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

Liquidity

~~As of September 30, 2019~~On October 19, 2020, we ~~had $14 million in debt principal payments due over the next twelve months. On November 1, 2019, we made a voluntary pre-payment of $100~~issued $800 million of 4.750% 2030 Notes. We used the net proceeds therefrom, after deducting transaction fees and estimated expenses, to redeem all of our ~~2019 Term Loan, using cash on hand. This pre-payment reduced~~outstanding 2024 Notes and to pay all fees and expenses in connection with the ~~lenders’ total loan commitment~~offering, including the redemption premium applicable to the 2024 Notes. We intend to use the remaining net proceeds for general corporate purposes, which could include the ~~2019 Term Loan by an equal amount and relieved our obligation~~repayment of outstanding debt from time to ~~make quarterly payments of loan principal on the 2019 Term Loan.~~time. Currently, we estimate that we will make approximately ~~$202~~$167 million in debt interest payments over the twelve months immediately following September 30, ~~2019.~~2020.

Although our cash flows from operations are subject to a number of risks and uncertainties, including the recent COVID-19 pandemic and related economic effects, 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~~2017 Term Loan 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~~2020 and ~~2018~~2019 nine-month periods were ~~$73~~$70 million and ~~$35~~$73 million, respectively. Excluding Repack, our capital expenditures ~~for the 2019 and 2018 nine months periods~~ were ~~$38~~$51 million and ~~$16~~$38 million, respectively. Our capitalized Repack costs for the ~~2019~~2020 and ~~2018~~2019 nine-month periods were ~~$34~~$19 million and ~~$17~~$34 million, respectively. As of September 30, ~~2019,~~2020, the amount requested from the FCC for Repack, but not yet received, was approximately $8$6 million. Excluding Repack, we expect that our capital expenditures will be approximately ~~$35~~$24 million to ~~$37~~$29 million during the remainder of ~~2019.~~2020. In addition, capital expenditures for Repack during the remainder of ~~2019~~2020 are expected to range between approximately $2$12 million ~~and $3~~to $19 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.

~~Subsequent~~ Other~~Acquisition~~

Our strategy includes the pursuit of accretive acquisition and/or investment opportunities. Currently we have commitments to acquire television stations and ~~Divestiture~~

~~On October 1, 2019, we acquired the~~to make investments in broadcasting, production, technology companies and other 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 orderthat total approximately $80 million. These transactions are expected to meet regulatory requirements, we divested our legacy stations in that market, WCAV-TV (CBS/FOX) and WVAW-TV (ABC). We expect that the divestiture will result in a gain of approximately $19 million that will be reportedclose in the fourth quarter of ~~2019.~~

~~Other~~2020 or early in 2021.

We file a consolidated federal income tax return and such state and local tax returns as are required. We made income tax payments (net of refunds) of approximately ~~$12~~$50 million and ~~$27~~$12 million in the ~~2019~~2020 and ~~2018~~2019 nine-month periods, respectively. We anticipate making income tax payments (net of refunds) of approximately ~~$13~~$7 million during the remainder of ~~2019.~~2020.

We have approximately ~~$776~~$438 million in federal operating loss carryforwards, that expire during the years ~~2021~~2023 through 2037. We expect to have federal taxable income in the carryforward periods, therefore we believe that ~~it is more likely than not that~~ these federal operating loss carryforwards will be fully utilized. Additionally, we have an aggregate of approximately ~~$837~~$677 million of various state operating loss carryforwards, of which we expect approximately ~~$564~~half million will be utilized.

During the 2019 nine-month period, we contributed $3 million to our defined benefit 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~~2019 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.~~1934 (the “Exchange Act”). 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 the evolving and uncertain nature of the COVID-19 pandemic and its impact on the Company, the media industry, and the economy in general, our results of operations, general and industry-specific economic conditions, future pension plan contributions, income tax payments, the expected impact of acquisitions ~~and divestitures~~ 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~~2019 Form 10-K, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 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.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We believe that the market risk of our financial instruments as of September 30, ~~2019~~2020 has not materially changed since December 31, ~~2018. The~~2019. Our market risk profile as of December 31, ~~2018~~2019 is disclosed in our ~~2018~~2019 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 nine-month period ended 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 nine-month period ended September 30, ~~2019, we began implementing~~2020, the effects of the COVID-19 pandemic have caused us to implement changes in our working environment and possibly our internal ~~control~~controls over financial ~~reporting in connection with~~reporting. We are evaluating the ~~Raycom Merger. These changes will continue to be identified~~impact of these disruptions and ~~implemented during~~are evaluating the ~~remainder of 2019.~~impact on our controls.

~~PART~~PART II. OTHER INFORMATION

Item 1A. Risk Factors

~~Please refer~~In addition to the other information set ~~out under~~forth in this Quarterly Report on Form 10-Q, you should carefully consider the ~~heading “Risk Factors”~~risk factors that affect our business and financial results that are discussed in Part I, Item 1A, inof our ~~2018~~Annual Report on Form 10-K for ~~a description~~the fiscal year ended December 31, 2019 and Part II, Item 1A, of ~~risk~~our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (the “First Quarter 2020 10-Q”). These 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 alsocould materially adversely affect our business, financial condition, ~~and~~liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. There have been no material changes to the Company’s risk factors from those disclosed in the ~~future.~~2019 10-K and the First Quarter 2020 10-Q.

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

~~In each of March and~~On November ~~2004, the~~5, 2019, our Board of Directors ~~of the Company~~ authorized the ~~Company to~~ repurchase of 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~~$150 million of our outstanding common stock and/or our Class A common stock prior to December 31, ~~2019~~2022 (the ~~“2016~~“2019 Repurchase Authorization”). The 2019 Repurchase Authorization superseded all prior repurchase authorizations. The 2019 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 Plan”).

On December 15, 2019, we entered into an Issuer Repurchase Plan (the “2019 IRP”), under Rules 10b-18 and 10b5-1 of the Exchange Act. The 2019 IRP facilitated the orderly repurchase of our common stock through the establishment of the parameters for repurchases of our shares. During the second quarter of 2020, we terminated the 2019 IRP. Later in the second quarter of 2020, we repurchased additional shares of our common stock on the open market under the 2019 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,~~2020, all of which were pursuant to the ~~2016~~2019 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

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, 2020 through July 31, 2020:		-	$	0.00		-	$	79,957,722

August 1, 2020 through August 31, 2020:		649,000	$	15.64		649,000	$	69,805,909

September 1, 2020 through September 30, 2020:		-	$	0.00		-	$	69,805,909

Total		649,000	$	15.64		649,000

(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~~and/or our Class A common stock ~~or our common stock,~~ under the ~~2004-2006~~2019 Repurchase Authorization.

Item 6. Exhibits

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

Exhibit Number		Description of Document

4.1		Indenture, dated as of October 19, 2020, by and among Gray Television, Inc., the Guarantors signatory thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed on October 19, 2020)
4.2		Form of 4.750% Senior Note due 2030 (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K filed on October 19, 2020)
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~~ The cover page from Gray Television, Inc.’s Quarterly Report on Form 10-Q for the fiscal period ended September 30, 2020 has been formatted in Inline ~~XBRL and contained in Exhibit 101)~~XBRL.

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: November 5, 2020	By:	/s/ James C. Ryan
		James C. Ryan
		Executive Vice President and Chief Financial Officer

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

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

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

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)
~~93,633,773~~89,112,965 shares outstanding as of October 31, ~~201~~20920		~~6,881,192~~7,048,006 shares outstanding as of October 31, ~~201~~20920


PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements

	Condensed consolidated balance sheets (Unaudited) - September 30, ~~2019~~2020 and December 31, ~~2018~~2019	3

	Condensed consolidated statements of operations (Unaudited) - three-months and nine-months ended September 30, ~~2019~~2020 and ~~2018~~2019	5

	Condensed consolidated statement of stockholders' equity (Unaudited) –- three, six and nine-months ended September 30, ~~2019~~2020 and ~~2018~~2019	6

	Condensed consolidated statements of cash flows (Unaudited) - nine-months ended September 30, ~~2019~~2020 and ~~2018~~2019	8

	Notes to condensed consolidated financial statements (Unaudited) - September 30, ~~2019~~2020	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3124

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3830

Item 4.	Controls and Procedures	3830

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors	3831

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3831

Item 6.	Exhibits	4033

SIGNATURES		4134

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)

	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

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

	September 30, 2019
	Three Months		Nine Months
	Ended		Ended
Transaction Related Expenses by type:
Legal, consulting and other professional fees	$	1	$	24
Incentive compensation and other severance costs		1		19
Termination of sales representation agreements		-		29
Total transaction related expenses	$	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	$	38
Corporate and administrative		1		34
Total transaction related expenses	$	2	$	72

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