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, 2021, which was derived from the Company’s audited financial statements as of December 31, 2021, and our accompanying unaudited condensed consolidated financial statements as of ~~March 31,~~June 30, 2022 and for the ~~three~~~~-month~~ periods ended ~~March 31,~~June 30, 2022 and 2021, 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. We manage our business on the basis of two operating 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, 2021 (the “2021 Form 10-K”). Our financial condition as of, and operating results for the three and six-months ended ~~March 31,~~June 30, 2022, 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, 2022.

Overview. We are a multimedia company headquartered in Atlanta, Georgia. We are the nation’s largest owner of top-rated local television stations and digital assets in the United States. Our television stations serve 113 television markets that collectively reach approximately 36 percent of US television households. This portfolio includes 80 markets with the top-rated television station and 100 markets with the first and/or second highest rated television station. We also own video program companies Raycom Sports, Tupelo ~~Honey,~~Media Group (formerly Tupelo Honey), PowerNation Studios, as well as the studio production facilities Assembly Atlanta and Third Rail Studios.

Investments in Broadcasting, Production and Technology Companies. We have investments in several television, production and technology companies. We account for all material investments in which we have significant influence over the investee under the equity method of accounting. Upon initial investment, we record equity method investments at cost. The amounts initially recognized are subsequently adjusted for our appropriate share of the net earnings or losses of the investee. We record any investee losses up to the carrying amount of the investment plus advances and loans made to the investee, and any financial guarantees made on behalf of the investee. We recognize our share in earnings and losses of the investee as miscellaneous (expense) income, net in our consolidated statements of operations. Investments are also increased by contributions made to and decreased by the distributions from the investee. The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired.

Investments in non-public businesses that do not have readily determinable pricing, and for which the Company does not have control or does not exert significant influence, are carried at cost less impairments, if any, plus or minus changes in observable prices for those investments. Gains or losses resulting from changes in the carrying value of these investments are included as miscellaneous (expense) income, net in our consolidated statements of operations. These investments are reported together as a non-current asset on our consolidated balance sheets.

Use of 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. Our actual results could differ materially from these estimated amounts. Our most significant estimates are our allowance for 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.

Earnings Per Share. We compute basic earnings per share by dividing net income available to common stockholders by the weighted-average number of 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, in the diluted weighted-average shares outstanding calculation, unless their inclusion would be antidilutive.

The following table reconciles basic weighted-average ~~common~~ shares outstanding to diluted weighted-average ~~common~~ shares outstanding for the three~~-months~~ and six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively (in millions):

Accumulated Other Comprehensive Loss. Our accumulated other comprehensive loss balances as of ~~March 31,~~June 30, 2022 and December 31, 2021, consist of adjustments to our pension liability and the related income tax effect. Our comprehensive income for the ~~three~~six~~-months~~-month periods ended ~~March 31,~~June 30, 2022 and 2021 consisted solely of our net income. As of ~~March 31,~~June 30, 2022 and December 31, 2021 the balances were as follows (in millions):

Property and Equipment. Property and equipment are carried at cost, or in the case of acquired businesses, at fair value. 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):

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 gain or loss is reflected in income or expense for the period.

In April 2017, the Federal Communications Commission (“FCC”) began the process of requiring certain television stations to change channels and/or modify their transmission facilities (“Repack”). The majority of our costs associated with 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):

Accounts Receivable and Allowance for 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 credit losses is an estimate of expected losses over the remaining contractual life of our 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 also apply additional allowance when warranted by specific facts and circumstances. We generally write off account receivable balances when the customer files for bankruptcy or when all commonly used methods of collection have been exhausted.

The following table provides a roll-forward 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):

Recent Accounting Pronouncements. In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848). In January 2021, the FASB issued an amendment to ASU 2020-04, ASU 2021-01, Reference Rate Reform (Topic 848), in response to concerns about structural risks of interbank offered rates, and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”). The amendments in this ASU apply to all entities that elect to apply the optional guidance in Topic 848. An entity may elect to apply the amendments in this ASU on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final standard, up to the date that financial statements are available to be issued. We are currently evaluating the applicability of this guidance.

In addition to the accounting standard described above, once implemented, certain amounts in our disclosures of revenues have been reclassified to conform to the current presentation. Beginning in 2022, we present our “Core” advertising revenue. In prior periods, we had presented separate line items of local advertising revenue and national advertising revenue and these amounts are now combined into Core advertising 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.~~sheets.

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. These deposits are recorded as deposit liabilities on our balance ~~sheet.~~sheets. 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.~~sheets. We generally require amounts payable under advertising contracts with our political advertising customers to be paid for in advance. We record the receipt of this cash as a deposit liability. Once the advertisement has been broadcast, the revenue is earned, and we record the revenue and reduce the balance in this deposit liability account. We recorded $13 million of revenue in the ~~three~~six-months ended ~~March 31,~~June 30, 2022 that was included in the deposit liability balance as of December 31, 2021. The deposit liability balance is included in deferred revenue on our condensed consolidated balance sheets. The deposit liability balance was ~~$16~~$19 million and $13 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, 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):

On April 1, 2022, we acquired television station WKTB-TV the Telemundo Network Group, LLC affiliate in the Atlanta, Georgia market (DMA 10), as well as certain digital media assets, for a combined purchase price of $31 million, using cash on hand (the “Telemundo Atlanta Transaction”).

The following table summarizes the preliminary values of the assets acquired and resulting goodwill of the Telemundo Atlanta Transaction (in millions):

These amounts are based upon management’s preliminary estimate of the fair values using valuation techniques including income, cost and market approaches. In determining the preliminary fair value of the acquired assets and assumed liabilities, the fair values were determined based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.

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

Amounts related to network affiliation and other intangible assets are being amortized over their estimated useful lives of approximately 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, as well as future synergies that we expect to generate from each acquisition. The goodwill recognized related to this acquisition is deductible for income tax purposes.

As of ~~March 31,~~June 30, 2022 and December 31, 2021, long-term debt consisted of obligations under our 2019 Senior Credit Facility (as defined below), our 5.875% senior notes due 2026 (the “2026 Notes”), our 7.0% senior notes due 2027 (the “2027 Notes”), our 4.75% senior notes due 2030 (the “2030 Notes”) and our 5.375% notes due 2031 (the “2031 Notes”), as follows (in millions):

As of ~~March 31,~~June 30, 2022, the interest rates on the balances outstanding under the 2017 Term Loan, the 2019 Term Loan and the 2021 Term Loan were ~~2.7%~~3.6%, ~~2.7%~~3.6% and ~~3.2%~~4.1% respectively. We expect that interest rates applicable to the 2019 Senior Credit Facility will be ~~modifed~~modified upon the implementation of a LIBOR replacement rate that will apply to our current and future borrowings under the 2019 Senior Credit Facility. The 2017 Term Loan, 2019 Term Loan and the 2021 Term Loan mature on February 7, 2024, January 2, 2026 and December 1, 2028, respectively.

As of ~~March 31,~~June 30, 2022, the aggregate minimum principal maturities of our long term debt for the remainder of 2022 and the succeeding ~~five~~5 years were as follows (in millions):

As of ~~March 31,~~June 30, 2022, there were no significant restrictions on the ability of ~~our~~Gray Television, Inc.'s subsidiaries to distribute cash to usGray or to the guarantor subsidiaries. The 2019 Senior Credit Facility contains affirmative and restrictive covenants with which we must comply. The 2026 Notes, the 2027 Notes, the 2030 Notes and the 2031 Notes also include covenants with which we must comply. As of ~~March 31,~~June 30, 2022 and December 31, 2021, we were in compliance with all required covenants under all our debt obligations.

For all of our interest bearing obligations, we made interest payments of approximately ~~$44~~$153 million and ~~$32~~$89 million during the ~~three~~six-months ended ~~March 31,~~June 30, 2022 and 2021, respectively. During the six months ended June 30, 2022, we capitalized $2 million of interest payments related to our Assembly Atlanta project. We did not capitalize any interest payments during the ~~three~~six-months ended ~~March 31,~~June 30, 2021.

In the six-months ended June 30, 2022, orwe paid the required principal reductions of $8 million of our ~~2021.~~2021 Term Loan and voluntarily pre-paid $50 million of the outstanding principal balance of our 2017 Term Loan.

We measure certain assets and liabilities at fair value, which are classified by the FASB Codification within the fair value hierarchy as level 1, 2, or 3, on the basis of whether the measurement employs observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions and consider information about readily available market participant assumptions.

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The use of different market assumptions or methodologies could have a material effect on the fair value measurement.

The carrying amounts of accounts receivable, prepaid and other current assets, accounts payable, employee compensation and benefits, accrued interest, other accrued expenses, and deferred revenue approximate fair value at both ~~March 31,~~June 30, 2022 and December 31, 2021.

At ~~each of~~ ~~March 31,~~June 30, 2022 and December 31, 2021, the carrying amount of our long-term debt was $6.7 billion and $6.8 ~~billion. The~~billion, respectively, and the fair value at ~~March 31, 2022~~ ~~and~~ ~~December 31, 2021~~ was ~~$6.7~~$6.1 billion and $6.9 billion, respectively. The fair value of our long-term debt is based on observable estimates provided by third party financial professionals as of each date, and as such is classified within Level 2 of the fair value hierarchy.

We are 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 common stock and Class A common stock are identical, except that our Class A common stock has 10 votes per share and our common stock has one 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. The Board of Directors declared a quarterly cash dividend of $0.08 per share on our common stock and Class A common stock to shareholders of record on each of March 15 and June 15, 2022 and 2021, payable on March 31 and June 30, 2022 and 2021. The total ~~dividend~~dividends declared and paid ~~was approximately $8 million~~ during ~~each of~~ the ~~three~~six~~-month periods ending~~-months ended ~~March 31,~~June 30, 2022 and ~~2021.~~2021 was approximately $15 million.

On May 5, 2022, our shareholders approved, and our Board of Directors adopted, our 2022 Equity and Incentive Compensation Plan (the “2022 EICP”). The 2022 EICP replaced our 2017 Equity and Incentive Compensation Plan. Under the 2022 EICP, 5.5 million shares of our common stock and 2.2 million shares of our Class A common stock were added to our shares authorized for issuance. 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 Class A common stock or common stock. As of ~~March 31,~~June 30, 2022, we had reserved ~~2,071,292~~7.5 million shares and ~~597,074~~2.8 million shares of our common stock and Class A common stock, respectively, for future issuance under various employee benefit plans. As of December 31, 2021, we had reserved ~~2,821,480~~2.8 million shares and ~~847,522~~0.8 million shares of our common stock and Class A common stock, respectively, for future issuance under various employee benefit plans.

During the ~~three~~six-months ended ~~March 31,~~June 30, 2022, we ~~have~~ ~~not~~repurchased ~~any~~2.6 million shares of our ~~common stock or Class A~~ common stock under our share repurchase ~~programs.~~programs for $50 million. As of ~~March 31,~~June 30, 2022, approximately ~~$174~~$124 million was available to repurchase shares of our common stock and/or Class A common stock under these programs.

The components of our net periodic pension benefit are included in miscellaneous income in our ~~statement~~condensed consolidated statements of operations. During the ~~three~~six-months ended ~~March 31,~~June 30, 2022, the amount recorded as a benefit was not material, and we did not make a contribution to our defined benefit pension ~~plan.~~plans. During the remainder of 2022, we expect to contribute $4 million to ~~this plan.~~these plans.

During the ~~three~~six~~-months~~-month period ended ~~March 31,~~June 30, 2022, we contributed $5$9 million in matching cash contributions, and shares of our common stock valued at ~~approximately~~ $7 million for our 2021 discretionary profit-sharing contributions, to the 401(k) plan. The discretionary profit-sharing contribution was recorded as an expense in 2021 and accrued as of December 31, 2021. ~~During~~Based upon employee participation as of June 30, 2022, during the remainder of 2022, we expect to contribute ~~approximately~~ ~~$11~~$7 million of matching cash contributions to this plan.

8. Stock-based Compensation

~~Stock-based Compensation~~

We recognize compensation expense for stock-based payment awards made to our employees, consultants and directors. ~~Our current stock-based compensation plan, is the~~ ~~2017~~ ~~Equity and Incentive Compensation Plan (the~~ ~~“2017~~ ~~EICP”). Our~~The following table provides our stock-based compensation expense and related income tax benefit for the three~~-months~~ and six-month periods ended ~~March 31,~~June 30, 2022 and 2021 ~~respectively~~ (in millions).:

							Three Months Ended						Six Months Ended
	Three Months Ended March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
Stock-based compensation expense, gross	$	5		$	4		$	6		$	4		$	11		$	7
Income tax benefit at our statutory rate associated with stock-based compensation		(1	)		(1	)		(2	)		(1	)		(3	)		(1	)
Stock-based compensation expense, net	$	4		$	3		$	4		$	3		$	8		$	6

All shares of common stock and Class A common stock underlying ~~Restricted stock,~~outstanding restricted stock units and performance awards are counted as issued at target levels under the ~~2017~~2022 EICP for purposes of determining the number of shares available for future issuance.

A summary of restricted common stock and Class A common stock ~~activities~~activity for the ~~three~~six~~-months~~-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively, is as follows:

	Three Months Ended March 31,										Six Months Ended
	2022					2021					June 30, 2022					June 30, 2021
				Weighted-					Weighted-					Weighted-					Weighted-
				Average					Average					average					average
	*Number*			*Grant Date*		*Number*			*Grant Date*					Grant Date					Grant Date
	of			*Fair Value*		of			*Fair Value*		*Number of*			*Fair Value*		*Number of*			*Fair Value*
	*Shares*			*Per Share*		*Shares*			*Per Share*		*Shares*			*Per Share*		*Shares*			*Per Share*
Restricted common stock:
Outstanding - beginning of period		1,035,728		$	19.69		917,533		$	16.84
Restricted stock - common:
Outstanding - beginning of period (1)												1,035,728		$	19.69		917,533		$	16.84
Granted (1)		333,382			22.16		296,042			18.21		400,927		$	21.68		343,402		$	18.73
Vested		(294,558	)		18.56		(502,241	)		16.10		(341,918	)	$	19.03		(580,963	)	$	15.48
Outstanding - end of period		1,074,552		$	20.76		711,334		$	17.94
Outstanding - end of period (1)												1,094,737		$	20.62		679,972		$	18.96

Restricted Class A common stock:
Outstanding - beginning of period		720,421		$	18.22		480,042		$	16.10
Restricted stock - Class A common:
Outstanding - beginning of period (1)												720,421		$	18.22		480,042		$	16.10
Granted (1)		250,448			20.52		233,425			17.67		250,448		$	20.52		233,425		$	17.67
Vested		(229,758	)		16.99		(248,539	)		15.00		(229,758	)	$	16.99		(248,539	)	$	15.00
Outstanding - end of period		741,111		$	19.38		464,928		$	17.47
Outstanding - end of period (1)												741,111		$	19.38		464,928		$	17.47

Restricted stock units - common stock:
Outstanding - beginning of period		125,247		$	19.02		90,184		$	18.92		125,247		$	19.02		90,184		$	18.92
Granted		259,079			23.87		95,115			19.05		259,079		$	23.87		95,115		$	19.05
Vested		(108,921	)		19.03		(60,052	)		18.92		(108,921	)	$	19.03		(60,052	)	$	18.92
Forfeited		(1,260	)		19.05		0			0		(1,260	)	$	19.05		0		$	0.00
Outstanding - end of period		274,145		$	23.60		125,247		$	19.02		274,145		$	23.60		125,247		$	19.02

(1)

~~For awards subject to future performance conditions, amounts assume target performance.~~

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

9. Leases

~~Leases~~

We determine if an arrangement is a lease at its inception. Operating 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 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 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 are used in determining our operating lease liabilities at lease inception may include options to extend or terminate the leases when it is reasonably certain that we will exercise such options. We amortize our ROU assets as operating lease expense generally on a straight-line basis over the lease term and classify both the lease amortization and imputed interest as operating expenses. We have lease agreements with lease and non-lease components, and in such cases, we generally account for the components separately with only the lease component included in the calculation of the ~~right of use~~right-of-use asset and lease liability.

We have operating leases that primarily relate to certain of our facilities, data centers and vehicles. As of ~~March 31,~~June 30, 2022, our operating leases substantially have remaining terms of one year to 99 years, some of which include options to extend and/or terminate the leases. We do not 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 other assets and accounts payable and other liabilities as presented in net cash provided by operating activities in our condensed consolidated statement of cash flows for the ~~three~~six-months ended ~~March 31,~~June 30, 2022.

As of ~~March 31,~~June 30, 2022, the ~~weighted average~~weighted-average remaining term of our operating leases was approximately 10 years. The ~~weighted average~~weighted-average discount rate used to calculate the values associated with our operating leases was 6.67%. The table below describes the nature of lease expense and classification of operating lease expense recognized in the three and six-months ended ~~March 31,~~June 30, 2022 and 2021, respectively (in millions):

					Three Months Ended				Six Months Ended
	Three Months Ended March 31,				June 30,				June 30,
	2022		2021		2022		2021		2022		2021
Lease expense
Operating lease expense	$	4	$	3	$	4	$	3	$	8	$	6
Short-term lease expense		1		1		0		0		1		1
Total lease expense	$	5	$	4	$	4	$	3	$	9	$	7

The maturities of operating lease liabilities as of ~~March 31,~~June 30, 2022, for the remainder of 2022 and the succeeding five years were as follows (in millions):

Year ending December 31,	Operating Leases			Operating Leases
Remainder of 2022	$	11		$	7
2023		12			13
2024		12			12
2025		11			11
2026		9			9
Thereafter		47			48
Total lease payments	$	102			100
Less: Imputed interest		(29	)		(28	)
Present value of lease liabilities	$	73		$	72

10. Commitments and Contingencies

~~Commitments and Contingencies~~

Legal Matters. 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.

Assembly Atlanta. On June 1, 2022, we announced that we have entered into a long-term agreement with NBCUniversal Media, LLC (“NBCU”) for NBCU to lease and operate new state-of-the-art studio facilities at our Assembly Atlanta development that is currently under construction.

Assembly Atlanta is expected to be a 135-acre mixed-use real estate complex centered around the studio industry at the former site of the General Motors Assembly Plant, located in the City of Doraville, Georgia. The Assembly Atlanta development includes the 43 acre Assembly Studios complex.

Under the terms of the lease, NBCU will manage all studio and production facilities on-site within the Assembly Studios complex, including Gray’s own studio facilities and Gray’s Third Rail Studios. This arrangement is expected to leverage NBCU’s extensive experience and expertise in managing studio lots, ensure consistency across all the studio operations and leasing opportunities for third parties, and permit Gray to retain its focus on its own video production business.

In addition to the Assembly Studios complex, current plans for Assembly Atlanta include mixed use and commercial buildings around a town center concept, when completed in the next five to seven years. We anticipate selling and leasing various parcels to third parties to construct and operate related retail, residential, office, and other amenities within the Assembly Atlanta complex, outside of Assembly Studios. We expect that our capital expenditures related to Assembly Atlanta will be within a range of $130 million to $140 million in 2022, and will be within a range of $80 million to $90 million in 2023. These capital expenditure amounts are net of currently anticipated proceeds from property sales and certain other incentive payments that we expect to receive.

11. Goodwill and Intangible Assets

A summary of changes in our goodwill and other intangible assets, on a net basis, for the six-months ended June 30, 2022 is as follows (in millions):

	Net Balance at									Net Balance at
	December 31,		Acquisitions							June 30,
	2021		and Adjustments		Impairments		Amortization			2022

Goodwill	$	2,649	$	8	$	-	$	-		$	2,657
Broadcast licenses		5,303		11		-		-			5,314
Finite-lived intangible assets		825		18		-		(104	)		739
Total intangible assets net of accumulated amortization	$	8,777	$	37	$	-	$	(104	)	$	8,710

1618

~~10.~~

~~Goodwill and Intangible Assets~~

A summary of the changes in our goodwill, on a gross basis, for the six-months ended June 30, 2022, is as follows (in millions):

	As of							As of
	December 31,			Acquisitions				June 30,
	2021			and Adjustments		Impairments		2022

Goodwill, gross	$	2,748		$	8	$	-	$	2,756
Accumulated goodwill impairment		(99	)		-		-		(99	)
Goodwill, net	$	2,649		$	8	$	-	$	2,657

As of ~~March 31,~~June 30, 2022 and December 31, 2021, our intangible assets and related accumulated amortization consisted of the following (in millions):

	As of March 31, 2022							As of December 31, 2021							As of June 30, 2022							As of December 31, 2021
			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	$	5,362	$	(53	)	$	5,309	$	5,356	$	(53	)	$	5,303	$	5,367	$	(53	)	$	5,314	$	5,356	$	(53	)	$	5,303
Goodwill		2,649		0			2,649		2,649		0			2,649		2,657		0			2,657		2,649		0			2,649
	$	8,011	$	(53	)	$	7,958	$	8,005	$	(53	)	$	7,952	$	8,024	$	(53	)	$	7,971	$	8,005	$	(53	)	$	7,952

Intangible assets subject to amortization:
Network affiliation agreements	$	204	$	(55	)	$	149	$	204	$	(44	)	$	160	$	218	$	(66	)	$	152	$	204	$	(44	)	$	160
Other finite-lived intangible assets		1,051		(427	)		624		1,051		(386	)		665
Other definite lived intangible assets																1,055		(468	)		587		1,051		(386	)		665
	$	1,255	$	(482	)	$	773	$	1,255	$	(430	)	$	825	$	1,273	$	(534	)	$	739	$	1,255	$	(430	)	$	825

Total intangible assets	$	9,266	$	(535	)	$	8,731	$	9,260	$	(483	)	$	8,777
Total intangibles															$	9,297	$	(587	)	$	8,710	$	9,260	$	(483	)	$	8,777

Amortization expense for the ~~three~~six-months ended ~~March 31,~~June 30, 2022 and 2021 was ~~$52~~$104 million and ~~$26~~$53 million, respectively. Based on the current amount of intangible assets subject to amortization, we expect that amortization expense for the remainder of 2022 will be approximately ~~$153~~$103 million, and, for the succeeding five years, amortization expense will be approximately as follows: 2023, ~~$194~~$197 million; 2024, ~~$129~~$132 million; 2025, ~~$118~~$121 million; 2026, ~~$88~~$91 million; and 2027, ~~$46~~$49 million. If and when acquisitions and dispositions occur in the future, actual amounts may vary materially from these estimates.

~~11.~~

12. Income Taxes

~~Income Taxes~~

For the three~~-months~~-month and six-month periods ended ~~March 31,~~June 30, 2022 and 2021, our income tax expense and effective income tax rates were as follows (dollars in millions):

							Three Months Ended						Six Months Ended
	Three Months Ended March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
Income tax expense	$	21		$	15		$	38		$	15		$	59		$	30
Effective income tax rate		25	%		28	%		28	%		28	%		27	%		28	%

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 ~~three~~six-months ended ~~March 31,~~June 30, 2022, these estimates increased or decreased our statutory Federal income tax rate to our effective income tax rate of ~~25%~~27% as ~~a result of~~follows: state income taxes ~~that~~ added 4%5% and permanent differences between our U.S. GAAP income and taxable income resulted in an increase of 1%. For the ~~three~~six-months ended ~~March 31,~~June 30, 2021, these estimates increased or decreased our statutory Federal income tax rate to our effective income tax rate of 28% as follows: state income taxes added 5%; and permanent differences between our U.S. GAAP income and taxable income resulted in an increase of 2%.

During the ~~first~~six ~~quarter of~~-months ended June 30, 2022,we made no ~~material~~$119 million of federal orand state income tax ~~payments.~~payments, net of refunds. During the remainder of 2022, we anticipate making income tax payments ~~net~~(net of ~~refunds,~~our expected $21 million refund) of ~~$170~~approximately $70 million to ~~$190~~$90 million. As of ~~March 31,~~June 30, 2022, we have an aggregate of approximately ~~$324~~$337 million of various state operating loss carryforwards, of which we expect that approximately 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. During 2020, we carried back certain net operating losses resulting in a refund of $21 million, that is currently outstanding.

~~12.~~

13. Segment Information

~~Segment information~~

The Company operates in 2 business segments: broadcasting and production companies. The broadcasting segment operates television stations in local markets in the U.S. The production companies segment includes the production of television 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 three months ended March 31, 2022:	Broadcast			Companies			Other			Consolidated
As of and for the six months ended June 30, 2022:													Broadcasting			Companies			Other			Consolidated

Revenue (less agency commissions)	$	804		$	23		$	0		$	827		$	1,659		$	36		$	0		$	1,695
Operating expenses before depreciation, amortization and gain on disposal of assets, net		530			26			28			584
Operating expenses before depreciation, amortization and gain on disposal of assets, net:														1,058			40			53			1,151
Depreciation and amortization		80			3			1			84			159			6			2			167
Gain on disposal of assets, net		(5	)		0			0			(5	)		(5	)		0			0			(5	)
Operating expenses		605			29			29			663			1,212			46			55			1,313
Operating income (loss)	$	199		$	(6	)	$	(29	)	$	164		$	447		$	(10	)	$	(55	)	$	382

Interest expense	$	0		$	0		$	79		$	79		$	0		$	0		$	160		$	160
Capital expenditures (excluding business combinations)	$	17		$	30		$	0		$	47		$	66		$	93		$	0		$	159
Goodwill	$	2,604		$	45		$	0		$	2,649		$	2,612		$	45		$	0		$	2,657
Total Assets	$	10,548		$	281		$	305		$	11,134
Total assets													$	10,570		$	343		$	210		$	11,123

For the three months ended March 31, 2021:
For the six months ended June 30, 2021:

Revenue (less agency commissions)	$	530		$	14		$	0		$	544		$	1,067		$	24		$	0		$	1,091
Operating expenses before depreciation, amortization and gain on disposal of assets, net		361			17			18			396
Operating expenses before depreciation, amortization and gain on disposal of assets, net:														715			26			43			784
Depreciation and amortization		47			3			1			51			95			6			2			103
Gain on disposal of assets, net		(4	)		0			0			(4	)		(5	)		0			0			(5	)
Operating expenses		404			20			19			443			805			32			45			882
Operating income (loss)	$	126		$	(6	)	$	(19	)	$	101		$	262		$	(8	)	$	(45	)	$	209

Interest expense	$	0		$	0		$	48		$	48		$	0		$	0		$	95		$	95
Capital expenditures (excluding business combinations)	$	13		$	0		$	0		$	13		$	28		$	6		$	87		$	121

As of December 31, 2021:

Goodwill	$	2,604		$	45		$	0		$	2,649		$	2,604		$	45		$	0		$	2,649
Total Assets	$	10,592		$	269		$	247		$	11,108
Total assets													$	10,592		$	269		$	247		$	11,108

~~13.~~

~~Subsequent Events~~

On ~~April 1, 2022,~~ ~~we acquired the assets of television station WKTB-CD the Telemundo Network Group, LLC affiliate serving the Atlanta, Georgia market (DMA~~ 10) for $30 million in cash, subject to certain adjustments (the “Telemundo Atlanta Transaction”) from the Korean American Television Broadcasting Corporation, Capital Media Group, LLC and Surge Digital Media, LLC. Due to the proximity of the closing date of the transaction to the filing date of this report we are unable to present a preliminary purchase price allocation for the acquired business. The $1 million escrow deposit payment related to this transaction is included in our other non-current assets at ~~March 31, 2022,~~ and is included in the acquisitions of television businesses and licenses, net of cash acquired line 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.

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, 2021 (the “2021 Form 10-K”) filed with the SEC.

Business Overview. We are a multimedia company headquartered in Atlanta, Georgia, that is the nation’s second largest television broadcaster in terms of revenues. We are the nation’s largest owner of top-rated local television stations and digital assets in the United States. Our television stations serve 113 television markets that collectively reach approximately 36 percent of US television households. This portfolio includes 80 markets with the top-rated television station and 100 markets with the first and/or second highest rated television station. We also own video program companies Raycom Sports, Tupelo ~~Honey,~~Media Group (formerly Tupelo Honey), PowerNation Studios, as well as the studio production facilities Assembly Atlanta and Third Rail Studios.

Our ~~operating~~ revenues are derived primarily from ~~broadcast~~broadcasting and internet advertising, retransmission consent fees and, to a lesser extent, other sources such as production of television and event programming, television commercials, tower rentals and management fees. For the ~~three-months~~six-months ended ~~March 31,~~June 30, 2022 and 2021, we generated revenue of ~~$827 million~~$1.7 billion and ~~$544 million,~~$1.1 billion, respectively.

Impact of the COVID-19 Global Pandemic and Related Government Restrictions on our Markets and Operations. The impact of the COVID-19 global pandemic and measures to prevent its spread continue to affect our businesses in a number of ways. The extent to which the COVID-19 global pandemic impacts our business, financial condition, results of operations and cash flows will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the pandemic; the negative impact it has on global and regional economies and economic activity, changes in advertising customers and consumer behavior, impact of governmental regulations that might be imposed in response 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 global pandemic subsides. The COVID-19 global pandemic’s impact on the capital markets could impact our cost of borrowing. See “The “COVID-19” global pandemic has had and is expected to continue to have an adverse impact on our business.” in Part I, Item 1A. Risk Factors of our 2021 Form 10-K.

Impact of Recent Acquisitions and Divestitures. As more fully described in our 2021 Annual Report on Form 10-K, during 2021 we completed several transactions that have, collectively, had a significant impact on our financial condition, results of operations and cash flows. We refer to these transactions collectively as the “2021 Acquisitions”. The impact of the 2021 Acquisitions is described in more detail in the following discussion of our operating results. The 2021 Acquisitions included:

●

On April 7, 2021, we acquired land in the Atlanta suburb of Doraville, Georgia for an initial investment of approximately $80 million of cash. We acquired this property, in part, for the development of studio production facilities, currently in-progress. We refer to this development as “Assembly Atlanta”;

●

On August 2, 2021, we completed the acquisition of all the equity interests of Quincy Media, Inc. Net of divestitures to facilitate regulatory approvals, this transaction added 10 television stations in eight local markets. Net of divestitures the ~~the~~ purchase price was $553 million;

●

On September 13, 2021, we completed the acquisition of Third Rail Studios for $27 million. The transaction represented an initial step in the broader development of Assembly Atlanta;

●

On November 9, 2021, to fund a portion of the purchase price for the Meredith Local Media Group we issued $1.3 billion of our 2031 Notes;

●

On December 1, 2021, to fund a portion of the purchase consideration for the Meredith Local Media Group we amended our Senior Credit facility and borrowed $1.5 billion under the 2021 Term Loan; and

●

On December 1, 2021, we completed the acquisition of the Meredith Local Media Group for $2.8 billion net of one divestiture to facilitate regulatory approvals. This transaction added 17 television stations in 12 local markets to our operations.

The following table summarizes the “Transaction Related Expenses” incurred in connection with the 2021 Acquisitions during the ~~three-months~~three and six-months ended ~~March 31,~~June 30, 2022 and 2021, by type and by financial statement line ~~item. Transaction Related Expenses in the three-months ended March 31, 2021 were not material~~item (in millions):

	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021		2022		2021
Transaction Related Expenses by type:
Legal, consulting and other professional fees	$	2	$	1	$	1	$	14	$	3	$	15
Incentive compensation and other severance costs		1		-		1		-		2		-
Total Transaction Related Expenses	$	3	$	1
Total transaction related expenses					$	2	$	14	$	5	$	15

Transaction Related Expenses by financial statement line item:
Operating expenses before depreciation, amortization and loss (gain) on disposal of assets, net:
Operating expenses before depreciation, amortization and gain on disposal of assets, net:
Broadcasting	$	2	$	-	$	2	$	-	$	4	$	-
Corporate and administrative		1		1		-		7		1		8
Total Transaction Related Expenses	$	3	$	1
Miscellaneous expense, net						-		7		-		7
Total transaction related expenses					$	2	$	14	$	5	$	15

Due to the significant effect that the 2021 Acquisitions have had on our results of operations, and in order to provide more meaningful period over period comparisons, we present herein certain financial information excluding the impact of the 2021 Acquisitions. This financial information does not include any adjustments for other events attributable to the 2021 Acquisitions unless otherwise described.

Revenues, Operations, Cyclicality and Seasonality. ~~Broadcast~~Broadcasting advertising is sold for placement generally preceding or following a television station’s network programming and within local and syndicated programming. ~~Broadcast~~Broadcasting 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~~broadcasting 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~~Broadcasting 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 and mobile apps. These advertisements may be sold as banner advertisements, video advertisements and other types of advertisements or sponsorships.

Our ~~broadcast~~broadcasting 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;

●

Core advertising revenue on our NBC-affiliated stations increases in certain years as a result of broadcasts of the Olympic Games; and

●

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

We derived a material portion of our non-political broadcast advertising revenue from advertisers in a limited number of industries, particularly the services sector, comprising financial, legal and medical advertisers, and the automotive industry. The services sector has become an increasingly important source of advertising revenue over the past few years. During each of the ~~three-months~~six-months ended ~~March 31,~~June 30, 2022 and 2021 approximately ~~29%~~28% of our broadcast advertising revenue (excluding political advertising revenue) was obtained from advertising sales to the services sector. During the ~~three-months~~six-months ended ~~March 31,~~June 30, 2022 and 2021 approximately 15% and ~~22%~~19%, respectively, of our broadcast advertising revenue (excluding political advertising revenue) was obtained from advertising sales to automotive customers. Revenue from these industries may represent a higher percentage of total revenue in odd-numbered years due to, among other things, the increased availability of advertising time, as a result of such years being the “off year” of the two-year election cycle.

While our total revenues have increased in recent years as a result of our acquisitions, our revenue remains under pressure from the impact on the advertising market as a result of the COVID-19 global pandemic and from the internet as a competitor for advertising spending. We have been taking steps to mitigate the impacts of COVID-19 and 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.

Assembly Atlanta. On June 1, 2022, we entered into a long-term agreement with NBCU, for NBCU to lease and operate new state-of-the-art studio facilities (Assembly Studios) at our Assembly Atlanta development that is currently under construction.

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 March 31,										Three Months Ended June 30,										Six Months Ended June 30,
	2022					2021					2022					2021					2022					2021
			Percent					Percent					Percent					Percent					Percent					Percent
	Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total			Amount		of Total
Revenue:
Core advertising	$	365		44	%	$	260		47	%	$	366		42	%	$	279		51	%	$	731		43	%	$	539		49	%
Political		26		3	%		9		2	%		90		10	%		6		1	%		116		7	%		15		1	%
Retransmission consent		393		48	%		247		45	%		382		44	%		242		44	%		775		46	%		489		45	%
Production companies		23		3	%		14		3	%		13		1	%		10		2	%		36		2	%		24		2	%
Other		20		2	%		14		3	%		17		3	%		10		2	%		37		2	%		24		3	%
Total	$	827		100	%	$	544		100	%	$	868		100	%	$	547		100	%	$	1,695		100	%	$	1,091		100	%

Results of Operations

Three-Months Ended ~~March 31,~~June 30, 2022 (“the 2022 three-month period”) Compared to Three-Months Ended ~~March 31,~~June 30, 2021 (“the 2021 three-month period”)

Revenue. Total revenue increased ~~$283~~$321 million, or ~~52%~~59%, to ~~$827~~$868 million in the 2022 three-month period. Total revenue increased primarily due to our 2021 Acquisitions that contributed ~~$234~~$253 million. During the 2022 three-month period, excluding the impact of the 2021 Acquisitions:

●

~~Retransmission consent revenue increased by $20 million due to an increase in rates;~~

●

~~Core advertising revenue increased by $11 million primarily due to the lessening effects of the COVID-19 global pandemic which had affected our customers in prior periods;~~

●

Political advertising revenue increased by ~~$10~~$50 million, resulting primarily from 2022 being the “on-year” of the two-year election cycle;

●

~~Core advertising~~Retransmission consent revenue ~~from the broadcast of the 2022 Super Bowl on our NBC-affiliated stations was approximately $5~~increased by $18 million ~~compared~~due to ~~$6 million that we earned from the broadcast of the 2021 Super Bowl on our CBS-affiliated stations and $8 million of revenue from the broadcast of the Olympic Games; and~~an increase in rates;

●

~~Production~~Core advertising revenue and production company revenue ~~increased by $8 million in~~were essentially unchanged from the ~~2022 three-month period primarily due to the lessening effects~~second quarter of ~~the COVID-19 global pandemic which had affected our customers in prior periods.~~2021;

Broadcasting Expenses. Broadcasting expenses (before depreciation, amortization and gain or loss on disposal of assets) increased ~~$169~~$174 million, or ~~47%~~49%, to ~~$530~~$528 million in the 2022 three-month period. Total broadcasting expenses increased primarily due to our 2021 Acquisitions that contributed ~~$150 million. In addition, broadcasting Transaction Related Expenses, related to the 2021 Acquisitions, were $2~~$153 million. During the 2022 three-month period, excluding the impact of the 2021 Acquisitions:

●

Payroll broadcasting expenses increased by approximately $6$8 million ~~in the 2022 three-month period~~ as a result of routine increases in compensation.

●

Non-payroll broadcasting expenses increased by approximately ~~$13~~$12 million primarily because ~~of the following:~~

~~Retransmission~~retransmission expense increased by $10 million, ~~in the 2022 three-month period~~ consistent with the increase in retransmission revenue, and $2 million of Transaction Related Expenses.

o●

Broadcast non-cash stock-based compensation expense was ~~not material in the 2022 three-month period. Broadcast non-cash stock-based compensation expense was~~approximately $1 million in each of the 2022 and 2021 three-month ~~period.~~periods.

Production Company Expenses. Production company operating expenses were ~~$26~~$14 million in the 2022 three-month period an increase of $9$5 million compared to the 2021 three-month period due to the lessening effects of the COVID-19 global pandemic which had affected production operations in prior periods.

Corporate and Administrative Expenses. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) ~~increased $10~~were $25 million ~~or 56%, to $28 million~~ in each of the 2022 and 2021 three-month periods. During the 2022 three-month ~~period.~~period compensation expense increased by $5 million and other non-compensation expenses increased by $2 million. These increases were ~~primarily the result of routine increases~~offset by reductions in ~~compensation expense of $4 million, professional fees of $2 million and~~ Transaction Related Expenses of $1$7 million ~~in the current year related~~when compared to the 2021 ~~Acquisitions.~~three-month period. Non-cash stock-based compensation expenses increased to $5$4 million in the 2022 three-month period compared to $3 million in the 2021 three-month period.

Depreciation. Depreciation of property and equipment totaled ~~$32~~$31 million for the 2022 three-month ~~period~~periods and $25 million for the 2021 three-month period. Depreciation increased primarily due to the addition of depreciable assets acquired in the 2021 Acquisitions.

Amortization. Amortization of intangible assets totaled $52 million in the 2022 three-month period and ~~$26~~$27 million in the 2021 three-month period. Amortization increased primarily due to the addition of definite-lived intangible assets acquired in the 2021 Acquisitions.

Interest Expense. Interest expense increased ~~$31~~$34 million to ~~$79~~$81 million for the 2022 three-month period compared to ~~$48~~$47 million in the 2021 three-month period. This increase was primarily attributable to the addition of debt related to the 2021 Acquisitions. In addition, average interest rates on ~~the balances~~our outstanding ~~under our 2019 Senior Credit Facility~~debt increased to ~~2.9%~~4.6% in the 2022 three-month period compared to ~~2.5%~~4.4% in the 2021 three-month period. Our average outstanding debt balance was $6.8 billion and $4.0 billion during the 2022 and 2021 three-month periods, respectively.

Income tax expense. During the 2022 three-month period, we recognized income tax expense of ~~$21~~$38 million. During the 2021 three-month period, we recognized income tax expense of $15 million. For the 2022 three-month period and the 2021 three-month period, our effective income tax rate was ~~25% and~~ 28%~~, respectively.~~ in each three month period. 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. For the 2022 three-month period, these estimates increased or decreased our statutory Federal income tax rate of 21% ~~to our effective income tax rate of 25%~~ as a result of state income taxes that added 4%5% and permanent differences that added 2%.

Six-months Ended June 30, 2022 (“the 2022 six-month period”) Compared to Six-months Ended June 30, 2021 (“the 2021 six-month period”)

Revenue. Total revenue increased $604 million, or 55%, to $1.7 billion in the 2022 six-month period. Total revenue increased primarily due to our 2021 Acquisitions that contributed $487 million. During the 2022 six-month period, excluding the impact of the 2021 Acquisitions:

●

Political advertising revenue increased by $59 million, resulting primarily from 2022 being the “on-year” of the two-year election cycle;

●

Retransmission consent revenue increased by $39 million due to an increase in rates;

●

Core advertising revenue increased by $8 million primarily due to the lessening effects of the COVID-19 global pandemic which had affected our customers in prior periods;

●

Core advertising revenue from the broadcast of the 2022 Super Bowl on our NBC-affiliated stations was approximately $5 million, compared to $6 million that we earned from the broadcast of the 2021 Super Bowl on our CBS-affiliated stations and $8 million of revenue from the broadcast of the Olympic Games; and

●

Production company revenue increased by $1 million in the 2022 six-month period primarily due to the lessening effects of the COVID-19 global pandemic which had affected our customers in prior periods.

Broadcasting Expenses. Broadcasting expenses (before depreciation, amortization and gain or loss on disposal of assets) increased $343 million, or 48%, to $1.1 billion in the 2022 six-month period. Total broadcasting expenses increased primarily due to our 2021 Acquisitions that contributed $303 million. During the 2022 six-month period, excluding the impact of the 2021 Acquisitions:

●

Payroll broadcasting expenses increased by approximately $14 million as a result of routine increases in compensation.

●

Non-payroll broadcasting expenses increased by approximately $25 million primarily because retransmission expense increased $20 million, consistent with the increase in retransmission revenue, and $4 million of Transaction Related Expenses.

●

Broadcast non-cash stock-based compensation expense was $2 million and $1 million in the 2022 and 2021 six-month periods, respectively.

Production Company Expenses. Production company operating expenses were $40 million in the 2022 six-month period, an increase of $14 million compared to the 2021 six-month period. The increase is due to the lessening effects of the COVID-19 global pandemic which had affected production operations in prior periods, respectively.

Corporate and Administrative Expenses. Corporate and administrative expenses (before depreciation, amortization and gain or loss on disposal of assets) increased $10 million, or 23%, to $53 million in the 2022 six-month period. These increases were primarily the result of routine increases in compensation expense of $9 million and increased non-compensation expenses of $1 million in the 2022 six-month period. Non-cash stock-based compensation expenses increased to $9 million in the 2022 six-month period compared to $6 million in the 2021 six-month period.

Depreciation. Depreciation of property and equipment totaled $63 million for the 2022 six-month period and $50 million for the 2021 six-month period. Depreciation increased primarily due to the addition of depreciable assets acquired in the 2021 Acquisitions.

Amortization. Amortization of intangible assets totaled $104 million in the 2022 six-month period and $53 million in the 2021 six-month period. Amortization increased primarily due to the addition of definite-lived intangible assets acquired in the 2021 Acquisitions.

Interest Expense. Interest expense increased $65 million to $160 million for the 2022 six-month period compared to $95 million in the 2021 six-month period. This increase was primarily attributable to the addition of debt related to the 2021 Acquisitions. In addition, average interest rates on our outstanding debt increased to 4.5% in the 2022 six-month period compared to 4.4% in the 2021 six-month period. Our average outstanding debt balance was $6.8 billion and $4.0 billion during the 2022 and 2021 six-month periods, respectively.

Income tax expense. During the 2022 six-month period, we recognized income tax expense of $59 million. During the 2021 six-month period, we recognized income tax expense of $30 million. For the 2022 six-month period and the 2021 six-month period, our effective income tax rate was 27% and 28%, respectively. 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. For the 2022 six-month period, these estimates increased or decreased our statutory Federal income tax rate of 21% to our effective income tax rate as a result of state income taxes that added 5% and permanent differences added 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):

	Three Months Ended
	March 31,						Six Months Ended June 30,
	2022			2021			2022			2021
Net cash provided by operating activities	$	141		$	147		$	330		$	238
Net cash used in investing activities		(53	)		(73	)		(201	)		(177	)
Net cash used in financing activities		(30	)		(28	)		(156	)		(49	)
Net increase in cash	$	58		$	46
Net (decrease) increase in cash							$	(27	)	$	12

	As of
	March 31,		December 31,		As of
	2022		2021		June 30, 2022		December 31, 2021
Cash	$	247	$	189	$	162	$	189
Long-term debt, including current portion, less deferred financing costs	$	6,755	$	6,755	$	6,705	$	6,755
Series A Perpetual Preferred Stock	$	650	$	650	$	650	$	650
Borrowing availability under the Revolving Credit Facility	$	496	$	497
Borrowing availability under Revolving Credit Facility					$	496	$	497

Net Cash Provided By (Used In) Operating, Investing and Financing Activities. Net cash provided by operating activities was ~~$141~~$330 million in the 2022 ~~three-month~~six-month period compared to ~~net cash provided by operating activities of $147~~$238 million in the 2021 ~~three-month period.~~six-month period, a net increase of $92 million. The ~~decrease of $6 million~~increase was primarily the result of ~~an increase~~increases in net income of ~~$23 million; an~~$83 million and a net increase of $53 million in non-cash expenses, primarily related to depreciation ~~expense~~of fixed assets and amortization of definite-lived intangible ~~assets expense of $33 million; less $60~~assets. These increases were offset by a $44 million use of cash ~~used by~~from changes in ~~net working capital.~~operating assets and liabilities in the 2022 six-month period.

Net cash used in investing activities was ~~$53~~$201 million in the 2022 ~~three-month~~six-month period compared to ~~$73~~net cash used in investing activities of $177 million infor the 2021 ~~three-month~~six-month period. The ~~decrease~~increase in the amount used was largely due to ~~reduced investment activities~~construction in progress on the ~~2022 three-month period compared to the 2021 three-month period.~~Assembly Atlanta project.

Net cash used in financing activities was ~~approximately $30~~$156 million in the 2022 ~~three-month~~six-month period compared to ~~$28~~net cash used in financing activities of $49 million in the 2021 ~~three-month~~six-month period. ~~The increase was primarily due to the use of $4~~During each period we used $26 million of cash to ~~repay a portion~~pay dividends to holders of ~~the amount outstanding under~~ our ~~2019 Senior Credit Facility in~~preferred stock. During the 2022 ~~three-month period.~~and 2021 six-month periods we used $16 million and $15 million, respectively, to pay dividends to holders of our common stock. In the 2022 six-month period, we used we used $58 million to pay down our outstanding indebtedness and $50 million to repurchase shares of our common stock on the open market.

Liquidity. WeBased on our debt outstanding and interest rates as of June 30, 2022, we estimate that we will make approximately ~~$300~~$325 million in debt interest payments over the twelve months immediately following ~~March 31,~~June 30, 2022. Interest rates have recently been increasing and may increase further over the remainder of 2022. Accordingly, our future debt interest payments may exceed our current estimate but we do not believe that the potential increase will have a material impact on our operations or liquidity.

Although our cash flows from operations are subject to a number of risks and uncertainties, including the COVID-19 global 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 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 2017 Term Loan under the 2019 Senior Credit Facility.

Debt. As of ~~March 31,~~June 30, 2022, long-term debt consisted of obligations under our 2019 Senior Credit Facility, our ~~$700 million in aggregate principal amount of senior notes due~~ 2026 Notes, our ~~$750 million in aggregate principal amount of senior notes due~~ 2027 Notes, our ~~$800 million in aggregate principal amount of senior notes due~~ 2030 Notes and our ~~$1.3 billion in aggregate principal amount of senior notes due 2031.~~2031 Notes. As of ~~March 31,~~June 30, 2022, the 2019 Senior Credit Facility provided total commitments of ~~$3.8~~$3.7 billion, consisting of ~~a $595 million term loan facility, a $1.2 billion term loan facility, a $1.5 billion term loan facility~~our 2017 Term Loan, our 2019 Term Loan, our 2021 Term Loan and $496 million available under our ~~revolving credit facility.~~Revolving Credit Facility. We were in compliance with the covenants in these debt agreements at ~~March 31,~~June 30, 2022. In the six-months ended June 30, 2022, we paid the required principal reductions of $8 million of our 2021 Term Loan and voluntarily pre-paid $50 million of the outstanding principal balance of our 2017 Term Loan.

Capital Expenditures. In April 2017, the Federal Communications Commission (“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 2022 and 2021 three-month periods were $47 million and $13 million, respectively. As of March 31, 2022, the reimbursement amount requested from the FCC for Repack, but not yet received, was approximately $4 million. Excluding Repack, weWe expect that our capital expenditures will range between approximately $120 million to $130 million during 2022 for routine purchases of broadcasting, ~~and~~ production company ~~equipment.~~and corporate purposes. In addition, we currently anticipate capital expenditures of between $130 million ~~and~~to $140 million in 2022, and approximately $80 million to $90 million in 2023 in connection with development of our studio production facilities for our own use and several additional such facilities that we anticipate constructing on our property pursuant to a long-term lease with a major content creation company. Capital expenditures for Repack during 2022 are expected to be approximately $2 million and we anticipate being reimbursed for the ~~majority of these Repack costs. However, reimbursement may be received in periods subsequent to those in which they were expended.~~

~~Pending Transactions.~~ ~~On April 1, 2022, we acquired the assets of television station WKTB-CD the Telemundo Network Group, LLC affiliate serving the~~Assembly Atlanta Georgia market (DMA 10) for $30 million in cash, subject to certain adjustments (the “Atlanta Telemundo Transaction”) from the Korean American Television Broadcasting Corporation, Capital Media Group, LLC and Surge Digital Media, LLC. Due to the proximity of the closing date of the transaction to the filing date of this report we are unable to present a preliminary purchase price allocation for the acquired business. The $1 million escrow deposit payment related to this transaction is included in our other non-current assets at March 31, 2022, and is included in the acquisitions of television businesses and licenses, net of cash acquired line 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.project.

Other. We file a consolidated federal income tax return and such state and local tax returns as are required. During the ~~first quarter of~~ 2022 six-month period, we made ~~no material~~$119 million of federal or state income tax payments. During the remainder of 2022, we anticipate making income tax payments (net of refunds) within a range of ~~$170~~$80 million to ~~$190~~$100 million. As of ~~March 31,~~June 30, 2022, we have an aggregate of approximately ~~$324~~$337 million of various state operating loss carryforwards, of which we expect that approximately 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. During 2020, we carried back certain net operating losses resulting in a refund of $21 million, that is currently outstanding.

During the 2022 ~~three-month~~six-month period, we did not make a contribution to our defined benefit pension plan. During the remainder of 2022, we expect to contribute $4 million to this pension plan.

Off-Balance Sheet Arrangements. There have been no material changes with respect to our off-balance sheet arrangements from those presented in our 2021 Form 10-K.

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 2021 Form 10-K.

2628

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (“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 (the “Exchange Act”). Forward-looking statements are all statements other than those of historical fact. When used in this annual report, the words “believes,” “expects,” “anticipates,” “estimates,” “will,” “may,” “should” and similar words and expressions are generally intended to identify forward-looking statements. These forward-looking statements reflect our then-current expectations and are based upon data available to us at the time the statements are made. Forward-looking statements may relate to, among other things, statements about the evolving and uncertain nature of the COVID-19 global pandemic and its impact on us, the media industry, and the economy in general, our strategies, expected results of operations, general and industry-specific economic conditions, ~~the remediation of a material weakness and the ongoing effectiveness of internal control over financial reporting,~~ future pension plan contributions, future capital expenditures, future income tax payments, future payments of interest and principal on our long-term debt, assumptions underlying various estimates and estimates of future obligations and commitments, and should be considered in context with the various other disclosures made by us about our business. Readers 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 significant 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 in Item 1A. of our Annual Report on Form 10-K and the other factors described from time to time in our SEC filings. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. 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 ~~March 31,~~June 30, 2022 has not materially changed since December 31, 2021. Our market risk profile on December 31, 2021 is disclosed in our 2021 ~~Annual Report on~~ 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 this evaluation, management has concluded that our internal control over financial reporting was ~~not~~ effective as of ~~March~~June 30, 2022, for the reasons discussed below. Consistent with Managements’ Report on Internal Control over Financial Reporting disclosed in Part II, Item 9A. of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2021, we had identified a material weakness as a result of deficiencies identified in our controls over user access that did not adequately restrict or provision/deprovision user access related to certain financial reporting programs and did not ensure appropriate segregation of duties as it relates to review. Importantly, partly as a result of other internal controls over financial reporting, we did not identify any incidents of improper system access related to the material weakness, ~~described below. Consistent with~~nor did the identified weakness result in any identified misstatements to our financial statements. There were no changes made, and no future changes intended to be made, to previously released financial results as a result of this material weakness.

Since the issuance of our Managements’ Report on Internal Control over Financial Reporting disclosed in Part II, Item 9A. of our annual report on Form 10-K for the year end December 31, 2021, ~~as a result of management’s evaluation, we identified a~~the Company has been engaged in processes to enhance our controls and procedures to remediate the material weakness ~~as a result of deficiencies identified in our controls over~~and has taken additional actions to improve user access ~~which did not adequately restrict or provision/deprovision user access related to certain financial reporting programs~~controls and ~~did not ensure appropriate segregation of~~appropriately segregate duties as it relates to review. ~~Notwithstanding~~Specifically, the ~~foregoing,~~Company has taken the following actions:

●	In the second quarter of 2022, semiannual user access reviews were performed for the general ledger, journal entry processing, advertising revenue, retransmission revenue, accounts payable processing and payroll systems. The reviews were conducted by staff knowledgeable of the respective systems.

●	On April 1, 2022, the Company initiated a new monitoring control to review the timeliness of reporting all employee terminations to the human resources department so that terminated employees can be promptly deleted from any system access.

●

In April 2022, the Company implemented a new daily user access control that compares the daily payroll system employee termination report to the system user access databases for the general ledger, journal entry processing, advertising revenue, retransmission revenue and accounts payable processing systems. Appropriate system administrators are notified daily to remove terminated employee user access to the respective systems.

Management believes that the design implementation and operating effectiveness of the controls that are discussed above and have been implemented address the previously identified material weakness. In addition, management believes ~~partly as a result of other~~that our internal ~~controls~~control over financial reporting ~~we did not identify any incidents~~was effective as of ~~improper system access related~~June 30, 2022 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the ~~material weakness, nor did it result in any identified misstatements~~Company’s management, including its principal executive officer and principal financial officer, as appropriate to ~~our financial statements,~~allow timely decisions regarding required disclosure.

In addition to the control changes mentioned above, the Company made the following changes to its controls over the general ledger and journal entry processing as follows:

●	All journal entries in the journal entry system above $2 million were programed to require a second independent review

●	All account reconciliations require a second independent reviewer.

●	Effective for the second quarter of 2022 a quarterly monitoring control was established providing an independent review to assure:

All journal entries requiring an independent review were independently reviewed.

In the rare instances in which the system administrator created or posted a journal entry to correct a system issue, the entry is independently reviewed for appropriateness.

Except for the changes mentioned above, there were no changes ~~to previously released financial results as a result of this material weakness.~~

~~There were no changes~~ in ~~our~~the Company’s internal ~~controls~~control over financial reporting during the ~~three-month period~~quarter ended ~~March 31,~~June 30, 2022, ~~identified in connection with this evaluation,~~ that have materially affected, or are reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting. ~~The Company is fully engaged in the process to further evaluate the material weakness and implement additional actions to improve user access controls and remediate the material weakness.~~

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.

2730

PART II. OTHER INFORMATION

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors that affect our business and financial results that are discussed in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. These factors could materially adversely affect our business, financial condition, 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 such risk factors.

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

On November 5, 2019, our Board of Directors authorized the repurchase of up to $150 million of our outstanding common stock and/or our Class A common stock prior to December 31, 2022 (the “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 June 3, 2022, under the 2019 Repurchase authorization, we entered into an issuer repurchase plan (the “2022 IRP”), under Rules 10b-18 and 10b5-1 of the Exchange Act. The 2022 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 2022, we repurchased shares of our common stock on the open market under the 2022 IRP.

The following table summarizes repurchases of our common stock in the three-months ended June 30, 2022, all of which were pursuant to the 2022 IRP:

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)

April 1, 2022 through April 30, 2022:		-	$	-		-	$	173,889,042

May 1, 2022 through May 31, 2022:		-	$	-		-	$	173,889,042

June 1, 2022 through June 30, 2022:		2,646,193	$	18.87		2,646,193	$	123,968,352

Total		2,646,193	$	18.87		2,646,193

(1)	All Shares purchased were shares of common stock.

(2)	Amount excludes standard brokerage commissions.

(3)	The amounts presented at each respective month-end include the remaining dollar value available to purchase our common stock and/or our Class A common stock under our outstanding repurchase authorizations.

Item 6. Exhibits

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

Exhibit Number		Description of Document

10.1		Gray Television, Inc. 2022 Equity and Incentive Compensation Plan
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		The cover page from Gray Television, Inc.’s Quarterly Report on Form 10-Q for the fiscal period ended ~~March 31,~~June 30, 2022 has been formatted in Inline XBRL and contained in Exhibit 101.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GRAY TELEVISION, INC.
	(Registrant)




Date: ~~May 6,~~August 5, 2022	By:	/s/ James C. Ryan
		James C. Ryan
		Executive Vice President and Chief Financial Officer

2933

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

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

	(404) 504-9828
	(Registrant's telephone number, including area code)


	Not Applicable
	(Former name, former address and former fiscal year, if changed since last report.)

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 ☐	~~Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐~~ Smaller reporting company ☐

Emerging growth company ☐

Common Stock (No Par Value)		Class A Common Stock (No Par Value)
~~88,117,327~~85,521,216 shares outstanding as of ~~April~~July 29, 2022		7,573,222 shares outstanding as of ~~April~~July 29, 2022

	Gray Television, Inc.
	(Exact name of registrant as specified in its charter)

PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements

	Condensed consolidated balance sheets (Unaudited) ~~– March 31,~~- June 30, 2022 and December 31, 2021	3

	Condensed consolidated statements of operations (Unaudited) –- three-months and six-months ended ~~March 31,~~June 30, 2022 and 2021	5

	Condensed consolidated ~~statement~~statements of stockholders' equity (Unaudited) –- three-months and six-months ended ~~March 31,~~June 30, 2022 and 2021	6

	Condensed consolidated statements of cash flows (Unaudited) ~~– three-months~~- six-months ended ~~March 31,~~June 30, 2022 and 2021	7

	Notes to condensed consolidated financial statements (Unaudited)	8

Item 2.	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	2022

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2729

Item 4.	Controls and Procedures	2729

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors	2831

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 6.	Exhibits	2832

SIGNATURES		2933

GRAY TELEVISION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)

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

																								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, 2020		8,935,773	$	34		103,100,856	$	1,110	$	862			(1,887,767	)	$	(26	)		(14,960,597	)	$	(188	)	$	(39	)	$	1,753			8,935,773	$	34		103,100,856	$	1,110	$	862			(1,887,767	)	$	(26	)		(14,960,597	)	$	(188	)	$	(39	)	$	1,753

Net income		-		0		-		0		39			-			0			-			0			0			39			-		0		-		0		39			-			0			-			0			0			39

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

Common stock dividends		-		0		-		0		(8	)		-			0			-			0			0			(8	)		-		0		-		0		(8	)		-			0			-			0			0			(8	)

Issuance of common stock:
401(k) Plan		0		0		390,389		6		0			0			0			0			0			0			6			0		0		390,389		7		0			0			0			0			0			0			7
2017 Equity and Incentive Compensation Plan:
Restricted stock awards		233,425		0		296,042		0		0			(110,412	)		(2	)		(239,597	)		(4	)		0			(6	)		233,425		0		296,042		0		0			(110,412	)		(2	)		(239,597	)		(4	)		0			(6	)
Restricted stock unit awards		0		0		60,050		0		0			0			0			(18,275	)		(1	)		0			(1	)		0		0		60,050		0		0			0			0			(18,275	)		(1	)		0			(1	)

Stock-based compensation		-		1		-		3		0			-			0			-			0			0			4			-		1		-		2		0			-			0			-			0			0			3

Balance at March 31, 2021		9,169,198	$	35		103,847,337	$	1,119	$	880			(1,998,179	)	$	(28	)		(15,218,469	)	$	(193	)	$	(39	)	$	1,774			9,169,198	$	35		103,847,337	$	1,119	$	880			(1,998,179	)	$	(28	)		(15,218,469	)	$	(193	)	$	(39	)	$	1,774

Net income																															-		0		-		0		39			-			0			-			0			0			39

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

Common stock dividends																															-		0		-		0		(7	)		-			0			-			0			0			(7	)

Issuance of common stock:
401(k) Plan																															0		0		3,655		0		0			0			0			0			0			0			0
2017 Equity and Incentive Compensation Plan:
Restricted stock awards																															0		0		47,360		0		0			0			0			(16,991	)		0			0			0

Stock-based compensation																															-		1		-		3		0			-			0			-			0			0			4

Balance at June 30, 2021																															9,169,198	$	36		103,898,352	$	1,122	$	899			(1,998,179	)	$	(28	)		(15,235,460	)	$	(193	)	$	(39	)	$	1,797


Balance at December 31, 2021		9,424,691	$	39		104,286,324	$	1,127	$	869			(1,998,179	)	$	(28	)		(16,747,268	)	$	(223	)	$	(27	)	$	1,757			9,424,691	$	39		104,286,324	$	1,127	$	869			(1,998,179	)	$	(28	)		(16,747,268	)	$	(223	)	$	(27	)	$	1,757

Net income		-		0		-		0		62			-			0			-			0			0			62			-		0		-		0		62			-			0			-			0			0			62

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

Common stock dividends		-		0		-		0		(8	)		-			0			-			0			0			(8	)		-		0		-		0		(8	)		-			0			-			0			0			(8	)

Issuance of common stock:
401(k) Plan		0		0		307,885		7		0			0			0			0			0			0			7			0		0		307,885		7		0			0			0			0			0			0			7
2017 Equity and Incentive Compensation Plan:
Restricted stock awards		250,448		0		333,382		0		0			(103,738	)		(2	)		(138,959	)		(3	)		0			(5	)		250,448		0		333,382		0		0			(103,738	)		(2	)		(138,959	)		(3	)		0			(5	)
Restricted stock unit awards		0		0		108,921		0		0			0			0			(32,958	)		(1	)		0			(1	)		0		0		108,921		0		0			0			0			(32,958	)		(1	)		0			(1	)

Share-based compensation		-		2		-		3		0			-			0			-			0			0			5
Stock-based compensation																															-		2		-		3		0			-			0			-			0			0			5

Balance at March 31, 2022		9,675,139	$	41		105,036,512	$	1,137	$	910			(2,101,917	)	$	(30	)		(16,919,185	)	$	(227	)	$	(27	)	$	1,804			9,675,139	$	41		105,036,512	$	1,137	$	910			(2,101,917	)	$	(30	)		(16,919,185	)	$	(227	)	$	(27	)	$	1,804

Net income																															-		0		-		0		99			-			0			-			0			0			99

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

Common stock dividends																															-		0		-		0		(8	)		-			0			-			0			0			(8	)

Issuance of common stock:
2017 Equity and Incentive Compensation Plan:
Restricted stock awards																															0		0		67,545		0		0			0			0			(17,463	)		0			0			0

Repurchase of common stock																															0		0		0		0		0			0			0			(2,646,193	)		(50	)		0			(50	)

Stock-based compensation																															-		2		-		4		0			-			0			-			0			0			6

Balance at June 30, 2022																															9,675,139	$	43		105,104,057	$	1,141	$	988			(2,101,917	)	$	(30	)		(19,582,841	)	$	(277	)	$	(27	)	$	1,838

							Estimated									Estimated
	*March 31,*			*December 31,*			*Useful Lives*			*June 30,*			*December 31,*			*Useful Lives*
	*2022*			*2021*			*(in years)*			*2022*			*2021*			*(in years)*
Property and equipment:
Land	$	277		$	277					$	280		$	277
Buildings and improvements		454			453		7	to	40		455			453		7	to	40
Equipment		970			961		3	to	20		972			961		3	to	20
Construction in progress		100			63						198			63
		1,801			1,754						1,905			1,754
Accumulated depreciation		(620	)		(589	)					(645	)		(589	)
Total property and equipment, net	$	1,181		$	1,165					$	1,260		$	1,165

Accounts receivable, net	$	1
Property and equipment and other assets		1
Goodwill		10
Broadcast licenses		1
Network affiliation		14
Other intangible assets		4
Total	$	31

	Minimum Principal Maturities												Minimum Principal Maturities
Year	2019 Senior Credit Facility		2026 Notes		2027 Notes		2030 Notes		2031 Notes		Total		2019 Senior Credit Facility		2026 Notes		2027 Notes		2030 Notes		2031 Notes		Total
Remainder of 2022	$	11	$	0	$	0	$	0	$	0	$	11	$	8	$	0	$	0	$	0	$	0	$	8
2023		15		0		0		0		0		15		15		0		0		0		0		15
2024		610		0		0		0		0		610		560		0		0		0		0		560
2025		15		0		0		0		0		15		15		0		0		0		0		15
2026		1,205		700		0		0		0		1,905		1,205		700		0		0		0		1,905
2027		15		0		750		0		0		765		15		0		750		0		0		765
Thereafter		1,410		0		0		800		1,300		3,510		1,410		0		0		800		1,300		3,510
Total	$	3,281	$	700	$	750	$	800	$	1,300	$	6,831	$	3,228	$	700	$	750	$	800	$	1,300	$	6,778