Gray Television (GTN) 8-K Gray Reports Record Revenue

Exhibit 99.1

NEWS RELEASE

Gray Reports Record Revenue

Gray Also Reports Broadcast and Corporate Expenses that are Below Guidance

Atlanta, Georgia –November 5, 2014. . . Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN and GTN.A)today announced results of operations for the three-month period (the “third quarter of 2014”) and nine-month period ended September 30, 2014. Revenue for both the third quarter of 2014 and the just-concluded nine-month period set new records for the Company.In addition, our revenue was at the high end of the range of our previously issued guidance of $128.0 million to $132.0 million; our broadcast expenses were below the range of our previously issued guidance of $74.0 million to $75.0 million and our corporate and administrative expenses were below the range of our previously issued guidance of $5.5 million to $6.0 million.

During the nine-month period ended September 30, 2014, we completed six acquisitions. During the third quarter of 2014, we completed the acquisition of WJRT-TV and WTVG-TV, which serve the Flint-Saginaw-Bay City, Michigan, and Toledo, Ohio, television markets, respectively (the “SJL Acquisition”). The stations acquired in the SJL Acquisition contributed $2.0 million of revenue and $0.9 million of broadcast expense to our results for the third quarter of 2014. These amounts were not considered in developing our previously issued guidance for the third quarter of 2014. The financial results of all other acquisitions completed during the nine-month period ended September 30, 2014 had been considered in connection with our previously issued guidance.

For the third quarters and nine-month periods ended September 30, 2014 and 2013, our revenue, broadcast expense, corporate and administrative expense, net income and certain non-GAAP cash flow amounts were as follows:

	Three Months Ended September 30,							Nine Months Ended September 30,
	2014		2013		% Change			2014		2013		% Change
Revenue (less agency commissions):
Total	$	131,702	$	88,288		49	%	$	330,248	$	250,742		32	%
Political	$	22,029	$	1,377		1500	%	$	33,437	$	2,769		1108	%
Operating expenses (1):
Broadcast	$	73,218	$	53,516		37	%	$	199,604	$	158,817		26	%
Corporate and administrative	$	5,271	$	4,470		18	%	$	21,618	$	13,587		59	%
Net income	$	13,940	$	7,073		97	%	$	16,808	$	13,087		28	%
Non-GAAP Cash Flow (2):
Broadcast Cash Flow	$	58,429	$	34,603		69	%	$	129,578	$	91,419		42	%
Broadcast Cash Flow Less
Cash Corporate Expenses	$	53,885	$	30,388		77	%	$	110,766	$	79,551		39	%
Free Cash Flow	$	25,309	$	13,319		90	%	$	41,644	$	27,021		54	%

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

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

4370 Peachtree Road, NE, Atlanta, GA 30319 |P 404.504.9828 F404.261.9607 | www.gray.tv

Highlights:

• We achieved record revenue for both the third quarter of 2014 and nine-month period ended September 30, 2014, as a result of increased revenue at our preexisting stations, as well as the addition of revenue from our Acquired Stations (defined below).

• Between October 31, 2013and September 30, 2014, we completed eight acquisitions in which we acquired the operations of19 television stations (the “Acquired Stations”). We are successfully integrating the Acquired Stations into our station group.

• Our only currently pending acquisitions are as follows: (1) the acquisition of KKHD-LD and the programming of KJCT-TV in Grand Junction, Colorado (2) the programming of KXJB-TV in Fargo, North Dakota and (3) the acquisition of KMTF-TV in Helena, Montana. The total consideration remaining to be paid for these acquisitions is approximately $3.7 million. We anticipate closing these transactions in the fourth quarter of 2014.

• Corporate and administrative expense for the third quarter of 2014 included non-recurring expenses of $0.6 million of legal and other professional expenses associated with our completed and pending acquisitions.

• For the periods ended September 30, 2014 and December 31, 2013, our total leverage ratio calculated on a trailing eight quarter basis under the terms of our senior credit facility was 6.3 and 5.7, respectively.

Comments on Results of Operations for the Three-Month Period EndedSeptember 30, 2014:

Revenue As Reported.

Total revenue increased $43.4 million, or 49%, to $131.7 million for the third quarter of 2014 compared to the third quarter of 2013. For the third quarters of 2014 and 2013, the Acquired Stations accounted for approximately $28.2million and $0.0 million of our total revenue, respectively.

The principal components of our revenue for the third quarter of 2014 compared to the third quarter of 2013 were as follows:

• Local advertising revenue increased $13.3 million, or 27%, to $62.0 million.

• National advertising revenue increased $2.6 million, or 19%, to $16.2 million.

• Local and national advertising revenue combined increased $15.9 million, or 25%, to $78.2 million.

• Internet advertising revenue increased $1.0 million, or 15%, to $7.4 million.

• Political advertising revenue increased $20.7 million, or 1500%, to $22.0 million.

• Retransmission consent revenue increased $10.5 million, or 115%, to $19.7 million.

• Other revenue increased $2.6 million, or 142%, to $4.4 million.

• Consulting revenue decreased $7.1 million to $0.0 million.

Political advertising revenue increased due to increased advertising by political candidates, political parties and special interest groups in the “on year” of the two-year election cycle. Retransmission consent revenue increased primarily due to increased subscriber rates. During the third quarter of 2013, we recognized a one-time payment of $7.1 million as incentive consulting revenue associated with a now-expired consulting agreement. We did not recognize any consulting revenue in the third quarter of 2014.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page2 of 14

Strong demand for our advertising inventory from political advertisers affected advertising revenue from our non-political advertising revenue categories. Excluding revenue attributable to the Acquired Stations and political advertisers, our five largest advertising categories on a combined local and national basis by customer type for the third quarter of 2014 demonstrated the following changes in revenue during the third quarter of 2014 compared to the third quarter of 2013:

• automotive decreased 3%;

• medical increased less than 1%;

• restaurant decreased 8%;

• communications decreased 15%; and

• furniture and appliances decreased 16%.

Revenue ona Combined Historical Basis.

In order to provide more meaningful period over period comparisons, we also present herein certain historical revenue and broadcast expense information on a "Combined Historical Basis."   Combined Historical Basis reflects financial results that have been prepared by adding Gray's historical revenue and broadcast expenses with the historical revenue and broadcast expenses of each of the Acquired Stations from January 1, 2013 (the beginning of the earliest period presented), but it does not include any adjustments for other events attributable to the acquisitions.  

On a Combined Historical Basis, total revenue increased $19.5million, or 16%, to $139.4 million in the third quarter of 2014 as compared to the third quarter of 2013.

On a Combined Historical Basis, the principal components of revenue for the third quarter of 2014 compared to the third quarter of 2013 were approximately as follows:

• Local advertising revenue decreased$0.9 million, or 1%, to $66.3 million.

• National advertising revenue decreased $1.6 million, or 8%, to $17.2 million.

• Local and national advertising revenue combined decreased $2.4 million, or 3%, to $83.5 million reflecting, in part, the strong demand on advertising inventory from political advertisers.

• Internet advertising revenue increased $0.4 million, or 5%, to $7.5 million.

• Political advertising revenue increased $21.3 million, or 1184%, to $23.1 million.

• Retransmission consent revenue increased $7.0 million, or 51%, to $20.9 million.

• Other revenue increased $0.4 million, or 10%, to $4.4 million.

• Consulting revenue decreased $7.1 million to $0.0 million.

BroadcastOperatingExpenses As Reported.

Broadcast expenses (before depreciation, amortization and loss on disposal of assets) increased $19.7 million, or 37%, to $73.2 million for the third quarter of 2014 compared to the third quarter of 2013. For the third quarters of 2014 and 2013, the Acquired Stations accounted for approximately $15.8 million and $0.0 million of our total broadcast expenses, respectively.

• Compensation expense increased $9.6 million due primarily to the net of the following:

◦ Salary expense increased $7.6 million resulting primarily from the addition of personnel at the Acquired Stations.

◦ Incentive compensation increased $1.0 million.

◦ Healthcare costs increased $0.3 million reflecting increased claim activity.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 3 of 14

◦ Non-cash stock-based compensation increased $0.3 million. Broadcast non-cash stock-based compensation expense increased due to the grant of restricted common stock to certain employees in 2014.

◦ Pension expense decreased $0.6 million.

• Non-compensation expense increased $10.1 million due primarily to the following:

◦ Network affiliation fees increased $3.4 million reflecting in part, increased fees payable to the ABC network under our affiliation agreements that renewed January 1, 2014.

◦ National sales representation fees increased $1.2 million due to commissions paid on increased revenue.

◦ Syndicated programming costs, software license fees, consulting fees expense and other professional fees also increased.

BroadcastOperatingExpenses on aCombined Historical Basis.

On a Combined Historical Basis, broadcast expenses (before depreciation, amortization and loss (gain) on disposal of assets) increased $4.7 million, or 6%, to $78.2 million for the third quarter of 2014 compared to the third quarter of 2013.

CorporateOperatingExpenses As Reported.

Corporate and administrative expenses (before depreciation, amortization and loss on disposal of assets) increased $0.8 million, or 18%, to $5.3 million.

• Non-compensation expense increased $0.6 million primarily due to increases in legal and other professional fees associated with our completed and pending acquisitions.

• Compensation expense increased $0.2 million primarily due to increases in non-cash stock-based compensation and routine increases in salary expense.

Comments on Results of Operations for the Nine-Month Period EndedSeptember 30, 2014:

Revenue as Reported.

Total revenue increased $79.5 million, or 32%, to $330.2 million for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013. For the nine months ended September 30, 2014 and 2013, the Acquired Stations accounted for approximately $40.7 million and $0.0 million of our total revenue, respectively.

The principal components of our revenue for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013 were as follows:

• Local advertising revenueincreased$23.7 million, or16%, to$169.8 million.

• National advertising revenue increased $2.3 million, or 5%, to $44.3 million.

• Local and national advertising revenue combined increased $26.0 million, or 14%, to $214.1 million.

• Internet advertising revenue increased $2.2 million, or 12%, to $20.7 million.

• Political advertising revenue increased $30.7 million, or 1108%, to $33.4 million.

• Retransmission consent revenue increased $25.2 million, or 89%, to $53.5 million.

• Other revenue increased $2.6 million, or 42%, to $8.6 million.

• Consulting revenue decreased $7.1 million to $0.0 million.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 4 of 14

Political advertising revenue reflected increased advertising by political candidates, political parties and special interest groups during the “on year” of the two-year political advertising cycle. Retransmission consent revenue increased primarily due to increased subscriber rates. Local and national advertising revenue in the nine months ended September 30, 2014 benefited from approximately $3.8 million earned from the broadcast of the 2014 Winter Olympic Games on our then fourteen NBC affiliated stations. There was no corresponding Olympic Games advertising revenue during the nine months ended September 30, 2013. Local and national advertising revenue included the broadcast of the 2014 Super Bowl on our then five FOX channels, which earned us approximately $0.2 million, a decrease of approximately $0.9 million compared to the broadcast of the 2013 Super Bowl on our then 20 CBS channels that earned us approximately $1.1 million. As noted in our discussion of our revenue for the third quarter of 2014, we recorded a one-time payment of $7.1 million during 2013 as incentive consulting revenue associated with a now-expired consulting agreement.

Strong demand for our advertising inventory from political advertisers affected advertising revenue from our non-political advertising revenue categories. Excluding revenue attributable to the Acquired Stations and political advertisers, our five largest advertising categories on a combined local and national basis by customer type for the nine-month period ended September 30, 2014 demonstrated the following changes in revenue during the nine-month period ended September 30, 2014 compared to the nine-month period ended September 30, 2013:

• automotive increased 4%;

• medical increased 5%;

• restaurant decreased 11%;

• communications decreased 8%; and

• furniture and appliances decreased 10%.

Revenue ona Combined Historical Basis.

On a Combined Historical Basis, total revenue increased $50.0 million, or 15%, to $393.9 million for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013.

On a Combined Historical Basis, the principal components of revenue for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013 were approximately as follows:

• Local advertising revenue increased $4.3 million, or 2%, to $205.2 million.

• National advertising revenue decreased $4.3 million, or 8%, to $52.8 million.

• Local and national advertising revenue combined decreased $0.1million, or 0%, to $257.9 million reflecting, in part, the strong demand on advertising inventory from political advertisers.

• Internet advertising revenue increased $1.5 million, or 7%, to $22.0 million.

• Political advertising revenue increased $33.5 million, or 975%, to $37.0 million.

• Retransmission consent revenue increased $22.5 million, or 55%, to $63.7 million.

• Other revenue decreased $0.4 million, or 3%, to $13.4 million.

• Consulting revenue decreased $7.1 million to $0.0 million.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 5 of 14

BroadcastOperating Expenses As Reported.

Broadcast expenses (before depreciation, amortization and loss (gain) on disposal of assets) increased $40.8 million, or 26%, to $199.6 million for the nine-month period ended September 30, 2014 compared to the nine-month period ended September 30, 2013. For the nine months ended September 30, 2014 and 2013, the Acquired Stations accounted for approximately $25.3 million and $0.0 million of our total broadcast expenses, respectively.

• Compensation expense increased $19.2 million due primarily to the net of the following:

◦ Non-cash paid-time-off increased $3.9 million reflecting the non-cash increase in expense for paid-time-off due to a change in our employee benefit policy. This non-cash charge is a non-recurring charge.

◦ Salary expense increased $16.2 million resulting primarily from the addition of personnel at the Acquired Stations.

◦ Healthcare costs increased $1.1 million reflecting increased claim activity.

◦ Non-cash stock-based compensation increased $1.2 million. Broadcast non-cash stock-based compensation expense increased due to the grant of restricted common stock to certain employees in 2014.

◦ Pension expense decreased $1.8 million.

• Non-compensation expense increased $21.6 million due primarily to the net of the following:

◦ Network affiliation fees increased $7.9 million reflecting, in part, increased fees payable to the ABC network under our affiliation agreements that renewed January 1, 2014.

◦ National sales representation fees increased $1.8 million due to commissions paid on increased revenue.

◦ Programming costs, software license fees, consulting fees, bad debt expense and other professional fees also increased.

BroadcastOperating Expenses on a Combined Historical Basis.

On a Combined Historical Basis, broadcast expenses (before depreciation, amortization and loss (gain) on disposal of assets) increased $18.5 million, or 8%, to $236.3 million for the nine-month period ended September 30, 2014 compared to the nine-month period ended September 30, 2013.

CorporateOperatingExpenses As Reported.

Corporate and administrative expenses (before depreciation, amortization and loss (gain) on disposal of assets) increased $8.0 million, or 59%, to $21.6 million.

• Non-compensation expense increased $6.2 million primarily due to increases in legal and other professional fees of $5.7 million associated with our completed and pending acquisitions.

• Compensation expense increased $1.8 million primarily due to increases in non-cash stock-based compensation expenses and routine increases in salary expense.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 6 of 14

Detailed table of operating results:

Gray Television, Inc.

Selected Operating Data (Unaudited)

(in thousands except for net income per share data)

	Three Months Ended
	September 30,
	2014			2013
Revenue (less agency commissions)	$	131,702		$	88,288
Operating expenses before depreciation, amortizationand loss on disposal of assets, net:
Broadcast		73,218			53,516
Corporate and administrative		5,271			4,470
Depreciation		8,228			6,024
Amortization of intangible assets		3,823			9
Loss on disposals of assets, net		6			49
Operating expenses		90,546			64,068
Operating income		41,156			24,220
Other income (expense):
Miscellaneous income (expense), net		11			-
Interest expense		(18,619	)		(12,656	)
Income before income tax		22,548			11,564
Income tax expense		8,608			4,491
Net income	$	13,940		$	7,073
Basic per share information:
Net income	$	0.24		$	0.12
Weighted-average shares outstanding		57,863			57,713
Diluted per share information:
Net income	$	0.24		$	0.12
Weighted-average shares outstanding		58,394			58,078
Political advertising revenue (less agency commissions)	$	22,029		$	1,377

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 7 of 14

Gray Television, Inc.

Selected Operating Data (Unaudited)

(in thousands except for net income per share data)

	Nine Months Ended
	September 30,
	2014			2013
Revenue (less agency commissions)	$	330,248		$	250,742
Operating expenses before depreciation, amortizationand loss (gain) on disposal of assets, net:
Broadcast		199,604			158,817
Corporate and administrative		21,618			13,587
Depreciation		21,598			17,762
Amortization of intangible assets		5,291			40
Loss (gain) on disposals of assets, net		385			(56	)
Operating expenses		248,496			190,150
Operating income		81,752			60,592
Other income (expense):
Miscellaneous income, net		14			-
Interest expense		(49,718	)		(37,790	)
Loss from early extinguishment of debt		(4,897	)		-
Income before income tax expense		27,151			22,802
Income tax expense		10,343			9,715
Net income	$	16,808		$	13,087
Basic per share information:
Net income	$	0.29		$	0.23
Weighted-average shares outstanding		57,857			57,600
Diluted per share information:
Net income	$	0.29		$	0.23
Weighted-average shares outstanding		58,330			57,907
Political advertising revenue (less agency commissions)	$	33,437		$	2,769

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 8 of 14

Other Financial Data:

	September 30, 2014		December 31, 2013
	(in thousands)
Cash	$	79,807	$	13,478
Long-term debt including current portion	$	1,306,470	$	842,874
Borrowing availability under our senior credit facility	$	40,000	$	30,000

	Nine Months Ended September 30,
	2014			2013
	(in thousands)
Net cash provided by operating activities	$	88,404		$	51,590
Net cash used in investing activities		(477,066	)		(19,603	)
Net cash provided by financing activities		454,991			266
Net increase in cash	$	66,329		$	32,253

Guidance for the Three Months Ending December 31,2014 (the “fourth quarter of2014”):   

We currently anticipate that our results of operations (which include the expected results of operations of Excalibur Broadcasting, LLC, a variable interest entity whose results are consolidated with those of Gray in accordance with GAAP (as defined below)) for the fourth quarter of 2014, will be within the ranges presented in the table below. These estimates do not include any impact from any pending acquisitions.

	Low End		% Change			High End		% Change
	Guidance for		From			Guidance for		From			Actual
	the Fourth		Actual Fourth			the Fourth		Actual Fourth			Fourth
	Quarter of		Quarter of			Quarter of		Quarter of			Quarter of
Selected operating data:	2014		2013			2014		2013			2013
	(dollars in thousands)
OPERATING REVENUE:
Revenue (less agency commissions)	$	171,000		79	%	$	174,000		82	%	$	95,556
OPERATING EXPENSES
(before depreciation, amortization andgain on disposals of assets):
Broadcast	$	84,500		44	%	$	86,500		48	%	$	58,594
Corporate and administrative	$	6,200		0	%	$	6,500		4	%	$	6,223
OTHER SELECTED DATA:
Political advertising revenue(less agency commissions)	$	46,000		2415	%	$	47,000		2470	%	$	1,829

Comments on Fourth Quarter 2014 Guidance: 

Fourth Quarter of2014 on an “AsReportedBasis.”

Based on our current forecasts for the fourth quarter of 2014, we anticipate the following changes from the three-month period ended December 31, 2013 (the “fourth quarter of 2013”) as outlined below. Our total revenue estimates for the fourth quarter of 2014 include approximately $47.4 million of revenue estimated to be contributed collectively by the Acquired Stations.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 9 of 14

Revenue.

• We believe our fourth quarter of 2014 local advertising revenue, excluding political advertising revenue, will increase by approximately28% to 32%.

• We expect our fourth quarter of 2014 national advertising revenue, excluding political advertising revenue, will increase by approximately20% to 25%.

• We anticipate our fourth quarter of 2014 internet advertising revenue, excluding political advertising revenue, will increase by approximately5% to 7%.

• We believe our fourth quarter of 2014 retransmission consent revenue will increase by approximately88%, or $10.1 million, to $21.6 million.

Operating expenses (before depreciation, amortization and gain on disposal of assets).

Our total broadcast operating expense estimates for the fourth quarter of 2014 include approximately $21.4 million of broadcast operating expense estimated to be incurred collectively by the Acquired Stations.

The anticipated increase in corporate and administrative expense for the fourth quarter 2014 compared to the fourth quarter of 2013 is expected to be due primarily to increases in incentive compensation and legal fees.

Fourth Quarter of2014 on a “Combined Historical Basis”.

Based on our current forecasts for the fourth quarter of 2014, we anticipate the following changes from the Combined Historical Basis fourth quarter of 2013 as outlined below.

Revenue:

• We believe our fourth quarter of 2014 total revenue will increase by approximately35% to 37%.

• We believe our fourth quarter of 2014 local advertising revenue, excluding political advertising revenue, will decrease slightly bylow single digits.

• We expect our fourth quarter of 2014 national advertising revenue, excluding political advertising revenue, will decrease slightly by low single digits.

• These anticipated results of local and national advertising revenue, excluding political advertising reflect, in part, the strong demand for our available advertising inventory from political advertisers during the fourth quarter of 2014.

• We anticipate our fourth quarter of 2014 internet advertising revenue, excluding political advertising revenue, will be generally consistent with our 2013 results.

• We believe our fourth quarter of 2014 political revenue will range between$46.0 million and $47.0million bringing anticipated full year 2014 political revenue to range between $83.0 million and $84.0 million. Our fourth quarter of 2013 political revenue wasapproximately $2.7 million.

• We believe our fourth quarter of 2014 retransmission consent revenue will increase by approximately 35% to approximately $21.6 million.

Operating expenses (before depreciation, amortization and gain on disposal of assets) on a Combined Historical Basis:

Our total broadcast operating expenses for the fourth quarter of 2014 are anticipated to increase from the fourth quarter of 2013 on a Combined Historical Basis by approximately $6.7 million. This increase reflects expected increases in network affiliation fees of $2.7 million (reflecting, in part, increased fees payable to the ABC network for our affiliation agreements that renewed January 1, 2014) and an increase of approximately $2.0 million in national sales representative commissions expected to be payable in the fourth quarter of 2014 on anticipated political revenue.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 10 of 14

Revenue (less agency commissions) by Category:

The table below presents our revenue (less agency commissions) or “net revenue” by type for the three-month and nine-month periods ended September 30, 2014 and 2013, respectively (dollars in thousands):

	Three Months Ended September 30,
	2014					2013
			Percent					Percent
	Amount		of Total			Amount		of Total
Revenue (less agency commissions):
Local	$	62,029		47.1	%	$	48,728		55.2	%
National		16,158		12.3	%		13,585		15.4	%
Internet		7,431		5.6	%		6,476		7.3	%
Political		22,029		16.7	%		1,377		1.6	%
Retransmission consent		19,674		14.9	%		9,165		10.4	%
Other		4,381		3.4	%		1,814		2.1	%
Consulting		-		0.0	%		7,143		8.0	%
Total	$	131,702		100.0	%	$	88,288		100.0	%

	Nine Months Ended September 30,
	2014					2013
			Percent					Percent
	Amount		of Total			Amount		of Total
Revenue (less agency commissions):
Local	$	169,751		51.4	%	$	146,025		58.2	%
National		44,332		13.4	%		42,061		16.8	%
Internet		20,676		6.3	%		18,439		7.4	%
Political		33,437		10.1	%		2,769		1.1	%
Retransmission consent		53,450		16.2	%		28,253		11.3	%
Other		8,602		2.6	%		6,052		2.4	%
Consulting		-		0.0	%		7,143		2.8	%
Total	$	330,248		100.0	%	$	250,742		100.0	%

The aggregate internet revenues presented above are derived from: (i) direct internet revenue and (ii) internet-related commercial time sales.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 11 of 14

Non-GAAP Terms

From time to time, Gray supplements its financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) by disclosing the non-GAAP financial measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses, operating cash flow as defined in Gray’s credit facility (“Operating Cash Flow”) and Free Cash Flow. These non-GAAP amounts are used by us to approximate the amount used to calculate a key financial performance covenant contained in our debt agreements.

Broadcast Cash Flow is defined as net income plus corporate and administrative expenses, loss from early extinguishment of debt, broadcast non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations and network compensation revenue.

Broadcast Cash Flow Less Cash Corporate Expense is defined as net income plus loss from early extinguishment of debt, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations and network compensation revenue.

Free Cash Flow is defined as net income plus loss from early extinguishment of debt, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, pension expense less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations, network compensation revenue, contributions to pension plans, interest expense (net of amortization of deferred financing costs and amortization of original issue discount on our debt), capital expenditures (net of any insurance proceeds) and the payment of income taxes (net of any refunds received).

These non-GAAP terms are not defined in GAAP and our definitions may differ from, and therefore not be comparable to, similarly titled measures used by other companies, thereby limiting their usefulness. Such terms are used by management in addition to and in conjunction with results presented in accordance with GAAP and should be considered as supplements to, and not as substitutes for, net income and cash flows reported in accordance with GAAP.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 12 of 14

Reconciliations:

Reconciliation of net income to the non-GAAP terms (dollars in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income	$	13,940		$	7,073		$	16,808		$	13,087
Adjustments to reconcile from net income toBroadcast Cash Flow Less Cash Corporate Expenses:
Depreciation		8,228			6,024			21,598			17,762
Amortization of intangible assets		3,823			9			5,291			40
Non-cash stock based compensation		981			255			4,032			1,719
Loss (gain) on disposals of assets, net		6			49			385			(56	)
Miscellaneous (income) expense, net		(11	)		-			(14	)		-
Interest expense		18,619			12,656			49,718			37,790
Loss from early extinguishment of debt		-			-			4,897			-
Income tax expense		8,608			4,491			10,343			9,715
Amortization of program broadcast rights		3,309			2,829			9,227			8,492
Common stock contributed to 401(k) planexcluding corporate 401(k) contributions		6			7			18			21
Network compensation revenue recognized		(122	)		(156	)		(343	)		(470	)
Payments for program broadcast rights		(3,502	)		(2,849	)		(11,194	)		(8,549	)
Corporate and administrative expenses excludingdepreciation, amortization of intangible assets andnon-cash stock based compensation		4,544			4,215			18,812			11,868
Broadcast Cash Flow		58,429			34,603			129,578			91,419
Corporate and administrative expenses excludingdepreciation, amortization of intangible assets andnon-cash stock based compensation		(4,544	)		(4,215	)		(18,812	)		(11,868	)
Broadcast Cash Flow Less Cash Corporate Expenses		53,885			30,388			110,766			79,551
Pension expense		1,518			2,156			4,611			6,464
Contributions to pension plans		(1,996	)		(1,082	)		(4,713	)		(3,686	)
Interest expense		(18,619	)		(12,656	)		(49,718	)		(37,790	)
Amortization of deferred financing costs		764			412			2,158			1,235
Amortization of original issue (premium) or discount on Notes		(215	)		69			(647	)		206
Purchase of property and equipment		(9,996	)		(5,953	)		(20,452	)		(18,441	)
Income taxes paid, net of refunds		(32	)		(15	)		(361	)		(518	)
Free Cash Flow	$	25,309		$	13,319		$	41,644		$	27,021

See the previous page for the definition of Non-GAAP terms.

The Company

We are a television broadcast company headquartered in Atlanta, Georgia, that owns and/or operates television stations and leading digital assets in markets throughout the United States. Upon completion of all pending transactions, we will own and/or operate television stations in 44 television markets broadcasting 139 program streams including 76 affiliates of the Big Four networks (ABC, CBS, NBC and FOX). At that time, our owned and/or operated stations will include 26 channels affiliated with the CBS Network, 24 channels affiliated with the NBC Network, 16 channels affiliated with the ABC Network and 10 channels affiliated with the FOX Network. We will then own and/or operate the number-one ranked television station in 29 of those 44 markets and the number-one or number-two ranked television station operations in 40 of those 44 markets. We reach approximately 8.1 percent of total United States television households.

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 13 of 14

Cautionary Statements for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act

This press release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. These “forward-looking statements” are not statements of historical facts, and may include, among other things, statements regarding our current expectations and beliefs of operating results for the fourth quarter of 2014 or other periods, future expenses, the completion of pending acquisitions and other future events. Actual results are subject to a number of risks and uncertainties and may differ materially from the current expectations and beliefs discussed in this press release. All information set forth in this release is as ofNovember 5, 2014. We do not intend, and undertake no duty, to update this information to reflect future events or circumstances. Information about certain potential factors that could affect our business and financial results and cause actual results to differ materially from those expressed or implied in any forward-looking statements are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the year ended December 31, 2013 and may be contained in reports subsequently filed with the U.S. Securities and Exchange Commission (the “SEC”) and available at the SEC's website at www.sec.gov.

Conference Call Information

We will host a conference call to discuss our third quarter operating results on November 5, 2014. The call will begin at 10:00 AM Eastern Time. The live dial-in number is 1 (800) 499-4035 and the confirmation code is 3796251. The call will be webcast live and available for replay at www.gray.tv. The taped replay of the conference call will be available at 1 (888) 203-1112, Confirmation Code: 3796251 until December 5, 2014.

For information contact:	Web site:www.gray.tv
Hilton Howell	Jim Ryan
President and Chief Executive Officer	Senior V. P. and Chief Financial Officer
(404) 266-5512	(404) 504-9828

Gray Television, Inc.

Earnings Release for the three-month and nine-month periods ended September 30, 2014     Page 14 of 14