Gray Sets Revenue Record and Reports Operating Results For the Three-Month Period and Year Ended December 31, 2012

Gray Sets Revenue Record and Reports Operating Results For the Three-Month Period and Year Ended December 31, 2012

ATLANTA, Feb. 20, 2013 /PRNewswire/ --Gray Television, Inc. ("Gray," "we," "us" or "our") (NYSE: GTN and GTN.A) today announced results from operations for the three-month period (the "fourth quarter of 2012") and year ended December 31, 2012 as compared to the three-month period (the "fourth quarter of 2011") and year ended December 31, 2011.

Highlights of Operating Results:

Gray reported record total revenue, Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses (each as defined) and political revenue for the fourth quarter of 2012 and the year ended December 31, 2012 as follows:


-- fourth quarter of 2012 revenue was $126.6 million; previous fourth
quarter record was $114.6 million set in the three-month period ended
December 31, 2010;
-- year ended December 31, 2012 revenue was $404.8 million; previous full
year record was $346.1 million set in the year ended December 31, 2010;
-- fourth quarter of 2012 Broadcast Cash Flow Less Cash Corporate Expenses
was $64.5 million; previous fourth quarter record was $58.2 million set
in the three-month period ended December 31, 2010;
-- year ended December 31, 2012 Broadcast Cash Flow Less Cash Corporate
Expenses was $176.1 million; previous full year record was $135.7
million set in the year ended December 31, 2010;
-- fourth quarter of 2012 Broadcast Cash Flow was $69.2 million; previous
fourth quarter record was $61.6 million set in the three-month period
ended December 31, 2010;
-- year ended December 31, 2012 Broadcast Cash Flow was $191.1 million;
previous full year record was $148.9 million set in the year ended
December 31, 2010;
-- fourth quarter of 2012 political revenue was $43.4 million; previous
fourth quarter record was $33.1 million set in the three-month period
ended December 31, 2010; and
-- year ended December 31, 2012 political revenue was $86.0 million;
previous full year record was $57.6 million set in the year ended
December 31, 2010.
Broadcast Cash Flow and Broadcast Cash Flow Less Cash Corporate Expenses are non-GAAP terms. These terms are defined on page 12 and reconciled to net income on pages 12 and 13 of this press release.

For the fourth quarters of 2012 and 2011, our revenue, broadcast expenses and corporate and administrative expenses were as follows:



Three Months Ended December 31,
-------------------------------
2012 2011 % Change
---- ---- --------
(in thousands except for percentages)
Revenue
(less
agency
commissions) $126,587 $84,670 50 %

Operating
expenses
(before
depreciation,
amortization
and loss
or gain
on
disposals
of
assets,
net):
Broadcast $56,651 $49,409 15 %

Corporate
and
administrative $5,182 $3,644 42 %




Comments on Results of Operations for the Fourth Quarter of 2012:

Revenue.

As described above, our total revenue for the fourth quarter of 2012 was the highest revenue Gray has reported for a fourth quarter period. Total revenue increased $41.9 million, or 50%, to $126.6 million for the fourth quarter of 2012 compared to the fourth quarter of 2011 due primarily to increased political advertising revenue, retransmission consent revenue and internet advertising revenue, partially offset by decreased local and national advertising revenue. Political advertising revenue increased due to increased advertising from political candidates and special interest groups in the "on year" of the two-year election cycle. Retransmission consent revenue increased primarily due to the improved terms of our retransmission contracts. A significant portion of our retransmission consent contracts expired in 2011, and we were able to renew substantially all of these contracts under terms more favorable to Gray, which resulted in increased revenue in the fourth quarter of 2012 compared to the fourth quarter of 2011. Internet advertising revenue increased due to increased spending by advertisers in an improving economic environment. National and local advertising revenue decreased, in part, due to an increased portion of our available advertising time being sold for political advertising revenue rather than local and national advertising. We continued to earn base consulting revenue from our agreement with Young Broadcasting, Inc. ("Young"); although we did not record any incentive consulting revenue from this agreement in either period. This agreement expired on December 31, 2012.

The principal components of our revenue for the fourth quarter of 2012 compared to the fourth quarter of 2011 were as follows:

<blockquote>

Local advertising revenue decreased $0.4 million, or 1%, to $50.4 million.

National advertising revenue decreased $1.0 million, or 6%, to $15.1 million.

Internet advertising revenue increased $0.8 million, or 14%, to $6.6 million.

Political advertising revenue increased $38.8 million, or 853%, to $43.4 million.

Retransmission consent revenue increased $3.5 million, or 71%, to $8.5 million.

Other revenue increased $0.2 million, or 9%, to $2.1 million.

Consulting revenue from our agreement with Young was consistent with the prior year period at $0.6 million.










































</blockquote>

Our five largest nonpolitical advertising categories on a combined local and national basis by customer type for the fourth quarter of 2012 demonstrated the following changes during the period compared to the fourth quarter of 2011: automotive increased 10%; medical decreased 7%; restaurant decreased 5%; furniture and appliances increased 10%; and communications decreased 7%.

Operating expenses.

Broadcast expenses (before depreciation, amortization and loss or gain on disposal of assets, net) increased $7.2 million, or 15%, to $56.7 million in the fourth quarter of 2012 compared to the fourth quarter of 2011. This increase was due primarily to increases in non-compensation expense of $4.7 million and compensation expense of $2.5 million. Non-compensation expense increased primarily due to increases in national sales commissions of $2.7 million and programming costs of $1.5 million. National sales commission expense increased primarily due to increased political advertising revenue. We pay a percentage of certain national advertising revenue to third parties as a commission. As this revenue increases or decreases our national sales commission expense changes accordingly. Programming costs increased primarily due to an increase of $0.9 million for affiliation fees charged by certain networks. Compensation expense increased primarily due to increases in health care, pension and salary expenses. As of December 31, 2012 and 2011, we employed 2,059 and 2,082 employees, respectively, in our broadcast operations. Since December 31, 2007, we have decreased the number of employees in our broadcast operations by 15.1%, or 366 positions.

Corporate and administrative expenses (before depreciation, amortization and loss or gain on disposal of assets, net) increased $1.5 million, or 42%, to $5.2 million in the fourth quarter of 2012 compared to the fourth quarter of 2011. The increase was due primarily to an increase in non-compensation expense of $0.8 million and an increase in compensation expense of $0.7 million. Non-compensation expense increased primarily due to an increase in fees paid to consultants for audience research. Compensation expense increased primarily due to increases in stock-based compensation and salary expenses. We recorded non-cash stock-based compensation expense during the fourth quarter of 2012 and the fourth quarter of 2011 of $554,000 and $34,000, respectively. Non-cash stock-based compensation expense increased due to the grant and vesting of additional equity incentive awards during 2012.

Comments on Results of Operations for the Year Ended December 31, 2012:

Revenue.

As noted above, our total revenue for the year ended December 31, 2012 was the highest revenue Gray has reported for a full year period. Total revenue increased $97.7 million, or 32%, to $404.8 million for the year ended December 31, 2012 compared to the year ended December 31, 2011, reflecting increased revenue from all sources. Political advertising revenue reflected increased advertising from political candidates and special interest groups during the "on year" of the two-year political advertising cycle. Our political advertising revenue also increased due to additional advertising related to a special election to recall the Governor of Wisconsin, where we have three television stations. Retransmission consent revenue increased primarily due to the improved terms of our retransmission contracts.

Local and national revenue increased due to increased spending by advertisers in a gradually improving economic environment and our broadcast of the 2012 Summer Olympics. During the year ended December 31, 2012, we earned approximately $4.0 million of revenue from local and national advertisers and $1.1 million of revenue from political advertisers during the broadcast of the 2012 Summer Olympics on our ten primary NBC stations. There were no Olympic games during 2011. In addition, local and national advertising revenue was positively influenced by the broadcast of the 2012 Super Bowl on our ten primary NBC channels, earning us approximately $0.8 million, an increase of approximately $0.6 million compared to the broadcast of the 2011 Super Bowl on our then-one primary FOX-affiliated channel and then-four secondary digital FOX-affiliated channels, which earned us approximately $0.2 million. While our internet advertising revenue has also benefited from an improved economy, we continue to focus on and invest resources into our internet sales efforts, which have also resulted in increased internet revenue.

Other revenue increased due to our receipt of a cable copyright royalty distribution during the year ended December 31, 2012. If any similar copyright royalty payments are received in future periods, they are likely to recur in lower amounts. We continued to earn consulting revenue under our agreement with Young in the year ended December 31, 2012, which was the final year of that agreement.

The principal components of our revenue for the year ended December 31, 2012 compared to the year ended December 31, 2011 were as follows:

<blockquote>

Local advertising revenue increased $4.3 million, or 2%, to $191.3 million.

National advertising revenue increased $0.4 million, or 1%, to $56.8 million.

Internet advertising revenue increased $4.9 million, or 24%, to $25.0 million.

Political advertising revenue increased $72.5 million, or 537%, to $86.0 million.

Retransmission consent revenue increased $13.5 million, or 67%, to $33.8 million.

Other revenue increased $1.8 million, or 23%, to $9.5 million.

Consulting revenue from our agreement with Young increased $0.2 million, or 11%, to $2.4 million.




































</blockquote>

Our five largest nonpolitical advertising categories on a combined local and national basis by customer type for the year ended December 31, 2012 demonstrated the following changes during the period compared to the year ended December 31, 2011: automotive increased 16%; medical increased 7%; restaurant decreased 4%; communications increased 2%; and furniture and appliances increased 8%.

Operating expenses.

Broadcast expenses (before depreciation, amortization and gain on disposal of assets, net) increased $18.1 million, or 9%, to $212.3 million. This increase was due primarily to increases in non-compensation expense of $10.4 million and compensation expense of $7.7 million. Non-compensation expense increased primarily due to increases in national sales commissions of $4.8 million and programming costs of $3.5 million. National sales commission expense increased primarily due to increased political advertising revenue. Programming costs increased primarily due to an increase of $5.5 million for affiliation fees charged by certain networks, offset in part by a decrease of $2.4 million under our syndicated film contracts. Compensation expense increased primarily due to an increase of $2.4 million in pension expense, an increase of $2.4 million in salary expense, an increase of $1.9 million in incentive compensation expense and an increase of $0.8 million in health care expense. Pension expense increased primarily due to a decrease in the discount rate used to calculate pension expense. Salary expense increased due to routine increases in base compensation. Incentive compensation increased as our stations' operating income increased. Health care expense increased due to increased claims activity.

Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets, net) increased $1.8 million, or 12%, to $15.9 million. The increase was due primarily to an increase in compensation expense of $1.6 million. Compensation expense increased primarily due to an increase of $0.7 million in non-cash stock-based compensation expense, an increase of $0.3 million in pension expense, an increase of $0.4 million in salary expense and an increase of $0.2 million in incentive compensation expense. We recorded non-cash stock-based compensation expense during the years ended December 31, 2012 and 2011 of $878,000 and $136,000, respectively. Non-cash stock-based compensation expense increased due to the grant and vesting of additional equity incentive awards during year ended December 31, 2012.

2012 Refinancing Activities and Related Loss From Early Extinguishment of Debt:

During the fourth quarter of 2012, we completed several financing transactions which included:


-- completing the repurchase of all remaining outstanding shares of our
Series D Perpetual Preferred Stock;
-- completing the offer and sale of $300.0 million aggregate principal
amount of 7½% Senior Notes due 2020 (the "2020 Notes");
-- completing the tender offer for and related redemption of our
outstanding $365.0 million 10½% Senior Secured Second Lien Notes due
2015 (the "2015 Notes"); and
-- repaying all amounts outstanding under our prior senior credit facility
and entering into an amended and restated senior credit facility (the
"2012 Senior Credit Facility").
As of December 31, 2012 and 2011, our long-term debt balance at liquidation value was $835.0 million and $837.0 million, respectively, with weighted average interest rates of 5.7% and 6.9%, respectively. For the year ended December 31, 2012, we incurred interest expense of $59.4 million and we estimate our interest expense will be approximately $50.0 million for the year ending December 31, 2013.

Also, as a result of completing the repurchase of all of our outstanding Series D Perpetual Preferred Stock, we will not incur Series D Perpetual Preferred Stock dividends in future periods. For the years ended December 31, 2012 and 2011, we incurred Series D Perpetual Preferred Stock dividends of $4.1 million and $7.2 million, respectively.

As a result of these financing transactions, we recorded a loss from early extinguishment of debt of $46.7 million during the fourth quarter of 2012 which included $38.6 million related to the tender offer for the 2015 Notes and $8.1 million related to the amendment and restatement of the 2012 Senior Credit Facility.

Detailed table of operating results:



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

Three Months Ended
December 31,
------------

2012 2011
---- ----

Revenue (less
agency
commissions) $126,587 $84,670
Operating expenses
before
depreciation,
amortization and
gain on disposal
of assets, net:
Broadcast 56,651 49,409
Corporate and
administrative 5,182 3,644
Depreciation 5,801 6,017
Amortization of
intangible assets 19 28
Loss (gain) on
disposal of
assets, net 423 (1,020)
Operating expenses 68,076 58,078
------ ------
Operating income 58,511 26,592
Other expense:
Interest expense (13,999) (15,269)
Loss from early
extinguishment of
debt (46,683) -
------- ---
(Loss) income
before income
taxes (2,171) 11,323
Income tax
(benefit) expense (62) 3,748
--- -----
Net (loss) income (2,109) 7,575
Preferred stock
dividends
(includes
accretion of
issuance cost of
$448 and $384,
respectively) 504 1,706
Net (loss) income
available to
common
stockholders $(2,613) $5,869
======= ======

Basic per share
information:
Net (loss) income
available to
common
stockholders $(0.05) $0.10
====== =====
Weighted-average
shares outstanding 57,226 57,121
====== ======

Diluted per share
information:
Net (loss) income
available to
common
stockholders $(0.05) $0.10
====== =====
Weighted-average
shares outstanding 57,424 57,125
====== ======

Political
advertising
revenue (less
agency
commissions) $43,368 $4,551




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

Year Ended
December 31,
------------

2012 2011
---- ----

Revenue (less agency
commissions) $404,831 $307,131
Operating expenses
before depreciation,
amortization and gain
on disposal of
assets, net:
Broadcast 212,286 194,196
Corporate and
administrative 15,927 14,173
Depreciation 23,133 26,183
Amortization of
intangible assets 75 125
Gain on disposal of
assets, net (31) (2,894)
Operating expenses 251,390 231,783
------- -------
Operating income 153,441 75,348
Other income
(expense):
Miscellaneous income,
net 2 3
Interest expense (59,443) (61,777)
Loss on early
extinguishment of
debt (46,683) -
------- ---
Income before income
taxes 47,317 13,574
Income tax expense 19,188 4,539
------ -----
Net income 28,129 9,035
Preferred stock
dividends (includes
accretion of
issuance cost of
$1,081 and $1,045,
respectively) 4,095 7,240
Net income available
to common
stockholders $24,034 $1,795
======= ======

Basic per share
information:
Net income available
to common
stockholders $0.42 $0.03
===== =====
Weighted-average
shares outstanding 57,170 57,117
====== ======

Diluted per share
information:
Net income available
to common
stockholders $0.42 $0.03
===== =====
Weighted-average
shares outstanding 57,262 57,118
====== ======

Political advertising
revenue (less agency
commissions) $85,973 $13,491




Other Financial Data:



December 31, 2012 December 31, 2011
----------------- -----------------
(in thousands)

Cash $11,067 $5,190
Long-term
debt,
including
current
portion $832,867 $832,233
Series D
Perpetual
Preferred
Stock (1) $ - $24,841
Long-term
accrued
dividends $ - $13,717
Borrowing
availability
under our
senior credit
facility $40,000 $31,000

Year Ended December 31,
2012 2011
---- ----
(in thousands)

Net cash
provided by
operating
activities $89,372 $38,173
Net cash used
in investing
activities (23,306) (21,869)
Net cash used
in financing
activities (60,189) (16,545)
Net increase
(decrease) in
cash $5,877 $(241)
====== =====



(1) As of December 31, 2011,
preferred stock does not
include unaccreted original
issuance costs and accrued
preferred stock dividends of
$1.1 million and $13.7 million,
respectively.
Internet Initiatives:

We continue to focus on expanding local content on our websites to drive increased traffic. Our website page view data for the fourth quarter of 2012 and year ended December 31, 2012 compared to the fourth quarter of 2011 and year ended December 31, 2011 is as follows:



Gray Websites - Aggregate Page Views

Three Months Ended December 31,
-------------------------------
2012 2011 % Change
---- ---- --------
(in millions, except percentages)

Advertising
impressions
generated 1,079.6 880.5 23 %
Total
page
views
(including
mobile
page
views) 388.2 288.2 35 %

Year Ended December 31,
-----------------------
2012 2011 % Change
---- ---- --------
(in millions, except percentages)

Advertising
impressions
generated 4,403.1 3,470.0 27 %
Total
page
views
(including
mobile
page
views) 1,551.4 1,105.9 40 %





Revenue (less agency commissions) by Category:

The table below presents our net revenue (less agency commissions) or "net revenue" by type for the three-month periods and years ended December 31, 2012 and 2011, respectively (dollars in thousands):



Three Months Ended December 31,
-------------------------------
2012 2011
---- ----
Percent Percent
Amount of Total Amount of Total
------ -------- ------ --------
Revenue (less agency commissions):
Local $50,368 39.8% $50,768 60.0%
National 15,111 11.9% 16,146 19.1%
Internet 6,580 5.2% 5,756 6.8%
Political 43,368 34.3% 4,551 5.4%
Retransmission consent 8,499 6.7% 4,963 5.9%
Other 2,111 1.7% 1,936 2.3%
Consulting 550 0.4% 550 0.5%
Total $126,587 100.0% $84,670 100.0%
======== ===== ======= =====




Year Ended December 31,
-----------------------
2012 2011
---- ----
Percent Percent
Amount of Total Amount of Total
------ -------- ------ --------
Revenue (less agency commissions):
Local $191,330 47.3% $187,029 60.9%
National 56,779 14.0% 56,335 18.3%
Internet 25,000 6.2% 20,081 6.5%
Political 85,973 21.2% 13,491 4.4%
Retransmission consent 33,774 8.3% 20,227 6.6%
Other 9,530 2.4% 7,768 2.5%
Consulting 2,445 0.6% 2,200 0.8%
Total $404,831 100.0% $307,131 100.0%
======== ===== ======== =====


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

Guidance for 2013:

We currently anticipate that our results of operations for the three-month period ending March 31, 2013 (the "first quarter of 2013") will approximate the ranges presented in the table below.




Low End % Change High End % Change
Guidance for From Guidance for From Actual
the First Actual First the First Actual First First
Quarter of Quarter of Quarter of Quarter of Quarter of
Selected operating data: 2013 2012 2013 2012 2012
------------------------ ---- ---- ---- ---- ----
(dollars in thousands)
OPERATING REVENUE:
Revenue (less agency commissions) $76,000 (6)% $77,000 (5)% $80,674

OPERATING EXPENSES
(before depreciation, amortization and
gain or loss on disposals of assets, net):
Broadcast $54,600 8 % $55,000 8 % $50,772
Corporate and administrative $3,800 22 % $4,000 29 % $3,106

OTHER SELECTED DATA:
Political advertising revenues
(less agency commissions) $200 (96)% $300 (94)% $4,959


Comments on Guidance:

First Quarter 2013.

Based on our current forecasts for first quarter of 2013, we anticipate the following changes from the three-month period ended March 31, 2012 (the "first quarter of 2012"):

Revenue.


-- We believe our first quarter of 2013 local revenue, excluding political
revenue, will increase from the first quarter of 2012 by approximately
1%.
-- We expect our first quarter of 2013 national revenue, excluding
political revenue, will increase from the first quarter of 2012 by
approximately 1%.
-- We anticipate our first quarter of 2013 internet revenue, excluding
political revenue, will increase from the first quarter of 2012 by
approximately 1%.
-- We believe our first quarter of 2013 retransmission consent revenue will
increase from the first quarter of 2012 by approximately 10% to 11%.
-- We do not anticipate any significant amount of political revenue in the
first quarter of 2013, reflecting the "off year" of the two year
political cycle and the absence of any special elections and special
political issue advertising campaigns.
-- Included in our current first quarter of 2013 expectations for our
local, national and internet revenue, excluding political revenue, we
presently estimate that we earned approximately $1.1 million from the
broadcast of the 2013 Super Bowl on our 20 CBS channels in comparison to
$0.8 million from the broadcast of the 2012 Super Bowl on our 10 NBC
channels.
Operating expenses (before depreciation, amortization and gain or loss on disposal of assets, net).

The anticipated increase in broadcast operating expense for the first quarter 2013 compared to the first quarter of 2012 is expected to be due primarily to increased payroll, healthcare, pension and affiliation expense, partially offset by a decrease in national sales commission expense.

The anticipated increase in corporate operating expense for the first quarter 2013 compared to the first quarter of 2012 is expected to be due primarily to increased payroll and audience research expense.

Full Year 2013.

Based on our current forecasts for the twelve months ending December 31, 2013 (the "full year 2013"), we anticipate the following changes from the twelve-month period ended December 31, 2012 (the "full year 2012"):

Revenue


-- We believe our full year 2013 local revenue, excluding political
revenue, will increase from the full year 2012 by approximately 5% to
7%.
-- We believe our full year 2013 national revenue, excluding political
revenue, will increase from full year 2012 by approximately 3% to 4%.
-- We anticipate our full year 2013 internet revenue, excluding political
revenue, will increase from the full year 2012 by approximately 11% to
12%.
-- We anticipate that our full year 2013 retransmission consent revenue
will increase from full year 2012 by approximately 14% to 15%.
-- We do not anticipate any significant amount of political revenue for the
full year 2013 reflecting the "off year" of the two year political cycle
and the absence of any special elections and special political issue
advertising campaigns.
Operating expenses (before depreciation, amortization and gain or loss on disposal of assets, net).

For the full year of 2013, we anticipate our broadcast operating expenses will increase by approximately 2.0% to 2.5%, reflecting increased payroll, healthcare, pension and affiliation expense, partially offset by a decrease in national sales commission expense.

For the full year 2013, we currently anticipate our corporate operating expense will approximate $15.3 million which is approximately $0.6 million less than the full year 2012.

Conference Call Information

We will host a conference call to discuss our fourth quarter and full year 2012 operating results on February 20, 2013. The call will begin at 10:30 AM Eastern Time. The live dial-in number is 1 (888) 481-2844 and the confirmation code is 2224964. 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: 2224964 until March 21, 2013.

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 and Broadcast Cash Flow Less Cash Corporate Expenses. 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 (loss) plus corporate and administrative expenses, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any loss on early extinguishment of debt, any income tax expense less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations and network compensation revenue and network payments. Corporate and administrative expenses (excluding depreciation, amortization and non-cash stock-based compensation) are deducted from Broadcast Cash Flow to calculate "Broadcast Cash Flow Less Cash Corporate Expenses." 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 (loss) and cash flows reported in accordance with GAAP.

Reconciliations:

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



Three Months Ended
December 31,
------------
2012 2011 % Change
---- ---- --------
Net (loss) income $(2,109) $7,575
Adjustments to reconcile to Broadcast Cash Flow Less
Cash Corporate Expenses:
Depreciation 5,801 6,017
Amortization of intangible assets 19 28
Amortization of non-cash stock based compensation 554 34
(Loss) gain on disposal of assets, net 423 (1,020)
Interest expense 13,999 15,269
Loss on early extinguishment of debt 46,683 -
Income tax (benefit) expense (62) 3,748
Amortization of program broadcast rights 2,831 2,796
Common stock contributed to 401(k) plan
excluding corporate 401(k) plan contributions 8 7
Network compensation revenue recognized (157) (174)
Network compensation per network affiliation agreement - (60)
Payments for program broadcast rights (3,453) (3,463)
------ ------
Broadcast Cash Flow Less Cash Corporate Expenses 64,537 30,757 110 %
Corporate and administrative expenses excluding
amortization of non-cash stock-based compensation 4,628 3,610
Broadcast Cash Flow $69,165 $34,367 101 %
======= =======



Year Ended
December 31,
------------
2012 2011 % Change
---- ---- --------
Net income $28,129 $9,035
Adjustments to reconcile to Broadcast Cash Flow Less
Cash Corporate Expenses:
Depreciation 23,133 26,183
Amortization of intangible assets 75 125
Amortization of non-cash stock based compensation 878 136
Gain on disposal of assets, net (31) (2,894)
Miscellaneous income, net (2) (3)
Interest expense 59,443 61,777
Loss on early extinguishment of debt 46,683 -
Income tax expense 19,188 4,539
Amortization of program broadcast rights 11,081 13,484
Common stock contributed to 401(k) plan
excluding corporate 401(k) plan contributions 26 29
Network compensation revenue recognized (627) (698)
Network compensation per network affiliation agreement (60) (240)
Payments for program broadcast rights (11,839) (15,915)
------- -------
Broadcast Cash Flow Less Cash Corporate Expenses 176,077 95,558 84 %
Corporate and administrative expenses excluding
amortization of non-cash stock-based compensation 15,049 14,037
Broadcast Cash Flow $191,126 $109,595 74 %
======== ========


The Company

We are a television broadcast company headquartered in Atlanta, GA, which owns and operates television stations broadcasting 40 primary channels and 45 secondary channels in 30 television markets. Nineteen of our primary channels and one secondary channel are affiliated with the CBS Network owned by CBS Inc. ("CBS"), ten primary channels are affiliated with the NBC Network owned by National Broadcasting Company, Inc. ("NBC"), eight primary channels and one secondary channel are affiliated with the ABC Network owned by American Broadcasting Company ("ABC"), and three primary channels and two secondary channels are affiliated with the FOX Network owned by the FOX Broadcasting Company ("FOX"). We also broadcast secondary channels that are affiliated with networks other than those listed above such as the CW Network or the CW Plus Network, both owned by The CW Network, LLC (collectively, "CW"), Master Distribution Service, Inc. (an affiliate of Twentieth Television, Inc.) ("MyNetworkTV" or "MyNet."), the MeTV Network owned by Weigel Broadcasting Co., This TV Network also owned by Weigel Broadcasting, Untamed Sports Network, the Country Network and Antenna TV. In addition to our affiliated secondary channels, we broadcast nine local news/weather channels in certain of our existing markets.

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 first quarter and full year 2013 or other periods, internet strategies, including those resulting from our recent refinancing activities, 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 of February 20, 2013. 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, 2011 and will be contained in our Annual Report on Form 10-K for the year ended December 31, 2012 and 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.

Web site: www.gray.tv

SOURCE Gray Television, Inc.

Gray Television, Inc.

CONTACT: Bob Prather, President and Chief Operating Officer, +1-404-266-8333, or Jim Ryan, Senior V. P. and Chief Financial Officer, +1-404-504-9828

Web Site: http://www.gray.tv


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