Gray Reports Operating Results for the Three Months and Six Months Ended June 30, 2006

Gray Reports Operating Results for the Three Months and Six Months Ended June 30, 2006

ATLANTA, Aug. 9 /PRNewswire-FirstCall/ -- Gray Television, Inc. ("Gray" or the "Company") (NYSE:GTN) today announced results from operations for the three months ("second quarter") and six months ended June 30, 2006 as compared to the three months and six months ended June 30, 2005.

Significant items to note for the period ended June 30, 2006:

Pro Forma(1) Adjusted Broadcast Change from Same Period of
Cash Flow Prior Year
See Page 10 for a reconciliation
of this Non-GAAP term to Net
Income

Pro Forma(1) Adjusted Broadcast Increased 9% or $2.9 million
Cash Flow for the three months
ended June 30, 2006 of $33.9
million

Pro Forma(1) Adjusted Broadcast Increased 6% or $3.1 million
Cash Flow for the six months
ended June 30, 2006 of $54.8
million

"As Reported" Operating Results Change from Same Period of
for the Three Months Ended Prior Year
June 30,2006

Net local broadcast advertising Increased 17% or $7.6 million
revenue, excluding political
advertising revenue, of $52.6
million

Net national broadcast advertising Increased 14% or $2.6 million
revenue, excluding political
advertising revenue, of $21.4
million

Net political advertising revenue Increased $4.0 million
of $4.7 million reflecting the "on-year"
of the political election cycle

"As Reported" Operating Results Change from Same Period of
for the Six Months Ended Prior Year
June 30, 2006

Net local broadcast advertising Increased 18% or $15.0
revenue, excluding political million
advertising revenue, of $99.1
million

Net national broadcast advertising Increased 13% or $4.5
revenue, excluding political million
advertising revenue, of $38.6
million

Net political advertising revenue Increased $5.5 million
of $6.5 million reflecting the "on-year"
of the political election
cycle

June 30, 2006 December 31, 2005
Cash on Hand $7.4 million $9.3 million
Total Debt(2) $858.3 million $792.5 million

Comments on Results of Operations for the Three Months Ended:

Revenues.

Total revenues increased $13.4 million, or 20%, to $81.4 million reflecting, in part, the acquisition of television stations WSWG, Albany, GA on November 10, 2005, WSAZ, Charleston - Huntington, WV on November 30, 2005 and WNDU, South Bend, IN on March 3, 2006. On a pro forma(1) basis, after giving effect to the acquisition of television stations WSAZ and WNDU total net revenue increased 4% to $81.4 million.

Local advertising revenues, excluding political advertising revenues,
increased $7.6 million, or 17%, to $52.6 million from $45.0 million.

Since January 1, 2005, the Company has launched 13 digital second
channels in its existing television markets and acquired the
television stations discussed above. Collectively, these transactions
account for approximately 87%, or $6.6 million of the Company's
overall increase of $7.6 million in local advertising revenues,
excluding political advertising revenues.

For the stations and digital second channels continuously operated
since January 1, 2005, local advertising revenues, excluding political
advertising revenues, increased 2% or $1.0 million due to increased
demand for commercial time by local advertisers.

On a pro forma(1) basis, after giving effect to the acquisition of
television stations WSAZ and WNDU discussed above, local advertising
revenues, excluding political advertising revenues, increased 3% or
$1.7 million due to increased demand for commercial time by local
advertisers.

National advertising revenues increased 14%, or $2.6 million, to $21.4
million from $18.8 million.

The station acquisitions and launch of the digital second channels
discussed above collectively account for approximately $3.0 million of
this increase.

National advertising revenues, excluding political advertising
revenues, for the stations and digital second channels continuously
operated since January 1, 2005 decreased 2% or $428,000 due to
decreased demand for commercial time by national advertisers.

On a pro forma(1) basis, after giving effect to the acquisition of
television stations WSAZ and WNDU discussed above, national
advertising revenues, excluding political advertising revenues,
decreased 3% or $641,000.

Political advertising revenues increased to $4.7 million from
$0.7 million reflecting the cyclical influence of the 2006 elections.

Operating expenses.

Operating expenses increased 19% to $57.7 million from $48.3 million in the same period of the prior year primarily as the result of the station acquisitions discussed above.

Broadcasting expenses, before depreciation, amortization and loss on
disposal of assets increased $5.9 million, or 15%, to $45.5 million from
$39.6 million.

The station acquisitions and the recently launched digital second
channels discussed above collectively account for approximately 90% or
$5.4 million of this increase.

For the stations and second channels continuously operated since
January 1, 2005 broadcast expenses increased approximately 1%, or
$569,000. Other non-payroll related expenses, including program
costs, increased $564,000.

On a pro forma(1) basis, after giving effect to the acquisition of
television stations WSAZ and WNDU discussed above, broadcast expenses
increased approximately 1% to $45.5 million generally reflecting
routine increases in payroll related expenses and in other non-payroll
related expenses, including program costs.

Corporate and administrative expenses, before depreciation, amortization
and loss on disposal of assets decreased 4% to $2.9 million from $3.0
million. The 2006 period includes an aggregate of approximately
$193,000 of non-cash expenses recorded in connection with the Company's
adoption on January 1, 2006 of Statement of Financial Accounting
Standards No. 123(R) ("SFAS 123(R)") which relates to the new accounting
rules for expensing stock based compensation. The corresponding period
of 2005 contains $98,000 of non-cash expenses associated with restricted
stock awards.

Comments on Results of Operations for the Six Months Ended:

Revenues.

Total revenues increased $23.3 million, or 18% to $149.6 million reflecting, in part, the acquisition of television stations KKCO, Grand Junction, CO on January 31, 2005, WSWG, Albany, GA on November 10, 2005, WSAZ, Charleston - Huntington, WV on November 30, 2005 and WNDU, South Bend, IN on March 3, 2006. On a pro forma(1) basis, after giving effect to the acquisition of television stations WSAZ and WNDU total net revenue increased 5% to $152.2 million.

Local advertising revenues, excluding political advertising revenues,
increased $15.0 million, or 18%, to $99.1 million from $84.1 million.

Since January 1, 2005, the Company has launched 13 digital second
channels in its existing television markets and acquired the
television stations discussed above. Collectively, these transactions
account for approximately 76%, or $11.4 million of the Company's
overall increase of $15.0 million in local advertising revenues,
excluding political advertising revenues.

For the stations and digital second channels continuously operated
since January 1, 2005, local advertising revenues, excluding political
advertising revenues, increased 4% or $3.6 million due to increased
demand for commercial time by local advertisers.

On a pro forma(1) basis, after giving effect to the acquisition of
television stations WSAZ and WNDU discussed above, local advertising
revenues, excluding political advertising revenues, increased 6% or
$5.7 million due to increased demand for commercial time by local
advertisers.

National advertising revenues increased 13% or $4.5 million to $38.6
million from $34.1 million.

The station acquisitions and launch of the digital second channels
discussed above collectively account for approximately $5.1 million of
this increase.

National advertising revenues, excluding political advertising
revenues, for the stations and digital second channels continuously
operated since January 1, 2005 decreased 2% or $617,000 due to
decreased demand for commercial time by national advertisers.

On a pro forma(1) basis, after giving effect to the acquisition of
television stations WSAZ and WNDU discussed above, national
advertising revenues, excluding political advertising revenues,
decreased 2% or $655,000.

Political advertising revenues increased to $6.5 million from $1.0
million reflecting the cyclical influence of the 2006 elections.

During the first quarter of 2006, the Company earned an aggregate total
of approximately $2.9 million of revenue from the broadcast of the
Winter Olympic Games. On a pro forma(1) basis, after giving effect to
the acquisition of the television station WNDU discussed above, the
aggregate total revenue attributable to the broadcast of the Winter
Olympic Games approximated $3.4 million. No Olympic Games were
broadcast in the first quarter of 2005.

Operating expenses.

Operating expenses increased 20% to $114.9 million from $95.4 million in the same period of the prior year primarily as the result of the station acquisitions discussed above.

Broadcasting expenses, before depreciation, amortization and loss on
disposal of assets increased $12.3 million, or 16%, to $90.6 million
from $78.3 million.

The station acquisitions and the recently launched digital second
channels discussed above collectively account for approximately 78% or
$9.6 million of this increase.

For the stations and second channels continuously operated since
January 1, 2005 broadcast expenses increased approximately 3%, or $2.7
million. This increase was due to increased payroll costs of $1.4
million. Other non-payroll related expenses, including program costs,
increased $1.2 million.

On a pro forma(1) basis, after giving effect to the acquisition of
television stations WSAZ and WNDU discussed above, broadcast expenses
increased approximately 4% to $92.7 million generally reflecting
routine increases in payroll related expenses and in other non-payroll
related expenses, including program costs.

Corporate and administrative expenses, before depreciation, amortization
and loss on disposal of assets increased 15% to $6.7 million from $5.8
million. The 2006 period includes an aggregate of approximately
$391,000 of non-cash expenses recorded in connection with the Company's
adoption on January 1, 2006 of SFAS 123(R) which relates to the new
accounting rules for expensing stock based compensation. The
corresponding period of 2005 contains $196,000 of non-cash expenses
associated with restricted stock awards. Payroll and benefit costs,
excluding non-cash stock based compensation, increased $438,000. In
addition, professional service fees including legal, audit and financial
consulting fees increased approximately $140,000 over the first six
months of 2005.

Balance Sheet:

Gray's cash balance was $7.4 million at June 30, 2006 compared to $9.3 million at December 31, 2005. Gray generated $40.5 million of net cash from operations during the first six months of 2006 compared to $21.7 million for the prior year. The 2006 net cash generated from operations was offset in part by the return of capital to Gray's common and preferred shareholders through the payment of $4.5 million of dividends. Gray used a total of $1.2 million to purchase and retire a portion of Gray's 9.25% Senior Subordinated Notes and used $10.1 million to repay a portion of its Senior Credit Facility and other outstanding debt. Total debt outstanding at June 30, 2006 and December 31, 2005 was $858.3 million and $792.5 million(2), respectively. Capital expenditures for the six months ended June 30, 2006 were $14.4 million compared to $17.1 million for the same period of the prior year.

Changes in the classification of certain items:

Prior year operating results of the publishing and wireless segments in the accompanying condensed consolidated financial statements have been reclassified to conform to the 2006 presentation which reflects the results of those operations in income from discontinued operations, net of income taxes.

A Detailed table of operating results follows on the next page.

Gray Television, Inc.
Selected As Reported and Pro Forma Operating Data (Unaudited)
(in thousands except for per share data and percentages)

As Reported Pro Forma(1)
Three Months Ended Three Months Ended
June 30, June 30,
% %
2006 2005 Change 2006 2005 Change

Revenues (less agency
commissions) $81,391 $67,988 20 % $81,391 $77,942 4 %
Operating expenses:
Operating expenses
before depreciation,
amortization and loss
on disposal of
assets, net: 45,538 39,585 15 % 45,538 45,121 1 %
Corporate and
administrative 2,916 3,033 (4)% 2,916 3,033 (4)%
Depreciation and
amortization of
intangible assets 9,022 5,671 59 % 9,022 7,624 18 %
Loss on disposals of
assets, net 189 51 271 % 189 51 271 %
57,665 48,340 19 % 57,665 55,829 3 %
Operating income 23,726 19,648 21 % 23,726 22,113 7 %
Other income
(expense):
Miscellaneous income,
net 59 159 (63)% 59 158 (63)%
Interest expense (16,656) (11,312) 47 % (16,656) (14,854) 12 %
Loss on early
extinguishment of
debt - (4,770) (100)% - (4,770) (100)%
Income from continuing
operations before
income tax expense 7,129 3,725 91 % 7,129 2,647 169 %
Income tax expense 2,809 1,472 91 % 2,809 1,032 172 %
Income from continuing
operations 4,320 2,253 92 % 4,320 1,615 167 %
Income from operations
of discontinued
publishing and wireless
operations net of
income tax expense
of $0, $746, $0 and
$1,941, respectively - 1,140 (100)% - 1,140 (100)%
Net income 4,320 3,393 27 % 4,320 2,755 57 %
Preferred dividends
(includes accretion
of issuance cost of $22,
respectively) 815 814 0 % 815 814 0 %
Net income available
to common stockholders $3,505 $2,579 36 % $3,505 $1,941 81 %

Basic per share
information:
Net income from
continuing operations
available to common
stockholders $0.07 $0.03 $0.07 $0.02
Income from
discontinued
operations, net of
tax - 0.02 - 0.02
Net income available
to common
stockholders $0.07 $0.05 $0.07 $0.04
Weighted average
shares outstanding 48,791 48,639 0 % 48,791 48,639 0 %

Diluted per share
information:
Net income from
continuing operations
available to common
stockholders $0.07 $0.03 $0.07 $0.02
Income from discontinued
operations, net of tax - 0.02 - 0.02
Net income available
to common stockholders $0.07 $0.05 $0.07 $0.04
Weighted average
shares outstanding 48,791 48,851 0 % 48,791 48,851 0 %

Political revenue
(less agency
commission) $4,706 $687 585 % $4,706 $929 407 %

Gray Television, Inc.
Selected As Reported and Pro Forma Operating Data (Unaudited)
(in thousands except for per share data and percentages)

As Reported
Six Months Ended
June 30,
%
2006 2005 Change

Revenues (less agency commissions) $149,626 $126,297 18 %
Operating expenses:
Operating expenses before depreciation,
amortization and loss on disposal of
assets, net: 90,602 78,279 16 %
Corporate and administrative 6,660 5,777 15 %
Depreciation and amortization of
intangible assets 17,350 11,291 54 %
Loss on disposals of assets, net 271 84 223 %
114,883 95,431 20 %
Operating income 34,743 30,866 13 %
Other income (expense):
Miscellaneous income, net 405 453 (11)%
Interest expense (32,123) (22,425) 43 %
Loss on early extinguishment of debt (110) (4,770) (98)%
Income from continuing operations before
income tax expense 2,915 4,124 (29)%
Income tax expense 1,149 1,622 (29)%
Income from continuing operations 1,766 2,502 (29)%
Income from operations of discontinued
publishing and wireless operations net
of income tax expense of $0, $746, $0
and $1,941, respectively - 2,966 (100)%
Net income 1,766 5,468 (68)%
Preferred dividends (includes
accretion of issuance
cost of $44, respectively) 1,629 1,629 0 %
Net income (loss) available to common
stockholders $137 $3,839 (96)%

Basic per share information:
Net income (loss) from continuing
operations available to common
stockholders $- $0.02
Income from discontinued operations,
net of tax - 0.06
Net income available to common
stockholders $- $0.08
Weighted average shares outstanding 48,767 48,619 0 %

Diluted per share information:
Net income (loss) from continuing
operations available to common
stockholders $- $0.02
Income from discontinued operations,
net of tax - 0.06
Net income (loss) available to common
stockholders $- $0.08
Weighted average shares outstanding 48,782 48,948 0 %

Political revenue (less agency
commission) $6,482 $980 561 %

Gray Television, Inc.
Selected As Reported and Pro Forma Operating Data (Unaudited)
(in thousands except for per share data and percentages)

Pro Forma(1)
Six Months Ended
June 30,
%
2006 2005 Change

Revenues (less agency commissions) $152,211 $144,573 5 %
Operating expenses:
Operating expenses before depreciation,
amortization and loss on disposal of
assets, net: 92,742 89,378 4 %
Corporate and administrative 6,660 5,777 15 %
Depreciation and amortization of
intangible assets 18,018 15,203 19 %
Loss on disposals of assets, net 271 84 223 %
117,691 110,442 7 %
Operating income 34,520 34,131 1 %
Other income (expense):
Miscellaneous income, net 405 453 (11)%
Interest expense (32,548) (28,884) 13 %
Loss on early extinguishment of debt (110) (4,770) (98)%
Income from continuing operations
before income tax expense 2,267 930 144 %
Income tax expense 911 363 151 %
Income from continuing operations 1,356 567 139 %
Income from operations of discontinued
publishing and wireless operations net
of income tax expense of $0, $746, $0
and $1,941, respectively - 2,966 (100)%
Net income 1,356 3,533 (62)%
Preferred dividends (includes
accretion of issuance cost of $44,
respectively) 1,629 1,629 0 %
Net income (loss) available to common
stockholders $(273) $1,904 (114)%

Basic per share information:
Net income (loss) from continuing
operations available to common
stockholders $(0.01) $(0.02)
Income from discontinued operations,
net of tax - 0.06
Net income available to common
stockholders $(0.01) $0.04
Weighted average shares outstanding 48,767 48,619 0 %

Diluted per share information:
Net income (loss) from continuing
operations available to common
stockholders $(0.01) $(0.02)
Income from discontinued operations,
net of tax - 0.06
Net income (loss) available to common
stockholders $(0.01) $0.04
Weighted average shares outstanding 48,767 48,948 0 %

Political revenue (less agency
commission) $6,562 $1,299 405 %

Guidance for the Third Quarter of 2006

We currently anticipate that Gray's broadcasting results of operations for the three months ended September 30, 2006 will approximate the ranges presented in the table below.

% %
2006 Change Change 2006
Guidance From From Guidance
Low Actual Pro Forma High
Selected operating date: Range 2005 2005 Range
(dollars in millions)
OPERATING REVENUES:
Revenues (less agency
commissions) $82,500 32 % 16 % $85,000

OPERATING EXPENSES:
(before depreciation, amortization
and other expenses)
Broadcast $48,250 21 % 7 % $48,750
Corporate $3,200 1 % 1 % $3,500

OTHER SELECTED DATA:
Broadcast political revenues
(less agency commissions) $10,000 $12,000

% %
Change Change
From From
Actual Pro Forma Actual Pro Forma
Selected operating date: 2005 2005 2005 2005
(dollars in millions)
OPERATING REVENUES:
Revenues (less agency
commissions) 36 % 19 % $62,281 $71,280

OPERATING EXPENSES:
(before depreciation, amortization
and other expenses)
Broadcast 22 % 8 % $40,019 $45,262
Corporate 11 % 11 % $3,155 $3,155

OTHER SELECTED DATA:
Broadcast political revenues
(less agency commissions) $448 $647

Pro Forma information presents certain operating results of WSAZ and WNDU
as if each station had been acquired on January 1, 2005.

Comments on Guidance

Gray currently intends to launch additional digital second channels during the third quarter of 2006. By September 30, 2006, Gray expects to be operating a total of 30 digital second channels including five Fox affiliates, nine CW affiliates and 16 MyNetworkTV affiliates.

The above guidance for broadcasting revenue reflects the cyclical impact of political advertising spending.

The above third quarter 2006 guidance for broadcasting revenue also includes the impact of Gray's launch of digital second channels in its existing television markets since July 1, 2005 and the acquisition of television stations WSWG, Albany GA on November 10, 2005, WSAZ, Charleston - Huntington, WV on November 30, 2005 and WNDU, South Bend, IN on March 3, 2006. Collectively these transactions account for approximately $11.0 million of the overall increase in third quarter broadcast revenue in comparison to the third quarter of 2005 on an "as reported" basis. On a pro forma(1) basis, after giving effect to the acquisition of television stations WSAZ and WNDU total broadcasting net revenue is expected to increase between 16% and 19%.

For television stations and digital secondary channels continuously operated since July 1, 2005, Gray currently anticipates that its local and national revenue, excluding political revenue, will increase approximately 3% over the third quarter of 2005. On a pro forma(1) basis, after giving effect to the acquisition of television stations WSAZ and WNDU local and national revenue, excluding political revenue, is expected to increase approximately 3% over the pro forma results for the third quarter of 2005.

The above third quarter 2006 guidance for broadcasting operating expense before depreciation, amortization, and other expenses also includes the current period impact of Gray's launch of digital second channels and the acquisition of several television stations as discussed above. Collectively these transactions account for approximately $6.9 million of the overall increase in third quarter broadcast operating expense before depreciation, amortization and other expenses in comparison to the third quarter of 2005 on an "as reported" basis.

On a pro forma(1) basis, after giving effect to the acquisition of television stations WSAZ and WNDU total broadcasting operating expense before depreciation, amortization and other expenses is expected to increase between 7% and 8%. The launch or planned launch of digital second channels is anticipated to produce approximately $1.3 million, or 3 percentage points, of this expense increase during the third quarter of 2006 compared to the third quarter of 2005. In addition, national sales representative commissions on the anticipated net political revenue is expected to account for between 1 and 2 percentage points of the overall expense increase. Basic operating expenses are expected to increase less than 3% after excluding the impact of the additional digital second channels and the national sales representative commissions on the anticipated net political revenue.

For television stations and secondary channels continuously operated since July 1, 2005, Gray currently anticipates that operating expenses before depreciation, amortization and other expenses will increase approximately 3% from the third quarter of 2005. National sales representative commissions on the anticipated net political revenue is expected to account for approximately 1 percentage point of the overall expense increase.

Also included within the broadcast operating expense estimates presented above, Gray currently estimates that the non-cash 401(k) plan expense will approximate $550,000 for the three months ended September 30, 2006 compared with $469,000 for the same period of 2005.

The guidance above for corporate expense for the three months ended September 30, 2006 includes an estimated $200,000 of non-cash expense currently anticipated in connection with the Company's adoption on January 1, 2006 of Statement of Financial Accounting Standard No. 123, (revised 2005) which relates to new accounting rules for expensing stock based compensation.

Conference Call Information

Gray Television, Inc. will host a conference call to discuss its second quarter operating results on August 9, 2006. The call will begin at 2:00 PM Eastern Time. The live dial-in number is 1-800-565-5442 and the confirmation code is 2649773. 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 1-719-457-0820, Confirmation Code: 2649773 until September 9, 2006.

Reconciliations:

Reconciliation of Net Income to the Non-GAAP term "Adjusted Broadcast Cash Flow" (in thousands):

As Reported Pro Forma(1)
Three Months Ended Three Months Ended
June 30, June 30,
2006 2005 2006 2005
(in thousands) (in thousands)
Net income $4,320 $3,393 $4,320 $2,755
Adjustments to reconcile to Adj.
Broadcast Cash Flow:
Depreciation and amortization of
intangible assets 9,022 5,671 9,022 7,624
Amortization of non-cash stock based
compensation 193 98 193 98
Loss on disposals of assets, net 189 51 189 51
Miscellaneous (income) expense, net (59) (159) (59) (158)
Interest expense 16,656 11,312 16,656 14,854
Loss on early extinguishment of debt - 4,770 - 4,770
Income tax expense 2,809 1,472 2,809 1,032
(Income) loss from discontinuing
operations - (1,140) - (1,140)
Amortization of program broadcast
rights 3,500 2,842 3,500 2,842
Common Stock contributed to 401(k)
Plan excluding corporate 401(k)
contributions 554 462 554 462
Network compensation revenue
recognized (361) (1,407) (361) (1,407)
Network compensation per network
affiliation agreement 524 2,060 524 2,060
Payments for program broadcast
rights (3,484) (2,853) (3,484) (2,853)
Adjusted Broadcast Cash Flow $33,863 $26,572 $33,863 $30,990

As Reported Pro Forma(1)
Six Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(in thousands) (in thousands)
Net income $1,766 $5,468 $1,356 $3,533
Adjustments to reconcile to Adj.
Broadcast Cash Flow:
Depreciation and amortization of
intangible assets 17,350 11,291 18,018 15,203
Amortization of non-cash stock based
compensation 391 196 391 196
Loss on disposals of assets, net 271 84 271 84
Miscellaneous (income) expense, net (405) (453) (405) (453)
Interest expense 32,123 22,425 32,548 28,884
Loss on early extinguishment of
debt 110 4,770 110 4,770
Income tax expense 1,149 1,622 911 363
(Income) loss from discontinuing
operations - (2,966) - (2,966)
Amortization of program broadcast
rights 6,804 5,657 6,804 5,657
Common Stock contributed to 401(k)
Plan excluding corporate 401(k)
contributions 1,126 967 1,126 967
Network compensation revenue
recognized (581) (3,050) (581) (3,050)
Network compensation per network
affiliation agreement 1,048 4,162 1,048 4,162
Payments for program broadcast
rights (6,770) (5,668) (6,770) (5,668)
Adjusted Broadcast Cash Flow $54,382 $44,505 $54,827 $51,682

See the next page for the definition of "Adjusted Broadcast Cash Flow"

This press release includes the non-GAAP financial measures of Adjusted Broadcast Cash Flow, which is reconciled to net income (loss). Adjusted Broadcast Cash Flow is used by the Company to approximate the amount used to calculate key financial performance covenants including, but not limited to, limitations on debt, interest coverage, and fixed charge coverage ratios as defined in the Company's senior credit facility and/or subordinated note indenture. Adjusted Broadcast Cash Flow is defined as operating income, plus depreciation and amortization (including amortization of program broadcast rights), non-cash compensation and (gain) loss on disposal of assets and cash payments received or receivable under network affiliation agreements less payments for program broadcast obligations, less network compensation revenue and less income (loss) from discontinued operations, net of income taxes. Adjusted Cash Flow is used in addition to and in conjunction with results presented in accordance with GAAP. Adjusted Cash Flow should be considered as a supplement to, and not as a substitute for net income (loss) calculated in accordance with GAAP.

Notes

(1) The pro forma presentation gives effect to the results of operations for the acquisition of television stations WSAZ, Charleston - Huntington, WV on November 30, 2005 and WNDU, South Bend, IN on March 3, 2006 as if each station had been acquired on January 1, 2005. Due to the relative size of the acquisition of KKCO, Grand Junction, CO and WSWG, Albany, GA, the results of operations for KKCO and WSWG are included as of their respective acquisition date in both the "As Reported" and "Pro Forma" results.

(2) Total debt as of June 30, 2006 and December 31, 2005 does not include $729,000 and $811,000, respectively, of unamortized debt discount on Gray's 9-1/4% Senior Subordinated Notes due March 2011. The decrease is due to the amortization of the discount.

The Company

Gray Television, Inc. is a television broadcast company headquartered in Atlanta, GA. Gray operates 36 television stations serving 30 markets. Each of the stations are affiliated with either CBS (17 stations), NBC (10 stations), ABC (8 stations), or Fox (1 station). In addition, Gray currently operates 13 digital multi-cast television channels, which are currently affiliated with either UPN or Fox in certain of its existing markets.

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

The comments on Gray's current expectations of operating results for the third quarter of 2006 are "forward looking" for purposes of the Private Securities Litigation Reform Act of 1995. Actual results of operations are subject to a number of risks and uncertainties and may differ materially from the current expectations discussed in this press release. All information set forth in this release and its attachments is as of August 9, 2006. Gray does not intend, and undertakes no duty, to update this information to reflect future events or circumstances. Information about potential factors that could affect Gray's business and financial results is included under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Gray's Annual Report on Form 10-K for the year ended December 31, 2005 which is on file with the SEC and available at the SEC's website at www.sec.gov. Additional information will also be set forth in those sections in Gray's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

Source: 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, both of Gray Television, Inc.

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

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