Gray Reports Operating Results for the Three Months and Nine Months Ended September 30, 2007

Gray Reports Operating Results for the Three Months and Nine Months Ended September 30, 2007

ATLANTA, Nov. 7 /PRNewswire-FirstCall/ -- Gray Television, Inc. ("Gray," "we" or "us") (NYSE:GTN) today announced results from operations for the three months ("third quarter") and nine months ended September 30, 2007 as compared to the three months and nine months ended September 30, 2006.

Comments on As Reported Results of Operations for the Three Months Ended September 30, 2007:

For the three months ended September 30, 2007 and 2006, we did not complete any acquisitions or disposals of properties; therefore, the following comments are on our "as reported" results.

Revenues.

On an as reported basis, total net revenue for all stations decreased $7.0 million, or 9%, to $73.6 million due primarily to decreased political advertising revenues and decreased national advertising revenues partially offset by increased local advertising revenue in the current period.

On an as reported basis, political advertising revenues decreased $9.1
million, or 86%, to $1.5 million reflecting the influence of the 2006
elections.

On an as reported basis, local advertising revenue increased $2.5
million, or 5%, to $50.3 million and national advertising revenue
decreased $0.3 million, or 1%, to $19.2 million.

Operating expenses.

On an as reported basis, total broadcast expenses (before depreciation, amortization and loss on disposal of assets) increased $2.1 million, or 4%, to $49.6 million.

Operation of our digital second channels is attributed for $0.5
million of the overall increase and reflects the expansion of the
number of digital second channels to 39 as of September 30, 2007.

The remaining $1.6 million of the overall increase is attributable to
the operation of our primary channels and reflects routine increases
in payroll.

Total aggregate broadcast expenses (before depreciation, amortization
and loss on disposal of assets) for all the primary channels and all
the digital second channels was approximately equal to management's
operating targets for the three months ended September 30, 2007.

On an as reported basis, corporate and administrative expenses, before depreciation, amortization and loss on disposal of assets, increased $0.5 million, or 13%, to $3.9 million due primarily to incremental increases in news research and/or consulting expense, legal expense and non-cash stock based compensation expense. We recorded non-cash stock based compensation expense for the three months ended September 30, 2007 and 2006 of $285,000 and $191,000, respectively.

Comments on Results of Operations for the Nine Months Ended September 30, 2007:

Due to the significance of WNDU to our results of operations, Gray's pro forma broadcast results for the nine months ended September 30, 2006 have been presented to include the results of WNDU as if the station had been acquired on January 1, 2006. The acquisition of WNDU did not significantly affect corporate and administrative expenses. Therefore, corporate and administrative expenses are presented on an "as reported" basis.

Revenues.

On a pro forma(1) basis, total net revenue for all stations decreased $9.8 million, or 4%, to $223.0 million due primarily to decreased political advertising revenues and decreased national advertising revenues partially offset by increased local advertising revenue in the current period.

On a pro forma(1) basis, political advertising revenues decreased
$12.0 million, or 70%, to $5.2 million reflecting the influence of the
2006 elections.

On a pro forma(1) basis, local advertising revenue increased $4.8
million, or 3%, to $153.3 million and national advertising revenue
decreased $2.5 million, or 4%, to $56.2 million.

Operating expenses.

On a pro forma(1) basis, total broadcast expenses (before depreciation, amortization and loss on disposal of assets) increased $7.3 million, or 5%, to $147.4 million.

On a pro forma(1) basis, operation of our digital second channels is
attributed for $2.6 million of the overall increase and reflects the
expansion of the number of digital second channels to 39 as of
September 30, 2007.

On a pro forma(1) basis, the remaining $4.7 million of the overall
increase is attributable to the operation of our primary channels and
reflects routine increases in payroll, programming and promotion.

On a pro forma(1) basis, total aggregate broadcast expenses (before
depreciation, amortization and loss on disposal of assets) for all the
primary channels and all the digital second channels was approximately
equal to management's operating targets for the nine months ended
September 30, 2007.

On an as reported basis, corporate and administrative expenses, before depreciation, amortization and loss on disposal of assets, increased $1.4 million, or 14%, to $11.6 million due primarily to incremental increases in news research and/or consulting expense, legal expense and non-cash stock based compensation expense. We recorded non-cash stock based compensation expense during the nine months ended September 30, 2007 and 2006 of $1,115,000 and $581,000, respectively.

Other Financial Data on an "as reported" basis:

September 30, December 31,
2007 2006
(in thousands)

Cash $1,233 $4,741
Total debt(2) 925,000 851,654
Preferred stock - 37,451
Available credit under senior credit facility 100,000 97,000

Nine Months Ended September 30,
2007 2006
(in thousands)

Net cash provided by operating activities $11,919 $60,444
Net cash used in investing activities (22,575) (117,085)
Net cash provided by financing activities 7,148 51,483

For the nine months ended September 30, 2007, we repurchased 647,800 shares of our common stock for $5.5 million at an average price per share of $8.49. For the nine months ended September 30, 2006, we repurchased 902,200 shares of our common stock for $5.6 million at an average price per share of $6.21. The repurchased common stock is held in treasury.

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

As Reported
Three Months Ended
September 30,
%
2007 2006 Change

Revenues (less agency commissions) $73,585 $80,592 (9)%
Operating expenses before depreciation,
amortization and loss on disposal
of assets, net:
Broadcast 49,583 47,456 4 %
Corporate and administrative 3,932 3,481 13 %
Depreciation and amortization of
intangible assets 10,156 9,478 7 %
Loss on disposals of assets, net 5 221 (98)%
63,676 60,636 5 %
Operating income 9,909 19,956 (50)%
Other income (expense):
Miscellaneous income, net 177 91 95 %
Interest expense (16,812) (17,542) (4)%
Loss on early extinguishment of debt - (237)
Income (loss) before income tax (6,726) 2,268
Income tax expense (benefit) (2,546) 909
Net income (loss) (4,180) 1,359
Preferred dividends
(includes accretion of issuance
cost of $0 and $47, respectively) - 840
Net income (loss) available
to common stockholders $(4,180) $519

Basic per share information:
Net income (loss) available
to common stockholders $(0.09) $0.01
Weighted average shares outstanding 47,760 48,072 (1)%

Diluted per share information:
Net income (loss) available
to common stockholders $(0.09) $0.01
Weighted average shares outstanding 47,760 48,072 (1)%

Political revenue (less agency commission) $1,450 $10,595 (86)%

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

As Reported Pro Forma(1)
Nine Months Ended Nine Months Ended
September 30, September 30,
% %
2007 2006 Change 2007 2006 Change

Revenues (less
agency commissions) $223,015 $230,216 (3)% $223,015 $232,801 (4)%
Operating expenses
before depreciation,
amortization and
loss on disposal of
assets, net:
Broadcast 147,449 138,058 7 % 147,449 140,195 5 %
Corporate and
administrative 11,577 10,140 14 % 11,577 10,140 14 %
Depreciation and
amortization of
intangible assets 30,048 26,828 12 % 30,048 27,496 9 %
Loss on disposals of
assets, net 122 493 (75)% 122 493 (75)%
189,196 175,519 8 % 189,196 178,324 6 %
Operating income 33,819 54,697 (38)% 33,819 54,477 (38)%
Other income
(expense):
Miscellaneous
income, net 984 496 98 % 984 496 98 %
Interest expense (50,610) (49,664) 2 % (50,610) (50,089) 1 %
Loss on early
extinguishment of
debt (22,853) (347) (22,853) (347)
Income (loss) before
income tax benefit (38,660) 5,182 (38,660) 4,537
Income tax expense
(benefit) (14,021) 2,058 (14,021) 1,823
Net income (loss) (24,639) 3,124 (24,639) 2,714
Preferred dividends
(includes accretion
of issuance cost of
$439, $91, $439, $91,
respectively) 1,626 2,469 1,626 2,469
Net income (loss)
available to common
stockholders $(26,265) $655 $(26,265) $245

Basic per share
information:
Net income (loss)
available to common
stockholders $(0.55) $0.01 $(0.55) $0.01
Weighted average
shares outstanding 47,728 48,532 (2)% 47,728 48,532 (2)%

Diluted per share
information:
Net income (loss)
available to common
stockholders $(0.55) $0.01 $(0.55) $0.01
Weighted average
shares outstanding 47,728 48,543 (2)% 47,728 48,543 (2)%

Political revenue
(less agency
commission) $5,181 $17,077 (70)% $5,181 $17,157 (70)%

Guidance for the Fourth Quarter of 2007

We currently anticipate that our broadcasting results of operations for the three months ending December 31, 2007 (the "fourth quarter") will approximate the ranges presented in the table below.

% %
2007 Change 2007 Change
Guidance From Guidance From
Selected Low Actual High Actual Actual
operating data: Range 2006 Range 2006 2006

(dollars in thousands)
OPERATING REVENUES:
Revenues (less agency
commissions) $82,500 (19)% $84,000 (18)% $101,920

OPERATING EXPENSES:
(before depreciation,
amortization and
other expenses)
Broadcast $52,250 (2)% $53,000 (1)% $53,444
Corporate and
administrative $3,800 (23)% $3,900 (21)% $4,956

OTHER SELECTED DATA:
Broadcast political
revenues
(less agency
commissions) $2,100 $2,200 $25,605

Expense for non-cash
contributions to
401(k) plan $575 $600 $568

Expense for corporate
non-cash stock based
compensation $100 $150 $511

Comments on Guidance

The total revenue results anticipated for the fourth quarter of 2007 reflect the incremental decline in political revenues. Local non-political advertising is currently anticipated to increase between 5% and 8%. While we anticipate continuing relative softness in non-political national advertising, we do expect modest growth in the low to mid-single digit range in the fourth quarter of 2007 compared to the comparable period in 2006. Estimates of net political revenue in the fourth quarter do not include any significant amounts relating to potential political advertising for the early 2008 primary elections. At present, we can not predict what impact, if any, political advertising for the early 2008 primary elections may have on our fourth quarter results.

The total operating costs, before depreciation, amortization and loss on disposal of assets, anticipated for the fourth quarter of 2007 will be less than the results for the comparable period in 2006 reflecting savings on national sales representatives' commissions due to cyclically lower net political revenues.

Conference Call Information

We will host a conference call to discuss our third quarter operating results on November 7, 2007. The call will begin at 9:30 AM Eastern Time. The live dial-in number is 1 (800) 839-7875 and the confirmation code is 5491426. 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: 5491426 until December 6, 2007.

Reconciliations:
Reconciliation of net income (loss) to the Non-GAAP terms (in thousands):

As Reported
Three Months Ended
September 30,
2007 2006
Net income (loss) $(4,180) $1,359
Adjustments to reconcile to Broadcast
Cash Flow Less Cash Corporate Expenses:
Depreciation and amortization of
intangible assets 10,156 9,478
Amortization of non-cash stock based
compensation 285 191
Loss on disposals of assets, net 5 221
Miscellaneous (income) expense, net (177) (91)
Interest expense 16,812 17,542
Loss on early extinguishment of debt - 237
Income tax expense (benefit) (2,546) 909
Amortization of program broadcast rights 3,750 3,628
Common stock contributed to 401(k) plan
excluding corporate 401(k) contributions 550 552
Network compensation revenue recognized (180) (258)
Network compensation per network affiliation
agreement 78 629
Payments for program broadcast rights (3,821) (3,587)
Broadcast Cash Flow Less Cash
Corporate Expenses 20,732 30,810
Corporate and administrative expenses
excluding amortization of non-cash stock
based compensation 3,647 3,290
Broadcast Cash Flow $24,379 $34,100

As Reported Pro Forma(1)
Nine Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Net income (loss) $(24,639) $3,124 $(24,639) $2,714
Adjustments to reconcile to
Broadcast Cash Flow Less
Cash Corporate Expenses:
Depreciation and amortization of
intangible assets 30,048 26,828 30,048 27,496
Amortization of non-cash stock based
compensation 1,115 581 1,115 581
Loss on disposals of assets, net 122 493 122 493
Miscellaneous (income) expense, net (984) (496) (984) (496)
Interest expense 50,610 49,664 50,610 50,089
Loss on early extinguishment
of debt 22,853 347 22,853 347
Income tax expense (benefit) (14,021) 2,058 (14,021) 1,823
Amortization of program broadcast
rights 11,345 10,432 11,345 10,432
Common stock contributed to 401(k)
plan excluding corporate 401(k)
contributions 1,750 1,679 1,750 1,679
Network compensation revenue
recognized (564) (839) (564) (839)
Network compensation per network
affiliation agreement 235 1,677 235 1,677
Payments for program broadcast
rights (11,507) (10,357) (11,507) (10,357)
Broadcast Cash Flow Less Cash
Corporate Expenses 66,363 85,191 66,363 85,639
Corporate and administrative
expenses excluding amortization
of non-cash stock based
compensation 10,462 9,559 10,462 9,559
Broadcast Cash Flow $76,825 $94,750 $76,825 $95,198

Non-GAAP Terms

This press release includes the non-GAAP financial measure of 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 as defined in our senior credit facility. Broadcast Cash Flow is defined as operating income, plus corporate expense, 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. Corporate 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 used 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) calculated in accordance with GAAP.

Notes
(1) The pro forma presentation gives effect to the results of operations
for the acquisition of television station WNDU, South Bend, IN on
March 3, 2006 as if the station had been acquired on January 1, 2006.

(2) Total debt as of December 31, 2006 does not include $653,000 of
unamortized debt discount on our 9.25% Notes. The 9.25% Notes were
redeemed on April 18, 2007.

Gray Television, Inc.

Gray Television, Inc. is a television broadcast company headquartered in Atlanta, GA. We currently operate 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, we currently operate 40 digital second channels including 1 ABC, 5 Fox, 8 CW and 16 MyNetworkTV affiliates plus 8 local news/weather channels and 2 "independent" channels in certain of our existing markets.

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

The comments on our current expectations of operating results for the fourth quarter of 2007 and other future events are "forward looking statements" 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 is as of November 7, 2007. We do not intend, and undertake no duty, to update this information to reflect future events or circumstances. Information about potential factors that could affect our business and financial results and cause actual results to differ materially from those in the 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, 2006 which is on file with the SEC and available at the SEC's website at www.sec.gov.

First Call Analyst:
FCMN Contact: dottie@gray.tv

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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