GRAY TELEVISION, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

Nine Months Ended September 30, 2015

Related

Divestiture

Pro Forma

Pro Forma

Gray

Schurz (a)

Transactions (b)

of Radio (c)

Adjustments

Combined

Revenues (less agency commissions)

Operating expenses before depreciation, amortization and (gain) loss on disposal of assets, net:

Broadcast

Corporate and administrative

(d)

Depreciation and amortization

(e)

Loss (gain) on disposal of assets, net

Operating expenses

Operating income (loss)

Other income (expense):

Miscellaneous income (expense), net

Interest (expense) income

(f)

Income (loss) before income taxes

Income tax expense (benefit)

(g)

Net income (loss)

Basic per share information:

Net income available to stockholders

Weighted average shares outstanding

Diluted per share information:

Net income available to stockholders

Weighted average shares outstanding

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

Year Ended December 31, 2014

Related

Divestiture

Pro Forma

Pro Forma

Gray

Schurz (a)

Transactions (b)

of Radio (c)

Adjustments

Combined

Revenues (less agency commissions)

Operating expenses before depreciation, amortization and loss (gain) on disposal of assets, net:

Broadcast

Corporate and administrative

(d)

Depreciation and amortization

(e)

Loss (gain) on disposal of assets, net

Operating expenses

Operating income (loss)

Other income (expense):

Miscellaneous income (expense), net

Interest (expense) income

(f)

Loss from early extinguishment of debt

Income (loss) before income taxes

Income tax expense

(g)

Net income (loss)

Basic per share information:

Net income available to stockholders

Weighted average shares outstanding

Diluted per share information:

Net income available to stockholders

Weighted average shares outstanding

GRAY TELEVISION, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

(in thousands)

September 30, 2015

Related

Divestiture

Pro Forma

Pro Forma

Gray

Schurz (h)

Transactions (i)

of Radio (j)

Adjustments

Combined

ASSETS

Current assets:

Cash and cash equivalents

(k)

Receivables, net

Other current assets

Total current assets

Property and equipment, net

(l)

Deferred loan costs, net

(m)

Broadcast licenses

(n)

Goodwill

(o)

Other intangible assets, net

(p)

Other assets

(q)

Total assets

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Current portion of program broadcast obligations

Deferred revenue

Current portion of long term debt

(q)

Total current liabilities

Long term debt, less current portion

(r)

Deferred income taxes

Other long term liabilities

(q)

Total liabilities

STOCKHOLDERS' EQUITY

Total liabilities and stockholders' equity

(a)

The unaudited historical combined financial information of Schurz has been adjusted to reflect certain reclassifications in order to conform to Gray’s financial statement presentation. Specifically, Schurz operating expense was allocated among three line items: broadcast operating expenses; corporate and administrative operating expenses; and loss (gain) on disposal of assets, net. Schurz depreciation expense and amortization expense were combined into a single line. Schurz interest expense – on debt due to parent and interest expense were combined into a single line item. Schurz other expense (income) was renamed miscellaneous income (expense), net. Such adjustments had no impact on combined historical amounts.

(b)

Adjustments to reflect the addition or elimination, as applicable, of the results of operations of the stations purchased (WBXX in Knoxville, Tennessee on February 1, 2016 and WLUC in Marquette, Michigan on February 16, 2016), and sold (KAKE in Wichita, Kansas on February 1, 2016 and WSBT in South Bend, Indiana on February 16, 2016) in the Related Transactions.

(c)

Adjustments to reflect the elimination of the results of operations of the Divestiture of Radio from Schurz’s historical financial statements, as such assets were not retained by Gray.

(d)

For the nine month period ended September 30, 2015, an adjustment to eliminate $0.5 million in legal and other professional fees related to the Schurz Acquisition which were incurred by Gray, and an adjustment to eliminate $5.1 million of corporate administrative expense which had been allocated to Schurz television stations from Schurz’s parent company and will not recur under Gray ownership. Such corporate assets were not acquired and related costs were not assumed by Gray. For the year ended December 31, 2014, an adjustment to eliminate $5.9 million of corporate administrative expense which had been allocated to Schurz television stations from Schurz’s parent company and will not recur under Gray ownership.

(e)

Adjustments to depreciation and amortization expense of stations acquired and retained by Gray in the Schurz Acquisition. The adjustment replaces historical depreciation and amortization expense for these stations with depreciation and amortization expense calculated using Gray’s preliminary fair value estimates for assets acquired and useful lives for those assets in accordance with Gray’s depreciation and amortization policies as follows (in thousands):

Nine Months Ended

September 30, 2015

Year Ended

December 31, 2014

Prior depreciation

Prior amortization

New depreciation

New amortization

Net adjustment

Base purchase price

Purchase price adjustment

Adjusted purchase price

Less: consideration received for Divestiture of Radio

Net purchase price

Accounts receivable

Other current assets

Property and equipment

Broadcast licenses

Goodwill

Other intangible assets

Other assets

Current liabilities

Long term broadcast obligations

Total

(f)

In connection with the completion of the Schurz Acquisition, the Company, as borrower, and the other parties thereto entered into the Second Amendment and Incremental Facility Agreement to the Company’s Second Amended and Restated Credit Agreement, dated as of June 13, 2014, with Wells Fargo Bank, National Association, as Administrative Agent and the lenders party thereto (the “Credit Agreement”). On February 16, 2016, the Company borrowed $425.0 million under the Credit Agreement at an effective interest rate of 4.25%, and used borrowings thereunder to pay the purchase price to complete the Schurz Acquisition and to pay related fees and expenses. As a consequence of this incremental borrowing, the effective interest rate on Gray’s existing balance under the Credit Agreement increased from 3.75% to 3.9375%. Adjustments reflect:

1.

the elimination of interest expense of $7.6 million and $8.7 million for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively, in each case relating to credit facilities for the Schurz stations which Gray did not assume;

2.

the inclusion of incremental interest expense of $14.5 million and $19.8 million for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively, in each case relating to the amounts outstanding under the Credit Agreement; and

3.

amortization expense of $1.1 million and $1.5 million for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively, in each case relating to the deferred financing charges incurred in connection with this amendment to the Credit Agreement.

(g)

Adjustments to reflect income tax benefit of $0.8 million for the nine months ended September 30, 2015 and income tax expense of $5.9 million for the year ended December 31, 2014, resulting from the Schurz Acquisition, the Related Transactions, the Divestiture of Radio and pro forma adjustments to the condensed combined statements of operations based on estimated combined federal and state effective income tax rates of 40.0% and 39.8% for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively.

(h)

The audited historical combined financial information of Schurz has been adjusted to reflect certain reclassifications in order to conform to Gray’s financial statement presentation. Specifically, intangible assets – net was allocated among broadcast licenses and other intangibles, net. Accounts receivable, less allowance for doubtful accounts $503, and $635 was renamed receivables, net. Prepaid expenses and other current assets, and Current portion of television program rights were combined into other current assets. Due from parent and television program rights – less current portion, and other assets were combined into other assets. Accrued expenses and unexpired subscriptions and deposits were combined into accrued expenses and deferred revenue. Long-term debt – due to parent and long-term debt – less current portion were combined into long term debt, less current portion. Other liabilities, supplemental deferred compensation plan and other nonqualified benefit plans were combined into other long term liabilities. Parent’s equity in broadcast was renamed stockholders’ equity. Such adjustments had no impact on combined historical amounts.

(i)

Reflects:

1.

elimination of the historical book value of the assets and liabilities of television stations KAKE in Wichita, Kansas and WSBT in South Bend, Indiana included in the Gray and Schurz historical financial information, respectively, which were divested as part of the Related Transactions; and

2.

inclusion of the assets and liabilities at fair value of additional television stations WBXX in Knoxville, Tennessee and WLUC in Marquette, Michigan, which Gray acquired from third parties as part of the Related Transactions.

(j)

Reflects the elimination of asset and liability balances associated with the Divestiture of Radio. These balances are included in Schurz historical financial information.

(k)

Adjustments to Gray’s cash on hand, as a result of the use of $18.2 million of cash on hand to fund in part deal expenses and the purchase price required to complete the Schurz Acquisition, and adjustments to opening balances of acquired stations to exclude $0.6 million in cash which was not included in the purchased assets.

(l)

Adjustment to reflect the value of property and equipment acquired at preliminary estimated fair values as follows (in thousands):

Historical Book Value

Preliminary Estimated Fair

Value at Acquisition Date

Land

Buildings and improvements

Equipment

Accumulated depreciation

Total

(m)

Adjustments to include incremental deferred loan costs. As noted in (f) above, the Company, in connection with the completion of the Schurz Acquisition borrowed $425.0 million under the Credit Agreement and, as a consequence, incurred $8.2 million in deferred financing costs which will be amortized over the life of the Credit Agreement.

(n)

Adjustments to reflect the preliminary estimated fair value of broadcast licenses acquired.

(o)

Adjustments to reflect the incremental value of goodwill (calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and liabilities assumed) acquired.

(p)

Adjustments to reflect the net incremental value of other intangible assets acquired from Schurz. The historical net book value of the other intangible assets associated with these acquired stations was adjusted to the appraised fair value of these licenses as of the acquisition date.

(q)

Adjustments to the opening balances of stations acquired from Schurz to exclude certain assets and liabilities which were not acquired or assumed.

(r)

Adjustments to reflect incremental debt incurred. See note (f).