Unaudited Pro Forma Condensed Combined Statements of Operations for the Nine Months Ended September 30, 2018

Unaudited Pro Forma Condensed Combined Statements of Operations for the Year Ended December 31, 2017

Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2018

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

Revenues (less agency commissions)

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

Broadcast

Corporate and administrative

Depreciation and amortization

(Gain) loss on disposal of assets, net

Operating expenses

Operating income (loss)

Other income (expense):

Miscellaneous income (expense), net

Interest (expense) income, net

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Dividends on perpetual preferred stock

Net income available to common stockholders

Basic per share information:

Net income available to common stockholders

Weighted average shares outstanding

Diluted per share information:

Net income available to common stockholders

Weighted average shares outstanding

Revenues (less agency commissions)

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

Broadcast

Corporate and administrative

Depreciation and amortization

(Gain) loss on disposal of assets, net

Operating expenses

Operating income (loss)

Other income (expense):

Miscellaneous income (expense), net

Interest (expense) income, net

Loss from early extinguishment of debt

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Dividends on perpetual preferred stock

Net income available to common stockholders

Basic per share information:

Net income available to common stockholders

Weighted average shares outstanding

Diluted per share information:

Net income available to common stockholders

Weighted average shares outstanding

ASSETS

Current assets:

Cash and cash equivalents

Receivables, net

Current portion of program broadcast rights, net

Other current assets

Total current assets

Property and equipment, net

Broadcast licenses

Goodwill

Other intangible assets, net

Other assets

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

Total current liabilities

Long term debt, less current portion and deferred financing costs

Deferred income taxes

Other long term liabilities

Total liabilities

Perpetual redeemable preferred stock

STOCKHOLDERS’ EQUITY

Total liabilities, preferred stock and stockholders’ equity

Upon consummation of the Raycom Merger, Raycom’s accounting policies will be conformed to those of Gray. Gray has identified preliminary adjustments to Raycom’s accounting policies to those of Gray based upon currently available information and assumptions management believes to be reasonable. Financial information presented in the “Raycom” column in the unaudited pro forma condensed combined statements of operations for nine months ended September 30, 2018 and the year ended December 31, 2017, has been reclassified to conform to that of Gray as indicated in the table below (in thousands):

Financial Statements

Financial Statements

Gross revenues

Revenues (less agency commissions)

Agency commissions and representation fees

Revenues (less agency commissions)

Operating expenses

Broadcast operating expenses

Selling, general, and and administrative expenses

Broadcast operating expenses

-

Corporate and administrative operating expenses

Depreciation and amortization

Depreciation and amortization

Interest expense

Interest (expense) income, net

Interest income

Interest (expense) income, net

Gain (loss) on long-term investments, sale of assets, and other, net

Miscellaneous income (expense), net

Income tax expense

Income tax (benefit) expense

Financial Statements

Financial Statements

Gross revenues

Revenues (less agency commissions)

Agency commissions and representation fees

Revenues (less agency commissions)

Operating expenses

Broadcast operating expenses

Selling, general, and and administrative expenses

Broadcast operating expenses

-

Corporate and administrative operating expenses

Depreciation and amortization

Depreciation and amortization

Gain on FCC spectrum auction

(Gain) loss on disposal of assets, net

Interest expense

Interest (expense) income, net

Interest income

Interest (expense) income, net

Other expense, net

Loss from early extinguishment of debt

Gain (loss) on long-term investments, sale of assets, and other, net

Miscellaneous income (expense), net

Income tax expense

Income tax (benefit) expense

In order to conform with the treatment of representation fees for Gray’s financial reporting, the $8.5 million and $10.1 million of Raycom’s representation fees for the nine months ended September 30, 2018 and for the year ended December 31, 2017, respectively, have been reclassified out of Agency commissions and representation fees into Broadcast operating expenses.

In order to conform with the treatment of corporate and administrative expenses for Gray’s financial reporting, the $26.8 million and $39.1 million of Raycom’s expenses related to corporate and administrative costs for the nine months ended September 30, 2018 and for the year ended December 31, 2017, respectively, have been reclassified out of Selling, general, and administrative expenses into Corporate and administrative operating expenses.

Adjustments to reflect the elimination of the results of operations of the television station WSWG in Albany, Georgia, which was sold effective January 2, 2019.

Adjustments to reflect the elimination of the results of operations of the television stations that were sold effective January 2, 2019 (WTNZ in Knoxville, Tennessee; WTOL in Toledo, Ohio; KXXV in Waco, Texas; WTXL in Tallahassee, Florida; WFXG in Augusta, Georgia; KWES in Odessa, Texas; WPGX in Panama City, Florida; and WDFX in Dothan, Alabama).

For the nine month period ended September 30, 2018, an adjustment to eliminate $4.5 million in legal and other professional fees related to the Raycom Merger which were incurred by Gray. No such expenses were incurred during the year ended December 31, 2017.

Adjustments to depreciation and amortization expense of assets acquired by Gray in the Raycom Merger. The adjustment replaces historical depreciation and amortization expense for these assets with estimated 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):

Prior depreciation

Prior amortization

New depreciation

New amortization

Net adjustment

Cash purchase price

Fair value of preferred stock

Fair value of common stock

Estimated purchase price

Cash and cash equivalents

Accounts receivable

Current portion of program broadcast rights, net

Other current assets

Property and equipment

Broadcast licenses

Goodwill

Other intangible assets

Other assets

Current liabilities

Deferred income taxes

Other liabilities

Total

In connection with the consummation of the Raycom Merger, Gray entered into an amendment and restatement of its existing senior credit facility on January 2, 2019 (such amended facility, the “2019 Senior Credit Facility”), under which Gray borrowed $1.4 billion of Incremental Term Loans. Additionally in association with the consummation of the Raycom Merger, Gray issued $750 million in aggregate principal of its 2027 Notes. Gray used the proceeds of the Incremental Term Loans and the 2027 Notes to pay a portion of the cash consideration to complete the Raycom Merger and to pay related fees and expenses for the Raycom Transactions. These adjustments reflect the impact of the borrowings under the 2019 Senior Credit Facility, and the issuance of the 2027 Notes, as follows:

the elimination of interest expense of $131.7 million and $163.7 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, in each case relating to credit facilities which were repaid upon consummation of the Raycom Merger and not assumed by Gray;

the inclusion of estimated incremental interest expense of $91.9 million and $122.5 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, in each case relating to the amounts outstanding under the 2019 Senior Credit Facility and the 2027 Notes; and

additional amortization expense of $5.9 million and $7.8 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, in each case relating to the deferred financing charges incurred in connection with the 2019 Senior Credit Facility and the 2027 Notes.

Adjustments to reflect income tax benefit of $8.2 million for the nine months ended September 30, 2018 and income tax expense of $88.5 million for the year ended December 31, 2017, resulting from the Raycom Merger and pro forma adjustments to the condensed combined statements of operations based on estimated combined federal and state effective income tax rates of 25.4% and 39.0% for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively.

Adjustments to reflect mandatory and cumulative dividends in the amount of $39.0 million and $52.0 million for the nine months ended September 30, 2018 and the year ended December 31, 2017, respectively, in each case relating to $650.0 million of the Gray’s preferred stock with an annual dividend rate of 8% that was issued to certain securityholders of Raycom in connection with the consummation of the Raycom Merger.

Adjustments to reflect the 11.5 million shares of the Company’s Common Stock that was issued to certain securityholders of Raycom in connection with the consummation of the Raycom Merger.

Financial information presented in the “Raycom” column in the unaudited pro forma condensed combined balance sheet as of September 30, 2018 has been reclassified to conform to that of Gray as indicated in the table below (in thousands):

Financial Statements

Financial Statements

Cash and cash equivalents

Cash and cash equivalents

Accounts receivable, net

Receivables, net

Income tax receivable

Other current assets

Current portion of programming rights

Current portion of program broadcast rights, net

Prepaid expenses and other assets assets

Other current assets

Programming rights, net of current portion, and accumulated amortization

Other assets

Property, plant, and equipment, net

Property and equipment, net

-

Broadcast licenses

Goodwill, net

Goodwill

Nonamortizable intangibles

Other intangible assets, net

Amortizable intangibles, net

Other intangible assets, net

Long-term deferred income taxes, net

Other assets

Other assets

Other assets

Current installments of long-term debt to related parties

Current portion of long term debt

Current installments of debt and capital leases

Current portion of long term debt

Current installments of programming liabilities

Current portion of program broadcast obligations

Accounts payable

Accounts payable

Accrued interest

Accrued expenses

Accrued expenses

Accrued expenses

Due to parent

Accounts payable

Other current liabilities

Accrued expenses

Long-term debt to related parties

Long term debt, less current portion and deferred financing costs

Long-term debt and capital leases, net of current installments

Long term debt, less current portion and deferred financing costs

Other liabilities

Other long term liabilities

Deficit in net assets

Stockholders’ equity

In order to conform with the presentation of broadcast license intangible assets for Gray’s financial reporting, $471.8 million relating to broadcast licenses as of September 30, 2018, has been reclassified out of nonamortizable intangibles, net into broadcast licenses.

Reflects the elimination of the historical book value of the assets, excluding cash, and liabilities of the television station WSWG in Albany, Georgia included in the Gray historical financial information, which was divested effective January 2, 2019, in connection with the Raycom Merger.

Reflects the elimination of the historical book value of the assets and liabilities of the television stations WTNZ in Knoxville, Tennessee, WTOL in Toledo, Ohio, KXXV in Waco, Texas, WTXL in Tallahassee, Florida, WFXG in Augusta, Georgia, KWES in Odessa, Texas, WPGX in Panama City, Florida, and WDFX in Dothan, Alabama included in the Raycom historical financial information, which were divested effective on January 2, 2019, in connection with the Raycom Merger.

Adjustments to Gray’s cash on hand, as a result of the use of $371.3 million of cash on hand to fund the cash consideration in the Raycom Merger and the costs and transaction expenses related to the Raycom Transactions and the divestiture of television stations.

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

Land

Buildings and improvements

Equipment

Accumulated depreciation

Total

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

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

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

Adjustments to reflect incremental debt that will be incurred as described in note (f), net of incremental deferred loan costs incurred of $59.9 million which will be amortized over the life of the Incremental Term Loans and the 2027 Notes. Additionally, amounts presented are net of Raycom debt obligations which were repaid upon the consummation of the Raycom Merger. Further, Raycom’s payable to its Parent related to its cash management operations was forgiven upon the consummation of the Raycom Merger.

Adjustments to reflect the reclassification of Raycom’s net deferred tax asset balance into Gray’s net deferred tax liability balance, and to record the estimated deferred tax liability generation resulting from the adjustments to the Raycom estimated opening balance sheets for the effects of the fair value of property and equipment acquired and the fair value identifiable intangible assets acquired as a result of the Raycom Merger, assuming an effective tax rate of 25.4%.

Adjustments to reflect the issuance of the perpetual redeemable preferred stock, as discussed in note (h) as a part of the Raycom Merger consideration.