About Gray Television

Gray Television, Inc. (Gray) operates as a multimedia company. The company is the nation’s largest owner of top-rated local television stations and digital assets in the United States. The company’s television stations serve 113 television markets that collectively reach approximately 36 percent of U.S. television households. This portfolio includes 79 markets with the top-rated television station and 102 markets with the first and/or second highest rated television station. The company also owns video program companies Raycom Sports, Tupelo Media Group, PowerNation Studios, as well as the studio production facilities Assembly Atlanta and Third Rail Studios. The company’s operating revenues are derived primarily from broadcast and internet advertising and from retransmission consent fees. Markets and Stations A key driver for the company’s strong market position is its focus on strong local news and information programming. The company is diversified across its markets and network affiliations. In 2023, the company’s largest market, by revenue, was Phoenix, Arizona, which contributed 4% of the company’s revenue. For the year ended December 31, 2023, the company’s CBS-affiliated channels accounted for approximately 39% of total revenue; the company’s NBC-affiliated channels accounted for approximately 27% of total revenue; the company’s FOX-affiliated channels accounted for approximately 14% of total revenue; and the company’s ABC-affiliated channels accounted for approximately 11% of total revenue. The company refers to CBS, NBC, ABC and FOX as the ‘Big Four’ networks. In each of the company’s markets, the company owns and operates at least one television station broadcasting a primary channel affiliated with one of the Big Four networks. The company also owns additional stations in some markets, some of which also broadcast primary channels affiliated with one of the Big Four networks. Nearly all of the company’s stations broadcast secondary digital channels that are affiliated with various networks or are independent of any network. The terms of the company’s affiliations with broadcast networks are governed by network affiliation agreements. Each network affiliation agreement provides the affiliated station with the right to broadcast all programs transmitted by the affiliated network. The company’s network affiliation agreements with the Big Four broadcast networks expire at various dates through January 1, 2026. Strategy The company’s strategies are to grow by leveraging the company’s diverse national footprint; maintain and grow the company’s market leadership position; continue to pursue strategic growth and accretive acquisition opportunities; and continue to monetize digital spectrum. Stations The company’s television stations serve local communities across the country. From the company’s largest market in Atlanta, Georgia (DMA 7) to its smallest in North Platte, Nebraska (DMA 209), the company informs, educates, entertains and connects each of these communities to their state, the nation and the whole world. Nearly all stations have a local studio, tower, sales, technical and administrative personnel dedicated to their community. The company’s network affiliations include the Big Four networks and many more smaller networks. Nearly all stations also provide content through digital platforms, including a local station website and one or more digital apps. Seasonality and Revenue Concentrations Broadcast stations like the company rely on advertising revenue and are therefore sensitive to cyclical changes in the economy. Broadcast advertising revenue is generally highest in the second and fourth quarters. This seasonality results partly from increases in consumer advertising in the spring and retail advertising in the period leading up to, and including, the holiday season. Broadcast advertising revenue is also typically higher in even-numbered years due to spending by political candidates, political parties and special interest groups during the ‘on year’ of the two-year election cycle. Political advertising spending is typically heaviest during the fourth quarter. In addition, the broadcast of the Olympic Games by the company’s NBC-affiliated stations generally leads to increased viewership and revenue during those years for the company’s NBC-affiliated stations. The company’s broadcast advertising revenue is earned from the sale of advertisements broadcast by the company’s stations. Station Network Affiliations In addition to affiliations with ABC, CBS, NBC and FOX, the company’s secondary channels are affiliated with numerous smaller networks and program services including, among others, the CW Network or the CW Plus Network (collectively, ‘CW’), MY Network, the MeTV Network, Telemundo, THE365, Outlaw, and others. Certain of the company’s secondary digital channels are affiliated with more than one network simultaneously. The company also broadcasts independent and local news/weather channels in some markets on both primary and secondary channels. The Big Four networks dominate broadcast television in terms of the amount of viewership that their original programming attracts. The ‘Big Three’ major broadcast networks of CBS, NBC and ABC provide their respective network affiliates with a majority of the programming broadcast each day. FOX and CW provide their affiliates with a smaller portion of each day’s programming compared to the Big Three networks. The CW Plus Network generally provides programming for the entire broadcast day for CW affiliates in markets smaller than the top 100 DMAs. The company records revenue and expense for trade transactions involving the exchange of tangible goods or services with the company’s customers. Affiliates of FOX and CW must purchase or produce a greater amount of programming for their non-network time periods, generally resulting in higher programming costs. On the other hand, affiliates of FOX and CW retain a larger portion of their advertising time inventory and the related revenues compared to Big Three affiliates. Competition Advertising. The company’s stations compete for advertising revenues in their respective markets with other television stations, digital platforms including Google and YouTube, Facebook and Instagram, TikTok, local cable and other MVPD systems, as well as local newspapers, radio stations, magazines, outdoor advertising, transit advertising, yellow page directories and direct mail. Federal Regulation of the Television Broadcast Industry Under the Communications Act of 1934, as amended (‘Communications Act’), television broadcast operations such as the company is subject to the jurisdiction of the FCC. History Gray Television, Inc., a Georgia corporation, was founded in 1891. The company was incorporated in 1897.