• Merger with Raycom Media, Inc. – On January 2, 2019, we completed our merger with Raycom Media, Inc. ("Raycom"), the related acquisitions of stations KYOU-TV and WUPV-TV, and the divestiture of stations in eight markets in order to facilitate regulatory approval due to market overlaps. We refer to these transactions and the divestiture of WSWG-TV on December 31, 2018, collectively as the "Raycom Merger". As a result of the Raycom Merger, we acquired television stations in 34 new markets. In addition to the high quality television stations acquired as part of the Raycom Merger, we also acquired businesses that provide sports marketing and production services that we believe has resulted in us becoming a more diversified media company.
  
  
• Financing for the Raycom Merger - In connection with the Raycom Merger, we completed several financing transactions:
  
  
  • On November 16, 2018, we completed the offering of $750.0 million of 7.0% unsecured notes due 2027 (the "2027 Notes") by our special purpose wholly-owned subsidiary. We assumed all obligations of the 2027 Notes upon completion of the Raycom Merger on January 2, 2019.
    
    
  • On January 2, 2019:
    
    
    • We amended our senior credit facility, pursuant to which we borrowed $1.4 billion of additional secured term loan financing and increased our un-drawn revolving credit facility to $200.0 million,
      
      
    • We issued $650.0 million of our 8.0% Series A Perpetual Preferred Stock, and
      
      
    • We issued 11.5 million shares of our common stock valued at $169.5 million.
      
      
• United Acquisition - On May 1, 2019, we completed the acquisition of the assets of WWNY-TV (CBS) and WNYF-CD (FOX) in Watertown, New York (DMA 178) and KEYC-TV (CBS/FOX) in Mankato, Minnesota (DMA 199) from United Communications, Inc. (the "United Acquisition") for $45.0 million. We began operating those stations on March 1, 2019 under a local programming and marketing agreement. As a result of the acquisition, we increased the total number of our markets to 93.
  
  
• Charlottesville Transactions - On February 28, 2019, we entered into an agreement to acquire the assets of WVIR-TV (NBC) in the Charlottesville, Virginia market (DMA 183) from Waterman Broadcasting Corporation for $12.0 million, using cash on hand. Also on February 28, 2019, in order to facilitate regulatory approval due to market overlaps, we entered into an agreement to divest our current television stations in that market, WCAV-TV (CBS/FOX) and WVAW-TV (ABC) for $25.0 million in cash to Lockwood Broadcasting, Inc. We expect to complete these transactions later in the second quarter of 2019. We refer to these transactions collectively as the "Charlottesville Transactions."

From January 1, 2017 through March 31, 2019, we completed 6 acquisition transactions and 2 divestiture transactions, including the Raycom Merger. Due to the significant effect that these transactions have had on our results of operations, and in order to provide more meaningful period over period comparisons, we present certain financial information below on a "Combined Historical Basis" (or "CHB"). Our Combined Historical Basis presentation reflects financial results that have been compiled by adding Gray's historical revenue, broadcast expenses and corporate and administrative expenses to the historical revenue, broadcast expenses and corporate and administrative expenses of the net stations acquired in those acquisitions, including the Raycom Merger, and subtracting the historical revenues and broadcast expenses of divested stations as if all stations had been acquired or divested, respectively, on January 1, 2017, the beginning of the earliest period that CHB information is presented herein.  For more information on CHB, see "Effects of Acquisitions and Divestitures on Our Results of Operations and Non-GAAP Terms" at the end of this release.

On January 2, 2019, we completed the Raycom Merger. Collectively, the stations and production companies acquired, net of divestitures, accounted for $280 million of the increase in our total revenue for the first quarter of 2019. Including the revenue attributable to these stations, revenue increased due to increases in retransmission revenue. Local and national advertising revenue increased, in part, due to the $5 million of revenue we earned from the broadcast of the 2019 Super Bowl on our CBS-affiliated stations, compared to $2 million that we earned from the broadcast of the 2018 Super Bowl on our NBC-affiliated stations. This increase was offset due to no revenue from Olympic broadcasts in 2019, compared to $6 million from the broadcast of the 2018 Winter Olympic Games on our NBC-affiliated stations. 

• Local advertising revenue (including internet/digital/mobile) decreased $3 million, or 1%, to $211 million.
  
  
• National advertising revenue decreased $3 million, or 6%, to $50 million.
  
  
• Political advertising revenue decreased $6 million, or 67%, to $3 million.
  
  
• Retransmission consent revenue increased $42 million, or 26%, to $204 million.
  
  
• Production company revenue increased $2 million, or 6%, to $37 million.
  
  
• Other revenue increased $2 million, or 18%, to $13 million.

• Non-compensation expense increased $125 million, or 156%, in the first quarter of 2019 compared to the first quarter of 2018. This increase was due largely to an increase in retransmission expense of $62 million and professional fees of $34 million. The remaining increase was due primarily to increases in programming expense and licensing fees. Non-compensation expenses also included acquisition related charges of $28 million for the termination of certain national sales representation agreements related to the Raycom Merger.
  
  
• Compensation expense increased $81 million, or 117%, in the first quarter of 2019 when compared to the first quarter of 2018. Compensation expenses also included acquisition related expenses of approximately $8 million primarily due to incentive compensation and severance costs related to the Raycom Merger.

• Retransmission expense increased $19 million, or 22%, to $104 million in the first quarter of 2019 compared to the first quarter of 2018 consistent with increases in retransmission consent revenue. Professional services expense increased $25 million or 147% to $41 million primarily as a result of $28 million of costs incurred to terminate sales representation agreements related to the Raycom Merger.
  
  
• Compensation expense increased by approximately $11 million, or 8%, in the first quarter of 2019 compared to the first quarter of 2018. Compensation expenses also included acquisition related charges of $8 million for incentive compensation and severance costs related to the Raycom Merger.

• We believe our second quarter of 2019 local advertising revenue (including internet/digital/mobile) will change to be within a range of approximately $223 million to $228 million, or +98% to +102%.
  
  
• We believe our second quarter of 2019 national advertising revenue will change to be within a range of approximately $55 million to $56 million, or +84% to 88%.
  
  
• We believe our second quarter of 2019 political revenue will be within a range of approximately $3 million to $4 million.
  
  
• We believe our second quarter of 2019 retransmission consent revenue will be within a range of approximately $205 million to $206 million.

• We believe our second quarter of 2019 total revenue will be within a range of approximately $502 million to $512 million (or increase approximately +0% to +2% from $503 million in the second quarter of 2018).
  
  
• We believe our second quarter of 2019 local advertising revenue (including internet/digital/mobile) will be within a range of approximately $223 million to $228 million (or decrease approximately -2% to +0% from $228 million in the second quarter of 2018).
  
  
• We believe our second quarter of 2019 national advertising revenue will be within a range of approximately $55 million to $56 million (or decrease approximately -9% to -8% from $60 million in the second quarter of 2018).
  
  
• We believe our second quarter of 2019 political advertising revenue will be within a range of approximately $3 million to $4 million. Our political advertising revenue was approximately $31 million in the second quarter of 2018 and approximately $6 million in the second quarter of 2017.
  
  
• We believe our second quarter of 2019 retransmission consent revenue will be within a range of approximately $205 million to $206 million (or increase approximately +26% to +27% from $162 million in the second quarter of 2018).

We are a television broadcast company headquartered in Atlanta, Georgia. Upon the completion of the Raycom Merger on January 2, 2019, we became the largest owner of top-rated local television stations and digital assets in the United States. Currently, we own television stations in 93 television markets broadcasting almost 400 separate program streams including approximately 150 affiliates of the ABC Network ("ABC"), the NBC Network ("NBC"), the CBS Network ("CBS") and the FOX Network ("FOX"). We refer to these major broadcast networks collectively as the "Big Four" networks. Our television stations ranked first or second among all local television stations in 87 of our 93 markets between December, 2017 and November, 2018. Our station portfolio reaches approximately 24% of total United States television households. We also own video program production, marketing, and digital businesses including Raycom Sports, Tupelo-Raycom, and RTM Studios, the producer of PowerNation programs and content.

This press release contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. These "forward-looking statements" are not statements of historical facts, and may include, among other things, statements regarding our current expectations and beliefs of operating results for the second quarter of 2019 or other periods, future income tax payments, the expected closing date of our Charlottesville Transactions and other future events. Actual results are subject to a number of risks and uncertainties and may differ materially from the current expectations and beliefs discussed in this press release. All information set forth in this release is as of the date hereof. We do not intend, and undertake no duty, to update this information to reflect future events or circumstances. Information about certain potential factors that could affect our business and financial results and cause actual results to differ materially from those expressed or implied in any 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, 2018 and may be contained in reports subsequently filed with the U.S. Securities and Exchange Commission (the "SEC") and available at the SEC's website at www.sec.gov.

We will host a conference call to discuss our first quarter operating results on May 8, 2019. The call will begin at 11:30 a.m. Eastern Time. The live dial-in number is 1-855-493-3489 and the confirmation code is 8275179. 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 1-855-859-2056, Confirmation Code: 8275179 until June 8, 2019.

From October 31, 2013, through March 31, 2019, we completed 24 acquisition transactions and 5 divestiture transactions. As more fully described in our Form 10-Q to be filed with the Securities and Exchange Commission today and in our prior disclosures, these transactions added television stations in 62 new television markets to our operations. We refer to the stations acquired in the 34 new markets added, and nine stations divested, in connection with, the Raycom Merger completed on January 2, 2019 as the "Raycom Acquisitions" and, collectively with the television stations we acquired in 2017 (the "2017 Acquisitions") as the "Acquisitions" or the "Acquired Stations."

Due to the significant effect that the Acquisitions have had on our results of operations, and in order to provide more meaningful period over period comparisons, we present herein certain financial information on a "Combined Historical Basis" (or "CHB"). Unless otherwise defined, Combined Historical Basis reflects financial results that have been compiled by adding Gray's historical revenue, broadcast expenses and corporate and administrative expenses to the historical revenue, broadcast expenses and corporate and administrative expenses of the Acquisitions and the net stations acquired in the Raycom Acquisitions and subtracting the historical revenues and broadcast expenses of divested stations, and the financing transactions for the Raycom Merger, as if they had been acquired or divested, respectively, on January 1, 2017, the beginning of the earliest period that CHB information is presented.

Combined Historical Basis financial information does not include any adjustments for other events attributable to the Acquisitions. Certain of the Combined Historical Basis financial information has been derived from, and adjusted based on, unaudited, unreviewed financial information prepared by other entities, which Gray cannot independently verify. We cannot assure you that such financial information would not be materially different if such information were audited or reviewed and no assurances can be provided as to the accuracy of such information, or that our actual results would not differ materially from the Combined Historical Basis financial information if the Acquisitions had been completed at the stated date. In addition, the presentation of Combined Historical Basis may not comply with accounting principles generally accepted in the United States of America ("GAAP") or the requirements for proforma financial information under Regulation S-X under the Securities Act. Gray is providing the second quarter of 2019 guidance on a Combined Historical Basis estimates which incorporate certain non–GAAP financial measures that are dependent on financial results that are not yet determinable with certainty. Therefore, we are unable to present a quantitative reconciliation of the estimated non-GAAP financial measures to their most directly comparable GAAP financial measures because such information is not available and management cannot reliably estimate all of the necessary components of such GAAP measures without unreasonable effort or expense. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.

From time to time, Gray supplements its financial results prepared in accordance with GAAP by disclosing the non-GAAP financial measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses, Free Cash Flow, Operating Cash Flow as defined in the Senior Credit Agreement and Total Leverage Ratio, Net of All Cash. These non-GAAP amounts are used by us to approximate amounts used to calculate key financial performance covenants contained in our debt agreements and are used with our GAAP data to evaluate our results and liquidity.

We define Broadcast Cash Flow as net income plus loss from early extinguishment of debt, corporate and administrative expenses, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense and non-cash 401(k) expense, less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights.

We define Broadcast Cash Flow Less Cash Corporate Expenses as net income plus loss from early extinguishment of debt, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, and non-cash 401(k) expense, less any gain on disposal of assets, any miscellaneous income, any income tax benefits and any payments for program broadcast rights.

We define Free Cash Flow as net income plus loss from early extinguishment of debt, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, amortization of deferred financing costs, any income tax expense and non-cash 401(k) expense, less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast rights, contributions to pension plans, amortization of original issue premium on our debt, purchases of property and equipment (net of reimbursements) and the payment of income taxes (net of any refunds received).

We define Operating Cash Flow as defined in our Senior Credit Agreement as net income plus loss from early extinguishment of debt, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, interest expense, any income tax expense, non-cash 401(k) expense and trade expense less any gain on disposal of assets, any income tax benefits, payments for program broadcast rights, trade income, and contributions to pension plans. Operating Cash Flow as defined in our Senior Credit Agreement gives effect to the revenue and broadcast expenses of the Acquisitions as if they had been acquired or divested, respectively, on January 1, 2017. It also gives effect to certain operating synergies expected from the Acquisitions and related financings and adds back professional fees incurred in completing the Acquisitions. Certain of the financial information related to the Acquisitions has been derived from, and adjusted based on, unaudited, un-reviewed financial information prepared by other entities, which Gray cannot independently verify. We cannot assure you that such financial information would not be materially different if such information were audited or reviewed and no assurances can be provided as to the accuracy of such information, or that our actual results would not differ materially from this financial information if the Acquisitions had been completed at the stated date. In addition, the presentation of Operating Cash Flow as defined in the Senior Credit Agreement and the adjustments to such information, including expected synergies resulting from such transactions, may not comply with GAAP or the requirements for pro forma financial information under Regulation S-X under the Securities Act.

Our Total Leverage Ratio, Net of All Cash is determined by dividing our Adjusted Total Indebtedness, Net of All Cash by our Operating Cash Flow as defined in our Senior Credit Agreement, divided by two. Our Adjusted Total Indebtedness, Net of All Cash represents the total outstanding principal of our long-term debt, plus certain other obligations as defined in our Senior Credit Agreement, less all cash (excluding restricted cash). Our Operating Cash Flow as defined in our Senior Credit Agreement, divided by two, represents our average annual Operating Cash Flow as defined in our Senior Credit Agreement for the preceding eight quarters.