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GRAY TELEVISION, INC. / SEC RESPONSE LETTER

Gray

Television, Inc.

July 20, 2007

VIA ELECTRONIC TRANSMISSION AND OVERNIGHT COURIER

Ms. Sharon Virga, Senior Staff Accountant and

Mr. Kyle Moffat, Accountant Branch Chief

United States Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549-0406

    Re:

    Gray Television, Inc.

Form 10-K for Fiscal Year Ended December 31, 2006 Filed March 15, 2007

Form 10-Q for March 31, 2007 filed May 7, 2007

File No. 1-13796

Dear Ms. Virga and Mr. Moffatt:

Gray Television, Inc. (“Gray” or the “Company”) received, on July 9, 2007, the Staff’s letter dated
June 7, 2007 requesting certain additional information with respect to our Form 10-K for the fiscal
year ended December 31, 2006 and/or our Form 10-Q for March 31, 2007. We have provided responses
to the Staff’s questions below. To facilitate your review of our replies, we have incorporated the
Staff’s original comments immediately above our replies.

Form 10-K for the fiscal year ended December 31, 2006

Note A. Description of Business and Summary of Significant Accounting Policies

Accounting for Derivatives, page 64

    1.

    We note that you recognize interest differentials from interest rate swap agreements as
adjustments to interest expense in the period they occur, with the differential paid or
received as interest rates change accrued and recognized as an adjustment to interest expense.
Tell us, and revise to disclose, more about your accounting for these swaps, such as how any
hedge ineffectiveness and any changes to the fair value of the swaps are recognized.

    RESPONSE:

    We had variable rate debt outstanding during the period under review. The interest rate paid
on this variable rate debt was LIBOR plus an additional margin. At times, we entered into
interest rate swap agreements to hedge against fluctuations in interest expense resulting from
fluctuations on this variable rate debt.

4370 Peachtree Road, NE * Atlanta, GA 30319

(404) 504-9828 * Fax (404) 261-9607

    Under these swap agreements, Gray received floating interest at the three-month LIBOR and
paid fixed interest. The variable rate was reset one time per three-month period for both the
swap agreements and the hedged portion of our variable rate debt.

    Upon entering into the swap agreements, we designated them as hedges of variability of our
floating-rate interest payments attributable to changes in three-month LIBOR, the designated
interest rate. For the period of the swap agreements, we recognized the swap agreements at
their fair value as an asset or liability in our balance sheet and marked the swap agreements
to their fair value through other comprehensive income. We recognized floating-rate interest
expense from our debt as interest expense in earnings. We recognized the offsetting effect of
payments to and or receipts from the swap agreements as an addition or offset to interest
expense. Hedge effectiveness was evaluated at the end of each quarter. The notional amount of
the swap agreements, the variable interest rate of the swap agreements and the settlement dates
of the swap agreements were substantially equal to that of the hedged portion of the debt and
as a result there was little or no hedge ineffectiveness. However, to the extent that any
hedge ineffectiveness did occur, it was recognized in earnings during the period that it
occurred.

    In future filings, we will revise our disclosures to make it clearer as to how we are
accounting for any hedge ineffectiveness and the changes in fair value of the swap agreements.

    2.

    For each type of hedging relationship entered into during the periods presented, please tell
us how you determined that they meet the criteria for hedge accounting pursuant to paragraphs
20, 21, 28 and 29 of SFAS 133 as applicable. Also, tell us the following information and
revise your disclosure in future filings:

    •

    the nature and specific terms of the hedged item or transaction;

    •

    the nature and terms of the derivative instrument;

    •

    the specific documented risk being hedged;

    •

    the quantitative measures you use to assess effectiveness off each hedge both at
inception and on an ongoing basis; and,

    •

    the quantitative measures you use to measure ineffectiveness.

    RESPONSE:

    We have entered into several hedging transactions during the period of review and they
were all interest rate swap agreements. Paragraphs 20 and 21 of SFAS 133 provide guidance
related to fair value hedges and paragraph 29 relates to forecasted transactions. Our swap
agreements hedged our exposure to variability in expected future cash flows related to interest
payments on existing debt. Therefore we applied paragraph 28 of SFAS 133 rather than
paragraphs 20, 21 and 29 to the accounting of our swap agreements.

    Paragraph 28, of SFAS 133 states that a swap agreement qualifies for cash flow hedge accounting
if all of the following criteria are met:

    a.

    At inception of the hedge, there is formal documentation of the hedging
relationship and the entity’s risk management objective and strategy for

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    undertaking the hedge, including identification of the hedging instrument, the hedged
transaction, the nature of the risk being hedged, and how the hedging instrument’s
effectiveness in hedging the exposure to the hedged transaction’s variability in cash
flows attributable to the hedged risk will be assessed. There must be a reasonable
basis for how the entity plans to assess the hedging instrument’s effectiveness.

    b.

    Both at inception of the hedge and on an ongoing basis, the hedging
relationship is expected to be highly effective in achieving offsetting cash flows
attributable to the hedged risk during the term of the hedge, except as indicated in
paragraph 28(d) of SFAS 133. An assessment of effectiveness is required whenever
financial statements or earnings are reported, and at least every three months. If the
hedging instrument, such as an at-the-money option contract, provides only one-sided
offset against the hedged risk, the cash inflows (outflows) from the hedging
instrument must be expected to be highly effective in offsetting the corresponding
change in the cash outflows or inflows of the hedged transaction. All assessments of
effectiveness shall be consistent with the originally documented risk management
strategy for that particular hedging relationship.

    c.

    If a written option is designated as hedging the variability in cash flows
for a recognized asset or liability or an unrecognized firm commitment, the
combination of the hedged item and the written option provides at least as much
potential for favorable cash flows as exposure to unfavorable cash flows. That test is
met if all possible percentage favorable changes in the underlying (from zero percent
to 100 percent) would provide at least as much favorable cash flows as the unfavorable
cash flows that would be incurred from an unfavorable change in the underlying of the
same percentage. (Refer to paragraph 20(c)(1) of SFAS 133.)

    d.

    If a hedging instrument is used to modify the interest receipts or payments
associated with a recognized financial asset or liability from one variable rate to
another variable rate, the hedging instrument must be a link between an existing
designated asset (or group of similar assets) with variable cash flows and an existing
designated liability (or group of similar liabilities) with variable cash flows and be
highly effective at achieving offsetting cash flows. A link exists if the basis (that
is, the rate index on which the interest rate is based) of one leg of an interest rate
swap is the same as the basis of the interest receipts for the designated asset and
the basis of the other leg of the swap is the same as the basis of the interest
payments for the designated liability. In this situation, the criterion in the first
sentence in paragraph 29(a) of SFAS 133 is applied separately to the designated asset
and the designated liability.

    As required by paragraph 28 of SFAS 133, at the inception of these swap agreements, we formally
documented the hedging relationships and our risk management objectives. Also as required by
paragraph 28 of SFAS 133, the hedging relationship was highly effective both at the inception
of the swap agreements and throughout their

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    contract terms. Our swap agreements did not include a written option. Therefore, the
requirement relating to written options did not apply. Our swap agreements modified the
payments for a recognized liability from a variable rate to a fixed rate. Therefore, the
requirement for modifying payments for a liability from one variable rate to another variable
rate did not apply.

    Year Ended December 31, 2006:

    We entered into a swap agreement for the purpose of converting $100 million of our variable
rate debt under our credit facility to fixed rate debt. The interest rate on this debt was
three-month LIBOR plus a margin as stated in the credit facility. The swap agreement hedged
against the risk of fluctuations in the LIBOR component of the interest expense on the debt.

    The swap agreement had a notional amount of $100 million and it was effective from April 3,
2006 through January 3, 2007 with quarterly settlement dates. Under the swap agreement, we
paid a fixed rate of 5.05% and received three-month LIBOR. Under the credit facility, we paid
variable interest at three-month LIBOR on the $100 million of designated debt. Due to us
receiving three-month LIBOR on the swap agreement and paying three-month LIBOR on the
designated debt, the hedge was highly effective. After each period, we compared the notional
amount to the debt principal outstanding, the settlement dates and the three-month LIBOR rates
charged for the swap agreement and the designated debt to confirm that the hedge had been
highly effective.

    Year Ended December 31, 2005:

    We did not have any interest rate swap agreements in effect.

    Year Ended December 31, 2004:

    We entered into multiple swap agreements for the purpose of converting $50 million of our
variable rate debt under our credit facility to fixed rate debt. The interest rate on this
debt was three-month LIBOR plus a margin as stated in the credit facility. The swap agreements
hedged against the risk of fluctuations in the LIBOR component of the interest expense on the
debt.

    The swap agreements had a combined notional amount of $50 million and they were effective from
November 3, 2003 through November 3, 2004 with quarterly settlement dates. Under the swap
agreements, we paid a weighted average fixed rate of 1.87% and received three-month LIBOR.
Under the credit facility, we paid variable interest at three-month LIBOR on the $50 million of
designated debt. Due to us receiving three-month LIBOR on the swap agreements and paying
three-month LIBOR on the designated debt, the hedge was highly effective. After each period,
we compared the notional amount to the debt principal outstanding, the settlement dates and the
three-month LIBOR rates charged for the swap agreements and the designated debt to confirm that
the hedges had been highly effective.

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    In future filings, we will revise our disclosures to make it clearer as to how we are complying
with the requirements of paragraph 28 of SFAS 133.

    3.

    Please tell us the nature of the hedging relationships for which you apply the short-cut
method or matched terms approach for assuming no ineffectiveness. Tell us how you determine
that the hedging relationship meets each of the conditions in paragraph 68 or 65 of SFAS 133.

    RESPONSE:

    See RESPONSE to #2 above for a description of the hedging relationships. Paragraph 68 of SFAS
133 specifies the conditions that must be met in order for us to apply the short-cut method to
our swap agreements. Our conclusions concerning those criteria are as follows:

    a.

    The notional amount of the swap did match the principal amount of the
interest-bearing liability being hedged.

    b.

    The hedging instrument was solely an interest rate swap and the fair value of
that swap agreement at the inception of the relationship was zero.

    c.

    The formula for computing net settlements under the interest rate swap
agreement was the same for each net settlement.

    d.

    The interest-bearing liability was prepayable and did not qualify for the
exception described in paragraph 68(d). Therefore, the short-cut method was not
available.

    e.

    The index on which the variable leg of the swap agreement was based matched
the benchmark interest rate designated as the interest rate risk being hedged for the
hedging relationship.

    f.

    The other terms in the interest rate swap were typical of those instruments
and did not invalidate the assumption of no ineffectiveness.

    g.

    All interest receipts or payments on the variable-rate asset or liability
during the term of the swap were designated as hedged, and no interest payments beyond
the term of the swap were designated as hedged.

    h.

    There were no floor or cap on the variable interest rate of the swap
agreement.

    i.

    The repricing dates match those of the variable-rate asset or liability.

    As a result of our swap agreements not qualifying for the short-cut method due to our
hedged debt being prepayable, we tested the hedges for ineffectiveness using the “change in
variable cash flows method” as described in FASB Statement 133 Implementation Issue G7. We
concluded that our hedge qualified for this methodology because the hedge was designed to have
(1) the floating-rate leg of the swap agreements and the hedged variable cash flows of the
liability based on the same interest rate index, (2) the interest rate reset dates applicable
to the floating-rate leg of the swap and to the hedged variable cash flows of the liability
were projected to be the same, (3) the hedging relationship did not contain any other basis
differences,(4) the likelihood of the obligor not defaulting was assessed as being probable and
(5) the fair value of the swap agreement was zero at its inception.

    After conclusion of each swap agreement, we (1) compared the floating rate of the swap
agreement to the floating rate of the hedged debt, (2) compared the notional amount of the swap
agreements to the principal amount of hedged debt and compared the settlement dates of the swap
agreements to the settlement dates of the hedged debt.

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    Based on this analysis, our hedge ineffectiveness did not exceed $5,500 in any reporting period
from January 1, 2004 through March 31, 2007. This small amount of ineffectiveness occurred
because one swap agreement did not settle on exactly the same date as the hedged debt. The
timing difference was approximately three days. As a result of our effectiveness testing, we
concluded that the hedges were highly effective and the amount of ineffectiveness was de
minimus.

Investment in Broadcasting Company, page 66

    4.

    We note that your investment of 33.5% in Sarkes Tarzian, Inc. represents 73% of the equity of
Sarkes Tarzian for purposes of dividends if paid and distributions in the event of any
liquidation, dissolution or other sale of Sarkes Tarzian. Provide us with your analysis of FIN
46(R) in determining that this entity should not be consolidated.

RESPONSE:

By way of background, we acquired our common equity shares of Sarkes Tarzian, Inc. (“Tarzian”) in
December of 2001. These shares were acquired from the estate of Mary Tarzian who was the spouse of
the founder of Tarzian. The investment represents approximately 33.5% of the total outstanding
common stock of Tarzian (both in terms of the number of shares of common stock outstanding and in
terms of voting rights), but such investment represents 73% of the equity of T