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Gray Television, Inc.

4370 Peachtree Road NE Atlanta, GA 30319

Phone: 404-504-9828 Fax: 404-261-9607

April 5, 2024

VIA EDGAR

Morgan Youngwood

Stephen Krikorian

Division of Corporate Finance

Office of Technology

United States Securities and Exchange Commission 100 F Street, N.E.

Washington, D.C. 20549

			Re:

			GRAY TELEVISION INC

			Form 10-K for the Fiscal Year Ended December 31, 2023

			Filed February 23, 2024

			Form 8-K

			Filed February 23, 2024

			File No. 001-13796

Dear Mr. Youngwood and Mr. Krikorian:

Reference is made to the comment of the Staff of the United States Securities and Exchange Commission (the “Staff”) in your letter dated March 22, 2024 (the “Comment Letter”) with respect to the Annual Report on Form 10-K of Gray Television, Inc. (“Gray” or the “Company”) for the Fiscal Year Ended December 31, 2023, and the Current Report on Form 8-K filed on February 23, 2024.

We are writing to respond to the comments contained in the Comment Letter. To facilitate your review of our reply, we have incorporated the Staff’s original comments immediately above our replies.

Comment #1:

Form 10-K for the Fiscal Year Ended December 31, 2023

Item 7. Management's Discussion and Analysis of the Financial Condition and Results of Operations

Critical Accounting Policies

Annual Impairment Testing of Broadcast Licenses and Goodwill, page 43

			1.

			Please disclose in future filings whether the estimated fair value of your broadcasting reporting unit substantially exceed its carrying value as a result of your goodwill impairment testing. If the broadcasting reporting unit has estimated fair values that do not substantially exceed its carrying values, please provide information that would allow investors to better assess the probability of a future goodwill impairment, including the following:

			●

			The percentage by which fair value exceeded carrying value at the date of the most recent test;

			●

			A description of key assumptions used and how they were determined;

			●

			A discussion of the degree of uncertainty associated with key assumptions and a sensitivity analysis of the impact of changes in key assumptions; and

			●

			A description of potential events and/or changes in circumstances that could reasonably be expected to negatively affect key assumptions.

Please refer to Item 303(a)(3)(ii) of Regulation S-K.

			Gray Television, Inc.
			Page 1 of 10

Reply to Comment #1:

The Company will expand its disclosures (as underlined below) within the “Critical Accounting Estimates” section of Management's Discussion and Analysis of Financial Condition and Results of Operations prospectively beginning in the Form 10-K for the Fiscal Year Ended December 31, 2024 (or earlier if an interim impairment analysis is required), as follows:

“[…]For our annual goodwill impairment test in 2024, we concluded that it was more likely than not that goodwill was not impaired based upon our qualitative assessments for [number] of our reporting units. We elected to perform a quantitative assessment for the remainder of our reporting units and concluded that their fair values exceeded their carrying values. To estimate the fair value of our reporting units, we utilize a discounted cash flow model supported by a market multiple approach. We believe that a discounted cash flow analysis is the most appropriate methodology to test the recorded value of long-term assets with a demonstrated long-lived/enduring franchise value. We believe the results of the discounted cash flow and market multiple approaches provide reasonable estimates of the fair value of our reporting units because these approaches are based on our actual results and reasonable estimates of future performance, and also take into consideration a number of other factors deemed relevant by us including, but not limited to, expected future market revenue growth, market revenue shares and operating profit margins. We have historically used these approaches in determining the value of our reporting units. We also consider a market multiple approach to corroborate our discounted cash flow analysis. We believe that this methodology is consistent with the approach that a strategic market participant would utilize if they were to value our television stations. Based on the results of the Company’s annual impairment testing, it was determined that the fair value of each of our reporting units is substantially in excess of their carrying amount.”

To the extent the fair value of a reporting unit is not substantially in excess of its carrying amount, the Company will provide the following disclosures:

			●

			The percentage by which fair value exceeded carrying value as of the date of the most recent test;

			●

			The amount of goodwill allocated to the reporting unit;

			●

			A description of the key assumptions used and how the key assumptions were determined;

			●

			A discussion of the degree of uncertainty associated with the key assumptions; and

			●

			A description of potential events and/or changes in circumstances that could reasonably be expected to negatively affect the key assumptions.

Comment #2:

Notes to Consolidated Financial Statements

Note 2 - Revenue, page 67

			2.

			Please describe the components other than the deposit liabilities that are classified as deferred revenue. Please clarify whether these components represent an obligation to transfer goods or services to a customer. Refer to ASC 606-10-45-2. That is, confirm that the satisfaction of these obligations will result in the recognition of revenue from contracts with customers. If not, these amounts should be not be classified as deferred revenue.

			Gray Television, Inc.
			Page 2 of 10

Reply to Comment #2:

Within the Company’s Form 10-K for the Fiscal Year Ended December 31, 2023, the components of deferred revenue were as follows (in millions):

			December 31, 2023

			December 31, 2022

			Deferred Revenue:

			Deposit liabilities (as reported)

			$
			13

			$
			12

			Other deposit liabilities

			10

			12

			Other contractual liabilities

			16

			-

			Total deferred revenues

			$
			39

			$
			24

As described within Note 2 of the Company’s Form 10-K for the Fiscal Year Ended December 31, 2023, deposit liabilities represent cash deposits received from our customers that are to be applied as payment once the performance obligation arises and is satisfied. Upon the satisfaction of the performance obligation, these amounts will result in the recognition of revenue from contracts with customers. The Company will include the amounts associated with other deposit liabilities, which are identical to those previously reported as deposit liabilities, within the deposit liabilities disclosure within its future filings, beginning in the Form 10-Q for the Quarter Ending March 31, 2024.

Gray’s other contractual liabilities are comprised of amounts received from third parties for which the Company has not fulfilled its obligations under the contracts, including obligations to transfer ownership of assets that Gray is constructing. Such amounts do not represent amounts which will result in the recognition of revenue from contracts with customers. The Company will reclassify such amounts to other accrued expenses within its future filings, beginning in the Form 10-Q for the Quarter Ending March 31, 2024.

Comment #3:

Note 13 - Goodwill and Intangible Assets

Impairment of goodwill and broadcast licenses, page 89

			3.

			Please provide us with a reconciliation of the aggregate fair value of your reporting units to your market capitalization as of or around the goodwill impairment test date. Refer to ASC 350-20-35-22 to 35-24.

			Gray Television, Inc.
			Page 3 of 10

Reply to Comment #3:

			Market Capitalization Reconciliation as of December 31, 2023

			(in millions, except stock price per share)

			Total enterprise value

			GTN

			GTN.a

			Total

			Stock price per share

			$
			8.96

			$
			8.57

			Shares outstanding

			87

			8

			Market value of equity (minority marketable basis)

			$
			782

			$
			70

			$
			852

			Total outstanding principal balance of indebtedness(1)

			6,210

			Preferred stock(1)

			650

			Total enterprise value

			$
			7,712

			Indicated enterprise fair value by reporting unit:

			Broadcasting

			$
			10,059

			Raycom Sports

			5

			Tupelo Honey

			26

			RTM Studios

			27

			Total estimated enterprise fair value

			$
			10,117

			Implied premium over enterprise value

			31.2
			%

			(1) To arrive at enterprise value, the Company has quantified the carrying value of total debt and preferred stock as of December 31, 2023.

As indicated within ASC 350-20-35-22, the FASB acknowledges that the market price of an individual equity security (and thus the market capitalization of a reporting unit with publicly traded equity securities) may not be representative of the fair value of the reporting unit as a whole. An acquiring entity often is willing to pay more for equity securities that give it a controlling interest than an investor would pay for a number of equity securities representing less than a controlling interest.

Gray’s stock is relatively closely held in terms of both shares and voting control. As a result, Gray’s “public float” is small which contributes to lighter trading volume. During the year ended December 31, 2023, the average daily trading volumes have represented less than 1% of outstanding shares. Each of these factors individually and collectively has a significant influence over any final pricing of a change in control transaction for Gray. For this reason, Gray utilizes a discounted cash flow model supported by a market multiple approach.

Based on the analyses performed, the Company concluded there is a difference between the market capitalization of the Company and the fair value of the Company’s reporting units, but that the difference is reasonable and the estimates used to arrive at the fair value of the reporting units are reasonable.

			Gray Television, Inc.
			Page 4 of 10

Comment #4:

Form 8-K filed February 23, 2024

Effects of Acquisitions and Divestitures on Our Results of Operations and Non-GAAP Terms

Reconciliation of Non-GAAP Terms (Unaudited), page 7

			4.

			We note that you present Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses and Free Cash Flow. Please explain whether these are Non-GAAP performance or liquidity measures, and clarify what the measures are attempting to convey. Help us better understand why you appear to be making cash-based adjustments to measures that are reconciled to GAAP net income/(loss). Please support the labels used for each of these measures as they imply that each is a liquidity measure. We refer you to Item 10(e)(1)(i) of Regulation S-K and Questions 100.01, 100.05 and 102.07 in the Compliance and Disclosure Interpretations on Non-GAAP Financial Measures.

Reply to Comment #4

The Company respectfully acknowledges the Staff’s comment. The Company considers Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses and Free Cash Flow as indicators of the Company’s operating performance and thus a measure of profitability by broadcast television companies rather than liquidity. However, despite use of the measure within the broadcast television industry, we recognize that cash-based adjustments should not be included in a performance measure and that such adjustments are typically associated with a liquidity measure. Accordingly, beginning with our first quarter 2024 earnings release, we will remove any reference to Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses, and Free Cash Flow as non-GAAP operating performance measures, and be replacing such metrics with “Adjusted EBITDA” and supplemental information. We have provided an example of the revised disclosure to be included in future filings within Exhibit A.

Comment #5:

Form 8-K filed February 23, 2024

Effects of Acquisitions and Divestitures on Our Results of Operations and Non-GAAP Terms

Reconciliation of Non-GAAP Terms (Unaudited), page 7

			5.

			We note that you present Operating Cash Flow, a non-GAAP measure reconciled to net income for the eight quarters ended December 31, 2023. We also note the disclosure explaining that this non-GAAP measure represents your average annual Operating Cash Flow as defined in your Senior Credit Facility. As this non-GAAP measure covers a period of eight quarters, appears to include cash-based adjustments, and gives effect to the revenue and broadcast expenses from acquisitions and divestitures along with synergies expected from acquisitions and related financings, please tell us how you determined that it is consistent with Item 10(e)(1)(i) of Regulation S-K and Regulation G.

Reply to Comment #5:

The Company respectfully advises the Staff that we believe disclosure of “Operating Cash Flow” as defined in the Senior Credit Facility is consistent with Item 10(e)(1)(i) of Regulation S-K and Regulation G for the following reasons. The defined term “Operating Cash Flow” within the Senior Credit Facility is a significant measure used in calculating material financial covenants within the Senior Credit Facility that limit our ability to incur indebtedness, incur liens, make investments, make restricted payments and set the interest cost on our $625 million revolving credit facility. Since the Company’s total principal amount of long-term debt outstanding as of December 31, 2023 was $6.21 billion, of which $2.66 billion of principal amount was outstanding under the Senior Credit Facility, is a material balance, disclosure of this defined metric is relevant and important to debt investors and shareholders to be able understand the Company’s ability to incur additional indebtedness, incur liens and/or make investments, restricted payments and the interest cost of any borrowings under our revolving credit facility.

			Gray Television, Inc.
			Page 5 of 10

Notwithstanding the foregoing, the Company acknowledges that the term “Operating Cash Flow” could be misconstrued to reflect the GAAP term “cash provided by or used in operations”. The Company proposes that beginning in the first quarter of 2024, we will change the description of this defined term to “L8QA OCF”. In Exhibit B, we provide an example of the prospective disclosure.

The Company respectfully notes that it discloses the covenant limitations discussed above, among others, in footnote 4 “Long Term Debt” contained in Form 10-K for the year ended December 31, 2023. That excerpted disclosure is presented below for ease of reference for the Staff:

“Collateral, Covenants and Restrictions. Our obligations under the 2019 Senior Credit Facility are secured by substantially all of our consolidated assets, excluding real estate. In addition, substantially all of our subsidiaries are joint and several guarantors of, and our ownership interests in those subsidiaries are pledged to collateralize, our obligations under the 2019 Senior Credit Facility. Gray Television, Inc. is a holding company, and has no material independent assets or operations. For all applicable periods, the 2026 Notes, 2027 Notes, 2030 Notes and 2031 Notes have been fully and unconditionally guaranteed, on a joint and several, senior unsecured basis, by substantially all of Gray Television, Inc.’s subsidiaries. Any subsidiaries of Gray Television, Inc. that do not guarantee the 2026 Notes, 2027 Notes, 2030 Notes and 2031 Notes are not material or are designated as unrestricted under the Senior Credit Facility. As of December 31, 2023, there were no significant restrictions on the ability of Gray Television, Inc.'s subsidiaries to distribute cash to Gray or to the guarantor subsidiaries.

The 2019 Senior Credit Facility contains affirmative and restrictive covenants with which we must compl