Acquisitions and Dispositions

During

2016,

2015

and

2014,

we entered into a number of acquisition and disposition transactions. The acquisition transactions were and are expected to, among other things, increase our revenues and cash flows from operating activities, and allow us to operate more efficiently and effectively by increasing our scale and providing us with the ability to negotiate more favorable terms in our agreements with

third

parties.

During

2016,

we completed

three

acquisitions which added

television stations to our operations and

one

disposition, that divested

one

television station from our operations. In addition, at

December

31,

2016,

we had several pending transactions certain of which were completed in

January

2017.

For a discussion of the completed transactions see Note

“Subsequent Events.”

2016

Acquisitions

and Dispositions

February

16,

2016,

we completed the acquisition of the television and radio broadcast assets of Schurz Communications, Inc. (“Schurz”) for an adjusted

purchase price of

$443.1

million plus transaction related expenses (the “Schurz Acquisition”).

To facilitate regulatory approval for the Schurz Acquistion, on

February

2016,

we exchanged the assets of KAKE-TV (ABC) (and its satellite stations) in the Wichita, Kansas television market, for the assets of Lockwood Broadcasting, Inc.’s television station WBXX-TV (CW) in the Knoxville, Tennessee television market and

$11.2

million of cash (the “WBXX Acquisition”). In connection with the divestiture of KAKE-TV’s assets, we recorded a gain of approximately

$2.0

million, excluding transaction related expenses.

To further faciliate regulatory approvals for the Schurz Acquisition, on

February

16,

2016,

we exchanged the assets of WSBT-TV for the assets of Sinclair Broadcast Group, Inc.’s television station WLUC-TV (NBC/FOX) in the Marquette, Michigan television market (the “WLUC Acquisition”), and we sold the Schurz radio broadcast assets (the “Schurz Radio Stations”) for

$16.0

million to

three

third

-party radio broadcasters. We did not record a gain or loss related to the WLUC Acquisition or related to the divestiture of the Schurz Radio Stations because the fair value of the assets given were determined to be equal to the assets received.

The Schurz Acquisition, the WBXX Acquisition, the WLUC Acquisition, and the sale of the Schurz Radio Stations are referred to collectively as the “Schurz Acquisition and Related Transactions.” We used borrowings of

$425.0

million (the

“2016

Term Loan”) under our then-existing senior credit facility, as amended (the

“2014

Senior Credit Facility”), to fund a portion of the purchase price to complete the Schurz Acquisition and to pay a portion of the related fees and expenses, the remainder of which were paid from cash on hand. See Note

“Long-term Debt” for further information regarding our financing activities.

The net consideration to complete the Schurz Acquisition and Related Transactions was as follows (in thousands):

						Schurz
						Acquisition
						and the
	Divestiture			Acquisition		Acquisition
	of KAKE-TV			of WBXX-TV		of WLUC-TV			Total

Base purchase price	$	-		$	30,000	$	442,500		$	472,500
Purchase price adjustment		-			-		574			574
Adjusted purchase price		-			30,000		443,074			473,074
Cash consideration received from sale of Schurz Radio Stations		-			-		(16,000	)		(16,000	)
Net adjusted purchase price allocated to assets acquired and liabilities assumed		-			30,000		427,074			457,074
Non-cash consideration received		(30,000	)		-		-			(30,000	)
Cash consideration received		(11,200	)		-		-			(11,200	)
Net consideration - the Schurz Acquisition and Related Transactions	$	(41,200	)	$	30,000	$	427,074		$	415,874

June

27,

2016,

we completed the acquisition of KYES-TV (MY, Ant.), a television station serving the Anchorage, Alaska television market, from Fireweed Communications, LLC (the “KYES-TV Acquisition”). The purchase price of

$0.5

million, plus transaction related expenses, was paid with cash on hand.

May

13,

2016,

we announced that we agreed to acquire television stations WDTV-TV (CBS) and WVFX-TV (FOX, CW), a legal duopoly in the Clarksburg-Weston, West Virginia television market (the “Clarksburg Acquisition”) from Withers Broadcasting Company of West Virginia and Withers Broadcasting Company of Clarksburg, LLC (collectively “Withers”) for a maximum total purchase price of

$26.5

million in cash. On

June

2016,

we made a partial payment of

$16.5

million to Withers and acquired the non-license assets of these stations. Also, on that date we began to provide services to Withers under a local programming and marketing agreement (an “LMA”). Subject to regulatory approval, we currently expect to complete this acquisition later in the

first

quarter or in the

second

quarter of

2017.

Collectively, we refer to the stations acquired and retained in

2016,

as well as those which we began operating under an LMA in

2016,

as the

“2016

Acquired Stations.”

The fair values of the assets acquired, liabilities assumed and resulting goodwill of the television station acquisitions we completed in

2016,

are summarized as follows (in thousands):

						Schurz
						Acquisition
						and the
	Acquisition		Acquisition			Acquisition
	of KYES-TV		of WBXX-TV			of WLUC-TV			Total

Accounts receivable	$	-	$	-		$	19,226		$	19,226
Other current assets		-		429			4,606			5,035
Property and equipment		176		1,633			97,814			99,623
Goodwill		28		10,288			61,981			72,297
Broadcast licenses		254		18,199			231,391			249,844
Other intangible assets		42		-			19,523			19,565
Other non-current assets		-		408			3,028			3,436
Current liabilities		-		(460	)		(8,903	)		(9,363	)
Other long-term liabilities		-		(497	)		(1,592	)		(2,089	)

Total	$	500	$	30,000		$	427,074		$	457,574

These amounts are based upon management’s determination of the fair values using valuation techniques including income, cost and market approaches. In determining the fair value of the acquired assets and assumed liabilities, the fair values were determined based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. Actual results

may

differ materially from these estimates.

Accounts receivable are recorded at their fair value representing the amount we expect to collect. Gross contractual amounts receivable are approximately

$0.2

million more than their recorded fair value.

Property and equipment are recorded at their fair value and are being depreciated over their estimated useful lives ranging from

three

years to

years.

Amounts related to other intangible assets represent primarily the estimated fair values of retransmission agreements of

$14.9

million; advertising client relationships of

$1.6

million; and favorable income leases of

$2.6

million. These intangible assets are being amortized over their estimated useful lives of approximately

4.9

years for retransmission agreements; approximately

5.5

years for advertising client relationships; and approximately

9.5

years for favorable income leases.

Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and liabilities assumed, and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, as well as future synergies that we expect to generate from each acquisition. We have recorded

$72.3

million of goodwill related to stations acquired in

2016.

The goodwill recognized related to these acquisitions is deductible for income tax purposes.

The Company’s consolidated results of operations for year ended

December

31,

2016

include the results of the

2016

Acquired Stations from the date of each transaction. Revenues attributable thereto and included in our consolidated statements of operations for the year ended

December

31,

2016

were

$130.4

million. Operating income attributable thereto and included in our consolidated statements of operations for year ended

December

31,

2016

were

$55.8

million.

In connection with acquiring the

2016

Acquired Stations, we incurred a total of

$7.4

million of transaction related costs during the year ended

December

31,

2016,

primarily related to legal, consulting and other professional services.

2015

Acquisitions:

Cedar Rapids Acquisition

September

2015,

we entered into an asset purchase agreement with The Cedar Rapids Television Company and The Gazette Company to acquire the assets of KCRG-TV, which is affiliated with the ABC Network and serves the Cedar Rapids, Iowa television market (the “Cedar Rapids Acquisition”). Also on

September

2015,

we acquired certain non-license operating assets of this station and entered into an LMA with the licensee. Under the terms of the LMA, we operated the station subject to the control of the seller and its obligations under the station’s FCC license. As a result of the terms of the LMA, we included the operating results of the station in our financial statements beginning on

September

2015.

October

2015,

we acquired the non-license related real estate assets of KCRG-TV. The acquisition was completed on

November

2015,

with the acquisition of the FCC license and license related assets. The total purchase price for the station assets was

$100.0

million, and was funded with cash on hand.

Odessa Acquisition

July

2015,

we acquired from ICA Broadcasting I, LTD, the assets of KOSA-TV, whose digital channels are affiliated with the CBS and MY Networks and which station serves the Odessa-Midland, Texas television market (the “Odessa Acquisition”). The total purchase price paid was

$33.6

million and was funded with cash on hand.

Twin Falls Acquisition

July

2015,

we acquired from Neuhoff Media Twin Falls, LLC the assets of KMVT-TV, whose digital channels are affiliated with the CBS and CW Networks, as well as KSVT-LD, whose digital channel is affiliated jointly with the FOX and MY Networks. These stations serve the Twin Falls, Idaho television market (the “Twin Falls Acquisition”). The total purchase price paid was

$17.5

million, and was funded with cash on hand.

Wausau Acquisition

July

2015,

we acquired from Davis Television Wausau, LLC certain non-license assets of WFXS-TV, which had served as the FOX affiliate for the Wausau-Rhinelander, Wisconsin television market (the “Wausau Acquisition”). On that date WFXS-TV ceased operating, and we began broadcasting its former program streams on our digital low power television station in Wausau, WZAW-LD. The total purchase price paid was

$14.0

million, and was funded with cash on hand.

Presque Isle Acquisition

July

2015,

we acquired from NEPSK, Inc. the assets of WAGM-TV, whose digital channels are affiliated with the CBS and FOX Networks and which station serves the Presque Isle, Maine television market (the Presque Isle Acquisition”). The total purchase price paid was

$10.3

million, and was funded with cash on hand.

Laredo Acquisition

July

2015,

we acquired from Eagle Creek Broadcasting of Laredo, LLC certain non-license assets of KVTV-TV, which had served as the CBS affiliate for the Laredo, Texas television market (the “Laredo Acquisition”). On that date KVTV-TV ceased operating, and we began broadcasting its former program streams on our digital low power television station in Laredo, KYLX-LD. The total purchase price paid was

$9.0

million, and was funded with cash on hand.

The fair values of the acquired assets, assumed liabilities and the resulting goodwill from the

2015

Acquired Stations are summarized as follows (in thousands):

	Acquisition
	Cedar Rapids			Odessa			Twin Falls			Wausau			Presque Isle			Laredo

Other current assets	$	503		$	87		$	93		$	87		$	45		$	22
Property and equipment		13,754			4,629			5,172			1,985			2,822			1,411
Goodwill		25,006			3,719			2,587			11,616			245			5,154
Broadcast licenses		55,676			22,253			6,333			-			6,150			-
Other intangible assets		5,849			3,067			3,485			397			1,039			2,435
Other non-current assets		13			13			32			87			-			13
Current liabilities		(792	)		(155	)		(170	)		(85	)		(51	)		(22	)
Other long-term liabilities		(13	)		(13	)		(32	)		(87	)		-			(13	)

Total	$	99,996		$	33,600		$	17,500		$	14,000		$	10,250		$	9,000

may

differ materially from these estimates.

Property and equipment are recorded at their fair value and are being depreciated over their estimated useful lives ranging from

three

years to

years.

The amount related to other intangible assets primarily represents the estimated fair values of retransmission agreements of

$9.7

million; advertising client relationships of

$1.0

million; and income leases of

$5.4

million. These intangible assets are being amortized over the estimated remaining useful lives of

5.3

years for retransmission agreements;

9.6

years for advertising client relationships; and

16.9

years for income leases. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and liabilities assumed, and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, as well as expected future synergies. We expect that goodwill of

$48.3

million will be deductible for tax purposes. We believe that the value of a television station is derived primarily from the attributes of its broadcast license rather than its network affiliation. Consistent with that determination, no fair value was separately allocated to the acquired network affiliation agreements.

Collectively, we refer to the stations acquired and retained in

2015

as the

“2015

Acquired Stations.” In connection with acquiring the

2015

Acquired Stations, we incurred transaction costs totaling

$6.5

million that are included in our corporate and administrative expenses in the year ended

December

31,

2015.

Montana

Dispositions

September

2015,

we donated the FCC license and certain other assets of KMTF-TV in Helena, Montana, which formerly simulcast the CW channel broadcast by our KTVH-

D2,

to Montana State University (“MSU”). This donation allowed MSU to operate a full power PBS affiliated television station in the state’s capital for the

first

time, augmenting the statewide PBS network that MSU operates. We recorded a loss on disposal of approximately

$0.1

million related to this donation.

November

2015,

we sold to Cordillera Communications, LLC television station KBGF-TV, the NBC affiliate for the Great Falls, Montana television market, and television station KTVH-TV, the NBC and CW affiliate for the Helena, Montana television market. Total consideration received was

$3.0

million, and we recorded a gain on disposal of approximately

$0.9

million related to this disposition in

2015.

2014

Acquisitions:

Hoak Acquisition

June

13,

2014,

we completed the acquisition of

100%

of the capital stock of certain wholly owned subsidiaries of Hoak Media, LLC (“Hoak”) for total purchase price of approximately

$299.9

million (the “Hoak Acquisition”). The following stations were acquired in the Hoak Acquisition:

	Network
Station	Affiliation	Market

KSFY-TV	ABC	Sioux Falls, SD
KABY-TV*	ABC	Sioux Falls, SD
KPRY-TV*	ABC	Sioux Falls, SD
KVLY-TV	NBC	Fargo-Valley City, ND
KNOE-TV	CBS	Monroe- El Dorado, LA
KFYR-TV	NBC	Minot-Bismarck-Dickinson, ND
KMOT-TV*	NBC	Minot-Bismarck-Dickinson, ND
KUMV-TV*	NBC	Minot-Bismarck-Dickinson, ND
KQCD-TV*	NBC	Minot-Bismarck-Dickinson, ND
KALB-TV	NBC/CBS	Alexandria, LA
KNOP-TV	NBC	North Platte, NE
KIIT-LP	FOX	North Platte, NE
* satellite station

The Hoak Acquisition also included our assumption of Hoak’s interest in certain operating agreements, and the acquisition of certain non-license assets of KHAS-TV, which served the Lincoln-Hastings, Nebraska market. On

June

13,

2014,

we transferred the programing of KHAS-TV to KSNB-TV, a station owned by Gray that also serves the Lincoln-Hastings, Nebraska, market. We used borrowings under the

2014

Senior Credit Facility, to fund the purchase price to complete the Hoak Acquisition.

As a component of the Hoak Acquisition, Gray assumed Hoak’s rights under certain agreements with Parker Broadcasting, Inc. (“Parker”) to provide back-office services, sales support and limited programming to KXJB-TV and KAQY-TV (each, a “Parker Agreement”). The Parker Agreements terminated upon the completion of the Parker Acquisition (defined below).

The Hoak Acquisition also included

two

subsidiaries with television stations located in the Panama City, Florida (KREX) and Grand Junction, Colorado (WMBB) markets. On

June

13,

2014,

in conection with the Hoak Acquisition, we divested those subsidiaries in exchange for

$33.5

million. This amount is not included in our total purchase price for Hoak.

SJL Acquisition

September

15,

2014,

we acquired from SJL Holdings, LLC and SJL Holdings II, LLC,

100%

of the capital stock of the entities that own and operate WJRT-TV and WTVG-TV, respectively, which are the ABC-affiliated television stations serving the Flint-Saginaw-Bay City, Michigan, and Toledo, Ohio, television markets, respectively, for total purchase price of

$131.5

million (the “SJL Acquisition”). We funded the SJL Acquisition with a combination of cash from operations and borrowings under our

2014

Senior Credit Facility.

KEVN Acquisition

May

2014,

we acquired from Mission TV, LLC

100%

of the capital stock of the entity that operates KEVN-TV and its satellite station, KIVV-TV (collectively, the “KEVN Stations”) The KEVN Stations are affiliated with FOX and serve the Rapid City, South Dakota television market. The total purchase price to complete the KEVN Acquisition was approximately

$8.8

million (the “KEVN Acquisition”). The purchase price to complete the KEVN Acquisition was funded with a combination of cash from operations and borrowings under our prior senior credit facility.

KNDX Acquisition

May

2014,

we acquired from Prime Cities Broadcasting, Inc. (“Prime Cities”) certain assets of KNDX-TV and its satellite station KXND-TV, as well as certain non-license assets of low power stations KNDX-LP and KXND-LP. These

four

stations served as FOX affiliates for the Minot-Bismarck, North Dakota television market. On

June

13,

2014,

we transferred the programing of KNDX-TV and KXND-TV to the television stations that we acquired from Hoak in the Minot-Bismarck, North Dakota television market. On

June

27,

2014,

we acquired the low power FCC licenses of KNDX-LP and KXND-LP from Prime Cities. We refer to the acquisition of these assets from Prime Cities as the “KNDX Acquisition.” The total purchase price was

$7.5

million, which was funded with a combination of cash from operations and borrowings under our prior senior credit facility.

Parker Acquisition

Also in

2014,

we acquired

100%

of the capital stock of

two

of Parker’s subsidiaries, Parker Broadcasting of Dakota, LLC and Parker Broadcasting of Louisiana, LLC (collectively, the “Parker Acquisition”). Parker Broadcasting of Dakota, LLC owned certain non-license assets of KXJB-TV, which was affiliated with the CBS network and served the Fargo, North Dakota television market. Parker Broadcasting of Louisiana LLC owned certain non-license assets of KAQY-TV, which was affiliated with the ABC network and served the Monroe, Louisiana television market. On

September

25,

2014,

we completed the acquisition of the outstanding capital stock of Parker Broadcasting of Louisiana LLC and transferred the programing of KAQY-TV to KNOE-TV, a station owned by Gray that also serves the Monroe, Louisiana, television market. On

December

2014,

we completed the acquisition of Parker Broadcasting of Dakota, LLC and transferred the programming of KXJB-TV to KVLY-TV, a station owned by us that also serves the Fargo, North Dakota television market. Upon the completion of the Parker Acquisition, the Parker Agreements were terminated.

The purchase price to complete the Parker Acquisition was

$6.7

million, of which approximately

$1.7

million was allocated to the Parker Broadcasting of Louisiana transaction and

$5.0

million was allocated to the Parker Broadcasting of Dakota transaction. The purchase price to complete the Parker Acquisition was funded with a combination of cash from operations and borrowings under our

2014

Senior Credit Facility.

WQCW Acquisition

April

2014,

we acquired the assets of WQCW-TV, Portsmouth, Ohio from Lockwood Broadcast Group (the "WQCW Acquisition"). WQCW-TV serves as the CW affiliate for the Charleston/ Huntington, West Virginia television market, where we own and operate WSAZ-TV, the market's NBC affiliate. The purchase price to complete the WQCW Acquisition was approximately

$5.5

million, which was funded with cash from operations.

Helena Acquisition

November

2014,

we acquired from Beartooth Communications Company the assets of KTVH-TV and KBGF-LD, which are NBC affiliates in the Helena, Montana and Great Falls, Montana television markets, respectively; and on

December

2014,

we acquired from Rocky Mountain Broadcasting Company the assets of KMTF-TV the CW affiliate for the Helena, Montana market (together, the “Helena Acquisition”). Total purchase price for both acquisitions was approximately

$1.9

million, which was funded with cash from operations

Collectively, we refer to the stations acquired and retained in

2014

as the

“2014

Acquired Stations.”

The fair values of the acquired assets, assumed liabilities and the resulting goodwill from the

2014

Acquired Stations are summarized as follows (in thousands):

	Acquisition
	Hoak			SJL			KEVN			KNDX			Parker			WQCW			Helena

Cash	$	-		$	-		$	615		$	-		$	-		$	-		$	-
Accounts receivable		10,722			7,132			569			-			765			-			14
Other current assets		509			1,946			96			39			964			45			49
Property and equipment		45,382			23,508			3,888			2,576			722			991			1,230
Goodwill		131,632			50,941			2,717			1,839			1,932			802			70
Broadcast licenses		91,958			86,685			1,675			500			-			3,691			146
Other intangible assets		35,386			10,091			1,786			2,584			3,163			15			431
Other non-current assets		-			253			29			15			16			-			-
Current liabilities		(3,544	)		(4,936	)		(211	)		(36	)		(826	)		(45	)		(90	)
Other long-term liabilities		-			(379	)		(38	)		(17	)		(5	)		-			-
Deferred income tax liabilities		(12,188	)		(43,712	)		(2,341	)		-			-			-			-

Total	$	299,857		$	131,529		$	8,785		$	7,500		$	6,731		$	5,499		$	1,850

These amounts are based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. Actual results

may

differ materially from these estimates.

Accounts receivable are recorded at their fair value that represents the amount we expect to collect. Gross contractual amounts receivable are approximately

$0.3

million more than their recorded fair value.

Property and equipment are recorded at their fair value and are being depreciated over their estimated useful lives ranging from

three

years to

years.

The amount related to other intangible assets primarily represents the estimated fair values of retransmission agreements of

$34.2

million; advertising client relationships of

$13.1

million; and income leases of

$4.1

million. These intangible assets are being amortized over the estimated remaining useful lives of

4.4

years for retransmission agreements;

5.5

years for advertising client relationships; and

8.3

years for income leases. We expect that goodwill of

$88.6

million related to asset acquisitions and stock acquisitions that are treated as asset acquisitions based on the tax elections made relating to the

2014

Acquired Stations will be deductible for tax purposes. As described above, no fair value was separately allocated to the acquired network affiliation agreements in our

2014

Acquired Stations.

In connection with acquiring the

2014

Acquired Stations, we incurred transaction costs totaling

$6.2

million that are included in our corporate and administrative expenses in the year ended

December

31,

2014.

Unaudited Pro Forma Financial Information

Pro Forma Data – Acquisitions Completed in

2016

The following table sets forth certain unaudited pro forma information for the years ended

December

31,

2016

and

2015

assuming that the acquisitions completed in

2016

occurred on

January

2015

(in thousands, except per share data):

	Years Ended
	December 31,
	2016		2015

Revenue (less agency commissions)	$	825,787	$	701,550
Net income	$	57,795	$	39,360

Basic net income per share	$	0.80	$	0.58
Diluted net income per share	$	0.79	$	0.57

This pro forma financial information is based on Gray’s historical results of operations and the historical results of operations of the stations acquired in

2016,

adjusted for the effect of fair value estimates and other acquisition accounting adjustments, and is not necessarily indicative of what our results would have been had we acquired each of the stations acquired in

2016

January

2015

or on any other historical date, nor is it reflective of our expected results of operations for any future period. The pro forma adjustments for the years ended

December

31,

2016

and

2015

reflect depreciation expense and amortization of finite-lived intangible assets related to the fair value of the assets acquired, and the related tax effects of the adjustments. This pro forma financial information has been prepared based on estimates and assumptions that we believe are reasonable as of the date hereof, and are subject to change based on, among other things, changes in the fair value estimates or underlying assumptions.

Pro Forma Data -

2015

Acquisitions

The following table sets forth certain unaudited pro forma information for the years ended

December

31,

2015

and

2014

assuming that the

2015

Acquisitions occurred on

January

2014

(in thousands, except per share data):

	Years Ended
	December 31,
	2015		2014

Revenue (less agency commissions)	$	621,530	$	559,538
Net income	$	46,181	$	59,342

Basic net income per share	$	0.68	$	1.03
Diluted net income per share	$	0.67	$	1.02

This pro forma financial information is based on Gray’s historical results of operations and the

2015

Acquisitions’ historical results of operations, adjusted for the effect of fair value estimates and other acquisition accounting adjustments, and is not necessarily indicative of what our results would have been had we completed each of the

2015

Acquisitions on

January

2014

or on any other historical date, nor is it reflective of our expected results of operations for any future period. The pro forma adjustments for the years ended

December

31,

2015

and

2014

In connection with completing the

2015

Acquisitions, we incurred a total of

$6.5

million of transaction related costs in

2015,

primarily related to legal, consulting and other professional services.

Net revenues and operating income of the businesses acquired in the

2015

Acquisitions included in our audited consolidated statements of operations for the year ended

December

31,

2015

were

$23.2

million and

$8.6

million, respectively.

Pro Forma Data - Ho

ak Acquisition and SJL Acquisition

The following table sets forth certain unaudited pro forma results of operations of the Company for the year ended

December

31,

2014

assuming that the Hoak Acquisition and the SJL Acquisition, along with transactions necessary to finance the Hoak Acquisition and the SJL Acquisition, occurred on

January

2013

(in thousands, except per share data):

	Year Ended December 31, 2014

Revenue (less agency commissions)	$	565,251
Net income	$	50,771

Basic net income per share	$	0.88
Diluted net income per share	$	0.87

This pro forma financial information is based on each of Gray’s, Hoak’s and SJL’s historical results of operations, adjusted for the effect of fair value estimates and other acquisition accounting adjustments, and is not necessarily indicative of what our results would have been had we completed each of the Hoak Acquisition, the SJL Acquisition and the related financing transactions on

January

2013

or on any other historical date, nor is it reflective of our expected results of operations for any future period. The pro forma adjustments for the year ended

December

31,

2014

reflect depreciation expense and amortization of finite-lived intangible assets related to the fair value of the assets acquired, additional interest expense related to the financing of each of the Hoak Acquisition and the SJL Acquisition and the related tax effects of the adjustments. This pro forma financial information has been prepared based on estimates and assumptions that we believe are reasonable as of the date hereof, and are subject to change based on, among other things, changes in the fair value estimates or underlying assumptions.

In connection with completing the Hoak Acquisition and SJL Acquisition, in

2014

we incurred a total of

$5.1

million of transaction related costs, primarily related to legal, consulting and other professional services.

Net revenues and operating income of the businesses acquired in the Hoak Acquisition and the SJL Acquisition included in our audited consolidated statements of operations for the year ended

December

31,

2014

were

$64.7

million and

$25.8

million, respectively.

Pro forma financial information for the following stations acquired in

2014

is not included as such information is not material to our financial statements : the KEVN Acquisition; the KNDX Acquisition; the Parker Acquisition; the WQCW Acquisition and the Helena Acquisition.