Gray Communications Signs Letter of Intent to Acquire Benedek Broadcasting Corporation

    ATLANTA, April 1 /PRNewswire-FirstCall/ -- Gray Communications Systems,
 Inc. (NYSE:   GCS GCS.B) of Atlanta, Georgia ("Gray") and Stations Holding
 Company, Inc., the parent company of Benedek Broadcasting Corporation
 ("Benedek"), jointly announced today they have executed a Letter of Intent
 calling for Gray to acquire all of the capital stock of Stations Holding
 Company for $500 million in cash plus proceeds from selected pending station
 divestitures.
     "We at Gray are delighted to add Benedek's television stations and senior
 management to our company," commented Robert Prather, Executive Vice President
 - Acquisitions, of Gray.  "Anyone familiar with affiliated television station
 groups targeting mid-sized markets sees that Gray and Benedek have a great
 deal in common -- this is about as perfect a 'fit' as one can come up with in
 the station business."
     Benedek was founded and built by its Chairman and Chief Executive Officer,
 A. Richard Benedek and its President, K. James Yager.  The company currently
 operates 22 television stations, which produced in 2001 net revenue of
 approximately $138.1 million and broadcasting cash flow of approximately
 $47.5 million (excluding Wheeling, West Virginia).  Benedek's station group of
 affiliated stations -- 10 CBS, 7 ABC, 4 NBC and 1 FOX -- are located in 21
 markets.  Benedek has previously announced that its Wheeling, West Virginia
 station will be sold in a separate pending transaction.
     "We have a superb management team and a strong group of stations with high
 margins," commented Richard Benedek.  "The sale to Gray is an excellent
 outcome.  The two groups have always been a natural fit."
     "We have always focused on mid-sized markets where we can develop stable
 cash flows and service our viewers and advertisers with highly rated local
 news, community-oriented and network programming," said Jim Yager, Benedek's
 President, who will join the combined Gray/Benedek broadcasting group.  "Gray
 has similar operating characteristics.  Furthermore, the geographic proximity
 of our two station groups offers compelling regional operating opportunities."
     Gray owns 13 stations serving 11 markets, of which 10 are affiliated with
 CBS and 3 with NBC.  Gray is publicly traded on the New York Stock Exchange
 and reported total net revenue of $156.3 million in 2001 and media cash flow
 of approximately $53.1 million, including $40.8 million from the television
 station division.  In addition to its television station division, Gray
 operates four local daily newspapers located in Georgia and Indiana.
     The combined station groups will comprise a total of 35 stations with 20
 CBS affiliates, 7 NBC affiliates, 7 ABC affiliates and 1 FOX affiliate.  The
 combined station group will have 24 stations ranked #1 in viewing audience
 within their respective markets.  The Company will reach in excess of 6% of
 total U.S. TV households.  In addition, with 20 CBS affiliated stations, it
 will be the largest non-Network owner of CBS affiliates in the country.  Based
 on results for the year ended December 31, 2001, the combined Gray and Benedek
 television stations produced approximately $244.5 million of revenue and
 $88.3 million of broadcast cash flow.  Including Gray's publishing and other
 operations, the combined Gray and Benedek operations for 2001 produced
 approximately $294.4 million of revenue and $100.6 million of media cash flow.
     The combined station group will have a strong presence in the Southeast,
 Midwest, Great Lakes and Texas areas of the United States.  The station
 locations, some of which are in adjacent markets, form natural geographic
 clusters.
     Gray intends to finance the acquisition by issuing a combination of debt
 and equity securities.  Gray is considering raising the equity financing
 through a secondary public offering of the company's common stock.
     The acquisition is subject to execution of a definitive agreement, which
 the companies expect to execute soon, as well as approval by the Federal
 Communications Commission of the transfer of control of Benedek's television
 licenses.  The transaction is also subject to approval of the Delaware
 bankruptcy court with jurisdiction over the reorganization of Stations Holding
 Company, Inc.  The transaction is expected to close by the fourth quarter of
 2002.
     Gray and Benedek will hold a joint investor conference call at 11:30 A.M.
 (EST) on April 2, 2002 accessible by dialing 800-446-4472.  A live webcast
 will be available at http://www.graycommunications.com (click on investor
 relations).  A replay of the call will be available through April 9, 2002 by
 dialing (888) 509-0081.
 
 
     Call       Designated                        % US TV    Affil- Market News
     Letters    Market Area       Rank Households Households iation  Rank  Rank
 
     *WVLT      Knoxville, TN      62     478       0.454%    CBS      2     3
 
      KAKE/
       KLBY(1)/
       KUPK(1)  Wichita -
                 Hutchinson, KS    65     453       0.429%    ABC      3     3
 
     *WKYT      Lexington, KY      66     436       0.413%    CBS      1     1
 
      WOWT      Omaha, NE          75     386       0.366%    NBC      1     2
 
      WMTV      Madison, WI        85     339       0.322%    NBC      1     2
 
      KKTV      Colorado
                 Springs, CO       91     306       0.290%    CBS      1     1
 
     *KWTX      Waco - Temple -
                 Bryan, TX         94     299       0.283%    CBS      1     1
 
     *KBTX (2)  Waco - Temple -
                 Bryan, TX         94     n/a         n/a     CBS      1     1
 
      WYTV      Youngstown, OH     98     275       0.261%    ABC      3     3
 
     *KOLN      Lincoln -
                 Hastings -
                 Kearney, NE      102     269       0.255%    CBS      1     1
 
     *KGIN (3)  Lincoln -
                 Hastings -
                 Kearney, NE      102     n/a         n/a     CBS      1     1
 
     *WITN      Greenville -
                 New Bern -
                 Washington, NC   106     251       0.238%    NBC      1     1
 
      WILX      Lansing, MI       111     238       0.226%    NBC      1     1
 
     *WCTV      Tallahassee, FL -
                 Thomasville, GA  113     237       0.224%    CBS      1     1
 
     *WRDW      Augusta, GA       114     234       0.222%    CBS      1     1
 
      WHOI      Peoria -
                 Bloomington, IL  116     234       0.221%    ABC      3     3
 
     *WEAU      La Crosse -
                 Eau Claire, WI   127     198       0.187%    NBC      1     1
 
      WIFR      Rockford, IL      132     176       0.167%    CBS      2     2
 
      KDLH      Duluth, MN -
                 Superior, WI     135     174       0.165%    CBS      3     3
 
      WSAW      Wausau -
                 Rhinelander, WI  137     169       0.160%    CBS      1     1
 
      WIBW      Topeka, KS        138     166       0.157%    CBS      1     1
 
      KMIZ      Columbia -
                 Jefferson
                 City, MO         139     159       0.151%    ABC      3     3
      K02NQ/
       K11TB(4) Columbia -
                 Jefferson
                 City, MO         139     n/a         n/a     FOX      3     3
 
      KAUZ      Wichita Falls, TX -
                 Lawton, OK       141     158       0.150%    CBS      2     2
 
     *WJHG      Panama City, FL   159     121       0.115%    NBC      1     1
 
     *KXII      Sherman, TX -
                 Ada, OK          160     119       0.113%    CBS      1     1
 
 
      KHQA      Quincy, IL -
                 Hannibal, MO -
                 Keokuk, IA       163     110       0.104%    CBS      2     2
 
      WTVY      Dothan, AL        172      95       0.090%    CBS      1     1
 
      WHSV      Harrisonburg, VA  178      84       0.080%    ABC      1     1
 
      WBKO      Bowling Green, KY 181      81       0.077%    ABC      1     1
 
      WTOK      Meridian, MS      185      70       0.066%    ABC      1     1
 
      WTAP      Parkersburg, WV   186      63       0.060%    NBC      1     1
 
      KGWN/
       KSTF (5) Cheyenne, WY -
                 Scottsbluf, NE   197      52       0.049%    CBS      1     1
 
      KGWC/KGWL (6)/
       KGWR (6) Casper -
                 Riverton, WY     200      50       0.047%    CBS      3     3
 
     *WYMT      Hazard, KY         (7)    169         n/a     CBS      1     1
 
     Total                              6,649        6.14%
 
 
     Sources:
     DMA, Household and %U.S. are based on data published by the A. C. Nielsen
     Company ("Nielsen").
 
     Market Rank is based on Management's review of Nielsen data.
 
     Notes:
     * stations are stations currently owned by Gray
      Benedek stations exclude WTRF - Wheeling, WV which is under contract to
      be sold.
 
     (1)  KLBY and KUPK are satellite stations of KAKE under FCC rules.
     (2)  KBTX is a satellite station of KWTX under FCC rules.
     (3)  KGIN is a satellite station of KOLN under FCC rules.
     (4)  K02NQ and K11TB are low power broadcast television stations operated
          by KMIZ-TV and distributed primarily via cable television.  These two
          stations began operating in September 1997 as a single entity
          operating from one facility and offering an identical programming
          schedule.
     (5)  KSTF is a satellite station of KGWN under FCC rules.
     (6)  KGWL and KGWR are satellite stations of KGWC under FCC rules.
     (7)  Special 16 county trading area defined by Nielsen and is part of the
          Lexington, KY DMA.
 
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SOURCE Gray Communications Systems, Inc.
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