The combined company will reach nearly a quarter of total US households with 142 television stations in 92 markets.
Gray’s shares jumped by 16.02% by the end of Monday, after the network made the announcement.
The transaction is expected to be completed toward the end of 2018. Raycom president and CEO Pat LaPlatney will become Gray’s president and co-CEO upon completion. Hilton H. Howell, Jr, Gray’s chairman, president and CEO will also be co-CEO.
The move arrives as a range of TV players consider consolidation to leverage their offering among the threat of streaming services and increased cord cutting.
Recent IHS Markit data showed that the uptake of subscription video services like Netflix, Hulu and Amazon Prime Video was three times that of pay TV services last year.
Volker Moerbitz, research analyst at Kagan, said: “Overall, the deal gives Gray improved national scale to better position it to compete for ad dollars, and raise its leverage in negotiations with multichannel operators and network partners.”
Howell said: “Combining our company with the excellent Raycom stations and the superb Raycom employees will create a powerhouse local media operation. Together, this new portfolio of leading local media outlets will excel at what they do best, which is to provide the local news that local communities trust, the entertainment and sports content that viewers crave, and the incredible reach that advertisers demand.”