Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Investor Presentation (November 2018)
33 slides from Gray Media's investor presentation, November 2018
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN November 2018 If Appendix is not included, see full presentation located at www.gray.tv for Non- GAAP Reconciliations. 4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 | F 404.261.9607 | www.gray.tv 0
Slide 2: Disclaimer and Non-GAAP Financial Data
Disclaimer and Non-GAAP Financial Data This presentation contains certain forward looking statements that are based largely on Gray Television, Inc.’s (“Gray”, “Gray Television”, “GTN” or the “Company”) current expectations and reflect various estimates and assumptions by Gray. These statements may
Slide 3: Raycom Transaction Overview
Raycom Transaction Overview 2
Slide 4: Introduction & Raycom Transaction Overview
Introduction & Raycom Transaction Overview • On June 25, 2018, Gray Television, Inc. (“Gray” or the “Company”) announced that it had reached an agreement to acquire Raycom Media, Inc. (“Raycom”) for a ~$3.6 billion enterprise value • The purchase price represents a multiple of ~7.8x blended ’17 / ’1
Slide 5: Sources & Uses and Pro Forma Capitalization
Sources & Uses and Pro Forma Capitalization ($ in Millions) Sources of Funds Uses of Funds Gray Cash $359 Cash and Stock to Raycom Equityholders and Debtholders $3,713 Raycom Cash 121 Estimated Fees & Expenses 85 After-tax Divestiture Proceeds 234 Acquisition of KDLT 33 Interim Free Cash Flow Throug
Slide 6: Pro Forma Debt Maturity Schedule
Pro Forma Debt Maturity Schedule Extended and Staggered Debt Maturity Profile with No Significant Maturities until 2024 ($ in Millions) $2,500 New $200 Million Revolver Due Nov 2023 (Undrawn) (2) Gray Term Loan B Due Feb 2024 (L+225) (1) $2,000 Incremental Term Loan B Due Nov 2025 (L+250) (2) Gray N
Slide 7: Highly Strategic Perpetual Preferred Equity Investment from the RSA
Highly Strategic Perpetual Preferred Equity Investment from the RSA Issuer: Gray Television, Inc. ("Gray") Purchaser: Certain Affiliates of the Retirement Systems of Alabama ("RSA"), upon closing of Raycom transaction Class of Stock: Newly issued series of perpetual preferred stock, designated
Slide 8: Acquisition Overview
- Acquisition Overview 1
Slide 9: Highly Complementary Portfolio Will Expand Geographic Footprint
Highly Complementary Portfolio Will Expand Geographic Footprint Combined Company Highlights(1) 92 Markets 24% of U.S. TV Households 61 #1 Rated TV Stations 92% of Markets with #1/#2 Rated TV Stations $1.9 Billion in L8QA 6/30/18 CHB Blended Revenue Gray Raycom $80 million of estimated Ot
Slide 10: Gray Continues to Prudently Grow its Scale
Gray Continues to Prudently Grow its Scale ($ in Millions) Pro Forma Gray + Raycom As-Reported Gray As-Reported Raycom (Post-Overlap Station Divestitures) Financial Profile L8QA 6/30/18 Net Revenue $901 $1,081 $1,939 (1) L8QA 6/30/18 Blended OCF $323 $342 $754 (2) % Margin 36% 32% 39% Scale TV Stati
Slide 11: Significant Identified and Achievable Synergies
Significant Identified and Achievable Synergies Total Expected Year 1 Annual Synergies of $80 Million Net Retransmission Comprised of contracted step-up of Raycom subscribers to Gray’s retransmission rates Revenue Rationalization of station expenses and creation of efficient operations Station-L
Slide 12: Evolution of Gray
Evolution of Gray Proven track record of acquisition integration and prudent balance sheet management, reducing net leverage ~2.0x since 2014 Raised a total of $406 million of primary equity in 2015 and 2017 to prudently manage capital structure and maintain a balanced growth strategy. In addi
Slide 13: Raycom Media Snapshot
Raycom Media Snapshot Segment Overview ($ in Millions) Division Description 65 television stations owned and/or operated in 44 markets reaching 16% of total U.S. households Owns, produces and markets sports and entertainment programming Produces live sports and entertainment events and develops digi
Slide 14: Key Investment Highlights
Key Investment Highlights 13
Slide 15: Summary of Key Investment Highlights
Summary of Key Investment Highlights One of the Largest Television Broadcasters with High Quality Assets Diversified Sources of Revenues Across Networks and Markets Large Political Upside in Election Years with Key Presence in Swing States Strong Growth in Net Retrans and Increasing Leverage With MV
Slide 16: Top Rated Stations Capture a Significant Share of Political Ad Spending
Top Rated Stations Capture a Significant Share of Political Ad Spending Pro Forma Markets with at Least One 2018 Election Governor 74% 2018 is a Non-Presidential US Senate 62% Political Year and Presents an Attractive Upside Opportunity House 100% Source: Company management, Company filings, The Coo
Slide 17: Gray Excels at Retransmission Revenue
Gray Excels at Retransmission Revenue As Reported Basis Combined Historical Basis Retransmission Revenue ($ in Millions) Gross Retransmission Revenue Network “Reverse Comp.” $299 $277 $283 “Net Retransmission Revenue” $201 136 139 173 $152 98 70 $75 20 141 144 125 82 103 55 2014 2015 2016 2017 L8QA
Slide 18: Successful Digital Media Initiatives
Successful Digital Media Initiatives • Leading Digital Platforms • 4.1 billion Total Page Views as of Q2 2018 (Gray/Raycom combined) • Mobile makes up 85% of all digital traffic as of Q2 Over 18 million 2018 (Gray/Raycom combined) Facebook Likes for Gray and Raycom • News & Weather Apps combined • G
Slide 19: Track Record of Successfully Integrating Acquisitions and Deleveraging
Track Record of Successfully Integrating Acquisitions and Deleveraging • Gray has demonstrated the ability to integrate acquisitions and delever rapidly • Since 2014, the Company has reduced leverage by ~2.0x despite closing more than $1.5 billion of acquisitions Financial Leverage Netting All Cash
Slide 20: Financial Overview
Financial Overview 19
Slide 21: Financial Policy
Financial Policy Financial strategy aimed at deleveraging Leverage Deleveraging to be driven by a combination of debt repayment and OCF growth Sufficient liquidity will be maintained to support business operations; revolver undrawn at close Liquidity Strong cash flow generation, cash on bala
Slide 22: Pro Forma CHB Financial Metrics
Pro Forma CHB Financial Metrics ($ in Millions) Net Revenue OCF & Margin Gray Gray Raycom Raycom Synergies As Reported PF CHB (1) As Reported PF CHB (2) $1,942 $1,981 $1,939 $1,851 $754 $1,515 80 $665 $665 1,059 1,081 $611 1,038 $498 917 365 342 312 306 674 812 883 901 299 299 323 597 192 2015 2016
Slide 23: Appendix: Non-GAAP Reconciliations and Glossary
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Appendix: Non-GAAP Reconciliations and Glossary 22
Slide 24: Pro Forma CHB L8QA Reconciliation
Pro Forma CHB L8QA Reconciliation YTD ($ in millions) 2015PF 2016PF 2017PF Q2'16PF Q2'17PF Q2'18PF LTM 6/30/17 PF LTM 6/30/18 PF L8QA 6/30/18 PF Net Revenues Local $426.8 $424.0 $415.9 $210.0 $208.2 $194.9 $422.1 $402.7 $412.4 National 127.2 119.4 122.1 59.8 59.0 54.4 118.6 117.4 118.0 Political 21.
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gray Television, Inc. Year Ended December 31, 2015 Gray and Gray Raycom Raycom Gray Gray Combined Raycom Raycom Combined Combined As Reported Other Historical As Reported Other Historical Historical Divestiture Pro Forma Basis Transactions Basis Basis Transactions Adjustments
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gray Television, Inc. Year Ended December 31, 2016 Gray and Gray Raycom Raycom Gray Gray Combined Raycom Raycom Combined Combined As Reported Other Historical As Reported Other Historical Historical Divestiture Pro Forma Basis Transactions Basis Basis Transactions Adjustments
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gray Television, Inc. Year Ended December 31, 2017 Gray and Gray Raycom Raycom Gray Gray Combined Raycom Raycom Combined Combined As Reported Other Historical As Reported Other Historical Historical Divestiture Pro Forma Basis Transactions Basis Basis Transactions Adjustments
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gray Television, Inc. Six Months Ended June 30, 2016 Gray and Gray Raycom Raycom Gray Gray Combined Raycom Raycom Combined Combined As Reported Other Historical As Reported Other Historical Historical Divestiture Pro Forma Basis Transactions Basis Basis Transactions Adjustmen
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gray Television, Inc. Six Months Ended June 30, 2017 Gray and Gray Raycom Raycom Gray Gray Combined Raycom Raycom Combined Combined As Reported Other Historical As Reported Other Historical Historical Divestiture Pro Forma Basis Transactions Basis Basis Transactions Adjustmen
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gray Television, Inc. Six Months Ended June 30, 2018 Gray and Gray Raycom Raycom L8QA Gray Gray Combined Raycom Raycom Combined Combined Ended As Reported Other Historical As Reported Other Historical Historical Divestiture Pro Forma June, 30 Basis Transactions Basis Basis Tr
Slide 31: Glossary
Glossary “Combined Historical Basis” or Combined Historical Basis reflects financial results that have been compiled by adding Gray’s or Raycom’s, as applicable, historical revenue and broadcast expenses to the historical revenue and broadcast expenses “CHB” of the stations acquired in the Completed
Slide 32: Non-GAAP Terms
Non-GAAP Terms From time to time, Gray supplements its financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) by disclosing the non-GAAP financial measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses,
Slide 33: Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319
Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319 www.gray.tv 32
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