Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Investor Presentation (May 2015)
41 slides from Gray Media's investor presentation, May 5, 2015
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation Tes NYSE:GTN (eee Kearns Gare yay @ CUZ Bw eoas ora ponte a 2 —— poly * 1 oom BB c- & ran May 2015
Slide 2: Forward-looking statements
Act of 1995 and other factors which y ly implied by such i i results to differ ially impli looking il the heading “Risk Factor: Form 10-K for the year , 2014 and other herein.
Slide 3: Overview: An Industry Leading Power
Slide 4: Pending acquisitions: KSVT-Sun Valley and Presque Isle
KSVT-SUN VALLEY Twin Falls, Idaho (DMA 192) = xg pn [FOKEA Presque Isle, M: {DMA 205) * Announced March 12, 2015 + Announced April 23, 2015 expected synergies expected synergies These Acquisitions are EXCLUDE! from all disclosures in this presentation.
Slide 5: Ranked #1 or #2 in majority of markets
Ranked #1 or a in 41 of 44 Markets Reaching approximately 8% of US TV household Platte, NE Helena, MT Te Rapid City, SD n Tarisonbur, Greenville - New Born - ‘Washington, NC rn © Wichita - Hutchinson, KS. ‘Sherman, TX Ada, OK ® Laredo, 7x no @Gray TV Station State Capital in DMA
Slide 6: Significant Scale Poised for Long-Term Success
Significant Scale Poised for Long-Term Succe 2014 PF (in millions) $572 $254 $229 $123 140 program streams 40 channels: 76 “Big 4” network affiliations 6/30/17 fod 3 channels:12/31/17 13 77 stations 44 markets 14 markets with two “Big 4” channels:12/31/18 network affiliations 24 channels: 2 markets
Slide 7: The Importance of Being #1 Stations
G gray Dominate local and political The Importance of Being revenue with highly-rated news itforms plat #1 Stations Can secure more than half of a market's political ad buys = Greater purchasing power and leverage with MVPDs, programmers, and other vendors Share of Franchises Market Ad § i it = Deli
Slide 8: Gray Dominates the Industry with the Highest Quality Portfolio of Local Television Stations
Gray Dominates the Industry with the Highest Quality Portfolio of Local Television Stations Ge va i i or #2 Y 28 of 44 markets with #1 news ranking Y Only pure-play TV broadcaster with a fulltime gray Gray Television, inc.
Slide 9: The Importance of Being #1
The Importance of Being #1 Long History of Being #1 ie Market 14 “4 13 8 13 12 ‘osros ‘06/07 ‘07/08 ‘08/09 ‘09101011442 tar4s tara (CBS National Ranking 1 1 2 1 1 1 1 1 1 7 18 B : U : U O LT ‘05706 ‘0607 ‘07708 ‘08/09 ‘O9r40 Horst 14742 tar43 A314 3 3 4 4 4 4 4 3 3 6 5 5 5 5 U 5 5 5 ‘05/06 ‘0607 ‘07
Slide 10: CBS, NBC, and ABC perform far better on Gray's stations
CBS, NBC, and ABC perform far better on Gray’s stations than national averages 7 across all key day-parts ‘The Morning Network News Prime (Mon- The Late Show ‘show Sun) “CBS® «cry NBC vs. Gray ray November 14 Household Share November 4 Household Share 30 = 28 ‘The Today Network News Prime (Mon— ‘Sho
Slide 11: Gray's newscasts outperform national average
gray National Average vs. November "14 eel ‘Share Amount by which Gray's late local newscasts outperform the national average... 0, +66% Amount by which Gray's 6PM. newscasts outperform the national average. ray’s national = NSI National Average: Gray Average of All Stations S programs Sauce: Neon a
Slide 12: Household Rating Analysis November 2014
€ gray VJ Household Rating Analy: November 201
Slide 13: Gray Leads the Industry in Political Ad Revenue
Gray Leads the Industry in Political Ad Revenu Gs 2014 Political Revenue Per TV Household $9.04 G gray Gannett” ‘Media General Meredith” "Scripps Nexstar” Sinclar” Tribune 2014 PoiticalRevenue (Sm) [$85 [seo S111 376 (| L_s47 | so | 2014 TV Households (mm) [ i | Loe? | 26 | 162 | 450 st? | rex Compa
Slide 14: Gray Excels at Retrans
Gray Excels at Retrans Gray TV Retransmission Revenui + Approximately 9.6 million Big-4 Affiliate 1h feheniinioe eres: 180.0 subscribers total across all markets BE Kerwon Rovere Com” 162.8 TE) “Net Retransmission Revenue” 4.48.0 Approximately 0.8 million Big-4 Affiliate subscribers will re-price by
Slide 15: 2014 EBITDA Margins
2014 EBITDA Margins Nexstar Sinclair Media General Entravision Tribune Gannett Meredith Scripps © gray Company ‘Sour: Company fogs, eso preseiaions Bone nen ran conga Con EBITDA and clan yar ending 1291/14 Fiscal yer ends 020 TOA. Catal o spon pots ss corporate ar pension pon expense: Repored in Sen
Slide 16: Significant Opportunity for Continued Growth
Significant Opportunity for Continued Growth Gs ase | wes FCC U.S. TV Household Cap: 39% 2% ne 39% 18% 18% 4% 4% 3% moe ks 2% 2% 2% ry ap ! | faa —.. ‘ee Seno fae" ey ote Sate Gey Gy Mt” See aah Col Oe rs om a ‘Source. Company figs, GU corpany wetstes Note Excluaes Bg Four nets Gray Television, Inc.
Slide 17: Investment Highlights
Investment Highlights cern wean WR WULTe OR Mi, OP) Ss EE
Slide 18: Investment Highlights
Investment Highlights Gs v ALeading isi Market Positions v Large F States 9 R I fl With Networks v I p P v Robust Free Cash F i a Two Year Cycle Successful Integrations
Slide 19: Highly Experienced Senior Management
Highly Experienced Senior Management Gs Name Years at Gray Vv Years in ustry Background and Notable Achievements Hilton H Howell, Jr. Director, Vice Chairman, * CEO since 2008, Vice Chairman since 2002 and director since 1993 Served as President and CEO of Atiantic American Corporation since 1995 pa
Slide 20: Acquisitions Announced and Closed Significantly Increased Scale and Margins
Acquisitions Announced and Closed in Significantly Increased Scale and Margins) Gs Summary Financial Liga 13AI'14A apr fate aga ir Averagi ae $522 $215 $200 $175 $154 67 sl Revenue BOF OCF FCF Revewe BOF OCF FOF Margin 41% 36% 44% ° | [_%Margin 41% 38% 46%. | —
Slide 21: How Does Gray Grow...
How Does Gray Grow... Go . 2015 March 31, 2015. (Sin millions) Actual $ Cash | Debt @ par 1,231.4 Market Equity 999.9 Market Capitalization 2.2313 Debt net cash $1,006.8
Slide 22: 2014PF Revenue and BCF by Affiliate
2014PF Revenue by Affiliate: 2014PF BCF by Affiliate: '$572mm () '$251mm (2) 140 Total Program Streams: Chane Ser ga secontaty 76 Big 4 Affiliates: ™* Cheanal 8 er = 26CBS = = 24NBC CI pee 73 Ad —_ Program Streams) Tarun No single market represents >10% of total revenue or BCF BF if 3 3 2 | News/Wea
Slide 23: Stable Markets — Concentration on DMAs 61-208
Stable Markets — Concentration on DMAs 61-208 with Focus on State Capitals / Collegiate P Go + Enrollment of approximately 547,000 students Approximate Approximate: Market College(s) Enrolim Market College(s) Enrollment B 20 20 50 Sioux Fas, SD ES Fry ry Cheyenne, WY & 1 “6 Charleston-Huntington, WV
Slide 24: Net revenue mix
i i political revenues 2010A Net Revenue 2014A Net Revenue Mix: 2014PF et Revenue Mix: $346mm () $508mm () 2mm () Other Internet Internot__ Other 5% Xe 8% XX 2% National % imate) aii Nationa a Seranaminten eK Retransmission tran an rs
Slide 25: Political revenue 2008-2014PF
2008 2010 2012 2014 2012PF 2014PF
Slide 26: 2016 political: open presidential contest and key races in Gray markets
Va Ballot Initiatives & Referendums Open Presid n ential Contest Gray Markets in 7 out of 9 2012 Swing States 34 Senate Races ‘9 Competitive Races in ts. NV, NC, OH, WI) 535 He 7 Compaitive pan in Gray Markets (FL, IN, Ml, MIN, NE, NV) jatorlal Races 4 oeopetiive Races in Gray kets (IN, MT, NC, WV)
Slide 27: Digital media: web and mobile applications in all markets
Operate web and mobile applications in all markets race on ae content: news, weather, All sites have smn to responsive desi “Moms Everyday" digital vertical; deployed in each Gray TV market ae continues to expand to other arkets a cok! 09208 tal Media Revenus Full service digital solutions (2) Gray
Slide 28: Significant Potential Upside from Spectrum Monetization Opportunities
Significant Potential Upside from Spectrum) Monetization Opportunitie: Gs Growing Secondary (D2) Channels “) Secondary Channel 2014 Financials (SinMiions) Revenue = BCF = Margin ‘As Reported Pro Forma
Slide 29: Slide 29
Slide 30: Net revenue, operating cash flow and capital expenditures
2010 2011 2012 2013 2014 2013PF 2014PF {BGA Growth % % 3% % 1% = % ] LIM 22¥F Growth o% 13% 7% 13% 25% = % Operating Cash Flow) Capital Expenditures“) {Gin millions) {(Sinmitions) um san ‘Actual Capex =PF Cape (3p nine Cpe facernge oy sncaone Rowan Gray Television, = 30
Slide 31: Presidential and non-election year OCF buildup
Presidential Election Year ic ti ‘Non Election Year 2012 OCF Buildup (2) tons) 2013 OCF Buildup (2) eS Non Presidential Election Year 2014 OCF Buildup (2) Ginn e (Sin milion) 4 (Siamions) 3 got se ee ee vs $258 eA Ze 40.9% er S229 si 487% 540% wd S178 342% sist $70 $123 suas ae $95, $39 2012 20120 2
Slide 32: Cash flow in both political and non-political years
cash flow in both political and non-political years (la mitiona) ™Secured Net Debt/OCF — ™Net Debt/ OCF Preferred Stock / OCF 5x 75x 20108, 20114 318172015 een $88 al [NetDebt+ Preferred Stock $881 se72 3824 bits $1207 ‘$1,006.87 ] CI ‘$104 ST ‘$136 ‘$144 $200 ‘$206 ]
Slide 33: Record Results Q1 2015
1) tutes deprecation amoriaton 12) Soe deinzon o non GAAP toms anda recnstaten e he nen GAAP ameunt et came ele elsewhere heen Gray Record Results Q1, 2015 Revenue (less agency commissions): Total Political Operating expenses (1) Broadcast Corporate and administrative Net income etd ‘Cash Flow (2):
Slide 34: Record Results Q1 2015 Combined Historical Basis
Gray Record Results Q1, 2015 Revenue (less agency commissions): Total Poitical Broadcast Operating Expenses(1) lon-GAAP Cash Flow (2): Cash Corpor Operating Cash Flow as defined in the Gray senior credit facility Free Cash Flow Free Cash Flow Per Share Data: Basic. Diluted 2) Bcutes depreciation smo
Slide 35: Capitalization Overview
Capitalization Overview Go Current Capitalization 3/31/2015 (Sin miions) mx cum tat soa eth ¢ oor Sere cath 8 Eeuaeis Revver $504) due 2018 a om ox Term Loan 8d 2021 (LIBOR 9% wth LIBOR Foorst0 75%) $558 ax aon 7 550 arm 2am 759% Sie Noes dv 102020 at par vee ———S075 oo 25 Tota Debt sta em sas Net e
Slide 36: Questions & Answers
Slide 37: Appendix
Slide 38: Definitions of acquisitions
gray “Acquisitions”: “The Hoak Acquisition and Gray's other previously completed acquisitions of Rapid Cities, Prime Cities, Lockwood, Yellowstone, KICT, Montana and SJL unless otherwise specified: excludes the Pending 2018 Acquisitions “Excalibur ‘Aelyson broadcaster with wo salons (KIT. KKHO) whos
Slide 39: Pending acquisitions of two stations in Twin Falls, Idaho
Go 2018 Idaho for $17.5 mill rd quarter 2015 acquisitions of two stations, a CBS station and a FOX station, in Twin Fall souuetion os euoctoroblntn]sopvval tie Savory eopectad ie coe >
Slide 40: Free cash flow reconciliation
Gray Television, Inc. ‘Year Ended December “Thige Months Ended March Por 2013 Pa PIER 2018 2s iotrousshasy Nt income 5 59350 $20,243 s Ss 1825 $6987 5.505 ‘Adjustments to reconcile from net income to Free Cash Flow: Depreciation 32.202 33794 7.896 ast 8x ‘Amotizaion of intangible assets 202 8.360 7
Slide 41: Se is i
Se is i 4, SB a (ME xcs