Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Deutsche Bank Media Conference 2019
26 slides from Gray Media's conference presentation, Mar 12, 2019
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN March 2019 Updated for December 31, 2018 Financial Information 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 |
Slide 2: Disclaimer, Definitions, and Non-GAAP Financial Data
Disclaimer, Definitions, 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 s
Slide 3: Gray Television's National Footprint
Gray Television’s National Footprint 93 markets “Big 4” network ~150 program streams total ~400 program streams 2
Slide 4: Gray Leads the Industry with the Highest Quality
Gray Leads the Industry with the #1 87/93 markets Highest Quality With #1 or #2 ranked television #2 station* Portfolio of Local Television Stations * Includes all stations owned and/or operated as of March 1, 2019 3
Slide 5: Recognized Industry Leader
Recognized Industry Leader Top Ranked Top Ranked 6PM Stations Local Newscasts All-Day Ratings for Newscast Ratings for All US TV Stations All US TV Stations November 2018 November 2018 2018 Service to Community Awards Large Market #1 Ranked ABC Station #1 Ranked ABC Station 1 of 7 Finalists #1 Ranke
Slide 6: Raycom Transaction
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Slide 7: Gray As Reported Data (Prior to Raycom Transaction)
Gray As Reported Data (Prior to Raycom Transaction) Year Ended December 31, % % Change Change 2018 to 2018 to 2018 2017 2017 2016 2016 (dollars in thousands) Revenue (less agency commissions): Total $ 1,084,132 $ 882,728 23 % $ 812,465 33 % Political $ 155,074 $ 16,498 840 % $ 90,095 72 % Operating
Slide 8: New Combined Scale
New Combined Scale Gray - Combined Historical Basis Select Financial Data (1) 2018 (2) 2017 2016 Revenue $ in Millions Total $ 2,167 $ 1,875 $ 1,932 Political $ 232 $ 31 $ 185 Retransmission $ 668 $ 534 $ 437 Production Companies $ 86 $ 85 $ 83 Operating Expenses (3) Total $ 1,383 $ 1,295 $ 1,233 Br
Slide 9: Highly Complimentary Combination
Highly Complimentary Combination Transaction closed effective January 2, 2019 ~$3.6 billion enterprise value Purchase price represented a multiple of ~7.8x blended ’17 / ’18E CHB OCF, including $80 million of year-1 expected annualized synergies and $136 million estimated NPV of Raycom’s NOLs
Slide 10: Strategic Financing
Strategic Financing • Gray financed the Raycom Transaction with: • $500 million of Cash $650 Million Series A Preferred • $1.4 billion 7-year Incremental Term Loan B Ranks junior to all debt and senior to all • $750 million 8.5-year Senior Notes equity Gray retains ability to pay dividends on, •
Slide 11: Staggered Debt Maturity Profile
Staggered Debt Maturity Profile No Significant Maturities until 2024 ($ in Millions) $2,500 $200 Million Revolver Due Nov 2023 (Undrawn) Gray Term Loan B Due Feb 2024 (L+225) $2,000 Incremental Term Loan B Due Nov 2025 (L+250) Gray Notes Due Oct 2024 (5.125%) $1,500 Gray Notes Due Jul 2026 (5.875%)
Slide 12: Key Investment Highlights
Key Investment Highlights 11
Slide 13: Summary of Key Investment Highlights
Summary of Key Investment Highlights One of the Largest Television Broadcasters with High Quality Assets Diversified Sources of Revenues Across Networks and Markets Large Political Upside in Election Years with Key Presence in Swing States Strong Growth in Net Retrans and Increasing Leverage With MV
Slide 14: Prudent Financial Policy
Prudent Financial Policy Financial strategy aimed at deleveraging Leverage Deleveraging to be driven by a combination of debt repayment and OCF growth Sufficient liquidity will be maintained to support business operations; revolver undrawn at close Liquidity Strong cash flow generation, cash
Slide 15: Significant Growth Since 2011
Significant Growth Since 2011… Increasing scale, decreasing leverage +290% +426% Household Reach(1) Broadcast Channels(1) Total channels of +419% +253% Reach of 6.2% of US TV programming increased Operating Revenue households at YE2011 from 76 at YE2011 Income grew to 10.2% of TVHH approximately 400
Slide 16: Gray Excels at Retransmission Revenue
Gray Excels at Retransmission Revenue As Reported Basis Combined Historical Basis Retransmission Revenue ($ in Millions) Gross Retransmission Revenue Network “Reverse Comp.” “Net Retransmission Revenue” $668 $355 $346$322 $277 $201 $152 $136$141 $165$190 $75 $70 $82 $98 $103 $20 $55 (1) 2014 2015 20
Slide 17: Retransmission Revenue Has Room to Grow
Retransmission Revenue Has Room to Grow • Broadcast Retrans Fees still represent just 17-18 percent of Total Program Broadcast Retrans Fees still Fees fail to reflect the value of the most watched and • Between 2015 and 2019, cable channel must-have channels on and RSN license fees grew nearly $8.0
Slide 18: Top Rated Stations Capture a Significant Share of Political Ad Spending
Top Rated Stations Capture a Significant Share of Political Ad Spending Gray Markets with at Least One 2018 Election 2018 was a Governor 74% Non-Presidential Political Year US Senate 62% $232 MILLION Net Political Revenue on Estimated House 100% Combined Historical Basis Source: Company management,
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: Robust OTT Distribution
Robust OTT Distribution Data reported to by third parties for all Gray Stations as of February 28, 2019. 19
Slide 21: Appendix: Non-GAAP Reconciliations and Glossary
Appendix: Non-GAAP Reconciliations and Glossary 20
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation on As-Reported Basis, in thousands: Year Ended December 31, 2018 2017 2016 Net income $ 210,803 $ 261,952 $ 62,273 Depreciation 53,883 51,973 45,923 Amortization of intangible assets 20,570 25,072 16,596 Non-cash stock based compensation 6,661 8,303 5,101 (Gain
Slide 23: Reconciliation of Total Leverage Ratio
Reconciliation of Total Leverage Ratio Reconciliation of Total Leverage Ratio, Net of All Cash, in thousands except for ratio: Eight Quarters Ended December 31, 2018 Net income $ 472,755 Adjustments to reconcile from net income to operating cash flow as defined in our Senior Credit Agreement: Deprec
Slide 24: 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 25: 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 26: Gray Television, Inc.
Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319 www.gray.tv 25
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