Gray Media, Inc. · NYSE:GTN

Gray Media — Gray Television — Investor Presentation (August 2014)

32 slides from Gray Media's investor presentation, Aug 27, 2014

  1. Slide 1: Investor Presentation

    Investor Presentation August 27, 2014 1

  2. Slide 2: Introduction

    Introduction Certain statements in this presentation constitute “forward-looking statements” within the meaning of and subject to the protections of the Private Securities Litigation Reform Act of 1995 and other federal and state securities laws. Such forward-looking statements involve known and unk

  3. Slide 3: Company Overview

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  4. Slide 4: Gray Has a Diverse and National Footprint

    Gray Has a Diverse and National Footprint 44 markets reaching approximately 8.1% of US TV households Great Falls, MT(1) Sioux Falls, SD Lincoln, NE Rockford, IL Lansing, MI South Bend, IN North Platte, NE Helena, MT(1) Rapid City, SD Fargo, ND (2) Wausau - Bismarck, ND Omaha, NE Toledo, OH(1) Rhinel

  5. Slide 5: Combination Snapshot

    Combination Snapshot Gray TV Closed Acquisitions Pro Forma Post- Standalone Pre-Synergies Synergies ($ in Millions) Financial Profile $82(4) ’12A-’13A Revenue $376 $474(4) ’12A-’13A BCF $160 $41(4) $205(4) ’12A-’13A OCF $147 $41(4) $195(4) Scale 54 19 Stations 75(5) Non-Duplicated Markets 36 6 44(5)

  6. Slide 6: Hoak Acquisition Overview

    Hoak Acquisition Overview  15 acquired stations of programming spread across seven attractive markets  Multicast programming in six of seven markets Hoak Geographic Footprint  #1 or #2 news rating in six of seven markets KSFY (#2)  Strong local news ratings drive political revenue and KFYR (#2)

  7. Slide 7: Prime Cities & Rapid Cities Acquisitions Overview

    Prime Cities & Rapid Cities Acquisitions Overview Prime Cities Broadcasting Mission TV (Rapid Cities) Minot-Bismarck- Rapid Dickinson, ND City, SD DMA 145 DMA 173  KXND operates in Minot, ND as a satellite station to  Gray acquired two FOX affiliated stations for $7.75 KNDX million on May 1, 2014

  8. Slide 8: Pending “SJL” Acquisition

    Pending “SJL” Acquisition  On July 24, 2014, Gray entered into definitive agreements to acquire:  WJRT-TV in Flint-Saginaw-Bay City, MI (ABC,DMA #68) and  WTVG-TV in Toledo, OH (ABC/CW, DMA # 76)  Cost is $128.0 million in cash, or approximately 7.0x 2012/2013 cash flow of ~$18 million with syne

  9. Slide 9: Senior Secured Credit Facility

    Senior Secured Credit Facility  Gray refinanced its senior secured indebtedness with $575 million in new senior secured credit facilities, consisting of the following:  $50 million Priority Revolving Credit Facility – matures June 13, 2019  Interest Rate is L + 200 with step ups based on first li

  10. Slide 10: Investment Highlights

    Investment Highlights  A Leading Television Broadcaster in Diverse Mid Markets with Dominant Market Positions  141 program streams and 76 “Big 4” network affiliations  #1 or #2 market rank in 40/44 markets; #1 news ranking in 29/44 markets  Improving Advertising Market and Diversification of Rev

  11. Slide 11: The Importance of Being #1

    The Importance of Being #1 Price Leadership Reinvest Long History of Being #1 in the Market in Business Gray Actual Pro Forma(1) 14 Share Highly 12 12 12 12 12 11 11 of Ranked News Reinvest 13 Market in Franchises Ad $ Business Drive Traffic Share of '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 '10/'11 '

  12. Slide 12: Stable Markets – Concentration on DMAs 61-208

    Stable Markets – Concentration on DMAs 61-208 With Focus on State Capitals / Collegiate Presence Approximate Approximate Market College(s) Enrollment Market College(s) Enrollment Waco, TX 92 Bowling Green, KY 18 Topeka, KS 53 Harrisonburg, VA 18 Lansing, MI 49 Cheyenne, WY 13 Tallahassee, FL 43 Char

  13. Slide 13: Diversification Across Networks and Markets

    Diversification Across Networks and Markets Station Mix 2013PF Revenue: Top 10 Markets (1) 2013PF BCF: Top 10 Markets (1), (3) 141 Total Program Streams:(4) Lexington, KY 6% Charleston, WV Charleston, WV 9% 76 Big 4 Affiliates:(4) 6% Omaha, NE Lexington, KY 7%  26 CBS 5% Monroe, LA Waco, TX 6%  24

  14. Slide 14: Revenue Mix Continues to Diversify

    Revenue Mix Continues to Diversify  Growth in net revenue, driven by increases in core revenue, political, retransmission and internet revenues  Revenue mix continues to diversify from traditional ad-based sources to new media – Internet and subscriber driven – and retransmission revenue  Diversi

  15. Slide 15: Gray is A Leading Beneficiary of Political Revenue with Large Upside

    Gray is A Leading Beneficiary of Political Revenue with Large Upside Gray TV Political Commentary 2012 Political Revenue as % of Total (1), (2)  $86 Million in 2012 – New Record  2011 - Off Year Record $13.5 million 19.8% 21.2%  Gray operates in key battleground states 15.1% 13.8%  #1 stations c

  16. Slide 16: Operational Strategy Focused on Market Leadership and Growth

    Operational Strategy Focused on Market Leadership and Growth  Maintain and grow our market leadership position Monetize Spectrum  Pursue selective strategic transactions Accretive Partnerships  Continue to prudently invest in local content and news, syndicated programs, top talent Maintain Intern

  17. Slide 17: Strong Growth in Retransmission Revenue

    Strong Growth in Retransmission Revenue Gray TV Retransmission Revenue (1)  Approximately 9.5 million Big-4 Affiliate ($ in millions) subscribers(2) $56.5  Approximately 5.0 million Big-4 Affiliate $12.1 $39.8 subscribers(2) re-pricing 12/31/14 $33.8 $7.6 $5.6  Approximately 0.9 million Big-4 Aff

  18. Slide 18: Successful Digital Media Initiatives

    Successful Digital Media Initiatives  Operate web and mobile Gray TV Digital Media Revenue (1) applications in all markets ($ in millions)  Focused on local content: news, weather, sports $27.8 $25.0 $25.4  All sites have converted to $20.1 responsive design $13.4 $11.4  “Moms Everyday” digital

  19. Slide 19: Television Continues to be the #1 Choice for Critical Mass Reach Among Advertisers

    Television Continues to be the #1 Choice for Critical Mass Reach Among Advertisers TV Reaches More People than Any Other Medium TV is the Most Influential Local Media Television 96 of the Top 100 Rated Programs are 88% Broadcast Programs (P18-49) Internet 73% Program Broadcast Cable Rank Stations TV

  20. Slide 20: Strong Growth Across the Industry in Other Key Revenue Streams

    Strong Growth Across the Industry in Other Key Revenue Streams  Record level of political revenue in 2012 and  Continued upside in retransmission fees, with estimates for continued growth through 2016 revenue projected to reach $7.1 billion in 2018 Industry-wide Political Spend on Local TV (1) Str

  21. Slide 21: Automotive Ad Spending on TV Continues to Grow and Still Below Peak Levels

    Automotive Ad Spending on TV Continues to Grow and Still Below Peak Levels  Television continues to be a critical medium for automotive advertising  TV auto ad spending growth of $0.2 billion or 6% from 2012 to 2013 but still below peak  Positive trend will continue, with automotive ad spending p

  22. Slide 22: Financial Overview

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  23. Slide 23: Gray Historical Financial Summary

    Gray Historical Financial Summary Net Revenue (1) LTM Revenue L8QA Revenue $474 $440 $405 $376 $346 $356 $346 $327 $308 $307 2010 2011 2012 2013 2013 PF ) L8QA Growth 3% 6% 9% 5% -- LTM 2-Yr. Growth 6% 14% 17% 13% -- Operating Cash Flow (1) Capital Expenditures (1) ($ in millions) ($ in millions) Ca

  24. Slide 24: Strong Free Cash Flow Conversion

    Strong Free Cash Flow Conversion  Gray realized record free cash flow of $95 million in 2012  Gray’s free cash flow is expected to increase with the Acquisitions due to the incremental OCF, expected tax savings, and only a modest increase in CAPEX  Gray will also benefit from ~$225 million in net

  25. Slide 25: Prudent Balance Sheet Management Leads to Deleveraging

    Prudent Balance Sheet Management Leads to Deleveraging  Gray has significantly reduced secured and total leverage from historical levels  Gray’s strategic investments have diversified its revenue base, allowing for significant free cash flow in both political and non-political years Net Financial

  26. Slide 26: Actual and Pro Forma Capitalization

    Actual and Pro Forma Capitalization Actual & Pro Forma Capitalization ($ in Millions) 6/30/2014 Cum. Cum. $ xL8QA xLTM SJL OCF1 OCF2 Cash & Equivalents $66.1 Amended and Restated Priority Revolver ($50MM) due 6/2019 - 0.0x 0.0x Amended and Restated Term Loan B due 6/2021 $525 2.7x 3.1x 128.0 Excalib

  27. Slide 27: Questions & Answers

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  28. Slide 28: Appendix

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  29. Slide 29: Glossary

    Glossary “Acquisitions”: The Hoak Acquisition and Gray’s other previously completed acquisitions of Rapid Cities, Prime Cities, Lockwood, Yellowstone and KJCT; excludes Montana and SJL unless otherwise specified “Excalibur” (Excalibur Broadcasting, A television broadcaster with two stations (KJCT, K

  30. Slide 30: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) Does NOT include pending Montana or SJL acquisitions ($ in thousands) Twelve Months Ended December 31, 2012 Gray Hoak/Parker Other Pro forma Gray Actual Acquisition Acquisitions Adjustments Pro forma Net income $ 28,129 30,360 1,212 (11,562) $ 48,139 Adj

  31. Slide 31: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) Does NOT include pending Montana or SJL acquisitions ($ in thousands) Twelve Months Ended December 31, 2013 Gray Hoak/Parker Other Pro forma Gray Actual Acquisition Acquisitions Adjustments Pro forma Net income $ 18,288 24,589 675 (17,142) $ 26,410 Adjus

  32. Slide 32: Investor Presentation

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