Gray Media, Inc. · NYSE:GTN

Gray Media — Gray Television — Non-Deal Roadshow (May 2014)

43 slides from Gray Media's roadshow presentation, May 13, 2014

1. Slide 1: NYSE: GTN Investor Presentation

   NYSE: GTN Investor Presentation May 13, 2014 1

2. Slide 2: Summary

   Summary  Company Overview Gray Television is a Dominant Mid-Market TV Platform with Significant Upside • Selectively acquiring stations ♦ Closed: 12 stations – 6 new markets–1 existing market, October 2013 to May 2014 ♦ Pending Acquisitions: 18 stations–20 affiliations–6 new markets–3 existing mark

3. Slide 3: Company Overview

   Company Overview Note: Certain station information in this presentation includes stations under LMA or SSA agreements with Gray. 3

4. Slide 4: Key Investment Highlights

   Key Investment Highlights  A Leading Television Broadcaster in Diverse Mid Markets with Dominant Market Positions  #1 or #2 market rank in 31 out of 36 markets as of May 1, 2014  #1 or #2 market rank in 38 out of 42 markets after all pending transactions close  Improving Advertising Market and D

5. Slide 5: Gray Television is a Dominant Mid-Market TV Platform

   Gray Television is a Dominant Mid-Market TV Platform As of February 1, 2014: “Big 4” Channels by Affiliate: 52  110 total program streams spread across 34 5 markets 10%  52 affiliations with a “Big 4” network and 9 58 additional program streams1 17% 24  Reached 6.4% of U.S. TV households, 46% sig

6. Slide 6: Gray Has a Diverse and National Footprint

   Gray Has a Diverse and National Footprint 42 markets reaching approximately 7.4% of US TV households(1) Great Falls, MT(4) Sioux Falls, SD(4) Lincoln, NE North Platte, NE(4) Helena, MT(4) Rapid City, SD Fargo, ND(4) Wausau - Omaha, NE (2,3) Rhinelander, WI Bismarck, ND Parkersburg, WV North Platte,

7. Slide 7: Highly Experienced Senior Management

   Highly Experienced Senior Management Focused on maximizing potential of existing portfolio, while prudently pursuing strategic growth opportunities Years at Years in Name Background and Notable Achievements Gray TV Industry  CEO since 2008, Vice Chairman since 2002 and director since 1993 Hilton H.

8. Slide 8: The Importance of Being #1

   The Importance of Being #1 Price Leadership Reinvest Long History of Being #1 in the Market 1 in Business 12 12 12 12 12 13 Dominant 11 11 Reinvest News Reinvest in in Franchises Business Business Drive Traffic Share of '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 '10/'11 '11/'12 '12/'13 Market Ad $ Netw

9. Slide 9: Gray's Stations Dominate Local News and Information

   Gray’s Stations Dominate Local News and Information National Average vs. Gray CBS vs. Gray  Gray’s early evening November ’13 Household Share November ’13 Household Share local newscasts 25 outperform the 19 19 national average 15 12 12 12 11 9 9 10 by 73% 5  Gray’s late local Early Evening News L

10. Slide 10: 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

11. Slide 11: 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

12. Slide 12: Gray TV has Significant Opportunity to Grow

    Gray TV has Significant Opportunity to Grow 44% FCC U.S. TV Household Cap of 39% 39% 38% 37% 30% 27% 23% 18% 15% 14% 13% 13% 11% 11% 10% 7.4% 4% 2% Tribune Sinclair CBS FOX Gannett NBC ABC Hearst Media Nexstar EW Raycom Cox LIN TV Meredith Gray Journal Quincy General Scripps ____________________ Sou

13. Slide 13: Strategic Acquisition Opportunities

    Strategic Acquisition Opportunities Potential for Equity Value Creation Through Accretive Acquisitions Illustrative Stock Price Accretion  Industry continues to consolidate 15.0%  Gray TV’s strategic transactions should not be curtailed by recent and proposed Acquisitions regulatory changes 10.0%

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 ad-based sources – internet and subscriber driven – and retransmission

15. Slide 15: Diversification Across Networks and Markets

    Diversification Across Networks and Markets As of December 31, 2013 2013 1 Revenue: Top 10 Markets 2013 1 BCF: Top 10 Markets Current Station Mix O ma ha , NE Cha rle ston / Cha rle ston / 6% 110 Total Program Streams:(4) Huntington, WV Huntington, WV 10 % O ma ha , NE 7% 7% Le xington, KY 52 Big 4

16. Slide 16: Gray is a Leading Beneficiary of Political Revenue

    Gray is a Leading Beneficiary of Political Revenue with Large Upside 2012 Political Revenue as % of Gray TV Political Revenue Commentary Total Net Revenue  $86 million in 2012 – new record 21.2%  2011 off year record $13.5 million  Gray operates in key battleground states 15.1% 13.8%  #1 station

17. Slide 17: Automotive Ad Spending on TV Continues to Grow

    Automotive Ad Spending on TV Continues to Grow but Remains Below Peak Levels  Gray TV continues to benefit from the growth in auto ad spending  Auto ad spending grew ~8% in 2013  In 2013, ~25% of Gray TV’s total broadcast advertising revenue was derived from automotive customers  TV auto ad spen

18. Slide 18: Strong Growth in Retransmission Revenue

    Strong Growth in Retransmission Revenue Gray TV Retransmission Revenue(1)  Approximately 2 million subscribers(2) $39.8 re-priced in two deals in Q4 2013 ($ in millions) $33.8  Remaining 4.5 million subscribers(2) $18.8 $20.2 re-pricing between 12/31/14 and $15.6 3/31/15 $2.4 $3.0 $1.0 $1.6  Anti

19. Slide 19: Successful Digital Media Initiatives

    Successful Digital Media Initiatives Gray TV Digital Media Revenue(1) ($ in millions)  Operate web and mobile $25.0 $25.4 applications in all markets $20.1  Focused on local content: news, $13.4 weather, sports $11.9 $11.4 $9.5 $7.6 $6.4  All sites already converted to responsive design  Moms Ev

20. Slide 20: Unlocking the Value of Spectrum

    Unlocking the Value of Spectrum Significant Potential Upside from the Monetization of Spectrum  As of 12/31/13, 58 additional program streams(1) with programming from key networks including CW, MyNetwork TV, Telemundo, MeTv and Antenna TV(3) 2013(4) 2012(4) Yr/Yr %  $19.5 million in net revenue ■

21. Slide 21: Industry Overview

    Television Digital * Mobile Industry Overview | de a a YS) > CE

22. Slide 22: Television Continues to be the #1 Choice for Critical Mass Reach

    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

23. Slide 23: Strong Growth in Other Key Revenue Streams

    Strong Growth 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 Strong Growth in Retransm

24. Slide 24: Significant Asset Value and Transaction Synergies for Television Broadcasters

    Significant Asset Value and Transaction Synergies for Television Broadcasters M&A Consolidation Stages  Stage 1: “Low hanging fruit”  TV broadcasting M&A activity has ramped up considerably  Stage 2: “Merger of smaller equals”  Sizeable individual transactions in 2012 and 2013 at attractive  St

25. Slide 25: Financial Overview

    Television Digital * Mobile Financial Overview a Mes MIO Ss a 4.60 & Cid a Soom mens cit 2 ws,

26. Slide 26: Historical Financial Overview – Continued Growth Over 2-Year Cycle

    Historical Financial Overview – Continued Growth Over 2-Year Cycle Net Revenue(1) ($ in millions) $405 $346 $346 $327 $307 $307 $270 2007 2008 2009 2010 2011 2012 2013 YOY Growth 6% (17%) 28% (11%) 32% (14%) 2YOY Growth (12%) 6% 14% 17% 13% Operating Cash Flow 2 Capital Expenditures (1,3) ($ in mill

27. Slide 27: Free Cash Flow

    Free Cash Flow  Record free cash flow of $95 Free Cash Flow 1 million in 2012 ($ in millions, except per share amounts )  2012 OCF conversion rate into $95 FCF: 54% $49 $50 $39  Equity value creation through $18 strong free cash flow generation $8 2007 2008 2009 2010 2011 2012 2013 -$15  Signifi

28. Slide 28: Financial Leverage at Six Year Low

    Financial Leverage at Six Year Low  De-levered significantly (~4.0x) between December 2009 and December 2013  Consistently reduced weighted average cost of debt  Gray now generates significant free cash flow in both political and non-political years Net Financial Leverage 1 ($ in millions) Net De

29. Slide 29: Prudent Cost Management and Increasing Margins

    Prudent Cost Management and Increasing Margins Increasing Operating Cash Flow Margins  Gray TV continues to grow operating margins through 43% identified operational 39% 36% efficiencies 33% 32% 26%  Decreased operating costs by converting to digital 2008 2009 2010 2011 2012 2013 Historical as rep

30. Slide 30: 2013 Operating Performance

    2013 Operating Performance 2013 Highlights Net Revenue(2) ($ in millions)  Strength in revenue driven by automotive and retransmission, etc. $346 $307  Local revenue +6% vs. 2012 and +9% vs. 2011  National Revenue +3% vs. 2012 and +3% vs. 2011  OCF +18% from 2011 to 2013 YTD 2011 YTD 2013 Operat

31. Slide 31: YTD 3/31/14 Operating Performance Update

    YTD 3/31/14 Operating Performance Update(1) YTD 2014 Highlights Net Revenue ($ in millions)  Strength in revenue driven by automotive +11% and retransmission revenue $91.3 $78.2  Local revenue +10% vs. YTD 2013  Retransmission Revenue +66% vs. YTD 2012 YTD 2013 YTD 2014 Operating Cash Flow Free C

32. Slide 32: Recent Completed Acquisitions

    Recent Completed Acquisitions Closed Purchaser Seller Price Market DMA Affiliation Station(s) Date Prime Cities Minot-Bismarck- KNDX/KXND Gray Broadcasting, $7.5 Million(1) Dickinson, ND 145 FOX LMA Commenced 5/1/14 Inc. May 1, 2014 Gray Mission TV, $7.8 Million Rapid City, SD 173 FOX KEVN/KIVV 5/1/

33. Slide 33: Pending Acquisitions

    Pending Acquisitions (closings subject to regulatory approval expected Q2 or Q3 2014) Purchaser Seller Price Market DMA Affiliation Station(s) Gray/Excalibur Hoak Media, $297.5 Lincoln-Hastings- 105 NBC KHAS(2) LLC/ Parker Million Kearney, NE Broadcasting, Sioux Falls, SD 111 ABC & CW KSFY/KABY/ KPR

34. Slide 34: Capitalization Overview

    Capitalization Overview Current Capitalization ($ in Millions) 3/31/2014 12/31/2013 Cash and Cash Equivalents $27.0 $13.5 $40MM Revolver due 2017 0.0 0.0 Term Loan B due 2019 (L + 350/ 1.0% LIBOR Floor) 159.0 159.0 Total First Lien Debt 159.0 159.0 7.500% Senior Unsecured Notes due 2020 675.0 675.0

35. Slide 35: Pro Forma – closed and announced transactions

    Pro Forma – closed and announced transactions Own/Operate stations: • 42 markets / DMAs 61-208 / 7.4% U.S. Households • #1 Ranked 28 of 42 markets / #1 or #2 Ranked in 38 of 42 markets • 11 state capitals / 22 university towns • 139 program streams •75 Big 4 Affiliations Currently Pending(1) Pending

36. Slide 36: Gray Non-GAAP Reconciliations

    Gray Non-GAAP Reconciliations 36

37. Slide 37: Gray Non-GAAP Reconciliation

    Gray Non-GAAP Reconciliation 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 and Broadcast Cash F

38. Slide 38: Gray Non-GAAP Reconciliation (Continued)

    Gray Non-GAAP Reconciliation (Continued)  Operating Cash Flow: Operating cash flow is defined as net income (loss) plus depreciation and amortization (including amortization of program broadcast rights), impairment of goodwill and broadcast licenses, loss on disposal of assets, loss on early exting

39. Slide 39: Gray Non-GAAP Reconciliation (Continued)

    Gray Non-GAAP Reconciliation (Continued) Year Ended December 31, 2007 2008 2009 2010 2011 2012 2013 Net income (loss) $ (23,151) $ (202,016) $ (23,047) $ 23,163 $ 9,035 $ 28,129 $ 18,288 Adjustments to reconcile from net income (loss) to Broadcast Cash Flow: Depreciation 38,558 34,561 32,595 30,630

40. Slide 40: Gray Non-GAAP Reconciliation (Continued)

    Gray Non-GAAP Reconciliation (Continued) Quarter Ended March 31, Trailing 12 Months Ended L8QA 2012 2013 2014 3/31/2013 3/31/2014 3/31/2014 Net income $ 3,371 $ 870 $ 1,277 $ 25,628 $ 18,695 $ 22,162 Adjustments to reconcile from net income to Broadcast Cash Flow : Depreciation 5,891 5,800 6,384 23,

41. Slide 41: Gray Non-GAAP Reconciliation (Continued)

    Gray Non-GAAP Reconciliation (Continued) Pro Forma Non-GAAP Reconciliation - Completed Acquisitions as of 3-31-14 Year Ended December 31, Three Months Ended March 31, Trailing Twelve Months Ended L8QA 2012 2013 2012 2013 2014 3/31/13 3/31/2014 3/31/2014 Net income $ 29,304 $ 17,940 $ 3,015 $ 698 $ 1

42. Slide 42: Safe-Harbor

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

43. Slide 43: NYSE: GTN Investor Presentation

    NYSE: GTN Investor Presentation 43

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