Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Investor Presentation (September 2015)
41 slides from Gray Media's investor presentation, September 2015
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN September 2015 1
Slide 2: Disclaimer
Disclaimer 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 unkno
Slide 3: Overview: An Industry Leading Power
Overview An Industry Leading Power 3
Slide 4: Gray TV has a Diverse and National Footprint
Gray TV has a Diverse and National Footprint Ranked #1 or #2 in 43 of 46 Markets Reaching approximately 8.5% of US TV households Sioux Falls, SD Omaha, NE Wausau - North Platte, NE Rapid City, SD Lincoln, NE Lansing, MI Fargo, ND Rhinelander, WI Presque Isle, ME Cedar Rapids, IA Rockford, IL Bismarc
Slide 5: Gray's latest acquisition…continuing our M&A Growth Strategy
Gray’s latest acquisition…continuing our M&A Growth Strategy Cedar Rapids, IOWA DMA 90 / 341,960 TV HH ● KCRG ABC - #1 News & #1 Viewing & #1 Revenue ● 38% Total Local TV Audience Share / 42.8% Total Local TV Market Revenue Share ● Multi Decade Commitment to Strong Local News and Community Service ●
Slide 6: Significant Scale Poised for Long-Term Success
Significant Scale Poised for Long-Term Success Net Revenue BCF OCF FCF 2014 PF (in millions) $621 $273 $257 $151 161 program streams 13 channels: 82 “Big 4” network affiliations 6/30/19 30 channels: 77 stations 8/31/19 46 markets 1 channel:12/31/15 3 14 markets with two “Big 4” channels:12/31/17 13
Slide 7: The Importance of Being #1
Dominate local and political The Importance of Being #1 revenue with highly-rated news platforms Price #1 Stations Can secure more than Leadership half of a market’s political ad buys Share of Market Ad $ Network and Greater purchasing power and Highly News Ratings leverage with MVPDs, Ranked
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 43 of 46 markets with stations ranked #1 or #2 32 of 46 markets with #1 news ranking One of Two pure-play TV broadcasters with a full-time Washington DC News Bureau Gray Television, Inc. 8 8
Slide 9: The Importance of Being #1
The Importance of Being #1 Long History of Being #1 in the Market 16 16 16 16 16 15 14 13 13 '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 10/'11 11/'12 12/'13 13/'14 CBS National Ranking 1 1 2 1 1 1 1 1 1 15 16 14 12 11 12 11 10 11 '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 '10/'11 11/'12 12/'13 13/'14 NBC
Slide 10: Gray's Stations Over-Index Every Major Network
Gray’s Stations Over-Index Every Major Network CBS vs. Gray November ’14 Household Share CBS, NBC, and ABC perform +73% 16 20 far better on Gray’s stations 12 12 Amount10by which Gray’s 9 11 late local newscasts 5 than national averages outperform the national average… The Morning Network News Prime
Slide 11: Gray Dominates Local News and Information
Gray Dominates Local News and Information +91% National Average vs. Gray Amount by which Gray’s late November ’14 Household Share local newscasts outperform the national average… 27 +80% 21 15 Amount by which Gray’s 6PM newscasts outperform the 11 national average… Gray’s national 6PM News Late News
Slide 12: Gray Has Long-Term Ratings Growth
Gray Has Long-Term Ratings GROWTH November DMA Rating – All Viewing(1) 8% Ratings Growth Since 2010 5.5 5.4 5.2 5.1 5.1 2010 2011 2012 2013 2014 (1) November DMA Average Rating in DMA TV HH Monday-Sunday 6:00am to 2:00am Gray Television, Inc. 1212
Slide 13: Gray Leads the Industry in Ratings
Gray Leads the Industry in Ratings Household Rating Analysis – November 2014 5.5 5.2 4.9 4.9 4.4 4.1 3.9 3.8 3.7 3.6 3.3 3.2 3.1 2.7 2.5 Cox Raycom Media Hearst Meredith TEGNA ABC O&O Sinclair Viacom-CBS Nexstar Tribune Scripps NBC O&O Fox General Source: Nielsen Media Research, November 2014; M-Sun
Slide 14: Gray Leads the Industry in Political Ad Revenues
Gray Leads the Industry in Political Ad Revenues 2014 Political Revenue Per TV Household $9.69 $4.40 $4.02 $3.63 $3.51 $3.45 $3.27 $1.75 (1) (2) (3) (4) (5) (6) (7) (8) TEGNA Media General Meredith Scripps Nexstar Sinclair Tribune 2014 Political Revenue ($mm) $94 $160 $111 $46 $76 $56 $147 $90 2014
Slide 15: Gray Excels at Retrans
Gray Excels at Retrans Gray TV Retransmission Revenue in Millions Approximately 10.2 million Big-4 Affiliate 200.0 subscribers total across all markets Retransmission Revenue Network “Reverse Comp.” 175.0 Approximately 0.6 million Big-4 Affiliate “Net Retransmission Revenue” 157.0 100.0 subscrib
Slide 16: Gray TV Leads Industry In Operating Margins
Gray TV Leads Industry In Operating Margins 2014 EBITDA Margins (1) 41% (2) (3) 37% 36% 35% 33% 31% (4) 25% (5) 18% (6) 10% Nexstar Sinclair Media General Entravision Tribune TEGNA Meredith Scripps Source: Company filings, Investor presentations Note: Based on “as-reported” financials for all compan
Slide 17: Significant Opportunity for Continued Growth
Significant Opportunity for Continued Growth 44% 38% FCC U.S. TV Household Cap: 39% 31% 23% 19% 18% 18% 13% 11% 11% 8.5% 6% 4% 4% 3% 3% 3% 2% 2% 2% 1% 1% ... Tribune Sinclair TEGNA Media Hearst EW Nexstar Raycom Cox Meredith Graham Weigel Hubbard Sunbeam Calkins Quincy Bahakel Schurz Dispatch Capita
Slide 18: Investment Highlights
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Slide 19: Investment Highlights
Investment Highlights A Leading Television Broadcaster in Diverse Mid-Markets with Dominant Market Positions Improving Advertising Market and Diversification of Revenue Mix Large Political Upside in Election Years with Presence in Key States Strong Growth in Net Retransmission Revenue and In
Slide 20: Highly Experienced Senior Management
Highly Experienced Senior Management 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 Howell, Jr. Served as President and CEO of Atlantic American Corporation since 1995 Director, Vice Chairman,
Slide 21: Acquisitions Announced and Closed in 2014 Significantly Increased Scale and Margins
Acquisitions Announced and Closed in 2014 Significantly Increased Scale and Margins Summary Financial Metrics ’13A/’14A Blended 2-Year Averages In Millions As Reported Pro Forma $566 $427 $233 $224 $175 $154 $121 $67 Revenue BCF OCF FCF Revenue BCF OCF FCF % Margin 41% 36% 44%(1) % Margin 41% 40% 54
Slide 22: Diversification Across Networks and Markets
Diversification Across Networks and Markets 2014PF Revenue by Affiliate: 2014PF BCF by Affiliate: Station Mix $621mm (1) $273mm (1), (3) 161 Total Program Streams: All Secondary All Secondary Channels & Other 2% Channels & Other 82 Big 4 Affiliates: 3% 3% <1% 30 CBS 19% 22 NBC 22% 39% 17 ABC 4
Slide 23: Stable Markets – Concentration on DMAs 61-209
Stable Markets – Concentration on DMAs 61-209 with Focus on State Capitals / Collegiate Presence Gray stations cover 12 state capitals and 25 university towns Better demographics, more stable economies Enrollment of approximately 602,000 students Approximate Approximate Market College(s) Enrol
Slide 24: 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
Slide 25: Gray is a Leading Beneficiary of Political Revenue
Gray is a Leading Beneficiary of Political Revenue with Large Upside in Presidential Years Gray TV Political Revenue in Millions $123 $82 $86 New $94 New Record $58 Record Non- $48 Presidential Presidential Year $ Year 2008 2010 2012 2014 2012PF 2014PF Gray Television, Inc. 2525
Slide 26: November 8, 2016 Elections
November 8, 2016 Elections Open Presidential Contest 1 Gray Markets in 8 out of 9 2012 Swing States 5 Ballot Presidential Initiatives & Primaries & Referendums General 34 Senate Races 9 Competitive Races in Gray Markets (CO, FL, GA, IL, IN, NV, NC, OH, WI) Federal State & Races Local 2 Races 535 Hou
Slide 27: Successful Digital Media Initiatives
Successful Digital Media Initiatives Operate web and mobile applications in all Gray TV Digital Media Revenue in Millions markets Approximately 80% of all traffic is Anticipate 3+ Billion Digital Ads Served in 2015 mobile Focused on local content: news, weather, sports Estimating 2 Billion p
Slide 28: Significant Potential Upside from Spectrum Monetization Opportunities
Significant Potential Upside from Spectrum Monetization Opportunities One of first broadcasters to monetize digital spectrum 84 secondary channels of programming today Opportunities to benefit from the 2016 FCC Broadcast Incentive Auction Potential opportunities from future changes to new br
Slide 29: Financial Overview
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Slide 30: Gray TV's Financial Scale Continues to Increase
Gray TV’s Financial Scale Continues to Increase Net Revenue (1) $621 $566 LTM L8QA $544 $508 $511 $427 $405 $356 $376 $346 $327 $346 $308 $307 2010 2011 2012 2013 2014 2013PF 2014PF ) L8QA Growth 3% 6% 9% 5% 14% -- 4% LTM 2-Yr. Growth 6% 14% 17% 13% 25% -- 8% Operating Cash Flow (1) Capital Expendit
Slide 31: Robust Free Cash Flow Generation
Robust Free Cash Flow Generation Gray realized record free cash flow of $95 million in 2014; $151 million pro forma FCF in 2014 Gray’s free cash flow is expected to increase with the Acquisitions due to the incremental OCF despite a moderate increase in capital and corporate expenditures Gray
Slide 32: 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
Slide 33: Record Results YTD, 2015
Record Results YTD, 2015 As Reported Basis Six Months Ended June 30, % % Change Change 2015 to 2015 to 2015 2014 2014 2013 2013 (in thousands except per share data) Revenue (less agency commissions): Total $ 276,767 $ 198,546 39 % $ 162,454 70 % Political $ 3,356 $ 11,408 (71)% $ 1,392 141 % Operati
Slide 34: Record Pro Forma Results YTD, 2015
Record Pro Forma Results YTD, 2015 Selected Operating Data on Pro Forma Basis (a.k.a. Combined Historical) Six Months Ended June 30, % % Change Change 2015 to 2015 to 2015 2014 2014 2013 2013 (dollars in thousands, except per share data) Revenue (less agency commissions): Total $ 297,632 $ 275,695 8
Slide 35: Pro Forma Annual Results 2012-2014
Pro Forma Annual Results 2012-2014 Selected Operating Data on Pro Forma Basis (a.k.a Combined Historical) Year Ended December 31 % % Change Change 2014 to 2013 to 2014 2013 2013 2012 2012 (in thousands except per share data) Revenue (less agency commissions): Total $ 621,018 $ 510,977 22 % $ 577,230
Slide 36: Capitalization Overview
Capitalization Overview No near-term debt maturities and ~$272 million of liquidity as of 6/30/15 Current Capitalization 6/30/2015 “As Reported” Pro Forma ($ in millions) Cum. X Cum. Cum. X Cum. X Actual L8QA X LTM Pro L8QA LTM $ OCF(1) OCF(2) Forma OCF(5) OCF(6) Cash & Equivalents $222 $48 Priori
Slide 37: Questions & Answers
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Slide 38: Appendix
Appendix 38
Slide 39: Glossary
Glossary “Cedar Rapids Acquisition”: The acquisition of KCRG, the ABC affiliate in Cedar Rapids, IA for $100 million in the aggregate. Closed on non-license assets on September 1, 2015 for $80 million; closing on FCC licenses for $20 million is subject to regulatory approval and is currently expecte
Slide 40: Combined Historical Results
Combined Historical Results(1) Pro Forma Non-GAAP Reconciliation Year Ended December 31, Six Months Ended June 30, 2012 2013 2014 2013 2014 2015 L8QA 2015 (in thousands) Net income $ 70,542 $ 39,190 $ 75,852 $ 14,094 $ 21,808 $ 22,213 $ 61,580 Adjustments to reconcile from net income to Free Cash Fl
Slide 41: Investor Presentation
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