Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Wells Fargo and RBC Conferences 2015
39 slides from Gray Media's conference presentation, Nov 10, 2015
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN Financial Information as of September 30, 2015 Note: Gray’s “as reported”, “pro forma” and “combined historical” information, where presented, does not include the Pending Schurz and Related Transactions. Please see Gray’s separate presentation di
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: 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: 6/30/19 82 “Big 4” network affiliations 30 channels: 77 stations 8/31/19 46 markets 1 channel:12/31/15 3 channels: 14 markets with two “Big 4” 12/31/17 13
Slide 6: 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 7: Gray Dominates the Industry with the Highest Quality Portfolio
Gray Dominates the Industry with the Highest Quality Portfolio of Local Television Stations ü 43 of 46 markets with stations ranked #1 or #2 ü 32 of 46 markets with #1 news ranking ü One of Two pure-play TV broadcasters with a full-time Washington DC News Bureau Gray Television, Inc. 7 7
Slide 8: 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 1 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 9: 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 12 12 far better on Gray’s stations Amount10by which Gray’s 11 9 late local newscasts 5 than national averages outperform the national average… The Morning Network News Prime
Slide 10: 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 21 +80% 15 Amount by which Gray’s 6PM newscasts outperform the 11 national average… Gray’s national 6PM News Late News
Slide 11: 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. 1111
Slide 12: 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 13: 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 $90 2014
Slide 14: Gray Excels at Retrans
Gray Excels at Retrans Gray TV Retransmission Revenue in Millions § Approximately 10.2 million Big-4 Affiliate 200.0 subscribers total across all markets Retransmission Revenue Network “Reverse Comp.” 175.0 § Approximately 0.6 million Big-4 Affiliate “Net Retransmission Revenue” 100.0 157.0 subscrib
Slide 15: Gray TV Leads Industry In Operating Margins
Gray TV Leads Industry In Operating Margins 2014 EBITDA Margins (1) 41% (2) (3) 37% 36% 35% 33% 31% (4) 25% (5) 18% (6) 10% Nexstar Sinclair Media General Entravision Tribune TEGNA Meredith Scripps Source: Company filings, Investor presentations Note: Based on “as-reported” financials for all compan
Slide 16: Significant Opportunity for Continued Growth
Significant Opportunity for Continued Growth 44% 38% FCC U.S. TV Household Cap: 39% 31% 23% 19% 18% 18% 13% 11% 11% 9.4%(1) 6% 4% 4% 3% 3% 3% 2% 2% 2% 1% 1% ... Tribune Sinclair TEGNA Media Hearst EW Nexstar Raycom Cox Meredith Graham Weigel Hubbard Sunbeam Calkins Quincy Bahakel Schurz Dispatch Cap
Slide 17: Investment Highlights
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Slide 18: Investment Highlights
Investment Highlights ü A Leading Television Broadcaster in Diverse Mid-Markets with Dominant Market Positions ü Improving Advertising Market and Diversification of Revenue Mix ü Large Political Upside in Election Years with Presence in Key States ü Strong Growth in Net Retransmission Revenue and In
Slide 19: Acquisitions Announced and Closed in 2014 Significantly Increased Scale and Margins
Acquisitions Announced and Closed in 2014 Significantly Increased Scale and Margins Summary Financial Metrics ’13A/’14A Blended 2-Year Averages In Millions ($ in Mil Finan As Reported Pro Forma ‘14A ‘14A ‘14A Politi $566 Scale Sta $427 Non TV Asse #1 / $233 $224 $175 $154 $121 $67 Revenue BCF OCF FC
Slide 20: 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 3% 82 Big 4 Affiliates: 3% <1% n 30 CBS 19% n 22 NBC 22% 39% n 17 ABC 4
Slide 21: 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 22: 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 23: 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 Record Non- $58 $48 Presidential Presidential Year $ Year 2008 2010 2012 2014 2012PF 2014PF Gray Television, Inc. 2323
Slide 24: November 8, 2016 Elections
November 8, 2016 Elections Open Presidential Contest 1 Gray Markets in 6 out of 7 Predicted 2016 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 Rac
Slide 25: 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 26: Significant Potential Upside from Spectrum Monetization Opportunities
Significant Potential Upside from Spectrum Monetization Opportunities n One of first broadcasters to monetize digital spectrum n 84 secondary channels of programming today n Opportunities to benefit from the 2016 FCC Broadcast Incentive Auction n Potential opportunities from future changes to new br
Slide 27: Financial Overview
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Slide 28: 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 29: 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
Slide 30: 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 31: Record Results YTD, 2015
Record Results YTD, 2015 As Reported Basis Nine Months Ended September 30, % % Change Change 2015 to 2015 to 2015 2014 2014 2013 2013 (in thousands except per share data) Revenue (less agency commissions): Total $ 427,869 $ 330,248 30 % $ 250,742 71 % Political $ 7,950 $ 33,437 (76)% $ 2,769 187 % O
Slide 32: Record Pro Forma Results YTD, 2015
Record Pro Forma Results YTD, 2015 Selected Operating Data on Pro Forma Basis (a.k.a. Combined Historical)(3) Nine Months Ended September 30, % % Change Change 2015 to 2015 to 2015 2014 2014 2013 2013 (dollars in thousands, except per share data) Revenue (less agency commissions): Total $ 454,016 $
Slide 33: 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 34: Capitalization Overview
Capitalization Overview § No near-term debt maturities and ~$131 million of liquidity as of 9/30/15 Current Capitalization ($ 9/30/2015 ($ in millions) Cum. X Cum. Actual L8QA X LTM $ OCF(1) OCF(2) Cash & Equivalents $81 Ca Priority Revolver ($50MM) due 2019 -- 0.0x 0.0x Pr Te Term Loan B due 2021 (
Slide 35: Questions & Answers
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Slide 36: Appendix
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Slide 37: Glossary
Glossary “Combined Historical Basis”: Combined Historical Basis reflects financial results, position or statistics that have been prepared by adding Gray’s historical financial results, position or statistics with the historical financial results, position or statistics of the Completed Acquisitions
Slide 38: Combined Historical Results
Combined Historical Results(1) Pro Forma Non-GAAP Reconciliation Year Ended December 31, Nine Months Ended September 30,(2) 2012 2013 2014 2013 2014 2015 L8QA 2015 (in thousands) Net income $ 70,542 $ 39,190 $ 75,852 $ 23,062 $ 37,667 $ 31,297 $ 61,639 Adjustments to reconcile from net income to Fre
Slide 39: Investor Presentation
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