Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — J.P. Morgan Global High Yield Leverage Finance Conference 2013
31 slides from Gray Media's conference presentation, Feb 27, 2013
Slide 1: Investor Presentation
Investor Presentation As of February 27, 2013 1
Slide 2: Company Overview
Company Overview GRAY (Bs cae Gy OE I fy SN (SD ele TELEVISION, INC. MINS my CID aE A QD MeO CY Bei iy euiee MA B
Slide 3: A Significant Pure-Play Mid-Market TV Platform
Gray Television Overview LTM 2012(1) Revenue by State A Significant Pure-Play Mid-Market TV Platform WI 13% Other 22% WV 10% NV 5% 85 channels of programming CO 5% KY 10% VA 6% Spread across 30 markets NE 10% KS 6% FL 6% TX 7% 40 top 4 primary network affiliates, 45 secondary channels LTM 2012
Slide 4: Gray's National Footprint
Gray’s National Footprint 30 markets reaching approximately 6.2% of US TV households Wausau - Omaha, NE Rhinelander, WI Lincoln - Hastings - La Crosse - Rockford, IL Kearney, NE Eau Claire, WI Madison, WI Parkersburg, WV South Bend, IN Harrisonburg, VA Topeka, KS Lansing, MI Lexington, KY Charleston
Slide 5: Investment Highlights
Investment Highlights Mid Markets Presence – State Capitals and University Towns Leading Market Revenue Share With #1 or #2 Station in 29 of 30 Markets Diversification Across Networks Long Standing Relationships and Strong Leverage With Networks Improving in Advertising Market Large Poli
Slide 6: Stable Markets – Concentration on DMA 61-200, State Capitals
Stable Markets – Concentration on Markets DMA 61-200 With Focus on State Capitals / Collegiate Presence Approximate Approximate Market College(s) Enrollment Market College(s) Enrollment Waco, TX 62 Lincoln, NE 24 Topeka, KS 53 Bowling Green, KY 21 Lansing, MI 49 Charlottesville, VA 21 Tallahassee, F
Slide 7: Gray's Market Leadership
Gray’s Market Leadership Market Rank News Rank Market Rank News Rank DMA Rank Market Station Affiliation in DMA in DMA DMA Rank Market Station Affiliation in DMA in DMA La Crosse / 61 Knoxville, TN WVLT CBS 2 2 128 WEAU NBC 1 1 Eau Claire, WI Wausau / 64 Lexington, KY WKYT CBS 2 2 134 WSAW CBS 2 2 R
Slide 8: The Importance of Being #1
The Importance of Being #1 Dominate local and political Price Reinvest revenue with highly-rated Leadership in news platforms Business Maximize cash flow Deliver high margins Share of Reduce syndicated Market Ad $ Network and programming costs News Ratings Attract and retain talent 8
Slide 9: Long History of Being #1 in the Market
Long History of Being #1 in the Market # of Gray Stations Ranked #1 12 12 12 12 12 11 11 11 11 11 11 11 10 '00/'01 '00/'01 '01/'02 '02/'03 '03/'04 '04/'05 '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 '10/'11 '11/'12 CBS National Ranking 1 2 1 1 1 1 1 2 1 1 1 1 8 8 8 8 7 7 7 7 7 6 5 5 '00/'01 '01/'02 '02/
Slide 10: Long-Term Affiliate Contracts
Long-Term Affiliate Contracts Gray currently has 40 primary stations in 30 markets # of Renewal # of Renewal # of Renewal # of Renewal Stations Date Stations Date Stations Date Stations Date 17 12-31-14 9 12-31-15 8 12-31-13 3 6-30-14 2 12-31-16 1 1-1-16 10
Slide 11: Dominate Local News & Information
Dominate Local News & Information National Average vs. Gray CBS vs. Gray November ’12 Household Share November ’12 Household Share Gray’s Early Evening 24 23 15 newscasts 12 12 14 15 10 10 outperform the 8 9 6 national average by 71% The Early Network Prime The Late Early Evening News Late News Sh
Slide 12: Continuing Rebound in Advertising Market
Continuing Rebound in Advertising Market Full Year 2012 Ad Revenue by Category Gray TV Continuing Ad Rebound % of Commercial Time Sales Supermarkets Legal Services Finance / Insurance 3% 3% 4% Auto up 15.5% for full year 2012 Department / Discount Other 11% 4% Entertainment 4% Most other categor
Slide 13: #1 News Platform Allows for Less Syndicated Programming
#1 News Platform Allows for Less Syndicated Programming Syndicated Program Payments as a % of Revenue(1) 9.3% 6.2% 5.2% 3.3% Nexstar Gray TV LIN TV Sinclair Gray’s Syndicated Program Payments as a % of Revenue is Among the Lowest of its Peers ____________________ (1) 2011 Information from Annual Rep
Slide 14: Diversification Across Networks and Markets
Diversification Across Networks and Markets LTM 2012(1) Revenue: Top 10 Current Station Mix Markets LTM 2012(1) BCF: Top 10 Markets Charleston / 85 channels of Huntington, WV Omaha, NE programming, including: Charleston / 10% 7% Huntington, WV Omaha, NE Madison, WI 8% Primary Channels 6% 7% Lexingto
Slide 15: Large Political Upside
Large Political Upside Gray TV Political Commentary 2010 Political as % of Total Revenue $86.0 Million – New Record 16.6% 2011 Odd Year Record $13.5 million Gray operates in key battleground states 11.5% 10.7% 10.0% • #1 stations can capture over 50% of the political 8.1% 5.7% budget for a mar
Slide 16: Growing Retransmission Revenue
Growing Retransmission Revenue Gray Retransmission Revenue Agreements with all Major Cable and ($ in millions) Satellite Providers $33.8 (“MVPD’s”) $20.2 $18.8 Agreements cover $15.6 virtually all in-market subscribers and certain $2.4 $3.0 $1.6 out-of-market $1.0 subscribers 2005 2006 2007 2008
Slide 17: Successful Digital Media Initiatives
Successful Digital Media Initiatives Operate web, mobile and desktop applications in all Gray TV Digital Media Revenue markets ($ in millions) $25.0 Focused on local content: news, weather, sports $20.1 Demonstrated strong growth $13.4 $11.9 in page views: ‘05 to ‘12 $11.4 $9.5 +746% (30.6% CA
Slide 18: Monetizing Digital Spectrum
Monetizing Digital Spectrum In 2012, Gray Generated $14.9 Million in Revenue, $8.2 Million in BCF(1) and 55% Margin from Additional Digital Channels As of February 27, 2013, 45 Secondary channels of programming, including 49 affiliations(2) with: 1 ABC 1 CBS 2 FOX 8 CW 18 MyNetwork TV 1
Slide 19: Prudent Cost Management
Prudent Cost Management As of December 31, 2012, reduced total number of employees by 367, or 15%, since December 31, 2007 Decreased operating costs by converting to digital 1.03% TV Expense CAGR 2007-2012 19
Slide 20: Industry Overview
Industry Overview ~~ [TINEWS.. TELEVISION, INC. 225 ap =e <2" @p @=o E) Beli} ze mes 2
Slide 21: Resilient Industry Fundamentals
Resilient Industry Fundamentals Time Spent Watching TV Per U.S. Household Per Day (hrs:mm) Television continues to be the #1 choice for critical mass reach among advertisers in an increasingly fragmented distribution landscape 8:11 8:14 8:14 8:21 8:21 8:37 8:40 7:53 6:36 6:53 5:56 4:35 5:06 1950 196
Slide 22: Resilient Industry Fundamentals
Resilient Industry Fundamentals Television Remains the Most Important Local Medium Most Influential of All Source of Local Weather, Primary Source of News Media Traffic and Sports Radio Outdoor Mobile / Other Newspapers 3.9% 14.0% 0.5% 0.6% Newspapers Mobile Other 2.4% 0.5% 12.3% Cable News Internet
Slide 23: Strong Growth on Other Key Revenue Streams
Strong Growth on Other Key Revenue Streams Strong Momentum in Retransmission Record Level of Political Spending in 2012 Revenue $4.9 Local TV National TV Print Internet Other Media $4.3 $3.6 $5,188 $3.0 493 $2.4 $4,550 311 $1.8 $4,213 495 $1.2 425 196 $0.8 1012 $0.5 $3,445 188 305 1125 40 1107 571 2
Slide 24: Significant Asset Value Support
Significant Asset Value Support Recent broadcasting transactions have an average blended EBITDA multiple of ~9.7x ~9.7x Avg. Blended Acquisition Multiple 10.4x 10.0x 10.1x 10.0x 10.0x 10.1x 8.3x 8.3x Sinclair/Four Points Scripps/McGraw-Hill Sinclair/Freedom LIN/New Vision Nexstar/Newport Sinclair/Ne
Slide 25: Financial Overview
Financial Overview GRAY (Bs ca yO I fy | La ele TELEVISION, INC. MINS my CID aE A QD MeO CY Bei iy euiee MA B
Slide 26: Historical Financial Overview
Historical Financial Overview Net Revenue Operating Cash Flow(2) ($ in millions) ($ in millions) $405 $174 $346 $136 $327 $119 $307 $307 $99 $97 $270 $71 2007 2008 2009 2010 2011 LTM 2012 (1) ) 2007 2008 2009 2010 2011 LTM 2012 ) (1) YOY Growth 6% (17%) 28% (11%) 32% % Margin 32% 36% 26% 39% 32% 43%
Slide 27: 2012 Performance
2012 Performance Variance vs. YTD 2012 Performance Highlights ($ in millions) 2012 2011 2011 Local/Regional $191.3 $187.0 $4.3 2% Solid Revenue performance YTD 2012 National 56.8 56.3 0.4 1% Core Revenue $248.1 $243.3 $4.8 2% • Local +2% Political Revenue 86.0 13.5 72.5 537% Internet Revenue 25.0
Slide 28: Broadcast Cash Flow less Cash Corporate Expenses to OCF Reconciliation
Broadcast Cash Flow less Cash Corporate Expenses to OCF Reconciliation ($ in millions) 2007 2008 2009 2010 2011 2012 Broadcast Cash Flow less $96.5 $118.1 $69.2 $135.7 $95.6 $176.1 Cash Corporate Expenses Plus: Pension Expense Accruals 3.2 3.2 5.2 4.9 5.1 7.9 Less: Pension Fund Payments (3.1) (2.9)
Slide 29: Capitalization
Capitalization Capitalization ($ in Millions) ($ in Millions) Actual Actual 12/31/2012 12/31/2012 Cash Cashand andCash CashEquivalents Equivalents $11.1 $ 11.1 $40MM Revolver due 2017 0.0 New Term $40MM Loan Bdue Revolver due 2019 2017 0.0 0.0 (L+375 / LIBOR Floor = 100) 535.0 New Term Loan B due 20
Slide 30: 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
Slide 31: Investor Presentation
Investor Presentation February 27, 2013 31
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