Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Deutsche Bank Conference – March, 2017
35 slides from Gray Media's conference presentation, Mar 6, 2017
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN March 2017 Edition Updated for December 31, 2016 Financial Information 4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 | F 404.261.9607 | www.gray.tv 1 1
Slide 2: Table of Contents
Table of Contents Company Overview 4 Investment Highlights 9 Financial Overview 22 See Appendix for Non-GAAP Reconciliations and Glossary of Defined Terms ALL COMBINED HISTORICAL BASIS DATA PRESENTED FOR GRAY IS ADJUSTED FOR ALL COMPLETED TRANSACTIONS UNLESS OTHERWISE NOTED. This presentation contai
Slide 3: An Industry Leading Power
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW APPENDIX An Industry Leading Power 3 3
Slide 4: Gray National Footprint
Gray National Footprint Ranked #1 or #2 in 54 of 56 Markets | Reaching approximately 10.3% of US TV households Lincoln, NE Sioux Falls, SD Omaha, NE Bismarck, ND Cedar Rapids, IA Rapid City, SD Fargo, ND Davenport, IA La Crosse-Eau Claire, WI North Platte, NE Wausau-Rhinelander, WI Madison, WI Presq
Slide 5: High Quality, Diverse Station Group
High Quality, Diverse Station Group Over 38 channels 56 200 102 27 29 channels 56 markets Over 200 102 “Big 4” 27 markets with owned total network with two or and/or program program more “Big operated streams streams 4” network 21 channels stations across 102 affiliations stations 15 channels Includ
Slide 6: Focus on State Capitals and College Markets
Focus on State Capitals and College Markets Better demographics, more stable economies Gray stations cover 11 state capitals 11 Gray stations cover 36 university towns 36 Enrollment of approximately 784,000 students 784,000 Includes Pending Acquisitions 6 6
Slide 7: Revenue Diversified Across Networks and Markets
Revenue Diversified Across Networks and Markets 2016CHB Revenue by Affiliate: 2015CHB BCF by Affiliate: $899mm $378mm Increasing Diversification of All Non-Big Four Channels All Non-Big Four Channels Revenue Sources 4% 3% 5% 3% 2008: • 96% of revenue derived from 29% 21% 23% advertising sales 34% 20
Slide 8: Pending Matters
Pending Matters $ 90,824,000 in proceeds from the FCC’s broadcast spectrum auction Gray’s winning bids will not lead to job losses and or a material change in operations or results for Gray or for any individual market Income taxes from proceeds are anticipated to be deferred on a long- term b
Slide 9: Recognized Industry Leader
Recognized Industry Leader Two Out of Three Ranked #77 NAB’s 2016 National Television Winners Fortune’s 100 Fastest Growing Companies Service to America Award KWTX/CBS Waco, Texas Service to Community Award “2016 top three-year TVNewscheck’s performers in revenue, 2016 Station Group profits, and sto
Slide 10: Investment Highlights
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW APPENDIX Investment Highlights 10 10 10
Slide 11: Significant Growth Since 2011
Significant Growth Since 2011 Increasing scale, decreasing leverage +66% +63% Household Reach Broadcast Channels +212% +164% Reach of 6.2% of US TV Total channels of Operating Revenue households at YE2011 programming increased Income grew to 10.3% (2) of from 76 at YE2011 to 200 Revenue increased fr
Slide 12: The Importance of #1 Highly Ranked News Franchises
The Importance of #1 Highly Ranked News Price Leadership Franchises Drive Traffic • Dominate local and political revenue with highly-rated news platforms • #1 Stations can secure more than half of a Share of Market Ad $ market’s political ad buys • Greater purchasing power and leverage with MVPDs, p
Slide 13: Gray Leads in Household Ratings
Gray Leads in Household Ratings Gray’s national Household Gray’s Ratings Have Share average exceeds all Remained Stable Over Time major affiliate news programs 5.9 5.9 Amount by which Gray’s late +60% 5.7 5.7 5.6 local newscasts outperform 5.6 5.6 the national average Amount by which Gray’s 6PM +62%
Slide 14: Network Programs Over-Index on Gray's Stations
CBS vs. Gray | November ’16 Household Share Network 21 15 16 10 11 9 Gray Programs 8 7 CBS Over-Index on The Morning Show Network News Prime (Mon-Sun) The Late Show Gray’s Stations NBC vs. Gray | November ’16 Household Share CBS, NBC, and 24 25 ABC perform 13 Gray 13 7 13 8 14 far better on NBC Gray
Slide 15: Gray Excels at Retransmission Revenue
Gray Excels at Retransmission Revenue $275 Retransmission Revenue in Millions $221 Gross Retransmission Revenue Network “Reverse Comp.” $185 133 “Net Retransmission Revenue” 108 $113 84 $73 32 142 $56 113 19 101 10 81 54 46 2012CHB 2013CHB 2014CHB 2015CHB 2016CHB 2017CHB Estimate Big-4 Network Renew
Slide 16: Significant Monetization of Spectrum Today
Significant Monetization of Spectrum Today Secondary Channel 2016 CHB Financials $119 MILLION IN REVENUE OVER 100 $73 MILLION IN BCF SECONDARY CHANNELS 62% MARGIN ON DIGITAL SECONDARY CHANNELS All secondary channels including “Big-4” secondary channels 1616
Slide 17: Successful Digital Media Initiatives
Successful Digital Media Initiatives Gray Digital Media • Pacing for 2.8 billion total page views in 2016 (up 22% over 2015) First local broadcaster launching all stations on Instant Articles • Mobile makes up 80% 1.7 million Twitter followers, up 40% from of all digital traffic same time last year
Slide 18: Room to Grow
Room to Grow 44% 44% 39% FCC U.S. TV Household Cap of 39% Household Reach 38% Household Reach w/UHF Discount 31% 19% 18% 16% 14% 27% 27% 27% 11% 23% 25% 11% 10% 7% 13% 12% 11% 10% 4% 4% 3% 7% 8% 3% 2% 6% 2% 4% 2% Pro forma for all announced and closed transactions; UHF channels are 14 and above and
Slide 19: Financial Overview
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW APPENDIX Financial Overview 19 19 19
Slide 20: 2014/2015/2016 Snapshot
2014/2015/2016 Snapshot Combined Historical Basis Year Ended December 31 % Change % Change 2016 to 2016 to 2016 2015 2015 2014 2014 Revenue: Total $898,978 $785,891 14 % $811,903 11 % Political $107,589 $ 21,104 410 % $138,403 (22)% Operating expenses (1): Broadcast $525,068 $500,050 5% $458,445 15
Slide 21: Financial Scale Continues to Increase
Financial Scale Continues to Increase Revenue ($ in millions) As Reported Combined Historical Basis LTM L8QA $899 $842 LTM L8QA $812 $812 $799 $734 $786 $705 $597 $553 $508 $405 $427 $307 $327 $356 $346 $376 2011 2012 2013 2014 2015 2016 2014 2015 2016 Operating Cash Flow ($ in millions) As Reported
Slide 22: 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 has diversified its revenue base, allowing for significant free cash flow in both political and non-political years. Financial Leverage Netting All Cash ($ in
Slide 23: Robust OCF and Free Cash Flow Generation
Robust OCF and Free Cash Flow Generation Non Presidential Election Year Presidential Election Year Non Election Year 2015 OCF Buildup 2014 OCF Buildup 2016 OCF Buildup ($ in millions) ($ in millions) ($ in millions) 63% $356 56% 57% $347 $285 49% $299 (2) 49% 49% $224 $194 195(2) $192(2) $162 $148 $
Slide 24: Capitalization
Capitalization Combined Historical Basis ($ in millions) Leverage using As of Estimated Last Eight Quarter Average or “L8QA” December 31, Cash OCF 2016 Interest December 31, 2016 Cash1 $ 50 Debt: Revolving Credit Facility - $100 Million2 $ - Term Loan B due 2024 – LIBOR + 2502 $ 556 $18.2 Total Secu
Slide 25: Appendix Follows
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Slide 26: Non-GAAP Reconciliations and Glossary of Defined Terms
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW APPENDIX Non-GAAP Reconciliations and Glossary of Defined Terms 26 2626
Slide 27: Disclaimer
Disclaimer ALL COMBINED HISTORICAL BASIS DATA PRESENTED FOR GRAY IS ADJUSTED FOR ALL COMPLETED TRANSACTIONS UNLESS OTHERWISE NOTED. This Appendix contains certain forward looking statements that are based largely on Gray’s current expectations and reflect various estimates and assumptions by Gray. T
Slide 28: Annual Year-Over-Year Results As Reported Basis
Annual Year-Over-Year Results As Reported Basis As Reported Results Year Ended December 31 % Change % Change 2016 to 2016 to 2016 2015 2015 2014 2014 (dollars in thousands) Revenue: Total $ 812,465 $ 597,356 36 % $ 508,134 60 % Political $ 90,095 $ 17,163 425 % $ 81,975 10 % Operating expenses (1):
Slide 29: Annual Year-Over-Year Results Combined Historical Basis
Annual Year-Over-Year Results Combined Historical Basis Combined Historical Basis Year Ended December 31 % Change % Change 2016 to 2016 to 2016 2015 2015 2014 2014 Revenue: Total $898,978 $785,891 14 % $811,903 11 % Political $107,589 $ 21,104 410 % $138,403 (22)% Operating expenses (1): Broadcast $
Slide 30: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis As Reported Year Ended December 31 2016 2015 2014 2013 (dollars in thousands) Net income $ 62,273 $ 39,301 $ 48,061 $ 18,288 Depreciation 45,923 36,712 30,248 24,096 Amortization of intangible assets 16,596 11,982 8,297 336 Non-cash stock-based compensation
Slide 31: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Year Ended December 31 2016 2015 2014 (dollars in thousands) Net income $ 90,572 $58,107 $120,868 Depreciation 49,602 49,504 47,023 Amortization of intangible assets 17,866 19,222 16,689 Non-cash stock-based compensation 5,1
Slide 32: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Year Ended December 31, 2016 Excluding Pending Acquisitions Including Pending Acquisitions Operating Cash Flow as defined in the Senior Credit Agreement: (dollars in thousands) Net income $ 112,562 $ 148,678 Depreciation 93,
Slide 33: Glossary
Glossary “Clarksburg Stations” WDTV (CBS) and WVFX (FOX), which Gray operates pursuant to a pre-closing Local Marketing Agreement. “Combined Historical Basis” Combined Historical Basis reflects financial results, position or statistics that have been prepared by adding Gray’s or “CHB” historical fin
Slide 34: Non-GAAP Terms
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, Broadcast Cash Flow Less Cash Corporate Expenses,
Slide 35: Gray Television, Inc.
Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319 www.gray.tv 3535
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