Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Benchmark 1on1 Conference 2018
37 slides from Gray Media's conference presentation, September 2018
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN September 2018 Edition Updated for June 30, 2018 Financial Information If Appendix is not included, see full presentation located at www.gray.tv for Non- GAAP Reconciliations. 4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 | F 404.261
Slide 2: Table of Contents
Table of Contents Pending Raycom Acquisition 3 Company Overview – Current Station Group 9 Investment Highlights 12 Financial Overview 20 Glossary 26 ALL COMBINED HISTORICAL BASIS DATA PRESENTED FOR GRAY IS ADJUSTED FOR ALL COMPLETED TRANSACTIONS UNLESS OTHERWISE NOTED. This presentation contains cer
Slide 3: Announced June 25, 2018
gray Announced June 25, 2018 ~~ THE WALL STREET JOURNAL. US.Edition + June 25,2018 | Today’sPaper Video Home World U.S. Politics Economy Business Tech Markets Opinion Life&Arts RealEstate WSJ.Magazine BUSINESS | MEDIA & MARKETING Gray TV to Buy Raycom in $3.65 Billion Deal Move comes amid consolidat
Slide 4: Gray Will be the Fourth Largest TV Broadcast Group with the Highest Quality Assets
Gray Will be the Fourth Largest TV Broadcast Group with the Highest Quality Assets 2016 / 2017 CHB Blended Adj. EBITDA(1) $886 $880 $772 $744 $725 TV Broadcast Affiliate Group ~$410 Owners $355 $336 ~$285 $222 $183 $155 Nexstar Sinclair TEGNA (2) (3) Tribune Hearst (4) Cox (4) Meredith Graham Scripp
Slide 5: Highly Complementary Portfolio Will Expand Geographic Footprint
Highly Complementary Portfolio Will Expand Geographic Footprint Combined Company Highlights(1) § 92 Markets § 24% of U.S. TV Households § 62 #1 Rated TV Stations § 92% of Markets with #1/#2 Rated TV Stations § $2.0 Billion in 2016/2017 CHB Blended Revenue § Highest CHB OCF(2)/ TVHH in the Industry §
Slide 6: Gray Continues to Prudently Grow its Scale…
Gray Continues to Prudently Grow its Scale… ($ in Millions) Gray + Raycom Gray Raycom ( P o s t- O v e rla p S ta tio n D iv e s titu re s ) Financial Profile 2016 / 2017 CHB Blended Net Revenue $921 $1,057 $1,897 (1) 2016 / 2017 CHB Blended OCF $336 $355 $744 (1,2) % Margin 37% 34% 39% (1) Scale Fu
Slide 7: Gray Continues to Prudently Grow its Scale…
Gray Continues to Prudently Grow its Scale… $2,736 39% $2,471 39% $1,949 33% $1,898 44% (1,2) $1,897 24% $1,133 19% (1) $1,057 16% (1) 2016 / 2017 Blended $921 10% U.S. Household Revenue(1) $808 19% (TV Only) Reach (Gross) ($ in millions) $784 11% $618 (TV Only) 11% Gray has Completed $410 (TV Only)
Slide 8: Transaction Summary
Transaction Summary § Gray to combine with Raycom for $3.647 billion in total proceeds ($3.547 billion enterprise value Transaction plus $100 million of Raycom cash) Value and § $2.850 billion in cash Proceeds § $650 million in new series of perpetual preferred stock § 11.500 million shares of Gray
Slide 9: An Industry Leading Power (current station group)
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY An Industry Leading Power (current station group) 99
Slide 10: High Quality, Diverse Station Group
High Quality, Diverse Station Group Current Station Group: 57 200+ 100+ 24 40 channels 29 channels Markets Total “Big 4” Markets with owned program network with two or and/or streams program more “Big operated streams 4” network 20 channels stations affiliations 14 channels 10 10
Slide 11: Current Gray National Footprint
Current Gray National Footprint Ranked #1 or #2 in all of our 57 markets | Reaching approximately 10.4% of US TV households Lincoln, NE Sioux Falls, SD Omaha, NE Bismarck, ND Cedar Rapids, IA Rapid City, SD Fargo, ND Davenport, IA Burlington, VT La Crosse-Eau Claire, WI North Platte, NE Wausau-Rhine
Slide 12: Investment Highlights
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Investment Highlights 12 12
Slide 13: The Importance of #1 Highly Ranked News Franchises Drive Price Leadership
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 Share of Market Ad $ half of a market’s political ad buys • Greater purchasing power and leverage with MVPDs, p
Slide 14: Gray Leads in Household Ratings – November 2017
Gray Leads in Household Ratings – November 2017 Gray’s primary stations had the HIGHEST average all-day #1 DMA Household Rating (M-S 6a-2a) across ALL network and affiliate group owners Gray’s national Household Share average exceeds all major #1 affiliate news programs In ALL 57 markets in OVERALL
Slide 15: Network Programs Over-Index on Gray’s Stations
CBS vs. Gray | November ’17 Household Share 19 16 11 13 13 9 Gray 10 9 CBS The Morning Show Network News Prime (Mon-Sun) The Late Show Network Programs Over-Index on NBC vs. Gray | November ’17 Household Share 23 26 Gray’s Stations 12 Gray 12 11 12 10 6 NBC ABC, CBS, and NBC The Today Show Network N
Slide 16: Revenue Diversified Across Networks and Markets
Revenue Diversified Across Networks and Markets 2017CHB Revenue by 2017CHB BCF by Affiliate: $895mm Affiliate: $332mm All Non-Big All Non-Big Four Channels Four Channels + Other + Other 7% 4% 4% 2% 34% 20% 21% 38% Increasing 34% 36% Diversification of Revenue Sources 2008: As Reported • 96% of reven
Slide 17: A Leading Beneficiary of Political Revenue
A Leading Beneficiary of Political Revenue Gray Markets with at Least One 2018 Gray Political Revenue ($ in millions) Election Governor 81% As Reported Combined Historical Basis 2018 is a Non- $143 Presidential $118 Political Year US Senate 65% $90 and Presents an $82 Attractive Upside House 100% Op
Slide 18: Gray Excels at Retransmission Revenue
Gray Excels at Retransmission Revenue Retransmission Revenue ($ in millions) $350 to Gross Retransmission Revenue $353 Network “Reverse Comp.” $280 “Net Retransmission Revenue” $226 168-169 $189 139 112 to $116 +29% 86 + 31% 34 182-184 +11% +23% 141 +26% 103 114 82 2014CHB 2015CHB 2016CHB 2017CHB 20
Slide 19: Successful Digital Media Initiatives
Successful Digital Media Initiatives • 3.4 billion total page views in 2017 Gray Digital (up 23% over 2016) 7.5 million Facebook followers, up 17% from Q1 2017 Media • Mobile makes up 82% of all digital traffic 2.3 million Twitter followers, up 18% from Q1 2017, Likes=57k, Tweets=3.4 million • 300%
Slide 20: Financial Overview
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Financial Overview 20 20
Slide 21: 2015/2016/2017 Snapshot
2015/2016/2017 Snapshot Combined Historical Basis Year Ended December 31 % Change % Change 2017 to 2017 to 2017 2016 2016 2015 2015 Revenue (less agency commissions): Total $895,081 $946,001 (5)% $821,599 9% Political $16,539 $117,538 (86)% $21,934 (25)% Operating expenses (1) (2): Broadcast $570,57
Slide 22: Financial Scale Continues to Increase
Financial Scale Continues to Increase Revenue ($ in millions) As Reported Combined Historical Basis LTM L8QA LTM L8QA $883 $848 $946 $812 $921 $705 $895 $597 $553 $884 $508 $851 $405 $427 $822 $836 $356 $346 $376 2012 2013 2014 2015 2016 2017 2014 2015 2016 2017 Operating Cash Flow ($ in millions) A
Slide 23: 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 ($
Slide 24: Robust Free Cash Flow Generation and Conversion
Robust Free Cash Flow Generation and Conversion Non Presidential Election Non-Election Year Non-Election Year Presidential Election Year Year 2015 OCF Buildup 2016 OCF Buildup 2017 OCF Buildup 2014 OCF Buildup ($ in millions) ($ in millions) ($ in millions) ($ in millions) FCF e in FCF reas f OCF In
Slide 25: Capitalization
Capitalization Combined Historical Basis(1) ($ in millions) “L8QA” or “Last Eight Quarter Average” Estimated for the period ended June 30, As of Annual Cash 2018 June 30, Interest 2018 Expense Leverage OCF Cash $ 511 Debt: Revolving Credit Facility – Availability is $100 Million $ - Term Loan B due
Slide 26: Glossary
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Glossary 26 26
Slide 27: Glossary
Glossary “Combined Historical Basis” Combined Historical Basis reflects financial results that have been compiled by adding Gray’s historical or “CHB” revenue and broadcast expenses to the historical revenue and broadcast expenses of the stations acquired in the Completed Transactions and subtractin
Slide 28: 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 29: Appendix: Non-GAAP Reconciliations
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Appendix: Non-GAAP Reconciliations 29 29
Slide 30: Annual Year-Over-Year Results As Reported Basis
Annual Year-Over-Year Results As Reported Basis As Reported Results Six Months Ended June 30 % Change % Change 2018 to 2018 to 2018 2017 2017 2016 2016 (dollars in thousands) Revenue (less agency commissions): Total $ 476,602 $ 430,142 11 % $ 370,356 29 % Political $ 23,845 $ 5,029 374 % $ 19,304 24
Slide 31: 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 2017 to 2017 to 2017 2016 2016 2015 2015 (dollars in thousands) Revenue (less agency commissions): Total $ 882,728 $ 812,465 9% $ 597,356 48 % Political $ 16,498 $ 90,095 (82)% $ 17,163 (4)%
Slide 32: 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 2017 to 2017 to 2017 2016 2016 2015 2015 (dollars in thousands) Revenue (less agency commissions): Total $ 895,081 $ 946,001 (5)% $ 821,599 9% Political $ 16,539 $ 117,538 (86)%
Slide 33: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis Non-GAAP Reconciliation Six Months Ended June 30, 2018 2017 2016 (dollars in thousands) Net income $ 60,650 $ 81,066 $ 26,652 Adjustments to reconcile from net income to Free Cash Flow: Depreciation 27,237 25,470 22,743 Amortization of intangible assets 10,5
Slide 34: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis As Reported Basis Year Ended December 31 2017 2016 2015 2014 (dollars in thousands) Net income $ 261,952 $ 62,273 $ 39,301 $ 48,061 Depreciation 51,973 45,923 36,712 30,248 Amortization of intangible assets 25,072 16,596 11,982 8,297 Non-cash stock-based com
Slide 35: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Year Ended December 31 2017 2016 2015 2014 (dollars in thousands) Net income $ 260,133 $ 105,523 $ 65,202 $ 130,807 Depreciation 52,710 51,829 52,056 49,781 Amortization of intangible assets 25,098 17,904 19,261 16,705 Non-c
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation Eight Quarters Ended June 30, 2018 Operating Cash Flow as defined in the Senior Credit Agreement: (dollars in thousands) Net income $ 358,223 Adjustments to reconcile Net Income as reported to Operating Cash Flow as defined in our Senior Credit Facility on a Combined Historic
Slide 37: Gray Television, Inc.
Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319 www.gray.tv 37