Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Investor Presentation (April 2016)
43 slides from Gray Media's investor presentation, April 2016
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN April 2016 Edition – Updated for December 31, 2015 Financial Information 1
Slide 2: Disclaimer
Disclaimer This presentation contains certain forward looking statements that are based largely on Gray’s current expectations and reflect various estimates and assumptions by Gray. These statements may be identified by words such as “expect,” “anticipate,” “will,” “implied,” “assume” and similar ex
Slide 3: Company Overview
Company Overview An Industry Leading Power HONORED BY THE AWARD. INSPIRED BY OUR PEOPLE. 2016 Station Group of the Year TVNewsCheck 3
Slide 4: Snapshot: High Quality, Diverse Station Group
Snapshot: High Quality, Diverse Station Group 50 markets 13 channels 35 channels 179 total program streams across 91 19 channels 26 channels stations 93 “Big 4” network program streams 23 markets with two or more “Big 4” network affiliations 49/50 markets with #1 or #2 ranked Standalone metrics full
Slide 5: Gray National Footprint
Gray National Footprint Ranked #1 or #2 in 49 of 50 Markets Reaching approximately 9.4% of US TV households Rapid City, SD Lincoln, NE Sioux Falls, SD Omaha, NE Wausau - Rockford, IL Lansing, MI North Platte, NE Rhinelander, WI Fargo, ND Cedar Rapids, IA Flint, MI Bismarck, ND Madison, WI Casper, WY
Slide 6: Combined Historical Results – Pro Forma
Combined Historical Results – Pro Forma (Includes Schurz and Related Transactions) Selected Operating Data on Combined Historical Basis Year Ended December 31, % Change % Change % Change 2015 to 2015 to 2015 to 2015 2014 2014 2013 2013 2012 2012 (in thousands, except per share data) Revenue (less ag
Slide 7: Gray Leads the Industry with the Highest Quality Portfolio of Local Television Stations
Gray Leads the Industry with the Highest Quality Portfolio of Local Television Stations § Dominate local and political revenue with highly-rated news The Importance of Being #1 platforms § #1 Stations can secure more than Price half of a market’s political ad Share of Leadership buys Market Ad $ Net
Slide 8: Gray Leads Industry In Operating Margins
Gray Leads Industry In Operating Margins 2014 EBITDA Margins 42% 37% 36% 36% 35% 33% 31% 21% 21% (3) (4) (6) (7) (1) Nexstar Sinclair(2) Media General TEGNA Entravision Tribune (5) Meredith E.W. Scripps •Source: Company filings, Company investor presentations and Company earnings calls •Note: Based
Slide 9: The Importance of Being #1
The Importance of Being #1 Long History of Being #1 in the Market(1) 19 18 19 19 19 17 16 17 16 15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CBS National Ranking 1 1 1 1 1 1 1 1 1 1 19 17 17 16 15 14 15 14 14 13 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 NBC National Ranking 3 3 4 4 4
Slide 10: Gray's Stations Over-Index Every Major Network
Gray’s Stations Over-Index Every Major Network(1) CBS vs. Gray November ’15 Household Share CBS, NBC, and ABC perform +73%10 16 10 18 12 14 10 far better on Gray’s stations Amount by which Gray’s 6 late local newscasts than national averages outperform the national average… The Morning Network News
Slide 11: Gray Dominates Local News and Information
Gray Dominates Local News and Information(1) +93% National Average vs. Gray Amount by which Gray’s 6PM November ’15 Household Share newscasts outperform the national average… 29 +92% 23 Amount by which Gray’s late 15 local newscasts outperform 12 the national average… Gray’s national Household Share
Slide 12: Gray Has Long-Term Ratings Stability
Gray Has Long-Term Ratings STABILITY November DMA Rating – All Viewing(1) Ratings Stable Since 2010 – Averaging 5.7 5.9 5.9 5.7 5.7 5.6 5.6 2010 2011 2012 2013 2014 2015 (1) Nielsen November DMA Average Rating in DMA TV HH Monday-Sunday 6:00am to 2:00am Note: Pro forma for all completed transactions
Slide 13: Gray Leads the Industry in Household Ratings
Gray Leads the Industry in Household Ratings Household Rating Analysis – November 2015(1) 5.7 5.3 4.9 4.6 4.3 4.3 4.0 3.8 3.7 3.6 3.4 3.3 3.0 2.8 2.8 Cox Raycom Media Hearst Meredith Viacom- Sinclair TEGNA ABC O&O Nexstar Tribune Scripps NBC O&O Fox General CBS ____________________ (1) Nielsen Novem
Slide 14: Recognized Industry Leader
Recognized Industry Leader TVNewscheck’s 2016 NAB’s National Winner: 2016 Station Group of the Year Service to America Award KWTX/CBS, Waco, Texas 2016 NAB’s National Winner: Service to Community Award KOLO/ABC, Reno, Nevada 2016 Strategic Investment in Technology Company Syncbak “Gray’s forward-thi
Slide 15: Network and Retrans Visibility
Network and Retrans Visibility All 14 @ 6/30/19 5 @ 9/30/17 All 26 @ 12/31/18 All 19 @ 12/31/20 30 @ 8/31/19 2016 2017 2018 2019 2020 2018 Retrans Renewals 4.2 M Subs 6.4 M Subs 1.0 M Subs 2022 All 21 @ 9/1/22 Gray Television, Inc. 1515
Slide 16: Gray Excels at Retrans
Gray Excels at Retrans Gray Retransmission Revenue in Millions § STABLE Sub Count 2012-2015 for continuously owned Big-4 stations (data unavailable for acquired stations) 240.0 § As Network Reverse Comp has increased 205.0 from 0% to 50% over past five years, Gray’s net retrans revenue increased 184
Slide 17: Significant Opportunity for Continued M&A
Significant Opportunity for Continued M&A 44% 38% FCC U.S. TV Household Cap: 39% 31% 23% 19% 18% 18% 14% 11% 11% 9.4% 6% 4% 4% 3% 3% 3% 2% 2% 1% ... Tribune Sinclair TEGNA Media Hearst EW Nexstar Raycom Cox Meredith Graham Weigel Hubbard Sunbeam Calkins Quincy Bahakel Dispatch Capitol General Scripp
Slide 18: Investment Highlights
HONORED BY THE AWARD. INSPIRED BY OUR PEOPLE. 2016 Station Group of the Year TVNewsCheck Investment Highlights 18
Slide 19: Key Credit Highlights
Key Credit Highlights A Leading Television Broadcaster in Diverse Mid-Markets with Dominant Market Positions Stable Advertising Market and Diversification of Revenue Mix Large Political Upside in Election Years with Presence in Key States. Larger Political Upside in Presidential Election Years Stron
Slide 20: Diversification Across Networks and Markets
Diversification Across Networks and Markets 2015PF Revenue by Affiliate: 2015PF BCF by Affiliate: Station Mix(1) $729mm (1) $285mm (1), (3) 179 Total Program Streams: All Secondary Channels & Other All Secondary 93 Big 4 Affiliates: 5% 3% Channels & Other 4% 9% n 35 CBS n 26 NBC 18% n 19 ABC 38% 33%
Slide 21: Stable Markets – Concentration on DMAs 62-209
Stable Markets – Concentration on DMAs 62-209 with Focus on State Capitals / Collegiate Presence § Gray stations cover 11 state capitals and 27 university towns § Better demographics, more stable economies § Enrollment of approximately 634,000 students Approximate Approximate Market College(s) Enrol
Slide 22: Diverse Revenue Mix
Diverse Revenue Mix Diverse Revenue Mix driven by: § Local Revenue § Retransmission Revenue § Political Revenue 2014PF Revenue Mix: 2015PF Revenue Mix: $746mm (1) $729mm (1) Other Internet Other Internet 3% 5% 2% 5% National National 14% 15% Local Local Retransmission 48% 51% 14% Retransmission 24%
Slide 23: 2016 Campaigns & Elections
2016 Campaigns & Elections Open Presidential Contest 1 Gray Markets in 7 out of 8 Predicted 2016 Swing States 5 (CO, FL, IA, NV, OH, VA, WI) Ballot Presidential Initiatives & Primaries & Referendums General 34 Senate Races 9 Competitive Races in Gray Markets (CO, FL, GA, IL, IN, NV, NC, OH, WI) Fede
Slide 24: Gray is a Leading Beneficiary of Political Revenue
Gray is a Leading Beneficiary of Political Revenue with Large Upside in Presidential Years Gray Political Revenue in Millions $143 $118 $86 $82 New New Record Record Presidential Non- $58 Year Presidential $48 Year 2008 2010 2012 2014 2012PF 2014PF 2014 Political Revenue Per TV Household $11.03 $ $4
Slide 25: Successful Digital Media Initiatives
Successful Digital Media Initiatives Gray Digital Media Revenue in Millions § Operates web and mobile applications in all markets 3+ Billion Digital Ads Served in 2015 § Approximately 76% of all traffic is mobile in 2015 § Focused on local content: news, weather, sports : 20% $35.4 14 CAGR § 2.29 bi
Slide 26: Significant Potential Upside from Spectrum Monetization Opportunities
Significant Potential Upside from Spectrum Monetization Opportunities n One of first to monetize digital spectrum Secondary Channel 2015 PF Financials n Opportunities to benefit from the 2016 FCC Broadcast Incentive Auction n Potential opportunities from future changes $98 to new broadcast technical
Slide 27: Financial Overview
HONORED BY THE AWARD. INSPIRED BY OUR PEOPLE. 2016 Station Group of the Year TVNewsCheck Financial Overview 27
Slide 28: Gray's Financial Scale Continues to Increase
Gray’s Financial Scale Continues to Increase Net Revenue Pro Forma All Completed Transactions LTM L8QA LTM L8QA $597 $553 $746 $729 $737 $508 $685 $678 $427 $610 $648 $405 $346 $308 $307 $327 $356 $346 $376 2010 2011 2012 2013 2014 2015 2012 2013 2014 2015 Operating Cash Flow LTM L8QA LTM L8QA $330
Slide 29: Robust Free Cash Flow Generation
§ Robust Free Cash Flow Generation § § Presidential Election Year Non Election Year Non Presidential Election Non Election Year 2015 OCF 2012 OCF Buildup (1), (2) 2013 OCF Buildup (1), (2) Year 2014 OCF Buildup (1), (2) Buildup (1), (2) § ($ in millions) ($ in millions) ($ in millions) 48% ($ in mil
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 has diversified its revenue base, allowing for significant free cash flow in both political and non-political years Net Financial Leverage (1) ($ in millio
Slide 31: Sources & Uses and Capitalization Gray + Schurz Acquisition
Sources & Uses and Capitalization Gray + Schurz Acquisition Current & Pro Forma Capitalization ($ in millions) Acq. Of Cum. Cum. X Cum. Schurz Cum. X Actual L8QA X LTM Broadcast Pro Forma X L8QA LTM ($ 12/31/2015 OCF(1) OCF(2) Assets(3) 12/31/2015 OCF(4) OCF(5) Cash & Equivalents $97 (6) 91 Priority
Slide 32: Record As-Reported Historical Results for 2015
Record As-Reported Historical Results for 2015 As-Reported Historical Results Year Ended December 31, % % Change Change 2015 to 2015 to 2015 2014 2014 2013 2013 (dollars in thousands, except per share data) Revenue (less agency commissions): Total $ 597,356 $ 508,134 18 % $ 346,298 73 % Political $
Slide 33: Combined Historical Results – Pro Forma
Combined Historical Results – Pro Forma (Includes Schurz and Related Transactions) Selected Operating Data on Combined Historical Basis Year Ended December 31, % Change % Change % Change 2015 to 2015 to 2015 to 2015 2014 2014 2013 2013 2012 2012 (in thousands, except per share data) Revenue (less ag
Slide 34: Questions
HONORED BY THE AWARD. INSPIRED BY OUR PEOPLE. 2016 Station Group of the Year TVNewsCheck Questions 34
Slide 35: Appendix: Non-GAAP Reconciliation and Glossary
Appendix: Non-GAAP Reconciliation and Glossary 35
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gray Television, Inc. Pro Forma Non-GAAP Reconciliation Year Ended December 31, 2012 2013 2014 2015 L8QA 2015 Net income $ 96,027 $ 50,911 $100,845 $ 49,952 $ 75,398 Adjustments to reconcile from net income to Broadcast Cash Flow Less Cash Corporate Expenses: Depreciation 40,
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gray Television, Inc. Year Ended December 31, 2012 Combined Schurz and As Reported Historical Related Basis Other Acquisitions Adjustments Basis Transactions Adjustments Pro Forma Net income $ 28,129 $ 48,253 $ (5,840) $ 70,542 $ 29,409 $ (3,924) $ 96,027 Adjustments to recon
Slide 38: Non-GAAP Reconciliation, continued
Non-GAAP Reconciliation, continued Gray Television, Inc. Year Ended December 31, 2013 Combined Schurz and As Reported Historical Related Basis Other Acquisitions Adjustments Basis Transactions Adjustments Pro Forma Net income $ 18,288 $ 31,477 $ (10,575) $ 39,190 $ 16,157 $ (4,435) $ 50,911 Adjustme
Slide 39: Non-GAAP Reconciliation, continued
Non-GAAP Reconciliation, continued Gray Television, Inc. Year Ended December 31, 2014 Combined Schurz and As Reported Other Historical Related Basis Transactions Adjustments Basis Transactions Adjustments Pro Forma Net income $ 48,061 $ 29,799 $ (2,008) $ 75,852 $ 29,303 $ (4,311) $ 100,845 Adjustme
Slide 40: Non-GAAP Reconciliation, continued
Non-GAAP Reconciliation, continued Gray Television, Inc. Year Ended December 31, 2015 Combined Schurz and As Reported Other Historical Related Basis Transactions Adjustments Basis Transactions Adjustments Pro Forma Net income $ 39,301 $ 6,880 $ $ 46,181 9,659 (5,889) $ 49,952 Adjustments to reconcil
Slide 41: 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 42: 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 43: Investor Presentation
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