Slide 1: Investor Presentation
Investor Presentation NYSE: GTN Historical Financial Data as of June 30, 2 Investor Presentation Select Other Data as of September, 2013 Historical Financial Data as of September 30, 2013 Select Other Data as of February 24, 2013 1
Slide 2: Summary
Summary Company Overview Gray Television is a Dominant Mid-Market TV Platform with Significant Upside • Selectively acquiring stations and/or entering into LMA or SSA Agreements ♦ Closed: 6 stations – 4 markets, October/November, 2013 ♦ Pending Acquisitions: 20 stations–26 affiliations–6 new marke
Slide 3: Company Overview
Company Overview Note: Certain station information in this presentation includes stations under LMA or SSA agreements with Gray. 3
Slide 4: Key Investment Highlights
Key Investment Highlights A Leading Television Broadcaster in Diverse Mid Markets with Dominant Market Positions #1 or #2 market rank in 31 out of 34 markets Improving Advertising Market and Diversification of Revenue Mix Strategic Acquisition and Duopoly Opportunities Large Political Upsi
Slide 5: Gray Television is a Dominant Mid-Market TV Platform
Gray Television is a Dominant Mid-Market TV Platform 110 total program streams spread across 34 “Big 4” Channels by Affiliate: 52 attractive markets 5 52 affiliations with a “Big 4” network and 10% 58 additional program streams1 9 18% Reaches 6.5% of U.S. TV households, 24 45% significantly be
Slide 6: Gray Has a Diverse and National Footprint
Gray Has a Diverse and National Footprint 40 markets reaching approximately 7.3% of US TV households Sioux Falls, SD(3) Wausau - North Platte, NE(3) Lincoln, NE Omaha, NE Fargo, ND(3) Rapid City, SD(3) Rhinelander, WI Bismarck, ND(3) Rockford, IL La Crosse - Parkersburg, WV North Platte, NE Madison,
Slide 7: Highly Experienced Senior Management
Highly Experienced Senior Management Focused on maximizing potential of existing portfolio, while prudently pursuing strategic growth opportunities Years at Years in Name Background and Notable Achievements Gray TV Industry CEO since 2008, Vice Chairman since 2002 and director since 1993 Hilton H
Slide 8: The Importance of Being #1
The Importance of Being #1 Price Leadership Reinvest Long History of Being #1 in the Market 1 in Business 12 12 12 12 12 13 Dominant 11 11 Reinvest News Reinvest in in Franchises Business Business Drive Traffic Share of '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 '10/'11 '11/'12 '12/'13 Market Ad $ Netw
Slide 9: Gray's Stations Dominate Local News and Information
Gray’s Stations Dominate Local News and Information National Average vs. Gray CBS vs. Gray Gray’s Early Evening November ’13 Household Share November ’13 Household Share newscasts 25 outperform the 19 19 national average by 15 12 12 12 11 9 9 10 73% 5 Gray’s late local Early Evening News Late Ne
Slide 10: Stable Markets – Concentration on DMAs 61-208
Stable Markets – Concentration on DMAs 61-208 With Focus on State Capitals / Collegiate Presence Approximate Approximate Market College(s) Enrollment Market College(s) Enrollment Charlottesville, VA Waco, TX 92 21 Topeka, KS 53 Reno, NV 19 Lansing, MI 49 Bowling Green, KY 18 Tallahassee, FL 43 Harri
Slide 11: Operational Strategy Focused on Market Leadership and Growth
Operational Strategy Focused on Market Leadership and Growth Maintain and grow our market leadership position Monetize Spectrum Continue to prudently invest in local content and news, syndicated programs, top talent Accretive Partnerships and community relationships Seek new media opportunitie
Slide 12: Gray TV has Significant Opportunity to Grow
Gray TV has Significant Opportunity to Grow 44% FCC U.S. TV Household Cap of 39% 39% 38% 37% 30% 27% 23% 18% 15% 14% 13% 13% 11% 11% 10% 7.3% 4% 2% Tribune Sinclair CBS FOX Gannett NBC ABC Hearst Media Nexstar EW Raycom Cox LIN TV Meredith Gray Journal Quincy General Scripps ____________________ Sou
Slide 13: Strategic Acquisition Opportunities
Strategic Acquisition Opportunities Potential for Equity Value Creation Through Accretive Acquisitions Illustrative Stock Price Accretion Industry continues to consolidate rapidly 15.0% Gray TV’s strategic transactions should not be impacted by proposed regulatory Acquisitions thresholds 10.0%
Slide 14: Revenue Mix Continues to Diversify
Revenue Mix Continues to Diversify Growth in Net Revenue, driven by core revenue, political, retransmission and internet Revenue mix continues to diversify from traditional ad-based sources to new media ad-based – Internet, and subscriber driven – Retransmission Lowers overall revenue volatili
Slide 15: Diversification Across Networks and Markets
Diversification Across Networks and Markets Current Station Mix 2012 1 Revenue: Top 10 Markets 2012 1 BCF: Top 10 Markets C har lest o n / C har l est o n / 110 Total Program Streams:(4) Hunt ing t o n, W V Omaha, N E Hunt i ng t o n, W V O maha, N E 8% 10 % 6% 7% 52 Big 4 Affiliates:(4) Lexing t o
Slide 16: Gray is the Leading Beneficiary of Political Revenue with Large Upside
Gray is the Leading Beneficiary of Political Revenue with Large Upside Gray TV Political Commentary 2012 Political as % of Total Net Revenue $86 Million in 2012 – New Record 21.2% 2011 Odd Year Record $13.5 million Gray operates in key battleground states 15.1% 13.8% #1 stations can capture
Slide 17: Automotive Ad Spending on TV Continues to Grow
Automotive Ad Spending on TV Continues to Grow and Still Below Peak Levels Gray TV continues to benefit from the growth in auto ad spending Auto for the first three quarters of 2013 is up ~8% In 2012, ~18% of Gray TV’s total broadcast advertising revenue was derived from automotive customers
Slide 18: Strong Growth in Retransmission Revenue
Strong Growth in Retransmission Revenue Over 50% of MVPD subscriber base Gray TV Retransmission Revenue(1) renewed at year-end 2011 at ($ in millions) $33.8 significant increases Approximately 2 million subs $20.2 $18.8 re-pricing in two deals in Q4 2013 $15.6 Remaining 4.5 million subs re-pri
Slide 19: Successful Digital Media Initiatives
Successful Digital Media Initiatives Operate web and mobile Gray TV Digital Media Revenue applications in all markets ($ in millions) $25.0 Focused on local content: news, weather, sports $20.1 Demonstrated strong growth in page $11.9 $13.4 $11.4 views: ‘05 to ’12: +746% $9.5 $7.6 (30.6% CAGR)
Slide 20: Unlocking the Value of Spectrum
Unlocking the Value of Spectrum Significant Potential Upside from the Monetization of Spectrum Currently 58 additional program streams(1) with programming from key networks including CW, MyNetwork TV, Telemundo, MeTv and Antenna TV(3) 2012 “As Reported” $14.9 million in 2012 Revenue $8.2 mil
Slide 21: Industry Overview
Television Digital * Mobile Industry Overview
Slide 22: Television Continues to be the #1 Choice for Critical Mass Reach
Television Continues to be the #1 Choice for Critical Mass Reach Among Advertisers TV Reaches More People than Any Other Medium TV is the Most Influential Local Media Television 96 of the Top 100 Rated Programs are 88% Broadcast Programs (P18-49) Internet 73% Program Broadcast Cable Rank Stations TV
Slide 23: Strong Growth in Other Key Revenue Streams
Strong Growth in Other Key Revenue Streams Record level of political in 2012 and estimates for Continued upside in retransmission fees, with 2016 project continued growth revenue projected to reach $7.1 billion in 2018 Industry-wide Political Spend on Local TV 1 Strong Growth in Retransmission R
Slide 24: Significant Asset Value and Transaction Synergies for Television Broadcasters
Significant Asset Value and Transaction Synergies for Television Broadcasters M&A Consolidation Stages Stage 1: “Low hanging fruit” TV broadcasting M&A activity has ramped up considerably Stage 2: “Merger of smaller equals” Sizeable individual transactions in 2013 and 2014 at attractive St
Slide 25: Financial Overview
Television Digital * Mobile Financial Overview
Slide 26: Historical Financial Overview – Continued Growth
Historical Financial Overview – Continued Growth Net Revenue ($ in millions) $405 $346 $327 $307 $307 $270 2007 2008 2009 2010 2011 2012 ) YOY Growth 6% (17%) 28% (11%) 32% 2YOY Growth (12%) 6% 14% 17% Operating Cash Flow 1 Capital Expenditures 2 ($ in millions) ($ in millions) $174 $136 $25 $119 $2
Slide 27: Record Free Cash Flow in 2012
Record Free Cash Flow in 2012 Record free cash flow of $94 Free Cash Flow 1 million in 2012 ($ and shares in millions) $94 2012 OCF conversion rate into FCF: 54% $50 $50 Equity value creation through strong free cash flow generation $18 Significant NOLs expected to $8 shield cash taxes in th
Slide 28: Financial Leverage at Five Year Low
Financial Leverage at Five Year Low De-levered by over $100 million (~4.1x) between December 2009 and September 2013 Consistently reduced weighted average cost of debt Gray now generates significant free cash flow in both political and non-political years Net Financial Leverage 1 ($ in million
Slide 29: Prudent Cost Management and Increasing Margins
Prudent Cost Management and Increasing Margins Gray TV continues to grow Increasing Operating Cash Flow Margins operating margins through identified operational 43% efficiencies As of December 31, 2012, reduced total number of 39% employees by 367, or 15%, since December 31, 2007 Decreased ope
Slide 30: YTD 9/30/2013 Operating Performance Update
YTD 9/30/2013 Operating Performance Update YTD 2013 Highlights Net Revenue ($ in millions) Strength in revenue driven by automotive and retransmission, etc. $251 $223 Local revenue +4% vs. 2012 and +7% vs. 2011 National Revenue +1% vs. 2012 and +5% vs. 2011 OCF +28% from 2010 to 2012 and +24
Slide 31: Recent Acquisitions/Investments
Recent Acquisitions/Investments Gray and Excalibur Broadcasting closed KJCT acquisitions October 31, 2013. KJCT-ABC, CW and Telemundo, Grand Junction Gray has SSA with Excalibur Yellowstone Television – November 1, 2013 $23 million investment for 99% voting interest Yellowstone owns KGNS
Slide 32: Capitalization Overview
Capitalization Overview Current and Pro Forma Capitalization ($ in Millions) Actual Pro Forma 1 9/30/2013 9/30/2013 Cash and Cash Equivalents $43.3 $12.0 $40MM Revolver due 2017 $0.0 $0.0 Term Loan B due 2019 (L+350 2 / 1.0% LIBOR Floor) 535.0 159.0 Total First Lien Debt $535.0 $159.0 7.500% Senior
Slide 33: Announced Acquisitions
Announced Acquisitions (closings subject to regulatory approval expected Q1 or Q2, 2014) Recently announced acquisitions by Gray/Excalibur of: Hoak Media, LLC Parker Broadcasting, Inc. Prime Cities Broadcasting, Inc. (Fox) Lockwood (CW), and Mission TV, LLC (Fox) Each acquisition brings: • Immediate
Slide 34: Announced Acquisitions
Announced Acquisitions (closings subject to regulatory approval expected Q1 or Q2, 2014) Purchaser Seller Price Market DMA Affiliation Station(s) Gray/Excalibur Hoak Media, $297.5 Lincoln-Hastings- 105 NBC KHAS(2) LLC/ Parker Million Kearney, NE Broadcasting, Sioux Falls, SD 111 ABC & CW KSFY/KABY/
Slide 35: Announced Acquisitions
Announced Acquisitions (closings subject to regulatory approval expected Q1 or Q2, 2014) Purchaser Seller Price Market DMA Affiliation Station(s) Excalibur Prime Cities $7.5 Million Minot-Bismarck- 145 FOX KNDX/KXND Broadcasting, Inc. Dickinson, ND Gray Lockwood $5.5 Million Charleston-Huntington, 6
Slide 36: Pro Forma – All transactions closed and announced
Pro Forma – All transactions closed and announced Own/Operate stations: • 40 markets / DMA’s 61-208 / 7.3% U.S. Households • #1 Ranked 27 of 40 markets / #1 or #2 Ranked in 37 of 40 markets • 136 program streams •73 Big 4 Affiliations Currently Pending(1) Pending Total Owned Operated Launch Acquisit
Slide 37: 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