Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Wells Fargo Securities Conference 2012
34 slides from Gray Media's conference presentation, Nov 7, 2012
Slide 1: Investor Presentation
Investor Presentation November 7, 2012 1
Slide 2: Company Overview
Company Overview GRAY Qs ms OME Oc Sh yy eo TELEVISION, INC. wi82 itu aap ame SH QD BewO LL] ome newest
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 12% Other 23% KY 10% GA 4% 85 channels of programming CO 5% NE 10% VA 6% Spread across 30 markets WV 10% KS 6% FL 6% TX 8% 40 top p4pprimary y network affiliates,, 45 secondary channels LTM
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 Rebound in Advertising Market Large Politi
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 1 1 134 WSAW CBS 1 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 B i 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 12 11 11 11 11 11 11 '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/'03 '03/'04
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 In 17 12-31-14 9 Negotiations 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 ’11 Household Share November ’11 Household Share Gray’s late local news 25 23 outperforms 15 14 13 15 14 10 10 the national 8 8 6 average by 64% Gray’s Early Early Evening News Late News The Early Network Prime The
Slide 12: #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% 6.2% 5.2% 3.3% Nexstar Grayy TV LIN TV Sinclair Gray’s Syndicated Program Payments as a % of Revenue is Among the Lowest of its Peers ____________________ (1) 2011 Information from Annu
Slide 13: 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 Cha rle ston / 85 channels of Huntington, WV O ma ha , NE programming, i iincluding: l di Cha rle ston / 10 % 7% Huntington, WV Le xington, KY Le xington, KY 7% Primary
Slide 14: Continuing Rebound in Advertising Market
Continuing Rebound in Advertising Market F ll Year Full Y 2011 Ad Revenue R b by Category C t Gray TV Continuing Ad Rebound % of Commercial Time Sales Legal Services Finance / Insurance D Departt mentt / 4% 5% Other Auto up 6% for full year 2011 Discount 15% 5% Political Supermarkets 5% 5% Most
Slide 15: YTD 2012 Continuing Rebound in Advertising Market
YTD June 2012 Continuing Rebound in Advertising Market YTD 9/30/2012 Ad Revenue R b by Category C t Gray TV Continuing Ad Rebound % of Commercial Time Sales Home Improve me nt De pa rtme nt / Le ga l S e rvic e s 3% Disc ount 3% 3% S upe rma rke ts Auto up 18% YTD 9/30/2012 3% Automotive Fina nc e
Slide 16: Large Political Upside
Large Political Upside Gray TV Political Commentary 2010 Political as % of Total Revenue YTD 9/30/2012 $42.6 Million – New 9 Month Record 2010 Even Year Record $57.6 million; 16.6% of Total 16.6% Revenue 11.5% 10.7% 10.0% 2011 Odd Year Record $13.5 million 8.1% 5.7% Gray operates in key batt
Slide 17: Growing Retransmission Revenue
Growing Retransmission Revenue Gray Retransmission Revenue Agreements with all Major Cable and ($ in millions) (1) Satellite Providers $34.0 ((“MVPD’s”) MVPD s ) $20.2 $18.8 Agreements cover $15.6 virtually all in-market in market subscribers and certain $2.4 $3.0 $1.6 out-of-market $1.0 subscri
Slide 18: Successful Digital Media Initiatives
Successful Digital Media Initiatives Operate web, mobile and desktop applications in all Gray TV Digital Media Revenue markets ($ in millions) $20.1 Focused on local content: news, weather, sports $13.4 Demonstrated strong growth $11.9 $11.4 in p page g views: ‘05 to ‘11 $9.5 $7.6 +497% (29.1%
Slide 19: Monetizing Digital Spectrum
Monetizing Digital Spectrum In 2011, Gray Generated $11.2 Million in Revenue and $5.4 Million in BCF(1) from Additional Digital Channels As of September 2012, 45 Secondary channels of programming, including 50 affiliations(2) with: 1 ABC 1 CBS 2 FOX 8 CW 18 MyNetwork TV 1 Untamed Sports
Slide 20: Prudent Cost Management
Prudent Cost Management As of September 30, 2012, reduced total number of employees by 365, or 14.9%, since December 31, 2007 Decreased operating costs by converting to digital 2011 TTotal t l TV Operating O ti Expense E off $194.2 $194 2 million illi below b l 2007 level of $199.7 million 2
Slide 21: Industry Overview
Industry Overview GRAY Bus OOM ecw & fy yj elo TELEVISION, INC. wi82 itu aap ame SH QD BewO LL] ome newest
Slide 22: Resilient Industry Fundamentals: Time Spent Watching TV
Resilient Industry Fundamentals Time Spent Watching TV Per U.S. Household Per Day (hrs:mm) Television continues to be the #1 choice for critical mass reach among advertisers in an increasingly fragmented distribution landscape 8:11 8:14 8:14 8:21 8:21 8:37 8:40 7:53 6:36 6:53 5:56 4:35 5:06 1950 196
Slide 23: Television Remains the Most Important Local Medium
Resilient Industry Fundamentals Television Remains the Most Important Local Medium Most Influential of All Source of Local Weather, Weather Primary Source of News Media Traffic and Sports Radio Outdoor Mobile / Other Newspapers 3.9% 14.0% 0.5% 0.6% Newspapers Mobile Other 2.4% 0.5% 12.3% Cable News
Slide 24: Significant Asset Value Support
Significant Asset Value Support Recent broadcasting g transactions have an average g blended EBITDA multiple of ~9.4x 10.0x 10.1x 10.0x 10.0x ~9.4x Avg. Blended 8.3x 8.3x Acquisition Multiple 1 1 1 1 Sinclair/Four Points Scripps/McGraw-Hill pp Sinclair/Freedom LIN/New Vision Nexstar/Newport p Sincla
Slide 25: Financial Overview
Financial Overview GRAY Bus OOM ecw & fy yj elo TELEVISION, INC, 22 tie Gp sxe GQ MeO LE] Tee perse moll HY
Slide 26: Historical Financial Overview
Historical Financial Overview Net Revenue Operating Cash Flow(2) ($ in millions) $363 ($ in millions) $346 $136 $142 $327 $307 $119 $307 $99 $97 $270 $71 2007 2008 2009 2010 2011 LTM 2007 2008 2009 2010 2011 LTM 2012 (1) ) 2012 (1) ) YOY Growth 6% (17%) 28% (11%) % Margin 32% 36% 26% 39% 32% 2YOY Gr
Slide 27: 2011 Performance
2011 Performance Year-To-Date December 31, Variance vs. 2011 Performance Highlights ($ in millions) 2011 2010 2010 Local/Regional $187.0 $183.2 $3.8 2.1% Solid revenue performance in 2011 given “off year” National 56.3 57.6 (1.3) -2.3% political cycle and Olympic and Super Bowl comps Core Revenue
Slide 28: Update on YTD 2012 Performance
Update on YTD 2012 Performance Year-To-Date September 30, Variance vs. YTD 2012 Performance Highlights ($ in millions) 2012 2011 2011 Local/Regional $141.0 $136.3 $4.7 3% Solid Revenue performance YTD 2012 National 41.7 40.2 1.5 4% Core Revenue $182.6 $176.5 $6.2 4% • Local +3% Political Revenue 4
Slide 29: Broadcast Cash Flow less Cash Corporate Expenses to OCF Reconciliation
Broadcast Cash Flow less Cash Corporate Expenses to OCF Reconciliation LTM ($ in i millions) illi ) 2007 2008 2009 2010 2011 2012(1) Broadcast Cash Flow less $96.5 $118.1 $69.2 $135.7 $95.6 $142.3 Cash Corporate Expenses Plus: Pension Expense Accruals 3.2 3.2 5.2 4.9 5.1 5.8 Less: Pension Fund Payme
Slide 30: Refinancing Transactions Overview
Refinancing Transactions Overview 30
Slide 31: Refinancing Transactions Introduction
Refinancing Transactions Introduction On September 24, 2012, Gray announced a comprehensive refinancing of its capital structure New Debt consists of: • Senior Secured Credit Facilities (the “Facilities”) – $40 million 5-year 5 year Senior Secured Priority Revolving Credit Facility (the “Revolve
Slide 32: Pro Forma Capitalization
Pro Forma Capitalization Pro Forma Capitalization ($ in Millions) A Actual l Pro Forma After f 9/30/2012 Refinancing Cash and Cash Equivalents $45.7 $10.0 $40MM Revolver due 2014 $0.0 $0.0 New $40MM Revolver due 2017 0.0 0.0 e Term Loan oa B due 2014 0 459.4 59 0.0 New Term Loan B due 2019 0.0 555.0
Slide 33: Safe-Harbor
SAFE-HARBOR Certain statements in this presentation constitute “forward-looking statements” t t t ” within ithi the th meaning i off and d subject bj t to t the th protections t ti the th Private Securities Litigation Reform Act of 1995 and other federal and state securities laws. Such forward-looki
Slide 34: Investor Presentation
Investor Presentation November 7, 2012 34
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