Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Barclays High Yield Bond Conference 2013
32 slides from Gray Media's conference presentation, May 22, 2013
Slide 1: Investor Presentation
Investor Presentation As of May 2, 2013 1
Slide 2: Company Overview
Company Overview [TIMEWS.. ans TELEVISION, INC. MING mecey GD ae OM GID Meme FI Gey iy xuize BME 3
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 13% Other 22% WV 10% NV 5% 86 channels of programming CO 5% KY 10% VA 6% Spread across 30 markets NE 10% KS 6% FL 6% TX 7% 45 top 4 primary network affiliates, 41 additional channels LTM 201
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 Improving in Advertising Market Large Poli
Slide 6: Stable Markets – Concentration on Markets DMA 61-200
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 2 134 WSAW CBS 2 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 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 11 11 11 11 11 11 11 10 '00/'01 '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/
Slide 10: Long-Term Affiliate Contracts
Long-Term Affiliate Contracts Gray currently has 45 “Big 4” channels in 30 markets # of Renewal # of Renewal # of Renewal # of Renewal Channels Date Channels Date Channels Date Channels Date 17 12-31-14 10 12-31-15 8 12-31-13 5 6-30-14 3 12-31-16 1 1-1-16 1 8-31-18 11 21 10
Slide 11: Dominate Local News & Information
Dominate Local News & Information National Average vs. Gray CBS vs. Gray November ’12 Household Share November ’12 Household Share Gray’s Early Evening 24 23 15 newscasts 12 12 14 15 10 10 outperform the 8 9 6 national average by 71% The Early Network Prime The Late Early Evening News Late News Sh
Slide 12: Continuing Rebound in Advertising Market
Continuing Rebound in Advertising Market Full Year 2012 Ad Revenue by Category Gray TV Continuing Ad Rebound % of Commercial Time Sales Supermarkets Legal Services Finance / Insurance 3% 3% 4% Auto up 15.5% for full year 2012 Department / Discount Other 11% 4% Entertainment 4% Most other categor
Slide 13: #1 News Platform Allows for Less Syndicated Programming
#1 News Platform Allows for Less Syndicated Programming Syndicated Program Payments as a % of Revenue(1) 7.0% 4.4% 2.9% 2.4% Nexstar Gray TV LIN TV Sinclair Gray’s Syndicated Program Payments as a % of Revenue is Among the Lowest of its Peers ____________________ (1) 2012 Information from Annual Rep
Slide 14: 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 85 channels of Cha rle ston / Huntington, WV O ma ha , NE programming, including: Cha rle ston / 10 % 7% Huntington, WV O ma ha , NE Ma dison, WI 8% Big 4 Affiliates 6%
Slide 15: Large Political Upside
Large Political Upside Gray TV Political Commentary 2012 Political as % of Total Revenue $86.0 Million – New Record 21.2% 2011 Odd Year Record $13.5 million 15.1% 13.8% Gray operates in key battleground states • #1 stations can capture over 50% of the political 10.4% 9.6% 8.6% budget for a mar
Slide 16: Growing Retransmission Revenue
Growing Retransmission Revenue Gray Retransmission Revenue Agreements with all Major Cable and ($ in millions) Satellite Providers $33.8 (“MVPD’s”) $20.2 $18.8 Agreements cover $15.6 virtually all in-market subscribers and certain $2.4 $3.0 $1.6 out-of-market $1.0 subscribers 2005 2006 2007 2008
Slide 17: Successful Digital Media Initiatives
Successful Digital Media Initiatives Operate web, mobile and desktop applications in all Gray TV Digital Media Revenue markets ($ in millions) $25.0 Focused on local content: news, weather, sports $20.1 Demonstrated strong growth $13.4 $11.9 in page views: ‘05 to ‘12 $11.4 $9.5 +746% (30.6% CA
Slide 18: Monetizing Digital Spectrum
Monetizing Digital Spectrum In 2012, Gray Generated $14.9 Million in Revenue, $8.2 Million in BCF(1) and 55% Margin from Additional Digital Channels Currently, 41 Additional channels of programming, including 45 affiliations(2) with: 1 ABC 8 CW 17 MyNetwork TV 5 ME TV Networks 2 Antenna TV
Slide 19: Prudent Cost Management
Prudent Cost Management As of December 31, 2012, reduced total number of employees by 367, or 15%, since December 31, 2007 Decreased operating costs by converting to digital 1.23% TV Expense CAGR 2007-2012 19
Slide 20: Industry Overview
Industry Overview GRAY [Bs cae (yO eH My aN (9, Lam =~ [TINEWS.. TELEVISION, INC. wees ap =e om Gp m=? G] Bei) eee mS
Slide 21: Resilient Industry Fundamentals
Resilient Industry Fundamentals Television continues to be the #1 choice for critical mass reach among advertisers in an increasingly fragmented distribution landscape Time Spent Watching TV Per U.S. Broadcast TV is the Most Influential Household Per Day (hrs:mm) Local Media 95 of the Top 100 Rated
Slide 22: Resilient Industry Fundamentals
Resilient Industry Fundamentals Television Remains the Most Important Local Medium Most Influential of All Source of Local Weather, Primary Source of News Media Traffic and Sports Radio Outdoor Mobile / Other Newspapers 3.9% 14.0% 0.5% 0.6% Newspapers Mobile Other 2.4% 0.5% 12.3% Cable News Internet
Slide 23: Strong Growth on Other Key Revenue Streams
Strong Growth on Other Key Revenue Streams Strong Momentum in Retransmission Industry-wide Political Spend on Local TV1 Revenue ($ in billions) ($ in billions) $4.9 $4.3 $3.6 $3.7 $3.0 $2.4 $3.2 $1.8 $1.2 $2.8 $0.8 $0.5 2008A 2009A 2010A 2011A 2012E 2013E 2014E 2015E 2016E $2.1 $1.7 Changing Composi
Slide 24: Significant Asset Value Support
Significant Asset Value Support Recent broadcasting transactions have an average blended EBITDA multiple of ~9.3x ~9.3x Avg. Blended Acquisition Multiple 12.4x 10.4x 10.0x 10.1x 10.0x 10.0x 10.1x 8.3x 8.3x 7.8x 7.9x 6.2x Sinclair/Four Points Scripps/McGraw-Hill Sinclair/Freedom LIN/New Vision Nexsta
Slide 25: Financial Overview
Financial Overview [TIMEWS.. ans TELEVISION, INC. MING mecey GD ae OM GID Meme FI Gey iy xuize BME 3
Slide 26: Historical Financial Overview
Historical Financial Overview Net Revenue Operating Cash Flow(1) ($ in millions) ($ in millions) $405 $174 $346 $136 $327 $119 $307 $307 $99 $97 $270 $71 2007 2008 2009 2010 2011 2012 ) 2007 2008 2009 2010 2011 2012 ) YOY Growth 6% (17%) 28% (11%) 32% % Margin 32% 36% 26% 39% 32% 43% 2YOY Growth (12
Slide 27: 2012 Performance
2012 Performance Variance vs. YTD 2012 Performance Highlights ($ in millions) 2012 2011 2011 Local/Regional $191.3 $187.0 $4.3 2% National 56.8 56.3 0.4 1% RECORD Revenue performance YTD 2012 Core Revenue $248.1 $243.3 $4.8 2% Political Revenue 86.0 13.5 72.5 537% Internet Revenue 25.0 20.1 4.9 24
Slide 28: 2013 Performance
2013 Performance Variance vs. YTD 2013 Performance Highlights ($ in millions) 2012 2011 2011 Local/Regional $46.4 $45.9 $0.5 1% National 13.4 13.0 0.4 3% Revenue performance YTD 2013 Core Revenue $59.8 $58.9 $0.9 2% Political Revenue 0.6 5.0 (4.4) -88% Internet Revenue 5.7 5.7 -- 0% • Local +1% Re
Slide 29: Broadcast Cash Flow less Cash Corporate Expenses to OCF Reconciliation
Broadcast Cash Flow less Cash Corporate Expenses to OCF Reconciliation ($ in millions) 2007 2008 2009 2010 2011 2012 Broadcast Cash Flow less $96.5 $118.1 $69.2 $135.7 $95.6 $176.1 Cash Corporate Expenses Plus: Pension Expense Accruals 3.2 3.2 5.2 4.9 5.1 7.9 Less: Pension Fund Payments (3.1) (2.9)
Slide 30: Capitalization
Capitalization Capitalization ($ in Millions) ($ in Millions) Actual Actual 3/31/2013 12/31/2012 Cash Cashand andCash CashEquivalents Equivalents $11.1 $ 20.1 $40MM Revolver due 2017 0.0 New Term $40MM Loan Bdue Revolver due 2019 2017 0.0 0.0 (L+375 / LIBOR Floor = 100) 535.0 New Term Loan B due 201
Slide 31: 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
Slide 32: Investor Presentation
Investor Presentation May 2, 2013 32
Gray Television — Barclays High Yield Bond Conference 2013 on 6ix