Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Investor Presentation (April 2015)
40 slides from Gray Media's investor presentation, April 2015
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN April 2015 1
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation constitute “forward-looking statements” within the meaning of and subject to the protections of the Private Securities Litigation Reform Act of 1995 and other federal and state securities laws. Such forward-looking statements involve known and unkno
Slide 3: Overview: An Industry Leading Power
Overview An Industry Leading Power 3
Slide 4: Gray TV has a Diverse and National Footprint
Gray TV has a Diverse and National Footprint Ranked #1 or #2 in 41 of 44 Markets Reaching approximately 8% of US TV households (1) Great Falls, MT Sioux Falls, SD Lincoln, NE Rockford, IL Lansing, MI North Platte, NE Helena, MT Fargo, ND Rapid City, SD Wausau - South Bend, IN Bismarck, ND Omaha, NE
Slide 5: Significant Scale Poised for Long-Term Success
Significant Scale Poised for Long-Term Success Net Revenue BCF OCF FCF 2014 PF (in millions)(1) $572 $251 $229 $123 140 program streams 10 channels: 76 “Big 4” network affiliations 6/30/17 26 channels: 77 stations 8/31/19 44 markets 3 channels:12/31/17 13 14 markets with two “Big 4” channels:12/31/1
Slide 6: The Importance of Being #1
Dominate local and political The Importance of Being #1 revenue with highly-rated news platforms Price #1 Stations Can secure more than Leadership half of a market’s political ad buys Share of Market Ad $ Network and Greater purchasing power and Highly News Ratings leverage with MVPDs, Ranked
Slide 7: Gray Dominates the Industry with the Highest Quality Portfolio
Gray Dominates the Industry with the Highest Quality Portfolio of Local Television Stations 41 of 44 markets with stations ranked #1 or #2 28 of 44 markets with #1 news ranking Only pure-play TV broadcaster with a full-time Washington DC Bureau Prior to the pending Twin Falls acquisition (anno
Slide 8: The Importance of Being #1: Long History
The Importance of Being #1 Long History of Being #1 in the Market 14 14 13 12 13 13 10 11 11 '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 10/'11 11/'12 12/'13 13/'14 CBS National Ranking 1 1 2 1 1 1 1 1 1 17 15 14 13 12 13 11 11 11 '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 '10/'11 11/'12 12/'13 13/'14 NBC
Slide 9: Gray's Stations Over-Index Every Major Network
Gray’s Stations Over-Index Every Major Network CBS vs. Gray November ’14 Household Share CBS, NBC, and ABC perform +73% 14 17 12 12 11 far better on Gray’s stations 10 9 Amount by which Gray’s late local newscasts 5 than national averages outperform the national average… The Morning Network News Pri
Slide 10: Gray Dominates Local News and Information
Gray Dominates Local News and Information +73% National Average vs. Gray Amount by which Gray’s late November ’14 Household Share local newscasts outperform the national average… 25 +66% 19 15 Amount by which Gray’s 6PM newscasts outperform the 11 national average… Gray’s national 6PM News Late News
Slide 11: Gray Leads the Industry in Ratings
Gray Leads the Industry in Ratings Household Rating Analysis – November 2014 5.4 5.2 4.9 4.9 4.4 4.1 3.9 3.8 3.7 3.6 3.3 3.2 3.1 2.7 2.5 Cox Raycom Media Hearst Meredith Gannett ABC O&O Sinclair Viacom-CBS Nexstar Tribune Scripps NBC O&O Fox General Source: Nielsen Media Research, November 2014; M-S
Slide 12: Gray Leads the Industry in Political Ad Revenues
Gray Leads the Industry in Political Ad Revenues 2014 Political Revenue Per TV Household $9.04 $4.40 $4.02 $3.63 $3.51 $3.45 $3.27 $1.75 (1) (2) (3) (4) (5) (6) (7) (8) Gray Gannett Media General Meredith Scripps Nexstar Sinclair Tribune 2014 Political Revenue ($mm) $85 $160 $111 $46 $76 $56 $147 $9
Slide 13: Gray Excels at Retrans
Gray Excels at Retrans Gray TV Retransmission Revenue in Millions Approximately 9.6 million Big-4 Affiliate 180.0 Retransmission Revenue subscribers total across all markets Network “Reverse Comp.” 162.8 “Net Retransmission Revenue” 148.0 90.0 Approximately 0.8 million Big-4 Affiliate subscriber
Slide 14: Gray TV Leads Industry In Operating Margins
Gray TV Leads Industry In Operating Margins 2014 EBITDA Margins (1) 40% (2) (3) 37% 36% 35% 33% 31% (4) 25% (5) 18% (6) 10% Gray Television Nexstar Sinclair Media General Entravision Tribune Gannett Meredith Scripps Company Source: Company filings, Investor presentations Note: Based on “as-reported”
Slide 15: Significant Opportunity for Continued Growth
Significant Opportunity for Continued Growth 44% 38% FCC U.S. TV Household Cap: 39% 31% 23% 19% 18% 18% 13% 11% 11% 8% 6% 4% 4% 3% 3% 3% 2% 2% 2% 1% 1% ... Tribune Sinclair Gannett Media Hearst EW Nexstar Raycom Cox Meredith Gray Graham Weigel Hubbard Sunbeam Calkins Quincy Bahakel Schurz Dispatch C
Slide 16: Investment Highlights
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Slide 17: Investment Highlights
Investment Highlights A Leading Television Broadcaster in Diverse Mid-Markets with Dominant Market Positions Improving Advertising Market and Diversification of Revenue Mix Large Political Upside in Presidential Election Years with Presence in Key States Strong Growth in Net Retransmission R
Slide 18: Highly Experienced Senior Management
Highly Experienced Senior Management 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 Howell, Jr. Served as President and CEO of Atlantic American Corporation since 1995 Director, Vice Chairman,
Slide 19: Acquisitions Announced and Closed in 2014 Significantly Increased Scale and Margins
Acquisitions Announced and Closed in 2014 Significantly Increased Scale and Margins Summary Financial Metrics ’13A/’14A Blended 2-Year Averages In Millions As Reported Pro Forma For All 2014 Acquisitions $522 $427 $215 $200 $175 $154 $97 $67 Revenue BCF OCF FCF Revenue BCF OCF FCF % Margin 41% 36% 4
Slide 20: How Does Gray Grow…
How Does Gray Grow… • $175.6 million(1) common equity raised March 31, 2015 • 13.5 million shares of Gray Common Stock issued at $13.00 per share • Intend to seek Free Cash Flow accretive acquisitions December 31, 2014 ($ in millions) Actual $ As Adjusted(2) Cash $30.8 $198.1 Total Debt @ par 1,231.
Slide 21: Diversification Across Networks and Markets
Diversification Across Networks and Markets 2014PF Revenue by Affiliate: 2014PF BCF by Affiliate: Station Mix $572mm (1) $251mm (1), (3) 140 Total Program Streams: All Secondary All Secondary Channels & Other 2% Channels & Other 76 Big 4 Affiliates: 3% 3% 1% 26 CBS 15% 24 NBC 19% 39% 16 ABC 40
Slide 22: Stable Markets – Concentration on DMAs 61-209
Stable Markets – Concentration on DMAs 61-209 with Focus on State Capitals / Collegiate Presence Gray stations cover 12 state capitals and 24 university towns Better demographics, more stable economies Enrollment of approximately 547,000 students Approximate Approximate Market College(s) Enrol
Slide 23: Revenue Mix Continues to Diversify
Revenue Mix Continues to Diversify Growth in net revenue, driven by increases in core revenue, political, retransmission and internet revenues Revenue mix continues to diversify from traditional ad-based sources to new media – internet and subscriber driven – and retransmission revenue Diversi
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 TV Political Revenue in Millions (1), (2) $118 $82 $86 New $85 New Record $58 Record Non- $48 Presidential Presidential Year $ Year 2008 2010 2012 2014 2012PF 2014PF 2012PF and 2014PF includes Gray and th
Slide 25: November 8, 2016 Elections
November 8, 2016 Elections Open Presidential Contest 1 Gray Markets in 7 out of 9 2012 Swing States 5 Ballot Presidential Initiatives & Primaries & Referendums General 34 Senate Races 9 Competitive Races in Gray Markets (CO, FL, GA, IL, IN, NV, NC, OH, WI) Federal State & Races Local 2 Races 535 Hou
Slide 26: Successful Digital Media Initiatives
Successful Digital Media Initiatives Operate web and mobile Gray TV Digital Media Revenue in Millions (1) applications in all markets Focused on local content: news, weather, sports All sites have converted to responsive design $29.5 $28.2 $28.1 “Moms Everyday” digital vertical; $25.4 $25.0
Slide 27: Significant Potential Upside from Spectrum Monetization Opportunities
Significant Potential Upside from Spectrum Monetization Opportunities One of first broadcasters to monetize digital spectrum 69 secondary channels of programming today Opportunities to benefit from the 2016 FCC Broadcast Incentive Auction Potential opportunities from future changes to new br
Slide 28: Financial Overview
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Slide 29: Gray TV's Financial Scale Continues to Increase
Gray TV’s Financial Scale Continues to Increase Net Revenue (1) $572 LTM L8QA $508 $514 $522 $473 $427 $405 $356 $376 $346 $327 $346 $308 $307 2010 2011 2012 2013 2014 2013PF 2014PF ) L8QA Growth 3% 6% 9% 5% 14% -- 2% LTM 2-Yr. Growth 6% 14% 17% 13% 25% -- 3% Operating Cash Flow (1) Capital Expendit
Slide 30: Robust Free Cash Flow Generation
Robust Free Cash Flow Generation Gray realized record free cash flow of $95 million in 2014; $123 million pro forma FCF in 2014 Gray’s free cash flow is expected to increase with the Acquisitions due to the incremental OCF despite a moderate increase in capital and corporate expenditures Gray
Slide 31: 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’s strategic investments have diversified its revenue base, allowing for significant free cash flow in both political and non-political years Net Financial
Slide 32: Capitalization Overview
Capitalization Overview No near-term debt maturities and ~$80 million of liquidity as of 12/31/14 Current Capitalization 12/31/2014 ($ in millions) Cum. X Cum. Actual L8QA X LTM $ OCF(1) OCF(2) Cash & Equivalents $31 Cash & Equivalents adjusted for equity issue(5) $198.1 Priority Revolver ($50MM)
Slide 33: Questions & Answers
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Slide 34: Appendix
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Slide 35: Glossary
Glossary “Acquisitions”: The Hoak Acquisition and Gray’s other previously completed acquisitions of Rapid Cities, Prime Cities, Lockwood, Yellowstone, KJCT, Montana and SJL unless otherwise specified; excludes Twin Falls “Excalibur” A television broadcaster with two stations (KJCT, KKHD) whose finan
Slide 36: Pro Forma Non-GAAP Reconciliation
Pro Forma Non-GAAP Reconciliation Gray Television Inc. Pro Forma Non-GAAP Reconciliation L8QA L8QA 2012 2013 2014 2013 2014 Net income $ 59,350 $ 29,243 $ 90,096 $ 44,297 $ 59,670 Adjustments to reconcile from net income to Broadcast Cash Flow Less Cash Corporate Expenses: Depreciation 31,838 32,202
Slide 37: Pro Forma Non-GAAP Reconciliation (continued)
Pro Forma Non-GAAP Reconciliation (continued) Pro Forma Twelve Months Ended December 31, 2012 Gray Pro forma Gray Actual Acquisitions Adjustments Pro forma Net income $ 28,129 $ 42,731 $ (11,510) $ 59,350 Adjustments to reconcile from net income to Broadcast Cash Flow Less Cash Corporate Expenses: D
Slide 38: Pro Forma Non-GAAP Reconciliation (continued)
Pro Forma Non-GAAP Reconciliation (continued) Pro Forma Twelve Months Ended December 31, 2013 Gray Pro forma Gray Actual Acquisitions Adjustments Pro forma Net income $ 18,288 $ 27,975 $ (17,020) $ 29,243 Adjustments to reconcile from net income to Broadcast Cash Flow Less Cash Corporate Expenses: D
Slide 39: Pro Forma Non-GAAP Reconciliation (continued)
Pro Forma Non-GAAP Reconciliation (continued) Pro Forma Twelve Months Ended December 31, 2014 Gray Pro forma Gray Actual Acquisitions Adjustments Pro forma Net income $ 48,061 $ 45,282 $ (3,247) $ 90,096 Adjustments to reconcile from net income to Broadcast Cash Flow Less Cash Corporate Expenses: De
Slide 40: Investor Presentation
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