Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Debt Investor Presentation (October 2018)
40 slides from Gray Media's debt investor presentation, Oct 22, 2018
Slide 1: Gray Television, Inc. Lender Presentation
Gray Television, Inc. Lender Presentation October 22nd, 2018 4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 | F 404.261.9607 | www.gray.tv Gray to Combine with Raycom to Become the Third Largest TV Broadcast Group Exhibit 99.2
Slide 2: Disclaimer and Non-GAAP Financial Data
Disclaimer and Non-GAAP Financial Data This presentation contains certain forward looking statements that are based largely on Gray Television, Inc.’s (“Gray”, “Gray Television”, “GTN” or the “Company”) current expectations and reflect various estimates and assumptions by Gray. These statements may
Slide 3: Management Overview
Management Overview Hilton Howell, Jr. Pat LaPlatney Kevin Latek Jim Ryan Executive Chairman and Co-CEO, Gray Television, Inc. 25 years of broadcasting experience and 25 years with Gray Also currently serves as the following: Atlantic American Corporation – President & CEO Delta Life Insurance Compa
Slide 4: Agenda
Agenda Transaction and Syndication Overview I Acquisition Overview II Key Credit Highlights III Historical Financial Overview IV Appendix V
Slide 5: Transaction and Syndication Overview
Transaction and Syndication Overview
Slide 6: Introduction & Transaction Overview
Introduction & Transaction Overview On June 25, 2018, Gray Television, Inc. (“Gray” or the “Company”) announced that it had reached an agreement to acquire Raycom Media, Inc. (“Raycom”) for a ~$3.6 billion enterprise value The purchase price represents a multiple of ~7.8x blended ’17 / ’18E pro form
Slide 7: Acquisition Overview
- Acquisition Overview . | NEWs © —_
Slide 8: Highly Complementary Portfolio Will Expand Geographic Footprint
Highly Complementary Portfolio Will Expand Geographic Footprint Source: Company filings and projections, BIA Investing in Television Market Report and Nielsen Media Research Gives effect to all other pending acquisitions; after giving effect to overlap station divestitures Combined Historical Basis
Slide 9: Gray Continues to Prudently Grow its Scale
Gray Continues to Prudently Grow its Scale Source: Company filings and projections, BIA Investing in Television Market Report and Nielsen Media Research Includes $13 million estimated revenue from pending acquisition of KDLT (NBC) in Sioux Falls, SD announced on 5/1/18, and excludes $95 million of r
Slide 10: Significant Identified and Achievable Synergies
Significant Identified and Achievable Synergies Total Expected Year 1 Annual Synergies of $80 Million Potential for Additional Synergies in the Mid- to Long-Term Comprised of contracted step-up of Raycom subscribers to Gray’s retransmission rates Net Retransmission Revenue ~$15 million Rationalizati
Slide 11: Evolution of Gray
Source: Company filings, Nielsen data Financial data presented on an As Reported L8QA basis unless otherwise noted Station count net of divestitures / swaps As reported OCF is equal to Broadcast Cash Flow less Cash Corporate Expenses plus Pension Expense less Pension Contributions Evolution of Gray
Slide 12: Overview of Raycom
Overview of Raycom $ in Millions 16/'17 CHB Description Cash Flow: RAYCOM _ ertut power television stations in 44 markets reaching 16% of total U.S. households AYER ows, pouces nd rakes spots nd entetnment roar 7 TUPELO*RAYCOM Produces live sports and entertainment events and develops digital conten
Slide 13: Raycom Media Snapshot
Raycom Media Snapshot L8QA 6/30/18 CHB Revenue by Affiliate Note: Amounts are prior to adjusting for divestitures L8QA 6/30/18 CHB Revenue of $1,081 million Charlotte, NC and Cleveland, OH are the largest revenue markets No market represents more than 7% of total revenue
Slide 14: Key Credit Highlights
Key Credit Highlights
Slide 15: Summary of Key Credit Highlights
Summary of Key Credit Highlights Third Largest Television Broadcaster with High Quality Assets Diversified Sources of Revenues Across Networks and Markets Large Political Upside in Election Years with Key Presence in Swing States Strong Growth in Net Retrans and Increasing Leverage With MVPDS and Ne
Slide 16: Gray Will be the Third Largest TV Broadcast Group
Gray Will be the Third Largest TV Broadcast Group with High Quality Assets 2017 / 2018E CHB Blended Adj. EBITDA(1) Source: Company filings, Wall Street research, BIA Investing in Television Market Report and Nielsen Media Research Note: Dollars in millions, except Adj. EBITDA / TV household; Raycom
Slide 17: Increasing Diversification of Revenue Sources
2017CHB Revenue by Affiliate: $1,871mm 2017CHB BCF by Affiliate: $672mm 2008: Gray + Raycom As Reported 95% of revenue derived from advertising sales 2017: Gray + Raycom 69% of revenue derived from advertising sales 29% of revenue derived from retransmission (subscription) fee income Increasing Dive
Slide 18: Top Rated Stations Drive Strong Political Revenue
Top Rated Stations Drive Strong Political Revenue 15 2016 Political Revenue Per TV Household Gray Markets with at Least One 2018 Election Political Revenue Governor 81% US Senate 65% House 100% Source: Company management, Company filings, The Cook Political Report Note: Percentages calculated based
Slide 19: Gray Excels at Retransmission Revenue
Gray Excels at Retransmission Revenue Retransmission Revenue ($ in Millions) I Gross Retransmission Revenue Network “Reverse Comp.” $280 $283 Il “net Retransmission Revenue” $189 2014CHB 2015CHB 2016CHB 2017CHB L8QA 6/30/18CHB | L8QA 6/30/18CHB Cc Gc RAYCOM Year End % Sub Base Retrans Renewals for I
Slide 20: Successful Digital Media Initiatives
Successful Digital Media Initiatives All Data is on an “as reported” basis and does not include station data prior to Gray’s acquisition of a station(s) Leading Digital Platforms 4.1 billion Total Page Views as of Q2 2018 (Gray/Raycom combined) Mobile makes up 85% of all digital traffic as of Q2 201
Slide 21: Track Record of Successfully Integrating Acquisitions and Deleveraging
Note: Financial leverage excludes preferred stock Secured debt netting all cash on hand as of the respective balance sheet date Operating Cash Flow (“OCF”) as defined under the existing credit agreement, which includes adjustments for all transactions completed as of the respective balance sheet dat
Slide 22: Historical Financial Overview
Historical Financial Overview
Slide 23: Financial Policy
Financial Policy 11 Equity Financial strategy aimed at deleveraging to mid-3x range by the end of 2020 Deleveraging to be driven by a combination of debt repayment and OCF growth Leverage Liquidity Gray’s policy is to maintain a conservative financial position that provides a reasonable margin of de
Slide 24: Pro Forma CHB Financial Metrics
Pro Forma CHB Financial Metrics Net Revenue(1) OCF(2) & Margin Includes $13 million estimated revenue from pending acquisition of KDLT (NBC) in Sioux Falls, SD announced on 5/1/18, and excludes revenue attributed to pending overlap station divestitures Includes $7 million estimated OCF from pending
Slide 25: Gray CHB Financial Metrics
Gray CHB Financial Metrics Revenues: Local $427 $424 National 127 119 Political 2 us 1 a2 Total Ad Revenue $616 $703 Gross Retransmission 189 226 Other Broadcasting 7 17 Total ue $822 $946 ($86) (suzy General Badeast Expenses (437) (441) ieee seeses| Geel CSET) ($523) ($553) F Adjustr 29 8 — $327 $4
Slide 26: Raycom CHB Financial Metrics
Raycom CHB Financial Metrics
Slide 27: Appendix
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Slide 28: Series A Preferred Stock Terms
Issuer: Gray Television, Inc. ("Gray") Purchaser: Certain Affiliates of the Retirement Systems of Alabama ("RSA") Class of Stock: Newly issued series of perpetual preferred stock, designated as Series A Preferred Investment Amount: $650 million Liquidation Value: Investment amount plus accrued but u
Slide 29: Summary Pro Forma Organizational Structure
Summary Pro Forma Organizational Structure Current Structure Final Structure Gray Shareholders Raycom Shareholders Gray Raycom Gray Merger Sub Raycom Subsidiaries Gray Subsidiaries Gray Shareholders Former Raycom Shareholders Gray Legacy Gray Subsidiaries Legacy Raycom Subsidiaries 89% Economic Owne
Slide 30: Raycom Station Portfolio
Raycom Station Portfolio Stations owned by American Spirit and operated by Raycom via SSA/LMA Stations operated by Raycom via SSA Divestitures under contract Legend:
Slide 31: Pro Forma CHB L8QA Reconciliation
Pro Forma CHB L8QA Reconciliation
Slide 32: Non-GAAP Reconciliation
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Slide 33: Non-GAAP Reconciliation
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Slide 34: Non-GAAP Reconciliation
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Slide 35: Non-GAAP Reconciliation
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Slide 36: Non-GAAP Reconciliation
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Slide 37: Non-GAAP Reconciliation
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Slide 38: Glossary
Glossary “Combined Historical Basis” or “CHB” Combined Historical Basis reflects financial results that have been compiled by adding Gray’s or Raycom’s, as applicable, historical revenue and broadcast expenses to the historical revenue and broadcast expenses of the stations acquired in the Completed
Slide 39: 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 40: Gray Television, Inc.
Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319 www.gray.tv
Gray Television — Debt Investor Presentation (October 2018) on 6ix