Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Wells Fargo Media & Telecom Conference 2017
37 slides from Gray Media's conference presentation, Nov 6, 2017
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN November 2017 Edition Updated for September 30, 2017 Financial Information If Appendix is not included, see full presentation located at www.gray.tv for Non- GAAP Reconciliations. 4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 | F 404
Slide 2: Table of Contents
Table of Contents Company Overview 3 Investment Highlights 9 Financial Overview 18 Glossary 24 ALL COMBINED HISTORICAL BASIS DATA PRESENTED FOR GRAY IS ADJUSTED FOR ALL COMPLETED TRANSACTIONS UNLESS OTHERWISE NOTED. This presentation contains certain forward looking statements that are based largely
Slide 3: An Industry Leading Power
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY An Industry Leading Power 33
Slide 4: High Quality, Diverse Station Group
High Quality, Diverse Station Group 57 200+ 100+ 25 39 channels 29 channels 57 markets Over 200 Over 100 25 markets with owned total “Big 4” with two or and/or program network more “Big operated streams program 4” network 21 channels stations across 103 streams affiliations stations 14 channels 4 4
Slide 5: Gray Continues to Prudently Grow its Scale
Gray Continues to Prudently Grow its Scale… HH Reach (Post-UHF Discount) (2) $4,353 72% 46% (3) $2,272 39% 26% $1,808 (TV Only) 32% 27% 2015 / 2016 Blended $1,100 19% 13% U.S. Household Revenue(1) $1,050 16% Reach (Gross) 11% ($ in millions) (4) $884 $884 10% 8% $780 11% 6% $779 18% 12% (Excl. Radio
Slide 6: Gray has Prudently Grown Through Accretive Acquisitions
Gray has Prudently Grown Through Accretive Acquisitions • Completed over $1.5 billion in acquisitions since 2014 at a blended average two-year buy-side multiple of 7.0 times • Business continues to generate Free Cash Flow margins (FCF/OCF) in excess of 50% • Weighted average cost of debt is under 5%
Slide 7: Gray National Footprint
Gray National Footprint Ranked #1 or #2 in 55 of 57 Markets | Reaching approximately 10.4% of US TV households Lincoln, NE Sioux Falls, SD Omaha, NE Bismarck, ND Cedar Rapids, IA Rapid City, SD Fargo, ND Davenport, IA Burlington, VT La Crosse-Eau Claire, WI North Platte, NE Wausau-Rhinelander, WI Ma
Slide 8: Focus on State Capitals and College Markets
Focus on State Capitals and College Markets Better demographics, more stable economies Gray stations cover 12 state capitals 12 Gray stations cover 37 university towns 37 Enrollment of approximately 848,000 students 848,000 8
Slide 9: Investment Highlights
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Investment Highlights 9 9
Slide 10: The Importance of #1 Highly Ranked News Franchises Drive Traffic
The Importance of #1 Highly Ranked News Price Leadership Franchises Drive Traffic • Dominate local and political revenue with highly-rated news platforms • #1 Stations can secure more than Share of Market Ad $ half of a market’s political ad buys • Greater purchasing power and leverage with MVPDs, p
Slide 11: Gray Leads in Household Ratings
Gray Leads in Household Ratings Gray’s national Household Share Gray’s Ratings Have average exceeds all major Remained Stable Over Time affiliate news programs 5.9 5.9 5.6 5.7 5.6 5.7 5.6 Amount by which Gray’s late +59% local newscasts outperform the national average Amount by which Gray’s 6PM +67%
Slide 12: Network Programs Over-Index on Gray's Stations
CBS vs. Gray | November ’16 Household Share 21 16 11 12 11 9 Gray 10 7 CBS The Morning Show Network News Prime (Mon-Sun) The Late Show Network Programs Over-Index on NBC vs. Gray | November ’16 Household Share 25 Gray’s Stations 24 Gray 13 13 14 10 11 8 NBC CBS, NBC, and ABC perform far better on Th
Slide 13: Revenue Diversified Across Networks and Markets
Revenue Diversified Across Networks and Markets 2016CHB Revenue by 2016CHB BCF by Affiliate: $946mm Affiliate: $401mm All Non-Big All Non-Big Four Channels Four Channels + Other + Other 5% 3% 3% 2% 30% 22% 24% 36% Increasing Diversification 36% 39% of Revenue Sources 2008: As Reported • 96% of reven
Slide 14: A Leading Beneficiary of Political Revenue
A Leading Beneficiary of Political Revenue Gray Political Revenue Gray Markets with at Least One 2018 Election ($ in millions) As Reported Combined Historical Basis Governor 81% 2018 is a Non- $143 Presidential $118 Political Year US Senate 65% $90 and Presents an $82 Attractive Upside House 100% Op
Slide 15: Gray Excels at Retransmission Revenue
Gray Excels at Retransmission Revenue Retransmission Revenue ($ in millions) $281 Gross Retransmission Revenue $226 Network “Reverse Comp.” $189 “Net Retransmission Revenue” 139 112 $116 86 34 142 103 114 82 2014CHB 2015CHB 2016CHB 2017CHB Estimate Retrans Renewals for In-Market Big-4 Subs (12/31 Ex
Slide 16: Significant Monetization of Spectrum Today
Significant Monetization of Spectrum Today Secondary Channel 2016 CHB Financials $120 MILLION IN REVENUE OVER 100 $74 MILLION IN BCF SECONDARY CHANNELS 62% MARGIN ON DIGITAL SECONDARY CHANNELS All secondary channels including “Big-4” secondary channels 16
Slide 17: Successful Digital Media Initiatives
Successful Digital Media Initiatives • Pacing for 3.4 billion 7.3 million Facebook followers, up 12% total page views in 2017 Gray (up 23% over 2016) from Q1 2017 Digital • Mobile makes up 82% 2.3 million Twitter followers, up 18% of all digital traffic from Q1 2017, Likes=41k, Tweets=2.9 Media mill
Slide 18: Financial Overview
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Financial Overview 18 18
Slide 19: 2014/2015/2016 Snapshot
2014/2015/2016 Snapshot Combined Historical Basis Year Ended December 31 % Change % Change 2016 to 2016 to 2016 2015 2015 2014 2014 Revenue: Total $946,001 $821,599 15% $850,699 11% Political $117,538 $21,934 436% $142,712 (18)% Operating expenses (1): Broadcast $553,118 $524,285 5% $482,828 15% Cor
Slide 20: Financial Scale Continues to Increase
Financial Scale Continues to Increase Revenue ($ in millions) As Reported Combined Historical Basis LTM L8QA LTM L8QA $812 $946 $705 $597 $553 $884 $508 $405 $427 $851 $356 $346 $376 $822 $836 $307 $327 2011 2012 2013 2014 2015 2016 2014 2015 2016 Operating Cash Flow ($ in millions) As Reported Comb
Slide 21: 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 has diversified its revenue base, allowing for significant free cash flow in both political and non-political years Financial Leverage Netting All Cash ($
Slide 22: Robust Free Cash Flow Generation and Conversion
Robust Free Cash Flow Generation and Conversion Non Presidential Election Year Non-Election Year Presidential Election Year 2014 OCF Buildup 2015 OCF Buildup 2016 OCF Buildup ($ in millions) ($ in millions) ($ in millions) 64% $374 58% $370 58% $300 49% $299(2) $239 $214 49% 49% $195(2) $192(2) $174
Slide 23: Capitalization
Capitalization Combined Historical Basis(1) ($ in millions) “L8QA” or “Last Eight Quarter Average” Estimated for the period ended September 30, As of Annual Cash 2017 September 30, Interest 2017 Expense Leverage OCF Cash $ 173 Debt: Revolving Credit Facility – Availability is $100 Million $ - Term L
Slide 24: Glossary
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Glossary 24 24
Slide 25: Glossary
Glossary “Combined Historical Basis” Combined Historical Basis reflects financial results that have been compiled by adding Gray’s historical or “CHB” revenue and broadcast expenses to the historical revenue and broadcast expenses of the stations acquired in the Completed Transactions and subtractin
Slide 26: 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 27: Appendix: Non-GAAP Reconciliations
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Appendix: Non-GAAP Reconciliations 27 27
Slide 28: Nine Months-Over-Nine Months Results As Reported Basis
Nine Months-Over-Nine Months Results As Reported Basis As Reported Results Nine Months Ended September 30 % Change % Change 2017 to 2017 to 2017 2016 2016 2015 2015 (dollars in thousands) Revenue: Total $ 649,119 $ 574,846 13 % $ 427,869 52 % Political $ 9,034 $ 41,576 (78)% $ 7,950 14 % Operating e
Slide 29: Nine Months-Over-Nine Months Results Combined Historical Basis
Nine Months-Over-Nine Months Results Combined Historical Basis Combined Historical Results Nine Months Ended September 30 % Change % Change 2017 to 2017 to 2017 2016 2016 2015 2015 (dollars in thousands) Revenue: Total $ 661,472 $ 670,473 (1)% $ 596,891 11 % Political $ 9,074 $ 54,169 (83)% $ 9,846
Slide 30: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis As Reported Nine Months Ended September 30 2017 2016 2015 (dollars in thousands) Net income $ 96,382 $ 26,439 $ 24,314 Depreciation 38,555 34,237 26,906 Amortization of intangible assets 18,684 12,365 8,715 Non-cash stock-based compensation 4,303 3,827 3,011
Slide 31: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Nine-Months Ended September 30 2017 2016 2015 (dollars in thousands) Net income $ 94,563 $ 52,083 $ 43,914 Depreciation 39,292 39,036 38,704 Amortization of intangible assets 18,710 13,563 14,111 Non-cash stock-based compens
Slide 32: Annual Year-Over-Year Results As Reported Basis
Annual Year-Over-Year Results As Reported Basis As Reported Results Year Ended December 31 % Change % Change 2016 to 2016 to 2016 2015 2015 2014 2014 (dollars in thousands) Revenue: Total $ 812,465 $ 597,356 36 % $ 508,134 60 % Political $ 90,095 $ 17,163 425 % $ 81,975 10 % Operating expenses (1):
Slide 33: Annual Year-Over-Year Results Combined Historical Basis
Annual Year-Over-Year Results Combined Historical Basis Combined Historical Basis Year Ended December 31 % Change % Change 2016 to 2016 to 2016 2015 2015 2014 2014 (dollars in thousands) Revenue: Total $ 946,001 $ 821,599 15 % $ 850,699 11 % Political $ 117,538 $ 21,934 436 % $ 142,712 (18)% Operati
Slide 34: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis As Reported Basis Year Ended December 31 2016 2015 2014 (dollars in thousands) Net income $ 62,273 $ 39,301 $ 48,061 Depreciation 45,923 36,712 30,248 Amortization of intangible assets 16,596 11,982 8,297 Non-cash stock-based compensation 5,101 4,020 5,012 L
Slide 35: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Year Ended December 31 2016 2015 2014 (dollars in thousands) Net income $ 105,523 $ 65,202 $ 130,807 Depreciation 51,829 52,056 49,781 Amortization of intangible assets 17,904 19,261 16,705 Non-cash stock-based compensation
Slide 36: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Twenty-Four Months Ended September 30, 2017 Operating Cash Flow as defined in the Senior Credit Agreement: (dollars in thousands) Net income $ 221,374 Depreciation 104,473 Amortization of intangible assets 41,764 Non-cash st
Slide 37: Gray Television, Inc.
Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319 www.gray.tv 37
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