Gray Media, Inc. · NYSE:GTN

Gray Media — Gray Television — Investor Presentation (June 2014)

37 slides from Gray Media's investor presentation, Jun 19, 2014

  1. Slide 1: Investor Presentation

    Investor Presentation June 19, 2014 1

  2. Slide 2: Introduction

    Introduction 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 unk

  3. Slide 3: Company Overview

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  4. Slide 4: Gray Has a Diverse and National Footprint

    Gray Has a Diverse and National Footprint 42 markets reaching approximately 7.4% of US TV households Great Falls, MT(1) Sioux Falls, SD Lincoln, NE North Platte, NE Helena, MT(1) Rapid City, SD Fargo, ND Wausau - (2) Omaha, NE (2) Rhinelander, WI Bismarck, ND Parkersburg, WV North Platte, NE La Cros

  5. Slide 5: Recent Acquisitions and Refinancing Transactions

    Recent Acquisitions and Refinancing Transactions  On June 13, 2014, Gray closed on the acquisition or agreements for the operation of 15 television stations from Hoak Media and Parker for $306.0 million in cash.  Gray financed the Hoak Acquisition, other recent acquisitions and refinanced its seni

  6. Slide 6: Combination Snapshot

    Combination Snapshot Rapid Cities / Gray TV (1) Hoak Acquisition Prime Cities Pro Forma Post-Synergies Standalone Pre-Synergies Pre-Synergies ($ in Millions) Financial Profile (2) ’12A-’13A Revenue $376 $76 $6 $474 ’12A-’13A BCF $160 $39 $2 $205 (2) (2) ’12A-’13A OCF $147 $39 $2 $195 Scale Stations

  7. Slide 7: Hoak Acquisition Overview

    Hoak Acquisition Overview  15 acquired stations of programming spread across seven attractive markets  Multicast programming in six of seven markets Hoak Geographic Footprint  #1 or #2 news rating in six of seven markets KFYR (#2) KSFY (#2) KABY KVLY (#2) KHAS (#4) Lincoln-Hastings- KQCD KPRY KXJ

  8. Slide 8: Acquisition Rationale

    Acquisition Rationale  Gray acquired and/or operates the #1 or #2 ranked local television station operations in six of seven Hoak Reinforces markets Gray’s Market  Gray owns and/or operates Big Four network affiliated channels in all Hoak markets Leadership  Pro forma for the Acquisitions includi

  9. Slide 9: Prime Cities & Rapid Cities Acquisitions Overview

    Prime Cities & Rapid Cities Acquisitions Overview Prime Cities Broadcasting Mission TV (Rapid Cities) ($ in millions) 2011A 2012A 2013A ($ in millions) 2011A 2012A 2013A Net Revenue $2.0 $2.6 $2.0 Net Revenue $3.4 $3.7 $3.9 Op. Expenses $1.6 $1.8 $1.5 Op. Expenses $2.6 $2.8 $3.0 Rapid BCF $0.4 $0.8

  10. Slide 10: Investment Highlights

    Investment Highlights  A Leading Television Broadcaster in Diverse Mid Markets with Dominant Market Positions  139 program streams and 75 “Big 4” network affiliations  #1 or #2 market rank in 38/42 markets; #1 news ranking in 27/42 markets  Improving Advertising Market and Diversification of Rev

  11. Slide 11: The Importance of Being #1

    The Importance of Being #1 Price Leadership Reinvest Long History of Being #1 in the Market in Business Gray Actual Pro Forma(1) 14 Share Highly 12 12 12 12 12 11 11 of Ranked News Reinvest 13 Market in Franchises Ad $ Business Drive Traffic Share of '05/'06 '06/'07 '07/'08 '08/'09 '09/'10 '10/'11 '

  12. Slide 12: Stable Markets – Concentration on DMAs 61-208

    Stable Markets – Concentration on DMAs 61-208 With Focus on State Capitals / Collegiate Presence Approximate Approximate Market College(s) Enrollment Market College(s) Enrollment Waco, TX 92 Bowling Green, KY 18 Topeka, KS 53 Harrisonburg, VA 18 Lansing, MI 49 Cheyenne, WY 13 Tallahassee, FL 43 Char

  13. Slide 13: Diversification Across Networks and Markets

    Diversification Across Networks and Markets Station Mix 2013PF Revenue: Top 10 Markets (1) 2013PF BCF: Top 10 Markets (1), (3) 139 Total Program Streams:(4) Lexington, KY 6% Charleston, WV Charleston, WV 9% 75 Big 4 Affiliates:(4) 6% Omaha, NE Lexington, KY 7%  27 CBS 5% Monroe, LA Waco, TX 6%  24

  14. Slide 14: 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

  15. Slide 15: Gray is A Leading Beneficiary of Political Revenue with Large Upside

    Gray is A Leading Beneficiary of Political Revenue with Large Upside Gray TV Political Commentary 2012 Political Revenue as % of Total (1), (2)  $86 Million in 2012 – New Record  2011 - Off Year Record $13.5 million 21.2% 19.8%  Gray operates in key battleground states 15.1% 13.8%  #1 stations c

  16. Slide 16: Operational Strategy Focused on Market Leadership and Growth

    Operational Strategy Focused on Market Leadership and Growth  Maintain and grow our market leadership position Monetize Spectrum  Pursue selective strategic transactions Accretive Partnerships  Continue to prudently invest in local content and news, syndicated programs, top talent Maintain Intern

  17. Slide 17: Strong Growth in Retransmission Revenue

    Strong Growth in Retransmission Revenue Gray TV Retransmission Revenue (1)  Approximately 2 million historical ($ in millions) Gray subscribers(2) re-priced in two $56.5 deals in Q4 2013 $12.1 $39.8 $33.8 $7.6  Remaining 4.5 million historical $5.6 $18.8 $20.2 $44.5 Gray subscribers(2) re-pricing

  18. Slide 18: Successful Digital Media Initiatives

    Successful Digital Media Initiatives  Operate web and mobile Gray TV Digital Media Revenue (1) applications in all markets ($ in millions)  Focused on local content: news, weather, sports $27.8 $25.0 $25.4  All sites have converted to $20.1 responsive design $13.4 $11.4  “Moms Everyday” digital

  19. Slide 19: Television Continues to be the #1 Choice for Critical Mass Reach Among Advertisers

    Television Continues to be the #1 Choice for Critical Mass Reach Among Advertisers TV Reaches More People than Any Other Medium TV is the Most Influential Local Media Television 96 of the Top 100 Rated Programs are 88% Broadcast Programs (P18-49) Internet 73% Program Broadcast Cable Rank Stations TV

  20. Slide 20: Strong Growth Across the Industry in Other Key Revenue Streams

    Strong Growth Across the Industry in Other Key Revenue Streams  Record level of political revenue in 2012 and  Continued upside in retransmission fees, with estimates for continued growth through 2016 revenue projected to reach $7.1 billion in 2018 Industry-wide Political Spend on Local TV (1) Str

  21. Slide 21: Automotive Ad Spending on TV Continues to Grow and Still Below Peak Levels

    Automotive Ad Spending on TV Continues to Grow and Still Below Peak Levels  Television continues to be a critical medium for automotive advertising  TV auto ad spending growth of $0.2 billion or 6% from 2012 to 2013 but still below peak  Positive trend will continue, with automotive ad spending p

  22. Slide 22: Financial Overview

    gtay Television Digital * Mobile Financial Overview

  23. Slide 23: Gray Historical Financial Summary

    Gray Historical Financial Summary Net Revenue (1) LTM Revenue L8QA Revenue $474 $440 $405 $376 $346 $356 $346 $327 $308 $307 2010 2011 2012 2013 2013 PF ) L8QA Growth 3% 6% 9% 5% -- LTM 2-Yr. Growth 6% 14% 17% 13% -- Operating Cash Flow (1) Capital Expenditures (1) ($ in millions) ($ in millions) Ca

  24. Slide 24: Strong Free Cash Flow Conversion

    Strong Free Cash Flow Conversion  Gray realized record free cash flow of $95 million in 2012  Gray’s free cash flow is expected to increase with the Acquisitions due to the incremental OCF, expected tax savings, and only a modest increase in CAPEX  Gray will also benefit from ~$225 million in net

  25. Slide 25: 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

  26. Slide 26: Actual and Pro Forma Capitalization

    Actual and Pro Forma Capitalization Actual & Pro Forma Capitalization ($ in Millions) Acquisition Adjustments 3/31/2014 3/31/2014PF Cum. Cum. Cum. Cum. Prime Rapid Refi. Existing $ xL8QA xLTM Hoak $ xL8QA xLTM Cities Cities Indebtedness OCF 1 OCF 2 OCF 1 OCF2 Cash & Equivalents $27.0 $31.6 $58.6 Pri

  27. Slide 27: Questions & Answers

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  28. Slide 28: Appendix

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  29. Slide 29: Glossary

    Glossary “Acquisitions”: The Hoak Acquisition and Gray’s other previously completed acquisitions of Rapid Cities, Prime Cities, Lockwood, Yellowstone and KJCT; excludes Montana unless otherwise specified “Excalibur” (Excalibur A television broadcaster with two stations (KJCT, KKHD) Broadcasting, Inc

  30. Slide 30: Q1'14 L8QA and LTM Financial Summary

    Q1’14 L8QA and LTM Financial Summary ($ in millions) 2012PF 2013PF Q1'12PF Q1'13PF Q1'14PF LTM 3/31/13 PF LTM 3/31/14 PF L8QA 3/31/14 PF Net Revenues Local 191.3 203.1 45.9 46.4 51.0 191.9 207.7 199.8 National 56.8 58.3 13.0 13.4 13.3 57.2 58.2 57.7 Political 86.0 4.6 5.0 0.6 2.8 81.7 6.7 44.2 Inter

  31. Slide 31: Pro Forma Non-GAAP Reconciliation

    Pro Forma Non-GAAP Reconciliation ($ in thousands) Year Ended December 31, Three Months Ended March 31, LTM L8QA 2012 2013 2012 2013 2014 3/31/13 3/31/2014 3/31/2014 Net income $ 48,139 $ 26,410 $ 5,497 $ 1,442 $ 6,159 $ 44,084 $ 31,127 $ 37,606 Adjustments to reconcile from net income to Broadcast

  32. Slide 32: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) ($ in thousands) Twelve Months Ended December 31, 2012 Gray Hoak/Parker Other Pro forma Gray Actual Acquisition Acquisitions Adjustments Pro forma Net income $ 28,129 30,360 1,212 (11,562) $ 48,139 Adjustments to reconcile from net income to Broadcast Ca

  33. Slide 33: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) ($ in thousands) Twelve Months Ended December 31, 2013 Gray Hoak/Parker Other Pro forma Gray Actual Acquisition Acquisitions Adjustments Pro forma Net income $ 18,288 24,589 675 (17,142) $ 26,410 Adjustments to reconcile from net income to Broadcast Cash

  34. Slide 34: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) ($ in thousands) Three Months Ended March 31, 2012 Gray Hoak/Parker Other Pro forma Gray Actual Acquisition Acquisitions Adjustments Pro forma Net income $ 3,371 5,314 (381) (2,807) $ 5,497 Adjustments to reconcile from net income to Broadcast Cash Flow

  35. Slide 35: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) ($ in thousands) Three Months Ended March 31, 2013 Gray Hoak/Parker Other Pro forma Gray Actual Acquisition Acquisitions Adjustments Pro forma Net income $ 870 5,625 (190) (4,863) $ 1,442 Adjustments to reconcile from net income to Broadcast Cash Flow Le

  36. Slide 36: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) ($ in thousands) Three Months Ended March 31, 2014 Gray Hoak/Parker Other Pro forma Gray Actual Acquisition Acquisitions Adjustments Pro forma Net income $ 1,277 7,042 56 (2,216) $ 6,159 Adjustments to reconcile from net income to Broadcast Cash Flow Les

  37. Slide 37: Investor Presentation

    Investor Presentation June 19, 2014 37

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