Gray Media, Inc. · NYSE:GTN

Gray Media — Gray Television — Wells Fargo Technology, Media and Telecom Conference 2014

30 slides from Gray Media's conference presentation, Nov 12, 2014

  1. Slide 1: Investor Presentation November 2014

    Investor Presentation November, 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 44 markets reaching approximately 8% of US TV households Great Falls, MT Sioux Falls, SD Lincoln, NE Rockford, IL Lansing, MI South Bend, IN North Platte, NE Helena, MT Rapid City, SD Fargo, ND (1) Wausau - Bismarck, ND Omaha, NE Toledo, OH Rhinelander, WI F

  5. Slide 5: Combination Snapshot

    Combination Snapshot Pro Forma All Acquisitions(1)(2) ($ in Millions) Financial Profile ’12A-’13A Revenue $515 ’12A-’13A BCF $221 ’12A-’13A OCF $213 Scale Stations 76 Non-Duplicated Markets 44 TV Household Reach 9.4 million (8.0%) Asset Quality #1 / #2 Stations 40 2012 Political Revenue(3) $118 10 2

  6. Slide 6: Investment Highlights

    Investment Highlights  A Leading Television Broadcaster in Diverse Mid Markets with Dominant Market Positions  139 program streams and 76 “Big 4” network affiliations  #1 or #2 market rank in 40/44 markets; #1 news ranking in 29/44 markets  Improving Advertising Market and Diversification of Rev

  7. Slide 7: 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

  8. Slide 8: 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 '

  9. Slide 9: 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

  10. Slide 10: 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 6% 8% 76 Big 4 Affiliates:(4) Omaha, NE 4% Lexington, KY 6%  26 CBS Waco, TX 4% Monroe, LA 5% 

  11. Slide 11: 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

  12. Slide 12: Strong Growth in Retransmission Revenue

    Strong Growth in Retransmission Revenue  Approximately 9.5 million Big-4 Gray TV Retransmission Revenue (1) $85.0 Affiliate subscribers(2) ($ in millions) $24.0 $60.4  Approximately 5.0 million Big-4 Affiliate subscribers(2) re-pricing $13.8 $39.8 12/31/14 $33.8 $7.6 $61.0 $5.6  Approximately 0.9

  13. Slide 13: 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 21.2% 21.2%  2011 - Off Year Record $13.5 million  Gray operates in key battleground states 15.1% 13.8%  #1 stations c

  14. Slide 14: 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 $28.2 $25.0 $25.4  All sites have converted to $20.1 responsive design $13.4 $11.4  “Moms Everyday” digital

  15. Slide 15: 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

  16. Slide 16: 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

  17. Slide 17: 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

  18. Slide 18: Financial Overview

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  19. Slide 19: Gray Historical Financial Summary

    Gray Historical Financial Summary Net Revenue (1) LTM Revenue L8QA Revenue $515 $474 $405 $356 $376 $346 $327 $346 $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

  20. Slide 20: 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

  21. 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’s strategic investments have diversified its revenue base, allowing for significant free cash flow in both political and non-political years Net Financial

  22. Slide 22: Sources & Uses and Pro Forma Capitalization

    Sources & Uses and Pro Forma Capitalization Current & Pro Forma Capitalization ($ in Millions) 9/30/2014 Cum. Cum. $ xL8QA xLTM OCF 1 OCF 2 Cash & Equivalents $79.8 Priority Revolver ($50MM) due 2019 - 0.0x 0.0x Term Loan B due 2021 $623.0 3.06x 3.2x Excalibur Term Loan 2.9 3.8x 3.2x Secured Debt $6

  23. Slide 23: Questions & Answers

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  24. Slide 24: Appendix

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  25. Slide 25: Glossary

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

  26. Slide 26: Pro Forma Revenue Summary

    Pro Forma Revenue Summary ($ in millions) 2012 2013 Net Revenues Local 191.3 203.1 National 56.8 58.3 Political 86.0 4.6 Internet 25.0 25.4 Retransmission 33.8 39.7 Other 9.5 8.0 Management Fee - Young 2.4 7.1 Gray Standalone Net Revenue 404.8 346.3 Local 40.5 42.0 National 10.0 11.2 Political 12.3

  27. Slide 27: Pro Forma Non-GAAP Reconciliation

    Pro Forma Non-GAAP Reconciliation ($ in thousands) Year Ended December 31, 2012 2013 Net income $ 59,350 $ 29,243 Adjustments to reconcile from net income to Broadcast Cash Flow Less Cash Corporate Expenses: Depreciation 31,838 32,202 Amortization of intangible assets 825 892 Non-cash stock based co

  28. Slide 28: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) Pro Forma Twelve Months Ended December 31, 2013 Gray SJL Other Pro forma Gray Actual Actual Acquisitions Adjustments Pro forma Net income $ 18,288 $ 2,944 $ 25,031 $ (17,020) $ 29,243 Adjustments to reconcile from net income to Broadcast Cash Flow Less C

  29. Slide 29: Pro Forma Non-GAAP Reconciliation (continued)

    Pro Forma Non-GAAP Reconciliation (continued) Pro Forma Twelve Months Ended December 31, 2012 Gray SJL Other Pro forma Gray Actual Actual Acquisitions Adjustments Pro forma Net income $ 28,129 $ 10,532 $ 32,199 $ (11,510) $ 59,350 Adjustments to reconcile from net income to Broadcast Cash Flow Less

  30. Slide 30: Investor Presentation

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