Financial Information as of June 30, 2008 Television Rating Information as of November, 2007

Transcription

1 Financial Information as of June 30, 2008 Television Rating Information as of November, 2007 Updated September 9, 2008

2 Competitive Advantage The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. Warren Buffett 2

3 Competitive Advantage Now, as we talk about Gray, remember 3

4 THE PURE PLAY GRAY TELEVISION 4

5 Current Affiliation Mix 76 channels of programming, including: 17 CBS 10 NBC 8 ABC 1 FOX 1 Digital ABC 5 Digital FOX 8 Digital CW 16 Digital MyNetwork TV 8 Local News/Weather 2 Independents Includes satellite stations under FCC Rules. 5

6 Gray A Significant Pure Play Mid-Market TV Platform ($ in millions) Pro Forma Year Ended 2007 Year Ended 2006* Broadcast Total Net Revenue $307.3 $334.7 Broadcast Total Cash Flow $110.4 $143.8 Broadcast Cash Flow less Cash Corporate Expenses $ 96.5 $129.8 Year Ended 2007 Number of markets** 30 Number of primary affiliates (Also operated 30 Digital with Network plus 10 News/Weather/Other) 36 Number of stations ranked #1 in news in market 20 Number of stations ranked #1 in market 23 Major collegiate markets 17 State Capitals (FL, KS, KY, MI, NE, NV, WI, WV) 8 *Pro Forma for acquisition of and WNDU on March 3, **Hazard, KY is considered a separate market. 6

7 CONCENTRATION ON MARKETS DMA Why University Towns and State Capitals? Better Demographics More Stable Economies Affinity between Station and University Sports Teams 7

8 Highly Stable Markets State Capitals / Collegiate Presence Market University Approximate enrollment Waco, TX Texas A&M and Baylor 60,000 Topeka, KS Kansas and Wichita State 44,000 Tallahassee, FL Florida State and Florida A&M 53,000 Lansing, MI Michigan State 46,000 South Bend, IN Notre Dame 9,000 Madison, WI Wisconsin 41,000 Harrisonburg, VA James Madison and Virginia 34,000 Lexington, KY Kentucky 18,000 Knoxville, TN Tennessee 26,000 Lincoln, NE Nebraska 22,000 Greenville, NC East Carolina 25,000 Charlottesville, VA University of Virginia 22,000 Parkersburg, WV Ohio University 17,000 Bowling Green, KY Western Kentucky 17,000 Reno, NV University of Nevada Reno 17,000 Charleston-Huntington, WV Marshall University 14,000 Colorado Springs, CO Air Force Academy 4,000 Gray operates stations in 8 state capitals and covers 17 major University towns, representing enrollment of approximately 469,000 students Indicates DMA includes state capital. 8

9 Gray s National Footprint 30 markets reaching approximately 6.2% of US TV households Lincoln - Hastings - Kearney, NE Omaha, NE La Crosse - Eau Claire, WI Wausau - Rhinelander, WI Madison, WI Rockford, IL Parkersburg, WV Topeka, KS South Bend, IN Lansing, MI Harrisonburg, VA Lexington, KY Charleston-Huntington, WV Charlottesville, VA Hazard, KY Reno, NV Grand Junction, CO Greenville - New Bern - Washington, NC Colorado Springs - Pueblo, CO Wichita - Hutchinson, KS Sherman, TX - Ada, OK Bowling Green, KY Knoxville, TN Augusta, GA Gray TV Station State capital in DMA Waco-Temple - Bryan, TX Dothan, AL Albany, GA Meridian, MS Panama City, FL Tallahassee, FL - Thomasville, GA 9

10 OUR COMPETITIVE MOAT 16 Stations Rated #1 in the Market for 50 straight years or more! #1 in Overall Audience in 23 of 30 Markets All other markets #2 (except for Albany, GA) #1 in News in 20 of 30 Markets All other News Markets #2 10

11 WHY DO WE WANT TO BE #1 Maximize Cash Flow Price Leadership Community Leadership Attract the best talent 11

12 WHAT DOES BEING #1 DO FOR US? Industry Leading Profit Margins Dominate Local Revenue Dominate Political Revenue Low Syndicated Program Cost 12

13 Digital Spectrum By February 17, 2009, all stations will be full Digital Implications New product for the viewers New product for the advertisers New source of revenue from multicasting 13

14 Continued Strong Growth in Digital Television Sales Shipments Increased at an 82% CAGR from 2000 to 2006, While Prices Declined 55% (Units in Millions; Avg. $ Price per Unit) $2, $1,812 $1,540 $1,571 $1,537 $1, $995 $954 $ E 2008E Note: Includes domestic sales of digital TV sets and displays. Source: Consumer Electronics Association, January

15 HOW DO WE FACE THE FUTURE? Look for ways to monetize our digital spectrum Look for opportunities to grow our new media products More local news and local programming Going full HDTV with local programming Maximize operating efficiency in back office operations such as traffic, master control and accounting 15

16 How Do We Monetize Our Digital Spectrum? 40 new channels of programming, including: 1 Digital ABC Station 5 Digital FOX Stations 8 Digital CW 16 Digital MyNetwork TV 8 Local 24 hour news and weather channels 2 Independent channels Potential for local VOD, Games on Demand, Music on Demand and other digital downloads 16

17 WHAT ABOUT NEW MEDIA? $9.5 Million of Revenue in 2007 Television Website: 6.2 million monthly unique visitors 52 million monthly page views Video Streaming: 862,000 monthly unique visitors 2.8 million monthly video views Television Website and Video on local cell phones: 1.2 million monthly visits 4.4 million monthly page views Desktop Alert Product: 1.1 million monthly unique visitors 2.92 million monthly page views Visit and Page View data for March,

18 Diversified Cash Flow Mix 2007 BCF Top 10 TV 2007 Broadcast Cash Flow by network Broadcast Cash Flow $110.4 Million All Other Markets 39% Charleston/ Huntington 10% Omaha 8% 10 markets 5 markets 15% Lexington 7% 43% 42% Tallahassee 7% Harrisonburg 4% Wichita 4% Madison 4% Lincoln 4% South Bend 6% Waco 7% 15 markets Largest independent CBS affiliate group 18

19 Leading Market Revenue Share Gray s 45% average in-market 2007 revenue share led all broadcasters 45% 45% 30% 34% 30% 29% 27% 26% 26% 20% 15% 0% Gray Lin TV Gannett Nexstar Young Hearst-Argy Belo Sinclair Source: BIA Media Access Pro, September 2008, data for

20 Dominate Local News & Information Gray operates the #1 overall local news station in 20 of 30 markets! Gray s Stations late local news overachieves the national average by 70%! Gray s Stations 6PM Newscasts overachieve the national average by 52%! November 07 Household Share % +70% NSI National Average GRAY Average of all stations 0 6PM News Late News Gray Stations significantly out perform the national averages for news! Source: Nielsen Media Research and Continental TV Sales. 20

21 AWARD WINNING NEWS Over 500 News and Community Service Awards earned by Gray Stations from Including 2006 and 2008: WKYT -- Radio/TV News Directors Association Edward R. Murrow Award for Continuing Coverage KAKE -- 6 Regional Emmy Nominations WTVY -- Most Outstanding News Operations 2 years in a row - AP WIFR -- Best Hard News Station Illinois AP KOLN -- 1 st Place Excellence Award Nebraska Broadcasters 2007 WIBW -- Station of the Year Kansas Association of Broadcasters WTOK -- 1 st Place Documentary/Series Award AP WCTV -- Best Website in Florida Florida AP WITN -- Best Website in North Carolina North Carolina AP WNDU -- Regional Edward R. Murrow Award RTNDA 2008 WIBW -- EPpy Award Finalist for Best Overall Local TV/Cable Affiliated Website Editor and Publisher; Mediaweek WRDW -- Best Website in Georgia Georgia AP WSAW -- Edward R. Murrow Award - RTNDA 21

22 Local Dominates Non-political Television Time Sales Year Ended December 31, % 72% Local National 22

23 Market Leaders - Year after Year Regardless of Network Affiliation* Market leading performance has remained consistent, even during periods when networks have experienced ranking volatility 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 #1 Gray CBS markets of CBS national ranking #1 Gray NBC markets of NBC national ranking #1 Gray ABC markets of ABC national ranking * Pro forma for all completed acquisitions. 23

24 Gray Television vs. The National Nielsen NTI Delivery November 06 Household Share 8 12 The Morning Show 10 Network News Prime (Mon-Sun) 9 16 The Late Show CBS GRAY Gray Television s CBS Affiliates out perform the CBS Network. Source: Nielsen. 24

25 Gray Television vs. The National Nielsen NTI Delivery November 06 Household Share NBC GRAY The Today Show Network News Prime (Mon-Sun) The Tonight Show Gray Television s NBC Affiliates out perform the NBC Network. Source: Nielsen. 25

26 Gray Television vs. The National Nielsen NTI Delivery November 06 Household Share 13 GMA Network News Prime (Mon-Sun) 6 13 Nightline/ Jimmy Kimmel ABC GRAY Gray Television s ABC Affiliates out perform the ABC Network. Source: Nielsen. 26

27 Long-Term Network Relationships Affiliation: CBS ABC NBC Markets/Renewal date:

28 Leverage with Vendors / Program Expense Syndicated program payments as a % of 2007 revenue 30% 25% 20% 17.9% 15% 10% 5% 4.6% 3.1% 7.0% 9.7% 11.4% 0% Gray Nexstar LIN TV Hearst-Argyle Sinclair Young Gray s syndicated program payments for 2007, as a % of revenue, is among the lowest of its peers Source: Annual reports filed on Form 10-K for

29 Operating Strategy Delivers Outperformance in Mid-Markets Gray delivers significantly more cash flow relative to the national average in similar sized markets ($ in millions) NAB Multiple of Gray cash flow national cash Gray station above national Gray Markets DMA flow average cash flow average (2006/2007 DMA) range Parkersburg (189/190) 190 $1.3 $1.0 $4.7 $ x 3.3x Bowling Green (183/183) x Harrisonburg (181/178) x Eau Claire (127/127) x Tallahassee (108/108) x Omaha (75/75) x Huntington (65/65) * x 3.4x 3.6x 2.4x 2.9x 3.8x 3.3x * WSAZ per management s pro forma estimate. 29

30 Disciplined Consolidator of Mid-Market Television Focused acquisition strategy seeks: Growing markets with strong demographics Dominant #1 or strong #2 Top 3 network affiliation Revenue enhancing opportunities with margin potential Geographic diversification and regional clustering Number of TV markets TV Markets ($ in millions) Date Description Amount # of Markets Acquired Mar. 06 South Bend, IN $ Nov. 05 Charleston- Huntington, WV Nov. 05 Albany, GA Jan. 05 TV Station Acquisition History Grand Junction, CO Aug. 04 Charlottesville, VA Dec. 02 Reno, NV Oct. 02 Stations Holding Oct. 99 Texas Stations Aug. 98 Busse Aug. 97 Greenville, NC Sept. 96 1st American Mar. 96 Augusta, GA Sept. 94 Kentucky

31 Growth Drivers Maximize audience share through leading local news Capture disproportionate revenue share through aggressive sales effort Margin expansion through strict cost controls Platform enhancement through selective acquisitions 31

32 Consolidated Broadcast Revenue ($ in millions) $332 $307 $293 $262 $256 $243 $292 $280 $339 $335 $297 $ $15 $23 $37 $55 $72 $91 $97 $121 $106 $147 0 '93 '94 '96 '98 '00 '02 '04 '06 '07 '01 '02 '03 '04 '05 '06 '07 Historical Pro forma (1) TV Markets (1) Pro forma for all acquisitions. 32

33 Consolidated Broadcast Cash Flow ($ in millions) $100 $137 $105 $143 $110 $101 $124 $115 $162 $144 $119 $ $65 $53 $31 $38 $39 $41 $23 $5 $8 $14 '93 '94 '96 '98 '00 '02 '04 '06 '07 '01 '02 '03 '04 '05 '06 '07 Historical Pro forma (1) TV Markets (1) Pro forma for all acquisitions. 33

34 Political Advertising Expenditures Historical and Projected Television Political Advertising $3,200 $3,000 $2,700 $2,200 $2,135 $1,700 $1,610 $1,200 $700 $200 $228 $203 $300 $355 $400 $499 $612 $707 ($300) E Political advertising on television has increased steadily and substantially over the past 18 years Source: TNS Media Intelligence; 2004 and 2006 TNS Media Intelligence/CMAG; 2008E CNN 10/15/2007 / TNS Media Intelligence/CMAG. 34

35 Gray Dominant News Produces Dominant Political Revenue 15% 14.2% Percent of 2004 Political Revenue to Total Broadcast Revenue 12.1% 11.9% 11.1% 11.0% 10.9% 10.9% 10% 7.6% 7.5% 6.2% 5% 4.3% 0% Gray E.W. Scripps NY Times Hearst- Argyle Source: Bear Stearns & Co. Estimates. Gannett Liberty Nexstar Meredith Belo LIN Sinclair 35

36 Political Revenue Pro Forma* $53 Million in A record $70 $60 $53 $60 ($ in millions) $50 $40 $30 $20 $10 $0 $43 $30 $26 $21 $7 $8 $2 $2 $ F** *Pro Forma for all acquisitions. **Management Forecast. 36

37 Capitalization ($ in millions) June 30, 2008 December 31, 2007 Cash Debt $ 22.6 $ 15.3 Senior credit facility* Senior subordinated notes Other Total Debt Preferred stock, liquidation value* Total shareholders equity market value** Total market capitalization $ $ 1,071.7 $ $ 1,311.2 Shares Outstanding total of GTN and GTN.A Broadcast Cash Flow less cash corporate expenses: Trailing 4 Quarters: T-12 Trailing 8 Quarters: L8QA Debt Leverage (debt, net cash) Trailing 4 Quarters: T-12 Trailing 8 Quarters: L8QA 48.4 $ x 7.23x 48.2 $ x 8.04x * Pro forma for issuance of $25 million liquidation value of Series D Preferred Stock in July, ** Assumes total outstanding shares of GTN and GTN.A of 48.5 and 48.0 million at the GTN 6/30/08 and 12/31/07 closing prices of $2.87 and $8.02, respectively. 37

38 Safe-Harbor Certain statements in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. See the Company s website for reconciliations of GAAP to non GAAP data. Reconciliations of broadcast cash flow and broadcast cash flow less cash corporate expenses to GAAP data is included in the financial reports section of the website. 38

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