jefferies 2013 global technology, media and telecom conference tv corp.pdf · local broadcast tv 1...
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Jefferies 2013 Global Technology, Media and Telecom Conference
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Safe Harbor
This presentation includes statements that constitute "forward-looking statements," including statements regarding our future plans and strategies. Forward-looking statements inherently involve risks and uncertainties, including, among other factors, general economic conditions, demand for advertising, competition for audience and programming, government regulations and new technologies, that could cause our actual results to differ materially from the forward-looking statements. Factors that could contribute to such differences include the risks detailed in our periodic reports filed with the Securities and Exchange Commission. Reports may be accessed online at www.sec.gov or www.linmedia.com. By making these forward-looking statements, we undertake no obligation to update these statements for revisions or changes after the date of this presentation.
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Record Results in 2012 ▲ Record revenue, EBITDA & margin
▲ Largest acquisition in company history
▲ Unprecedented political revenues
▲ New retrans agreements for almost half "of LIN’s pay TV subs
▲ Record interactive revenue & "contribution to total revenue
▲ Issued notes at lowest cost of "borrowing on company record
▲ Total year-end debt leverage 3.3x, "lowest level in nearly a decade
▲ Developed a plan to resolve NBC JV
2008 2012
Net Debt $723.2 $843.9
EBITDA $123.4 $218.7
Interest Expense $54.6 $46.7
Leverage Ratio 5.9x 3.3x
Interest Expense Coverage Ratio
2.3x 4.5x
Equity Market Capitalization
$56.1 $407.6
Strongest Balance Sheet Since Going Public in 2002
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Executing our Strategy in 2013
Summary of Q1’13 Results
Ø Revenue +37% vs PY (+4.1% on same-station basis)
Ø Core -2.4% on same-station basis; mixed economic signals – fragile in many markets
Ø Retrans & Interactive revenues more than offset softness
Ø Interactive revenues +29% vs PY
ü All 10 acquired/serviced TV stations transitioned to LIN’s news, sales and digital platforms
ü Hired DSDs in 6 mkts; all selling LIN Digital
ü Upgraded research capabilities
M&A – Integrating & Maximizing Benefits
ü 68% of Big-4 news stations ranked #1 or #2 in their markets(1) for ratings
ü 100% of measured web sites & mobile apps ranked #1 or #2 for unique visitors vs local broadcast competitors(2)
ü Two new digital acquisitions – HYFN & Dedicated Media
ü LIN Mobile – leveraged LIN Digital to develop mobile creative solutions; integrated ads into TV app platforms
Operational Excellence Across Multiple Platforms
Building & Differentiating Digital Business
1 Average of LIN Media’s February 2013 Nielsen ratings based on Key Demographics. Monday‑Friday, Early Morning, Early Evening, Late News. All Nielsen data included in this presentation represents Nielsen’s estimates, and Nielsen has neither reviewed nor approved the data included in this presentation. 2 comScore media and mobile metrix data; March 2013 (3 month average). The basis for comparison is calculated against the Company’s and local media competitors’ self-defined classification from within the comScore dictionary, excluding the television stations acquired from New Vision Television in October 2012 as sites were not launched until Q2 2013.
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Our Expanded Footprint
New Markets LIN Markets Digital Sales Tech Centers Corporate Offices
Expanded Shared Services & Tech Centers
Opened 3rd Tech Center
7 New Markets & 4M HH
2 New Digital AcquisiKons
Digital Sales HQ & LIN Mobile
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Meaningful Actions to Diversify Revenue
TV Ad Revenue Reduced from 80% of Total in 2008 to 60% of Total in 2012
Digital
Other
Political
60% 16%
10%
14%
Digital
Other
Political
80%
2%
10%
8%
2008 2012
Notes: Digital includes TV staKon web sites in 2008 and TV staKon web sites, LIN Digital and Nami Media in 2012 Other includes retransmission fees, network compensaKon, barter and other miscellaneous. All amounts on a same-‐asset basis.
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Unified Media Solutions ‘Under One Roof’ Ø We utilize any combination of our multiplatform products to develop customized
campaigns that reach target audiences & generate results
We are Building Deeper Relationships with Advertisers By Offering Innovative Local Opportunities
SMS/Text Video
Local Television!
Market-leading news
Unique local programming Top-rated
syndicated programs
Digital !Media!
Targeted Websites
Mobile
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Ø 37 billion – 2012 US digital advertising dollars; +15%
Ø 65% digital marketing now performance-based
Ø 137 million total smartphones in US
Ø 58% Internet users that are mobile users
Ø 1 in 8 total page views from mobile devices
Ø 17% of 2013 US digital ad spending to be mobile
Ø 27% of consumer time spent on social networks
Ø 11 billion – social media advertising revenue by 2017
Ø Performance Marketing Ø Planning & Buying Ø Display & Rich Media Ø Video Ø Search Ø PPC Ø Tier I, II, III Agency & Direct Clients & Publishers Ø Proprietary technology identifies, engages, clean
audiences Ø “Target-ability” = ROI
Ø Premium Publisher Relations & Inventory Ø Creative & Delivery Ø Reporting & Analysis Ø Client Real-time Dashboard Ø Mobile ROI
Ø Platform-Agnostic Ø Creative, Development & Implementation Ø Facebook Preferred Developer (one of few w/ multiple
badges) Ø Social App, Game, e-Commerce & Advertising
LIN Digital Media – Gaining Share of Wallet
Mobile
Social Media
Marke=ng Services
300+ AEs presen=ng a diversified suite of marke=ng/adver=sing solu=ons for every screen – na=onal, regional and local
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Subscriber Fees
Broadcast TV Model Now Has Cable’s Dual Revenue Streams
Ø Q4’12 Avg. $.47/sub; +$.13 PY Ø 2012 Avg. $.43/sub; +$.32 PY Ø Peers starting to make retrans a priority Ø LIN committed early; continues to see modest growth
SNL Kagan Retrans Analysis – 4Q’12
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75% 72% 71% 70%
38% 38% 36% 36%
CBS NBC ABC FOX TBSC USA ESPN TNT
CUME Rating
Ø Broadcast TV still the best way to reach large audiences; 2x more than Cable
Source: Adage, SNL Kagan, Veronis Suhler Stevenson 2010-‐2014 and TVB Media Comparisons Study. 1. Survey of the public’s percepKon of adverKsing in media by delivery type. 2. Measure of weekly cumulaKve audience (CUME), defined as the percentage of adults tuning into television each week.
TV Still the Dominant Media
Top 4 Broadcast Networks Top 4 Cable Networks
S=ll the Best Way to Reach Mass Audiences (2) Most Influen=al Adver=sing Medium (1)
Local Ad Revenue Projected TV Sta=on Revenue Mix
Magazines 2.0%
Newspapers 3.1% Radio
3.8%
Internet 4.5%
Mobile 0.9%
1% 2% 1%
96%
7%
19%
74%
Ad Revenue
Retrans Revenue
Online Revenue
Network Comp
2018 2006
10
$.8 $1.1 $1.2 $1.4 $1.6 $1.7
$16.9 $16.5 $12.6
$15.6 $15.8 $16.4
2007 2008 2009 2010 2011 2012
Website Local Broadcast TV (in billions)
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1 Sinclair indicated a buyer’s multiple of 6.5x based on odd-even year EBITDA including synergies during September 8, 2011 conference call 2 On October 3, 2011 conference call, E.W. Scripps indicated a 8.0x multiple based on $190 million purchase price net of estimated present value of tax benefits and 2012 estimated cash flow; Buyer multiple based on 35% margin
3 Sinclair indicated a 6.6x buyer’s multiple of ‘12E/’13E Blended EBITDA during November 2, 2011 conference call 4 On May 9, 2012 conference call, LIN indicated a buyer’s multiple of just under 6.0x ‘11A/’12E EBITDA inclusive of $25 million of annual synergies and -4.5x ‘11A/’12E EBITDA net of estimated present value of tax step-up
5 On August 1, 2012 conference call; Sinclair indicated a buyer’s multiple of 7.2x and seller’s multiple of 9.75x based on odd-even year BCF 6 On July 19, 2012 conference call, Nexstar indicated a buyer’s multiple of 5.5x based on ‘11A/’12E BCF inclusive of $19 million of projected synergies and a seller’s multiple of 8.3x ‘11A/’12E BCF
Source: Wells Fargo Securities
Recent Private Market Broadcasting Valuations (Blended BCF Multiple)
Target:
Acquirer:
Seller Mul=ple High: 10.4x Median: 9.1x Low: 8.2x
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Looking Forward…Industry Opportunities
Ø Benefit from local ad recovery, particularly in auto & political
Ø Ability to generate greater retransmission revenue
Ø Unique & effective digital marketing services & solutions
Ø Advanced technology creates competitive advantages
Ø Long term disintermediation; TV aggregates largest audiences
Ø Opportunities for M&A
Catalysts
Strong Get Stronger