Jefferies 2013 Global Technology, Media and Telecom Conference
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Jefferies 2013 Global Technology, Media and Telecom Conference 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. 2 Record Results in 2012 ▲ Record revenue, EBITDA & margin Strongest Balance Sheet Since ▲ Largest acquisition in company history Going Public in 2002 ▲ Unprecedented political revenues 2008! 2012! Net Debt! $723.2! $843.9! ▲ New retrans agreements for almost half " of LIN’s pay TV subs ! EBITDA! $123.4! $218.7! ▲ Record interactive revenue & " Interest Expense! $54.6! $46.7! contribution to total revenue! Leverage Ratio! 5.9x! 3.3x! ▲ Issued notes at lowest cost of " Interest Expense 2.3x! 4.5x! borrowing on company record! Coverage Ratio! Equity Market $56.1! $407.6! ▲ Total year-end debt leverage 3.3x, " Capitalization! lowest level in nearly a decade! ▲ Developed a plan to resolve NBC JV! 3 Executing our Strategy in 2013! M&A – Integrating & Maximizing Benefits! Summary of Q1’13 Results! ü All 10 acquired/serviced TV stations transitioned to LIN’s Ø Revenue +37% vs PY news, sales and digital platforms! (+4.1% on same-station ü Hired DSDs in 6 mkts; all selling LIN Digital! basis) ! ü Upgraded research capabilities! Ø Core -2.4% on same-station Building & Differentiating Digital Business! basis; mixed economic signals – fragile in many ü Two new digital acquisitions – HYFN & Dedicated Media! markets! ü LIN Mobile – leveraged LIN Digital to develop mobile creative solutions; integrated ads into TV app platforms! Ø Retrans & Interactive Operational Excellence Across Multiple Platforms! revenues more than offset softness ! ü 68% of Big-4 news stations ranked #1 or #2 in their markets(1) for ratings! Ø Interactive revenues +29% ü 100% of measured web sites & mobile apps ranked #1 or vs PY! #2 for unique visitors vs local broadcast competitors(2)! 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. ! 4 Our Expanded Footprint! Corporate LIN Markets New Markets Offices Digital Sales Tech Centers 7 New Markets & 4M HH Expanded Shared Services & Tech Centers Digital Sales HQ & LIN Mobile 2 New Digital AcquisiKons Opened 3rd Tech Center 5 ! Meaningful Actions to Diversify Revenue 2008 2012 Digital! 2%! Digital! Political! 10%! 10%! Political! Other! 14%! 8%! 80%! Other 60%! 16%! TV Ad Revenue Reduced from 80% of Total in 2008 to 60% of Total in 2012! Notes: Digital includes TV staon web sites in 2008 and TV staon web sites, LIN Digital and Nami Media in 2012 Other includes retransmission fees, network compensaon, barter and other miscellaneous. All amounts on a same-asset basis. 6 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 ! Local Digital ! Television! Media! Targeted! Email! Market- Unique local Websites! leading news! programming! Top-rated Video! SMS/Text! syndicated Mobile! programs! We are Building Deeper Relationships with Advertisers By Offering Innovative Local Opportunities 7 LIN Digital Media – Gaining Share of Wallet! Ø 37 billion – 2012 US digital Marke=ng Services advertising dollars; +15%! Ø Performance Marketing! Ø Planning & Buying! Ø 65% digital marketing now Ø Display & Rich Media! performance-based! Ø Video! Ø Search ! Ø 137 million total smartphones Ø PPC! in US! Ø Tier I, II, III Agency & Direct Clients & Publishers! Ø Proprietary technology identifies, engages, clean Ø 58% Internet users that are audiences! mobile users! Ø “Target-ability” = ROI! Mobile Ø 1 in 8 total page views from mobile devices! Ø Premium Publisher Relations & Inventory! Ø Creative & Delivery! Ø Reporting & Analysis! Ø 17% of 2013 US digital ad Ø Client Real-time Dashboard! spending to be mobile! Ø Mobile ROI! Ø 27% of consumer time spent Social Media on social networks! Ø Platform-Agnostic! Ø Creative, Development & Implementation! Ø 11 billion – social media Ø Facebook Preferred Developer (one of few w/ multiple advertising revenue by 2017! badges)! Ø Social App, Game, e-Commerce & Advertising! 300+ AEs presen=ng a diversified suite oF marke=ng/adver=sing solu=ons For every screen – na=onal, regional and local 8 Subscriber Fees SNL Kagan Retrans Analysis – 4Q’12 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 Broadcast TV Model Now Has Cable’s Dual Revenue Streams 9 TV Still the Dominant Media Ø Broadcast TV still the best way to reach large audiences; 2x more than Cable Most Influen=al Adver=sing Medium (1) S=ll the Best Way to Reach Mass Audiences (2) CUME Rating Newspapers Magazines 3.1% 2.0% Mobile Radio 0.9% Top 4 Broadcast Networks Top 4 Cable Networks 3.8% 75% 72% 71% 70% Internet 4.5% 38% 38% 36% 36% CBS NBC ABC FOX TBSC USA ESPN TNT Projected TV Sta=on Revenue Mix Local Ad Revenue 2006 2018 2% 7% (in billions) Website Local Broadcast TV 1% 1% 19% Ad Revenue $16.9 $16.5 $15.6 $15.8 $16.4 Retrans Revenue $12.6 Online Revenue $.8 $1.1 $1.2 $1.4 $1.6 $1.7 Network Comp 96% 74% 2007 2008 2009 2010 2011 2012 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 cumulave audience (CUME), defined as the percentage of adults tuning into television each week. 10 Recent Private Market Broadcasting Valuations (Blended BCF Multiple) Seller Mul=ple High: 10.4x Median: 9.1x Low: 8.2x Target: Acquirer: 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 11 Looking Forward…Industry Opportunities Catalysts 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 Strong Get Stronger 12 .