Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tegna Inc (TGNA, Financial) reported a 13% year-over-year increase in total company revenue for the third quarter, exceeding their guidance of 9% to 12% growth.
- The company achieved record political advertising revenue in the third quarter, emphasizing the strategic importance of their footprint in key battleground states.
- Tegna Inc (TGNA) is on track to generate $90 million to $100 million in core annualized savings by the end of 2025, with approximately $50 million expected by the end of 2024.
- The company returned approximately $91 million of capital to shareholders in the third quarter, keeping them on track to meet their commitment of returning approximately $350 million in 2024.
- Tegna Inc (TGNA) has a strong cash position with $536 million in cash and cash equivalents at the end of the third quarter, and net leverage finished the quarter at 2.8 times, below their annual guidance of 3 times.
Negative Points
- Subscription revenue decreased 6% year over year to $356 million in the third quarter.
- The automotive, retail, and home improvement advertising categories continue to be soft, impacting overall advertising revenue.
- Premion, Tegna Inc (TGNA)'s digital advertising platform, faced challenges in the third quarter, contributing to a slight decline in overall advertising and marketing services revenue.
- The company faces ongoing challenges from the decline in traditional pay TV homes and TV advertising, with a shift towards digital platforms.
- Fourth-quarter expenses are expected to increase by 1% to 3% year over year, driven by growth in programming and Premion costs, despite cost reduction initiatives.
Q & A Highlights
Q: How does the potential for a more favorable FCC impact TEGNA's strategy, particularly regarding free cash flow allocation and potential opportunities?
A: Mike Steib, President and CEO, expressed optimism about regulatory changes that could benefit local broadcasters. He emphasized the importance of being good capital allocators and being prepared to unlock shareholder value through potential acquisitions or sales, depending on opportunities and prices.
Q: Can you provide more details on TEGNA's cost reduction efforts and expectations for expense growth in 2025?
A: Julie Heskett, CFO, highlighted successful cost reductions in legacy operations, with a focus on integrating Octillion and returning Premion to growth. While specific 2025 guidance wasn't provided, she indicated that the growth rate seen in Q4 would likely continue into 2025.
Q: What is TEGNA's approach to digital acquisitions, given the risks associated with them?
A: Mike Steib emphasized a cautious approach, focusing on acquisitions that unlock cost savings or revenue synergies. He noted that many past digital acquisitions in the media industry have not been successful, and TEGNA would prioritize deals that enhance cash flow.
Q: How is Premion performing, and what is its growth outlook for Q4 and beyond?
A: Julie Heskett noted that Premion faced challenges in Q3 but is expected to return to growth in Q4, driven by local advertising. She highlighted that local Premion has consistently performed well, growing double digits, while national trends remain challenging.
Q: What are TEGNA's views on local sports rights, and how do they plan to make these deals profitable?
A: Mike Steib expressed enthusiasm for acquiring local sports rights, emphasizing their importance for audience engagement and advertiser opportunities. He stated that any rights deals would be evaluated based on their ability to generate cash flow returns that meet the company's cost of capital.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
