Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tegna Inc (TGNA, Financial) successfully achieved key guidance metrics for the first quarter of 2024.
- The company made significant progress on its $350 million capital return commitment for 2024, returning more than $100 million to shareholders through share repurchases and dividends.
- Tegna Inc (TGNA) closed the acquisition of Octillion, enhancing its OTT platform, Premion, with improved technology and market positioning.
- Political advertising trends are positive, with Tegna Inc (TGNA) well-positioned in key states for upcoming elections, potentially boosting ad revenues.
- The company announced new sports broadcasting deals, which could increase viewership and advertising revenue.
Negative Points
- National advertising remains challenging, impacting both core operations and the Premion platform.
- Subscription revenue was down 9% year-over-year, primarily due to net subscriber declines and a temporary service disruption.
- First quarter total company revenue decreased by 4% year-over-year, driven by lower subscription revenue.
- Advertising and Marketing Services (AMS) revenue declined by 3% year-over-year, with continued softness in national advertising.
- The company faces uncertainty in national advertising trends, which could affect future revenue growth.
Q & A Highlights
Q: Can you provide more details on the second quarter guidance, particularly why revenue expectations might seem low despite overcoming previous disruptions?
A: (David T. Lougee - President, CEO & Director) The second quarter doesn't have major retransmission deals up for renewal, which affects the revenue. Also, while political advertising is expected to improve slightly from the first quarter, it won't increase dramatically. (Julie A. Heskett - Senior VP & CFO) National advertising continues to show softness, which is expected to persist into the second quarter, impacting the revenue.
Q: With the transformation and cost savings initiatives, are there significant upfront costs that might affect free cash flow in 2024?
A: (David T. Lougee - President, CEO & Director) No significant upfront costs are anticipated with the transformation initiatives, meaning the savings will directly benefit free cash flow as per the guidance.
Q: Could you discuss any potential for bolt-on M&A that could benefit Premion following the acquisition of Octillion?
A: (Tom Cox - Senior VP of Digital & Chief Growth Officer) The integration of Octillion with Premion is primarily to enhance technology and sales capabilities. While there are opportunities for further M&A in the streaming landscape, specifics can't be disclosed currently.
Q: Can you elaborate on the benefits of the Octillion acquisition, particularly on the technology side?
A: (Tom Cox - Senior VP of Digital & Chief Growth Officer) Octillion provides both offensive and defensive advantages, enhancing product offerings and controlling more inventory pathways, which is expected to accelerate Premion's growth and improve margins.
Q: What are the dynamics of investing in women's sports broadcasting rights, considering potential viewership gains against costs?
A: (David T. Lougee - President, CEO & Director) Investing in women's sports like the WNBA's Fever offers potential high viewership at lower costs. While women's sports generally have lower market acceptance, this is expected to change, providing a beneficial arbitrage opportunity.
Q: How do you see the NBA rights potentially moving to NBC impacting TEGNA, given your strong presence in NBC markets?
A: (David T. Lougee - President, CEO & Director) The potential shift of NBA broadcasts to NBC is viewed positively, enhancing content on TEGNA's strong NBC stations. This change is expected to benefit viewership and advertising, despite needing to address game placements and time zones.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
