Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tegna Inc (TGNA, Financial) achieved key guidance metrics for Q2 2024, finishing at the midpoint of the guidance range for revenue and in line with the expense range.
- Local advertising is faring well despite national headwinds, with small and medium local businesses showing a willingness to spend.
- Premion, Tegna Inc (TGNA)'s CTV sales platform, continues to show positive momentum, delivering revenue growth in the low double-digits compared to last year.
- Tegna Inc (TGNA) is well-positioned to capture political ad dollars during the upcoming election cycle, with coverage in key competitive states.
- The company has made significant progress in returning capital to shareholders, repurchasing $72 million of common stock in Q2 and achieving 56% of its $350 million commitment for 2024.
Negative Points
- Total company revenue for Q2 2024 fell year-over-year due to declines in subscriber and national advertising, partially offset by political advertising.
- National advertising demand remains weak, with national AMS revenue down double-digits year-over-year.
- Subscription revenue was down 7% year-over-year, primarily due to subscriber declines.
- Auto advertising, a significant category, experienced a downturn in Q2, impacting overall AMS performance.
- The economic outlook remains uncertain, with sluggish national ad spend and mixed signals from the broader economy.
Q & A Highlights
Q: How should we be thinking about the potential upside for political advertising over the balance of this year?
A: David Lougee (President, CEO, Director): There's definitely new enthusiasm and new dollars, especially with the recent changes in the Democratic ticket. However, the last couple of months of Biden staying in the race had suppressed fundraising on the Democratic side. Julie Heskett (SVP, CFO): For full-year 2020, excluding the Georgia Senate runoff, comparable political dollars were $395 million. We're slightly behind 2020 in the first half of this year, but presidential spending is looking strong.
Q: Can you provide more details on the impact of the Olympics on your financials?
A: Julie Heskett (SVP, CFO): The Olympics are extremely favorable, driving strong audience and revenue. Some Olympic dollars fall into the political line item, not just AMS. Historically, Olympic incremental has been 3% to 5% of AMS, and we expect it to be at the high end of that range this year. Auto advertising has also improved in Q3.
Q: What was the actual subscriber loss percentage year-over-year?
A: David Lougee (President, CEO, Director): Net subscribers were down mid-single digits, slightly more towards high single-digits. Julie Heskett (SVP, CFO): There is cyclicality in subscriber trends, with weaker numbers in late winter, spring, and summer, but they jump back up in Q3 and Q4.
Q: How did local advertising perform in the second quarter, and what are the trends for the third quarter?
A: Julie Heskett (SVP, CFO): National advertising was down double-digits, while local advertising was more resilient, slightly up. Auto was a significant factor, down double-digits in Q2 but has improved in Q3.
Q: What percentage of your retrans or distribution revenue is digital, and how should we think about net retrans for the quarter in 2024?
A: Julie Heskett (SVP, CFO): We don't break out data between traditional, virtual, and streaming. The majority of top-line revenue decline is due to traditional subscriber declines, offset by increases in virtual and streaming subscribers. Net retrans is stable quarter to quarter.
Q: How important are the seven-state electoral races relative to the rest of the country in terms of political ad dollars?
A: David Lougee (President, CEO, Director): A disproportionate share of total political ad dollars goes to competitive races, including governor, senate, and presidential races. We cover many of these competitive races, which will see a significant share of PAC money.
Q: Can you talk about the availability of your stations on CTV platforms?
A: Tom Cox (Chief Growth Officer): We continue to see strong acceleration in viewership across streaming platforms. This presents a significant opportunity for direct sales and higher revenues, especially since it's our owned and operated inventory.
Q: What are the key areas to drive future growth as net retrans begins to flatten?
A: David Lougee (President, CEO, Director): Future growth will come from programming in both digital and linear spaces, strategic use of our balance sheet, and potential regulatory relief. The company is well-positioned to find new areas of growth under Mike Steib's leadership.
Q: Can you expand on the auto trends you saw in the quarter and your outlook for Q3?
A: Julie Heskett (SVP, CFO): Auto was down low-double digits in Q2, mostly driven by Tier 1 and Tier 2. However, it has improved in Q3, partly due to the Olympics. Even excluding the Olympics, we see core auto as flat to up slightly in Q3.
Q: How are you feeling about the US economy now versus three months ago?
A: David Lougee (President, CEO, Director): The national advertising landscape has cooled, particularly in auto. There's a bit of wait-and-see sentiment, with no definitively negative or optimistic view. The job market is changing, and advertisers are cautious.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
