Tegna 2Q Revenue Drops 7%

Tegna this morning released second quarter 2023 results that included total revenue of $732 million, down 7% year-over-year, due primarily to the reduction of political revenue from the mid-term election cycle last year.

Subscription revenue was a 2Q record $396 million, up 2% year-over-year, driven by contractual rate increases, partially offset by subscriber declines.

Advertising and marketing services (AMS) revenue was $396 million, up 2% year-over-year, driven by contractual rate increases, partially offset by subscriber declines.

Net income was $200 million on a GAAP basis, or $97 million on a non-GAAP basis.

Total company adjusted EBITDA was $194 million, representing a decrease of 24% compared to the same quarter of 2022.

GAAP operating expenses were $450 million, down 20% year-over-year, driven by the

merger termination fee of $136 million from Standard General, which is reflected as a reduction to operating expenses. Non-GAAP operating expenses were $565 million, up 1% year-over-

year, with the increase driven primarily by programming costs, partially offset by operational expense management improvements.

Free cash flow was $112 million for the quarter.

Total cash at the end of the quarter was $489 million.

Dave Lougee, president-CEO, said: “Our ability to navigate the changing trends in our industry has been key to our success. After terminating the merger agreement, we swiftly transitioned to an offensive strategy focused on performance, operating efficiency and delivering maximum value to our shareholders. During the second quarter, we successfully met the outlook for our key financial metrics, achieved a record second quarter for subscription revenue and saw sequential improvement in advertising and marketing services revenue driven by improving trends in key verticals such as automotive.

“Automotive, our largest category within AMS, has steadily recovered and is generating strong year-over- year growth for the fourth consecutive quarter. Underlying advertising trends were down low-single digit percent year-over-year, adjusting for the loss of a single large Premion national account we discussed last quarter.

“Our high-margin subscription revenue remains a core driver of our cash flow, with a new second quarter record achieved. Subscription revenue was up two percent compared to the second quarter of last year. Looking ahead, we will be repricing approximately 30 percent of our traditional subscribers at the end of this year, improving multi-year visibility for a significant portion of our subscription revenue.

“Our results reflect the strength of our high-quality local station brands in large and important markets, dependable cash flows, and a healthy balance sheet with the lowest leverage levels since we became a pure-play broadcasting company. With no near-term debt maturities and attractively priced fixed-rate debt, our balance sheet is among the best in our industry, and we expect to maintain net leverage below 3.0x.

“We continue to focus on returning accumulated capital to our shareholders. The additional $325 million ASR program we are announcing today reflects our methodical approach to return capital accumulated during the pendency of the merger while re-engaging with investors to inform our actions to drive shareholder value over time. We have committed this year to more than three-quarters of a billion dollars in share repurchases through these two ASR programs and the settlement of our merger termination fee in shares.

“Our people play an essential role in our success. As we seek to attract and develop the highest caliber talent in our industry, during the quarter, we were proud to welcome our sixth group of Producer-In- Residence program participants to Tegna. This program has grown to one of the largest entry-level producer development programs in the industry, and we actively recruit diverse candidates from major journalism schools, regional universities and colleges and historically black institutions. This is just one of the ways we are developing the next generation of talent in our newsrooms. Together with the work we continue to do as part of our Inclusive Journalism program, we remain committed to fostering new ways for our newsrooms to engage with and represent our communities even better.

“Finally, we are honored to be named a 2023 recipient of The Civic 50 by Points of Light and the Telecommunications Sector Leader. The Civic 50 honors the most community-minded companies in the United States and 2023 marks TEGNA’s fourth consecutive year on the list, and the third year as Telecommunications Sector Leader. I want to thank all our colleagues for contributing to this honor that reflects our purpose to serve the greater good of our communities.”

Read the company’s report here.

Also, Tegna declared a regular quarterly dividend of 11.375 cents per share, payable on Oct. 2 to stockholders of record as of the close of business on Sept. 8.