The increase to $489 million is primarily driven by new initiatives and a 24% increase in a new category, Subscription Revenue, which includes retrans.
Tegna this morning released second quarter results that included operating revenue of $489 million, up 3% from $477 million in the same period a year ago.
Net income from continuing operations was $49 million; adjusted EBITDA excluding corporate totaled $186 million.
On May 31, Tegna completed the spin-off of Cars.com and received a tax-free distribution of $650 million in cash. On July 31, Tegna, together with the other owners of CareerBuilder, completed the sale of a controlling interest in this non-core business. As a result, Tegna will report one segment going forward which will include Media and a small remaining digital marketing services contract that was previously reported in the Digital Segment.
The company now reports a new revenue line, Advertising and Marketing Services, to better reflect its strategy to focus on marketing all products across platforms as well as new initiatives. This category includes all of the company’s traditional and digital revenues including Premion, Hatch, G/O Digital and other digital advertising and marketing revenues across our platforms.
The Retransmission revenue category has been renamed Subscription to better reflect the future changes in that revenue stream, including the distribution of Tegna stations on OTT streaming services.
Revenue growth was driven by a $34.5 million increase in subscription revenue as well as revenue contributions from new initiatives including OTT ad network Premion and Hatch, the company’s centralized marketing resource. Revenue growth was partially offset by a decline in advertising and marketing services revenue and lower politically-related advertising. The following summarizes the year-over-year changes in revenue categories:
- Advertising & Marketing Services was down 5.6% to $296 million.
- Political decreased 27.3% to $7.4 million.
- Subscription grew 23.7% to $180 million.
- Other was up 25.4% to $5.2 million.
Operating expenses were up 7% in the quarter. Operating income declined 6 percent compared to the second quarter in 2016.
Net income from continuing operations totaled $49.3 million.
Dave Lougee, president-CEO, said: “For its first quarter reporting as a pure play media company, Tegna delivered solid operating results. Comparable revenue was up 5%, at the high-end of guidance, and adjusted EBITDA margin, excluding corporate, was 38%. We are successfully executing our strategy of being a best-in-class operator, transforming our content, sales and marketing offerings through innovation and data-driven decision making. Leveraging our scale derived from our industry- leading local stations in large markets across a third of the country, we are reaching new audiences and advertising clients, and expanding the markets we’re targeting with new products and businesses.”
Lougee continued: “Looking ahead, we believe industry consolidation in a changing regulatory environment presents a compelling opportunity for Tegna. Our track record in broadcast operations, along with our scale and financial firepower, uniquely positions us to play an active role in vertical and horizontal consolidation, and we will evaluate and pursue accretive opportunities to enhance our organic growth strategy, all within our usual financial discipline.
“Our capital allocation strategy has provided us with a strong balance sheet that gives us the flexibility to act opportunistically, and our success in achieving synergy targets demonstrates our ability to execute. In addition, our strategic and innovative initiatives in content, programming and sales give us the ability to create additional shareholder value through M&A, whether vertical or horizontal, beyond traditional revenue and cost synergies.”
Lougee concluded: “Reflecting our ongoing investment in content-related initiatives, we made great progress across a number of innovations. Notably, we launched Verify news fact-checking segments across all our platforms, as well as HeartThreads, a new national digital content vertical. We announced the host line-up and Sept. 11 premiere date for our Tegna-owned daily, live syndicated program Daily Blast Live, which will air live in 36 Tegna markets and nationally on Facebook and YouTube. We announced a new live, daily talk show, Sister Circle, produced out of WATL in Atlanta, which will premiere on Sept. 11 in 12 Tegna markets and nationally live on TV One, reaching 60% of U.S. television households. Tegna and KXTV in Sacramento partnered with the Cheddar OTT network to launch Cheddar Local, which will provide KXTV with local business and technology segments relevant to the Sacramento community.”
Read the company’s report here.