QUARTERLY REPORT

Tegna Reports 8% 2Q Revenue Gain

The increase to $578 million is driven by acquisitions, continued growth in subscription revenue and political revenue, partially offset by advertising declines as a result of COVID-19.

Tegna this morning released second quarter 2020 results that included total revenue of $578 million, up 8% year-over-year.

Excluding political advertising, second quarter revenue grew 5% year-over-year.

Subscription revenue came in at $323 million, up 37% due to rate increases and acquisitions, reflecting the 50% of subscribers repriced in the fourth quarter of 2019.

Due to COVID-19, advertising and marketing services revenue was down 21% year-over-year, but increased steadily throughout the quarter; the rate of decline improved by more than 20 percentage points from April to June.

Net income was $20 million in the second quarter, down 75% from $80 million a year ago.

Total company adjusted EBITDA was $124 million, down from $169 million in 2Q 2019.

BRAND CONNECTIONS

Dave Lougee, Tegna president-CEO, said: “Our second quarter performance reflects our ability to execute on Tegna’s five-pillar strategy in any economic environment. The actions we have taken leading up to and during the COVID-19 pandemic have positioned Tegna for continued shareholder value creation, while we also remain focused on all our stakeholders, who rely on us now more than ever. We have continued to serve the greater good by providing critical information to viewers during these challenging times, through our “Facts Not Fear” editorial philosophy.

“For our shareholders, our second quarter performance is proof that our strategy to build a more diversified, durable business is working. Tegna remains uniquely positioned for continued subscription revenue growth due to successful negotiations at the end of 2019, receiving top of market Big Four affiliate rates across half of our subscribers with approximately another 35% of subscribers up at the end of 2020. We still expect our full year subscription revenue to be up mid-twenties percent. Additionally, we did not see an acceleration in subscription declines from April to May, better than we anticipated at the onset of the pandemic.

“We are also positioned to benefit from anticipated record political advertising spending this year, as races are turning more competitive within the Tegna footprint, which includes our expanded reach in key battleground states as a result of recently closed acquisitions. Our strong portfolio of Big Four affiliates with strong local news remains the preferred medium to reach targeted constituents, and our stations play a critical role in political marketing strategies. We now expect political revenues to contribute at least $370 million for the full year, an increase from our prior estimate.

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“The significant declines in advertising and marketing revenues that began in late March improved by more than 20 percentage points through June, and our sales and marketing teams have innovated with advertisers to adapt to this dynamic environment. Although we can’t be certain when the broader advertising industry will fully recover from the challenges presented by the COVID-19 pandemic, our long-term value proposition to advertisers remains intact. That includes the relevance and demand for our local platforms which has only grown stronger.

“In the quarter, we continued to act in accordance with our prudent expense management strategy, taking action at the beginning of the pandemic to manage discretionary costs. The result was a nearly $40 million expense reduction from our original plan. The innovation required to operate in this environment has provided us new learnings that will turn into permanent efficiencies. These actions will be combined with the continuous streamlining of our business processes and companywide cost saving initiatives that have been in place well before the recent downturn. Together, these will benefit our cash flows, and long-term health of the business, over time.

“Overall television viewing has expanded across demographics for both daytime and late news time slots. Digital viewership saw an even greater rise in consumption, setting records in 2020 across key digital metrics such as visitors, video plays, and monthly active users. Tegna reached a record 87 million visitors across owned platforms in March, and is averaging 75 million monthly visitors in 2020, with June the second highest month ever.

“While I am proud of our financial performance, since the onset of COVID-19, our number one priority has been the physical health and safety and emotional and economic wellbeing of our colleagues. Our entire team has shown extraordinary resilience during a time of unprecedented change and national uncertainty. This has allowed us to serve our other key stakeholders — the communities we serve.

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“In the wake of the global pandemic, our audiences on all platforms have been appreciative of our “Facts Not Fear” philosophy of editorial coverage, using our Verify franchise and great reporting to make facts 2 and context the antidote to the anxiety produced by some national news and social media outlets. On May 25, in the hometown of our KARE-11 station in Minneapolis, the world changed again, and forever, with the murder of George Floyd. No local journalism company has been more at the local epicenter of this story, shedding light on the nuances between peaceful protests and the small number of nonpeaceful incidents across our stations, that include markets with the largest degree of public engagement, including Washington D.C., Seattle, Portland, Oregon, Louisville and Atlanta, and of course Minneapolis.

“At Tegna, we are committed to taking this seminal moment in American history and doing our part to bring change, beginning with a new process of assessing and holding ourselves accountable for our own recruitment, hiring, development and promotion practices. And we will, in turn, create new accountability for how our powerful local media platforms reflect our communities in our editorial practices and our news products. One example is a recent initiative discussed by our board of directors, whereby we are defining specific areas of oversight for each committee around the way that Tegna approaches diversity across a number of different dimensions.

“Looking forward, we are confident in Tegna’s ability to perform, even if our economy experiences a slow recovery. During these unprecedented times, we will continue to provide purpose-driven, impactful local journalism to viewers and increase engagement with the communities we serve across all of our platforms.”

Read the company’s report here.


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