EARNINGS CALL

Delayed Sports To Boost Tegna This Quarter

In its second quarter earnings call with analysts, CEO Dave Lougee said that looking forward, the company will “benefit from a large number of unusual events that we would not normally see in the back half of the year that are rescheduled from the second quarter.”

Following a second quarter in which pandemic lockdowns depressed advertiser demand, even as stay-at-home orders increased TV viewing, there might yet be a silver lining for the TV advertising business. That, as Tegna President-CEO Dave Lougee explained to analysts in the company’s quarterly conference call Monday morning, is because so many sports events were delayed and didn’t air as normally scheduled.

“Now, as live sports returns this fall, we’re going to benefit from a large number of unusual events that we would not normally see in the back half of the year that are rescheduled from the second quarter. Our strong and large portfolio of NBC stations will now benefit, for instance, from the Indianapolis 500. And we have the host city, the host NBC market of Indianapolis now as part of our acquisition. We’ll have the U.S. Open golf tournament and the Kentucky Derby taking place in August and September. And then there’s the Stanley Cup playoffs in September and possibly into early October. The NBA on ABC is now back on the air, and we look forward to airing regular season and many playoff games on our many ABC stations in the months ahead,” the CEO said.

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“Considering these events would not typically take place in the second half of the year, when we will also experience extraordinary political advertising demand, we will benefit from having this additional high-value content and inventory in the coming months,” Lougee said.

Political advertising, as has been widely reported, stayed strong in the second quarter, with TV advertising one of the few ways for campaigns to get their messages out during the COVID-19 restrictions.

Tegna announced that it has increased its full year 2020 guidance for political ad revenue to $370 million, with the suggestion that it might be more. The company’s previous guidance, issued as the year began, was $300 million.

The second quarter results that Tegna announced showed total revenues up 8% (5% excluding political advertising) to $578 million. That included 13 TV stations acquired since the year-ago period and the Justice and Quest digital broadcast networks.

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When analyst Craig Huber of Huber Research Partners asked whether pro forma core advertising was down 33%-34%, Lougee said the actual number was at the low end of that range.

EVP-CFO Victoria Harker had earlier told the analysts that ad sales had been sequentially better month after month, following the big drop in April — just as other groups had been reporting. Lougee then confirmed to Huber that a drop of only 12% which Tegna reported for July was on a “same-store basis with the acquisitions.”

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Lougee began the call by thanking employees for their efforts during the pandemic and the simultaneous unrest sparked by the police killing of a black man, caught on video and posted to social media. “The death of George Floyd in Minneapolis is, we believe, a seminal moment of clarity regarding systemic racism in our country,” Lougee declared.

Tegna was at the epicenter of the subsequent protests and riots, with KARE Minneapolis. Its portfolio also included most of the other markets with major outbreaks, including Atlanta; Louisville, Ky.; Portland, Ore.; Seattle; and Washington.

Lougee praised the company’s journalists for their efforts to cover the events and their cause, including a number of TV specials throughout the period of unrest. He announced a number of moves by Tegna to “address and combat systemic racism in our country, especially given the platforms we have.”


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