EARNINGS CALL

Trump Factor Net Positive For Tegna Political

In today’s earnings call, Tegna Media President Dave Lougee and Tegna CEO Gracia Matore were unconcerned about a shortfall in political in the second quarter, saying 3Q and 4Q would be significantly greater than in comparable years with Trump spending ramping up. In addition, core should rebound in the 3Q because of the Olympics airing on Tegna's NBC affiliates next month. "Olympics are really strong," Lougee said, noting that sales are up in "high single digits" percentage over the $48 million the group booked from the games in the 2012.

Republican Presidential nominee Donald Thump and his supporters may spend less on political TV advertising this year than Mitt Romney and his backers did in 2012, but that should not stop Tegna from posting record political revenue for the year, Tegna executives told securities analysts on a call to discuss their second quarter earnings this morning.

Tegna Media President Dave Lougee explained “the Trump Factor.”

First of all, Trump spending will likely pick up, he said. Second, Republican donors who don’t want to spend money on Trump will simply spend it on GOP candidates for the House, Senate and state houses.

“We are as good or better in terms of our footprint on those contested races as we are presidential, so for us it’s just a shift of funds,” Lougee said.

And, third, Trump may put more states into play. “For instance, he and Hillary Clinton are now polling neck and neck in one poll in Georgia.”

Lougee and Tegna CEO Gracia Matore were unconcerned about a shortfall in political in the second quarter because it traditionally is not a big quarter for that category, relying mostly on early presidential spending.  

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The shortfall is immaterial, she said, amounting to only a “few million dollars.”

“We are always well aware when we are budgeting that 80% to 85% of the dollars come in the back half of the year,” said Matore.

Neither Martore nor Lougee would give a dollar estimate for their political take for the year, except to say it would be a record and that the take in the back half of the year (3Q and 4Q) would be significantly greater than in comparable years.

In 2012, the last presidential year, political revenue was $170 million ($56 million in 3Q and $114 million in 4Q), Matore said.

Lougee also explained why core advertising was slightly down in the second quarter.

“We were unfavorably affected by two factors, not having the Final Four game on CBS this year and a negative variance in insurance category due to Obamacare spending last year,” he said. “We finally cycled past that issue starting in this third quarter.”

Pressed by the analysts, Lougee added that the group also suffered from weakness in the telecom and retail categories. That retail downturn was “driven mostly by a large advertiser in the South that we chose not to take because of some pricing issues.”

Lougee also said Texas stations suffered because of a downturn in the state’s oil economy.

On the other hand, Martore said, auto and services were “very strong.” The “nice increase in auto” was particularly welcomed as it accounts for 25% of core, she said.

Of course, core should rebound in the 3Q because of the Olympics airing on Tegna’s NBC affiliates next month.

“Olympics are really strong,” Lougee said, noting that sales are up in “high single digits” percentage over the $48 million the group booked from the games in the 2012.

The negative news about the Olympics and the readiness of Rio de Janiero has not had a negative effect on sales, Lougee said. On the contrary, the “news and noise” has raised the interest in the games, he said. There’s been “nothing to scare away advertisers.”

Tegna is making the most of the games, he said. “As with all past Olympics, our NBC stations will be among the very highest rated. Using our scale, we have a centralized crew in Rio that will be co-producing with NBC Sports a nightly half-hour program for all our NBC stations giving higher rated lead-in programming for primetime coverage as well as more inventory to sell.”

Louge said that Tegna is also benefiting from a new centralized spot pricing desk. It’s “putting dollars in our pockets by using data and analytics to make better and faster pricing decisions as political orders come in at the last minute with little visibility.”

In his presentation, Lougee trumpeted a few other initiatives. In news, he said, the group is rolling out a series of “proven practices.”

Among them is what Tegna calls “social listening,” he said. With software like CrowdTangle, he said, “our journalists are now using crowd-sourced data to make real-time content decisions on every platform. The result is less repetition and more relevance.”

Another is Verify, a political fact-checking service that, Lougee said, “lives at the intersection of Anthony Bordain and local news.” The service offers skeptical viewers “a transparent look at the truth.”

Lougee also oversees Tegna’s budding program syndication arm. Its first major offering, T.D. Jakes, is now cleared in 58 markets covering 43% of U.S. TV homes. And those numbers will soon grow with the announcement of another distribution deal, he said.

“Awareness of host T.D. Jakes has skyrocketed in the aftermath of the tragic police shootings in Dallas,” Lougee said. “He was sought out by civic leaders and media outlets everywhere as a healing voice for the city and the nation on both traditional outlets as well as social media.”

The show is a harbinger, he said. “We have six different pilots of new live local shows underway in six markets and in the syndication space.”


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