Excluding political, second quarter ad revenues were down just slightly, Tegna president and CEO Dave Lougee told analysts in the company’s quarterly conference call Thursday morning.
“Automotive, our largest category within AMS [Advertising and Marketing Services], has steadily recovered and is generating strong year-over-year growth — and it did so in the second quarter for the fourth consecutive quarter, and is doing it again and is strong in Q3 as well,” Lougee said.
Later, during the Q&A session, Tegna SVP of Financial Planning Julie Heskett added detail on the national and local advertising trends. “We too are seeing improvement in national. National is still weaker than local. Local continues to hold in there and is doing good. National is improving sequentially quarter-over-quarter and I would expect that to continue into Q3 as well,” she said.
Just before the call concluded, Lougee announced that Heskett will become CFO of Tegna at the end of this year as Victoria Harker retires. Harker, who said she is very proud of what she’s accomplished in 17 years at Tegna and Gannett, will assist with the transition through the end of March 2024.
In her formal remarks on the call, Harker had also noted the continuing recovery of the auto sector. “We also continue to see year-over-year strength in home improvement, services, and travel and tourism,” she noted.
Categories facing headwinds in the current macro-economic environment include media, telcom, restaurants, healthcare, and retail,” Harker added.
“For the third quarter, we expect total company revenue to be down by low double digits year-over-year, primarily driven by the absence of political revenue,” the CFO said. The third quarter of 2022 had included $93 million of political revenue.
“Another factor in improved advertising trends is the accelerating shift in audience reach from cable to broadcast — a favorable impact for broadcast from cord-cutting,” noted Lougee.
“While many of the traditional cable and satellite homes we lose are replaced by virtual MVPDs as well as over-the-air antenna homes, the local cable interconnects in our many markets don’t have that subscriber and viewer replacement mechanism. And their reach in any local market is down dramatically in recent years. Advertisers are increasingly recognizing this dramatic and growing delta between the reach of local broadcast compared to local cable—and the dollars will follow. And that will impact the political dollars as well,” he told the Wall Street analysts.
Lougee sought to assure analysts that Tegna will still be able to negotiate retrans rate increases as contracts come up for renewal. “One thing for us, because we do not have many MyNets or CWs or any extraneous cable channels, we do not have to compromise at all on the rate we get for our Big Four subscribers. I don’t think that’s probably true for most everybody else, depending on what their portfolio is,” he said.
Following its abandoned acquisition by Standard General, Tegna has been focused on returning capital to shareholders. A previously announced accelerated share repurchase (ASR) program totaling $300 million has passed the $240 million mark and is expected to be completed by the end of the current quarter. Tegna’s board has now approved an additional $325 million ASR program to begin after third quarter results are announced in early November. In addition, the entire $136 million breakup fee from Standard General was satisfied by transferring shares of Tegna common stock.
In all, Tegna will be retiring more than three-quarters of a billion dollars of its outstanding stock.
16 May 2024
23 May 2024
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