Tegna Reports 2% 3Q Revenue Gain

Tegna this morning released third quarter 2021 results that included total revenue of $756 million, up 2% year-over-year, driven by record third quarter subscription revenue and record advertising and marketing services (AMS) revenue despite the absence of the record $116 million of political revenue achieved in the third quarter of 2020..

• Subscription revenue came in at $369 million, up 16%.
• AMS revenue was a 3Q record of $364 million, up 22% year-over-year.

Net income was $128 million on a GAAP basis, or $123 million on a non-GAAP basis.

Total company adjusted EBITDA was $244 million, down 6%, or approximately $15 million.

Free cash flow for the third quarter was $137 million, driven by continued growth in subscription and AMS revenues.

Dave Lougee, Tegna president-CEO, said: “The positive momentum at Tegna continues to accelerate, with record financial achievements in each of the past four quarters, driven by continued execution of our long-term strategy to maximize value for our shareholders.

“Tegna’s local station brands and advertising platforms continue to fill a critical role and are well-positioned to capitalize on a robust advertising market given our sustained operational excellence. We expect this performance to continue into the fourth quarter, and remain on track to meet or exceed all of our key guidance metrics for full-year 2021.

“Our five key pillars of value creation continue to anchor Tegna’s business strategy as demonstrated by the strength we are seeing in AMS revenue and subscription revenue growth. Our AMS revenue continues to over-deliver, with significant strength in every major advertising category except auto. Of our top 15 categories, all except auto were up double digits year-over-year. Sports betting was up more than 200%, and is the fastest growing in terms of absolute dollars.

“Notably, when compared to 2019 on a pro forma basis, third quarter AMS revenue was up 12 percent, despite the ongoing supply chain issues impacting the auto industry. Third quarter AMS revenue did benefit from Summer Olympics, though not significantly, given both pandemic and time zone challenges. Excluding the estimated incremental impact of Olympics, AMS revenue was up fully 7% compared to 2019.

“Premion, our industry-leading OTT advertising platform, continues its very strong growth both in revenue and the number of advertisers it serves. Through ongoing systems, processes, and technology improvements, Premion enhanced its operational and financial efficiencies during the year. With our leadership position in this space, we are poised for ongoing significant growth in the years ahead due to both our team’s strong execution and continued tailwinds from changing consumer behavior.

“Our portfolio of high-quality local station brands is delivering record results supported by improving subscriber trends and leading Big Four affiliate rates. The powerful combination of improving subscriber trends, coupled with our multi-year distribution agreements, enhances the visibility of future cash flows for years to come. Tegna provides trusted, differentiated and non-substitutable programming to our communities. Our network content, live local news and weather and local and national sports remain some of the most popular and highly-viewed programming available.

“Tegna is well-positioned ahead of the upcoming political cycle, and we are raising our internal estimates for 2022 political revenue with nearly all of the U.S. Senate and gubernatorial races that are expected to be competitive occurring within our footprint. We believe we will set new records for a midterm political year in 2022 compared to the prior midterm political year in 2018. Tegna’s portfolio of high-quality local station brands will continue to play a critical role in political marketing strategies as the preferred medium to reach targeted constituents in battleground states.

“Tegna has a long track record of returning value to shareholders through our disciplined capital allocation framework, fueled by the strength and visibility of our free cash flow. We successfully integrated the stations we acquired in 2019, rapidly strengthened our balance sheet by reducing leverage more than 1.5x since the acquisitions’ close, increased our quarterly dividend by approximately 36 percent, and announced the acceleration of our opportunistic buybacks, subject to blackouts, as part of our previously announced $300 million share repurchase program. The Board remains focused on maximizing shareholder value and will continue to proactively evaluate all options for capital deployment going forward.

“Tegna has also continued to make significant progress on our diversity, equity and inclusion (“DE&I”) and environmental, social and governance (“ESG”) focus areas, two important priorities for our Board and management. We remain committed to accelerating the pace of racial diversity and inclusion across our company and holding ourselves accountable to all stakeholders. I am proud to say that we are progressing ahead of schedule in meeting our publicly stated and disclosed 2025 DE&I hiring goals which we developed in 2020.

“All Tegna stations have also completed the first phase of our innovative Inclusive Journalism program. This program is designed to help us ensure our coverage and storytelling reflects all of the communities we serve through unconscious bias, inclusive reporting, and leadership training. We are committed to measuring our progress and have engaged an independent research firm to audit our content and provide actionable feedback. These actions are driving meaningful change throughout Tegna and we look forward to keeping you updated on the positive impact we are driving at each of our stations, and across the communities we serve.”

Read the company’s report here.