TEGNA Inc. ((TGNA)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
TEGNA Inc.’s recent earnings call painted a mixed picture for investors. While the company showcased robust digital revenue growth and effective cost-cutting measures, it faced challenges with declining total revenue and advertising and marketing services revenue. The anticipated revenue decline in Q3 adds to these challenges. However, positive regulatory developments and stable network partnerships offer some optimism for future growth.
Strong Digital Revenue Growth
TEGNA’s digital strategy continues to pay off, with its owned and operated digital products delivering strong double-digit growth year-over-year for the third consecutive quarter. This success underscores the effectiveness of TEGNA’s focus on digital transformation.
Cost-Cutting Initiatives
The company has made significant strides in reducing operational costs, with non-GAAP expenses down 3% year-over-year. TEGNA is on track to achieve $90 million to $100 million in annualized core nonprogramming savings by the end of 2025, having already reached 80% of this target.
Constructive Network Affiliate Relationships
TEGNA renewed station affiliations with FOX Corporation for six markets, covering 7% of TEGNA’s households. This development indicates stable network partnerships, which are crucial for maintaining audience reach and revenue streams.
Positive Regulatory Developments
Recent regulatory progress is expected to benefit local broadcasters. The Eighth U.S. Circuit Court of Appeals vacated the FCC’s top 4 prohibition rule, potentially allowing broadcasters more scale in local markets, which could be advantageous for TEGNA.
Revenue Decline
TEGNA reported a 5% year-over-year decrease in total company revenue to $675 million, primarily due to lower political advertising revenue and softer advertising and marketing services. This decline highlights the challenges faced in the current economic climate.
Advertising and Marketing Services Revenue Decline
Advertising and marketing services revenue fell by 4% year-over-year to $288 million, impacted by macroeconomic headwinds and a shift in Premion’s reseller partnership. This decline reflects broader challenges in the advertising sector.
Distribution Revenue Challenges
Distribution revenue remained flat year-over-year at $370 million, as subscriber declines offset contractual rate increases. This stagnation poses a challenge to revenue growth.
Upcoming Revenue Decline in Q3
TEGNA anticipates a significant revenue decline of 18% to 20% year-over-year in Q3, attributed to the absence of significant political and Summer Olympic advertising. This forecast underscores the challenges ahead for the company.
Forward-Looking Guidance
Despite the challenges, TEGNA remains proactive in managing its financial performance amid economic uncertainties. The company reaffirmed its adjusted free cash flow guidance of $900 million to $1.1 billion over 2024-2025 and revised its full-year interest expense guidance to $160-$165 million, reflecting strategic debt management. TEGNA continues to focus on digital growth, technological advancements, and cost-cutting measures, targeting $90-$100 million in annualized nonprogramming savings by 2025.
In summary, TEGNA Inc.’s earnings call highlighted a mix of challenges and opportunities. While the company faces revenue declines, its strong digital growth, cost-cutting measures, and positive regulatory developments provide a foundation for potential future growth. Investors will be keen to see how TEGNA navigates these challenges in the coming quarters.