TEGNA(TGNA) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total company revenue for Q4 2024 increased by 20% year over year to $871 million, aligning with the outlook of 19% to 21% growth, primarily driven by political advertising revenue [29] - For the full year, total company revenue grew by 7% to $3.1 billion, resulting in $931 million of adjusted EBITDA [30] - Subscription revenue for Q4 was $357 million, up 5% year over year, driven by MVPD contract renewals and contractual rate increases [34] - Cash and cash equivalents totaled $693 million at year-end, with net leverage finishing at 2.7 times, comfortably below the three times annual guidance [39][40] Business Line Data and Key Metrics Changes - Advertising and marketing services revenue faced pressure in Q4, finishing 11% below last year due to political displacement and softness from national accounts [31] - Digital advertising revenue grew year over year, with TEGNA's owned and operated digital products offsetting a slight decline in premium revenue [32] - The company achieved approximately $50 million in annualized savings by the end of 2024, representing roughly 50% of the goal to generate $90 million to $100 million in core non-programming annualized savings [37] Market Data and Key Metrics Changes - Political advertising revenue for the full year reached $373 million, nearly matching 2020 results despite fewer competitive races [30] - Automotive advertising remains challenged, with slight improvements noted in Q4 but still down across the board [62] Company Strategy and Development Direction - The company has identified five key areas of opportunity: building a world-class team, leveraging strengths across stations, deploying technology and AI, growing digital revenue, and scrutinizing expenses [8][9] - TEGNA is focused on transforming operations to improve efficiency and effectiveness, including centralized marketing operations and technology deployment [14][15] - The regulatory environment is evolving, with potential M&A opportunities arising from deregulation discussions [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's strong market position and financial flexibility, emphasizing the importance of disciplined capital allocation [40][43] - The first quarter of 2025 is expected to see total company revenue down in the 4% to 7% range year over year, primarily due to lower political revenue [42] Other Important Information - TEGNA congratulated KXTV in Sacramento for receiving the prestigious 2025 Alfred DuPont Columbia University Award for excellence in journalism [23][24] - The company is committed to returning 40% to 60% of adjusted free cash flow to shareholders over the 2024-2025 period [38] Q&A Session Summary Question: TEGNA's position as a buyer or seller in the context of deregulation - Management stated that they are disciplined capital allocators and will evaluate opportunities based on value creation for shareholders, with a strong balance sheet providing optionality [48][49] Question: Details on Q1 expense guidance - Management noted that programming expenses are expected to be higher due to sports rights, while core operational reductions are showing sequential improvement [50][51] Question: Trends in core advertising for TV stations - Core advertising started sluggish but improved throughout the quarter, with low single-digit declines noted [59] Question: Challenges in the automotive advertising category - Automotive advertising remains challenged, with slight improvements but overall down across tier one and tier two markets [62] Question: Clarification on retransmission subscribers up for renewal - The majority of retransmission subscribers are up for renewal at the end of the year, with one exception during the year [65] Question: FCC's role in TV station ownership rules - Management clarified that the FCC has authority over in-market regulation, while the national cap's authority is less clear [67] Question: Challenges within the premium advertising segment - Premium advertising continues to grow locally but faces challenges nationally due to shifts in large national holding companies [71][73] Question: Addressing the 2026 bond - Management confirmed they have the cash to pay off the 2026 bonds and are looking at all options for disciplined capital deployment [82][83]