With the failed merger acquisition by Standard General, with Apollo Global Management’s involvement, some 10 months in the past, capital return commitment and sustained shareholder returns are among the many investor benefits TEGNA CEO Dave Lougee is touting, as the broadcast TV station owner said it will again see a down quarter once the first three months of 2024 conclude.
Lougee struck a positive tone before Julie Heskett, newly installed as EVP/CFO at TEGNA, detailed the company’s financial performance in Q4 2023, noting “TEGNA is back on offense, operating from a position of strength.”
The nation’s biggest NBC affiliate owner, however, is pacing down in the low-to-mid-single digit percent range in Q1 2024, as the Q4 2023 portrait is impacted by political spending fluctuations compared to the previous year.
How different was the final quarter of 2023 for TEGNA, compared to Q4 2022? Revenues dipped by 21% to $725.85 million, from $917.13 million, as operating income sank by 56.2%, to $143.73 million from $328.22 million.
The revenue finish missed the $750.82 million consensus estimate of 6 analysts polled by Yahoo! Finance.
Net income came in at $76.13 million ($0.40 per share), sliding from $218.6 million ($0.97). Five analysts polled by Yahoo! Finance pegged the EPS to come in at $0.47.
For FY 2023, revenue declined by 11.2% to $2.91 billion, as net income slid by 24.4% to $476.72 million.
With capital allocation and share repurchasing permeating TEGNA’s Q4 2023 call, shifting attention away from the EPS and revenue miss in the final quarter of last year, investors responded positively, with NYSE-traded “TGNA” rising by 4.7% to $14.20 as of 10:15am Eastern.
RETRANS IMPASSE IMPACTS REVENUE
On the earnings call, Heskett detailed how “subscription revenue” fell 9% year-over-year, to $339 million, in Q4. With its peers seeing strong growth in what is traditionally called retransmission consent revenue, there’s one key reason for this dip — the impasse over a fresh carriage agreement between TEGNA and DirecTV.
Had there been no service disruption, which by law saw DirecTV block to its customers all TEGNA broadcast TV stations, subscription revenue would have been nearly flat year-over-year, Heskett said.
The DirecTV dispute resulted in Advertising and Marketing Services revenue surpassing that of retrans, with AMS dollars flat on tough comps, moving to $351.92 million from $352.93 million.
SHAREHOLDER BENEFITS FROM BMI DEAL
TEGNA also shared that the February 8 sale of Broadcast Music, Inc., to a shareholder group led by New Mountain Capital LLC delivered approximately $153 million in pre-tax cash proceeds for its interest in the entity.
Proceeds from the sale will be included in the newly announced return of capital to shareholders and/or the pursuit of bolt-on M&A as seen with Premion’s recent acquisition of Octillion Media, the company says.
