One week ago, DirecTV and TEGNA began a retransmission consent impasse due to their distant beliefs concerning what constitutes a fair price for the direct broadcast satellite’s right to profit from delivering a free over-the-air signal to its paying customers. Words have been lobbed back and forth by each company as often as a Coco Gauff tennis match.
While no resolution appears in sight for the immediate future, investors in the TV station owner have been largely nonplussed by the loss of TEGNA stations to DirecTV customers. In fact, Zacks analyst Vasundhara Sawalka declares TEGNA one of three stocks to buy “in a prospering industry.”
As Sawalka sees it, TEGNA — along with AMC Networks and “sports first” vMVPD Fubo — “are benefiting from a massive spike in digital content consumption.”
In the case of the company formerly known as Gannett, owner of 64 television stations and a pair of spoken word radio stations in Columbus, Ohio, Zacks gives “TGNA” a “Strong Buy” recommendation.
Why? Sawalka says TEGNA “is benefiting from accretive acquisitions, a consistent spike in subscription revenues and a resurgence in advertising revenues. The company enjoys a stable subscriber base and higher rates.”
Another positive, as TEGNA sees it, is that the company led by Dave Lougee plans to reprice nearly 30% of its traditional subscribers by the end of this year, which the Zacks analysts says improves visibility.
What else excites Sawalka regarding TEGNA, which had been on track to merge with Standard General and see Deb McDermott take over as CEO but was thwarted by concerns expressed from FCC Media Bureau head Holly Saurer?
“TEGNA’s buyouts of local TV stations that comprise the ‘Big Four’ affiliates, along with aggressive spending on political ads, are likely to aid the top line,” the analyst notes. “Moreover, higher streaming consumption is driving demand for Premion, TEGNA’s OTT advertising solution. The focus on regional content is aiding subscription revenues from traditional cable, satellite operators and OTT providers. New station acquisitions also aid the expansion of the customer base.”
As of 1:04pm Eastern, TEGNA shares were up 22 cents to $15.40, up from $15.01 on Wednesday.
Meanwhile, Fubo got high marks and a “Buy” rating from Zacks in part for its newly announced audio platform, powered by Super Hi-Fi. In the case of AMC Networks, Sawalka likes the arrival of an ad-supported version of AMC+, and how it “has extended leadership in TV advertising through the launch of programmatic buying on the company’s linear networks, which is expected to boost revenues in the near term.”
