TEGNA INC Q3 FY2023 earnings call

• TEGNA's business plan focuses on enhancing performance, optimizing efficiency, and driving long-term value. Completed initial $300 million accelerated share repurchases earlier than anticipated, increasing capital commitment to return nearly $800 million to shareholders.
• Third quarter results: Subscription revenue was a record; AMS revenue saw sequential improvement. Completed a multiyear deal with ABC renewing network affiliations in 13 markets. Locked On hit milestones with over 27 million listens/views per month and launched local fast channels. Daily Blast LIVE entered its seventh season with broader distribution. VERIFY show increased viewership, and TEGNA station streaming apps reached 677 million minutes, up 78% year-over-year.
• Capital allocation: Industry-leading balance sheet allows return of capital to shareholders via share repurchases and dividends. Second ASR program of $325 million to commence, expected to retire ~45-50 million shares by March 2024.

Total company revenue finished in line with guidance, down 11% year-over-year mainly due to reduced political revenue. Excluding political, revenue was slightly down. Subscription revenue was a record for the third quarter, up slightly year-over-year. AMS revenue was down 3% year-over-year, but underlying advertising trends were flat when adjusting for the Premion national account loss. Automotive, the largest category within AMS, was up 20% year-over-year, and Services, the second largest category, was up 15% year-over-year. Subscription revenue contributes stably with contractual rate increases partially offset by subscriber declines. AMS revenue benefits from improving trends in key verticals like auto and services.

• Third quarter 2023: Total company revenue in line with guidance. Fourth quarter expected to be down mid- to high teens percent year-over-year primarily due to absence of political revenue, but excluding political, flat. Operating expenses in fourth quarter expected to increase low single-digit percentage, but including programming costs, down low single-digit percent year-over-year.
• Full year 2023: On track to meet key guidance metrics. Corporate expense range $40M-$45M, depreciation $60M-$65M, amortization $53M-$54M, interest expense $170M-$175M, capital expenditures $55M-$60M, effective tax rate 23.5%-24.5%, net leverage below 3 times.

• Macro environment: Broader macroeconomic challenges could impact advertising and revenue trends.
• Negotiations: Uncertainties around network negotiations, including potential impact of streaming plans on sports content and retransmission consent deals.
• Political revenue: Dependence on political revenue, and potential variability in political spending across election cycles.

Q: Dan Kurnos on reconciling ad trends and guide, sub churn, conservatism in guide A: Dave Lougee and Julie Heskett discussed sequential ad trend improvement, Premion national business impact, and how trends are included in guidance.

Q: Steven Cahall on network partner negotiations, sports streaming, share repurchase appetite A: Dave Lougee talked about network negotiation confidentiality, Victoria Harker discussed opportunistic share repurchases and ASR program.

Q: James Goss on streaming apps, DBL economics, ATSC 3.0 A: Dave Lougee discussed streaming app distribution, DBL time slots and economics, and ATSC 3.0 outlook.

Q: Craig Huber on Premion, retrans guide, macro impact on share repurchases A: Julie Heskett and Dave Lougee discussed Premion local revenue growth, retrans negotiation impact, and balance sheet strength affecting share repurchases.

Q: Craig Huber on ad revenue from network prime time, Hollywood strikes impact A: Victoria Harker and Dave Lougee discussed network prime time revenue percentage and no material impact from Hollywood strikes on TEGNA's ad revenues.