The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of September 30, 20172022 and December 31, 20162021 (in thousands):
Our retransmission agreements and network affiliation agreements are amortized on a straight-line basis over their estimated useful lives. Other intangibles primarily include customer relationshipsdistribution agreements from our multicast networks acquisition, which are also amortized on a straight-line basis over their useful lives. DuringIn the secondthird quarter of 2017, we recorded a goodwill impairment charge within discontinued operations related2022, gross retransmission agreement intangible assets and associated accumulated amortization decreased by $10.4 million due to our former CareerBuilder reporting unit. See Note 12 for further discussion.certain retransmission intangible assets reaching the end of their useful lives.
NOTE 87 – Earnings per share
Our earnings per share (basic and diluted) are presented below (in thousands, of dollars, except per share amounts): |
| | | | | | | | | | | | | | | |
| | Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | |
| Net income from continuing operations | $ | 50,754 |
| | $ | 76,737 |
| | $ | 144,682 |
| | $ | 211,615 |
|
| (Loss) income from discontinued operations, net of tax | (10,803 | ) | | 56,698 |
| | (233,261 | ) | | 132,141 |
|
| Net loss (income) attributable to noncontrolling interests from discontinued operations | 2,806 |
| | (14,752 | ) | | 58,698 |
| | (40,178 | ) |
| Net income (loss) attributable to TEGNA Inc. | $ | 42,757 |
| | $ | 118,683 |
| | $ | (29,881 | ) | | $ | 303,578 |
|
| | | | | | | | |
| Weighted average number of common shares outstanding - basic | 215,863 |
| | 214,813 |
| | 215,558 |
| | 216,865 |
|
| Effect of dilutive securities: | | | | |
|
| |
|
|
| Restricted stock units | 828 |
| | 1,630 |
| | 880 |
| | 1,662 |
|
| Performance share units | 721 |
| | 775 |
| | 674 |
| | 1,049 |
|
| Stock options | 683 |
| | 881 |
| | 715 |
| | 935 |
|
| Weighted average number of common shares outstanding - diluted | 218,095 |
| | 218,099 |
| | 217,827 |
| | 220,511 |
|
| | | | | | | | |
| Earnings from continuing operations per share - basic | $ | 0.24 |
| | $ | 0.36 |
| | $ | 0.67 |
| | $ | 0.98 |
|
| (Loss) earnings from discontinued operations per share - basic | (0.04 | ) | | 0.19 |
| | (0.81 | ) | | 0.42 |
|
| Net income (loss) per share - basic | $ | 0.20 |
| | $ | 0.55 |
| | $ | (0.14 | ) | | $ | 1.40 |
|
| | | | | | | | |
| Earnings from continuing operations per share - diluted | $ | 0.23 |
| | $ | 0.35 |
| | $ | 0.66 |
| | $ | 0.96 |
|
| (Loss) earnings from discontinued operations per share - diluted | (0.04 | ) | | 0.19 |
| | (0.80 | ) | | 0.42 |
|
| Net income (loss) per share - diluted | $ | 0.19 |
| | $ | 0.54 |
| | $ | (0.14 | ) | | $ | 1.38 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
| Net Income | $ | 146,157 | | | $ | 128,699 | | | $ | 412,384 | | | $ | 348,385 | |
| Net income attributable to the noncontrolling interest | (92) | | | (419) | | | (516) | | | (861) | |
| Adjustment of redeemable noncontrolling interest to redemption value | (235) | | | 116 | | | (447) | | | (32) | |
| Earnings available to common shareholders | $ | 145,830 | | | $ | 128,396 | | | $ | 411,421 | | | $ | 347,492 | |
| | | | | | | |
| Weighted average number of common shares outstanding - basic | 223,968 | | | 221,805 | | | 223,456 | | | 221,314 | |
| Effect of dilutive securities: | | | | | | | |
| Restricted stock units | 621 | | | 749 | | | 469 | | | 626 | |
| Performance shares | 332 | | | 245 | | | 296 | | | 231 | |
| Stock options | — | | | — | | | — | | | 1 | |
| Weighted average number of common shares outstanding - diluted | 224,921 | | | 222,799 | | | 224,221 | | | 222,172 | |
| | | | | | | |
| Earnings per share - basic | $ | 0.65 | | | $ | 0.58 | | | $ | 1.84 | | | $ | 1.57 | |
| Earnings per share - diluted | $ | 0.65 | | | $ | 0.58 | | | $ | 1.83 | | | $ | 1.56 | |
Our calculation of diluted earnings per share includes the impact ofdilutive effects for the assumed vesting of outstanding restricted stock units and performance share units, and the exercise of outstanding stock options based on the treasury stock method when dilutive. The diluted earnings per share amounts exclude the effects of approximately 96,000 and 142,000 stock awards for the three and nine months ended September 30, 2017, respectively; and 192,000 and 292,000 for the three and nine months ended September 30, 2016, respectively, as their inclusion would be accretive to earnings per share.
shares.
NOTE 98 – Fair value measurement
We measure and record certain assets and liabilities at fair value in the accompanying condensed consolidated financial statements certain assets and liabilities at fair value.statements. U.S. GAAP establishes a hierarchy for those instruments measured at fair value that distinguishes between market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 - Quoted market prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3 - Unobservable inputs developed using our own estimates and assumptions, which reflect those that a market participant would use.
The following table summarizes our assets and liabilities measured at fair value inIn the accompanying Condensed Consolidated Balance Sheets as of September 30, 2017, and December 31, 2016 (in thousands): |
| | | | | | | | | | | | | | | |
| | Fair Value Measurements as of Sept. 30, 2017 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| | | | | | | | |
| Available for sale investment | — |
| | — |
| | — |
| | — |
|
| Total | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| | | | | | | | |
| Deferred compensation investments valued using net asset value as a practical expedient: | | |
| Interest in registered investment companies | | | | | | | $ | 14,921 |
|
| Fixed income fund | | | | | | | 13,672 |
|
| Total investments at fair value | | | | | | | $ | 28,593 |
|
|
| | | | | | | | | | | | | | | |
| | Fair Value Measurements as of Dec. 31, 2016 (recast) |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| | | | | | | | |
| Available for sale investment | 16,744 |
| | — |
| | — |
| | 16,744 |
|
| Total | $ | 16,744 |
| | $ | — |
| | $ | — |
| | $ | 16,744 |
|
| | | | | | | | |
| Deferred compensation investments valued using net asset value as a practical expedient: | | |
| Interest in registered investment companies | | | | | | | $ | 10,140 |
|
| Fixed income fund | | | | | | | 13,575 |
|
| Total investments at fair value | | | | | | | $ | 40,459 |
|
Available for sale investment: Our investment previously consisted of shares of common stock of Gannett Co., Inc., which had been classified as a Level 1 asset as the shares are listed on the New York Stock Exchange. During the secondfirst quarter of 20172022, we recorded an OTTI lossa $2.5 million impairment charge, in the“Other non-operating items, line item of thenet” within our Consolidated Statement of Income, anddue to the decline in the third quarterfair value of 2017 we sold the investment in its entirety.
Interest in registered investment companies: These investments include one fundof our investments. The fair value was determined using a market approach which invests in intermediate-term investment grade bonds and a fund which invests in equities listed predominantlywas based on European and Asian exchanges. Funds are valued using the net asset values as quoted through publicly available pricing sources and investments are redeemable on request.
Fixed income fund investment: Valued using the net asset value provided monthly by the fund company and shares are generally redeemable on request. There are no unfunded commitments to these investments as of September 30, 2017.
In addition to the financial instruments listedsignificant inputs not observable in the table above, wemarket, and thus represented a Level 3 fair value measurement. We also hold other financial instruments, including cash and cash equivalents, receivables, accounts payable and debt. The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values. The fair value of our total debt, based on the bid and ask quotes for the related debt (Level 2), totaled $3.49$2.88 billion at September 30, 2017,2022, and $4.19$3.40 billion at December 31, 2016.2021.
The sale of the majority of our ownership in CareerBuilder resulted in a $342.9 million pre-tax loss recorded within discontinued operations (see Note 12). The loss includes a goodwill impairment charge of $332.9 million. The valuation used in
NOTE 9 – Other matters
the Step 1 goodwill impairment test was based on the enterprise value determined in the purchase agreement (which represents a Level 3 input in the fair value hierarchy).Litigation
DuringIn the third quarter of 2017,2018, certain national media outlets reported the existence of a fewconfidential investigation by the United States Department of ourJustice Antitrust Division (DOJ) into the local television advertising sales practices of station owners. We received a Civil Investigative Demand (CID) in connection with the DOJ’s investigation. On November 13 and December 13, 2018, the DOJ and seven other broadcasters settled a DOJ complaint alleging the exchange of competitively sensitive information in the broadcast television industry. In June 2019, we and four other broadcasters entered into a substantially identical agreement with DOJ, which was entered by the court on December 3, 2019. The settlement contains no finding of wrongdoing or liability and carries no penalty. It prohibits us and the other settling entities from sharing certain confidential business information, or using such information pertaining to other broadcasters, except under limited circumstances. The settlement also requires the settling parties to make certain enhancements to their antitrust compliance programs, to continue to
cooperate with the DOJ’s investigation, and to permit DOJ to verify compliance. The costs of compliance have not been material, nor do we expect future compliance costs to be material.
Since the national media reports, numerous putative class action lawsuits were filed against owners of television stations (the Advertising Cases) in different jurisdictions. Plaintiffs are a class consisting of all persons and entities in the United States who paid for all or a portion of advertisement time on local television provided by the defendants. The Advertising Cases assert antitrust and other claims and seek monetary damages, attorneys’ fees, costs and interest, as well as injunctions against the allegedly wrongful conduct.
These cases have been consolidated into a single proceeding in the United States District Court for the Northern District of Illinois, captioned Clay, Massey & Associates, P.C. v. Gray Television, Inc. et. al., filed on July 30, 2018. At the court’s direction, plaintiffs filed an amended complaint on April 3, 2019, that superseded the original complaints. Although we were impacted by hurricanes Harvey and Irma. In particular, Hurricane Harvey caused major damage to our Houston television station (KHOU), andnamed as a result, we recognized $10.2 milliondefendant in non-cash charges, writing off destroyed equipmentsixteen of the original complaints, the amended complaint did not name TEGNA as a defendant. After TEGNA and recording an impairmentfour other broadcasters entered into consent decrees with the DOJ in June 2019, the plaintiffs sought leave from the court to further amend the complaint to add TEGNA and the other settling broadcasters to the valueproceeding. The court granted the plaintiffs’ motion, and the plaintiffs filed the second amended complaint on September 9, 2019. On October 8, 2019, the defendants jointly filed a motion to dismiss the matter. On November 6, 2020, the court denied the motion to dismiss. On March 16, 2022, the plaintiffs filed a third amended complaint, which, among other things, added ShareBuilders, Inc., as a named defendant. ShareBuilders filed a motion to dismiss on April 15, 2022, which was granted by the court without prejudice on August 29, 2022. TEGNA has filed its answer to the third amended complaint denying any violation of law and asserting various affirmation defenses. We believe that the claims asserted in the Advertising Cases are without merit, and intend to defend ourselves vigorously against them.
Litigation Relating to the Merger
As of November 9, 2022, seven lawsuits have been filed by purported TEGNA stockholders in connection with the Merger. The lawsuits have been filed against TEGNA and the current members of the building (fair valueBoard of Directors of TEGNA (the Board of Directors). The complaints generally allege that the preliminary proxy statement filed by TEGNA with the SEC on March 25, 2022 in connection with the Merger contained alleged material misstatements and/or omissions in violation of federal law. Plaintiffs in the complaints generally seek, among other things, to enjoin TEGNA from consummating the Merger, or in the alternative, rescission of the building was determined using a market based valuation). Merger and/or compensatory damages, as well as attorneys’ fees. As of November 9, 2022, all but one of those lawsuits have been voluntarily dismissed.
In addition, we incurred $8.4 million in cash expenses related to repairing the studio and office and providing for additional staffing and operational needs to keep the station operating during and immediately following these weather emergencies. Partially offsetting these expenses, we received initial insurance proceeds of $11.0 million ($5.0 million was received as of September 30, 2017 and $6.0 million wasNovember 9, 2022, TEGNA received four demand letters from purported TEGNA shareholders in October 2017)connection with TEGNA’s filing of a definitive proxy statement with the SEC on April 13, 2022 relating to the Merger (the “definitive proxy statement”). The net expense impact fromEach letter alleged deficiencies in the hurricane of $7.6 million has been recordeddefinitive proxy statement that were similar to the deficiencies alleged in asset impairment and facility consolidation charges on our Consolidated Statements of Income.the complaints referenced above.
We also recorded a non-cash impairment charge of $5.8 millionbelieve that the claims asserted in the second quartercomplaints and letters described above are without merit and no additional disclosures were or are required under applicable law. However, to moot the unmeritorious disclosure claims, to avoid the risks of 2017 associatedthe actions described above delaying or adversely affecting the Merger and to minimize the costs, risks and uncertainties inherent in litigation, without admitting any liability or wrongdoing, TEGNA voluntarily made supplemental disclosures to the definitive proxy statement as described in the Form 8-K filed by TEGNA with the write-offSEC on May 9, 2022. Additional lawsuits arising out of a note receivable from one of our equity method investments (see Note 3).
NOTE 10 – Business segment information
Our reportable segment determination is based on our management and internal reporting structure, the nature of products and services offered by the segments, and the financial information that is evaluated regularly by our chief operating decision maker.
Immediately following the spin-off of Cars.com and the sale of our majority stake in CareerBuilder, we began classifying our operations as one operating and reportable segment, Media, which consists of our 46 television stations operating in 38 markets, offering high-quality television programming and digital content. Also now includedMerger may also be filed in the Media Segment is our DMS business which was previously reported in our Digital Segment.future.
As a result of classifying the former Digital Segment’s historical financial results as discontinued operations there is no remaining activity in 2017 as shown in the tables below. The 2016 activity shown below for our Digital Segment relates to our former Cofactor business which did not meet the criteria for discontinued operation reporting when the business was sold in December 2016. The historical periods below have also been updated to restate the historical results of our DMS business within our Media business.
Segment operating results are summarized as follows (in thousands): |
| | | | | | | | | | | | | | | |
| | Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | | | (recast) | | | | (recast) |
| Revenues: | | | | | | | |
| Media | $ | 464,264 |
| | $ | 517,021 |
| | $ | 1,412,703 |
| | $ | 1,449,202 |
|
| Digital | — |
| | 2,596 |
| | — |
| | 8,031 |
|
| Total | $ | 464,264 |
| | $ | 519,617 |
| | $ | 1,412,703 |
| | $ | 1,457,233 |
|
| | | | | | | | |
| Operating Income (net of depreciation, amortization, asset impairment and facility consolidation charges): | | | | | | | |
Media (a) | $ | 130,338 |
| | $ | 219,766 |
| | $ | 433,629 |
| | $ | 568,163 |
|
| Digital | — |
| | (17,832 | ) | | — |
| | (23,300 | ) |
Corporate (a) | (13,477 | ) | | (16,083 | ) | | (43,577 | ) | | (46,974 | ) |
| Total | $ | 116,861 |
| | $ | 185,851 |
| | $ | 390,052 |
| | $ | 497,889 |
|
| | | | | | | | |
| Depreciation, amortization, asset impairment and facility consolidation charges: | | | | | | | |
| Media | $ | 27,538 |
| | $ | 18,583 |
| | $ | 67,864 |
| | $ | 59,735 |
|
| Digital | — |
| | 15,565 |
| | — |
| | 16,297 |
|
| Corporate | 596 |
| | 57 |
| | 1,115 |
| | 3,109 |
|
| Total | $ | 28,134 |
| | $ | 34,205 |
| | $ | 68,979 |
| | $ | 79,141 |
|
| | | | | | | | |
| (a) In the first quarter of 2017, we adopted new accounting guidance that changed the classification of certain components of net periodic pension and other post-retirement benefit expense (post-retirement benefit expense). The service cost component of the post-retirement benefit expense will continue to be presented as an operating expense while all other components of post-retirement benefit expense will be presented as non-operating expense. The prior year period was adjusted to reflect the effects of applying the new guidance. This resulted in an increase to operating income in third quarter of 2017 and 2016 of $1.7 million and $1.8 million and for the nine months ended September 30, 2017 and 2016 of $4.9 million and $5.8 million, respectively. Net income, earnings per share, and retained earnings were not impacted by the new standard. |
NOTE 11 – Other matters
Commitments, contingencies and other matters
We, along with a number of our subsidiaries, also are defendants in other judicial and administrative proceedings involving matters incidental to our business. We do not believe that any material liability will be imposed as a result of theseany of the foregoing matters.
Voluntary Retirement ProgramRelated Party Transactions
During the first quarter of 2016, we initiated a Voluntary Retirement Program (VRP) at our Media Segment. Under the VRP, Media employees meeting certain eligibility requirements were offered buyout paymentsWe have an equity investment in exchange for voluntarily retiring. Eligible non-union employees had until April 7, 2016, to retire under the plan. In 2016, based on acceptances received, we recorded $16.0 million of severance expense. Upon separation, employees accepting the VRP received salary continuation payments primarily based on years of service, the majority ofMadHive which occurred evenly over the 12-month period following separation date. As of September 30, 2017, we had less than $0.4 million of VRP buyout obligation remaining.
FCC Broadcast Spectrum Program
Congress authorized the Federal Communications Commission (FCC) to conduct a voluntary incentive auction to reallocate certain spectrum currently occupied by television broadcast stations to mobile wireless broadband services, along withis a related “repacking”party of TEGNA. In addition to our investment, we also have a commercial agreement with MadHive, under which MadHive supports our Premion business in acquiring over-the-top advertising inventory and delivering corresponding advertising impressions. In the television spectrum for remaining television stations. The repacking requires that certain television stations move to different channels,third quarter and some stations will have smaller service areas and/or experience additional interference. Congress announced the resultsfirst nine months of the auction, including a list2022, we incurred expenses of the stations to be repacked, in April 2017. None of our stations will relinquish any spectrum rights$30.4 million and $86.3 million, respectively, as a result of the auction,commercial agreement with MadHive. In the third quarter and accordinglyfirst nine months of 2021, we will not receive any incentive auction proceeds. The FCC has, however, notified us that 13incurred expenses of our stations will be repacked to new channels. The repacking process is scheduled to occur over$19.7 millionand $62.1 million, respectively, as a 39-month period, divided into ten phases. Our stations have been assigned to phases two through nine,result of the commercial agreement with MadHive. As of September 30, 2022, and a majority of our capital expenditures in connectionDecember 31, 2021 we had accounts payable and accrued liabilities associated with the repack will occur in 2018 and 2019.MadHive commercial agreements of $19.4 million and $8.9 million, respectively.
We are eligible to seek reimbursement for costs associatedIn December 2021, we renewed our two existing commercial agreements with implementing changes to our facilities required by the repack. The legislation authorizing the incentive auction and repacking established a $1.75 billion fund for reimbursement of costs incurred by stations required to change channels in the repacking. The FCC has reported that the aggregate cost estimated by repacked stations to complete the repack will be almost $1.9 billion. In October 2017, the FCC announced that it had made an approximately $1 billion allocation from the fund to repacked stations to allow those stations to begin to be reimbursed for expenses incurred in connectionMadHive. Simultaneously with the construction of facilities on reassigned channels. This allocation represents approximately 52% of the total estimated demand for repack funds. Althoughcommercial agreement renewals, we expect the FCC to make additional allocations from the fund, it is not clear at this time whether the FCC ultimately will receive from Congress the additional funds necessary to completely reimburse each repacked station for all amounts incurred in connection with the repack. Beyond the potential for not being reimbursed for all amounts we incur, it is still too early to predict the ultimate impact of the incentive auction and repacking upon our business.
As noted above, while we did not sell any of our spectrum in the auction, we did enter into a channel share agreement with another broadcaster that sold spectrum in the auction. Pursuant toalso amended the terms of our channel share agreementthen outstanding available-for-sale convertible debt security that we held as discussed in Note 3. In exchange for the convertible debt modifications, we received $32.6 millionfavorable terms in cash proceeds duringour renewed commercial agreements. We estimated the third quarterfair value of 2017. These proceeds were deferred and will be amortized onour available-for-sale security at December 31, 2021 using a straight-line basis as other revenue over a 20 year period. The $32.6 million cash proceeds were reflected as cash flow from operating activities on our Condensed Consolidated Statements of Cash Flow.
NOTE 12 – Discontinued operations
Cars.com spin-off
On May 31, 2017, we completed the previously announced spin-off of Cars.com creating two publicly traded companies: TEGNA, an innovative media company with the largest broadcast group among major network affiliates in the top 25 markets; and Cars.com, a leading digital automotive marketplace. The spin-off was effected through a pro rata distribution of all outstanding common shares of Cars.com to TEGNA stockholders of record at the close of business on May 18, 2017 (the “Record Date”). Stockholders retained their TEGNA shares and received one share of Cars.com for every three shares of TEGNA stock they ownedmarket fair value approach based on the Record Date. Cars.com began “regular way” trading on the New York Stock Exchange on June 1, 2017 under the symbol “CARS”. In connection with the Cars.com spin-off,cash we received a one time tax-free cash distribution from Cars.com of $650.0 million. In the second quarter of 2017, we used $609.9 millionexpect to receive upon maturity of the tax-free distribution proceeds to fully pay down outstanding revolving credit agreement borrowings. In October 2017, we used the remainder of the proceeds to pay down a portion of the outstanding principal on unsecured notes due in October 2019 (see Note 5).
Separation Agreement
We entered into a separation agreement with Cars.com which sets forth, among other things, the identified assets transferred, the liabilities assumednote and the contracts assigned to each of TEGNA and Cars.com as part ofestimated cash savings that the separation and the conditions related to the distribution of Cars.com outstanding stock to TEGNA stockholders.
Transition Services Agreement
We entered into a transition services agreement with Cars.com prior to the distribution pursuant to which we and our subsidiariesfavorable contract terms will provide certain services to Cars.com on an interim and transitional basis, not to exceed 24 months. The services to be provided include certain tax, human resource and risk management consulting services, and certain other short term services to complete a limited number of ongoing analysis projects. The agreed upon charges for such services are generally intended to allow us to recover all costs and expenses of providing such services, and such charges are not expected to be material to either us or Cars.com.
The transition services agreement will terminate on the expiration ofover the term of the last service provided under it, with a minimum service period of 60 days and a maximum service period of 24 months, with most services expected to lastcommercial agreements. In January 2022, we recorded an intangible contract asset for less than the maximum service period following the distribution date. Cars.com generally can terminate a particular service prior$20.8 million (equal to the scheduled expiration date, subject generally toestimated cash savings), and are amortizing this asset on a straight-line
basis over the minimum service period and a minimum notice period of 45 days.
Tax Matters Agreement
Prior to the distribution, we entered into a tax matters agreement that governs the parties’ respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failurenoncancellable term of the distribution and certain related transactions to qualify as tax-free for U.S. federal income tax purposes), tax attributes, the preparation and filingcommercial agreements of tax returns, the controltwo years. This non-cash expense is recorded within “Cost of audits and other tax proceedings and assistance and cooperation in respect of tax matters.
Employee Matters Agreement
We entered into an employee matters agreement with Cars.com prior to the distribution to allocate liabilities and responsibilities relating to employment matters, employee compensation and benefit plans and programs and other related matters. The employee matters agreement governs certain compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of each company.
The employee matters agreement provides that, unless otherwise specified, Cars.com will be responsible for liabilities associated with employees who will be employed by Cars.com following the spin-off and former employees whose last employment was with the Cars.com businesses, and we will be responsible for all other current and former TEGNA employees. Cars.com will retain sponsorship of 401(k) retirement plans, deferred compensation plans and other incentive plans maintained for the exclusive benefit of Cars.com employees as well as various welfare plans applicable to the Cars.com employees.
CareerBuilder Sale
On July 31, 2017, we sold our majority ownership interest in CareerBuilder to an investor group led by investment funds managed by affiliates of Apollo Global Management, LLC, a leading global alternative investment manager, and the Ontario Teachers’ Pension Plan Board. Our share of the pre-tax net cash proceeds from the sale was $198.3 million. These net proceeds were used in October 2017 to pay down existing debt (see Note 5). Additionally, during the third quarter of 2017 and prior to the closing of the sale, CareerBuilder issued a final dividend to its selling shareholders, of which $25.8 million was retained by TEGNA. As part of the agreement, we remain an ongoing partner in CareerBuilder, reducing our 53% controlling interest to approximately 17% interest (or approximately 12% on a fully-diluted basis) and two seats on CareerBuilder’s 10 person board. As a result, subsequent to the sale, CareerBuilder is no longer consolidatedrevenues,” within our reported operating results. Our remaining ownership interest will be accounted for as an equity method investment. Subsequent to the date of sale we recorded $0.5 million of equity earnings during the remainder of the third quarter of 2017 from our remaining interest in CareerBuilder.
FinancialConsolidated Statement Presentation of Digital Segment
As a result of the Cars.com and CareerBuilder transactions described above, the operating results and financial position of our former Digital Segment have been included in discontinued operations in the Condensed Consolidated Balance Sheet and Consolidated Statements of Income for all applicable periods presented. The results of discontinued operations for the nine months ended September 2017 include a $342.9 million pre-tax loss related to the sale of CareerBuilder (after noncontrolling interest, $271.7 million of the pre-tax loss is attributable to TEGNA). The pre-tax loss includes a goodwill impairment charge of $332.9 million and costs to sell the business of $10.9 million. Fair value used for the pre-tax loss was based on the enterprise value of CareerBuilder as determined in the definitive purchase agreement.
The carrying value of the assets and liabilities of our former Digital Segment’s discontinued operations as of December 31, 2016 were as follows (in thousands):
|
| | | |
| | |
| | Dec. 31, 2016 |
| | |
| ASSETS | |
| Cash and cash equivalents | $ | 61,041 |
|
| Accounts receivable, net | 214,171 |
|
| Property and equipment, net | 74,695 |
|
| Goodwill | 1,488,112 |
|
| Other Intangibles, net | 1,718,592 |
|
| Other assets | 71,193 |
|
| Total assets | $ | 3,627,804 |
|
| | |
| LIABILITIES | |
| Accounts payable | $ | 166,853 |
|
| Deferred revenue | 110,071 |
|
| Deferred tax liability | 280,264 |
|
| Other liabilities | 66,969 |
|
| Total liabilities | $ | 624,157 |
|
The financial results of discontinued operations in the third quarter and the nine months ended September 30, 2017 and 2016 are presented as a loss (income) from discontinued operations, net of tax, on our Consolidated Statements of Income. The following table presentsdebt matured in June 2022 at which time the financial resultsprincipal balance of discontinued operations (in thousands):$3.0 million plus accrued interest was paid to us.
|
| | | | | | | | | | | | | | | |
| | Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| | 2017 (1) | | 2016 | | 2017 (1) | | 2016 (2) |
| | | | | | | | |
| Operating revenues | $ | 54,874 |
| | $ | 340,649 |
| | $ | 647,021 |
| | $ | 999,929 |
|
| | | | | | | | |
| Cost of revenue and SG&A expenses | 60,301 |
| | 228,152 |
| | 522,287 |
| | 708,815 |
|
| Depreciation | — |
| | 9,421 |
| | 19,569 |
| | 24,843 |
|
| Amortization | — |
| | 23,385 |
| | 40,300 |
| | 68,159 |
|
| Loss on sale of CareerBuilder | (1,872 | ) | | — |
| | 342,900 |
| | — |
|
| Total operating expenses | 58,429 |
| | 260,958 |
| | 925,056 |
| | 801,817 |
|
| | | | | | | | |
| Total operating (loss) income | (3,555 | ) | | 79,691 |
| | (278,035 | ) | | 198,112 |
|
| | | | | | | | |
| Non-operating income (expense) | 647 |
| | (3,304 | ) | | (1,078 | ) | | (8,989 | ) |
| | | | | | | | |
| (Loss) income from discontinued operations, before income taxes | (2,908 | ) | | 76,387 |
| | (279,113 | ) | | 189,123 |
|
| Provision for income taxes | (7,895 | ) | | (19,689 | ) | | 45,852 |
| | (56,982 | ) |
| (Loss) income from discontinued operations, net of tax | $ | (10,803 | ) | | $ | 56,698 |
| | $ | (233,261 | ) | | $ | 132,141 |
|
| | | | | | | | |
| (1) The quarter and nine months ended September 30, 2017 include CareerBuilder’s operations through the date of sale on July 31, 2017. Cars.com operations are included in the nine months ended September 30, 2017 through the date of spin-off on May 31, 2017. |
| (2) The nine months ended September 30, 2016 include approximately $7.5 million of net loss from discontinued operations related to the operations of our former Sightline business through the date of sale on March 18, 2016. |
In our Consolidated Statements of Cash Flows, the cash flows from discontinued operations are not separately classified. As such, major categories of discontinued operation cash flows for the nine months ended September 30, 2017 and 2016 are presented below (in thousands):
|
| | | | | | | |
| | Nine months ended Sept. 30, |
| | 2017 (1) | | 2016 |
| | | | |
| Depreciation | $ | 19,569 |
| | $ | 24,843 |
|
| Amortization | 40,300 |
| | 68,159 |
|
| Capital expenditures | 37,441 |
| | 38,825 |
|
| Payments for acquisitions, net of cash acquired | $ | — |
| | $ | 196,750 |
|
| | | | |
| (1) The nine months ended September 30, 2017 includes Cars.com through the spin-off date of May 31, 2017 and CareerBuilder’s operations through the date of sale on July 31, 2017. |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Company Overview
We are an innovative media company that servesserving the greater good of our communities. Across platforms, we tell empowering stories, conduct impactful investigations and deliver innovative marketing services. With 4664 television stations and two radio stations in 3851 U.S. markets, we are the largest owner of top four network affiliates in the top 25 markets among independent station groups, reaching approximately one-third39% of all U.S. television households nationwide.households. We also own leading multicast networks True Crime Network, Twist and Quest. Each television station also has a robust digital presence across online, mobile, connected television and social platforms, reaching consumers whenever, whereveron all devices and platforms they are. Each month, we reach 50 million adults on-air and 35 million across our digital platforms.use to consume news content. We have been consistently honored with the industry’s top awards, including Edward R. Murrow, George Polk, Alfred I. DuPont and Emmy Awards. WeThrough TEGNA Marketing Solutions (TMS), our integrated sales and back-end fulfillment operations, we deliver results for advertisers through unparalleledacross television, digital and innovative solutionsover-the-top (OTT) platforms, including Premion, our Over the Top (“OTT”) localOTT advertising network, Premion, centralized marketing resource, Hatch; and our digital marketing services (DMS) business, a one-stop shop for local businesses to connect with consumers through digital marketing. Across platforms, we tell empowering stories, conduct impactful investigations and deliver innovative marketing solutions. network.
We continue to make innovative programming a priority and invest in local news and other special programming to ensure we stay connected to our audiences and empower them throughout the day. For example, we recently launched VERIFY news, a fact-checking segment across platforms, and HeartThreads, a new national digital content vertical. Additionally, in September 2017 we premiered our TEGNA-owned daily live syndicated program “Daily Blast LIVE,” which airs on 36 TEGNA stations and nationally on Facebook and YouTube. Also in September, we launched a daily talk show, “Sister Circle,” produced out of WATL in Atlanta, which airs in 12 TEGNA markets and nationally live on TV One, reaching 60% of U.S. television households. Finally, our KXTV station in Sacramento partnered with Cheddar network to launch “Cheddar Local,” which provides KXTV with local business and technology segments relevant to the Sacramento community.
After completing the strategic actions discussed below, we now have one operating and reportable segment. The primary sources of our revenues are: 1) subscription revenues, reflecting fees paid by satellite, cable, OTT (companies that deliver video content to consumers over the Internet) and telecommunications providers to carry our television signals on their systems; 2) advertising & marketing services (AMS) revenues, which include local and national non-political television advertising, as well as DMSdigital marketing services (including Premion), and advertising on the stations’ websites, and tablet and mobile products; 2)products and OTT apps; 3) political advertising revenues, which are driven by electionseven year election cycles at the local and peak in even yearsnational level (e.g. 2016, 2014)2022, 2020, etc.) and particularly in the second half of those years; 3) subscription revenues, representing fees primarily paid by satellite and cable operators and telecommunications companies to carry our television signals on their systems and OTT revenues; and 4) other services, such as production of programming, tower rentals, and distribution of our local news content.
Merger Agreement
On February 22, 2022, we entered into the Merger Agreement with Parent, Merger Sub, and solely for purposes of certain provisions specified therein, other subsidiaries of Parent, certain affiliates of Standard General and CMG, and certain of its subsidiaries. We still expect the closing of the transaction, which is subject to regulatory approvals, and other customary closing conditions, to occur in the second half of 2022. See Notes 1 and 9 to the condensed consolidated financial statements for further information about the Merger Agreement, the pending Merger and related matters.
We plan to continue to pay our regular quarterly dividend of $0.095 per share through the closing of the Merger, which is the maximum rate and frequency permitted by the Merger Agreement. As a result of the pending transaction, we suspended share repurchases under our previously announced share repurchase program.
Consolidated Results from Operations
The following discussion is a comparison of our consolidated results on a GAAP basis. The year-to-year comparison of financial results is not necessarily indicative of future results. In addition, see the section titled “Results from Operations - Non-GAAP Information” for additional tables presenting information which supplements our financial information provided on a GAAP basis.
Our operating results are subject to significant fluctuations across yearly periods (primarily driven by even-year political election cycles). As such, in addition to prior year comparisons, our management team and Board of Directors also review quarterly and year-to-date operating results compared to the same periods two years ago (e.g., 2022 vs. 2020). We believe these additional comparisons provide useful information to investors and therefore, have supplemented our prior year comparisons of consolidated results with comparisons against third partiesquarter and productionnine months ended September 30, 2020 results (through operating income).
Our consolidated results of operations on a GAAP basis were as follows (in thousands, except per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| 2022 | | 2021 | | Change from 2021 | | 2020 | | Change from 2020 | | 2022 | | 2021 | | Change from 2021 | | 2020 | | Change from 2020 |
| | | | | | | | | | | | | | | | | | | |
| Revenues | $ | 803,111 | | | $ | 756,487 | | | 6 | % | | $ | 738,389 | | | 9 | % | | $ | 2,362,115 | | | $ | 2,216,446 | | | 7 | % | | $ | 2,000,205 | | | 18 | % |
| | | | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | |
| Cost of revenues | 428,891 | | | 399,751 | | | 7 | % | | 379,185 | | | 13 | % | | 1,260,576 | | | 1,191,561 | | | 6 | % | | 1,103,920 | | | 14 | % |
| Business units - Selling, general and administrative expenses | 98,582 | | | 100,425 | | | (2 | %) | | 89,943 | | | 10 | % | | 300,136 | | | 286,700 | | | 5 | % | | 267,919 | | | 12 | % |
| Corporate - General and administrative expenses | 13,367 | | | 11,891 | | | 12 | % | | 11,263 | | | 19 | % | | 48,299 | | | 51,944 | | | (7 | %) | | 61,289 | | | (21 | %) |
| Depreciation | 15,219 | | | 16,792 | | | (9 | %) | | 16,086 | | | (5 | %) | | 46,058 | | | 48,526 | | | (5 | %) | | 49,697 | | | (7 | %) |
| Amortization of intangible assets | 14,953 | | | 15,774 | | | (5 | %) | | 17,113 | | | (13 | %) | | 44,952 | | | 47,307 | | | (5 | %) | | 50,577 | | | (11 | %) |
| Spectrum repacking reimbursements and other, net | (159) | | | 504 | | | *** | | (2,902) | | | (95 | %) | | (322) | | | (2,394) | | | (87 | %) | | (10,533) | | | (97 | %) |
| Total operating expenses | $ | 570,853 | | | $ | 545,137 | | | 5 | % | | $ | 510,688 | | | 12 | % | | $ | 1,699,699 | | | $ | 1,623,644 | | | 5 | % | | $ | 1,522,869 | | | 12 | % |
| | | | | | | | | | | | | | | | | | | |
| Total operating income | $ | 232,258 | | | $ | 211,350 | | | 10 | % | | $ | 227,701 | | | 2 | % | | $ | 662,416 | | | $ | 592,802 | | | 12 | % | | $ | 477,336 | | | 39 | % |
| | | | | | | | | | | | | | | | | | | |
| Non-operating expenses | (42,274) | | | (45,781) | | | (8 | %) | | (53,464) | | | (21 | %) | | (117,437) | | | (140,947) | | | (17 | %) | | (169,596) | | | (31 | %) |
| Provision for income taxes | 43,827 | | | 36,870 | | | 19 | % | | 41,967 | | | 4 | % | | 132,595 | | | 103,470 | | | 28 | % | | 69,699 | | | 90 | % |
| Net income | 146,157 | | | 128,699 | | | 14 | % | | 132,270 | | | 10 | % | | 412,384 | | | 348,385 | | | 18 | % | | 238,041 | | | 73 | % |
| Net (income) loss attributable to redeemable noncontrolling interest | (92) | | | (419) | | | (78 | %) | | (51) | | | 80 | % | | (516) | | | (861) | | | (40 | %) | | 433 | | | *** |
| Net income attributable to TEGNA Inc. | $ | 146,065 | | | $ | 128,280 | | | 14 | % | | $ | 132,219 | | | 10 | % | | $ | 411,868 | | | $ | 347,524 | | | 19 | % | | $ | 238,474 | | | 73 | % |
| | | | | | | | | | | | | | | | | | | |
| Earnings per share - basic | $ | 0.65 | | | $ | 0.58 | | | 12 | % | | $ | 0.60 | | | 8 | % | | $ | 1.84 | | | $ | 1.57 | | | 17 | % | | $ | 1.08 | | | 70 | % |
| Earnings per share - diluted | $ | 0.65 | | | $ | 0.58 | | | 12 | % | | $ | 0.60 | | | 8 | % | | $ | 1.83 | | | $ | 1.56 | | | 17 | % | | $ | 1.08 | | | 69 | % |
| | | | | | | | | | | | | | | |
| *** Not meaningful | | | | |
Revenues
Our Subscription revenue category includes revenue earned from cable and satellite providers for the right to carry our signals and the distribution of TEGNA stations on OTT streaming services. Our AMS category includes all sources of our traditional television advertising material.and digital revenues including Premion and other digital advertising and marketing revenues across our platforms.
Our revenues and operating results are subject to seasonal fluctuations. Generally, our second and fourth quarter revenues and operating results are stronger than those we report for the first and third quarter. This is driven by the second quarter reflecting increased spring seasonal advertising, while the fourth quarter typically includes increased advertising related to the
holiday season. In addition, our revenue and operating results are subject to significant fluctuations across yearly periods resulting from political advertising. In even numbered years, political spending is usually significantly higher than in odd numbered years due to advertising for the local, state and national elections. Additionally, every four years, we typically experience even greater increases in political advertising in connection with the presidential election. The strong demand for advertising from political advertisers in these even years can result in the significant use of our available inventory (leading to a “crowd out” effect), which can diminish our AMS revenue in the even year of a two year election cycle, particularly in the fourth quarter of those years.
The following table summarizes the year-over-year changes in our revenue categories (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| 2022 | | 2021 | | Change from 2021 | | 2020 | | Change from 2020 | | 2022 | | 2021 | | Change from 2021 | | 2020 | | Change from 2020 |
| | | | | | | | | | | | | | | | | | | |
| Subscription | $ | 377,368 | | | $ | 368,672 | | | 2 | % | | $ | 316,677 | | | 19 | % | | $ | 1,158,101 | | | $ | 1,130,490 | | | 2 | % | | $ | 972,954 | | | 19 | % |
| Advertising & Marketing Services | 320,764 | | | 364,234 | | | (12) | % | | 298,605 | | | 7 | % | | 1,010,490 | | | 1,027,957 | | | (2) | % | | 822,841 | | | 23 | % |
| Political | 92,904 | | | 15,010 | | | *** | | 116,494 | | | (20) | % | | 161,727 | | | 34,019 | | | *** | | 181,425 | | | (11) | % |
| Other | 12,075 | | | 8,571 | | | 41 | % | | 6,613 | | | 83 | % | | 31,797 | | | 23,980 | | | 33 | % | | 22,985 | | | 38 | % |
| Total revenues | $ | 803,111 | | | $ | 756,487 | | | 6 | % | | $ | 738,389 | | | 9 | % | | $ | 2,362,115 | | | $ | 2,216,446 | | | 7 | % | | $ | 2,000,205 | | | 18 | % |
| | | | | | | | | | | | | | | | | | | |
| *** Not meaningful | | | | | | | | | | | | | | | | | | | |
2022 vs. 2021
Total revenues increased $46.6 million in the third quarter of 2022 and $145.7 million in the first nine months of 2022 compared to the same periods in 2021. The net increases were primarily due to growth in political revenue ($77.9 million third quarter, $127.7 million first nine months) due to contested primaries and the run up to the mid-term elections which will occur in the fourth quarter. Also contributing to the increase was growth in subscription revenue ($8.7 million third quarter, $27.6 million first nine months) primarily due to annual rate increases under existing agreements, partially offset by declines in subscribers. Partially offsetting these increases was a decline in AMS revenue ($43.5 million third quarter, $17.5 million first nine months). The decline in third quarter revenue was partially due to the crowd out effect of political revenue as well as the absence of last year’s Olympics. Additionally, macroeconomic headwinds negatively impacted AMS revenue in both current year periods.
2022 vs. 2020
Total revenues increased $64.7 million in the third quarter of 2022 and $361.9 million in the first nine months of 2022 compared to the same periods in 2020. The net increases were primarily due to growth in subscription revenue ($60.7 million third quarter, $185.1 million first nine months) mainly due to annual rate increases under existing and newly renegotiated retransmission agreements, partially offset by declines in subscribers. Also contributing was growth in AMS revenue ($22.2 million third quarter, $187.6 million first nine months) reflecting higher demand for advertising despite current macroeconomic headwinds in 2022 (as fiscal year 2020 was adversely impacted by reduced demand due to the COVID-19 pandemic). These increases were partially offset by a decrease in political revenue ($23.6 million third quarter, $19.7 million first nine months) primarily due to 2020 being a presidential election year.
Cost of revenues
2022 vs. 2021
Cost of revenues increased $29.1 million in the third quarter of 2022 and $69.0 million in the first nine months of 2022 compared to the same periods in 2021. The increases were partially due to higher digital expenses ($14.7 million third quarter, $26.4 million first nine months) driven by growth in Premion. Growth in programming costs ($11.8 million third quarter, $34.2 million first nine months) driven by rate increases under existing affiliation agreements also contributed to the increases.
2022 vs. 2020
Cost of revenues increased $49.7 million in the third quarter of 2022 and $156.7 million in the first nine months of 2022 compared to the same periods in 2020. The increases were partially due to growth in programming costs ($30.9 million third quarter, $94.9 million first nine months) driven by rate increases under existing and newly renegotiated affiliation agreements and growth in subscription revenue (certain programming costs are linked to such revenues). Higher digital expenses ($9.9 million third quarter, $40.4 million first nine months) driven by growth in Premion also contributed to the increases.
Business units - Selling, general and administrative expenses
2022 vs. 2021
Business unit selling, general and administrative expenses decreased $1.8 million in the third quarter of 2022 and increased $13.4 million in the first nine months of 2022 compared to the same periods in 2021. The decrease for the quarter was primarily due to a $3.0 million decline in professional fees. This decline was partially offset by the absence in 2022 of a $0.7 million reduction in bad debt expense that occurred in 2021 which was primarily attributable to improved collection trends. The increase in the first nine months was primarily due to a $13.7 million increase in sales commissions and payroll costs driven by growth in digital revenue. Also contributing to the increase was a $2.6 million absence in 2022 of a reduction in bad debt expense primarily attributed to improved collection trends which occurred in 2021. These increases were partially offset by an $8.8 million decline in professional fees.
2022 vs. 2020
Business unit SG&A expenses increased $8.6 million in the third quarter of 2022 and $32.2 million in the first nine months of 2022 compared to the same periods in 2020. The increases were primarily due to higher sales commissions and payroll costs (together, $8.7 million third quarter, $26.9 million first nine months) driven by growth in AMS revenue.
Corporate - General and administrative expenses
Our corporate costs are separated from our business expenses and are recorded as general and administrative expenses in our Consolidated Income Statement. These costs include activities that are not directly attributable or allocable to our media business operations.Statement of Income. This category primarily consists of broad corporate management functions including legal, human resources,Legal, Human Resources, and finance,Finance, as well as activities and costs not directly attributable to the operations of our media business.
Strategic Actions2022 vs. 2021
On May 31, 2017, we completed the previously announced spin-off of Cars.com. The spin-off was achieved through a pro rata distribution of all outstanding common shares of Cars.com to TEGNA stockholders of record at the close of business on May 18, 2017 (the “Record Date”). Stockholders retained their TEGNA sharesCorporate general and received one share of Cars.com for every three shares of TEGNA stock they owned on the Record Date. Cars.com began “regular way” trading on the New York Stock Exchange on June 1, 2017 under the symbol “CARS”. In connection with the Cars.com spin-off we received a one time cash distribution from Cars.com of $650.0 million.
On July 31, 2017, we completed the sale of our majority ownership interest in CareerBuilder to an investor group led by investments funds managed by affiliates of Apollo Global Management, LLC, a leading global alternative investment manager,
and the Ontario Teachers’ Pension Plan Board. Our share of the pre-tax net cash proceeds from the sale was $198.3 million. These net proceeds were used in October 2017 to pay down existing debt (see Note 5). Additionally, prior to the sale, CareerBuilder issued a final dividend to its selling shareholders, $25.8administrative expenses increased $1.5 million of which was retained by TEGNA.
As part of the sale agreement, we remain an ongoing partner in CareerBuilder, reducing our 53% controlling interest to approximately 17% equity interest (or approximately 12% on a fully-diluted basis) and two seats on CareerBuilder’s 10 member board. As a result, CareerBuilder is no longer consolidated within our reported operating results. Our remaining ownership interest is accounted for as an equity method investment.
Consolidated Results from Operations
The following discussion is a period-to-period comparison of our consolidated results from continuing operations on a GAAP basis. On May 31, 2017, we completed the spin-off of Cars.com and on July 31, 2017, we completed the sale of our majority ownership interest in CareerBuilder. Results for Cars.com and CareerBuilder are now reflected as Discontinued Operations in our Consolidated Statements of Income for all applicable periods presented. As a result, we will report one segment going forward which will include the results for Media and a remaining DMS contract that was previously reported in the Digital Segment. The historical financial results also include our former Cofactor business through the date of its sale in December 2016.
The period-to-period comparison of financial results is not necessarily indicative of future results. In addition, see the section on page 26 titled ‘Results from Operations - Non-GAAP Information’ for additional tables presenting information which supplements our financial information provided on a GAAP basis. Our consolidated results of continuing operations on a GAAP basis were as follows (in thousands, except per share amounts):
|
| | | | | | | | | | | | | | | | | | | | | |
| | Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| | 2017 | | 2016 | | Change | | 2017 | | 2016 | | Change |
| | | | (recast) | | | | | | (recast) | | |
| Revenues | $ | 464,264 |
| | $ | 519,617 |
| | (11 | %) | | $ | 1,412,703 |
| | $ | 1,457,233 |
| | (3 | %) |
| | | | | | | | | | | | |
| Operating expenses: | | | | |
|
| | | | | | |
| Cost of revenues, exclusive of depreciation | 235,474 |
| | 200,495 |
| | 17 | % | | 696,565 |
| | 590,058 |
| | 18 | % |
| Business units - selling, general and administrative expenses, exclusive of depreciation | 70,914 |
| | 83,039 |
| | (15 | %) | | 214,645 |
| | 246,280 |
| | (13 | %) |
| Corporate - General and administrative expenses, exclusive of depreciation | 12,881 |
| | 16,027 |
| | (20 | %) | | 42,462 |
| | 43,865 |
| | (3 | %) |
| Depreciation | 15,186 |
| | 13,212 |
| | 15 | % | | 41,721 |
| | 42,653 |
| | (2 | %) |
| Amortization of intangible assets | 5,395 |
| | 5,775 |
| | (7 | %) | | 16,172 |
| | 17,542 |
| | (8 | %) |
| Asset impairment and facility consolidation charges | 7,553 |
| | 15,218 |
| | (50 | %) | | 11,086 |
| | 18,946 |
| | (41 | %) |
| Total operating expenses | $ | 347,403 |
| | $ | 333,766 |
| | 4 | % | | $ | 1,022,651 |
| | $ | 959,344 |
| | 7 | % |
| | | | | | | | | | | | |
| Total operating income | $ | 116,861 |
|
| $ | 185,851 |
| | (37 | %) | | $ | 390,052 |
| | $ | 497,889 |
| | (22 | %) |
| | | | | | | | | | | | |
| Non-operating expense | (54,660 | ) | | (70,673 | ) | | (23 | %) | | (190,515 | ) | | (194,236 | ) | | (2 | %) |
| Provision for income taxes | 11,447 |
| | 38,441 |
| | (70 | %) | | 54,855 |
| | 92,038 |
| | (40 | %) |
| Net income from continuing operations | $ | 50,754 |
| | $ | 76,737 |
| | (34 | %) | | $ | 144,682 |
| | $ | 211,615 |
| | (32 | %) |
| | | | | | | | | | | | |
| Earnings from continuing operations per share - basic | $ | 0.24 |
| | $ | 0.36 |
| | (33 | %) | | $ | 0.67 |
| | $ | 0.98 |
| | (32 | %) |
| Earnings from continuing operations per share - diluted | $ | 0.23 |
| | $ | 0.35 |
| | (34 | %) | | $ | 0.66 |
| | $ | 0.96 |
| | (31 | %) |
Revenues
During the second quarter of 2017, we changed the way we present certain revenues, which we now call Advertising and Marketing Services (AMS), to better reflect our sales transformation strategy that focuses on customer needs versus specific products. This category includes all sources of our traditional and digital revenues including Premion, DMS and other digital advertising and marketing revenues across our platforms.
Also, the “Retransmission” revenue category was renamed “Subscription” to better reflect changes in that revenue stream, including the distribution of TEGNA stations on OTT streaming services.
As a result of these changes, revenues are grouped into the following categories: Advertising & Marketing Services, Political, Subscription, Other, and our former business unit Cofactor (sold in December 2016).
The following table summarizes the year-over-year changes in these select revenue categories (in thousands): |
| | | | | | | | | | | | | | | | | | | | | |
| | Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| | 2017 | | 2016 | | Change | | 2017 | | 2016 | | Change |
Advertising & Marketing Services (a) | $ | 277,817 |
| | $ | 330,589 |
| | (16 | %) | | $ | 843,175 |
| | $ | 934,977 |
| | (10 | %) |
| Political | 3,783 |
| | 38,060 |
| | (90 | %) | | 13,387 |
| | 64,050 |
| | (79 | %) |
| Subscription | 177,692 |
| | 143,676 |
| | 24 | % | | 540,344 |
| | 436,292 |
| | 24 | % |
| Other | 4,972 |
| | 4,696 |
| | 6 | % | | 15,797 |
| | 13,883 |
| | 14 | % |
| Cofactor | — |
| | 2,596 |
| | *** |
| | — |
| | 8,031 |
| | *** |
|
| Total | $ | 464,264 |
| | $ | 519,617 |
| | (11 | %) | | $ | 1,412,703 |
| | $ | 1,457,233 |
| | (3 | %) |
| | | | | | | | | | | | |
| (a) Includes traditional television advertising, digital advertising as well as revenue from our DMS business. |
Revenues decreased $55.4 million, or 11%, in the third quarter of 2017 compared to the same period in 2016. This net decrease was primarily due to a decline in AMS revenue of $52.82022 and decreased $3.6 million or 16%, in the third quarter of 2017. This decline was primarily due to the absence of Olympic revenue in 2017 as compared to $57.3 million in 2016 and lower DMS revenue due to the conclusion of a transition services agreement with Gannett. Partially offsetting the overall AMS decline was an increase in digital revenue, including Premion revenue. Political revenue was down by $34.3 million, due to an expected decrease reflecting the absence of 2016 politically related advertising spending. Partially offsetting these decreases was an increase in subscription revenue of $34.0 million, or 24%, due to the recent renewal of certain retransmission agreements as well as annual rate increases under other existing retransmission agreements.
In the first nine months of 2017, operating revenue decreased $44.5 million, or 3%, compared to the same period in 2016. The net decrease was due to a net decline in AMS revenue of $91.8 million, or 10%, for the first nine months of 2017. The third quarter decline in AMS revenue, described above, drove most of the year-to-date decline. In addition we had lower Super Bowl revenue due to the shift in coverage from our larger CBS station footprint to smaller FOX station footprint (which impacted 2017 results by $9.1 million). These AMS declines were partially offset by an increase in digital revenue, including our Premion revenue. Additionally, political revenue was down $50.7 million for the nine months ended September 30, 2017 due to an expected decrease reflecting the absence of 2016 Presidential election year political spending. Partially offsetting these decreases was an increase in subscription revenue of $104.1 million, or 24%, in the first nine months of 2017 due to the recent renewal of certain retransmission agreements as well as annual rate increases under other existing retransmission agreements.
Cost of Revenues
Cost of revenues increased $35.0 million, or 17%, in the third quarter of 20172022 compared to the same periodperiods in 2016.2021. The increase for the quarter was primarily due to a $42.6 million increase in programming costs (primarily driven by 11 of our NBC stations paying reverse compensation payments for first time$3.7 million M&A-related costs mainly incurred in 2017). This increase was partially offset by a decline in DMS costs of $7.4 million driven by the conclusionsupport of the transition service agreement with Gannett.
Inregulatory review of the Merger. The decrease for the first nine months of 2017, cost of revenues increased $106.5 million, or 18%, compared to the same period in 2016. The increase was primarily due to a $135.1 million increase in programming costs (primarily driven by 11the absence in 2022 of our NBC stations paying reverse compensation payments for first time$16.6 million of advisory fees incurred in 2017). This increase was2021 related to activism defense and a $3.5 million decline in professional fees, partially offset by the absence of $10.8$18.1 million of expenses associated with our 2016 voluntary retirement program and a declineM&A-related costs incurred in DMS costs of $11.8 million associated with the conclusion of the transition service agreement with Gannett.2022.
Business Units - Selling, General and Administrative Expenses2022 vs. 2020
Business unit selling, general and administrative expenses decreased $12.1 million, or 15%, in the third quarter of 2017 compared to the same period in 2016. The decrease was primarily the result of a $6.0 million decline in DMS selling and advertising expense related to the transition service agreement conclusion. Also contributing to the decline was the absence of $2.6 million of Cofactor expenses, due to its disposition in December 2016.
In the first nine months of 2017, business unit selling, general and administrative expenses decreased $31.6 million, or 13%, compared to the same period in 2016. This decrease was due to a $14.7 million decline in DMS selling and advertising expenses, the absence of $6.5 million of expenses associated with Cofactor, and the absence of $4.0 million of expenses associated with our 2016 voluntary retirement program. These decreases were partially offset by $1.6 million of severance expenses for broadcast employees in 2017.
Corporate General and Administrative Expenses
Corporate general and administrative expenses decreased $3.1increased $2.1 million or 20%, in the third quarter of 2017 compared to the same period in 2016. The decrease was primarily due to the absence of $1.62022 and decreased $13.0 million of severance expenses from the third quarter of 2016, as well as the continued right sizing of the corporate function in connection with the strategic actions impacting our former Digital Segment.
During the first nine months of 2017, corporate general and administrative expenses decreased $1.4 million, or 3%, compared to the same period in 2016. This change was primarily due to the absence of $1.6 million of severance expenses from the third quarter of 2016, partially offset by severance expense incurred in the first nine months of 2017 of approximately $1.1 million. The remaining difference is attributable to the continued right sizing of the corporate function in connection with the strategic actions impacting our former Digital Segment.
Depreciation Expense
Depreciation expense increased $2.0 million, or 15%, in the third quarter of 2017 compared to the same period in 2016. The increase was primarily due to $1.4 million of additional depreciation related to a change in useful lives of certain broadcasting assets in connection with the FCC channel reassignment process.
In the first nine months of 2017, depreciation expense decreased $0.9 million, or 2%, as compared to the same period in 2016. The decrease was primarily due to recent declines in the purchase of property and equipment, offset by accelerated depreciation related to a change in useful lives of certain broadcasting assets.
Amortization Expense
Amortization expense decreased by $0.4 million and $1.4 million in the third quarter and first nine months of 2017, respectively,2022 compared to the same periods in 2016.2020. The decreases were a resultincrease for the quarter was primarily driven by $3.7 million of certain assets associated with previous acquisitions reachingM&A-related costs incurred in support of the endregulatory review of their useful lives.the Merger. The decrease for the first nine months was primarily driven by the absence in 2022 of $23.1 million of advisory fees and $4.6 million of M&A due diligence costs incurred in 2020, partially offset by $18.1 million of M&A-related costs incurred in 2022.
Asset Impairment and Facility Consolidation ChargesDepreciation
Asset impairment and facility consolidation charges were $7.62022 vs. 2021
Depreciation expense decreased by $1.6 million in the third quarter of 20172022 and $2.5 million in the first nine months of 2022 compared to $15.2the same periods in 2021. The decreases were due to certain assets reaching the end of their assumed useful lives.
2022 vs. 2020
Depreciation expense decreased by $0.9 million in the third quarter of 2016. In the third quarter of 2017, a few television stations were impacted by hurricanes Harvey2022 and Irma. In particular, Hurricane Harvey caused significant damage to our Houston television station (KHOU); as a result, we recognized $10.2$3.6 million in non-cash charges, writing off destroyed equipment and recording an impairment to the value of the building. In addition, we incurred $8.4 million in cash expenses related to repairing the studio and office and providing for additional staffing and operational needs to keep the stations operating during and immediately following these weather emergencies. Partially offsetting these expenses, we received initial insurance proceeds of $11.0 million ($5.0 million was received as of September 30, 2017 and $6.0 million was received in October 2017). The net expense impact from the hurricane of $7.6 million has been recorded in asset impairment and facility consolidation charges. The 2016 charge relates to a goodwill impairment at Cofactor.
During the first nine months of 2017, asset impairment and facility consolidation charges were $11.1 million,2022 compared to $18.9the same periods in 2020. The decreases were due to certain assets reaching the end of their assumed useful lives.
Amortization of intangible assets
2022 vs. 2021
Amortization expense decreased $0.8 million in the third quarter of 2022 and $2.4 million in the first nine months of 2022 compared to the same periods in 2021. The decreases were due to certain assets reaching the end of their assumed useful lives and therefore becoming fully amortized.
2022 vs. 2020
Amortization expense decreased $2.2 million in the third quarter of 2022 and $5.6 million in the first nine months of 2022 compared to the same periods in 2020. The decreases were due to certain assets reaching the end of their assumed useful lives and therefore becoming fully amortized.
Spectrum repacking reimbursements and other, net
2022 vs. 2021
Spectrum repacking reimbursements and other net gains were $0.2 million in the third quarter of 2022 compared to net losses of $0.5 million in the same period in 2016. The 2017 charges primarily consisted2021 and net gains of net $7.6$0.3 million in expenses related to Hurricane Harvey, $1.4 million related to the consolidation of office space at corporate headquarters and at our DMS business unit, and $2.2 million of non-cash impairment charges incurred by our broadcast stations. The 2016 charges were comprised of the third quarter goodwill impairment charge of $15.2 million at Cofactor and a $3.7 million impairment charge related to a long-lived-asset.
Operating Income
Our operating income decreased $69.0 million, or 37%, in the third quarter of 2017 and $107.8 million, or 22%, in the first nine months of 2017,2022 compared to $2.4 million in the same period in 2021. The 2022 activity is related to reimbursements received from the Federal Communications Commission (FCC) for required spectrum repacking. The 2021 activity is primarily related to reimbursements from spectrum repacking ($0.6 million third quarter, $5.0 million first nine months), partially offset by a $1.5 million contract termination fee which was incurred in the second quarter of 2021 and a $1.1 million write off of certain assets which impacted both prior year periods.
2022 vs. 2020
Spectrum repacking reimbursements and other net gains were $0.2 million in the third quarter of 2022 compared to net gains of $2.9 million in the same period in 2020 and $0.3 million in the first nine months of 2022 compared to $10.5 million in the same period in 2020. The 2022 activity consists of the reimbursements discussed above. The 2020 activity primarily consists of reimbursements received from the FCC for required spectrum repacking ($2.9 million third quarter, $12.7 million first nine months), partially offset by $2.1 million impairment charge which occurred in the second quarter of 2020 due to the retirement of a brand name.
Operating income
2022 vs. 2021
Operating income increased $20.9 million in the third quarter of 2022 and $69.6 million in the first nine months of 2022 compared to the same periods in 2016.2021. The decreasesincreases were driven by the changes in revenue and expenses discussed above. As a result, our consolidated operating margins were 25%above, most notably the increase in political revenue.
2022 vs. 2020
Operating income increased $4.6 million in the third quarter of 20172022 and 28%$185.1 million in the first nine months of 2017,2022 compared to 36%the same periods in 2020. The increases were driven by the changes in revenue and expenses discussed above, most notably the increases in subscription and AMS revenues as well as programming expense.
Non-operating (expense) income
Non-operating expenses decreased $3.5 million in the third quarter of 2016 and 34%2022 compared to the same period in 2021. This decrease was primarily due to a $3.1 million decrease in interest expense driven by lower average outstanding debt partially offset by a higher weighted average interest rate. Total average outstanding debt was $3.09 billion for the third quarter of 2022, compared to $3.37 billion in the same period of 2021. The weighted average interest rate on outstanding debt was 5.27% for the third quarter of 2022, compared to 5.18% in the same period of 2021.
In the first nine months of 2022, non-operating expenses decreased $23.5 million compared to the same period in 2021. This decrease was primarily due to a $20.8 million gain recognized on our available for sale investment in MadHive (see Note 3 to the condensed consolidated financial statements). Further, interest expense decreased $9.6 million driven by lower average outstanding debt partially offset by a higher weighted average interest rate. The average debt outstanding was $3.12 billion for the first nine months of 2022, compared to $3.46 billion in the same period of 2021. The weighted average interest rate on outstanding debt was 5.25% for the first nine months of 2022, compared to 5.13% in the same period of 2021.
Provision for income taxes
Income tax expense increased $7.0 million in the third quarter of 2022 compared to the same period in 2021. Income tax expense increased $29.1 million in the first nine months of 2016.
Non-Operating Income (Expense)
Non-operating expense decreased $16.0 million, or 23%, in the third quarter of 20172022 compared to the same period in 2016.2021. The decrease wasincreases were primarily due to a reductionincreases in transaction costs of $10.9 million primarily associated with costs incurred in the prior year period related to the Cars.com spin-off. Also contributing to the decreasenet income before tax. Our effective income tax rate was a decline in interest expense of $5.7 million driven by lower average debt outstanding, due to the pay down of the drawn amounts on the revolving line of credit. The total average outstanding debt was $3.38 billion23.1% for the third quarter of 2017,2022, compared to $4.31 billion in the same period of 2016. The weighted average interest rate on total outstanding debt was 5.75%22.3% for the third quarter of 2017, compared to 5.21%2021. The tax rate for the third quarter of 2022 is higher than the comparable rate in the same period of 2016.
During the first nine months of 2017, non-operating expenses decreased $3.7 million, or 2%, compared to the same period in 2016. The decrease was2021 primarily due to lower interest expense of $13.3 million, partially offset by increaseddiscrete tax benefits realized related to a previously-disposed business in 2021 and nondeductible M&A-related transaction costs associated with the strategic actions of $3.4 million (primarily the Cars.com spin-off) and a $5.8 million loss associated with the write-off of a note receivable from one of our equity method investments. The lower interest expenseincurred. Our effective income tax rate was due to lower average debt outstanding. The total average outstanding debt was $3.75 billion during the first nine months of 2017, compared to $4.28 billion in the same period of 2016. The weighted average interest rate on total outstanding debt was 5.51%24.4% for the first nine months of 2017,2022, compared to 5.32% in the same period of 2016.
Income Tax Expense
Income tax expense decreased $27 million, or 70%, in the third quarter of 2017 as compared to22.9% for the same period in 2016, and decreased $37.2 million, or 40%, in the first nine months of 2017 compared to the same period in 2016.2021. The decrease in Income tax expense is primarily due to a decline in net income before tax, as well as a favorable deferred tax adjustment related to a previously-disposed business. Our reported effective income tax rate was 18.4% in the third quarter of 2017, compared to 33.4% for continuing operations for the third quarter of 2016. The reported effective income tax rate was 27.5% for the first nine months of 2017, compared to 30.3% for the same period in 2016. The tax rates for the third quarter and first nine months of 2017 are lower2022 is higher than the comparable 2016 ratesamount in 2021 primarily due to a valuation allowance recorded on a minority investment, nondeductible M&A-related transaction costs incurred,
and net deferred tax benefits as a result of state tax planning strategies implemented in 2021. Partially offsetting the reductionincrease were tax benefits from the utilization of capital loss carryforwards in net income before taxconnection with certain transactions and the deferred tax adjustment mentioned above.release of the associated valuation allowance.
Income from continuing operationsNet income attributable to TEGNA Inc.
Income from continuing operationsNet income attributable to TEGNA Inc. was $50.8$146.1 million, or $0.23$0.65 per diluted share, in the third quarter of 20172022 compared to $76.7$128.3 million, or $0.35$0.58 per diluted share, during the same period in 2016.2021. For the first nine months of 2017, we reported2022, net income from continuing operations of $144.7attributable to TEGNA Inc. was $411.9 million, or $0.66$1.83 per diluted share, compared to $211.6$347.5 million, or $0.96$1.56 per diluted share, for the same period in 2016.2021. Both income from continuing operations and earnings per share were affected by the factors discussed above.
The weighted average number of diluted common shares outstanding in the both the third quarter of 20172022 and 2016 was 218.1 million.2021 were 224.9 million and 222.8 million, respectively. The weighted average number of diluted shares outstanding in the first nine months quarter of 2017 decreased by 2.72022 and 2021 was 224.2 million shares to 217.8and 222.2 million, from 220.5 million in the same period in 2016.respectively.
Results from Operations - Non-GAAP Information
Presentation of Non-GAAP information
We use non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the related GAAP measures, nor should they be considered superior to the related GAAP measures, and should be read together with financial information presented on a GAAP basis. Also, our non-GAAP measures may not be comparable to similarly titled measures of other companies.
Management and our Board of Directors use the non-GAAP financial measures for purposes of evaluating business unit and consolidated company performance. Furthermore, the ExecutiveLeadership Development and Compensation Committee of our Board of Directors uses non-GAAP measures such as Adjusted EBITDA, non-GAAP net income, non-GAAP EPS and free cash flow to evaluate management’s performance. Therefore, we believe that each of the non-GAAP measures presented provides useful information to investors and other stakeholders by allowing them to view our business through the eyes of management and our Board of Directors, facilitating comparisons of results across historical periods and focus on the underlying ongoing operating performance of our business. We also believe these non-GAAP measures are frequently used by investors, securities analysts and other interested parties in their evaluation of our business and other companies in the broadcast industry.
We discuss in this Form 10-Q non-GAAP financial performance measures that exclude from our reported GAAP results the impact of “special items” consistingwhich are described in detail below in the section titled “Discussion of severance expense, charges related to asset impairmentSpecial Charges and facility consolidations, costs associated with the Cars.com spin-off transaction, and certain tax benefits associated with the Cars.com spin-off and sale of CareerBuilder.Credits Affecting Reported Results.” We believe that such expenses charges and gains are not indicative of normal, ongoing operations. SuchWhile these items may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period and are significantly impacted by the timing and nature of these events.depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses charges and gains in the future, we believe that removing these items for purposes of calculating the non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.
We discuss Adjusted EBITDA (with and without corporate expenses), a non-GAAP financial performance measure that we believe offers a useful view of the overall operation of our businesses. We define Adjusted EBITDA as net income from continuing operationsattributable to TEGNA before (1) net income attributable to redeemable noncontrolling interest, expense, (2) income taxes, (3) interest expense, (4) equity income (losses)loss in unconsolidated investments, net, (4)(5) other non-operating items, net, (6) M&A-related costs, (7) advisory fees related to activism defense, (8) spectrum repacking reimbursements and other, net, (9) depreciation and (10) amortization. We believe these adjustments facilitate company-to-company operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as spin-off transaction expensescapital structures (interest expense), income taxes, and investment income, (5) severance expense, (6) facility consolidation charges, (7) impairment charges, (8)the age and book appreciation of property and equipment (and related depreciation and (9) amortization.expense). The most directly comparable GAAP financial measure to Adjusted EBITDA is Net income from continuing operations.attributable to TEGNA. Users should consider the limitations of using Adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternativealternate to net income as a measure of operating performance or to cash
flows from operating activities as a measure of liquidity. In particular, Adjusted EBITDA is not intended to be a measure of free cash flow available for management’s discretionary expenditures, as this measure does not consider certain cash requirements, such as working capital needs, capital expenditures, contractual commitments, interest payments, tax payments and other debt service requirements.
We also consider adjusted revenues to be an important non-GAAP financial measure. Our adjusted revenue is calculated by taking total company revenues on a GAAP basis and adjusting it to exclude (1) estimated incremental Olympic and Super Bowl revenue, (2) Political revenues, (3) revenues from a previously sold business (Cofactor), and (4) revenues associated with a discontinued portion of our DMS business. These adjustments are made to our reported revenue on a GAAP basis in order to evaluate and assess our core operations on a comparable basis, and it represents the ongoing operations of our broadcast business.
We also discuss free cash flow, a non-GAAP liquidity measure.performance measure that the Board of Directors uses to review the performance of the business. Free cash flow is definedreviewed by the Board of Directors as “net cash flow from operating activities” as reported ona percentage of revenue over a trailing two-year period (reflecting both an even and odd year reporting period given the statementpolitical cyclicality of cash flows reduced by “purchase of property and equipment”our business). We believe thatThe most directly comparable GAAP financial measure to free cash flow is a useful measure for management and investorsNet income attributable to evaluate the level of cash generated by operations and the ability of its operations to fund investments in new and existing businesses, return cash to shareholders under the company’s capital program, repay indebtedness, add to our cash balance, or use in other discretionary activities. We use freeTEGNA. Free cash flow to monitor cash availableis calculated as non-GAAP Adjusted EBITDA (as defined above), further adjusted by adding back (1) stock-based compensation, (2) non-cash 401(k) company match, (3) syndicated programming amortization, (4) dividends received from equity method investments, (5) reimbursements from spectrum repacking and (6) proceeds from company-owned life insurance policies. This is further adjusted by deducting payments made for repayment(1) syndicated programming, (2) pension, (3) interest, (4) taxes (net of indebtednessrefunds) and in discussions with the investment community.(5) purchases of property and equipment. Like Adjusted EBITDA, free cash flow is not intended to be a measure of cash flow available for management’s discretionary use.
Discussion of special chargesSpecial Charges and credits affecting reported resultsCredits Affecting Reported Results
Our results for the quarter and first nine months ended September 30, 2017 included the following items we consider “special items” and are not indicative of our normal ongoing operations:that, while at times recurring, can vary significantly from period to period:
Operating asset impairmentQuarter and facility consolidation charges related to damage caused by Hurricane Harvey and the consolidation of office space at corporate headquarters and at our DMS business unit;
Other non-operating items associated with costs of the spin-off of our Cars.com business unit, charitable donations made to the TEGNA Foundation, non-cash asset impairment charges associated with write off of a note receivable from an equity method investment;
A special tax benefit related to deferred tax remeasurement attributable to the spin-off of our Cars.com business unit and a deferred tax adjustment related to a previously-disposed business; and
Severance charges which included payroll and related benefit costs.
Our results for the quarter and first nine months ended September 30, 2016 included2022:
•Spectrum repacking reimbursements and other, net consisting of gains due to reimbursements from the following special items:FCC for required spectrum repacking;
Severance charges primarily•M&A-related costs;
•Other non-operating items consisting of a gain recognized on an available-for-sale investment and an impairment charge related to a voluntary retirement program at our broadcast stations (which includes payrollanother investment; and related benefit costs);
Non-cash asset impairment charges•Tax expense, net, associated with goodwill,establishing a valuation allowance on a deferred tax asset related to an operating asset, and equity method investments;investment.
Quarter and nine months ended September 30, 2021:
Non-operating costs associated with
•Spectrum repacking reimbursements and other, net consisting of gains due to reimbursements from the spin-offFCC for required spectrum repacking, a contract termination fee, and the write off of our Cars.com business unitcertain fixed assets;
•Advisory fees related to activism defense;
•Other non-operating items consisting of a gain due to an observable price increase in an equity investment; and acquisition-related costs.
•Net deferred tax benefits as a result of state tax planning strategies implemented during the second quarter of 2021 and deferred tax benefits related to partial capital loss valuation allowance release.
Reconciliations of certain line items impacted by special items to the most directly comparable financial measure calculated and presented in accordance with GAAP on our consolidated statementsConsolidated Statements of incomeIncome follow (in thousands, except per share amounts):
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| | | | Special Items | | | | |
| Quarter ended Sept. 30, 2022 | | GAAP
measure | | M&A-related costs | | Spectrum repacking reimbursements and other | | Special tax item | | Non-GAAP measure | | |
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| Corporate - General and administrative expenses | | $ | 13,367 | | | $ | (3,701) | | | $ | — | | | $ | — | | | $ | 9,666 | | | |
| Spectrum repacking reimbursements and other, net | | (159) | | | — | | | 159 | | | — | | | — | | | |
| Operating expenses | | 570,853 | | | (3,701) | | | 159 | | | — | | | 567,311 | | | |
| Operating income | | 232,258 | | | 3,701 | | | (159) | | | — | | | 235,800 | | | |
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| Income before income taxes | | 189,984 | | | 3,701 | | | (159) | | | — | | | 193,526 | | | |
| Provision for income taxes | | 43,827 | | | 47 | | | (37) | | | 2,588 | | | 46,425 | | | |
| Net income attributable to TEGNA Inc. | | 146,065 | | | 3,654 | | | (122) | | | (2,588) | | | 147,009 | | | |
Earnings per share - diluted (a) | | $ | 0.65 | | | $ | 0.02 | | | $ | — | | | $ | (0.01) | | | $ | 0.65 | | | |
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(a) Per share amounts do not sum due to rounding. | | | | | | | | |
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| Quarter ended September 30, 2017 | | GAAP measure | | Operating asset impairment and facility consolidation | | Other non-operating items | | Tax benefits | | Non-GAAP measure |
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| Operating expenses | | $ | 347,403 |
| | $ | (7,553 | ) | | $ | — |
| | $ | — |
| | $ | 339,850 |
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| Operating income | | 116,861 |
| | 7,553 |
| | — |
| | — |
| | 124,414 |
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| Other non-operating items | | (3,671 | ) | | — |
| | 2,688 |
| | — |
| | (983 | ) |
| Total non-operating expense | | (54,660 | ) | | — |
| | 2,688 |
| | — |
| | (51,972 | ) |
| Income before income taxes | | 62,201 |
| | 7,553 |
| | 2,688 |
| | — |
| | 72,442 |
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| Provision for income taxes | | 11,447 |
| | 2,780 |
| | 629 |
| | 8,086 |
| | 22,942 |
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| Income from continuing operations | | 50,754 |
| | 4,773 |
| | 2,059 |
| | (8,086 | ) | | 49,500 |
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Earnings from continuing operations per share - diluted (a) | | $ | 0.23 |
| | $ | 0.02 |
| | $ | 0.01 |
| | $ | (0.04 | ) | | $ | 0.23 |
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| (a) Per share amounts do not sum due to rounding. | | | | | | | | | | |
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| | | | Special Items | | | | |
| Quarter ended Sept. 30, 2021 | | GAAP
measure | | Spectrum repacking reimbursements and other | | Other non-operating items | | Special tax items | | Non-GAAP measure | | |
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| Spectrum repacking reimbursements and other, net | | $ | 504 | | | $ | (504) | | | $ | — | | | $ | — | | | $ | — | | | |
| Operating expenses | | 545,137 | | | (504) | | | — | | | — | | | 544,633 | | | |
| Operating income | | 211,350 | | | 504 | | | — | | | — | | | 211,854 | | | |
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| Other non-operating items, net | | 2,486 | | | — | | | (1,941) | | | — | | | 545 | | | |
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| Income before income taxes | | 165,569 | | | 504 | | | (1,941) | | | — | | | 164,132 | | | |
| Provision for income taxes | | 36,870 | | | 115 | | | (502) | | | 4,347 | | | 40,830 | | | |
| Net income attributable to TEGNA Inc. | | 128,280 | | | 389 | | | (1,439) | | | (4,347) | | | 122,883 | | | |
| Earnings per share - diluted | | $ | 0.58 | | | $ | — | | | $ | (0.01) | | | $ | (0.02) | | | $ | 0.55 | | | |
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| Nine months ended Sept. 30, 2022 | | GAAP
measure | | M&A-related costs | | Spectrum repacking reimbursements and other | | Other non-operating items | | Special tax item | | Non-GAAP measure |
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| Corporate - General and administrative expenses | | $ | 48,299 | | | $ | (18,147) | | | $ | — | | | $ | — | | | $ | — | | | $ | 30,152 | |
| Spectrum repacking reimbursements and other, net | | (322) | | | — | | | 322 | | | — | | | — | | | — | |
| Operating expenses | | 1,699,699 | | | (18,147) | | | 322 | | | — | | | — | | | 1,681,874 | |
| Operating income | | 662,416 | | | 18,147 | | | (322) | | | — | | | — | | | 680,241 | |
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| Other non-operating items, net | | 16,764 | | | — | | | — | | | (18,308) | | | — | | | (1,544) | |
| Total non-operating expenses | | (117,437) | | | — | | | — | | | (18,308) | | | — | | | (135,745) | |
| Income before income taxes | | 544,979 | | | 18,147 | | | (322) | | | (18,308) | | | — | | | 544,496 | |
| Provision for income taxes | | 132,595 | | | 85 | | | (78) | | | 168 | | | (4,529) | | | 128,241 | |
| Net income attributable to TEGNA Inc. | | 411,868 | | | 18,062 | | | (244) | | | (18,476) | | | 4,529 | | | 415,739 | |
| Net income per share-diluted | | $ | 1.83 | | | $ | 0.08 | | | $ | — | | | $ | (0.08) | | | $ | 0.02 | | | $ | 1.85 | |
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| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
| | | | | Special Items | | |
| Quarter ended September 30, 2016 | | GAAP measure | | Severance expense | | Operating asset impairment and facility consolidation | | Other non-operating items | | Non-GAAP measure |
| | | | | | | | | | | |
| Operating expenses | | $ | 333,766 |
| | $ | (2,870 | ) | | $ | (15,218 | ) | | $ | — |
| | $ | 315,678 |
|
| Operating income | | 185,851 |
| | 2,870 |
| | 15,218 |
| | — |
| | 203,939 |
|
| Other non-operating items | | (11,874 | ) | | — |
| | — |
| | 13,161 |
| | 1,287 |
|
| Total non-operating expense | | (70,673 | ) | | — |
| | — |
| | 13,161 |
| | (57,512 | ) |
| Income before income taxes | | 115,178 |
| | 2,870 |
| | 15,218 |
| | 13,161 |
| | 146,427 |
|
| Provision for income taxes | | 38,441 |
| | 1,112 |
| | 5,900 |
| | 3,515 |
| | 48,968 |
|
| Income from continuing operations | | 76,737 |
| | 1,758 |
| | 9,318 |
| | 9,646 |
| | 97,459 |
|
Earnings from continuing operations per share - diluted (a) | | $ | 0.35 |
| | $ | 0.01 |
| | $ | 0.04 |
| | $ | 0.04 |
| | $ | 0.45 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | Special Items | | |
| Nine months ended Sept. 30, 2021 | | GAAP
measure | | Advisory fees related to activism defense | | Spectrum repacking reimbursements and other | | Other non-operating items | | Special tax items | | Non-GAAP measure |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Corporate - General and administrative expenses | | $ | 51,944 | | | $ | (16,611) | | | $ | — | | | $ | — | | | $ | — | | | $ | 35,333 | |
| Spectrum repacking reimbursements and other, net | | (2,394) | | | — | | | 2,394 | | | — | | | — | | | — | |
| Operating expenses | | 1,623,644 | | | (16,611) | | | 2,394 | | | — | | | — | | | 1,609,427 | |
| Operating income | | 592,802 | | | 16,611 | | | (2,394) | | | — | | | — | | | 607,019 | |
| Equity income (loss) in unconsolidated investments, net | | (5,716) | | | — | | | — | | | — | | | — | | | (5,716) | |
| Other non-operating items, net | | 4,340 | | | — | | | — | | | (1,941) | | | — | | | 2,399 | |
| Total non-operating expenses | | (140,947) | | | — | | | — | | | (1,941) | | | — | | | (142,888) | |
| Income before income taxes | | 451,855 | | | 16,611 | | | (2,394) | | | (1,941) | | | — | | | 464,131 | |
| Provision for income taxes | | 103,470 | | | 4,291 | | | (626) | | | (502) | | | 7,144 | | | 113,777 | |
| Net income attributable to TEGNA Inc. | | 347,524 | | | 12,320 | | | (1,768) | | | (1,439) | | | (7,144) | | | 349,493 | |
| Net income per share-diluted | | $ | 1.56 | | | $ | 0.06 | | | $ | (0.01) | | | $ | (0.01) | | | $ | (0.03) | | | $ | 1.57 | |
(a) Per share amounts do not sum due to rounding.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Special Items | | |
| Nine Months Ended September 30, 2017 | | GAAP measure | | Severance expense | | Operating asset impairment | | Other non-operating items | | Tax benefits | | Non-GAAP measure |
| | | | | | | | | | | | | |
| Operating expenses | | $ | 1,022,651 |
| | $ | (3,053 | ) | | $ | (11,086 | ) | | $ | — |
| | $ | — |
| | $ | 1,008,512 |
|
| Operating income | | 390,052 |
| | 3,053 |
| | 11,086 |
| | — |
| | — |
| | 404,191 |
|
| Other non-operating items | | (26,853 | ) | | — |
| | — |
| | 31,991 |
| | — |
| | 5,138 |
|
| Total non-operating expense | | (190,515 | ) | | — |
| | — |
| | 31,991 |
| | — |
| | (158,524 | ) |
| Income before income taxes | | 199,537 |
| | 3,053 |
| | 11,086 |
| | 31,991 |
| | — |
| | 245,667 |
|
| Provision for income taxes | | 54,855 |
| | 1,174 |
| | 4,104 |
| | 6,921 |
| | 11,724 |
| | 78,778 |
|
| Income from continuing operations | | 144,682 |
| | 1,879 |
| | 6,982 |
| | 25,070 |
| | (11,724 | ) | | 166,889 |
|
| Earnings from continuing operations per share - diluted | | $ | 0.66 |
| | $ | 0.01 |
| | $ | 0.03 |
| | $ | 0.12 |
| | $ | (0.05 | ) | | $ | 0.77 |
|
| | | | | | | | | | | | | |
| | | | | Special Items | | |
| Nine Months Ended September 30, 2016 | | GAAP measure | | Severance expense | | Operating asset impairment | | Equity investment impairment | | Other non-operating items | | Non-GAAP measure |
| | | | | | | | | | | | | |
| Operating expenses | | $ | 959,344 |
| | $ | (20,118 | ) | | $ | (18,946 | ) | | $ | — |
| | $ | — |
| | $ | 920,280 |
|
| Operating income | | 497,889 |
| | 20,118 |
| | 18,946 |
| | — |
| | — |
| | 536,953 |
|
| Equity (loss) income in unconsolidated charges | | (2,763 | ) | | — |
| | — |
| | 1,869 |
| | — |
| | (894 | ) |
| Other non-operating items | | (16,029 | ) | | — |
| | — |
| | — |
| | 16,324 |
| | 295 |
|
| Total non-operating expense | | (194,236 | ) | | — |
| | — |
| | 1,869 |
| | 16,324 |
| | (176,043 | ) |
| Income before income taxes | | 303,653 |
| | 20,118 |
| | 18,946 |
| | 1,869 |
| | 16,324 |
| | 360,910 |
|
| Provision for income taxes | | 92,038 |
| | 7,799 |
| | 7,345 |
| | 725 |
| | 4,583 |
| | 112,490 |
|
| Income from continuing operations | | 211,615 |
| | 12,319 |
| | 11,601 |
| | 1,144 |
| | 11,741 |
| | 248,420 |
|
| Earnings from continuing operations per share - diluted | | $ | 0.96 |
| | $ | 0.06 |
| | $ | 0.05 |
| | $ | 0.01 |
| | $ | 0.05 |
| | $ | 1.13 |
|
| | | | | | | | | | | | | |
Adjusted RevenuesEBITDA - Non-GAAP
Reconciliations of adjusted revenuesAdjusted EBITDA to our revenuesnet income presented in accordance with GAAP on our Consolidated Statements of Income are presented below (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| 2022 | | 2021 | | Change | | 2022 | | 2021 | | Change |
| | | | | | | | | | | |
| Net income attributable to TEGNA Inc. (GAAP basis) | $ | 146,065 | | | $ | 128,280 | | | 14 | % | | $ | 411,868 | | | $ | 347,524 | | | 19 | % |
| Plus: Net income attributable to redeemable noncontrolling interest | 92 | | | 419 | | | (78 | %) | | 516 | | | 861 | | | (40 | %) |
| Plus: Provision for income taxes | 43,827 | | | 36,870 | | | 19 | % | | 132,595 | | | 103,470 | | | 28 | % |
| Plus: Interest expense | 43,406 | | | 46,477 | | | (7 | %) | | 129,976 | | | 139,571 | | | (7 | %) |
| Plus: Equity loss in unconsolidated investments, net | 178 | | | 1,790 | | | (90 | %) | | 4,225 | | | 5,716 | | | (26 | %) |
| Less: Other non-operating items, net | (1,310) | | | (2,486) | | | (47 | %) | | (16,764) | | | (4,340) | | | *** |
| Operating income (GAAP basis) | 232,258 | | | 211,350 | | | 10 | % | | 662,416 | | | 592,802 | | | 12 | % |
| | | | | | | | | | | |
| Plus: M&A-related costs | 3,701 | | | — | | | *** | | 18,147 | | | — | | | *** |
| Plus: Advisory fees related to activism defense | — | | | — | | | *** | | — | | | 16,611 | | | *** |
| Less (Plus): Spectrum repacking reimbursements and other, net | (159) | | | 504 | | | *** | | (322) | | | (2,394) | | | (87 | %) |
| Adjusted operating income (non-GAAP basis) | 235,800 | | | 211,854 | | | 11 | % | | 680,241 | | | 607,019 | | | 12 | % |
| Plus: Depreciation | 15,219 | | | 16,792 | | | (9 | %) | | 46,058 | | | 48,526 | | | (5 | %) |
| Plus: Amortization of intangible assets | 14,953 | | | 15,774 | | | (5 | %) | | 44,952 | | | 47,307 | | | (5 | %) |
| Adjusted EBITDA (non-GAAP basis) | 265,972 | | | 244,420 | | | 9 | % | | 771,251 | | | 702,852 | | | 10 | % |
| Corporate - General and administrative expense (non-GAAP basis) | 9,666 | | | 11,891 | | | (19 | %) | | 30,152 | | | 35,333 | | | (15 | %) |
| Adjusted EBITDA, excluding Corporate (non-GAAP basis) | $ | 275,638 | | | $ | 256,311 | | | 8 | % | | $ | 801,403 | | | $ | 738,185 | | | 9 | % |
| | | | | | | | | | | |
| *** Not meaningful | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
| | Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| | 2017 | | 2016 | | Change | | 2017 | | 2016 | | Change |
| | | | | | | | | | | | |
Advertising & Marketing Services (a) | $ | 277,817 |
| | $ | 330,589 |
| | (16.0 | %) | | $ | 843,175 |
| | $ | 934,977 |
| | (9.8 | %) |
| Political | 3,783 |
| | 38,060 |
| | (90.1 | %) | | 13,386 |
| | 64,050 |
| | (79.1 | %) |
| Subscription | 177,692 |
| | 143,676 |
| | 23.7 | % | | 540,345 |
| | 436,292 |
| | 23.8 | % |
| Other | 4,972 |
| | 4,696 |
| | 5.9 | % | | 15,797 |
| | 13,883 |
| | 13.8 | % |
| Cofactor | — |
| | 2,596 |
| | *** |
| | — |
| | 8,031 |
| | *** |
|
| Total company revenues (GAAP basis) | $ | 464,264 |
| | $ | 519,617 |
| | (10.7 | %) | | $ | 1,412,703 |
| | $ | 1,457,233 |
| | (3.1 | %) |
| Factors impacting comparisons: | | | | | | | | | | | |
| Estimated incremental Olympic and Super Bowl | $ | — |
| | $ | (28,300 | ) | | *** |
| | $ | — |
| | $ | (37,210 | ) | | *** |
|
| Political | (3,783 | ) | | (38,060 | ) | | (90.1 | %) | | (13,386 | ) | | (64,050 | ) | | (79.1 | %) |
| CoFactor (sold in December 2016) | — |
| | (2,596 | ) | | *** |
| | — |
| | (8,031 | ) | | *** |
|
| Discontinued digital marketing services | — |
| | (13,893 | ) | | *** |
| | (16,673 | ) | | (40,509 | ) | | (58.8 | %) |
| Total company adjusted revenues | $ | 460,481 |
| | $ | 436,768 |
| | 5.4 | % | | $ | 1,382,644 |
| | $ | 1,307,433 |
| | 5.8 | % |
| | | | | | | | | | | | |
| (a) Includes traditional advertising, digital advertising as well as revenue from our DMS businesses. |
Excluding the impacts of Political revenue, impacts from the discontinued DMS transition services agreement, the absence of Cofactor revenue, and estimated prior year incremental Olympic and Super Bowl revenue, total company adjusted revenues on a comparable basis increased five percent inIn the third quarter and six percent in the first nine months of 2017 compared to the same periods in 2016.
2022 Adjusted EBITDA - Non-GAAP
Reconciliations of Adjusted EBITDA to net income from continuing operations attributable to TEGNA Inc. presented in accordance with GAAP on our Consolidated Statements of Income are presented below (in thousands): |
| | | | | | | | | | | | | | | | | | | | | |
| | Quarter ended Sept. 30, | | Nine months ended Sept. 30, |
| | 2017 | | 2016 | | Change | | 2017 | | 2016 | | Change |
| | | | | | | | | | | | |
| Net income from continuing operations (GAAP basis) | $ | 50,754 |
| | $ | 76,737 |
| | (34 | %) | | $ | 144,682 |
| | $ | 211,615 |
| | (32 | %) |
| Provision for income taxes | 11,447 |
| | 38,441 |
| | (70 | %) | | 54,855 |
| | 92,038 |
| | (40 | %) |
| Interest expense | 51,855 |
| | 57,601 |
| | (10 | %) | | 162,113 |
| | 175,444 |
| | (8 | %) |
| Equity loss in unconsolidated investments, net | (866 | ) | | 1,198 |
| | *** |
| | 1,549 |
| | 2,763 |
| | (44 | %) |
| Other non-operating items | 3,671 |
| | 11,874 |
| | (69 | %) | | 26,853 |
| | 16,029 |
| | 68 | % |
| Operating income (GAAP basis) | 116,861 |
| | 185,851 |
| | (37 | %) | | 390,052 |
| | 497,889 |
| | (22 | %) |
| Severance expense | — |
| | 2,870 |
| | *** |
| | 3,053 |
| | 20,118 |
| | (85 | %) |
| Asset impairment and facility consolidation charges | 7,553 |
| | 15,218 |
| | (50 | %) | | 11,086 |
| | 18,946 |
| | (41 | %) |
| Adjusted operating income (non-GAAP basis) | 124,414 |
| | 203,939 |
| | (39 | %) | | 404,191 |
| | 536,953 |
| | (25 | %) |
| Depreciation | 15,186 |
| | 13,212 |
| | 15 | % | | 41,721 |
| | 42,653 |
| | (2 | %) |
| Amortization of intangible assets | 5,395 |
| | 5,775 |
| | (7 | %) | | 16,172 |
| | 17,542 |
| | (8 | %) |
| Adjusted EBITDA (non-GAAP basis) | 144,995 |
| | 222,926 |
| | (35 | %) | | 462,084 |
| | 597,148 |
| | (23 | %) |
| Corporate - General and administrative expense, exclusive of depreciation (non-GAAP basis) | 12,881 |
| | 14,470 |
| | (11 | %) | | 41,402 |
| | 42,308 |
| | (2 | %) |
| Adjusted EBITDA, excluding Corporate (non-GAAP basis) | $ | 157,876 |
| | $ | 237,396 |
| | (33 | %) | | $ | 503,486 |
| | $ | 639,456 |
| | (21 | %) |
Third quarter 2017 adjusted EBITDA margin was 34% without corporate expense or 31%33% with corporate. Our total Adjusted EBITDA decreased $77.9 millionor35% in thecorporate expense, compared to third quarter of 20172021 Adjusted EBITDA margin of 34% without corporate expense or 32% with corporate expense. For the nine months ended September 30, 2022, Adjusted EBITDA margin was 34% without corporate expense or 33% with corporate expense, compared to 2016 and decreased $135.1 million or 23% for the first nine months ended September 30, 2021 Adjusted EBITDA of 2017 from the prior year comparable period. The decrease was33% without corporate expense or 32% with corporate expense. These margin increases were primarily driven by higher programming costs (due to 11 of our NBC stations which began making reverse compensation payments for the first time),operational factors discussed above within the absence of Olympic revenue in 2017 and operating expense fluctuation explanation sections, most notably, the expected declineincrease in political revenue in 2017.
Certain Matters Affecting Future Operating Results
The following items will affect year-over-year comparisons for 2017 results:
Revenues - In the fourth quarter of 2017 revenue will be impacted primarily due to the absence of $82 million in net political revenues compared to the fourth quarter of 2016, and the absence of $16 million of DMS revenue due to the conclusion of a transition services agreement with Gannett.
Based on current trends, we expect total company revenues on a GAAP basis comparedrun up to the prior year quartermid-
term elections and subscription revenue from annual rate increases under existing and newly renegotiated retransmission agreements.
Free Cash Flow Reconciliation
Reconciliation from “Net income” to be down in the high-single to low double-digits. Adjusting to remove political revenue“Free cash flow” follow (in thousands):
| | | | | | | | | | | |
| Two-year period ended Sept. 30, |
| 2022 | | 2021 |
| | | |
| Net income attributable to TEGNA Inc. (GAAP basis) | $ | 1,133,127 | | $ | 914,257 |
| Plus: Provision for income taxes | 352,670 | | 294,453 |
| Plus: Interest expense | 365,187 | | 410,169 |
| Plus: M&A-related costs | 21,885 | | 6,252 |
| Plus: Depreciation | 128,082 | | 131,100 |
| Plus: Amortization | 125,076 | | 132,571 |
| Plus: Stock-based compensation | 62,868 | | 49,702 |
| Plus: Company stock 401(k) contribution | 34,932 | | 33,116 |
| Plus: Syndicated programming amortization | 142,980 | | 141,983 |
| Plus: Workforce restructuring expense | — | | 5,933 |
| Plus: Advisory fees related to activism defense | 16,611 | | 45,778 |
| Plus: Cash dividend from equity investments for return on capital | 6,035 | | 9,235 |
| Plus: Cash reimbursements from spectrum repacking | 5,774 | | 21,209 |
| Plus: Net income attributable to redeemable noncontrolling interest | 2,176 | | 846 |
| Plus: Reimbursement from Company-owned life insurance policies | 1,456 | | 530 |
| Plus (Less): Equity loss (income) in unconsolidated investments, net | 11,948 | | (3,908) |
| Less: Spectrum repacking reimbursements and other, net | (2,051) | | (6,285) |
| (Less) Plus: Other non-operating items, net | (6,830) | | 24,691 |
| Less: Syndicated programming payments | (146,021) | | (147,411) |
| Less: Income tax payments, net of refunds | (348,387) | | (242,077) |
| Less: Pension contributions | (10,250) | | (25,230) |
| Less: Interest payments | (364,287) | | (434,763) |
| Less: Purchases of property and equipment | (113,519) | | (122,042) |
| Free cash flow (non-GAAP basis) | $ | 1,419,462 | | $ | 1,240,109 |
| | | |
| Revenue | $ | 6,290,783 | | $ | 5,848,181 |
| Free cash flow as a % of Revenue | 22.6 | % | | 21.2 | % |
| | | |
Our free cash flow, a non-GAAP performance measure, was $1.42 billion and revenue related to the terminated transition services agreement, we expect our fourth quarter adjusted company revenues to be up in the high single-digit to low double-digits year-over-year.
Programming Costs - Beginning in January 2017, 11 of our NBC stations began making reverse compensation payments$1.24 billion for the first time. As such, 2017 is an unusual year as there will be an unfavorable gap between thetwo-year periods ended September 30, 2022 and 2021, respectively. The increase in subscription revenue we earn from multichannel video programming distributors (MVPD), compared to the increase in fees we will pay our affiliates. At the end of 2016, we renegotiated several new subscriptions agreements with major MVPD carriers, and as a result, we have reduced our net retransmission gap in 2017 to approximately $31 million to $34 million. Further, we expect our strategic initiatives launched in 2016 (including Premion, centralized pricing initiatives, and Hatch) will more than offset the remaining net retransmission gap in 2017.
Income Taxes - After the spin-off of Cars.com and disposition of CareerBuilder, the recurring effective income tax rate for 2018free cash flow is anticipated to be approximately 35%. This estimated effective income tax rate is higher than that for the third quarter and the first nine months of 2017primarily due to tax benefits associated with the spin-off of Cars.comincreases in subscription and other non-recurring items realized in 2017.political revenues.
Liquidity, Capital Resources and Cash Flows
Our strongoperations have historically generated positive cash generation capability and financial condition, togetherflow which, along with our significant borrowing capacityavailability under our existing revolving credit agreement, arefacility and cash and cash equivalents on hand, have been sufficient to fund our capital expenditures, interest expense, dividends, share repurchases, investments in strategic initiatives (including acquisitions) and other operating requirements. Over the longer term, we
We paid dividends totaling $63.5 million in first nine months of 2022 and $57.4 million in first nine months of 2021. We expect to continue to fundpay our regular quarterly dividend of $0.095 per share through the closing of the Merger, which is the maximum rate and frequency permitted by the Merger Agreement.
As of September 30, 2022, we were in compliance with all covenants contained in our debt maturities, acquisitionsagreements and investments through a combination of cash flows from operations, borrowings undercredit facility and our leverage ratio, calculated in accordance with our revolving credit agreement, and funds raisedwas 2.47x, below the permitted leverage ratio of less than 4.75x. The leverage ratio is calculated using annualized adjusted EBITDA (as defined in the capital markets. Asagreement) for the trailing eight quarters. We believe that we summarize below, during 2017 we have completed several strategic actions that have positioned us to be able to pursue strategic acquisition opportunities that may develop in our sector, invest in new content and revenue initiatives, and grow revenue in fiscal year 2018.
During the second quarter we completed our spin-off of Cars.com which resulted in a one-time tax-free cash distribution of $650.0 million to TEGNA. We used $609.9 million of the tax-free distribution proceeds to fully pay down our then outstanding revolving credit agreement borrowings.
On July 31, 2017, we sold our majority ownership interest in CareerBuilder. Our share of the pre-tax net cash proceeds from the sale was $198.3 million, net of cash transferred of $36.6 million. Additionally, prior to the sale, CareerBuilder issued a final dividend to its selling shareholders, of which $25.8 million was retained by TEGNA. On October 16 2017, we used the net proceeds from the CareerBuilder sale, the remaining cash distribution proceeds from Cars.com of $40.1 million, and cash on hand to early retire $280.0 million of principal of unsecured notes due in October 2019.
On August 1, 2017, we amended our Amended and Restated Competitive Advance and Revolving Credit Agreement. Under the amended terms, our maximum total leverage ratio will remain at 5.0x through Junecompliant with all covenants for the foreseeable future.
As of September 30, 2018, after which, as amended, it will be reduced to 4.75x through June 2019 and then to 4.5x until the expiration of the credit agreement on June 29, 2020. Lastly, on September 19, 2017, we announced that our Board of Directors authorized a new share repurchase program for up to $300 million of our common stock over the next three years.
At the end of the third quarter of 2017,2022, our total debt was $3.32$3.07 billion, and cash and cash equivalents totaled $383.4 million. As of September 30, 2017,$376.6 million, and we had unused borrowing capacity of $1.5$1.49 billion under our revolving credit facility. We intend to continue to invest in organic and strategic growth opportunities and also intend to maintain the financial flexibility to pursue strategic acquisitions when appropriate. Our debt consists of unsecured notes which have fixed interest rates.
Our financial and operating performance, as well as our ability to generate sufficient cash flow to maintain compliance with credit facility covenants, are subject to certain risk factors; see the Part II. Other Information,factors. See Item 1A. Risk“Risk Factors, discussion below.” in our 2021 Annual Report on Form 10-K for further discussion. We expect our existing cash and cash equivalents, cash flow from our operations, and borrowing capacity under the revolving credit facility will be more than sufficient to satisfy our recurring contractual commitments, debt service obligations, capital expenditure requirements, and other working capital needs for the next twelve months and beyond.
Cash Flows
The following table provides a summary of our cash flow information followed by a discussion of the key elements of our cash flow (in thousands):
| | | | | | | | | | | |
| Nine months ended Sept. 30, |
| 2022 | | 2021 |
| | | |
| Balance of cash and cash equivalents beginning of the period | $ | 56,989 | | | $ | 40,968 | |
| | | |
| Operating activities: | | | |
| Net income | 412,384 | | | 348,385 | |
| Depreciation, amortization and other non-cash adjustments | 114,895 | | | 138,261 | |
| Pension contributions, net of income | (1,697) | | | (14,821) | |
| Decrease (increase) in trade receivables | 51,986 | | | (49,687) | |
| Decrease in interest and taxes payable | (23,104) | | | (76,372) | |
| Other, net | 46,241 | | | (3,162) | |
| Cash flow from operating activities | 600,705 | | | 342,604 | |
| | | |
| Investing activities: | | | |
| Purchase of property and equipment | (35,527) | | | (39,418) | |
| All other investing activities | (535) | | | (5,938) | |
| Cash flow used for investing activities | (36,062) | | | (45,356) | |
| | | |
| Cash flow used for financing activities | (244,991) | | | (287,002) | |
| Increase in cash and cash equivalents | 319,652 | | | 10,246 | |
| Balance of cash and cash equivalents end of the period | $ | 376,641 | | | $ | 51,214 | |
|
| | | | | | | |
| | Nine months ended Sept. 30, |
| | 2017 | | 2016 |
| | | | |
| Cash and cash equivalents from continuing operations, beginning of period | $ | 15,879 |
| | $ | 26,096 |
|
| Cash and cash equivalents from discontinued operations, beginning of period | 61,041 |
| | 103,104 |
|
| Balance of cash and cash equivalents, beginning of the period | 76,920 |
| | 129,200 |
|
| | | | |
| Operating activities: | | | |
| Net (loss) income | (88,579 | ) | | 343,756 |
|
| Loss on write down of CareerBuilder | 342,900 |
| | — |
|
| Depreciation, amortization and other non-cash adjustments | 153,242 |
| | 197,025 |
|
| Pension (contributions), net of expense | (12,547 | ) | | 2,135 |
|
| Spectrum channel share agreement proceeds | 32,588 |
| | — |
|
| Other, net | (76,421 | ) | | (88,153 | ) |
| Net cash flows from operating activities | 351,183 |
| | 454,763 |
|
| Net cash from (used for) investing activities | 152,499 |
| | (273,309 | ) |
| Net cash used for financing activities | (197,248 | ) | | (203,325 | ) |
| Increase (decrease) in cash and cash equivalents | 306,434 |
| | (21,871 | ) |
| | | | |
| Cash and cash equivalents from continuing operations, end of period | 383,354 |
| | 19,185 |
|
| Cash and cash equivalents from discontinued operations, end of period | — |
| | 88,144 |
|
| Balance of cash and cash equivalents, end of the period | $ | 383,354 |
| | $ | 107,329 |
|
Operating Activities activities -Cash flow from operating activities was $351.2$600.7 million for the nine months ended September 30, 2017,2022, compared to $454.8$342.6 million for the same period in 2021. Driving the increase in operating cash flow was a favorable change in accounts receivable of $101.7 million, primarily due to timing of cash payments related to AMS revenue and an increase in subscription revenue. Operating cash flow was also positively impacted by an increase in political revenue of $127.7 million in the first nine months of 2022 as compared to 2021 (political revenue is paid upfront and provides an immediate benefit to cash flow from operating activities). Also contributing to the increase was a favorable change in accounts payable of $22.5 million in the first nine months of 2022 as compared to the same period in 2021, due to timing of payments. Lastly, tax payments declined $22.4 million due to the absence of elevated tax payments made in arrears in 2021 related to record political-driven results achieved in fourth quarter of 2020.
Investing activities -Cash flow used for investing activities was $36.1 million for the nine months ended September 30, 2016.2022, compared to $45.4 million for the same period in 2021. The decrease in net cash flow from operating activitiesof $9.3 million was primarilyprimary due to higher programming costs$13.3 million being invested on an acquisition in 2021 and an absence of $135.1 million (primarily dueacquisitions in 2022. Also contributing to the NBC affiliation agreement), the declinedecrease was a decrease in political revenuecapital expenditures of $50.7 million, and the absence of operating cash flow Cars.com and CareerBuilder following their spin-off and sale, respectively.$3.9 million. These decreasesfavorable changes were partially offset by declinesa $4.7 million reduction in tax paymentsreimbursements from spectrum repacking in the first nine months of $40.6 million and interest payments of $19.8 million. Also partially offsetting2022 as compared to the net operating cash flow decrease was a cash inflow receivedsame period in 2017 of $32.6 million from a spectrum channel sharing agreement.2021.
Investing ActivitiesFinancing activities -Cash flow from investingused for financing activities totaled $152.5was $245.0 million for the nine months ended September 30, 2017,2022, compared to cash used for investing activities of $273.3$287.0 million for the same period 2016.in 2021. The 2017 net cash inflow was primarily a result of the sale of the majority of our ownership in CareerBuilder, which provided $198.3 million of proceeds, net of cash transferred. Additionally, we had cash inflow of $15.1 million from the sale of assets, primarily comprised of proceeds of $14.6 million from the sale of Gannett Co., Inc., common stock. These inflows were partially offset by purchases of property and equipment of $63.8 million in 2017.
The 2016 net cash used for investing activities of $273.3 million was primarily comprised of $196.8 million paid for the acquisitions of businesses (net of cash acquired) and purchase of property and equipment in the amount of $68.6 million.
Financing Activities - Cash used for financing activities totaled $197.2 million for the nine months ended September 30, 2017, compared to $203.3 million net outflow for the same period in 2016. The 2017 net outflow of cash for financing activitieschange was primarily due to debt activity and dividends. With regards to 2017 debt activity, prior to the completion of the spin-off, Cars.com borrowed approximately $675.0 million under aour revolving credit facility agreement, while incurring $6.2which had net repayments of $166.0 million of debt issuance costs. The proceeds were used to make a one time tax-free cash distribution of $650.0 million from Cars.com to TEGNA. We used most of the cash received to pay down our then outstanding revolving credit balance of $609.9 million. Total net payments on the revolving credit facility in the first nine months of 2017 were $635.0 million. We used an additional $99.2 million2022 as compared to pay down other existing debt. Additionally, in 2017 we made dividend payments of $75.1 million, paid a final dividend to the noncontrolling owners of CareerBuilder of $23.0 million, and transferred $20.1 million to Cars.com in connection with the spin-off.
The 2016 net financing outflow of $203.3 million was primarily a result of stock repurchases of $150.9 million and dividend payments of $91.6 million. These outflows were partially offset by a net debt inflow of $58.7 million primarily comprised of $310.0 million of borrowings which were partially offset by debt repayments of $249.6 million.
Non-GAAP Liquidity Measure
Our free cash flow, a non-GAAP liquidity measure, was $287.3$219.0 million forin the first nine months of 2017 compared to $386.2 million for the same period in 2016. Our free cash flow for the first nine months of 2017 was lower than the first nine months of 2016 because of the same factors affecting cash flow from operating activities discussed above. Free cash flow, which we reconcile to “Net cash flow from operating activities,” is cash flow from operating activities reduced by “Purchase of property and equipment.” We believe that free cash flow is a useful measure for management and investors to evaluate the level of cash generated by operations and the ability of our operations to fund investments in new and existing businesses, return cash to shareholders under our capital program, repay indebtedness or to use in other discretionary activities.2021.
Reconciliations from “Net cash flow from operating activities” to “Free cash flow” follow (in thousands):
|
| | | | | | | | | | | |
| | | | | | Nine months ended September 30, |
| | | | | | 2017 | | 2016 |
| | | | | | | | |
| Net cash flow from operating activities | | | | | $ | 351,183 |
| | $ | 454,763 |
|
| Purchase of property and equipment | | | | | (63,846 | ) | | (68,577 | ) |
| Free cash flow |
| |
| | $ | 287,337 |
| | $ | 386,186 |
|
Certain Factors Affecting Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q containthat do not describe historical facts may constitute forward-looking statements regarding business strategies, market potential,within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on a number of assumptions about future financial performanceevents and other matters. The words “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,” “project” and similar expressions, among others, generally identify “forward-looking statements”. These forward-looking statements are subject to certainvarious risks, uncertainties and uncertaintiesother factors that couldmay cause actual results and events to differ materially from those anticipatedthe views, beliefs, projections and estimates expressed in the forward-looking statements, includingsuch statements. These risks, uncertainties and other factors include, but are not limited to, those described underwithin Part I, Item 1A.1A “Risk Factors” in our 2016 Annual Report on Form 10-K.
Our actual financial results may be different10-K for the fiscal year ended December 31, 2021 and our Quarterly Reports on Form 10-Q, including the following: (1) the timing, receipt and terms and conditions of any required governmental or regulatory approvals of the proposed transaction and the related transactions involving the parties that could reduce the anticipated benefits of or cause the parties to abandon the proposed transaction, (2) risks related to the satisfaction of the conditions to closing the proposed transaction (including the failure to obtain necessary regulatory approvals), and the related transactions involving the parties, in the anticipated timeframe or at all, (3) the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the Company’s common stock, (4) disruption from those projectedthe proposed transaction could make it more difficult to maintain business and operational relationships, including retaining and hiring key personnel and maintaining relationships with the Company’s customers, vendors and others with whom it does business, (5) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement entered into pursuant to the proposed transaction or of the transactions involving the parties, (6) risks related to disruption of management’s attention from the Company’s ongoing business operations due to the inherent natureproposed transaction, (7) significant transaction costs, (8) the risk of projections. Given these uncertainties, forward-looking statements shouldlitigation and/or regulatory actions related to the proposed transaction or unfavorable results from currently pending litigation and proceedings or litigation and proceedings that could arise in the future, (9) other business effects, including the effects of industry, market, economic, political or regulatory conditions, (10) information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity, malware or ransomware attacks, and (11) changes resulting from the COVID-19 pandemic (including the effect of COVID-19 on the Company’s revenues, particularly our non-political advertising revenues), which could exacerbate any of the risks described above. Potential regulatory actions, changes in consumer behaviors and impacts on and modifications to our operations and business relating thereto and our ability to execute on our standalone plan can also cause actual results to differ materially. We are not be relied on in making investment decisions. The forward-looking statementsresponsible for updating the information contained in this Quarterly Report on Form 10-Q speakbeyond the published date.
Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of the Company. Each such statement speaks only as of the date of its filing. Except where requiredday it was made. We undertake no obligation to update or to revise any forward-looking statements. The factors described above cannot be controlled by applicable law, we expressly disclaim a duty to provide updates to forward-looking statements after the date ofour Company. When used in this Quarterly Report on Form 10-Q, the words “believes,” “estimates,” “plans,” “expects,” “should,” “could,” “outlook,” and “anticipates” and similar expressions as they relate to reflect subsequent events, changed circumstances, changes in expectations,our Company or the estimates and assumptions associated with them. The forward-lookingmanagement are intended to identify forward looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are intended to be subject tomay include, without limitation: statements about the safe harbor protection provided bypotential benefits of the federal securities laws.proposed acquisition, anticipated growth rates, the Company’s plans, objectives, expectations, and the anticipated timing of closing the proposed transaction.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, refer to the following section of our 20162021 Annual Report on Form 10-K: “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.” Our exposureexposures to market risk has been reducedhave not changed materially since December 31, 2016, due to the sale of our majority ownership in CareerBuilder, which has decreased our exposure to changes in foreign exchange rates related to CareerBuilder’s international operations.2021.
As of September 30, 2017, we had $379.2 million in long-term floating rate obligations outstanding. These obligations fluctuate with market interest rates. By way2022, approximately $3.09 billion of comparison,our debt has a 50 basis points increase or decrease in the averagefixed interest rate for these obligations would result in a change in annualized interest expense(which represents 100% of approximately $1.9 million.our total principal debt obligation). The fair value of our total debt, based on bid and ask quotes for the related debt, totaled $3.49$2.88 billion as of September 30, 2017,2022 and $4.19$3.40 billion as of December 31, 2016.2021.
Item 4. Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the Company’sCompany’s disclosure controls and procedures as of September 30, 2017.2022. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective, as of September 30, 2017,2022, to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
There have been no material changes in our internal controls or in other factors during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Other than ordinary, routine litigation incidentalSee Note 9 to the condensed consolidated financial statements for information regarding our business, neither we nor any of our subsidiaries currently is party to any material pending legal proceeding.proceedings.
Item 1A. Risk Factors
While we attempt to identify, manage and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. “Item 1A. Risk Factors” of our 20162021 Annual Report on Form 10-K describes the risks and uncertainties that we believe may have the potential to materially affect our business, results of operations, financial condition, cash flows, projected results and future prospects. The information below describesWe do not believe that there have been any material changes from the risk factors previously disclosed in our 20162021 Annual Report on Form 10-K and should be read in conjunction with the risk factors and information described therein.10-K.
The spin-off of our Cars.com business and sale of our majority ownership interest in CareerBuilder has reduced the size and diversification of our business, which in turn increases our exposure to the changes and highly competitive environment of the broadcast industry.
We now operate as a single business segment which is more exposed to the increased competition and changing regulatory environment within the broadcast industry. Broadcast companies operate in a highly competitive environment and compete for audiences, advertising & marketing services revenue and quality programing. Lower audience share, declines in advertising & marketing services revenue and increased programming costs would adversely affect our business, financial condition and results of operations.
In addition, the Federal Communications Commission (FCC) and Congress are contemplating several new laws and changes to existing media ownership and other broadcast-related regulations, regarding a wide range of matters (including permitting companies to own more stations in a single market, as well as owning more stations nationwide). Changes to FCC rules may lead to additional opportunities and increased uncertainty in the industry. We cannot be assured that we will be able to compete successfully in the future against existing, new or potential competitors, or that competition and consolidation in the media marketplace will not have a material adverse effect on our business, financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On September 19, 2017, we announced thatIn December 2020, our Board of Directors authorized a newthe renewal of our share repurchase program for up to $300.0 million of our common stock over the next three years. During the third quarter of 2017, noNo shares were repurchased.repurchased during the nine months ended September 30, 2022. As a result of the announcement of the Merger Agreement on February 22, 2022, we have suspended share repurchases under this program.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
|
| | | | | | | |
| Exhibit Number | | Description | | Location |
| | | | |
3-1 | | Third |
| 3-1 | | | | |
| | | | |
3-1-1 | | Amendment to Third Restated Certificate of Incorporation of TEGNA Inc. | | |
| | | | |
3-1-23-2 | | Amendment to Third Restated Certificate of Incorporation of TEGNA Inc. | | |
| | | | |
3-2 | | By-laws, as amended through December 8, 2015. | | |
| | | | |
10-131-1 | | Tenth Amendment, dated as of August 1, 2017, to the Amended and Restated Competitive Advance and Revolving Credit Agreement, dated as of December 13, 2004 and effective as of January 5, 2005, as amended and restated as of August 5, 2013, and as further amended, among TEGNA Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the several banks and other financial institutions from time to time parties thereto. | | |
| | | | |
31-1 | | Rule 13a-14(a) Certification of CEO. | | |
| | | | |
| 31-2 | | | | |
| | | | |
| 32-1 | | | | |
| | | | |
| 32-2 | | | | |
| | | | |
101101.INS | | The following financial information from TEGNA Inc. Quarterly Report on Form 10-Q forInline XBRL Instance Document - the quarter ended September 30, 2017, formattedinstance document does not appear in the Interactive Data File because its XBRL includes: (i) Condensed Consolidated Balance Sheets at September 30, 2017tags are embedded within the Inline XBRL document.
|
| | |
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document. |
| | |
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| | |
| 101.DEF | | Inline XBRL Taxonomy Extension Definition Document. |
| | |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| | |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| | |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and December 31, 2016, (ii) Consolidated Statements of Income for the quarter and year-to-date periods ended September 30, 2017 and September 30, 2016, (iii) Consolidated Statements of Comprehensive Income for the quarter and year-to-date periods ended September 30, 2017 and September 30, 2016, (iv) Condensed Consolidated Cash Flow Statements for the year-to-date periods ended September 30, 2017 and September 30, 2016, and (v) the notes to unaudited condensed consolidated financial statements.
contained in Exhibit 101). |
| | |
We agree to furnish to the Commission, upon request, a copy of each agreement with respect to long-term debt not filed herewith in reliance upon the exemption from filing applicable to any series of debt representing less than 10% of our total consolidated assets.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | |
| Date: November 9, 2022 | TEGNA INC. |
| |
Date: November 8, 2017 | TEGNA INC. |
| |
| /s/ Clifton A. McClelland III |
| Clifton A. McClelland III |
| Senior Vice President and Controller |
| (on behalf of Registrant and as ChiefPrincipal Accounting Officer) |