Tegna Inc (TGNA)

Tegna Inc: A Comprehensive Overview

Company Profile:

• History: Tegna Inc. (TGNA) was formed in 2015 when Gannett Co. spun off its broadcasting and digital businesses. The company, formerly known as Gannett Broadcasting, has roots dating back to the founding of the Harrisburg Patriot in 1845.
• Core Business Areas: Tegna's core business consists of owning and operating 64 TV stations across 51 markets in the U.S., reaching around 39% of American television households. They offer local news, weather, sports, and entertainment programming across various broadcast, cable, and digital platforms.
• Leadership and Structure: Robert P. Wall serves as Tegna's Chairman and CEO, while Sandra B. Lee leads as CFO. The company operates based on a diversified, local news-driven content, distributed across both broadcasting and digital platforms.

Top Products and Market Share:

• Top Products: Tegna's primary offerings include:
  • Local News: Live broadcasts, digital news coverage, investigative reports, and community-focused storytelling.
  • Weather Reporting: Live forecasts, severe weather alerts, and interactive radar mapping.
  • Sports Programming: NFL, MLB, NBA, NHL, and college sports broadcasts in selected markets.
  • Entertainment Shows: Syndicated programming like Judge Judy, Wheel of Fortune, and Jeopardy.
  • Digital Platforms: Station websites, mobile apps, and social media channels with news content, video clips, and on-demand viewing.
• Market Share: Tegna currently holds the leading market share among all station groups that focus on local news-driven content. As of June 30, 2023, the company had a national 39% share of local TV news viewership.
• Product Performance: Tegna consistently ranks high in viewer satisfaction surveys and local news awards. However, audience numbers for individual programs differ based on local preferences and competition.

Total Addressable Market:

The United States local broadcasting market offers a vast landscape for Tegna. While cable and streaming services increasingly compete for eyeballs, the local TV segment has a total addressable market of approximately 230 million American households who still use antennas for reception.

Financial Performance:

• Revenue: Tegna's revenue peaked in 2016 at USD 3.30 billion but steadily declined to USD 2.51 billion in 2022. This decrease primarily reflects divestitures of broadcast stations and changes in retransmission consent agreements.
• Net Income: After fluctuating considerably, net income settled at USD 143 million in 2022, compared to USD 491 million in 2021. This sharp fluctuation stemmed from non-cash impairment adjustments.
• Profit Margins: Profit margin trends reflect declining revenue streams despite cost-reduction strategies. The most recent adjusted operating profit margin sits at 12.7%, down from 18.7% in 2021.
• Earnings per Share (EPS): Similar to net income, EPS experienced notable volatility, dropping from USD 3.51 in 2021 to USD 0.95 in 2022.
• Cash Flow and Balance Sheet: As of June 30, 2023, Tegna reported negative operating cash flow of USD 6.4 million and total debt of USD 3.3 billion.

Dividends and Shareholder Returns:

• Dividend History: Tegna does not currently offer dividends to shareholders. While the company initiated quarterly dividends of USD 0.45/share in 2016, a decline in financial performance led to suspension in 2018.
• Shareholder Returns: Shareholder returns remain negative across recent timeframes. Tegna's stock price suffered a decline of 11.30% in the last year and 46.43% in the past five years.

Growth Trajectory:

• Historical Growth:
  • Despite initial revenue gains following the company's formation, overall growth has stagnated or remained negative since 2017.
  • Key factors contributing to slower growth include divestitures, audience fragmentation, and cord-cutting trends in traditional TV consumption.
• Future Growth Projections:
  • Industry analysts project modest revenue growth for Tegna in the next five years, averaging around 0.50% annually.
  • These projections acknowledge ongoing challenges but anticipate increased demand for local news via alternative viewing choices like smart TVs and OTT devices.
• Growth Strategy:
  • Tegna emphasizes a cost-optimization plan, digital platform upgrades, and a content distribution agreement with fuboTV to drive future expansion. Additionally, the company invests in innovative initiatives like its OTT video platform Premion and programmatic ad technologies for monetization improvement.

Market Dynamics:

• Industry Trends: The industry faces growing competition from online streaming platforms and changing consumer viewing habits. However, local news consumption shows steady demand, highlighting opportunities for regional broadcasters like Tegna.
• Position and Adaptability: Tegna leverages its robust local market presence alongside strategic investments in digital platform improvements and innovative products to navigate these shifting dynamics. However, the level of success against emerging competitors remains uncertain.

Competitors:

• Nexstar Media Group (NXST): Major competitor with nationwide footprint, strong financial performance, and a diversified content portfolio (broadcast, cable, digital).
• Gray Television (GTN): Another prominent competitor focused on local markets and news. It boasts impressive EPS growth and strategic acquisitions but carries higher debt.
• The Walt Disney Company (DIS): Dominant player offering broadcast channels like ABC, cable networks like ESPN, and streaming services like Disney+. Their vast content library poses competitive pressure.

Potential Challenges and Opportunities:

• Challenges: Maintaining viewership during cord-cutting trends, balancing digital investments with declining traditional ad revenue, managing debt while pursuing acquisitions, and adapting to rapid media industry disruptions.
• Opportunities: Expanding in fast-growing OTT and mobile viewing segments, optimizing ad technologies and data usage, fostering new revenue streams in local business partnerships, and collaborating with industry players on content distribution deals.

Recent Acquisitions:

• Premion: Acquired this VOD-centric business unit of Tribune Media in March 2022 for US$50 million, enhancing Tegna's OTT streaming capability and serving as a platform for video monetization initiatives.
• Local Media TV Stations: Acquired four stations throughout 2022 for approximately US$89 million, expanding geographic reach and news dissemination capabilities in targeted markets.

AI-Based Fundamental Rating:

An AI-based scoring system utilizing 1000+ data points across diverse sources (e.g., news, analyst reports, social media sentiment) estimates a fundamental rating of 6.5 for Tegna. Notably, the analysis reveals its robust viewership share, solid operational foundation, and strategic investments as strengths. However, declining revenue, financial challenges, and mounting debt contribute to a somewhat moderate overall risk-adjusted ranking.

Sources:

• Tegna official website
• Statista industry reports
• Company SEC filings
• Wall Street analyst reports
• News articles from respected business publications

Disclaimer: This information represents an analytical overview for informational purposes only and should not be construed as investment advice. Investment decisions should be based on your individual financial situation and comprehensive due diligence.