UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-Q

_______________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-6961

___________________________

TEGNA INC.

(Exact name of registrant as specified in its charter)

___________________________

Delaware

16-0442930

Delaware16-0442930

(State or other jurisdiction of incorporation

or organization)

(I.R.S. Employer Identification No.)

8350 Broad Street, Suite 2000,

Tysons, Virginia

22102-5151

(Address of principal executive offices)

(Zip Code)

(703)873-6600


(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock

TGNA

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No


The total number of shares of the registrant’s Common Stock, $1 par value, outstanding as of July 31, 2023April 30, 2024 was 201,522,005.
169,605,246.




INDEX TO TEGNA INC.

June 30, 2023

March 31,2024 FORM 10-Q

Item No.

Page

 

PART I. FINANCIAL INFORMATION

 

 

 

 

1.

Financial Statements

 

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

3

 

 

 

 

Consolidated Statements of Income for the Quarters ended March 31, 2024 and 2023

5

 

 

 

 

Consolidated Statements of Comprehensive Income for the Quarters ended March 31, 2024 and 2023

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

7

 

 

 

 

Consolidated Statements of Equity and Redeemable Noncontrolling Interest for the Quarters ended March 31, 2024 and 2023

8

 

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

 

3.

Quantitative and Qualitative Disclosures about Market Risk

26

 

 

 

4.

Controls and Procedures

26

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

1.

Legal Proceedings

26

 

 

 

1A.

Risk Factors

27

 

 

 

2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

 

 

 

3.

Defaults Upon Senior Securities

27

 

 

 

4.

Mine Safety Disclosures

27

 

 

 

5.

Other Information

27

 

 

 

6.

Exhibits

28

 

 

 

 

SIGNATURE

29

Item No. Page
PART I. FINANCIAL INFORMATION
1.Financial Statements
2.
3.
4.
PART II. OTHER INFORMATION
1.
1A.
2.
3.
4.
5.
6.

2



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


TEGNA Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands of dollars (Unaudited)

June 30, 2023Dec. 31, 2022
ASSETS
Current assets
Cash and cash equivalents$489,373 $551,681 
Accounts receivable, net of allowances of $4,249 and $3,697, respectively593,410 658,318 
Other receivables10,534 13,493 
Syndicated programming rights17,326 44,064 
Prepaid expenses and other current assets33,257 36,152 
Total current assets1,143,900 1,303,708 
Property and equipment
Cost1,076,634 1,067,191 
Less accumulated depreciation(634,853)(610,138)
Net property and equipment441,781 457,053 
Intangible and other assets
Goodwill2,981,587 2,981,587 
Indefinite-lived and amortizable intangible assets, less accumulated amortization of $263,484 and $348,087, respectively
2,355,561 2,381,606 
Right-of-use assets for operating leases73,605 78,448 
Investments and other assets118,839 126,494 
Total intangible and other assets5,529,592 5,568,135 
Total assets$7,115,273 $7,328,896 

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

430,764

 

 

$

361,036

 

Accounts receivable, net of allowances of $2,535 and $2,845, respectively

 

604,537

 

 

 

624,445

 

Other receivables

 

11,023

 

 

 

9,299

 

Syndicated programming rights

 

21,281

 

 

 

31,530

 

Prepaid expenses and other current assets

 

28,386

 

 

 

24,008

 

Total current assets

 

1,095,991

 

 

 

1,050,318

 

Property and equipment

 

 

 

 

 

Cost

 

1,082,848

 

 

 

1,078,209

 

Less accumulated depreciation

 

(640,149

)

 

 

(626,029

)

Net property and equipment

 

442,699

 

 

 

452,180

 

Intangible and other assets

 

 

 

 

 

Goodwill

 

3,015,973

 

 

 

2,981,587

 

Indefinite-lived and amortizable intangible assets, less accumulated amortization of $257,433 and $289,949, respectively

 

2,349,712

 

 

 

2,328,972

 

Right-of-use assets for operating leases

 

70,897

 

 

 

73,479

 

Investments and other assets

 

129,388

 

 

 

113,521

 

Total intangible and other assets

 

5,565,970

 

 

 

5,497,559

 

Total assets

$

7,104,660

 

 

$

7,000,057

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3



TEGNA Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands of dollars, except par value and share amounts (Unaudited)

June 30, 2023Dec. 31, 2022
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current liabilities
Accounts payable$78,788 $76,212 
Accrued liabilities
   Compensation38,598 50,339 
   Interest44,625 45,480 
   Contracts payable for programming rights99,593 117,743 
   Other67,724 78,265 
Income taxes payable3,416 22,985 
Total current liabilities332,744 391,024 
Noncurrent liabilities
Deferred income tax liability574,975 556,131 
Long-term debt3,071,026 3,069,316 
Pension liabilities73,380 73,684 
Operating lease liabilities74,231 79,503 
Other noncurrent liabilities66,653 70,098 
Total noncurrent liabilities3,860,265 3,848,732 
Total liabilities4,193,009 4,239,756 
Commitments and contingent liabilities (see Note 9)
Redeemable noncontrolling interest (see Note 1)18,106 17,418 
Shareholders’ equity
Common stock of $1 par value per share, 800,000,000 shares authorized, 324,418,632 shares issued324,419 324,419 
Additional paid-in capital27,941 27,941 
Retained earnings7,989,312 7,898,055 
Accumulated other comprehensive loss(123,467)(125,533)
Less treasury stock at cost, 122,978,320 shares and 100,970,426 shares, respectively(5,314,047)(5,053,160)
Total equity2,904,158 3,071,722 
Total liabilities, redeemable noncontrolling interest and equity$7,115,273 $7,328,896 

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

$

80,001

 

 

$

114,950

 

Accrued liabilities

 

 

 

 

 

   Compensation

 

48,271

 

 

 

54,929

 

   Interest

 

11,891

 

 

 

45,144

 

   Contracts payable for programming rights

 

130,298

 

 

 

119,562

 

   Other

 

97,064

 

 

 

82,782

 

Income taxes payable

 

66,453

 

 

 

6,005

 

Total current liabilities

 

433,978

 

 

 

423,372

 

 

 

 

 

 

 

Noncurrent liabilities

 

 

 

 

 

Deferred income tax liability

 

578,244

 

 

 

578,219

 

Long-term debt

 

3,073,692

 

 

 

3,072,801

 

Pension liabilities

 

69,706

 

 

 

70,483

 

Operating lease liabilities

 

70,937

 

 

 

73,733

 

Other noncurrent liabilities

 

61,040

 

 

 

57,765

 

Total noncurrent liabilities

 

3,853,619

 

 

 

3,853,001

 

Total liabilities

$

4,287,597

 

 

$

4,276,373

 

 

 

 

 

 

 

Commitments and contingent liabilities (see Note 10)

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interest (see Note 1)

$

19,174

 

 

$

18,812

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

Common stock of $1 per value per share, 800,000,000 shares authorized, 324,418,632 shares issued

 

324,419

 

 

 

324,419

 

Additional paid-in capital

 

27,941

 

 

 

27,941

 

Retained earnings

 

8,248,066

 

 

 

8,091,245

 

Accumulated other comprehensive loss

 

(118,499

)

 

 

(119,610

)

Less treasury stock at cost, 153,095,072 shares and 144,502,338 shares, respectively

 

(5,684,038

)

 

 

(5,619,123

)

Total equity

 

2,797,889

 

 

 

2,704,872

 

Total liabilities, redeemable noncontrolling interest and equity

$

7,104,660

 

 

$

7,000,057

 

The accompanying notes are an integral part of these condensed consolidated financial statements.


4


4



TEGNA Inc.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited, in thousands of dollars, except per share amounts

Quarter ended June 30,Six months ended June 30,
2023202220232022
Revenues$731,506 $784,881 $1,471,833 $1,559,004 
Operating expenses:
Cost of revenues1
430,528 420,235 857,460 831,685 
Business units - Selling, general and administrative expenses97,231 99,585 196,340 201,554 
Corporate - General and administrative expenses26,506 13,612 38,606 34,932 
Depreciation14,987 15,534 30,036 30,839 
Amortization of intangible assets13,296 14,999 26,878 29,999 
Asset impairment and other3,359 (105)3,359 (163)
Merger termination fee(136,000)— (136,000)— 
Total449,907 563,860 1,016,679 1,128,846 
Operating income281,599 221,021 455,154 430,158 
Non-operating (expense) income:
Equity loss in unconsolidated investments, net(283)(236)(520)(4,047)
Interest expense(42,797)(42,950)(85,703)(86,570)
Other non-operating items, net5,781 (1,865)11,192 15,454 
Total(37,299)(45,051)(75,031)(75,163)
Income before income taxes244,300 175,970 380,123 354,995 
Provision for income taxes44,207 44,030 76,026 88,768 
Net Income200,093 131,940 304,097 266,227 
Net loss (income) attributable to redeemable noncontrolling interest12 (371)311 (424)
Net income attributable to TEGNA Inc.$200,105 $131,569 $304,408 $265,803 
Earnings per share:
Basic$0.92 $0.59 $1.37 $1.19 
Diluted$0.92 $0.59 $1.37 $1.19 
Weighted average number of common shares outstanding:
Basic shares217,830 223,675 221,168 223,197 
Diluted shares217,979 224,489 221,391 223,867 
1 Cost of revenues exclude charges for depreciation and amortization expense, which are shown separately above.

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Revenues

$

714,252

 

 

$

740,327

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Cost of revenues1

 

430,567

 

 

 

426,932

 

Business units - Selling, general and administrative expenses

 

102,260

 

 

 

99,109

 

Corporate - General and administrative expenses

 

14,798

 

 

 

12,100

 

Depreciation

 

14,310

 

 

 

15,049

 

Amortization of intangible assets

 

13,660

 

 

 

13,582

 

Asset impairment and other

 

1,097

 

 

 

 

Total

 

576,692

 

 

 

566,772

 

Operating income

 

137,560

 

 

 

173,555

 

 

 

 

 

 

Non-operating (expense) income:

 

 

 

 

 

Interest expense

 

(42,368

)

 

 

(42,906

)

Interest income

 

5,573

 

 

 

7,573

 

Other non-operating items, net

 

149,758

 

 

 

(2,399

)

Total

 

112,963

 

 

 

(37,732

)

 

 

 

 

 

Income before income taxes

 

250,523

 

 

 

135,823

 

Provision for income taxes

 

61,261

 

 

 

31,819

 

Net income

 

189,262

 

 

 

104,004

 

Net loss attributable to redeemable noncontrolling interest

 

298

 

 

 

299

 

Net income attributable to TEGNA Inc.

$

189,560

 

 

$

104,303

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

$

1.06

 

 

$

0.46

 

Diluted

$

1.06

 

 

$

0.46

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

Basic shares

 

177,823

 

 

 

224,544

 

Diluted shares

 

178,437

 

 

 

224,839

 

1 Cost of revenues exclude charges for depreciation and amortization expense, which are shown separately.

The accompanying notes are an integral part of these condensed consolidated financial statements.

5



TEGNA Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited, in thousands of dollars

Quarter ended June 30,Six months ended June 30,
2023202220232022
Net income$200,093 $131,940 $304,097 $266,227 
Other comprehensive income, before tax:
Foreign currency translation adjustments— — — 142 
Recognition of previously deferred post-retirement benefit plan costs1,327 1,085 2,777 2,061 
Realized gain on available-for-sale investment during the period— — — (20,800)
Other comprehensive income (loss), before tax1,327 1,085 2,777 (18,597)
Income tax effect related to components of other comprehensive income(339)(279)(711)4,785 
Other comprehensive income (loss), net of tax988 806 2,066 (13,812)
Comprehensive income201,081 132,746 306,163 252,415 
Comprehensive loss (income) attributable to redeemable noncontrolling interest12 (371)311 (424)
Comprehensive income attributable to TEGNA Inc.$201,093 $132,375 $306,474 $251,991 

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Net Income

$

189,262

 

 

$

104,004

 

     Recognition of previously deferred post-retirement benefit plan costs

 

1,500

 

 

 

1,450

 

     Income tax effect related to components of other comprehensive income

 

(389

)

 

 

(372

)

Other comprehensive income, net of tax

 

1,111

 

 

 

1,078

 

Comprehensive income

 

190,373

 

 

 

105,082

 

Comprehensive loss attributable to redeemable noncontrolling interest

 

298

 

 

 

299

 

Comprehensive income attributable to TEGNA Inc.

$

190,671

 

 

$

105,381

 

The accompanying notes are an integral part of these condensed consolidated financial statements.


6

6



TEGNA Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited, in thousands of dollars


 

Three months ended Mar. 31,

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

Net income

$

189,262

 

 

$

104,004

 

Adjustments to reconcile net income to net cash flow from operating activities:

 

 

 

 

 

Depreciation and amortization

 

27,970

 

 

 

28,631

 

Employee stock-based compensation awards

 

11,132

 

 

 

3,688

 

Company stock 401(k) match contributions

 

5,429

 

 

 

5,564

 

Gain on investment sale

 

(152,867

)

 

 

 

Equity loss in unconsolidated investments, net

 

234

 

 

 

237

 

Pension expense, net of employer contributions

 

742

 

 

 

1,416

 

Change in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Decrease in trade receivables

 

22,153

 

 

 

20,615

 

(Decrease) increase in accounts payable

 

(34,950

)

 

 

12,100

 

Increase (decrease) in interest and taxes payable

 

26,958

 

 

 

(1,627

)

(Decrease) increase in deferred revenue

 

(533

)

 

 

1,797

 

Changes in other assets and liabilities, net

 

4,850

 

 

 

(6,038

)

Net cash flow from operating activities

 

100,380

 

 

 

170,387

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(4,911

)

 

 

(2,845

)

Payments for acquisitions of businesses and assets, net of cash acquired

 

(52,799

)

 

 

(1,150

)

Payments for investments

 

(8,985

)

 

 

(163

)

Proceeds from investments

 

152,867

 

 

 

23

 

Proceeds from sale of assets

 

52

 

 

 

13

 

Net cash flow provided by (used for) investing activities

 

86,224

 

 

 

(4,122

)

Cash flows from financing activities:

 

 

 

 

 

Repurchase of common stock

 

(82,394

)

 

 

 

Dividends paid

 

(19,898

)

 

 

(21,360

)

Payments for debt issuance costs

 

(6,448

)

 

 

 

Other, net

 

(8,136

)

 

 

(13,407

)

Net cash flow used for financing activities

 

(116,876

)

 

 

(34,767

)

Increase in cash and cash equivalents

 

69,728

 

 

 

131,498

 

Balance of cash and cash equivalents at beginning of period

 

361,036

 

 

 

551,681

 

Balance of cash and cash equivalents at end of period

$

430,764

 

 

$

683,179

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

Cash paid for income taxes, net of refunds

$

1,044

 

 

$

914

 

Cash paid for interest

$

74,240

 

 

$

73,862

 


Six months ended June 30,
20232022
Cash flows from operating activities:
Net income$304,097 $266,227 
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization56,914 60,838 
Stock-based compensation8,845 17,209 
     Company stock 401(k) contribution10,226 9,929 
Gains on assets, net— (18,308)
Equity losses from unconsolidated investments, net520 4,047 
Merger termination fee(136,000)— 
Pension expense, net of employer contributions2,655 (1,070)
Change in other assets and liabilities:
Decrease in trade receivables64,356 25,263 
Increase in accounts payable2,576 13,385 
Increase in interest and taxes payable, net1,100 9,615 
Increase in deferred revenue861 1,687 
Change in other assets and liabilities, net(8,665)2,565 
Net cash flow from operating activities307,485 391,387 
Cash flows from investing activities:
Purchase of property and equipment(14,491)(23,094)
Reimbursements from spectrum repacking— 163 
Payments for acquisition of assets(1,150)— 
Purchases of investments(328)(4,706)
Proceeds from investments23 3,451 
Proceeds from sale of assets39 367 
Net cash flow used for investing activities(15,907)(23,819)
Cash flows from financing activities:
Payments under revolving credit facilities, net— (166,000)
Dividends paid(40,489)(42,331)
Repurchase of common stock(300,000)— 
 Other, net(13,397)(15,456)
Net cash flow used for financing activities(353,886)(223,787)
(Decrease) increase in cash(62,308)143,781 
Balance of cash, beginning of period551,681 56,989 
Balance of cash, end of period$489,373 $200,770 
Supplemental cash flow information:
Cash paid for income taxes, net of refunds$74,372 $79,915 
Cash paid for interest$83,058 $84,361 


The accompanying notes are an integral part of these condensed consolidated financial statements.

7



TEGNA Inc.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

Unaudited, in thousands of dollars, except per share data

Quarters ended:Redeemable noncontrolling interestCommon
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total Equity
Balance at Mar. 31, 2023$17,754 $324,419 $27,941 $7,879,619 $(124,455)$(4,956,259)$3,151,265 
Net (loss) income(12)— — 200,105 — — 200,105 
Other comprehensive income, net of tax— — — — 988 — 988 
Total comprehensive income201,093 
Dividends declared: $0.095 per share— — — (19,130)— — (19,130)
Company stock 401(k) contribution— — (961)(12,697)— 18,320 4,662 
Stock-based awards activity— — (184)(2,441)— 2,636 11 
Stock-based compensation— — 5,157 — — — 5,157 
Repurchase of common stock— — (4,220)(55,780)— (378,744)(438,744)
Adjustment of redeemable noncontrolling interest to redemption value364 — — (364)— — (364)
Other activity— — 208 — — — 208 
Balance at June 30, 2023$18,106 $324,419 $27,941 $7,989,312 $(123,467)$(5,314,047)$2,904,158 
Redeemable noncontrolling interestCommon
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total Equity
Balance at Mar. 31, 2022$16,430 $324,419 $27,941 $7,479,795 $(111,834)$(5,101,472)$2,618,849 
Net income371 — — 131,569 — — 131,569 
Other comprehensive income, net of tax— — — — 806 — 806 
Total comprehensive income132,375 
Dividends declared: $0.095 per share— — — (21,180)— — (21,180)
Company stock 401(k) contribution— — (5,004)(4,810)— 14,405 4,591 
Stock-based awards activity— — (2,053)(1,974)— 4,022 (5)
Stock-based compensation— — 6,714 — — — 6,714 
Adjustment of redeemable noncontrolling interest to redemption value(36)— — 36 — — 36 
Other activity— — 343 — — — 343 
Balance at June 30, 2022$16,765 $324,419 $27,941 $7,583,436 $(111,028)$(5,083,045)$2,741,723 
8


TEGNA Inc.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NON-CONTROLLING INTEREST
Unaudited, in thousands of dollars, except per share data
Six Months Ended:Redeemable noncontrolling interestCommon
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total
Balance at Dec. 31, 2022$17,418 $324,419 $27,941 $7,898,055 $(125,533)$(5,053,160)$3,071,722 
Net income(311)— — 304,408 — — 304,408 
Other comprehensive income, net of tax— — — — 2,066 — 2,066 
Total comprehensive income306,474 
Dividends declared: $0.19 per share— — — (40,489)— — (40,489)
Company stock 401(k) contribution— — (1,536)(27,188)— 38,950 10,226 
Stock-based awards activity— — (3,609)(88,695)— 78,907 (13,397)
Stock-based compensation— — 8,845 — — — 8,845 
Repurchase of common stock— — (4,220)(55,780)— (378,744)(438,744)
Adjustment of redeemable noncontrolling interest to redemption value999 — — (999)— — (999)
Other activity— — 520 — — — 520 
Balance at June 30, 2023$18,106 $324,419 $27,941 $7,989,312 $(123,467)$(5,314,047)$2,904,158 
Redeemable noncontrolling interestCommon
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total
Balance at Dec. 31, 2021$16,129 $324,419 $27,941 $7,459,380 $(97,216)$(5,194,618)$2,519,906 
Net income424 — — 265,803 — — 265,803 
Other comprehensive income, net of tax— — — — (13,812)— (13,812)
Total comprehensive income251,991 
Dividends declared: $0.19 per share— — — (42,331)— — (42,331)
Company stock 401(k) contribution— — (6,326)(16,084)— 32,339 9,929 
Stock-based awards activity— — (11,570)(83,120)— 79,234 (15,456)
Stock-based compensation— — 17,209 — — — 17,209 
Adjustment of redeemable noncontrolling interest to redemption value212 — — (212)— — (212)
Other activity— — 687 — — — 687 
Balance at June 30, 2022$16,765 $324,419 $27,941 $7,583,436 $(111,028)$(5,083,045)$2,741,723 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters ended:

Redeemable noncontrolling interest

 

 

 

Common stock

 

Additional paid-in capital

 

Retained earnings

 

Accumulated other comprehensive loss

 

 

Treasury stock

 

 

Total Equity

 

Balance as of Dec. 31, 2023

$

18,812

 

 

 

$

324,419

 

$

27,941

 

$

8,091,245

 

$

(119,610

)

 

$

(5,619,123

)

 

$

2,704,872

 

Net (loss) income

 

(298

)

 

 

 

 

 

 

 

189,560

 

 

 

 

 

 

 

 

189,560

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

1,111

 

 

 

 

 

 

1,111

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

190,671

 

Dividends declared: $0.11375 per share

 

 

 

 

 

 

 

 

 

(19,898

)

 

 

 

 

 

 

 

(19,898

)

Company stock 401(k) match contributions

 

 

 

 

 

 

 

(15,532

)

 

(2,719

)

 

 

 

 

23,680

 

 

 

5,429

 

Stock-based awards activity

 

 

 

 

 

 

 

(54,029

)

 

(9,462

)

 

 

 

 

55,354

 

 

 

(8,137

)

Employee stock-based compensation awards

 

 

 

 

 

 

 

11,132

 

 

 

 

 

 

 

 

 

 

11,132

 

Repurchase of common stock

 

 

 

 

 

 

 

58,029

 

 

 

 

 

 

 

(143,949

)

 

 

(85,920

)

Adjustment of redeemable noncontrolling interest to redemption value

 

660

 

 

 

 

 

 

 

 

(660

)

 

 

 

 

 

 

 

(660

)

Other activity

 

 

 

 

 

 

 

400

 

 

 

 

 

 

 

 

 

 

400

 

Balance as of Mar. 31, 2024

$

19,174

 

 

 

$

324,419

 

$

27,941

 

$

8,248,066

 

$

(118,499

)

 

$

(5,684,038

)

 

$

2,797,889

 

 

Redeemable noncontrolling interest

 

 

 

Common stock

 

Additional paid-in capital

 

Retained earnings

 

Accumulated other comprehensive loss

 

 

Treasury stock

 

 

Total Equity

 

Balance as of Dec. 31, 2022

$

17,418

 

 

 

$

324,419

 

$

27,941

 

$

7,898,055

 

$

(125,533

)

 

$

(5,053,160

)

 

$

3,071,722

 

Net (loss) income

 

(299

)

 

 

 

 

 

 

 

104,303

 

 

 

 

 

 

 

 

104,303

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

1,078

 

 

 

 

 

 

1,078

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105,381

 

Dividends declared: $0.095 per share

 

 

 

 

 

 

 

 

 

(21,360

)

 

 

 

 

 

 

 

(21,360

)

Company stock 401(k) match contributions

 

 

 

 

 

 

 

(575

)

 

(14,491

)

 

 

 

 

20,630

 

 

 

5,564

 

Stock-based awards activity

 

 

 

 

 

 

 

(3,425

)

 

(86,253

)

 

 

 

 

76,271

 

 

 

(13,407

)

Employee stock-based compensation awards

 

 

 

 

 

 

 

3,688

 

 

 

 

 

 

 

 

 

 

3,688

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment of redeemable noncontrolling interest to redemption value

 

635

 

 

 

 

 

 

 

 

(635

)

 

 

 

 

 

 

 

(635

)

Other activity

 

 

 

 

 

 

 

312

 

 

 

 

 

 

 

 

 

 

312

 

Balance as of Mar. 31, 2023

$

17,754

 

 

 

$

324,419

 

$

27,941

 

$

7,879,619

 

$

(124,455

)

 

$

(4,956,259

)

 

$

3,151,265

 

The accompanying notes are an integral part of these condensed consolidated financial statements.


8

9



TEGNA Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – Basis of presentation merger agreement and accounting policies


Basis of presentation: Our (or TEGNA’s) accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting, the instructions for Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all information and footnotes which are normally included in the Form 10-K and annual report to shareholders. In our opinion, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. The condensed consolidated financial statements should be read in conjunction with our (or TEGNA’s) audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.2023.


The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We use the best information available in developing significant estimates inherent in our financial statements. Actual results could differ from these estimates, and these differences resulting from changes in facts and circumstances could be material. Significant estimates include, but are not limited to, evaluation of goodwill and other intangible assets for impairment, allocation of purchase price to assets and liabilities in business combinations, fair value measurements, post-retirement benefit plans, income taxes including deferred taxes, and contingencies.The condensed consolidated financial statements include the accounts of subsidiaries we control. We eliminate all intercompany balances, transactions, and profits in consolidation. Investments in entities over which we have significant influence, but do not have control, are accounted for under the equity method. Our share of net earnings and losses from these ventures iswere previously included in “Equity loss in unconsolidated investments, net” in the Consolidated Statements of Income, however beginning in the first quarter of 2024 such amounts are now included in “Other non-operating items, net”. Additionally, we now present interest income separately within the Non-operating income (expense) section of our Consolidated Statements of Income.

We have recast the prior year amounts to conform to these new presentations.


We operate one operating and reportable segment, which primarily consists of our 64television stations and two radio stations operating in 51 markets, providing high-quality television programming and digital content. Our reportable segment determination is based on our management and internal reporting structure, the nature of products and services we offer, and the financial information that is evaluated regularly by our chief operating decision maker.


Merger Agreement: On February 22, 2022, we entered into an Agreement and Plan of Merger (as amended, the Merger Agreement), with Teton Parent Corp., a newly formed Delaware corporation (Parent), Teton Merger Corp., a newly formed Delaware corporation and an indirect wholly owned subsidiary of Parent (Merger Sub), and solely for purposes of certain provisions specified therein, other subsidiaries of Parent, certain affiliates of Standard General L.P., a Delaware limited partnership (Standard General) and CMG Media Corporation, a Delaware corporation (CMG), and certain of its subsidiaries.

On May 22, 2023, after a protracted regulatory review, we terminated the Merger Agreement in accordance with its terms. Under the terms of the Merger Agreement, Parent was required to pay us a $136.0 million fee as a result of this termination. In lieu of cash payment for the termination fee, we agreed to accept from Parent 8.6 million shares of the Company’s common stock, which Parent transferred to the Company on June 1, 2023, and which was recorded as an increase to our Treasury stock. The $136.0 million termination fee was recorded as an operating item within our Consolidated Statement of Income and Consolidated Statement of Cash flow. Approximately $9.9 million of the termination fee was contractually due to one of the Company’s professional advisors. This expense was recorded within “Corporate - General and Administrative expenses” within our Consolidated Statement of Income.

Accounting guidance adopted in 2023:2024: We did not adopt any new accounting guidance in 20232024 that had a material impact on our condensed consolidated financial statements or disclosures.


New accounting guidance not yet adopted: ThereIn November 2023, the Financial Accounting Standards Board (FASB) issued new guidance that changes required disclosures related to segment reporting. The guidance will require entities to disclose on a quarterly and annual basis the significant segment expense items that are regularly provided to the entity’s chief operating decision maker (CODM). Entities will also be required to disclose the title and position of their CODM. The new guidance is effective for us beginning in 2024 on an annual basis and the first quarter of 2025 on a quarterly basis, and is to be applied on a retrospective basis. Early adoption of the guidance is permitted. We are currently noevaluating the effect this new guidance will have on our disclosures.

In December 2023, the FASB issued accounting standards not yetnew guidance that changes certain disclosures related to income taxes. The guidance requires entities to disclose additional quantitative and qualitative information about the reconciliation between their statutory and effective tax rates. Specifically, the guidance requires disaggregation of the reconciling items using standardized categories. This guidance also requires additional disclosure of income taxes paid to now include disaggregation on a federal, state and foreign basis and to specifically include the amount of income taxes paid to individual jurisdictions when they represent five percent or more of total income tax payments. The new guidance is effective for us beginning in 2025 and may be applied on either a prospective or retrospective basis. Early adoption of the guidance is permitted. We are currently evaluating the effect this new guidance will have on our disclosures.

In March 2024, the U.S. Securities and Exchange Commission (“SEC”) adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule will require companies to make disclosures about climate-related matters, specifically, it will require the disclosure of:

Climate-related risks that we expectare reasonably likely to have a material impact on our consolidateda company’s business strategy, results of operations or financial statements or disclosures.condition;

The nature and extent of management’s role in assessing and managing climate-related risks and the board of directors’ oversight of such risks, whether and how climate-related risks are integrated into the company’s overall risk management processes, and any transition plans to manage material transition risks that are part of the company’s risk management strategy;
The processes for identifying, assessing, and managing climate-related risks;

9


Any climate-related target or goal that has materially affected or is reasonably likely to materially affect the registrant’s business, results of operations, or financial condition; and
Measures related to greenhouse gas emissions.

On April 4, 2024, the SEC stayed these rules due to pending legal challenges.

We are currently evaluating the final rule to determine its impact on our future disclosures.

Trade receivables and allowances for doubtful accounts: Trade receivables are recorded at invoiced amounts and generally do not bear interest. The allowance for doubtful accounts reflects our estimate of credit exposure, determined principally on the basis of our collection experience, aging of our receivables and any specific reserves needed for certain customers based on their credit risk. Our allowance also takes into account expected future trends which may impact our customers’ ability to pay, such as economic growth (or declines), unemployment and demand for our products and services. We monitor the credit quality of our customers and their ability to pay through the use of analytics and communication with individual customers. As of June 30, 2023,March 31, 2024, our allowance for doubtful accounts was $4.2$2.5 million as compared to $3.7$2.8 million as of December 31, 2022.2023.


10


Programming assets: We are party to programming contracts which provide us with rights to broadcast syndicated programs, original series and films. These contracts are recorded at the gross amount of the related liability when the programs are available for telecasting. The related assets are recorded at the lower of cost or estimated net realizable value. Programming assets are classified as current (within Prepaid expenses and other current assets) or noncurrent (within Investments and other assets) in the Condensed Consolidated Balance Sheets, based on when the programming is expected to air. Expense is recognized on a straight line basis which appropriately matches the cost of the programs with the revenues associated with them.

We evaluate the net realizable value of our programming asset when a triggering event occurs, such as a change in our intended usage, or sustained lower than expected ratings for the program. We determine the net realizable value based on a projection of the estimated revenues less projected direct costs associated with the programming. If the future direct costs exceed expected revenues, impairment of the program asset may be required. In the second quarter of 2023, we recognized an impairment charge of $3.4 million related to certain programming assets. The impairment was recorded in the “Asset impairment and other” line item of the Consolidated Statements of Income.

Redeemable Noncontrolling interest: Our Premion business operates an advertising network for over-the-top (OTT) streaming and connected television platforms. In March 2020, we sold a minority interest in Premion to an affiliate of Gray Television (Gray) and entered into a commercial reselling agreement with the affiliate. During the first quarter of 2023, we entered into a multi-year extension of the reselling agreement with Gray. Gray’s investment allows it to sell its interest to Premion if there is a change in control of TEGNA or if the commercial agreement terminates. Since redemption of the minority ownership interest is outside our control, Gray’s equity interest is presented outside of the Equity section on the Condensed Consolidated Balance Sheets in the caption “Redeemable noncontrolling interest.” When the redemption or carrying value (the acquisition date fair value adjusted for the noncontrolling interest’s share of net income (loss) and dividends) is less than the recorded redemption value, we adjust the redeemable noncontrolling interest to equal the redemption value with changes recognized as an adjustment to retained earnings. Any such adjustment, when necessary, will be performed as of the applicable balance sheet date.


Treasury Stock: We account for treasury stock under the cost method. When treasury stock is re-issued at a price higher than its cost, the difference is recorded as a component of additional paid-in-capital (APIC) in our Condensed Consolidated Balance Sheets. When treasury stock is re-issued at a price lower than its cost, the difference is recorded as a component of APIC to the extent that there are previously recorded gains to offset the losses. If there are no treasury stockaccumulated gains in APIC, the losses upon re-issuance of treasury stock are recorded as a reduction of retained earnings in our Condensed Consolidated Balance Sheets.


Accelerated share repurchase program: On June 2, 2023, we entered into an accelerated share repurchase (ASR) program with JPMorgan Chase Bank, National Association (JPMorgan). Under the terms of the ASR, we repurchased $300 million in TEGNA common shares from JPMorgan, with an initial delivery of approximately 15.2 million shares received on June 6, 2023, representing 80% ($240 million) of the value of the ASR contract. The final number of shares to be repurchased will be based on the average daily volume-weighted average price of TEGNA shares during the term of the ASR, less a discount and subject to customary adjustments pursuant to the terms of the ASR. At settlement, JPMorgan may be required to deliver additional shares of common stock to us, or under certain circumstances, we may be required to make a cash payment or deliver shares of common stock to JPMorgan. The final settlement of the ASR is expected to be completed by the end of the third quarter of 2023, subject to acceleration at JPMorgan’s discretion.

Revenue recognition: Revenue is recognized upon the transfer of control of promised services to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Amounts received from customers in advance of providing services to our customers are recorded as deferred revenue.


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 revenues, which include local and national non-political television advertising, digital marketing services (including Premion), advertising on the stations’ websites, tablet and mobile products, and OTT apps; 3) political advertising revenues, which are driven by even-year election cycles at the local and national level (e.g. 2022, 2024, 2022, etc.) and particularly in the second half of those years; and 4) other services, such as production of programming, tower rentals and distribution of our local news content.


11


Revenue earned by these sources in the secondfirst quarter of 2024 and first six months of 2023 and 2022 are shown below (amounts in thousands):

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Subscription

$

375,324

 

 

$

414,280

 

Advertising & Marketing Services

 

298,692

 

 

 

307,845

 

Political

 

27,828

 

 

 

5,291

 

Other

 

12,408

 

 

 

12,911

 

Total revenues

$

714,252

 

 

$

740,327

 

10


Quarter ended June 30,Six months ended June 30,
2023202220232022
Subscription$396,126 $389,079 $810,406 $780,733 
Advertising & Marketing Services317,726 335,259 625,571 689,726 
Political5,991 50,858 11,282 68,823 
Other11,663 9,685 24,574 19,722 
Total revenues$731,506 $784,881 $1,471,833 $1,559,004 



NOTE 2 – Goodwill and other intangible assets

The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of June 30, 2023March 31, 2024 and December 31, 20222023 (in thousands):

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

 

Gross

 

 

Accumulated Amortization

 

 

Gross

 

 

Accumulated Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

$

3,015,973

 

 

$

 

 

$

2,981,587

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Indefinite-lived intangibles:

 

 

 

 

 

 

 

 

 

 

 

Television and radio station FCC broadcast licenses

 

2,124,731

 

 

 

 

 

 

2,124,731

 

 

 

 

Amortizable intangible assets:

 

 

 

 

 

 

 

 

 

 

 

Retransmission agreements

 

101,423

 

 

 

(88,477

)

 

 

113,621

 

 

 

(95,619

)

Network affiliation agreements

 

275,524

 

 

 

(116,239

)

 

 

309,502

 

 

 

(144,834

)

Other

 

105,467

 

 

 

(52,717

)

 

 

71,067

 

 

 

(49,496

)

Total indefinite-lived and amortizable intangible assets

$

2,607,145

 

 

$

(257,433

)

 

$

2,618,921

 

 

$

(289,949

)

June 30, 2023Dec. 31, 2022
GrossAccumulated AmortizationGrossAccumulated Amortization
Goodwill$2,981,587 $— $2,981,587 $— 
Indefinite-lived intangibles:
Television and radio station FCC broadcast licenses2,124,731 — 2,123,898 — 
Amortizable intangible assets:
Retransmission agreements113,621 (84,747)224,827 (184,796)
Network affiliation agreements309,503 (133,250)309,503 (121,664)
Other71,190 (45,487)71,465 (41,627)
Total indefinite-lived and amortizable intangible assets$2,619,045 $(263,484)$2,729,693 $(348,087)


Our retransmission agreements and network affiliation agreements are amortized on a straight-line basis over their estimated useful lives. Other intangibles primarily include distribution agreements from our multicast networks acquisition, which are also amortized on a straight-line basis overover their useful lives. In 2023,the first quarter of 2024, gross retransmission agreement intangible assets and associated accumulated amortization decreased by $111.2$46.2 million, due to certain retransmission intangible assets reaching the end of their useful lives.

On January 31, 2024, Premion, LLC acquired substantially all the assets of Octillion Media, a next-generation demand-side platform focused on Local Connected TV(CTV)/Over-the-Top (OTT) advertising. The acquisition will expand Premion’s capabilities in the growing CTV marketplace by combining Octillion’s technology with Premion’s local CTV/OTT advertising solution.

The base purchase price of the acquisition was $56.0 million plus an adjustment for working capital and a maximum earnout of $14.0 million that the sellers will be entitled to receive if the Octillion Media business achieves certain technological and financial milestones during a defined period following the closing. Through the first quarter of 2024, $52.8 million of the purchase price had been paid.

The acquisition was funded with available cash on hand.

We are accounting for the acquisition as a business combination, which required us to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of the net assets acquired was recorded as goodwill. We have commenced the appraisals necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed and the amount of goodwill to be recognized. Based on preliminary valuations we have recorded $34.4 million of intangible assets related to acquired technology and customer relationships. We also recorded an additional $34.4 million as goodwill, which represents the future economic benefits expected to arise from the acquisition that do not qualify for separate recognition, including assembled workforce, as well as future synergies that we expect to generate. The goodwill and intangible assets are expected to be deductible for tax purposes.

The amounts recorded for acquired assets and liabilities are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date.


NOTE 3 – Investments and other assets


Our investments and other assets consisted of the following as of June 30, 2023March 31, 2024 and December 31, 20222023 (in thousands):

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

 

 

 

 

 

 

Cash value life insurance

$

51,706

 

 

$

50,865

 

Equity method investments

 

16,520

 

 

 

16,195

 

Other equity investments

 

22,454

 

 

 

19,526

 

Deferred debt issuance costs

 

7,274

 

 

 

 

Prepaid assets

 

8,851

 

 

 

9,878

 

Other long-term assets

 

22,583

 

 

 

17,057

 

Total

$

129,388

 

 

$

113,521

 

June 30, 2023Dec. 31, 2022
Cash value insurance$50,300 $48,919 
Equity method investments16,810 17,003 
Other equity investments20,158 20,158 
Deferred debt issuance costs450 2,232 
Long-term contract assets11,881 14,135 
Other long-term assets19,240 24,047 
Total$118,839 $126,494 


11

12



Cash value life insurance: We are the beneficiary of life insurance policies on the lives of certain employees/retirees, which are recorded at their cash surrender value as determined by the insurance carrier. These policies are utilized as a partial funding source for deferred compensation and other non-qualified employee retirement plans. Gains and losses on these investments are included in “Other non-operating items, net” within our Consolidated StatementStatements of Income and were not material for all periods presented.


Equity method investments: These are investments in entities in which we have significant influence, but do not have a controlling financial interest. Our share of net earnings and losses from these ventures is included in “Other non-operating items, net” in the Consolidated Statements of Income.

Other equity investments: Represents investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control orand do not exert significant influence. These investments are recorded at cost less impairments, if any, plus or minus changes in observable prices for those investments.


In the first quarter of 2024 we received $152.9 million of pre-tax cash proceeds upon the completion of the previously announced sale of Broadcast Music, Inc. (BMI) to a private equity firm. The gain associated with this sale is included in “Other non-operating items, net” in the Consolidated Statements of Income. Following this sale we no longer have any ownership interest in BMI.

Deferred debt issuance costs: These costs consist of amounts paid to lenders related to our revolving credit facility. On January 25, 2024, we entered into an amendment of our credit facility which resulted in the capitalization of $6.4 million of fees paid to lenders under the new amendment. Additionally, we reclassified approximately $1.1 million of fees under the previous credit facility agreement as non-current deferred debt issuance costs. See Note 4 for additional details of the revolving credit facility amendment. Debt issuance costs paid for our unsecured notes are accounted for as a reduction in the debt obligation.


Long-term contractPrepaid assets: These amounts primarily consist of an asset related to a long-term services agreement for IT security.

NOTE 4 – Long-term debt

Our long-term debt is summarized below (in thousands):

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

 

 

 

 

 

 

Unsecured notes bearing fixed rate interest at 4.75% due March 2026

$

550,000

 

 

$

550,000

 

Unsecured notes bearing fixed rate interest at 7.75% due June 2027

 

200,000

 

 

 

200,000

 

Unsecured notes bearing fixed rate interest at 7.25% due September 2027

 

240,000

 

 

 

240,000

 

Unsecured notes bearing fixed rate interest at 4.625% due March 2028

 

1,000,000

 

 

 

1,000,000

 

Unsecured notes bearing fixed rate interest at 5.00% due September 2029

 

1,100,000

 

 

 

1,100,000

 

Total principal long-term debt

 

3,090,000

 

 

 

3,090,000

 

Debt issuance costs

 

(21,022

)

 

 

(22,226

)

Unamortized premiums and discounts, net

 

4,714

 

 

 

5,027

 

Total long-term debt

$

3,073,692

 

 

$

3,072,801

 

On January 25, 2024, we entered into an amendment to our revolving credit facility (the Credit Agreement). Among other things, the amendment amends the revolving credit facility to:

Reduce the Five-Year Commitments (as defined in the Credit Agreement) from $1.51 billion to $750 million;
June 30, 2023Dec. 31, 2022
Unsecured notes bearing fixed rate interest at 4.75% due March 2026$550,000 $550,000 
Unsecured notes bearing fixed rate interest at 7.75% due June 2027200,000 200,000 
Unsecured notes bearing fixed rate interest at 7.25% due September 2027240,000 240,000 
Unsecured notes bearing fixed rate interest at 4.625% due March 20281,000,000 1,000,000 
Unsecured notes bearing fixed rate interest at 5.00% due September 20291,100,000 1,100,000 
Total principal long-term debt3,090,000 3,090,000 
Debt issuance costs(24,616)(26,911)
Unamortized premiums5,642 6,227 
Total long-term debt$3,071,026 $3,069,316 
Extend the term of such Five-Year Commitments from August 15, 2024 to January 25, 2029, subject to a 91-day springing maturity date if debt in excess of $300 million (subject to certain exceptions) were to mature before such date;
Add the right to obtain a temporary 0.5x step-up in the Total Leverage Ratio (as defined in the Credit Agreement) after consummating a Qualified Acquisition (as defined in the Credit Agreement);
Increase the amount of Unrestricted Cash (as defined in the Credit Agreement) to $600 million;
Amend the definition of Consolidated EBITDA to include an add-back for certain professional fees and expenses; and
Establish a $50 million swingline facility.

Under the amended Credit Agreement, the Company’s maximum Total Leverage Ratio (as defined in the Credit Agreement) will remain unchanged at 4.50x.

As of June 30, 2023,March 31, 2024, cash and cash equivalents totaled $489.4$430.8 million and we had $12.7 million of letters of credit outstanding and unused borrowing capacity of $1.49 billion$737.3 million under our $1.51 billion$750 million revolving credit facility, which now expires in August 2024.January 2029. We were in compliance with all covenants, including the leverage ratio (our one financial covenant) contained in our debt agreements and revolving credit facility. We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future.


12

Under our revolving credit facility we have the ability to draw loans based on two different interest rate indices, one of which was previously based on the London Interbank Offered Rate (LIBOR). During the second quarter of 2023, we amended our revolving credit facility to replace the LIBOR-based interest rate index, which was phased out, with a Secured Overnight Financing Rate (SOFR) based interest rate index. The transition from LIBOR to SOFR did not have a material impact on the Company.

13



NOTE 5 – Retirement plans


We have various defined benefit retirement plans. Our principal defined benefit pension plan is the TEGNA Retirement Plan (TRP). The total net pension obligations, including both current and non-current liabilities, as of June 30, 2023,March 31, 2024, were $79.0$75.5 million, of which $5.6$5.8 million is recorded as a current obligation within accrued liabilities on the Condensed Consolidated Balance Sheet.


Pension costs (income), which primarily include costs for the qualified TRP and the non-qualified TEGNA Supplemental Retirement Plan (SERP), are presented in the following table (in thousands):

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Interest cost on benefit obligation

$

5,675

 

 

$

6,150

 

Expected return on plan assets

 

(5,500

)

 

 

(5,225

)

Amortization of prior service cost (credit)

 

25

 

 

 

(125

)

Amortization of actuarial loss

 

1,475

 

 

 

1,575

 

Expense for company-sponsored retirement plans

$

1,675

 

 

$

2,375

 

Quarter ended June 30,Six months ended June 30,
2023202220232022
Interest cost on benefit obligation$6,116 $4,241 12,266 8,541 
Expected return on plan assets(5,245)(4,851)(10,470)(9,751)
Amortization of prior service credit(107)(117)(232)(242)
Amortization of actuarial loss1,434 1,202 3,009 2,302 
Expense from company-sponsored retirement plans$2,198 $475 $4,573 $850 


Benefits no longer accrue for TRP and SERP participants as a result of amendments to the plans in past years, and as such we no longer incur a service cost component of pension expense. All other components of our pension expense presented above are included within the “Other non-operating items, net” line item of the Consolidated Statements of Income.


During the sixthree months ended June 30,March 31, 2024 and 2023, and 2022, we did notnot make any cash contributions to the TRP. We made benefit payments to participants of the SERP of $0.9 $1.9 million during both of the sixthree month periods ended June 30, 2023March 31, 2024 and 2022.2023. Based on actuarial projections and funding levels, we do not expect to make cash payments of $6.9 any cash paymentsmillion to the TRP in 2023.2024. We expect to make additional cash payments of $3.0$4.9 million to our SERP participants during the remainder of 2023.2024.

14


NOTE 6 – Accumulated other comprehensive loss


The following table summarizes the components of, and the changes in, Accumulated Other Comprehensive Loss (AOCL), net of tax (in thousands):

 

Retirement
Plans

 

 

Foreign
Currency

 

 

Total

 

Quarters ended:

 

 

 

 

 

 

 

 

Balance as of Dec. 31, 2023

$

(120,142

)

 

$

532

 

 

$

(119,610

)

Amounts reclassified from AOCL

 

1,111

 

 

 

 

 

 

1,111

 

Total other comprehensive income

 

1,111

 

 

 

 

 

 

1,111

 

Balance as of Mar. 31, 2024

$

(119,031

)

 

$

532

 

 

$

(118,499

)

 

 

 

 

 

 

 

 

 

Balance as of Dec. 31, 2022

$

(126,065

)

 

$

532

 

 

$

(125,533

)

Amounts reclassified from AOCL

 

1,078

 

 

 

 

 

 

1,078

 

Total other comprehensive income

 

1,078

 

 

 

 

 

 

1,078

 

Balance as of Mar. 31, 2023

$

(124,987

)

 

$

532

 

 

$

(124,455

)

Retirement PlansForeign Currency TranslationAvailable-For-Sale InvestmentTotal
Quarters ended:
Balance at Mar. 31, 2023$(124,987)$532 $— $(124,455)
Amounts reclassified from AOCL988 — — 988 
Total other comprehensive income988 — — 988 
Balance at June 30, 2023$(123,999)$532 $— $(123,467)
Balance at Mar. 31, 2022$(112,366)$532 $— $(111,834)
Amounts reclassified from AOCL806 — — 806 
Total other comprehensive income806 — — 806 
Balance at June 30, 2022$(111,560)$532 $— $(111,028)
Retirement PlansForeign Currency TranslationAvailable-For-Sale InvestmentTotal
Six Months Ended:
Balance at Dec. 31, 2022$(126,065)$532 $— $(125,533)
Other comprehensive income before reclassifications2,066 — — 2,066 
Total other comprehensive income (loss)2,066 — — 2,066 
Balance at June 30, 2023$(123,999)$532 $— $(123,467)
Balance at Dec. 31, 2021$(113,090)$455 $15,419 $(97,216)
Other comprehensive income before reclassifications— 77 — 77 
Amounts reclassified from AOCL1,530 — (15,419)(13,889)
Total other comprehensive income1,530 77 (15,419)(13,812)
Balance at June 30, 2022$(111,560)$532 $— $(111,028)


Reclassifications from AOCL to the Consolidated Statements of Income are comprised of recognition of a realized gain on an available-for-sale investment as well as pension and other post-retirement components. Pension and other post retirementpost-retirement reclassifications are related to the amortizations of prior service costs and actuarial losses. Amounts reclassified out of AOCL are summarized below (in thousands):

Quarter ended June 30,Six months ended June 30,
2023202220232022
Amortization of prior service credit, net$(107)$(123)$(232)$(248)
Amortization of actuarial loss1,434 1,208 3,009 2,309 
Realized gain on available-for-sale investment— — — (20,800)
Total reclassifications, before tax1,327 1,085 2,777 (18,739)
Income tax effect(339)(279)(711)4,850 
Total reclassifications, net of tax$988 $806 $2,066 $(13,889)


15

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Amortization of prior service cost (credit), net

$

25

 

 

$

(125

)

Amortization of actuarial loss

 

1,475

 

 

 

1,575

 

Total reclassifications, before tax

 

1,500

 

 

 

1,450

 

Income tax effect

 

(389

)

 

 

(372

)

Total reclassifications, net of tax

$

1,111

 

 

$

1,078

 

13



NOTE 7 – Earnings per share


Our earnings per share (basic and diluted) are presented below (in thousands, except per share amounts):

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Net income

$

189,262

 

 

$

104,004

 

Net loss attributable to the noncontrolling interest

 

298

 

 

 

299

 

Adjustment of redeemable noncontrolling interest to redemption value

 

(660

)

 

 

(635

)

Earnings available to common shareholders

$

188,900

 

 

$

103,668

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

177,823

 

 

 

224,544

 

Effect of dilutive securities:

 

 

 

 

 

Restricted stock units

 

438

 

 

 

187

 

Performance share awards

 

176

 

 

 

108

 

Weighted average number of common shares outstanding - diluted

 

178,437

 

 

 

224,839

 

 

 

 

 

 

Net income per share - basic

$

1.06

 

 

$

0.46

 

Net income per share - diluted

$

1.06

 

 

$

0.46

 

Quarter ended June 30,Six months ended June 30,
2023202220232022
Net Income$200,093 $131,940 $304,097 $266,227 
Net loss (income) attributable to the noncontrolling interest12 (371)311 (424)
Adjustment of redeemable noncontrolling interest to redemption value(364)36 (999)(212)
Earnings available to common shareholders$199,741 $131,605 $303,409 $265,591 
Weighted average number of common shares outstanding - basic217,830 223,675 221,168 223,197 
Effect of dilutive securities:
Restricted stock units64 466 126 393 
Performance shares85 348 97 277 
Weighted average number of common shares outstanding - diluted217,979 224,489 221,391 223,867 
Earnings per share - basic$0.92 $0.59 $1.37 $1.19 
Earnings per share - diluted$0.92 $0.59 $1.37 $1.19 


Our calculation of diluted earnings per share includes the dilutive effects for the assumed vesting of outstanding restricted stock units and performance shares.share awards. The diluted earnings per share amounts exclude the effects of approximately 500 thousand stock awards for the three months ended March 31, 2024 as their inclusion would be accretive to earnings per share.


NOTE 8 – Fair value measurement


We measure and record certain assets and liabilities at fair value in the accompanying condensed consolidated financial 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.


In the second quarter of 2023 we recognized an impairment charge of $3.4 million, in “Asset impairment and other” within our Consolidated Statement of Income, related to certain programming assets. The fair value was determined based on a projection of the estimated revenues less projected direct costs associated with the programming (which is classified as Level 3 in the fair value hierarchy).

In the first quarter of 2022, we recorded a $2.5 million impairment charge, in “Other non-operating items, net” within our Consolidated Statement of Income, due to the decline in the fair value of one of our investments. The fair value was determined using a market approach which was based on significant inputs not observable in the market, and thus represented a Level 3 fair value measurement.

We also hold other financial instruments including cash and cash equivalents, receivables, accounts payable, contingent consideration 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 $2.79 billion$2.90 at June 30, 2023,billion on March 31, 2024, and $2.95$2.93 billion aton December 31, 2022.2023.

As described in Note 2, in connection with the Octillion acquisition, the sellers may be entitled to earn additional consideration in the form of earnouts depending on the achievement of certain technological and financial milestones. The maximum value of these earnouts is $14.0 million and we currently estimate their fair value to be $12.8 million. The estimated fair value is based on unobservable inputs and is therefore a Level 3 fair value. The Company’s valuation was based on an income approach, which utilized Monte Carlo simulations that included expected payoff estimates calculated based on various discounted cash flow valuations.


16


NOTE 9 – Share repurchase program

On June 2, 2023, we entered into our first accelerated share repurchase program (the first ASR) with JPMorgan Chase Bank, National Association (JPMorgan). Under the terms of the first ASR, we repurchased $300 million in TEGNA common stock from JPMorgan, with an initial delivery of approximately 15.2 million shares received on June 6, 2023, representing 80% ($240 million) of the value of the first ASR contract. The first ASR program was completed during the third quarter of 2023 at which time JPMorgan delivered an additional 3.1 million shares to us. The final share settlement was based on the average daily volume-weighted average price of TEGNA shares during the term of the first ASR program, less a discount, less the previously delivered 15.2 million shares.

On November 9, 2023, we entered into a second accelerated share repurchase (the second ASR) program with JPMorgan. Under the terms of the second ASR, we repurchased $325 million in TEGNA common stock from JPMorgan, with an initial delivery of approximately 17.3 million shares received on November 13, 2023, representing 80% ($260 million) of the value of the second ASR contract. The second ASR program was completed on February 22, 2024, shortly after which date JPMorgan delivered an additional 4.0 million shares to us. The final share settlement was based on the average daily volume-weighted average price of TEGNA shares during the term of the second ASR program, less a discount, less the previously delivered 17.3 million shares.

14


In December 2023, our Board of Directors authorized a new share repurchase program for up to $650.0 million of our common stock, which was in addition to the second ASR program. This new share repurchase program expires on December 31, 2025. In the first quarter of 2024, 5.8 million shares were repurchased under this program at an average share price of $14.50 for an aggregate cost of $84.5 million, of which $2.1 million had not yet been paid as of the end of the first quarter.

During the first quarter of 2024, we returned $102.3 million of capital to shareholders with $82.4 million of share repurchases, representing 5.7 million shares, and paid $19.9 million in dividends. Excluded from this commitment are share repurchases completed under our previously announced accelerated share repurchase program which were completed during the quarter on February 27, 2024, including final settlement of approximately 4.0 million shares.

Our capital allocation plan is subject to a variety of factors, including our strategic plans, market and economic conditions and the discretion of our Board of Directors.

NOTE 10 – Other matters


Litigation


Antitrust matters

In the third quarter of 2018, certain national media outlets reported the existence of a confidential investigation by the United States Department of Justice 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 certain 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 as alleged by the DOJ, 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 were consolidated into a single proceeding in the United States District Court for the Northern District of Illinois, captioned In re: Local TV Advertising Antitrust Litigation on October 3, 2018. At the court’s direction, plaintiffs filed an amended complaint on April 3, 2019, that superseded the original complaints. Although we were named as a defendant in sixteen of the original complaints, the amended complaint did not name TEGNA as a defendant. After TEGNA and four other broadcasters entered into the 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 proceeding. 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 affirmative defenses.


On May 26, 2023, plaintiffs moved for preliminary approval of settlements with four co-defendants – CBS Corp (n/k/a Paramount Global), Fox Corp., certain Cox entities (including Cox Media Group, LLC, Cox Enterprises, Inc., CMG Media Corporation and Cox Reps, Inc.) and ShareBuilders, Inc. Although ShareBuilders prevailed on its motion to dismiss the case, as noted above, because the court had dismissed the claims without prejudice, ShareBuilders entered into a zero dollar-dollar settlement with the plaintiffs in order to ensure that the plaintiffs do not re-file the claims in the future. In exchange for a release of plaintiffs’ claims against them, the settling defendants, among other things, collectively agreed to pay $48$48 million, while expressly denying any liability or wrongdoing. The Court is in the process of reviewing the proposed settlements and related notice program to determine whether they are fair to the proposed settlement class, the settling defendants, and the non-settling defendants. A hearing on final approval ofcourt approved the settlements is currently scheduled for October 17, 2023.

in
December 2023
.

Discovery in the Advertising Cases is ongoing. We believe that the claims asserted in the Advertising Cases are without merit and intend to defend vigorously against them.


As of August 3, 2023, six out of seven lawsuits that were filed by purported TEGNA stockholders in connection with the Merger have been voluntarily dismissed. The remaining lawsuit, like the others that were dismissed, was filed against TEGNA and the current members of the Board of Directors of TEGNA. The complaint generally alleges 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. Plaintiff generally seeks, among other things, to enjoin TEGNA from consummating the Merger, or in the alternative, rescission of the Merger and/or compensatory damages, as well as attorneys’ fees.

In addition, as of

 August 3, 2023, TEGNA received four

demand letters from purported TEGNA shareholders in 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”). Each letter alleged deficiencies in the definitive proxy statement that were similar to the deficiencies alleged in the remaining complaint referenced above.15


We believe that the claims asserted in the remaining complaint and letters described above are without merit and are moot in light of TEGNA’s termination of the Merger agreement. Moreover, although we believe that no additional disclosures were or are required under applicable law, TEGNA, without admitting any liability or wrongdoing, voluntarily made supplemental disclosures to the definitive proxy statement as described in the Form 8-K filed by TEGNA with the SEC on May 9, 2022. Notwithstanding TEGNA’s termination of the Merger Agreement, additional lawsuits arising out of the Merger could also be filed in the future.
17




Other litigation 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 any of the foregoing matters.


Related Party Transactions


We have an equity investmentsinvestment in MadHive, Inc. (MadHive) which is a related party of TEGNA. We also have a commercial agreementagreements with MadHive, under which MadHive supports our Premion business in acquiring over-the-top advertising inventory and delivering corresponding advertising impressions. In the secondfirst quarter 2024 and first six months of 2023, we incurred expenses of $ $24.014.3 million and $49.1 million$, respectively, as a result of the commercial agreement with MadHive. In the second quarter and first six months of 2022, we incurred expenses of $29.9 million25.1and $55.9 million, respectively, as a result of the commercial agreementagreements with MadHive. As of June 30, 2023,March 31, 2024, and December 31, 20222023, we had accounts payable and accrued liabilities associated with the MadHive commercial agreements of $4.9 $6.6 million anand $d $10.05.4 million, respectively.


16


In December 2021, we renewed two commercial agreements with MadHive. Simultaneously with the commercial agreement renewals, we also amended the terms of our then outstanding available-for-sale convertible debt security investment. In exchange for the convertible debt modifications, we received favorable terms in our renewed commercial agreements. We estimated the fair value of our available-for-sale security at December 31, 2021 using a market fair value approach based on the cash we expect to receive upon maturity of the note and the estimated cash savings that the favorable contract terms will provide over the term of the commercial agreements. In January 2022, we recorded an intangible contract asset for $20.8 million (equal to the estimated cash savings), and are amortizing this asset on a straight-line basis over the noncancellable term of the commercial agreements of two years. This non-cash expense is recorded within “Cost of revenues,” within our Consolidated Statement of Income. The debt matured in June 2022 at which time the principal balance of $3.0 million plus accrued interest was paid to us.


In the second quarter of 2023, we further extended the terms of our commercial agreement with MadHive for an additional two years, through December 31, 2025.

NOTE 10 - Subsequent events

In July 2023, we sold a portion of our MadHive investment for $26.4 million, which reduced our ownership in MadHive to 19% on a fully diluted basis.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Company Overview


We are an innovative media company serving the greater good of our communities. Across platforms, we tell empowering stories, conduct impactful investigations and deliver innovative marketing services. With 64 television stations and two radio stations in 51 U.S. markets, we are the largest owner of top four network affiliates in the top 25 markets among independent station groups, reaching approximately 39% of all U.S. television 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 on all devices and platforms they 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. Through TEGNA Marketing Solutions (TMS), our integrated sales and back-end fulfillment operations, we deliver results for advertisers across television, digital and over-the-top (OTT) platforms, including Premion, our OTT advertising network.


We 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, digital marketing services (including Premion), and advertising on the stations’ websites, tablet and mobile products and OTT apps; 3) political advertising revenues, which are driven by even year election cycles at the local and national level (e.g. 2022, 2024, 2022, etc.) and particularly in the second half of those years; 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.

18


On May 22, 2023, after a protracted regulatory review, we terminated the Merger Agreement in accordance with its terms. Under the terms of the Merger Agreement, Parent was required to pay us a $136.0 million fee as a result of this termination. In lieu of cash payment for the termination fee, we agreed to accept from Parent 8.6 million shares of the Company’s common stock, which Parent transferred to the Company on June 1, 2023.

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 whichthat 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 current period operating results compared to the same periods two years ago (e.g., 2023 vs. 2021). We believe these additional comparisons provide useful information to investors and therefore have supplemented our prior year comparison of consolidated results to also include a comparison against the second quarter and six months ended June 30, 2021 results (through operating income).


In recent years, our business has evolved toward generating more recurring and highly profitable revenue streams, driven by the increased contribution of political and subscription revenue streams as a percentage of our total revenue. Such revenues have been a majority of our overall revenue the past few years and we expect this to continue.

Our consolidated results of operations on a GAAP basis were as follows (in thousands, except per share amounts):
Quarter ended June 30,Six months ended June 30,
20232022Change from 20222021Change from 202120232022Change from 20222021Change from 2021
Revenues$731,506 $784,881 (7 %)$732,908 %$1,471,833 $1,559,004 (6 %)$1,459,959 %
Operating expenses:
Cost of revenues430,528 420,235 %397,118 %857,460 831,685 %791,810 %
Business units - Selling, general and administrative expenses97,231 99,585 (2 %)96,949 %196,340 201,554 (3 %)186,275 %
Corporate - General and administrative expenses26,506 13,612 95 %23,183 14 %38,606 34,932 11 %40,053 (4 %)
Depreciation14,987 15,534 (4 %)15,838 (5 %)30,036 30,839 (3 %)31,734 (5 %)
Amortization of intangible assets13,296 14,999 (11 %)15,773 (16 %)26,878 29,999 (10 %)31,533 (15 %)
Asset impairment and other3,359 (105)***(1,475)***3,359 (163)***(2,898)***
Merger termination fee(136,000)— ***— ***(136,000)— ***— ***
Total operating expenses$449,907 $563,860 (20 %)$547,386 (18 %)$1,016,679 $1,128,846 (10 %)$1,078,507 (6 %)
Total operating income$281,599 $221,021 27 %$185,522 52 %$455,154 $430,158 %$381,452 19 %
Non-operating expenses(37,299)(45,051)(17 %)(47,682)(22 %)(75,031)(75,163)%(95,166)(21 %)
Provision for income taxes44,207 44,030 %30,986 43 %76,026 88,768 (14 %)66,600 14 %
Net income200,093 131,940 52 %106,854 87 %304,097 266,227 14 %219,686 38 %
Net loss (income) attributable to redeemable noncontrolling interest12 (371)***(227)***311 (424)***(442)***
Net income attributable to TEGNA Inc.$200,105 $131,569 52 %$106,627 88 %$304,408 $265,803 15 %$219,244 39 %
Earnings per share - basic$0.92 $0.59 56 %$0.48 92 %$1.37 $1.19 15 %$0.99 38 %
Earnings per share - diluted$0.92 $0.59 56 %$0.48 92 %$1.37 $1.19 15 %$0.99 38 %
*** Not meaningful
19


 

Quarter ended Mar. 31,

 

2024

 

 

2023

 

 

Change

 

 

 

 

 

 

 

 

Revenues

$

714,252

 

 

$

740,327

 

 

(4%)

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Cost of revenues

 

430,567

 

 

 

426,932

 

 

1%

Business units - Selling, general and administrative expenses

 

102,260

 

 

 

99,109

 

 

3%

Corporate - General and administrative expenses

 

14,798

 

 

 

12,100

 

 

22%

Depreciation

 

14,310

 

 

 

15,049

 

 

(5%)

Amortization of intangible assets

 

13,660

 

 

 

13,582

 

 

1%

Asset impairment and other

 

1,097

 

 

 

 

 

***

Total

$

576,692

 

 

$

566,772

 

 

2%

 

 

 

 

 

 

 

Operating income

$

137,560

 

 

$

173,555

 

 

(21%)

 

 

 

 

 

 

 

Non-operating income (expense)

 

112,963

 

 

 

(37,732

)

 

***

Provision for income taxes

 

61,261

 

 

 

31,819

 

 

93%

Net income

 

189,262

 

 

 

104,004

 

 

82%

Net loss attributable to redeemable noncontrolling interest

 

298

 

 

 

299

 

 

(0%)

Net income attributable to TEGNA Inc.

$

189,560

 

 

$

104,303

 

 

82%

 

 

 

 

 

 

 

Net Income per share - basic

$

1.06

 

 

$

0.46

 

 

***

Net Income per share - diluted

$

1.06

 

 

$

0.46

 

 

***

*** Not meaningful

Revenues


Our Subscription revenue category includes revenue earned from cable, satellite and satellitetelecommunication 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 and digital revenues, including Premion and other digital advertising and marketing revenues across our platforms.

17



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.quarters. 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 yeartwo-year election cycle, particularly in the fourth quarter of those years.


In recent years, our business has evolved toward generating more recurring and highly profitable revenue streams, driven by the increased contribution of political and subscription revenue streams as a percentage of our total revenue. Such revenues have been a majority of our overall revenue in the past few years and we expect this to continue.

The following table summarizes the year-over-year changes in our revenue categories (in thousands):

Quarter ended June 30,Six months ended June 30,
20232022Change from 20222021Change from 202120232022Change from 20222021Change from 2021
Subscription$396,126 $389,079 %$375,081 %$810,406 $780,733 %$761,818 %
Advertising & Marketing Services317,726 335,259 (5)%340,889 (7)%625,571 689,726 (9)%663,723 (6)%
Political5,991 50,858 (88)%9,581 (37)%11,282 68,823 (84)%19,009 (41)%
Other11,663 9,685 20 %7,357 59 %24,574 19,722 25 %15,409 59 %
Total revenues$731,506 $784,881 (7)%$732,908 %$1,471,833 $1,559,004 (6)%$1,459,959 %

 

Quarter ended Mar. 31,

 

2024

 

 

2023

 

 

Change

 

 

 

 

 

 

 

 

Subscription

$

375,324

 

 

$

414,280

 

 

(9%)

Advertising & Marketing Services

 

298,692

 

 

 

307,845

 

 

(3%)

Political

 

27,828

 

 

 

5,291

 

 

***

Other

 

12,408

 

 

 

12,911

 

 

(4%)

Total revenues

$

714,252

 

 

$

740,327

 

 

(4%)


2023 vs. 2022


*** Not meaningful

Total revenues decreased $53.4 million in the second quarter of 2023 and $87.2$26.1 million in the first six monthsquarter of 20232024 compared to the same periodsperiod in 2022.2023. The net decreases weredecrease was primarily driven by a $39.0 million decline in subscription revenue primarily due to decreasesdeclines in political revenue ($44.9 million second quarter, $57.5 million first six months) due to the absence in 2023subscribers and a temporary disruption of election primaries that occurred in 2022. Additionally, AMS revenueservice with a distribution partner which was down ($17.5 million second quarter, $64.2 million first six months) reflecting softer demand for advertising, particularly national, causedsuccessfully resolved on January 13, 2024. These declines were partially offset by continued macroeconomic headwinds as well as the loss of a large national account in our Premion business. The first six months was also impacted by the Winter Olympics and Super Bowl airing last year on NBC, our largest network affiliate partner. Partially offsetting these decreases was an increase in subscription revenue ($7.0 million second quarter, $29.7 million first six months) primarily due to annual rate increases under existing and newly renegotiatedour retransmission agreements, partially offset by declines in subscribers.


2023 vs. 2021

Total revenues decreased $1.4agreements. Also contributing to the decline was a reduction of $9.2 million in AMS revenue due to continued softness in the second quarteradvertising market. Partially offsetting these decreases was a $22.5 million increase in political revenue.

Cost of 2023 andrevenues

Cost of revenues increased $11.9$3.6 million in the first six monthsquarter of 20232024 compared to the same periodsperiod in 2021. The net decrease for the quarter was primarily due to a $23.2 million decline in AMS revenue reflecting softer demand for advertising, particularly national, caused by continued macroeconomic headwinds. Partially offsetting this decline was a $21.0 million increase in subscription revenue mainly due to annual rate increases under existing and newly renegotiated retransmission agreements, partially offset by declines in subscribers. The first six months increase was primarily due to $48.6 million increase in subscription revenue due to the same drivers as the quarter comparison. Partially offsetting this increase was a $38.2 million decline in AMS revenue also due to the same drivers as the quarter comparison.


Cost of revenues

2023 vs. 2022

Cost of revenues increased $10.3 million in the second quarter of 2023 and $25.8 million in the first six months of 2023 compared to the same periods in 2022. 2023. The increase was primarily due to growtha $2.3 million increase in programmingpayroll costs ($13.1and $1.3 million of employee retention costs.second quarter, $28.4 million first six

 months) driven by rate increases under existing and newly renegotiated affiliation agreements.


20


2023 vs. 2021

Cost of revenues increased $33.4 million in the second quarter of 2023 and $65.7 million in the first six months of 2023 compared to the same periods in 2021. The increase was primarily due to growth in programming costs ($24.1 million second quarter, $50.8 million first six months) driven by rate increases under existing and newly renegotiated affiliation agreements. Higher digital expenses ($4.8 million second quarter and first six months) also contributed to the increase.

Business units - Selling, general and administrative expenses


2023 vs. 2022

Business unit selling, general and administrative expenses decreased $2.4increased $3.2 million in the secondfirst quarter of 2023 and $5.2 million in the six months of 20232024 compared to the same period in 2022. 2023. The decreases wereincrease was primarily due to a lower stock-based compensation$1.5 million increase in workforce restructuring expense and a decrease$1.2 million of employee retention costs incurred in sales compensation driven by a decline in advertising revenue.2024.


2023 vs. 2021


Business unit SG&A expenses increased $0.3 million in the second quarter of 2023 and $10.1 million in the six months of 2023 compared to the same periods in 2021. The increase was due in part to an absence of bad debt expense reversal that occurred in 2021 that did not recur in 2023 as well as an increase in payroll and benefit costs.

Corporate - General and administrative expenses


Our corporate costs are separated from our direct business expenses and are recorded as general and administrative expenses in our Consolidated StatementStatements of Income. This category primarily consists of broad corporate management and support functions including Legal, Human Resources, and Finance, as well as activities and costs not directly attributable to the operations of our media business.

Finance.


2023 vs. 2022


Corporate general and administrative expenses increased $12.9$2.7 million in the secondfirst quarter of 2023 and $3.7 million in the six months of 20232024 compared to the same periodsperiod in 2022.2023. The increase was primarily due to increases were primarily driven by an increase in M&A-related costs incurred in connection with the now terminated Merger ($12.9 million second quarter, $5.4 million first six months). Partially offsetting the M&A-related expense increases,employee stock-based compensation, employee retention and workforce restructuring costs.

Depreciation

Depreciation expense was lower in 2023 ($0.3 million second quarter, $1.8 million first six months) drivendecreased by a decline in our stock price.


2023 vs. 2021

Corporate general and administrative expenses increased $3.3$0.7 million in the secondfirst quarter of 2023 and decreased $1.4 million in the six months of 20232024 compared to the same periodsperiod in 2021. The increase for the quarter was primarily driven by a $17.1 increase in M&A-related costs incurred in connection with the now terminated Merger, partially offset by the absence in 2023 of $12.0 million of advisory fees related to activism defense incurred in the second quarter of 2021 and a $0.5 million decline in stock-based compensation expense driven by a decline in our stock price.2023. The decrease for the first six months iswas primarily due to the absence in 2023impact of $16.6 million of advisory fees related to activism defense incurred in 2021 and a decline of $1.7 million in stock based compensation expense due to the decline in our stock price during the first six months of 2023. These declines were partially offset by a $19.8 million increase in M&A-related costs incurred in connection with the now terminated Merger.

Depreciation

2023 vs. 2022

Depreciation expense decreased by $0.5 million in the second quarter of 2023 and $0.8 million in the first six months of 2023 compared to the same periods in 2022. The decreases were due to certain assets reaching the end of their assumed useful lives.
lives during 2023.


2023 vs. 2021


Amortization of intangible assets

Depreciation

Intangible asset amortization expense decreased by $0.9increased $0.1 million in the secondfirst quarter of 2023 and $1.7 million in the six months of 20232024 compared to the same periodsperiod in 2021.2023. The decreases wereincrease was primarily due to the amortization of intangible assets acquired in the Octillion Media acquisition, partially offset by a decrease in amortization due to certain assets reaching the end of their assumed useful lives.


21


Amortization of intangible assets

2023 vs. 2022

Amortization expense decreased $1.7 million in the second quarter of 2023 and $3.1 million in the six months of 2023 compared to the same periods in 2022. The decreases were due to certain assets reaching the end of their assumed useful lives and therefore becoming fully amortized.

18



2023 vs. 2021


Amortization expense decreased $2.5 million in the second quarter of 2023 and $4.7 million in the six months of 2023 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.


Asset impairment and other


2023 vs. 2022


Asset impairment and other expenses were $3.4$1.1 million in both the second quarter of 2023 and the first six months of 20232024 compared to net gains of $0.1 millionno expense in the second quarter of 2022 and net gains of $0.2 million in the first six months of 2022.2023. The 20232024 activity was due to a $3.4 million impairment charge recognized on programming assets in the second quarter of 2023. The 2022 activity is related to reimbursements received from the Federal Communications Commission (FCC) for required spectrum repacking.
contract termination fee.


2023 vs. 2021


Operating income

Asset impairment and other expense was $3.4 million in the second quarter of 2023 and for the six months of 2023 compared to net gains of $1.5 million in the second quarter of 2022 and net gains of $2.9

Operating income decreased $36.0 million in the first six months of 2022. The 2023 activity relates to the item discussed above. The 2021 activity is primarily related to reimbursements from spectrum repacking ($3.0 million second quarter, $4.4 million first six months), partially offset by a $1.5 million contract

termination fee which impacted both the second quarter and first six months of 2021.

Merger termination fee

In the second quarter of 2023, we terminated the Merger Agreement. Per the terms of the Merger Agreement, the Parent was required to pay TEGNA a fee of $136.0 million as a result of this termination which was satisfied in TEGNA common stock and recorded as a reduction in operating expense.

Operating income

2023 vs. 2022

Operating income increased $60.6 million in the second quarter of 2023 and $25.0 million in the six months of 2023 compared to the same periods in 2022. The increase was driven by the $136.0 million Merger termination fee received in the second quarter of 2023, partially offset by declines in AMS and political revenues and an increase in programming costs.

2023 vs. 2021

Operating income increased $96.1 million in the second quarter of 2023 and $73.7 million in the six months of 2023 compared to the same periods in 2021. The increases were driven by the same factors impacting the 2023 vs. 2022 comparison discussed above.

Non-operating (expense) income

Non-operating expenses decreased $7.8 million in the second quarter of 20232024 compared to the same period in 2022.2023. This decrease was primarily due to an $8.0driven by the decline in subscription and AMS revenues described above.

Non-operating income (expense)

Non-operating income (expense) increased $150.7 million increase in interest income, primarily from interest earned on short-term time-deposit and money market investments.


In the first six monthsquarter of 2023, non-operating expenses decreased $0.1 million2024 compared to the same period in 2022. This decrease2023. The increase was primarily due to $15.5 million increase in interest income, primarily from interest earned on short-term time-deposit and money market investments and the absence of a $3.7 million loss from our CareerBuilder investment. Partially offsetting this decrease was the absence of a $20.8$152.9 million gain recognized on the sale of our available for sale investment in MadHive (see Note 9 toBroadcast Music, Inc. in the condensed consolidated financial statements).
first quarter of 2024.


22


Provision for income taxes


Income tax expense increased $0.2$29.4 million in the secondfirst quarter of 20232024 compared to the same period in 2022.2023. The increase was primarily due to an increase in net income before tax partially offset by a decrease in the effective income tax rate. Income tax expense decreased $12.7 million in the first six months of 2023 compared to the same period in 2022. The decrease in the first six months was primarily due to a decrease in the effective income tax rate partially offset by an increaseincreases in net income before tax. Our effective income tax rate was 18.1% for the second quarter of 2023, compared to 25.1% for the second quarter of 2022. Our effective income tax rate was 20.0%24.5% for the first six monthsquarter of 2023,2024, compared to 25.0%23.4% for the same period in 2022.first quarter of 2023. The tax rate for the secondfirst quarter and the first six months of 20232024 is lowerhigher than the comparable rateamount in 20222023 primarily due to the deduction of previously capitalized transaction costs resulting from the termination of the Merger Agreement and a portion of the Merger termination fee being treated as non-taxable.net excess tax expense recognized with respect to stock-based compensation. The effective income tax rate for the first six months of 20222023 was also unfavorablyfavorably impacted by a valuation allowance recorded on minority investments and nondeductible transaction costs. Partially offsetting these unfavorable impacts werenet deferred tax benefits realized in 2022 from the utilizationas a result of capital loss carryforwards in connection with certain transactions and the release of the associated valuation allowance.

state tax planning strategies.


Net income

Net income attributable to TEGNA Inc.


Net income attributable to TEGNA Inc. was $200.1$189.3 million, or $0.92$1.06 per diluted share, in the secondfirst quarter of 20232024 compared to $131.6$104.0 million, or $0.59$0.46 per diluted share, during the same period in 2022. For the first six months of 2023, net income attributable to TEGNA Inc. was $304.4 million, or $1.37 per diluted share, compared to $265.8 million, or $1.19 per diluted share, during the same period in 2022.2023. Both income and earnings per share were affected by the factors discussed above.


The weighted average number of diluted common shares outstanding inas of the secondfirst quarter of 2024 and 2023 and 2022 were 218.0178.4 million and 224.5 million, respectively. The weighted average number of diluted shares outstanding in the first six months of 2023 and 2022 was 221.4 million and 223.9224.8 million, respectively. The decline in the number of diluted common shares outstanding iswas primarily due to share repurchases of 39.5 million under our ASR programs which began in the second quarter of 2023, the receipt of 8.6 million shares to satisfy the mergerMerger termination fee and the receipt of 15.2 million shares under the accelerated share repurchase program, both of which occurred in the second quarter of 2023.

2023 and share repurchases of 7.6 million starting in the third quarter of 2023 through the first quarter of 2024 under our authorized repurchase program.

23

19



Results from Operations - Non-GAAP Information


Presentation of Non-GAAP information


We use non-GAAP financial performance 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 regularly use Corporate – General and administrative expenses, Operating expenses, Operating income and Income before income taxes, Provision for income taxes, Net income attributable to TEGNA Inc., and Diluted earnings per share, each presented on a non-GAAP financial measuresbasis, for purposes of evaluating company performance. Management and our Board of Directors also use Adjusted EBITDA and Adjusted free cash flow to evaluate performance. Furthermore, the Leadership 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 Adjusted 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” which are described in detail below in the section titled “Discussion of Special Charges and Credits Affecting Reported Results.” We believe that such expenses and gains are not indicative of normal, ongoing operations. While these items 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 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)stock-based compensation expense), 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 attributable to TEGNA before (1) net loss (income)(loss) attributable to redeemable noncontrolling interest, (2) income taxes, (3) interest expense, (4) equity loss in unconsolidated investments, net,interest income, (5) other non-operating items, net, (6) the Merger termination fee, (7) M&A-related costs, (8)(7) asset impairment and other, (8) workforce restructuring, (9) employee retention costs, (10) depreciation and (10) amortization.(11) amortization of intangible assets. We believe these adjustments facilitate company-to-company operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, and the age and book appreciation of property and equipment (and related depreciation expense). The most directly comparable GAAP financial measure to Adjusted EBITDA is Net income 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 alternate 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 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 discuss Adjusted free cash flow and Adjusted free cash flow as a percentage of revenues, non-GAAP performance measuremeasures that the Board of Directors uses to review the performance of the business. Freebusiness and compensate senior management. Adjusted free cash flow is reviewed by the Board of Directors as a percentage of revenue over a trailing two-year period (reflecting both an even and odd year reporting period given the political cyclicality of our business). The most directly comparable GAAP financial measure to Adjusted free cash flow is Net income attributable to TEGNA. FreeAdjusted free cash flow is calculated as non-GAAP Adjusted EBITDA (as defined above), further adjusted by adding back (1) employee stock-based compensation awards, (2) non-cashCompany stock 401(k) company match contributions, (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.policies and (7) interest income. This is further adjusted by deducting payments made for (1) syndicated programming, (2) pension, (3) interest, (4) taxes (net of refunds) and (5) purchases of property and equipment. Like Adjusted EBITDA, free cash flow is not intended to be a measure of residual cash flow available for management’s discretionary use.

use since it omits significant sources and uses of cash flow including mandatory debt repayments and changes in working capital.

24

20



Discussion of Special Charges and Credits Affecting Reported Results


Our results included the following items we consider “special items” that, while at times recurring, are not normal and can vary significantly from period to period:

Quarter ended March 31, 2024:


QuarterRetention costs, including stock-based compensation (SBC) and six months ended June 30, 2023:cash payments to certain employees to ensure their continued service to the Company following the termination of the previously proposed merger;

M&A-related costs;
Merger termination fee;
Workforce restructuring expenses;
Asset impairment and other consisting of programming asset impairments; anda contract termination fee;
Tax benefit associated with previously disallowed transaction costs.

Quarter and six months ended June 30, 2022:

Asset impairment and other consisting of gains due to reimbursements from the FCC for required spectrum repacking;
M&A-related costs;
Other non-operating itemsitem consisting of a gain recognized on an available-for-sale investment and an impairment charge related to another investment; andthe sale of one of our investments.

Quarter ended March 31, 2023:

M&A-related costs.

Tax expense, net, associated with establishing a valuation allowance on a deferred tax asset related to an equity method investment.


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 Statements of Income follow (in thousands, except per share amounts):

 

 

 

 

 

Special Items

 

 

 

 

Quarter ended Mar. 31, 2024

 

GAAP
measure

 

 

Retention costs - SBC

 

 

Retention costs - Cash

 

 

M&A-related costs

 

 

Workforce restructuring

 

 

Asset impairment and other

 

 

Other non-operating item

 

 

Non-GAAP
measure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate - General and administrative expenses

 

$

14,798

 

 

$

(752

)

 

$

(221

)

 

$

(2,290

)

 

$

(111

)

 

$

 

 

$

 

 

$

11,424

 

Operating expenses

 

 

576,692

 

 

 

(2,893

)

 

 

(570

)

 

 

(2,290

)

 

 

(1,807

)

 

 

(1,097

)

 

 

 

 

 

568,035

 

Operating income

 

 

137,560

 

 

 

2,893

 

 

 

570

 

 

 

2,290

 

 

 

1,807

 

 

 

1,097

 

 

 

 

 

 

146,217

 

Income before income taxes

 

 

250,523

 

 

 

2,893

 

 

 

570

 

 

 

2,290

 

 

 

1,807

 

 

 

1,097

 

 

 

(152,867

)

 

 

106,313

 

Provision for income taxes

 

 

61,261

 

 

 

431

 

 

 

77

 

 

 

593

 

 

 

445

 

 

 

284

 

 

 

(36,621

)

 

 

26,470

 

Net income attributable to TEGNA Inc.

 

 

189,560

 

 

 

2,462

 

 

 

493

 

 

 

1,697

 

 

 

1,362

 

 

 

813

 

 

 

(116,246

)

 

 

80,141

 

Earnings per share - diluted (a)

 

$

1.06

 

 

$

0.01

 

 

$

 

 

$

0.01

 

 

$

0.01

 

 

$

 

 

$

(0.65

)

 

$

0.45

 

(a) Per share amounts do not sum due to rounding.

 

 

 

 

 

Special Items

 

 

 

 

Quarter ended Mar. 31, 2023

 

GAAP
measure

 

 

M&A-related costs

 

 

Non-GAAP
measure

 

 

 

 

 

 

 

 

 

 

 

Corporate - General and administrative expenses

 

$

12,100

 

 

$

(2,766

)

 

$

9,334

 

Operating expenses

 

 

566,772

 

 

 

(2,766

)

 

 

564,006

 

Operating income

 

 

173,555

 

 

 

2,766

 

 

 

176,321

 

Income before income taxes

 

 

135,823

 

 

 

2,766

 

 

 

138,589

 

Provision for income taxes

 

 

31,819

 

 

 

181

 

 

 

32,000

 

Net income attributable to TEGNA Inc.

 

 

104,303

 

 

 

2,585

 

 

 

106,888

 

Earnings per share - diluted

 

$

0.46

 

 

$

0.01

 

 

$

0.47

 

Special Items
Quarter ended June 30, 2023GAAP
measure
M&A-related costsMerger termination feeAsset impairment and otherSpecial tax itemNon-GAAP measure
Corporate - General and administrative expenses$26,506 $(17,082)$— $— $— $9,424 
Asset impairment and other3,359 — — (3,359)— — 
Merger termination fee(136,000)— 136,000 — — — 
Operating expenses449,907 (17,082)136,000 (3,359)— 565,466 
Operating income281,599 17,082 (136,000)3,359 — 166,040 
Income before income taxes244,300 17,082 (136,000)3,359 — 128,741 
Provision for income taxes44,207 4,371 (24,504)860 6,443 31,377 
Net income attributable to TEGNA Inc.200,105 12,711 (111,496)2,499 (6,443)97,376 
Earnings per share - diluted (a)
$0.92 $0.06 $(0.51)$0.01 $(0.03)$0.44 
(a) Per share amounts do not sum due to rounding.
25

21



Special Items
Quarter ended June 30, 2022GAAP
measure
M&A-related costsAsset impairment and otherNon-GAAP measure
Corporate - General and administrative expenses$13,612 $(4,212)$— $9,400 
Asset impairment and other(105)— 105 — 
Operating expenses563,860 (4,212)105 559,753 
Operating income221,021 4,212 (105)225,128 
Income before income taxes175,970 4,212 (105)180,077 
Provision for income taxes44,030 (27)44,010 
Net income attributable to TEGNA Inc.131,569 4,205 (78)135,696 
Earnings per share - diluted (a)
$0.59 $0.02 $— $0.60 
(a) Per share amounts do not sum due to rounding.
Special Items
Six months ended June. 30, 2023GAAP
measure
M&A-related costsMerger termination feeAsset impairment and otherSpecial tax itemNon-GAAP measure
Corporate - General and administrative expenses$38,606 $(19,848)$— $— $— $18,758 
Asset impairment and other3,359 — — (3,359)— — 
Merger termination fee(136,000)— 136,000 — — — 
Operating expenses1,016,679 (19,848)136,000 (3,359)— 1,129,472 
Operating income455,154 19,848 (136,000)3,359 — 342,361 
Income before income taxes380,123 19,848 (136,000)3,359 — 267,330 
Provision for income taxes76,026 4,552 (24,504)860 6,443 63,377 
Net income attributable to TEGNA Inc.304,408 15,296 (111,496)2,499 (6,443)204,264 
Net income per share-diluted (a)
$1.37 $0.07 $(0.50)$0.01 $(0.03)$0.91 
(a) Per share amounts do not sum due to rounding.
26


Special Items
Six months ended June. 30, 2022GAAP
measure
M&A-related costsAsset impairment and otherOther non-operating itemsSpecial tax itemNon-GAAP measure
Corporate - General and administrative expenses$34,932 $(14,446)$— $— $— $20,486 
Asset impairment and other(163)— 163 — — — 
Operating expenses1,128,846 (14,446)163 — — 1,114,563 
Operating income430,158 14,446 (163)— — 444,441 
Other non-operating items, net15,454 — — (18,308)— (2,854)
Total non-operating expenses(75,163)— — (18,308)— (93,471)
Income before income taxes354,995 14,446 (163)(18,308)— 350,970 
Provision for income taxes88,768 38 (41)168 (7,117)81,816 
Net income attributable to TEGNA Inc.265,803 14,408 (122)(18,476)7,117 268,730 
Net income per share-diluted$1.19 $0.06 $— $(0.08)$0.03 $1.20 

Adjusted EBITDA - Non-GAAP


Reconciliations of Adjusted EBITDA to net income presented in accordance with GAAP on our Consolidated Statements of Income are presented below (in thousands):
Quarter ended June 30,Six months ended June 30,
20232022Change20232022Change
Net income attributable to TEGNA Inc. (GAAP basis)$200,105 $131,569 52 %$304,408 $265,803 15 %
(Less) Plus: Net (loss) income attributable to redeemable noncontrolling interest(12)371 ***(311)424 ***
Plus: Provision for income taxes44,207 44,030 — %76,026 88,768 (14 %)
Plus: Interest expense42,797 42,950 — %85,703 86,570 (1 %)
Plus: Equity loss in unconsolidated investments, net283 236 20 %520 4,047 (87 %)
(Less) Plus: Other non-operating items, net(5,781)1,865 ***(11,192)(15,454)(28 %)
Operating income (GAAP basis)281,599 221,021 27 %455,154 430,158 %
Plus: M&A-related costs17,082 4,212 ***19,848 14,446 37 %
Plus (Less): Asset impairment and other3,359 (105)***3,359 (163)***
Less: Merger termination fee(136,000)— ***(136,000)— ***
Adjusted operating income (non-GAAP basis)166,040 225,128 (26 %)342,361 444,441 (23 %)
Plus: Depreciation14,987 15,534 (4 %)30,036 30,839 (3 %)
Plus: Amortization of intangible assets13,296 14,999 (11 %)26,878 29,999 (10 %)
Adjusted EBITDA (non-GAAP basis)194,323 255,661 (24 %)399,275 505,279 (21 %)
Corporate - General and administrative expense (non-GAAP basis)9,424 9,400 — %18,758 20,486 (8 %)
Adjusted EBITDA, excluding Corporate (non-GAAP basis)$203,747 $265,061 (23 %)$418,033 $525,765 (20 %)
*** Not meaningful


 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

Change

 

 

 

 

 

 

 

 

 

 

Net income attributable to TEGNA Inc. (GAAP basis)

$

189,560

 

 

$

104,303

 

 

 

82

%

Less: Net loss attributable to redeemable noncontrolling interest

 

(298

)

 

 

(299

)

 

 

(0

%)

Plus: Provision for income taxes

 

61,261

 

 

 

31,819

 

 

 

93

%

Plus: Interest expense

 

42,368

 

 

 

42,906

 

 

 

(1

%)

Less: Interest income

 

(5,573

)

 

 

(7,573

)

 

 

(26

%)

(Less) Plus: Other non-operating items, net

 

(149,758

)

 

 

2,399

 

 

***

 

Operating income (GAAP basis)

 

137,560

 

 

 

173,555

 

 

 

(21

%)

Plus: M&A-related costs

 

2,290

 

 

 

2,766

 

 

 

(17

%)

Plus: Asset impairment and other

 

1,097

 

 

 

 

 

***

 

Plus: Workforce restructuring

 

1,807

 

 

 

 

 

***

 

Plus: Retention costs - Employee stock-based compensation awards

 

2,893

 

 

 

 

 

***

 

Plus: Retention costs - Cash

 

570

 

 

 

 

 

***

 

Adjusted operating income (non-GAAP basis)

 

146,217

 

 

 

176,321

 

 

 

(17

%)

Plus: Depreciation

 

14,310

 

 

 

15,049

 

 

 

(5

%)

Plus: Amortization of intangible assets

 

13,660

 

 

 

13,582

 

 

 

1

%

Adjusted EBITDA

$

174,187

 

 

$

204,952

 

 

 

(15

%)

Stock-based compensation:

 

 

 

 

 

 

 

 

Employee awards

 

8,240

 

 

 

3,688

 

 

***

 

Company stock 401(k) match contributions

 

5,429

 

 

 

5,564

 

 

 

(2

%)

Adjusted EBITDA before stock-based compensation costs

$

187,856

 

 

$

214,204

 

 

 

(12

%)

*** Not meaningful

In the secondfirst quarter of 20232024 Adjusted EBITDA margin was 28% without corporate24% with stock-based compensation expense or 27% with corporate expense,26% without those expenses. Our total Adjusted EBITDA decreased $30.8 million, or 15%, in 2024 compared to second quarter of 2022 Adjusted EBITDA margin of 34% without corporate expense or 33% with corporate expense. For the six months ended June 30, 2023, Adjusted EBITDA margin2023. This decrease was 28% without corporate expense or 27% with corporate expense, compared to six months ended June 30, 2022 Adjusted EBITDA of 34% without corporate expense or 32% with corporate expense. These margin decreases were primarily driven by the operational factors discussed above within the revenue and operating expense fluctuation explanation sections, most notably, the decrease in subscription and AMS and political revenues and theoffset by an increase in programming expenses.political revenue.

27

22



Adjusted Free Cash Flow Reconciliation


FreeAdjusted free cash flow as a percentage of revenue is computed over a trailing two-year period (reflecting both an even and odd year reporting period given the political cyclicality of our business).


Reconciliation from “Net income” to “Free“Adjusted free cash flow” follow (in thousands):


Two-year period ended June 30,
20232022
Net income attributable to TEGNA Inc. (GAAP basis)$1,192,588$1,119,281
Plus: Provision for income taxes347,277350,810
Plus: Interest expense352,281373,677
Plus: M&A-related costs44,10318,184
Plus: Depreciation124,338128,949
Plus: Amortization118,238127,236
Plus: Stock-based compensation54,66961,462
Plus: Company stock 401(k) contribution36,64534,974
Plus: Syndicated programming amortization136,535142,664
Plus: Workforce restructuring expense1,021
Plus: Advisory fees related to activism defense16,611
Plus: Cash dividend from equity investments for return on capital4,2388,240
Plus: Cash reimbursements from spectrum repacking8278,517
Plus: Net income attributable to redeemable noncontrolling interest1,2182,135
Plus: Reimbursement from Company-owned life insurance policies1,9291,456
Plus (Less): Equity loss (income) in unconsolidated investments, net10,78014,299
Plus: Asset impairment and other3,627(4,794)
(Less) Plus: Other non-operating items, net(37,594)(6,481)
Less: Merger termination fee(136,000)
Less: Syndicated programming payments(134,274)(148,229)
Less: Income tax payments, net of refunds(307,031)(343,503)
Less: Pension contributions(12,172)(10,140)
Less: Interest payments(339,372)(364,856)
Less: Purchases of property and equipment(101,279)(107,361)
Free cash flow (non-GAAP basis)$1,361,571$1,424,152
Revenue$6,282,212$6,226,061
Free cash flow as a % of Revenue21.7 %22.9 %

 

Two-year period ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Net income attributable to TEGNA Inc. (GAAP basis)

$

1,162,519

 

 

$

1,099,110

 

Plus: Provision for income taxes

 

349,092

 

 

 

334,056

 

Plus: Interest expense

 

345,674

 

 

 

356,093

 

Plus: M&A-related costs

 

32,421

 

 

 

27,021

 

Plus: Depreciation

 

119,969

 

 

 

125,189

 

Plus: Amortization of intangible assets

 

112,009

 

 

 

120,715

 

Plus: Employee stock-based compensation awards

 

55,615

 

 

 

56,923

 

Plus: Company stock 401(k) match contribution

 

37,381

 

 

 

36,063

 

Plus: Syndicated programming amortization

 

114,427

 

 

 

136,964

 

Plus: Workforce restructuring expense

 

1,807

 

 

 

 

Plus: Advisory fees related to activism defense

 

 

 

 

12,012

 

Plus: Cash dividend from equity investments for return on capital

 

500

 

 

 

4,276

 

Plus: Cash reimbursements from spectrum repacking

 

265

 

 

 

3,842

 

Plus: Net income attributable to redeemable noncontrolling interest

 

1

 

 

 

1,457

 

Plus: Reimbursement from Company-owned life insurance policies

 

1,879

 

 

 

1,929

 

Plus: Retention costs, cash portion

 

5,018

 

 

 

Plus (Less): Asset impairment and other

 

4,191

 

 

 

(1,207

)

Less: Other non-operating items, net

 

(162,922

)

 

 

(5,746

)

Less: Merger termination fee

 

(136,000

)

 

 

 

Less: Syndicated programming payments

 

(110,970

)

 

 

(140,650

)

Less: Income tax payments, net of refunds

 

(298,525

)

 

 

(351,206

)

Less: Pension contributions

 

(9,613

)

 

 

(12,149

)

Less: Interest payments

 

(332,842

)

 

 

(345,153

)

Less: Purchases of property and equipment

 

(105,400

)

 

 

(104,069

)

Adjusted free cash flow (non-GAAP basis)

$

1,186,496

 

 

$

1,355,470

 

 

 

 

 

 

 

Revenue

$

6,130,304

 

 

$

6,286,614

 

Adjusted free cash flow as a % of Revenue

 

19.4

%

 

 

21.6

%

Our Adjusted free cash flow a non-GAAP performance measure, was $1.36$1.19 billion and $1.42$1.36 billion for the two-year periods ended June 30,March 31, 2024 and 2023, respectively.

Our share of net earnings and 2022, respectively.

28

losses from investments that we have significant influence over, but do not have control, were previously included in “Equity loss in unconsolidated investments, net” in the Consolidated Statements of Income. However, beginning in the first quarter of 2024 such amounts are now included in “Other non-operating items, net”. Prior year amounts have been reclassified to conform to the new presentation.


Starting in the fourth quarter of 2023, TEGNA began presenting interest income as a separate line item on its Statements of Income as a result of its increasing size. Prior to this, interest income was included in Other non-operating items, net. Prior year amounts have been reclassified to conform to the new presentation. Interest income is included in Adjusted free cash flow while Other non-operating items, net is not, consistent with past presentations.

Liquidity, Capital Resources and Cash Flows


Our operations have historically generated positive cash flow which,that, along with availability under our existing revolving credit facility and cash and cash equivalents on hand, havehas been sufficient to fund our capital expenditures, interest payments, dividends, share repurchases, investments in strategic initiatives and other operating requirements.


We paid dividends totaling $40.5$19.9 million and $42.3$21.4 million in first sixthe three months ofended March 31, 2024 and 2023, and 2022, respectively. In the second quarter of 2023On May 8, 2024 we announced a 20% increasethat our Board of Directors further increased the dividend by 10%, from 11.375 to our quarterly dividend from 9.5 to 11.37512.5 cents per share. We paid the previously declared regularThis increase builds on a 20 percent increase to TEGNA’s dividend in 2023. The increased dividend will be in effect for quarterly dividend of 9.5 cents per share onpayments, beginning with the July 3, 2023,1, 2024 payment, to stockholders of record as of the close of business on June 9, 2023, and expect the increased dividend to be in effect in future regular quarterly dividend payments, subj7, 2024.

ect to the Board of Directors declaration.

23



The now terminated Merger Agreement did not permit us to increase the dividend or to repurchase our common stock. As a result of these two restrictions, our cash balance was $551.7 million at the end of 2022. In the second quarter of

On June 2, 2023, we employed $300 million of cash when we launched anentered into our first accelerated share repurchase (ASR) program under which(the first ASR) with JPMorgan Chase Bank, National Association (JPMorgan). Under the terms of the first ASR, we will repurchaserepurchased $300 million in TEGNA common sharesstock from JPMorgan. Under the ASR, the Company made an initial payment to JPMorgan, of $300 million and receivedwith an initial delivery of approximately 15.2 million shares received on June 6, 2023, representing 80% ($240 million) of the value of the first ASR contract. The final numberfirst ASR program was completed during the third quarter of 2023 at which time JPMorgan delivered an additional 3.1 million shares to be repurchased will beus. The final share settlement was based on the average daily volume-weighted average price of TEGNA shares during the term of the first ASR program, less a discount, and subject to customary adjustments pursuant toless the previously delivered 15.2 million shares.

On November 9, 2023, we entered into a second accelerated share repurchase (the second ASR) program with JPMorgan. Under the terms of the ASR. The final settlement of thesecond ASR, is expected to be completed by the end of the third quarter of 2023, subject to acceleration at JPMorgan’s discretion.


On August 3, 2023, TEGNA announced an additional ASR program with a value ofwe repurchased $325 million which is expected to commence in the fourth quarter of 2023. Similar to the initial ASR program, we expect to receiveTEGNA common stock from JPMorgan, with an initial delivery of approximately 17.3 million shares equal toreceived on November 13, 2023, representing 80% ($260 million) of the value of the second ASR contract. The second ASR program with thewas completed on February 22, 2024, shortly after which JPMorgan delivered an additional 4.0 million shares to us. The final number of shares received to beshare settlement was based on the average daily volume-weighted average price of TEGNA shares during the term of the second ASR program, less a discount, and subjectless the previously delivered 17.3 million shares.

In December 2023, our Board of Directors authorized a new share repurchase program for up to customary adjustments pursuant$650.0 million of our common stock, which was in addition to the termssecond ASR program. This new share repurchase program expires on December 31, 2025. In the first quarter of 2024, 5.8 million shares were repurchased under this program at an average share price of $14.50 for an aggregate cost of $84.5 million, of which $2.1 million had not yet been paid as of the ASR.

end of the first quarter.


Our comprehensive capital allocation framework supports shareholder value creation through a predictable and sustained distribution of free cash flow to shareholders. We are on track and reaffirm our expectation to return 40-60 percent of Adjusted free cash flow generated in 2024-2025 to shareholders through share repurchases and dividends, with the remaining Adjusted free cash flow expected to be used for organic investments and/or bolt-on acquisitions and to prepare for future debt retirement. We will continue to analyze all uses of capital, including regular evaluation of the dividend, with a goal of maximizing long-term shareholder value creation.

Consistent with this framework, we are on track to return approximately $350 million of capital to shareholders in 2024 through dividends and opportunistic share repurchases from time to time on the open market at prevailing prices or in negotiated transactions.

Our Adjusted free cash flow guidance free cash flow guidance includes the impact of transformation initiatives to streamline operations, pursue innovation-driven opportunities, and achieve cost reductions. We expect to complete these transformation initiatives by the end of 2025, with initial benefits expected to occur in the second half of 2024. We expect to realize annualized cost savings of $90-$100 million exiting 2025.

During the first halfquarter of 2023,2024, we primarilyreturned $102.3 million of capital to shareholders with $82.4 million of share repurchases, representing 5.7 million shares, and paid $19.9 million in dividends. Excluded from this commitment are share repurchases under our previously announced accelerated share repurchase program, which were completed during the quarter on February 27, 2024, including final settlement of approximately 4.0 million shares.

Our capital allocation plan is subject to a variety of factors, including our strategic plans, market and economic conditions and the discretion of our Board of Directors.

In addition to the above share repurchase initiatives, during 2024 we deployed surplus cash in time deposit and money market investments with several financial institutions.


Under

On January 25, 2024, we entered into an amendment to our revolving credit facility we havefacility. Among other things, the ability to draw loans based on two different interest rate indices, one of which was previously based onamendment amends the London Interbank Offered Rate (LIBOR). During the second quarter of 2023, we amended our revolving credit facility to:

Reduce the Five-Year Commitments (as defined in the Credit Agreement) from $1.51 billion to replace$750 million;
Extend the LIBOR-based interest rate index, which was phased out, withterm of such Five-Year Commitments from August 15, 2024 to January 25, 2029, subject to a Secured Overnight Financing Rate (SOFR) based interest rate index. The transition from LIBOR91-day springing maturity date if debt in excess of $300 million (subject to SOFR did not havecertain exceptions) were to mature before such date;
Add the right to obtain a material impacttemporary 0.5x step-up in the Total Leverage Ratio (as defined in the Credit Agreement) after consummating a Qualified Acquisition (as defined in the Credit Agreement);
Increase the amount of Unrestricted Cash (as defined in the Credit Agreement) to $600 million;
Amend the definition of Consolidated EBITDA to include an add-back for certain professional fees and expenses; and
Establish a $50 million swingline facility.

Under the amended Credit Agreement, the Company’s maximum Total Leverage Ratio (as defined in the Credit Agreement) will remain unchanged at 4.50x. None of the available capacity on the Company.

revolving credit facility was drawn on the amendment date.

24


As of June 30, 2023,March 31, 2024, we were in compliance with all covenants contained in our debt agreements and credit facility. Our leverage ratio, calculated in accordance with our revolving credit agreement,Credit Agreement, was 2.50x,2.79x, below thethe maximum permitted leverage ratio of 4.50x. TheThe leverage ratio is calculated using annualized adjusted EBITDA (as defined in the credit agreement)Credit Agreement) for the trailing eight quarters. We believe that we willexpect to remain compliant with all covenants for the foreseeable future.


As of June 30, 2023,March 31, 2024, our total debt was $3.07$3.07 billion,, cash and cash equivalents totaled $489.4$430.8 million,, and we had unused borrowing capacity of $1.49 billion$737.3 million under our revolving credit facility. 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 Item 1A. “Risk Factors,” in our 20222023 Annual Report on Form 10-K for further discussion. We expect our existing cash and cash equivalents, expected future cash flow from our operations, and borrowing capacity under the revolving credit facility will be more than sufficient to fund the $325 million ASR scheduled for the fourth quarter as well as satisfy our recurring contractual commitments, debt service obligations, capital expenditure requirements, and other working capital needs for the next twelve months and beyond.


29


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):

Six months ended June 30,
20232022
Balance of cash and cash equivalents beginning of the period$551,681 $56,989 
Operating activities:
    Net income304,097 266,227 
    Depreciation, amortization and other non-cash adjustments76,505 73,715 
    Merger termination fee(136,000)— 
    Pension expense, net of contributions2,655 (1,070)
    Decrease in trade receivables64,356 25,263 
    Increase in interest and taxes payable1,100 9,615 
    Other, net(5,228)17,637 
Cash flow from operating activities307,485 391,387 
Investing activities:
Purchase of property and equipment(14,491)(23,094)
All other investing activities(1,416)(725)
Cash flow used for investing activities(15,907)(23,819)
Financing activities:
Payment under revolving credit facilities, net— (166,000)
Repurchase of common stock(300,000)— 
All other financing activities(53,886)(57,787)
Cash flow used for financing activities(353,886)(223,787)
Increase in cash and cash equivalents(62,308)143,781 
Balance of cash and cash equivalents end of the period$489,373 $200,770 


 

Three months ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of the period

$

361,036

 

 

$

551,681

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

Net income

 

189,262

 

 

 

104,004

 

Gain on investment sale

 

(152,867

)

 

 

 

Depreciation, amortization and other non-cash adjustments

 

44,765

 

 

 

38,120

 

Pension expense, net of contributions

 

742

 

 

 

1,416

 

Decrease in trade receivables

 

22,153

 

 

 

20,615

 

(Decrease) increase in accounts payable

 

(34,950

)

 

 

12,100

 

Increase (decrease) in interest and taxes payable

 

26,958

 

 

 

(1,627

)

All other operating activities

 

4,317

 

 

 

(4,241

)

Net cash flow from operating activities

 

100,380

 

 

 

170,387

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(4,911

)

 

 

(2,845

)

Payments for acquisitions of businesses and assets, net of cash acquired

 

(52,799

)

 

 

(1,150

)

Proceeds from investments

 

152,867

 

 

 

23

 

All other investing activities

 

(8,933

)

 

 

(150

)

Net cash flow provided by (used for) investing activities

 

86,224

 

 

 

(4,122

)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Repurchase of common stock

 

(82,394

)

 

 

 

Dividends paid

 

(19,898

)

 

 

(21,360

)

Payment of debt issuance costs

 

(6,448

)

 

 

 

All other financing activities

 

(8,136

)

 

 

(13,407

)

Net cash flow used for financing activities

 

(116,876

)

 

 

(34,767

)

Net change in cash and cash equivalents

 

69,728

 

 

 

131,498

 

Cash and cash equivalents at end of the period

$

430,764

 

 

$

683,179

 

Operating activities - Cash flow from operating activities was $307.5$100.4 million forfor the sixthree months ended June 30, 2023,March 31, 2024, compared to $391.4$170.4 million for the same period in 2022. Net income increased2023. The decrease of $70.0 million was primarily driven by changes in 2023working capital, primarily accounts payable, due to the timing of payments. Also contributing to the decrease was the impact of the December 2023 temporary service disruption with one time merger termination fee of $136 million that was settledour distribution partners which negatively impacted collections in the secondfirst quarter of 2023. The merger termination fee was satisfied in the form of TEGNA common stock and therefore did not impact cash flows. Driving the decrease in operating cash flow of $83.9 million was an $87.2 million decline in revenue and a $28.4 million increase in programming costs,2024. These declines were partially offset by a $39.1 million decrease in accounts receivable in the first six monthstiming of 2023 as comparedpayments to 2022.one of our network affiliation partners.


Investing activities - Cash flow used forfrom investing activities was $15.9was a net cash inflow of $86.2 million for the sixthree months ended June 30, 2023,March 31, 2024, compared to $23.8a net cash outflow of $4.1 million for the same period in 2022.2023. The decreaseincrease in net cash flows of $7.9$90.3 million from investing activities was primary due to a reductionprimarily driven by proceeds of $152.9 million from the sale of our investment in capital expendituresBMI in the first six monthsquarter of 2023 as compared to2024. This was partially offset by cash outflows of $52.8 million for the same period in 2022.acquisition of Octillion Media.

25



Financing activities - Cash flow used for financing activities was $353.9$116.9 million for the sixthree months ended June 30, 2023,March 31, 2024, compared to $223.8$34.8 million for the same period in 2022.2023. The changeincrease was primarily due to our initial payment to JPMorganrepurchase of $300common stock. In the first quarter of 2024 we repurchased approximately $82.4 million pursuant toof shares under our authorized share repurchase program. Additionally, we paid $6.4 million in fees in conjunction with the ASR program in which we received an initial deliveryamendment of 15.2 million shares on June 6, 2023, representing 80% ($240 million) of the value of the ASR program. Also contributing to the change was our revolving credit facility which had no net repaymentsrevolver in the first six monthsquarter of 2023 as compared to net repayments of $166.0 million in the first six months of 2022.2024.

30


Certain Factors Affecting Forward-Looking Statements


Certain statements in this Quarterly Report on Form 10-Q that do not describe historical facts may constitute forward-looking statements 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. When used in the communication, the words “believes,” “estimates,” “plans,” “expects,” “should,” “could,” “outlook,” and “anticipates” and similar expressions as they relate to the Company, or its financial results are intended to identify forward-looking statements. Forward-looking statements in this communication may include, without limitation, statements regarding anticipated growth rates, the Company’s capital allocation framework, the Company’s business transformation initiatives, and the Company’s other plans, objectives and expectations. Forward-looking statements are based on a number of assumptions about future events and are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from the views, beliefs, projections and estimates expressed in such statements.statements, many of which are outside the Company’s control. These risks, uncertainties and other factors include, but are not limited to, risks and uncertainties related to: changes in the market price of the Company’s shares, general market conditions; constraints, volatility, or disruptions in the capital markets or other factors affectingmarkets; the possibility that Company’s share repurchases, including through ASR programs, and the Company’s ASR program;execution of the possibility that the Company’s ASR program, or any future share repurchases,capital allocation framework may not enhance long-term stockholder value; the Company’s ability to realize cost savings and execute its business transformation initiatives; the possibility that share repurchases pursuant to the ASR program could increase the volatility of the price of the Company’s common stock and diminish the Company’s cash reserves;stock; legal proceedings, judgments or settlements; the response of customers, suppliers and business partners to the termination of the merger agreement, including impacts on and modifications to the Company’s plans, operations and business relating thereto; difficulties in employee retention due to the termination of the merger agreement; the Company’s ability to re-price or renew subscribers; potential regulatory actions; changes in consumer behaviors and impacts on and modifications to TEGNA'sthe Company’s operations and business relating thereto; other business effects, including the effects of industry, market, economic, political or regulatory conditions; information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity, malware or ransomware attacks; and economic, competitive, governmental, technological and other factors and risks that may affect the Company’s operations or financial results, which are discussed in our Annual Report on Form 10-K

10-K.


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 day it was made. We undertake no obligation to update or to revise any forward-looking statements. The factors described above cannot be controlled by our 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 our Company or management are intended to identify forward looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q may include, without limitation: anticipated growth rates, the Company’s plans, objectives and expectations.

31


Item 3. Quantitative and Qualitative Disclosures about Market Risk


For quantitative and qualitative disclosures about market risk, refer to the following section of our 20222023 Annual Report on Form 10-K: “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.” Our exposures to market risk have not changed materially since December 31, 2022.

2023.


As of June 30, 2023,March 31, 2024, we did not have any floating interest obligations outstanding and had unused borrowing capacity of $1.49 billion under our $1.51 billion$750 million revolving credit facility, which expires in August 2024. During the second quarter of 2023, we amended our revolving credit facility to replace the LIBOR-based interest rate index, which was phased out, with a Secured Overnight Financing Rate (SOFR) based interest rate index. The transition from LIBOR to SOFR did not have a material impact on the Company. January 2029. Any amounts borrowed under the revolving credit facility in the future are subject to a variable rate. Refer to Note 8 to the condensed consolidated financial statements for information regarding the fair value of our long-term debt.


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’s disclosure controls and procedures as of June 30, 2023.March 31, 2024. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective, as of June 30, 2023,March 31, 2024, 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

See Note 910 to the condensed consolidated financial statements for information regarding our legal proceedings.

26



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 20222023 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. Other than those risk factors related to the now terminated merger, weWe do not believe that there have been any material changes from the risk factors previously disclosed in our 20222023 Annual Report on Form 10-K, with the exception of the below risk factor related to the repurchasing of our common stock.


We may not realize the anticipated benefits of our share repurchase programs and any failure to repurchase our common stock after we have announced our intention to do so may negatively impact our stock price.

On June 2, 2023 we entered into an accelerated share repurchase (ASR) program under which we will repurchase $300 million of our common stock. On August 3, we announced we expect to enter into a second ASR program in the fourth quarter under which we will repurcha10-K.se $325 million of our common stock. Both of these ASR agreements are in addition to the $300 million share repurchase program authorized by our Board of Directors in December 2020.

The timing and amount of any repurchases under these programs will depend on factors such as the stock price, economic and market conditions, and corporate and regulatory requirements. Any failure to repurchase shares after we have announced our intention to do so may negatively impact our reputation, investor confidence and the price of our common stock.

The existence of these share repurchase programs could cause the price of the Company’s common stock to be higher than it otherwise would be and could potentially reduce the market liquidity for our stock. Although these programs are intended to enhance long-term stockholder value, there is no assurance they will do so because the market price of our common stock may decline below the levels at which we repurchased shares and short-term stock price fluctuations could reduce the effectiveness of the programs.

Repurchasing common stock will reduce the amount of cash we have available to fund capital expenditures, interest payments, dividends, share repurchases, investments in strategic initiatives and other operating requirements and we may fail to realize the anticipated benefits of these share repurchase programs.
32


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


Issuer Purchases of Equity Securities


The following table presents stock repurchases by the Company during the three month periodmonths ended June 30, 2023March 31, 2024 (in thousands, except per share amount)amounts):


Period EndedTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
April 1, 2023 - April 30, 2023— $— — $300,000 1
May 1, 2023 - May 31, 2023— — — 300,000 1
June 1, 2023 - June 30, 2023
     Accelerated share repurchases2
15,180 — 15,180 60,000 
     Merger termination fee3
8,640 15.78 8,640 — 
Total Second Quarter 202323,820 $— 23,820 $360,000 4

Period Ended

 

Total
Number
of Shares
Purchased

 

 

Average
Price Paid
per Share

 

 

Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs

 

 

Approximate
Dollar Value
of Shares
that May Yet
be Purchased
Under the
Plans or
Programs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2024 - January 31, 2024

 

 

 

$

 

 

 

 

 

715,000

 

(1)

February 1, 2024 - February 29, 2024

 

 

3,999

 

 

 

14.51

 

 

 

3,999

 

 

 

650,000

 

(2)

March 1, 2024 - March 31, 2024

 

 

5,828

 

 

$

14.50

 

 

 

5,828

 

 

 

565,505

 

(3)

Total First Quarter 2024

 

 

9,827

 

 

 

 

 

 

9,827

 

 

 

 

 


(1) Represents as of the beginning of the first quarter of 2024 (i) the remaining value of the $650 million share repurchase program authorized by our Board of Directors in December 2023 and (ii) the remaining $65 million (20% of the total value) under the second ASR program described in footnote 2 below.

(2) In the fourth quarter of 2023, we entered into a second ASR agreement with JPMorgan to repurchase TEGNA common stock with an aggregate value of $325 million. Under the terms of the ASR, we paid JPMorgan $325 million and received an initial delivery of approximately 17.3 million shares in November of 2023, representing approximately 80% ($260 million) of the value of the second ASR. The second ASR program was completed on February 22, 2024, shortly after which date JPMorgan delivered an additional 4.0 million shares to us. The second ASR program was separately authorized by our Board of Directors and therefore did not impact the $650 million share repurchase program authorized by our Board of Directors in December 2023 described in Note 3 below.

(3) In December 2020,2023, our Board of Directors authorized the renewal of our share repurchase program for up to $300$650 million of our common stock over the next threetwo years. The shares may be repurchased at management’s discretion, either on the open market or in privately negotiated block transactions. Management’s decision to repurchase shares will depend on price, blackout periods and other corporate developments. Purchases may occur from time to time and no maximum purchase price has been set. In the second quarter and six months ended June 30, 2023, noMarch of 2024, we repurchased 5.8 million shares were repurchased under this program.

(2) As announced on June 2, 2023, we entered into the ASR agreement with JPMorgan Chase Bank, National Association (JPMorgan) on June 2, 2023 to repurchase TEGNA common stock with at an aggregate valuecost of $300 million. Under the terms$84.5 million, of the ASR, wewhich $2.1 million had not yet been paid JPMorgan $300 million and received an initial deliveryas of approximately 15.2 million shares on June 6, 2023, representing approximately 80% ($240 million) of the value of the ASR. The total number of shares to be repurchased will be based on the average of our daily volume-weighted average stock price, less a discount, during the repurchase period, which is expected to be completed by the end of the third quarter of 2023, at which time share settlement for the full value of the ASR program will be completed. This ASR program was separately authorized by our Board of Directors and therefore did not impact the $300 million share repurchase program authorized by our Board of Directors in December 2020 described in Note 1 above.
(3) On June 1, 2023 Standard General transferred to TEGNA shares of TEGNA common stock to satisfy the approximately $136 million merger termination fee due under the Merger Agreement. Receipt of the shares from Standard General will not reduce the $300 million ASR described in footnote 2 above. Refer to Note 1 to the condensed consolidated financial statements for additional information.
(4) Represents (i) $300 million remaining under the share repurchase program authorized by our Board of Directors in December 2020 as described in footnote 1 above, and (ii) $60 million remaining under the ASR program, which is expected to be settled by the end of the third quarter of 2023, as described in footnote 2 above.

first quarter.

Item 3. Defaults Upon Senior Securities


None.


Item 4. Mine Safety Disclosures


None.


Item 5. Other Information


Rule 10b5-1 Trading Plans

On March 7, 2024, Lynn Beall (Trelstad), Executive Vice President and Chief Operating Officer, entered into a Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K of the Exchange Act) with the intent of selling up to 75,000 shares of the Company’s common stock for diversification purposes. The plan expires upon the earlier of October 31, 2024, or the completion of all authorized transactions under the plan.

None.
33

27



The adoption of this trading plan occurred during an open insider trading window and is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended.

Item 6. Exhibits

Exhibit Number

Description

3-1

3-2

10-1

10-2

10-3

Form of Executive Officer Restricted StockPerformance Share Award Agreement. *

10-4

Form of CEO Performance Share Unit Award Agreement*Agreement. *

10-310-5

10-410-6

10-7

FourteenthFifteenth Amendment, dated as of May 15, 2023January 25, 2024, and effective as of May 29, 2023,January 25, 2024, to the Amended and Restated Competitive Advance and Revolving Credit Agreement, dated as of December 13, 2004 and effective as of January 5, 2005, and as amended and restated as of August 5, 2013, as further amended as of June 29, 2015, as further amended as of September 30, 2016, as further amended as of August 1, 2017, as further amended as of June 21, 2018, as further amended as of August 15, 2019, and as further amended as of June 11, 2020, and as further amended as of May 14, 2023, 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.(incorporatedthereto (incorporated by reference to Exhibit 10-110-1 to TEGNA IncsInc.’s Form 8-K filed on May 23, 2023)January 25, 2024).

31-1

31-2

32-1

32-2

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File becauseas its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.With Embedded Linkbase Documents

101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


* Asterisks identify management contracts and compensatory plans and arrangements.

34

28



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: August 3, 2023May 8, 2024

TEGNA INC.

/s/ Clifton A. McClelland III

Clifton A. McClelland III

Senior Vice President and Controller

(on behalf of Registrant and as Principal Accounting Officer)

29


35