TGNA - Earnings call transcript Q1 2018

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Operator

Good day and welcome to the TEGNA First Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jeff Heinz. Please go ahead.

Jeffrey Heinz

Thanks, Cathy. to quarter welcome and earnings and webcast. morning our XXXX first call Good and and Dave Harker, our CEO, Today, President Lougee; TEGNA's performance will financial our and results. review Victoria CFO, open call we'll that, After for questions. the opportunity the this release. had you've to Hopefully, morning's review press

yet If of the TEGNA.com. a release, you seen copy available it's have at not

SEC may remind outlined Before and may results our like conference This cause to and are that filings. that differ them we our includes get financial started, webcast also call in actual differ. this measures. I'd certain includes statements presentation Factors forward-looking non-GAAP

to We the have provided to the the our reconciliations most and me release that, comparable of Investor in over those turn measures With portion call of measures website. Dave. GAAP on Relations directly press let the

David T. Lougee

and we're I'll strategy Thank take positioned the proof good progress in us Today, that that growth advantage that the our before morning, and our well everyone. quarter track us. review gives further opportunities to of on you, is Jeff,

revenue record was a at broadcasting Our first end of which non-GAAP revenue the and high guidance history was a on quarter in our our of quarter the basis, in first business. year-over-year XX% up

grew Bowl, was Excluding of from tailwinds revenue Subscription and up X%. Super the our political, still XX%. revenue nearly revenue Olympics,

YouTube Importantly, subs, virtual new MVPD growth sequential a seen subscribers we paid with have NOW, subscribers to services and three in combination Hulu, MVPD total TV. months of DIRECTV along of traditional like

broadcast a to has of and new saw reflection affiliates positive total is trends that quarter strong MVPDs. continued critical these we Specifically, first quarter of are our virtual how the the sub in reversal into fourth a

a our DMAs, subscriber color on we strongest our trends total subs, virtual market between traditional trends necessarily we relationship clearer and during glad month-over-month today, MVPD us. becoming every growth million now MVPD further X subs And As largest year, portion this give this Q&A the seasonality, call. the have be are in more to virtual due I'll and anticipate to are month of which than of don't positive to while the and sub total new

subscription As up a Super year in in the TEGNA both Olympics. raising quarter, stations for result, during full audience we're dominated XXXX revenue Bowl Also to the guidance the our metrics the mid-teens. and being

Bowl, four share For the of the Super in ranked and to one TEGNA affiliates XX number stations XX had top ratings all nationally demographic. the adults both XX NBC among and in

stations ratings, stations events in one quarter top overall. seven among For the more Minneapolis Denver during overall success had four incremental context, in give two for will all revenue and TEGNA net the And spots Victoria affiliates. approximately $XX first Olympics, respectively, our million in combined, ranked these of TEGNA portfolio. and to NBC our but led you

is minus our for events. these added what revenue reminder, money our shifts a from away is the same our incremental stations NBC net that As to non-NBC stations

well as process Moving of now double Premion, year. TEGNA's services growth new success Premion is partnerships to on provide. one expand leveraging meet revenue to can last the on our to from Premion many as We're outcomes our this And tangible versus to the expectations. continues and year innovation. we're track create disciplined organic business of we aggressive

programming place dozens any it – As and on ads local, do more can in and a advertisers on-demand the program and in touch I'll on country. two video regional, national partners, Premion long-form reminder, Premion to market XXX live allows OTT developments. we in briefly and than

underway, Baseball MLB, Major now its the with as League baseball has season Premion. relationship extended First, is

for in OTT ones our as you on impactful in one Premion the most we're are year. League is is XX of of home teams. the some MLB.TV team XX MLB.TV services ads Major markets who can this OTT nationwide on watched local Baseball Now, This markets, markets rights of and has for of our local for MLB.TV, XX know, regional And probably especially only country. advertising sell which and the partnership

Another for Macon, for Atlanta many and Portland, MLB package the the for markets including of cities, our in Red Premion, build sports joins Boston networks, example, for are OTT MLB major major or Braves neighboring teams Georgia, regional XX Sox. out Maine, for brands to sports advertisers other one-of-a-kind brands.

Premion an capabilities we such challenge partnered more like at putting revolutionize in earlier for by or companies TVs to solves leading the this companies, Audience made MadHive development launch OTT the and ecosystem. will called. homeowners reach offering solutions of with platform Selects right first DMP data platform. data quarter marketplace. auto first-of-its-kind XINFO, it's and and customer platform, advertising at and Premion developments, This the Selects. X,XXX forefront in the advertisers' advertisers and to right significant build OTT investments sports audience with streaming Vizbee, segments, time Premion's as is Tubi These on OTT management Premion Audience brands second And as the and different of offers intenders, travel devices. We've in true last And innovative the forth. industry-wide they're enthusiasts, emerging collection so are it data than brands month us data along two management The fans, called the

and of business, side in invest we processes. to discipline innovation On the impactful our continue content

execution people. And process come most talented our strategic our Our across several Since brainstorming, we've company. these and we starting testing employees of ideas recently best launched initiatives. Innovation and held amongst seventh a successful pilots the summits, piloting, from Summit,

new Atlanta. a Based success Washington using across portfolio local reach D.C.'s And digital-first us the our out unit and team of allows One of their to investigative second platforms This is audiences. we WUSAX. these is digital-first continue award-winning investigative content. launched innovative Team expand Atticus, entirely to we on quarter, this in valuable our digital-first to our journalism scaled based distribute we're

to know providing morning. audiences and also We've content snackable highlights you five public inside stories Snapchat us use again, sit-in Snap University with X-day content public entirely devices, stories partnered an created students. Seattle, reach KING-TV Snapchat the at the us like Alexa platform, to need content giving in new Amazon's new instance, We for news our top For we Administration the created exclusive that bring Building, content each and, audience. allowing held to all Echo Howard recent to things by

awards content media from in and innovation local Edward awards, more TEGNA talked earlier. for Our than innovation Nine most Regional about efforts history being any and of nationally won eight recognized. the and excellence processes these XX are R. other Murrow pilot I these came were company. our

launched. as we call we're original LIVE will Blast DBL, to This non-TEGNA Another the daily is expand with live thanks or Daily through partnership programs way Sony. fall, footprint it, our into innovating its non-new we've markets,

markets, the XX of digital with in we're the next deployed very services We Phoenix, define the collaboration on effort digital comprehensive of distribution TV. have ATSC be that a launch television forward how in quarters digital viewers, TV unique, the to the X.X as maintaining must-see standard, Part generation to is And format. moves more national show's can deals come highlighting that the of working to ATSC networks our popularity X.X members, the industry show while the entered with Arizona, as existing of test for ahead. market live, to for alliance as business air new Pearl our well

and our closed quarter, our very in San acquisition as content, And gone there many has well. the TEGNA's marketing is Diego, of KFMB team already sales, innovations, integration on we and such This leveraging Premion.

very Our see very, picture good. Diego significant year. for political TEGNA Overall, looks strong station the should San also this political revenue

And unprecedented. that battle said today, new than we And we of House control as voter before, As and of seats increase see on these U.S. to last in this as that's House we've main as will also, in is we said the gubernatorial our for clear the and of our for you very got us becoming the footprint know, fundraising a elections dynamic year's But the call, races. event. expect competitive be competitive now for energy XX% is number Senate mid-term a in more footprint.

UHF topics TEGNA. noise, recently, as court surrounding Sinclair-Tribune of noise M&A, about of to to the are noise turning a been as lot the there Neither transaction. case, has these of concern discount Finally, well

our we're is X our due less relates stake only concentration, points due discount to First, discount, XX.X% to with cap without ownership specifically it. discount only the it as under VHF the to XX.X% the but

FCC for ample headroom strategy rules leverage to within have the opportunity current current market no and discount. which growth, definitions. execute we even ample with cap DOJ existing previously our vertical consolidation, we have So, under is stated Furthermore, end-market

in each markets largest I've reiterating, big And of worth these our before, country. stated we only markets. owner overall, affiliates top the independent own but As in in two XX are four market is XX big we one all but four the of of

industry, pass the benefit regardless I'll are consolidation to we the temporary coming to that, in-market the of So, current the noise. regulatory from uniquely positioned And in with Victoria. call

Victoria D. Harker

Thanks, Dave. everyone, you for and joining Good morning, us. thank

As the quarter a growing the and diversifying revenue our to Combined investments for broadcast the organic that start and quarter with operational to in of sector. strong dividend highest highest first the generate to for effectiveness, streams, Dave create reflecting value, financial growth in revenue XXXX, power mentioned, marked business. fuel returns first yield and shareholder ever our the discipline amongst the allows us inorganic our making this continue and

a allocation for the items results I'd Before with to special I cover just financial our few capital quarter, consolidated review and like you.

charge the payments. quarter, lump a recorded we of sum $X.X During related pension to million

special primarily $X.XX recognized of which was a All-in, February. acquisition In quarter million of items addition, completed $XX.X million, or expenses associated totaled in for the $X.X KFMB, transaction our we with share.

in financial today performance focused the to order on basis first my now drivers Moving and of results non-GAAP on of mind, a comments operations to insight keep our the into continuing results, from clearly be our all quarter in financial business. will provide consolidated

comparatives text the You our the our in prior press in can reported find period contained both tables release. and all data and

the at high quarter a was call. and second Dave impact revenue again to reported With political mentioned, the Winter revenue and comparisons Super spending. well even this as the the on the for impacted by that growth at subscription the the million. roughly excluding marketing looking reflecting of the for was our guidance XX% revenue impact growth Bowl as million range was to as stations, revenue with and political at revenue results of also reminder, well in subscribers earnings revenue Revenue for X% benefits XXXX, due for the context, with end financial $X projected of with termination provided MVPDs X%, year, excluding total up our agreements NBC June as was as year-over-year. still by quarter events continued when total Gannett the quarter, advertising first our the last of basis, terminated quarter Subscription are high growth up these up last that, of OTT and revenues, growth on XX% services $XX the traditional providers. company were in our unfavorably associated services, as nearly was quarter year-over-year a agreement Olympics over On the advertising our Just from in quarter to digital expectations. years, first end Note up revenue due primarily cyclical negotiated and prior both of

in Dave have months of growth seen mentioned, total As three paid we subscribers. now sequential

of base our renewal only the was end reminder, a As X% up at subscriber MVPD of for XXXX.

XX% prior escalators, years. there up XXXX, renews while the half, renewal percentage lower year annual drive our of in By will in subscriber significant in base approximately not While renewals this growth year-over-year XXXX. MVPD almost subscriber XX%, comparison, or is for are seen of the

raised said now mid-teens. we've release, As Dave full-year in and the our revenue highlighted, we to growth subscription the

advertising positive this services basis, and also marketing marketing Beyond marking revenue reported services was trends, $XX and On excluding higher X%, first the million. X% quarter Super year. by digital than and driven last services up these quarter, revenue Bowl, subscription revenue increased discontinued of a Olympics advertising revenue

Keep Olympics last call, in totaled this the million, a our at million earnings Now, for discussed at Bowl closely, more and not of is comprised events quarter incremental. all mind, first detail on the as $XX looking advertising $XX in we little Super $XX these at Olympic million. advertising revenue

in $XX across some while million the $X the to to Olympics we leverage million NBC stations year the gained estimate this station that as non-NBC $XX Just provide net advertisers that lost was moved approximately our dollars revenue stations market context, incremental viewership. XX%, temporarily company meaning or million Olympic our NBC to generated by the

than deals Beyond this, in XXXX this $X incremental. also in million unwired we had less deals Olympics. we year XXX% had are And the unwired

XX top that dollars brand are in just markets stations dollars NBC unwired come that recall to for You'll the Olympics. the

all excluding largely impact XXXX. By to $XX I these unwired incremental Together, events to revenue for is this, mentioned Super both quarter. $XX equal the the of the incremental, Olympics million for of demand So, net comparison was million $XX nearly million Bowl our earlier. lesser the advertising, revenue produced

Now, revenue guidance, will business year. driven the mind year-over-year, expect Premion digits The looking mid-single first company the to political, from X%. soon the KFMB. contribution comparison lap to total revenue second we quarter and wind-down increase revenue, terminated we quarter only that in of last to digital quarter Keep addition by total revenue impact the in second from to year-over-year subscription, is the full

such in Bowl. were events and by total terminated the higher expenses Super look Now, the year-over-year, of digital services increases turning business. a back as partially XX% higher a fees, Premion company by investments for absence first are at expenses, Expense marketing quarter cost primarily and to higher non-GAAP the driven the for operating basis Olympics on programming offset

last our the based to As shifts on mix year sales of we of revenue discussed expense sale. product-related quarter, cost throughout our

costs the costs half latter of example, to mix of For sale, this this quarter, the editorial shifts were sales with this political due Bowl. higher significantly, Olympics Super margin higher lower and revenue. In year, in

following corporate quarter, former compared During This reflects corporate the the of to first million the $XX XXXX. digital $XX functions expense was businesses. rightsizing segment our of spinoff million in

EBITDA million, margin for our was adjusted a producing business expense, quarter corporate Excluding the of $XXX approximately operations XX%. from

the our revenue May. at full-year lower XX% to we continue range wanted the outlook for EBITDA to projecting with end strong that on growth were factors the provided margin of likely of these we of Premion. last XX%, with All to we are full-year that range I in included Investor also adjusted note XXXX be Day also comfortable

capital mandatory in capital to expect investments expenditures to headquarters to $XX efficiency expenditures quarter, the related fully of prior facility allocation we and for expenditures projections and news repacking, quarter relocation, the capital turning for repacking content, maintenance, including of million reimbursed. expect including million, mandatory which In recurring with and line to same the we our the capital year, roughly first projects of million totaled new Now, Houston. and amount for during in $XX expenditures million nonrecurring upcoming reflecting channel $X be spectrum our full items, $XX the approximately a

$XXX earnings Now, on of I cash allocation, use as we revolver KFMB million through turning call, of to acquisition noted and our the capital on last the funded our hand.

As leverage quarter-end, a was result, debt X.X at year-end. total from increase approximately a of $X.X net slight billion, times, producing

to We expect call, that on noted last the times X cash our of flows. to by strong the end I return given as about XXXX,

in the restart September. $XXX we last Beyond KFMB this, a we since initiated X-year you of acquisition We've know, million on been repurchases. as repurchase program we announced share to plan December, hiatus now but share

the in we by equity With compression undervalued, of the measure. prices any recent sector, are

opportunity. a As TEGNA's investment very represent result, attractive shares a

cash over future way in to commitment any time. both deleveraging our continued this M&A and did fire power our and flows, preclude Given not

turn to for me let remarks. Dave call back final Now, some the

David T. Lougee

Victoria. Thanks,

Operator? can see, it innovation. brands with well progress regulatory from you our I'd for on open As strategic tangible long up questions. of short like We're through in term and uniquely growth and to positioned making And changing landscape. to our are the that, well-positioned both to the benefit we're culture

Operator

first to Partners. go Huber We'll you. with Thank Craig Research Huber

Craig Anthony Huber

Yes. Hi. my questions. taking Thanks for

your core the acquisition, for slightly is to embedded X% quarter, On say? aside the year-over-year, within down X%, second outlook, guidance, it advertising your putting

David T. Lougee

I because than say and little and a we writ advertising haven't per don't se, it's the and quarter don't second marketing Craig, we overall. core past services will we quarter advertising break is large. that don't, bit guide anymore first in remember softer to But and our we

you give would I So, that guide.

Craig Anthony Huber

the do And help tracking also, Olympics, The as please? second retail in out both they Bowl then, in us? best can categories, and quarter, can it you the you also, quarter, and auto just separate how's how first did Super and

David T. Lougee

and to second retail in Super Olympics when flattish tough a positive was when categories, from we auto out quarter. both are break little and was in it, bit softer first a Bowl in but Olympics quarter Super you It's out Bowl. still They and the the little Yeah. do take it

are quarter quite auto entertainment. and the they retail But services, were in categories generally in telecom, a stronger other and when and than are softer Some bit like even first, Olympics media second exclude the Super Bowl. you

Craig Anthony Huber

how to the year-over-year, the retrans more OTT I here, top bit And worry meat at add have, down put investors that? much on cord-cutting say, a the just much say, appreciate that how there that. then and did basis your on of on traditional quarter, aside bones putting first then, year-over-year the acquisition, end of the little on the subs, was a out

David T. Lougee

Well, Craig, arrears quarter yet, first get we of when all, the it through of the because end we're have we in don't subs. our

of U-verse but in when flat now are U-verse, paid as the again, through a have early current February. August. since the basically two last combined, each we And had year. the decline issue, is about we them – year-over-year decreased if then. that did you are they a at way part month last have basis. as have, numbers which we in is we which And you we're trend, a On together, on decline we we're them basis, basically of we we it, months So, put The look the of many were rate with exclude of have we this cycling line year-to-year the two bottom subs when, has the that into through,

Craig Anthony Huber

Thank Okay. you.

Operator

Kyle next with we'll go And Stephens. Evans to

Kyle Evans

morning. good Hey,

Victoria D. Harker

Good morning.

David T. Lougee

Kyle. morning, Good

Kyle Evans

cable do who Who do I taking it terms you little And bundle the dig a the providers? OTT see million on want then, subs. in some most you see X I of on giving have And traditional follow-ups. the the side OTT to satellite deeper up? bit

David T. Lougee

Yeah. I the on of are our MVPDs good is color doing companies. subs. really top say on Kyle, – just in in increasing overall, with comment without There all relationships our will based subs. higher the subs right? and side on with with XX that for we losses give a terrestrial market confidentiality all correlate market size. markets MVPD don't top and even DMAs. in The well virtual but ecosystem sub sort MVPDs and too, XX the agreements on our same, variance the our some some will These providers individual based naming the the really companies, in size on across I and, cases, totally – traditional Most market are percentage of a the markets big top

you If few down a XX, XX XXX we a break plus to of then each XX those XX right? markets, actually stations XX, to top categories, up. down line, it's straight by we've XX XXX and got in our company quite to markets are and So,

top our it. Our for markets through subs actually decline a are are in going in the on us, the right year-to-year tracking is X% negative for XX up what's DMAs. But strength now, markets XX But is below on and offsetting XXX-plus, basis of XX instance increasing. rate

So, to a sort it two is comes of a when it of cities size. market tale

Kyle Evans

Thanks.

it can you of think U.S. it you fours your end if understanding TV are markets will for have the markets, that do what to And on to by the do DOJ two want have do two open You of your don't big markets, already opportunity? you where of households. kind more only and highlighted allow, you mentioned many How you by based market. are you opportunity

David T. Lougee

was What bit half. probably under little before I just said a

Kyle Evans

of well for households U.S. that markets? is And as true number as TV

David T. Lougee

asking Were thought I end sorry. end you market, asking about me market. Kyle? I'm were you about

Kyle Evans

sir. Yes,

David T. Lougee

we'll if do households, I unrelated right? I swap, So, swaps, smaller. Because markets to end go frankly, a – do we that's mean,

Kyle Evans

take you'll it Yeah, down.

David T. Lougee

right. down. it take we'll Yeah, That's

Kyle Evans

stand-out Premion Can markets. there, in the top little the you MLB.com to bit is new The of growth were kind the that one line. entrants? your talk mentioned a about could you the landscape only sell barriers competitive You

DMP a You little bit the launch. about talked

off worry you do about? square do who who there Just against and you

David T. Lougee

which remnant selling providing stand way there out the it advertising. selling our and name programmatic. not data to kind people out they gotten They're we're I'm is there's just but clients. us we've of to the programmatic, What sort is out like are. just on makes of names, front going quality Well, of

in there's they Obviously, target they lot got companies a this peer TV some It's advertising, are getting the that that better business in So, why They've opportunities. than data are sell trying targeting of publishers, able themselves. And of is business. there. of about with but other by our they Obviously, and groups unique can Everywhere. we're our back programming plays. the to out players even dramatically own to programmatic because cable our are being premium their OTT out data sought those proposition they're value don't have are getting

also become where separate targeting management makeup learning it's as So the that advertising. and advertisers going turbocharge business platform that's a to the about And programming brands not about a just to business the of and of we're audience. They're programmers. will data sell service as their well as will that

Kyle Evans

your Great. aren't station do you to ATSC expect ones the and One will when station be in evolve as to that it rollout? Pearl relates different X.X last the the and than When that materially Phoenix consortium? how in the one,

David T. Lougee

What using our on test we're Well, collaborating is on, we're it's test, X.X. on X.X. right? keep ATSC running our will other ATSC station So, sticks keeping to together a Phoenix people's

the be aspects models. And so, different applications the different different platform, different consortium for codes, testing will business of

X.X lights be is or it is is yet first in we it not truly a test. markets to So, determined. broadcasters. It do a not laboratory the ATSC permanently other or up in Phoenix collective that for whether is But

Kyle Evans

to What you first applications expect are see? the

David T. Lougee

may things thought we our even business winning I I've all fully before, Kyle. said I way with it's of with as that be mobile, I targeted time iPhone, i.e., view interesting the platform We And, programs of don't puts which will put happen and the believe this will for by then, as money that entertainment from as advertising, and not and applications said driverless along, and an there yet, the write it been moves rate new model deployed and testing. view the are than mean, have like changing, know. strategy automobile I we're Different example. will developers like tested but come it be of in faster, car video, out the later, the will audio sort really other to it it. some and applications, that sooner like rather an the head

So, I think we don't the know is yet. answer

Kyle Evans

you. Great. Thank

David T. Lougee

Thanks, Kyle.

Operator

And we'll with go to Barton next Crockett FBR. Riley B.

Barton Crockett

Thank Okay. if bit be your see the taking of Great. more you specific on revenues, encouraging could kind subscription for an take on up It's to net little question. wondering retrans. but I you the was a

last quarter, I a this looking asked retrans the Do And Can same you gross? with line to expect pace you think question. better. see said gross little I now, be net? your the net of your bit in

David T. Lougee

Yes. Barton. Absolutely, Absolutely.

Barton Crockett

Okay. All right.

that transitions from in to not virtual assume that can there's as deterioration that correct? growth we MVPDs. material So, Is economics

David T. Lougee

There is zero deterioration.

Barton Crockett

Okay.

David T. Lougee

Zero.

Barton Crockett

Okay. All right. That's great.

shifts predicting the spend Internet. Now, mean, guess, overall that TV out been as on political to there, reports political, some also will I one of be there's share things I is on down

period had, You not think, are did less others that there comparability small had but kind feel I guys, a about issues. have you quarter you years that ago, four of stance us, it's How others? some do very than political although and this

David T. Lougee

No. all. that I at don't believe

sort at years, all, of when second in of First they different quarters meaningful. first are you look and

and fourth If bit in really what with in – third you history, and No. sometimes June. don't comes all they a track that look much the revenue at

that's think absolute. I

somebody House are those the those long think tell very is grind talked over large mail, In amount or go people up to is not dollars, two inside to TV, that so share, that who ecosystem been but ecosystem agency, be very of the And up will much of every detailed the has And is in matter fact fact, a taking Certainly, Digital lot specific you has controlling dollars years. been in the in by markets in pie bigger. when the bias races specific be of by been to significantly. to I a breakouts they'll be picking we've television the about share spent a on think, to control agencies. some going you it. story ecosystem, in we axe for cable going has the shift has especially But used the time. so up. to that dollars direct agencies the And the talk dollars, a seen

Barton Crockett

That's great.

David T. Lougee

And be broadcast up. specifically will

Barton Crockett

great. That's

thing. final one So,

You your million, lift M&A, I Investor May new really ownership $XXX think, had market on I potential to in local from million Day rules. $XXX flagged think, end guys focused EBITDA the

included incremental to have done just of just guys to You $XXX that that acquisition. bought Diego? Diego a or is $XXX Was kind you San that San million million, in what in

David T. Lougee

No, it's said horizontal was be incremental. That the the market end of would value time. – we over M&A

Barton Crockett

up you in environment's shaped that, And the given still confident feel how to-date?

David T. Lougee

in I There's do. little now, Right I the do. a we're bit lot of noise slowed up. obviously been system. a

just But back are the all up. stars that probably starting hair. gun been the has a still it's pushed lining So,

Barton Crockett

you Okay. That's much. very great. Thank

Operator

next Wells Marci And with we'll Fargo. Ryvicker to go

Marci L. Ryvicker

Is Thanks. your comments? I the subscriber due increase just want to the to subscription be in revenue clear. guidance

David T. Lougee

it's a Marci. going we bit Yeah. We to Yeah, XXX%, had X and better thought. than what be forecasted quite

Marci L. Ryvicker

then... And Okay.

David T. Lougee

quarters two look really remember, just to it, we going had it's sizable we ago, on know you we've now, what that didn't right? mix. we about, was some mix so, And numbers got if under the said some And clarity like,

Marci L. Ryvicker

Okay. And then...

David T. Lougee

off mean didn't I to there. Sorry. cut you

Marci L. Ryvicker

much meaning do then, how For monthly booked? talk And the is quarter, have, visibility point? about much you at this the you trends second how can

David T. Lougee

You subscriber talking revenues? about

Marci L. Ryvicker

No.

Advertising. Sorry.

it Just versus softer mentioned because you QX. was

David T. Lougee

got still But go. A a ways we to booked. lot is

we than been has continue mentioned, a bit little although I has first that's it in so will through hope it a nicely June. the as improved So, quarter, weeks, softer trend last two

Marci L. Ryvicker

$XX is your Okay. the CapEx guidance, the Victoria, that items or Is And exclusive million. of then, total just mentioned? you CapEx that for to million $XX one-time inclusive

Victoria D. Harker

of recurring had terms It's Day. Investor what That's with guidance previously line No. in a on in our put out basis. we on

nonrecurring that, that to just all large Houston and CapEx, to obviously, facility, we have we our but expect one-time. a incremental headquarters have portion new which we of is the So, reimbursed, be also so to of repacking, relative

and it's CapEx, roughly the You to the size million $XX that $XX into recurring. as recurring shouldn't bake million same

Marci L. Ryvicker

for just of think Okay. And you isn't I second question QX, off in on understood really it and clear, half side my investment the the the any QX for then, second year. year? the maybe half? Is the expense throughout comment can Should the Street tail spend there last the Premion, hasn't make

David T. Lougee

The of should tail Marci. off, rate investment

side we that, of business, invested slow related As rate of data opportunity, this what sold soon will do to the the absolute of of got expense technology, expense hot and margin but investment. the (XX:XX) platform so on The selling management already zero that people the I'd that in saw The via back-end ad to business. a as we profitable down. cost we've goods business call is the the selling is

Marci L. Ryvicker

you Got much. it. very Thank

David T. Lougee

Marci. Thanks,

Operator

Okay. go next Company. to Benchmark And with Kurnos we'll The Dan

Dan L. Kurnos

Great. Thanks. Good morning.

guess OTT today. I sub jour and topic du is So

maybe your thoughts So, just, let dig little level, me on Dave, to this. high just deeper a bit

I over and years. of renewal think the the next will most for Fox come up deals CBS OTT couple

lot guys Sony the Vue. in who's for the You a been first fire space seem space. a shot noise maybe player had We the the making to of test interesting be pretty other lately, with case

the MVPD And you of vein, to terms in start this ultimately, of you to if up change have where about think trends, is? relationships, while those this, it curious you you of you on of those XX%, kind one-for-one on sustainability sort go? do talked you or a a sense pans of lever of give can sub the you do or mean, will so how in the I guys color to try do some in traditional subs I'm picking up leverage out whatever have negotiations did to against equation So, XX% and try how you think your or sort

David T. Lougee

Yeah.

hard providers question incomes, the let is conversion one-for-one is going us. it's time, me the in who rate Dan, is services. to Actually, it do a be. know markets first. last we there the that take So, for over which higher the of major both to from have some like right people what say absolute now, almost But have

than lot for the small a stations not like something too, YouTube well is in I of better us doing look a I players concern noise some when have some But the these that It's unclear, it's are or market a service, that. the you have to fully rate, as that traditional do So, have tells data you're markets. one deployed. MVPD the as small think markets comps TV large going our

YouTube get NOW out fully to out right TV sort of is the and large whereas them of deployed. smaller satellite, early XXX, has at at for get to Market now topped restarted for we much industry DIRECTV I like the markets, days hope think the

network to nice I negotiations – Abilene. the I Fox, different. to in It's chessboard. and to Angelo I frank. because every have questions, a OTT be really right? the thing think all don't related I'll speak and earlier Fox process your we mean, about San Every the can't is relationship We're

how you've they're and to for is station effect, most television in carte that. broadcast really on streaming have And XX can't having nice days ago, want basically on, of be they're la that integrated cable And it's linear our right, discussion OTT, But no right? I that carte version there or said our service speak in But, consumers or a So, whether to the thing traditional. every have this, the years we the channels a ecosystem. early matter markets, now. a that viewed the voted la got in was right? in Remember bad the the of consumers in would a

on what, So, both Dan. and plays rate, ecosystem place, I that how distribution who the think regardless a of out good in we're the and wholesale negotiates on

Dan L. Kurnos

That's helpful. Thanks. it. Got

David T. Lougee

Yeah, on is network focused our of is discussions the the where with we just with negotiation together traditional it's that share like color the Thanks, about just that. networks it we partners on The enough on the side. collaborative we're But Dan. ongoing share. on size before one are large more piece of argue the dialogue, the pie,

Dan L. Kurnos

you. Got Yes.

shifting discount market quickly of if mean, focus M&A Is end scale of do will me there to stuff? will on win the return gave but way of is. sort So, the your color politicians just would scale something that you that thoughts you probably M&A, I forgetting sort with to If kind capital cap on what change Would sort the the capital that past then, addressed the to DC, market relative there? that enough the do fact more cap, end allocation great goings shareholders? unilaterally it, you about you've over opportunity the (XX:XX) the cannot of which think and day just you to – the just Can of on in the also, have and in your obviously, market space. still and thoughts kind to to give near-term up you the FCC

David T. Lougee

Yeah.

case, of like we're the DOJ we earlier it market end to what to future room with or what, year point, the for an market But deals we've The the XX% no terms even DOJ to do a I broadcast got be of don't next sort market we'll number definition being number. right? So, end will change, the know comfortable ample share, able Obviously, looks do. on does there's the of court antiquated need FCC that FCC whether mean, but side. on two. – matter my again, to threshold the very So, that can do in in stuff, under

I vertical, under we'll room still we a to of like lot X% some it cap relates number said, smaller think the get do cap, we When under is. whatever swaps, I that's that the as there. got

world consolidation – we looking till industry a companies in So, in will and because be the there today. the scale think think to there industry. I will yes, that industry so, a they're coming seller think to matters I And start of opportunistic – I be that seller. this nobody And be is will the be a appropriately will

Dan L. Kurnos

DMP, targeting that I from just geolocation targeting type ROI, for still more a or really for the ad given of not the get large, on if you mean, tool? are one perspective in as could just it but of thinking more is a is analytics stuff, And tech or and backdrop overly tool sneak which, to I end more that of market opportunity sort pretty this technical of on Great. Internet-y a OTT

David T. Lougee

it of a the back-end a but to will technology play than is brands sell, this their that a its not by a way separate business. that a in same – that It's It's will will be Premion's core be higher that. data the do we business. kind to service and services other business, drive way, ties them put of yet, a it to and engine the service going that will data on higher margin it programming very being that data, consumer that advertisers service, but than programming And sophisticated number drives margin Premion's their and for core Premion all not. I'm shows

Dan L. Kurnos

competing certainly Analytics of No. lot wondering that seen Google that a wonder that. if sort With expect because TV, space. I there. YouTube know yet, doesn't the just I of I sound Is but it would services like we've a was out other I don't comparable fair? it there's in

David T. Lougee

No.

I is of to right? definitely there lot think long thing, exploding, tail that's And about is one, space, players there's fair. entry this I the a that's which think earlier question, fair So, reminder, just No, out the to in a who's say. a good a is the and there. barriers space and

lot a the it's growing by So, of day. and there's inventory,

Dan L. Kurnos

the for Got it. color. Great. all Thanks All right.

David T. Lougee

Dan. Thanks,

Operator

Research. Arthur next And we'll to Doug with Huber go

Douglas Middleton Arthur

some the any of there terms Super double-digit Thanks. incremental growth questions, the way quarter. Yeah. quarter, year caused so fair Bowl, what Is increase goes in in to a on, cost was that terms assessment? Victoria, is of as it Two I lower the then, in in by first sounds unpack benefit cost seasonality Olympics? And mean, like that you second the expect

Victoria D. Harker

quarter, To it as to as and related cost, impact $X point, yes, from expense and both to the the cost both for well higher have year. higher Premion, earlier general of in as reverse which in It's result the year on, an about E the of an top of latter lower political because that, the your we nonrecurring perspective. see. (XX:XX) sales Olympics And a to we goes was well Super To and in for on second order, year editorial goes million margin the quarter. as answer coming as as on, of half that expense improvement as R won't the their Bowl the a

at with comfortable from still we're very given end, margin, a perspective the range total growth lower of So, Premion. the

Douglas Middleton Arthur

sorry. I'm okay. Oh,

$X million I'm million. The what? said sorry. $X You was

Victoria D. Harker

incremental and the The two cost of sales during with to from of related Bowl expense both first those higher perspective. a events quarter associated Super Olympics

David T. Lougee

TV market, crews that, to costs related was to a higher as home had plus send of And We station we sales, Doug, cost Super the we editorial had Olympics. we costs. have Minneapolis the our so, coverage Bowl too. on

Douglas Middleton Arthur

it. Got

revenues that Okay. to development, doubling just for is mean, Premion is then, built-in And on that? I this I Dave, the mean, year? in obviously incremental this MLB how

David T. Lougee

It's Doug. question, a good

now. we'd publishers. to deal. sell number tell just a always it. expectations the them We put Built we is is to into haven't didn't our on what get who. We significant Sell, knew we're sell, be I adding focusing right know

is side retrospect, can't they've that of and house to political be of political be the obvious, data, the integrate really of attractive voter what to proving us attractive out own that speak to capability to right, out to got some data, turning their agencies targeting ability the on point What I that's Premion to to now, So, digital really, shop. is in the very I is the is will whether incremental. right, for because that

So, that, pretty number about can't enthusiastic might but to we a be. that put are what

Douglas Middleton Arthur

Terrific. Thank you.

Operator

Barry with & And we'll Company. Lucas Gabelli go to next

Barry L. Lucas

morning. you good Thank and

Just million. reference, a in couple, Dave, was political $XXX about for XXXX

David T. Lougee

Yeah.

Barry L. Lucas

the contributed? Okay. And of at least talk or could what identify Diego weeks you San six

Victoria D. Harker

We don't We've this call stations. talked call individual on out about last the time.

it For less double the digits. than quarter, was

that half of ballpark we're base about So, a our it's it for it's out. But this weeks. point, embedded calling kind and five not about in business at and

Barry L. Lucas

really test, And expect of Thanks. milestone the what would sort of do for X.X? Phoenix you you and the Victoria. think what be would out Okay, ATSC next

David T. Lougee

be top On test. right milestones now. at And the this technology technology both, simulcast ability applications, is written to test. that, the business time. to ATSC we applications right in the homes. Well, to at different simulcast I to one, the number sticks now, they going think That's first right, work? a really other It's that's to what and right, provide of of the be they're same able prove are point, how, it's able be to But not, model test. applications do then, service X.X a technology utilize this need to existing for to and all, a in to It's X.X as

milestones So, the work. be first how are these well applications going to do

Barry L. Lucas

right any talking about me, swaps, Last given and really for haven't why them, of the kind of Dave, seen the that. and been yet? delay? trades one Thanks Okay. Why a to number the coming parties to parties back M&A, economic we have benefits for the obvious

David T. Lougee

that wisdom have I companies or think saw think it itself been And by than others. up. later spooked it some the noise that's of the the clearing regulatory became companies also to now wisdom some in I attracted

Barry L. Lucas

Okay. lot for Thanks that, Dave. a

David T. Lougee

Thanks, Barry.

Operator

Jim to Goss with Barrington next go we'll And Research.

James Charles Goss

I'm Thanks. you how Good business. morning. With Premion, process the wondering view building of that

any traditional there that Is is that data if or a granular how MLB you'd Selects that's collected, part privacy like of find For example, aspects? non-individual, more you broadcast-type it the some Premion data? using of those is demographic will data other look unique of at partnership, maybe issues? be it? are that Are that that? things a can asset embedded And Audience the DMP there you is be How and sort the

David T. Lougee

for Jim. Thanks No. the question, Yeah. Yeah.

audience or incredibly First of don't not of right. what any a so that earlier, of collect demographic. we we all want. what intentions, say type the, segments no advertiser brand right? segments, consumer literally there's audience it said PII It's Facebook-related information, X,XXX targeted of be get issues, cross-referenced And It's in when I there's privacy – them number an like the to can anonymized. they But, all, literally like no, and terms of that for is traditional

advertising UI/UX of secret just the the performance really of the advertising, the is them the in in and brands even the it's much traditional which banner for that the desktop So, not Premion. old is for for in their see a get, And to space. advertiser of world existed done easily they it's with than more previous And world. something transparency digital sauce

driving might DMP separate technology is advertisers even would and same to that that of a can type this but other audience are we that today. provide not But the want now, the what's So, business, there will Premion, use segmentation become brands using DMP. be

James Charles Goss

others MLB, trying that of of you're are to Okay. regarding sign? the there And unique qualities like thinking

David T. Lougee

the are I I'll There a other think big And, we about of inbound look, they're cases, is us the houses there now out on targeting. side to. things many business, their are that, that too. are wanting one-year – although in there out there's talking because digital Premion sell calls in word people other offer yeah. have to to players other the But that deal, what it's can

James Charles Goss

the something a those Hearst to broadcast existing really nature, partner or in I broadcasters, on there's a size market not markets, know only or is like-minded finding interest side, out where if finding Okay. you another appetite might your type getting or your And double-down of in one not pile they an in with but that M&A for for properties swaps, market notion similar the of of wondering opportunity, your those? on of but get one any company, market, of a of I'm

David T. Lougee

start the two one in get end stations we to that station without Nashville rumors, right. messed my than your would be yes, idea, stations Well, – And it say, not Vegas, but markets is station so, smart Nashville, in two and don't a rather company idea for the markets. market, you I would station, names, the owned math, right, us any be we're station if – you mentioning Two to just in, one if I market company I in in so just in vice-versa. pick up let's idea one but just let's that and you The owned a take former. Las with and up

James Charles Goss

Yeah.

David T. Lougee

And in the under get we that's cap. how

and go So, we appetite that is we two market, up a actually happening. there, And right, one in market. are those but stations with down end out conversations

James Charles Goss

Okay.

it I'll leave think with I that. Thank go much. you

Victoria D. Harker

Jim. you, Thank

Jeffrey Heinz

Jim. you, Thank

David T. Lougee

Okay.

XXX... have. with call as at the time. we all always, everyone's Heinz Jeff for that's think And, can you questions I Thanks questions

Jeffrey Heinz

XXX-XXXX.

David T. Lougee

XXX-XXX...

Victoria D. Harker

XXXX.

David T. Lougee

XXXX.

Victoria D. Harker

XX.

David T. Lougee

time. Thank say We'll a XX. you, louder Thanks. little everyone. next it

Operator

today's participation. you And thank this your We does for conclude call.

You disconnect. now may

TEGNA (TGNA) 8 May 182018 Q1 Earnings call transcript