TGNA - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the TEGNA Fourth Quarter 2018 Earnings Conference Call. This call is being recorded.

Our speakers for today will be Dave Lougee, President and Chief Executive Officer; and Victoria Harker, Chief Financial Officer. At this time, I would like to turn the call over to Jeff Heinz, Vice President, Investor Relations. Please go ahead.

Jeffrey Heinz

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

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

to Before me We've conference certain actual Relations includes the them non-GAAP Investor webcast and our press are call results Dave. to financial may started, measures differ. reconciliations differ forward-looking call also like measures. that in and remind to our comparable release provided portion This directly of the I'd over get in and GAAP the turn we you this Factors measures may SEC that to outlined presentation let statements most cause filings. our the those website. on of that, With includes

David Lougee

everyone. TEGNA positive the a and flow. Jeff, was great XXXX you, record achieving note on for year and year quarter fourth good free Thank revenues cash ended we a morning, and very

increase subscription grew and up quarter, by mid-single-digits revenue X% million revenue quarter with expectation in reported line XX% company our revenue to still political in $XX of excluding growth. year-over-year When political the fourth advertising, increase million. For was $XXX million total driven $XXX revenue. was XX% or Fourth revenue non-GAAP year-over-year, in

were subscription of revenues revenue revenue. and half stations increase in to full drivers was is portfolio and our continue and percentage approximately trends. evolving of fourth Our experienced we subscriber year record streams company of XX% Comprising towards political the from political revenue company quarters both and of industry-leading key the subscription XXXX, in the benefit total total strength our higher

existing ABC been and XXXX affiliation 'XX between key late Our as continued stock our cash be visibility respectively this The the will the and as XXXX of continued through have the XX% subscribers revenue combination and stable early end to the of continue very of of repriced excellent year, increases a well streams. a and and in and of [ph] into our us agreements the of growth that long-term shareholder story TEGNA's driver quarter value. NBC approximately positive with trends fourth agreements flow give

us As unique I'm MVPDs that and revenue revenues macroeconomic and to TEGNA. be pleased key political to again, consecutive to year-over-year external I'd eight margin that significantly, combination and to increased straw for predictable able MVPDs cash TEGNA's spending traditional free a any high pressures these report trend the natural giving virtual and streams, subscription largely barriers months, immune highlight subscribers, are of again flow.

year. $XXX we the of $XXX Going than and full records deeper quarter mid-term all-time prior on achieved XX% million for in political, respectively the revenue for the and million segment higher XX% election fourth political XXXX.

future and our in their margin high XXXX. higher As innovative very It quarter, political I of spending organic footprint normal high for of passion to next year candidates will zero trends strength simply that as future beyond. 'XX leveraging we alluded are stations political are in political XXXX ground with we in to two stations, strong stations are put starts growth approved. our gives continue audiences for in an news for in And there our in fact us a they that for from XXXX. speaking stations our growth and the to country, vote confidence numbers. key reach all-time These advertisers most combined dynamics our in last reach strong our unprecedented local confidence in of honored Presidential a normal constituents; local to the the and and new are a turn, voter raising high, and new is spending there levels is Advertising engagement approved, targeted also our fund 'XX strong spending. and as expected Presidential platform And and be with with the station preferred have

customer solution. and growing products our the expand audience further we expanding suite client and solutions, new bringing our the and reach. expansion as client continue dollars. through base Our local of an new consumer marketing our And Premion to of TEGNA on on we constant innovation side, audiences into is with focus are markets advertising efforts and OTT unprecedented Together, both our us

we Moving in disciplined our to value a process create now philosophy; to our for follow capital evaluating shareholders. allocation opportunities

to opportunities the all and one billion, of and cover of U.S. XX% free of In flexibility and if the On strategy, to and Texas. reduce proactive under with to of trajectories, analysis growth the as in opportunities. with capitalize TV a strongest internal of of M&A KWS and in our our completion now state Texas. strongest cover of quarter, WTOL the in Midland-Odessa, and Ohio an flows Texas country, on the strategic investment not households we our $X also a debt We record we in deployed acquisitions future increased part front, cash pursuit third a external now are we the Toledo,

our Going forward, continue creation focus execution to shareholders. and drive to growth innovation and we'll on for value

the of with our closing, months, important some I'd with XXXX both the further updates strength and late agreement an was our -- the last share XXXX and January four of growth strong turn Victoria, for very carriage through nearly in year. to business with we a December, call important Dish and of Before Tegna. Fios; In year few portfolio. and these agreements I the exemplary TV, Verizon couple of like we've in multi-year this agreement X-year subscription I solidify agreement business. reached beginning included In top over as underscore to our ABC to renewed And earlier, from continued affiliation referenced

reinforce create the throughout mix Our revenues evolving and value to subscription have cycles cash strong of company and high unique flows and margin excellence. political operational and market free positioned our

thereafter. sub expect for margin account high higher and fully X-year a and our revenue As XXXX will revenues in half political we percentage beginning approximately our total of a reminder, that

organic strategic and motion best-in-class strategy And pass growth we continue to a long-term over I'll support to maintain in have balance to with continue M&A that, will disciplined initiatives call drive the We our to to value. sheet execute strong and Victoria.

Victoria Harker

Thanks, Dave and morning, good everyone. for joining Thanks us.

our mentioned, reinforce Dave our record quarter confidence excellence, as results well As fourth in strategy. as our operational

capital related and million of just $X.X an about for items to related financial included and included Before million few million acquisition, I expense for review quarter, fees $X.X I'd to $X.X repacking operating [ph] special which television our quarter cover like consolidated and non-operating reimbursement allocation Toledo, items. a special primarily The equity million to sectional the station which results and of of transaction the by FDC offset was impairment This expenses. our Ohio investment. $X Texas items the charge Midland-Odessa, reduced

Premion results, discuss I'd XXXX. address the refunds to like that I in our announced Before financial December we

internal fourth year. adjustments the decided to audio Our system [ph]. The million refund and Premion selects of our financial delivered In certain segment XXXX quarter it $XX to proactively team impact customers, not issue turn, identified was correctly affected issue we targeting only the issues the the determines immediately does in and that to for totaling impact reported reflected This is full our impacts the XXXX guidance reflect adjustment given to rates amount. also the but in first cash and only of by cash free quarter roughly obviously total quarter.The quarters. same for during revenue million our reduction reported a flow customers and would November in affect EBITDA the refund includes previously will not results issued growth $XX the for corrected the

which which clear results. as financial financial of Keep on and most exclude onto basis drivers into my our focused broken we've quarter political out reminder, performance on in non-GAAP Now, operating continuing fourth operations Tegna's mind, results. today consolidated insight revenues services Also separately. are marketing our and comments the advertising, that a from a provides advertising

find reported comparatives release. and data in You'll of our our press prior all period

quarter. results. for midpoint reported Now revenues our was the the year-over-year fourth range which provided last up basis XX% XX% for at company to is on quarter XX% the guidance of Total a

reported this driven despite impacted of important revenue to displacement.Also, It's XX% growth revenue the is the political company's in from by and been million that As periods. which $XX respectively. adjustment, rate negatively per was our release, guidance. without up by grew year-over-year revenues seen you've that the Total political ahead a keep including $XXX political was million prior as and total million basis being $XXX on note that X% subscription XX% mind, adjustment benefit would from of revenue have growth Premion revenue

seen Dave and subscriber us stability the the rates. year-over-year growth over confidence of subscriber our the eight As net trends ability in give mentioned, months great we've past

visibility. forecasting margin high cash before, us we've life such strong allow produce discussed and flows annuity As which these sticky

guidance expect healthy increase growth are subscription We providing of another percentage year. of XXXX the in mid-teens year for the in a revenue and revenue

Turning now to political advertising.

was cycle. million fully Premion XXXX record $XXX quarter prior mid-term full up election fourth and of revenue XX%. also revenue XXXX political than of any our the million thus in in Dave XX% higher As presidential net noted, $XXX a of level the substantially than $X type including higher highest and year far election million Political history the adjustments, year was the election,

crowd for even low by was out. the quarter services leading year impacted expected, rates When and marketing advertising and to revenue last Notably, quarter advertising digits. from the to up not TV improvement was to impact out which this marketing experienced marketing due demand slightly the advertising. stronger crowd advertising adjusted quarters. non-political up was level the services growth of fourth Advertising in services As political revenue mid-single December, lower to up for entirely strong election prior X% compared and

worth and When advertising outer marketing quarter adjusting up low services. services period in the both fourth is Additionally, for marketing single-digits. political adjustments, Premion revenue of the three displacement and points was and adjustment the advertising Premion

medical category when restaurants positive. Now for were revenue in prior color performance all quarter flat out. proud home services, provide the which category automotive, lower quarters. and political entertainment Several improvement is trends. further showed or packaged and within improvement specific quarter up from on but media, to Telecom Other goods were the Retail, adjusting some categories were

premiere see strong to for continue demand offering that capabilities. access we remains reporting and Premion a to solution unique for and targeting evidence this looking OTT gain inventory Lastly, advertisers

cost of given expenses non-GAAP expected political sort to to sales. see of expenses, advertising, my now Moving fourth higher quarter record operating we our

the driven this, higher was operating primarily XX% Beyond by our quarter GAAP fees. on higher a programming expenses basis,

same-store to which increased costs, basis, increased on increase X% the XX% you a tied up similar X%. year only operating to basis increased revenues a growth On about exclude year-over-year, subscription less than compensation these a fees items. reminder, reverse and content As a networks in transformation of and revenues. cost include Premion sales paid On programming and basis, higher excluding alongside investments a same-store to were when cost expenses full aforementioned equivalent

fourth the line with million expenses were year-over-year, was from healthy fully $XX a totaling expense down under During a excluding $XX million million.Adjusted XX% million of ahead in quarter expenses year, for guidance up quarter, XX% last excluding of a a non-GAAP EBITDA consensus. $XX With basis corporate on margin. year. full million depreciation corporate was corporate and $XX million, record Adjusted well XX% and $XXX EBITDA was the very $XXX producing down

strength of approximately down new $X.X invest products initiatives leverage $XXX of we ending continue with we fourth debt these a our revenues As X.X A maintain driven new subscription revenues. debt cash us by to commitment and margin of record quarter cash and continuing generated strong million In billion flows to quarter. acquisitions. allow to reduced a pay sheet, flow the balance description well for The will as in cash the significant as funding record flow, high debt was a free times. political to while quarter free result,

in for Now metrics. help fullyear key XXXX guidance turning forecast future ahead to growth quarter first and and you providing we're quarter guidance; year several effort financial to

two won't have this reaches. households portfolio our of last Olympics CBS BC As thirds versus Bowl did and on the on last portfolio which across revenue CBS the year NBC we we stations as year, we of in index in. of a Also, political reminder, Super benefit year, are reaches stations this that aired NBC both quarter advertising over

result, the increase total single-digits low quarter excluding we a and events Super growth As like expect reported Bowl company political their first comparative revenue. revenue impacts Olympics to cyclical of

high expense we increase We From or expect mid-single-digits mid range. first be programming to expect to revenue slightly excluding expense. the up up growth flats an to perspective, quarter in single-digits

are However, projected acquisitions, excluding mid-single-digit Premion and expenses investments percent's. operating down other all be to

So metrics the XXXX. here's full in year some for key organic guidance

expenses the We full back renewals timing half the mid-teens expect to approximately are in subscription trends to up Corporate see million. sub based year. of year's expected and revenue of occur on $XX which MVPD total the

to be range depreciation million million for roughly expectation the amortization million. Our is and $XX $XX a to $XX in of

or about range XX% to million cash headquarters including expense $XX new anticipate XX% million, million capital XX%. $XX Houston, $XX to in We channel $XX XXX project XXXX tax $XX projects a on about be for which flow rate of of to and recurring repacking revenue our facility to relocation of million the be about XX% to We and $XX expenses and CapEx million We expect two-year million and to XXXX interest of million projected mandatory non-recurring free is and basis revenue in million. to to in to XX%. $XXX between a in XX% XXXX XX% of includes effective

four times. Lastly, to the we year expect approximate leverage of end with

rates with medium not in current by we M&A nowadayscomments to enhance our that capital framework strong growth our for the and delevering dividends, follow opportunities to to over XX% environment, sheet, organic options to continues that disciplined strategic on decisions highest a capital attractive rate maximizing and and TEGNA returns. a As shareholders balances rising the driven a return of a our Capital the debt environment. interest capital therefore, accretive long-term to at Building repurchases. is risk our fixed focus to growth allocations, shareholder desire acquisitions at our through regarding are actual balance offer and share reminder, allocation of value consistently allocate commitment profile

assets actively have that synergies As drive and sheet strength and demonstrated right for us we'll from for in processes can participate assets to said, them. financial constraints. current continue We've within fit M&A regulatory industry we Dave the to balance fund the

our In disciplined our to with diversifying on as remain long-term XXXX our always strategy. being organically. streams as evaluation results current decreased making well top summary, demonstrate cash can and objective achieve our we we'll confidence our for value and reaffirm our primary revenue strong outlook what as our of incremental to in flow we're in However, progress shareholder

less As a shareholder profitable result, ability growth create only to cyclical of serves continued the businesses our enhance to value.

opportunities to is to potential our Operator? about the continue of it growth and stability up the ahead. are appreciated to excited like that, believe and under We questions. open With business I'd

Operator

[Operator our question Instructions]We Please Marci of go ahead. from will Ryvicker take first Wolfe Research.

Marci Ryvicker

two have topics. actually I Thanks.

I understand And for I to And the if is I charge quarter you happened. first to impact for one your fourth million previous beyond? only then know impact was understand on $XX took just get does first million the not for related is and this financial the or the So, where you Victoria, the Premion so quarters, any there want what for $XX Premion a or on about exactly I think of million fourth the quarter. did $X change quarter outlook what But year. XXXX one. said

David Lougee

But advertisers, to give reported the to and campaigns our the decision, than delivered thing XXXX ourselves first been not, put, simply fully delivered launched that be is quarter one we to of did full what even impressions and of total impressions delivered is and the about year, products at is do. was was Victoria me what we right deliver to immediately then talk discovered internally I'll the there But or made to has all we last what take that promised try call go issue. that it sort sold. impressions and will refunds fixed the and let chose do first not though and the So, third rather were back of can that's that question we the were simply issue

bullish Actually, we're more the So than it on now ever. about future now the of business. talk

with bigger right. the obvious OTT consumer changed reasons, For opportunity than it's is ever been, platforms,

provide at a And seeing. it to don't of going a the so since item. we recalibrating broke we line this the guidance But and to market it separate obviously is excited not we're what We to out end we're sense TEGNA. new the like, it to we're the are did size growth really, performing as very the going really We year year hiccup have well. But at what about very, report little year, of look give a time. so the was business was last

going with see in we we're overall. growth think year double-digit year exit a expect mid-teens strong very to on and I the the business this to margin

Victoria Harker

And Marci, prior about for about $XX just you to impact impact fourth. to exactly fourth it the fourth quarter, and for periods the is effect for $X follow-up heard of on your taken the was right point, the and P&L relative in all million the quarter P&L

actual theories the push and wish advertisers XX% it's terms P&L being million would double-digits, didn't result roughly to XX% the XX%. that given you had word, became impact. to first impacting first So remind sort through just of of flow it would in to I been prior $XX growth to million. My what further it rate $XX to there's have we of just refunds of and back in the part no the point

Some of modeling as just for it's that occur would [indiscernible], quarter. in cash, some that your a but of reminder the cash first purposes basis us

Marci Ryvicker

And how being but then about environment tribune unrelated, by for and the given the and maybe is now pipeline the specifically for do M&A Cox you for question TEGNA my Apollo, acquired the think space? Nexstar entire second

David Lougee

chance another but I specifically value but I reinforces of Marcy. and XX I a the will let's number of positive be of much now I private ballpark raised pipeline in lot it's FCC of sector. to understanding this time, the pretty up future equity interim not over which pipeline the value ask, that combinations. better year whatever Nexstar between for in business collaborations new let's the think divestitures, by model, is is the speak way high is broadcast didn't we're will opportunities is, to XXs, new not and say, either that and the concerned open you going there I Well, the the about sort than say think space cap think won't and right the it's

is So, cap change, in not things of that far probably the scheme very away.

not So, overall, long-term. we're concerned in the

Operator

Kyle ahead. question Please with next will go come our Stephens. And from Evans

Kyle Evans

Thanks my question. for taking

for out understand Victoria. numbers? help lot you Could how a were those calculating exactly crowd the numbers gave adjusted us you of You quarter,

David Lougee

one, morning. I'll take Good Kyle. that

So, bottom line [indiscernible].

if points than more an services. it's So, little rough to a marketing be and advertising against bit estimate. seven it Kyle, but it's about a obviously, roughly art science, a put of we

So the of like how without sort some sequential did it? question is quarter was more next where actually see we So, the improvement. we

down think which we political mid-single-digits, little up spoke little categories in much when before. more a it but for wasn't it hadn't bit the December that where we we sort lot impacts. to at continued fourth I sequentially we and lot other to quarter. piece, a was and had those improve the a and improved in December. bit year. the in wasn't when exiting the look And we saw none was adjustments of just strength It the low for of up December Auto, a quarter of up do of

can overall, crowd based it out on trend. what So exclude positive a when we we for tell was

Victoria Harker

X% terms had the estimated call, basically and a previous Kyle, And, of we our in as reminder that's that what just earnings out in we crowd to saw. we X% had

been. that estimated. had crowd what impacts of in reconciling would basically out we're have that net pockets we just of That's for So previously these you the

services trend about our was Premion low in adjustment that. net the of total, up points mid-single-digits, worth of marketing to in So, three it period

Kyle Evans

the thought said could that just you rates. you get Dave, cap we

kind all what we year maybe thought and think about you were last has collectively weigh have might that or to thinking wrong. we probably we changed what and get of have Can it committee do the would different? you think I talk

David Lougee

[Technical Difficulty]

Kyle Evans

sorry, think I'm I'm difficulties some my side my on I with I'll back queue. having get technical in phone here.

David Lougee

[Technical Difficulty]

Operator

Kyle, if you would question. like to your redo

Kyle Evans

question, your my heard didn't hear you think I Dave, response. just I

David Lougee

which Well, I… one?

Victoria Harker

question. hear we one; second The second didn't the

David Lougee

heard think second we don't your question. I

Kyle Evans

and think cap we didn't the expected to last why you get was we're we kind year do [ph] are this do commission it all Pie question year, and wrong. my it, So all raise the going of

trying to is of little the probability of what thoughts your you raise kind get a cap Just bit more. a on

David Lougee

one want noise, and last year in obviously the is transaction, think that system of press a the lot pipeline don't that it the a year both, want in I of technology Yes, of and and they I there going of this commission to by gotten XXXX; I the [ph] they've it's that it political to noise And potentially over about that. the particular your was do at through slowed act and from into problems I need view down so they poised got think to anyway, VOJ up think I that to separate but think apologize this get and end and from in separate waiting the at they of even I output -- FCC, cycle the now the our probability at commission well be the coming important a kind for co-generative think year would XX% to lot way. view. the

Kyle. Sorry,

Kyle Evans

marketing to I us in hear I you know of digital We of your used services? didn't G/O, is have them. name change. force glad cause quite a update those, kind guys saw consolidated an you in bit could kind a about on reduction give I XQ; there the Hatch and a I'm

David Lougee

just Yes. higher The that the were was created margin. of force reallocation a in to products reduction only in resources the towards

downsized and G/O one strategy small of called but we just solutions coordinated for coordinated and be script Tegna we Hatch good our used from products group in into and both marketing couple Digital, what referenced So [Technical the that yield Difficulty]. go-to-market and weren't a which called clients, for us, producing I to fulfillment,

Operator

please standby, go Please still some technical some we're Please ahead. And difficulties. experiencing standby, we're experiencing technical difficulties.

David Lougee

Dave problem operator, the technology is. whatever -- for apologize We this the Hi Lougee. is

part corporate of working moved perfectly this new call. referenced our in script, our everything headquarters Victoria we has downsizing, corporate As until to been a as

answer or let's hear recontinue.Kyle, that, not? with So to you -- my did able were you

Kyle Evans

not. I was

David Lougee

right Well I hear apologize all now can but me you

Kyle Evans

Sir. Yes,

David Lougee

version put it. of simply a I'll Yes, do shortened

the last created XX/XX values sort it that much we transaction presumably well through, election want FCC they noise competence as something this the year year Cap have then of that year. the they the do press than the ahead OJ[ph] in that infamous will my work and didn't to a little better the with of and system of lot do a but think of go at bit the cycle quite of I this paralysis next know year You and

Victoria Harker

Kyle, force I'll that just close question the of the so force quarter. reductions in the It the on also related office. doing in your just loop that Geo have reductions we ongoing SPAC[ph] was on digital, that. wasn't third into also streamlining were we're Validation to they and

Kyle Evans

Okay, thank you.

Operator

from of Our Royal from Bank next question Steven [ph] Canada.

Unidentified Analyst

Hey, can hear me you okay?

David Lougee

Yes, we we can can.

Unidentified Analyst

could OEM looks out? Two in a us could of be I OEM. first; a there your out called wondering let I'm category of outlook your bit guessing if what auto particular, weakness political there's for I then free maybe was seeing was that driving cash if in one you a me, the know of touch .it flow maybe that's you worth as just because anything, the strong auto that maybe at and one calling revenue your some percentage was level wondering pretty little XXXX of just if assumption to as some you. peers Thank you're on and

David Lougee

the the not one without we was year right I other as all significant going of increases you've said be before. seen guiding at up because very level been but be margin political called Now side high And some around for out we're one would let heard which us is first probably a as to question me political that on to take year was is revenue scripts OEM the to see strong category tierX business as political your well. would some yeah believe in in going as subscription so a good the the number being actually my around well, we're but is affecting that the to our you which it's Dodge itself. players Jeep or be in positive at That's second Chrysler

Operator

Our from Kurnos next Benchmark The question with Daniel Company.

Daniel Kurnos

seeing tech the what there's maybe of timely on I you're you're to did not here of experienced? kind question assuming guess premium you refund it confidence had us from know sort due the of the Dave, premium any whatever at even lack expectations year. for this -- can or about that you're and issue you sort place sort no for market giving you of I'm just directionally seeing no not guidance to help you there's the a not backlash growth in issue think of though least

David Lougee

been larger advertisers over publishers do of of clients frankly space environments, our and actually trust. in appreciate we-we the our demand guidance of know but the and place come way is the like confident to matter the of well, premium select said even of as and XXX% it certainly already the third-party handled actually reasons. very to of question outsourced year from back a always so of because pre-qualify but were very a actually our -- the fact obvious Yes, we of we're We're orders a I've not them positive product other, this way kind hallmarks are and to want kept stronger earned we is, our get earlier they'll be the a growth and the year the the I one competitors that wanted clients very recalibrate. programmatic I actually a a the determine-- sort advertising just appreciative clients because for in. Marci's than we and that inventory advertising many again with I'd it's full giving is direct very so those much point into to yes who build had orders. of booked digital other we overall we for for of environments confident why so into at like I said relative ever have be the consumer question as market you probably that's trust strong and services credibility double-digit I'm turned they at business wasn't our advertising it's in group

Victoria Harker

agencies Just which Marci number in cash to it's relative continued through we cash that to more make of -- of through did will good number to much for quarter. are the the them and credit of confidence and I little and color most in the point sort preparation device product. give their answered or of point get be so just case refund a instead flowing Dave's of a first requests

the standpoint from the a of than total refund cash lower then be so impact. And number PNO[ph] -- will

Daniel Kurnos

varying thanks.And outpacing the heard assuming know from providers helpful, trends on industry that's degrees it, that's generally satellite large have you because linear are been problems footprint from the then, your of a through Got for mostly guys some but sub mean, of your I obviously but you a know some speaking flow been you perspective. Dave, there's some healthy. like market peers we've and of I'm

You guys the know you know in side clearly healthy this of you pretty re-trends know balance you in gives stay of that. is you -- you that visibility into what you think reasonable outperformed year? I of know sort some the I sort the that know trends confidence -- you guidance embedded which to your through

David Lougee

Yes.

saying in our because profile ever the it's a large is we'll industry right the stability we're quite year for subs assume more and we're is saying a we're of think between story cater growing not different that your going have of... we're see different not industry markets is -- clear going overall clearly real large. -- whether of growth the that markets that market lot really be what at, we'll us account have is a So And total our we're positive but to much large over I aren't a compared it because continue be sub to to saying saying sure overall a we're to that but which in than people than smallest where to our it's for our a smallest not trajectory just markets lot again GAAP

Daniel Kurnos

they after that benefits since mode more market falls acquisition And too guess. of are though market. smaller could you're then it's eventually go that do of that know suspect I to one Gray Gray's [indiscernible] SCC Sioux theoretically in because a and that I revenue curiosity big just clearly out to in guys maybe acquisition today you for precedent percentage even of force clearly set there if you just much will making economic you on a rule could the on

David Lougee

of Yes, specific matter view company. involving other opinion on a I no point have or

Daniel Kurnos

but actually general, forcing you be question. of Yes, general really it's they'll think to more in start the allowing markets,

David Lougee

can't marketplace may be the on to that of of a by fronts, back public X, video the definition on hold think I players considering that should been that Big market. more Fours point a when Division's the recall, May if broadcasters hearing, the -- suggesting have as two of little is head have instance, that to Antitrust a and the was DOJ to that outdated considered I definition some for I held the current or going think big speak Antitrust as Division in of Internet market activities, hear that temporarily but that I it heartening a result DOJ bit of more Yes. is

think time. a pertains sign, two that to good I on Fours Big So over that's the potentially be [indiscernible] releasing

Operator

our will question move go we Joyce David next from with ahead. ISI. on to Please And Evercore

David Joyce

you shift who had to reach? been ad please impact advertising broadly, could you more digital the you commentary on are a of will initiative. like other for in are think where If When do the the you start that TV back having allocating sales? your advertisers to tip addressable on come broad aspects of provide Thanks. some to just an seeing wanting And then

David Lougee

To think back agencies The the little going for bit, it, can, The is but the the been a we -- important. an as all we taking no so so don't standards, know why open good been but in the platform get solved question, that creating -- don't the yet initiative think because we're to think it's very it's as news I successful initiative successfully has that I has tip problem industry. tip don't we to I obviously, that's we've yet Yes. not technology end gatekeeper. yet, it's there, single have of

there 'XX, best near large can't companies, agencies get I is those among but It's the company create the end, our Broadcast the that same a about much On see, and our that to growing of money where consensus been in called upon know mutual agencies through. big year MX, to of Group's, as really the they the the you'll this in it's term put dollars we're lot the to have out. I figured buy a a us very now interest in a the have Hudson but among to efficiencies I it's start are, -- this as markets say starting dollars national there consensus well using think I move on think is lot side, -- will how which

technology So, rules on business terms we initiative I on been need now, working business of think as tip has work the the industry. piece. an and sort And to the

Operator

move ahead. we'll question Research next our Huber Huber with Please on to go Craig And from Partners.

Craig Huber

what for question, year renewal next first paying if of percent are this about My what your I and year, could, subs please?

David Lougee

XX%. this quarter -- mostly about the of the year, Craig, the by got end about year, at We've fourth end in of the

Craig Huber

please? And what about next year,

David Lougee

On the another next year I believe. about XX%

of end next and of subs between to be important the the end flow about our repricing this the percent the revenue XX% the next earlier year of as of which will cash is of between free our year. to of asked So end end note year question and this a year

Craig Huber

suggesting some on? some year just And there you're December is or in clarity, more that nearly XX% this earlier all is

David Lougee

not. I'm

of less be of it little quarter, half. a beginning will is there bit at than So the the that

the impact there that the majority fourth though be So will impacted next in till quarter, some won't year. be of

Craig Huber

almost you all in that of... unclear, so sort quarter, just the it's I'm sorry, fourth mean I'm

David Lougee

the quarter. at impact will any be on fourth of of subs but will no most third about but any impact the in probably quarter, XX% those fourth, a the There

Craig Huber

but And change total please, your the maybe subs? year-over-year, and I OTT in missed then this, on, percent the with without what paying latest period, count the sub was

David Lougee

give in between without -- months right total now varying plus different work again these numbers Actually, I X.X month. can averaging with we've plus are arrears, have the but But and it, they've don't breakout I'll the OTT. month X.X, been the been a by to bit in in of

Craig Huber

little in the first would core talk if you And -- year-over-year. advertising then advertising can quarter the further outlook a bit you also, just for

incremental said with a I things year that and think, without ago, Bowl how adjustment, curious a was or million are year Super I'm revenues? but the you pacing maybe ago, Olympics $XX for ad

David Lougee

Yes.

little more stations year. and a on we we what I ABC then our an was what remember, our the So last Bowl put -- that us year And the homes. Olympics stations. we get but last which lose last CBS on bit for about we have $XX that's year, against at minus Super NBC Craig, million incremental of estimate, and NBC the

this $XX Super So, negative we events for about more so did a the the million two than quarter-to-quarter. putting net the on $X together, last Bowl year impact million did impact as a we're year, we roughly

Craig Huber

is advertising? And then, core how the

David Lougee

It got the we and is.Again, charter banking, space medical, now of well. in we're the we've on don't and know But Telecom a I tourism auto, is auto COGS OTT noise notably in January finance, improve. lot sports around industry. travel strong home a those we're the and and and competition to got lot of Media as quarter, all probably goods more the continues Olympics, us, about in think video a we've We're positive for incrementally very exclusive from are and improvement, of with lot because notably, flattish overall, package auto, positive and turnaround very, but With of March the events months. which

Craig Huber

my net last year? expected you about revenues in up it And the you mentioned question if what subscription Dave, mid-teens then the you've this for sneak retrans year,

David Lougee

digits up Expect be in to as double well. that low

Operator

ahead. next go question from our from Please will Capital [ph] come And Markets. Michael Noble

Unidentified Analyst

CapEx, to allocated X.X. broadcasters ATSC have this for stations? you you Thank giving point, any upgrade CapEx At me the upgrades have indicated Other opportunity.

David Lougee

We got we've But the to we of part test. that bit to Phoenix opportunity market -- we've already have. now, see just be some about flow on this prepared total a a we We to might $X based for few as little got the move are change of million opportunistic stations in We right year, timing tests. allocated a markets.

Victoria Harker

-- million the about talked recurring I the mentioned non-recurring million non-recurring the a was as repack Dave sort of the well. bit $XX as but $XX CapEx, When there bulk versus of little

Unidentified Analyst

Got many you. stations have And upgraded will how then? you

David Lougee

number don't top the the I have of head. my off

do recall, did a again probably year. will if adding on it'll have that we overall, even have -- to think if could stations of But be else from we around it. significant Phoenix, significant CapEx a dollars I last wholesome I we by so the counting few X the have on won't that a to not impact end year X which to somewhere number It change depending opportunities.

Unidentified Analyst

ABC you other contract, update the your can renewed the course, of And time for just line networks? you

David Lougee

'XX and I up the of before, year. Yes. then, homes We've what this got end less Fox, CBS and this 'XX we've NBC and up is ABC got it's actually at middle our as in of of year than -- X% up early said in you

Victoria Harker

website And reminder, on on updated a have we our then if weren't as writing investor down, the just that people presentation.

Unidentified Analyst

reductions And other bit, headquarters you is still there? can there or corporate add you the color flowing -- little and expenses a is Company's guidance, still the that down XXXX through there coming corporate any for can that

Victoria Harker

the support. and No, office consolidation it back is. It's basically ongoing

double expense. for approximately addition, the rent run facility In million XX% fully through new or here another once of that's $X operating reduction in we so our year-over-year

Unidentified Analyst

still expenses And we down? should be to see corporate our in to XXXX of flat so kind

Victoria Harker

Yes.

David Lougee

Yes.

Unidentified Analyst

previously And opportunities, about question M&A this on swap swaps the environment, that point, then Marci's still table? following about talk can about you the the on station Company is at talked

David Lougee

get for you more needs opportunities a that but that things divestitures be I M&A, the down out they've will I much Yes, probably think I got be going about to industry together, M&A M&A vertical a Big I of I overlaps, Fours bit now raises because I shared earlier right paralysis way is to you there the that said see more, get may vertical done. as opportunity, do groups focus and is vertical of looking now relative at Groups focused to belief little and also But more bit. vertical and earlier, happening little could the because slowed as I are but think, there the there question people the to that of think swaps cap the think to there are on think it right think now. are a and do issues right the kind the is. that on To opportunities.

Operator

come next question Huber ahead. Doug Arthur go Please from our will with And Research.

Doug Arthur

Yeah, discussion. of thanks. was lot a There

I think about political in XXXX.

Given or a traditionally the realistic? is could political of see than heated off-year have that you better XXXX number kind not you environment, in

David Lougee

We're not forecasting question, it. Doug. not We're great -- it's a

good as New are we a we little when our I have, presidential very from in But early right to Manchester. don't the don't of we not in primary got of Hampshire. money think bit we're Maine in not in we and now exposure have we're as the lot footprint a markets, is Maine Boston,

not that in see those I end presidential in think quarter but I on if starts stranding toward markets, the that, if December you it. for of year, even stuff but So in states the surprised we're after year, wouldn't this you're be there's of fourth the counting

Doug Arthur

sort the of nice this cited on of primary OTT. terms mean was I and point? And in you driver quarter, then pickup subscription fourth escalators Victoria, step-up quarter, the most you I the growth mean in the fourth of your clearly the cadence retrans, of renewals of had big comment a the in in or what are

Victoria Harker

relative in we've think that well. I discussed as renewal a had we period externally previously that Yes, and

David Lougee

quarter, but disagreement, to had well expiration which did the as Doug. affect disagreement was date, as its retroactive we the Yes --

Doug Arthur

the Verizon, you've mean these this a where of QX I point? impact a sub numbers about is mean, is Addition that it the obviously at that, driver I you impact -- of I of meaningful get OTT, lot and talked

David Lougee

because to It's not MVPD, question traditional it's it its Craig's the our a earlier, is but gap dollars, huge meaningful overall to with helping. number

than of same but that basis, on have it's others, as a still not we the Our market losses again but relative MVPD our are other it's large but because companies, traditional sub more large. also virtual not exposure,

Operator

Jim take Barrington from And with we next will our question Goss Research.

James Goss

I aspect network pay are people declining is your them the prices. cause viewing, has OTT, stabilized advertisers you're to for had was shows and of terms television premium think the individual all a rates? scarcity it's on higher time numbers trends of back including the in any to viewing if as impact seeing, there subscription viewing ad the that wondering I'm

David Lougee

function rates think of supply in Jim. demand ad were programming, the and I quality of a the

it's it relates se, programming more to consumers true programming, think So per network as are for that there absolutely and for scripted right. options more I

once get And the time very that rates, a we so have I right. for it can't same still of speak to did ad premium prime doesn't but rates few good the network's but program programming, ratings years lot a ago,

for got like So, the events the etcetera. you though, NFL right, premium Oscars great still still but and the Grammy's, a big the event live sporting

per at cost subscription to reach a around us the XX%, as growing the on like of of point where to and total got is distribution delta tying individual for we distribution a So by cable of and viewer on a very far fast good together on that advertisers. broadest there's implications sports rates XX% broadcasters we're still it's that. exclusive so to a with that reminder, with overall. still in because as CAGR XX% ad down dollars that's channels by prime reminder GAAP our per are question And get between And that now and so network losing revenue, basis, trends, programming, affected go not very paces, ratings vehicle cost cable network channels even reduced of

Our good same to very exposed we for of local continue get not rates that. trends news those is and to some really, as

James Goss

things; serve bigger working programming are is there the sort DBL have? to from announced net programming a initiatives share of Live about initiatives the a a of whatever can there you other of potential are local the like related initiatives programming how might dollars, of cost and news catering to And other [ph], the talk you some who of few other this a point? also, that and And on supplement day -- part in are event aside

David Lougee

I announced we at because other point we will about in we opportunities we place find the opportunities is have in -- [indiscernible] ones pipeline, the a to at And see Yes, thought unique now doing some in I so in day it's programming performance is last talking an looking talk upcoming growing. do growth interesting time just be that, looking we February very be seeing replacing prior some targeted not -- are is not the and have night, in yet calls. investment be that an but they with course do initiatives, significant cost. on are at DBL probably this marketplace, to be focused to we'll more like which it's to markets country, audience, and but ratings is -- well, shows was none we're on parts around they some of our easy us of and are for patient going we better it are programming content some always the nice

that our M&A, effective us. strategic we're think cost we So, with other as leverage being is very along patient it for the strategic we and and do initiative also ability initiatives to way with that

Operator

our final question [indiscernible]. from take will we And

Unidentified Analyst

can on there but bit grow us about is are gets is I see you would little there point what's bundles? -- growth growing; you lag; anything your pace into see And your with of little online change of that to versus your bit earlier has the your [ph] few the different the to about could of revenues for projection comment sense think the be happening something there wanted kind grace can't as know unpack first -- subs in we provide -- you to a just a anything over trend there sub-growth how is new I of look much any if in the months? traditional past I see the are this know you year somewhat I that been able quarter? the cause subcounted that were you And you a give a to and quantification a around

David Lougee

it's we're don't but it have have doesn't about we lag, only so to we winters I seasonal cyclicality, mean, Yes, account. in do I into so I think two in in -- it, are that month that three We've worth know. take there so and sales MVPD, like actually Phoenix's the exactly the the got Tampa's and the look people summers. not to

we're So lag cyclicality doesn't about range months seen we ago X.X, plus -- over months plus not with the had We've you and so X in, that trends, increasing. the then in ago, a plus that look is the MVPDs sometimes. yes, But a add is virtual it our overall traditional had of we've we've reason like terms we -- a starting had plus in a And again, some trend. the on it's steady X.X; last decline the months got of X.X, declining although always we rate it's been year got subs not we XX-day right. X that so so the MVPD so for plus a in and and downward last had trend, month all that have months, pretty X.X, had a X been the

point account said, be being but be could MVPDs -- and that we the traditional side, we're into traditionals, fact in think. what but take on the our been is, of the my and into increase than rate So that there earlier based assumptions trends have prepared some the our for will on regardless people better the reporting decline

Unidentified Analyst

Okay, Thank you. great. that's

David Lougee

help? that Did

Unidentified Analyst

It sure. did, for

David Lougee

you. Thank

Operator

Thank you.

David Lougee

we and questions, With successful indicated by year just went us had very a everyone no you conclude, thank the results as we us for to more joining through.

revenue about grow shareholders. opportunities and value and detail sustained talked us Our higher share just streams revolving and execution of inorganic that we our to organic growth to mix these our significant in margin position our initiatives for

forward on phone first a you So quarter speaking to on we earnings different look system. with call our

additional to reach have Thank XXX-XXX-XXXX. If at Jeff you you, questions, everyone. please Heinz out

Operator

participation, Thank may your for you And this concludes and today's you now disconnect. conference.

TEGNA (TGNA) 1 Mar 192018 Q4 Earnings call transcript