TGNA - Earnings call 4 2023

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Operator

Good day, and welcome to the Q4 and Full Year 2023 TEGNA Inc. Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded. I would now like to turn the call over to Kirk von Seelen, Vice President and Treasurer.

begin. may You

Kirk von Seelen

Treasurer. Today, this Good and operator. My welcome our am to is Lougee; CEO, Thank our and year morning, XXXX quarter new TEGNA's and questions. opportunity outlook. Heskett, I and we'll After will full von webcast. President results open financial press Hopefully, year the full morning's conference the performance fourth and Kirk TEGNA's Julie TEGNA's Dave review you, Seelen, and for you've that, to had CFO, and and call review our provide call name release. quarter and ahead

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

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

reconciliations in directly measures provided to have release. those most press the the of We measures GAAP comparable

let With me Dave. over to that, the call turn

David Lougee

good growth. efficiencies been the we've of termination you, capital merger Kirk, for out Coming May, morning, on opportunities future shareholders, evaluating everyone. driving last and returning to increased laser-focused Thank and

dynamics. industry-leading necessary strength our As ability assets, By required. time morning saw again, company time we accordingly. and navigate current proven have We and positioned our show, the coming, and and our the to our market assets announcements the we balance of the this industry the industry and the sheet team leveraging trends culture, challenging we've

the an distribution and reach broadcast The Local areas. most brands growing and ecosystem, vast is thriving durable, in specifically to more and channel irreplaceable, They revenues for a are content. fragmented high-margin channels of in essential portfolio remains predominantly national programmers. cable metropolitan of competitors our station and flows. powerful advantage Our compared predictable distribution broadcasting local cash economically local generate leading large,

Bowl sinking that's a distributed stations reminder watched me. recent since something that with the on even most event, evidence the Super live still CBS was in most landing, to As that, glaring our moon the

have now of payments subscribers affiliate with model, completed of to of XX% provide it now give later. agreements a compensation approximately our are or flow, through us of Julie will counts. subscriber on subscribers enhanced tied traditional cash network reverse That We subscribers comes covering fact, our into Big to the almost combined payment beyond. to tying more renegotiation visibility and detail our The late these when payments variable our X agreements for future which majority 'XX revenues retrans all

Now to has strategy. pillar been capital our always allocation, of key a which

This termination Board $XXX last nearly you with capital we're XX%. new and increased million sustained may comprehensive team our committed morning, and dividend the May, Following predictable, by of our a durable management announcing creation forward. to going framework, allocation recall, commitments outlining repurchases, return shareholder share value merger our capital and

dividends, of used long-range to with Under free this the investments, flow XX% over expect and of we years prepare bolt-on debt free and for maturities. next in XX% cash form the to expected to new framework, return for X organic M&A, be buybacks the flow remaining cash

priced to shareholders. our no maturities capital significant sheet industry-leading continuing maintain near-term and debt, attractively to expect balance while We return with very rate to fixed

to XXXX. free new year of termination shareholders, merger allocation Applying on the range 'XX, period our in the based current $X.X our cash to the $XXX guidance, we billion outlined since period. we As in generate of X-year million capital return during to $X.X through last flow to to projections, this we framework XXXX, expect our expect release, billion

interest in also pretax cash BMI. As proceeds has million $XXX sale approximately outlined TEGNA our received in our for in of release, the

included our framework. not included are guidance, in under capital announced cash proceeds allocation will free flow the these they newly be While

the side forward. and we We're innovation, scale AI operational and have leveraging business, our pillar across benefits our initiatives flexibility. half to and history in company, occur going efficiencies expected Initial excellence a that's like durable of by embracing new proven providing of of technologies our financial completed our XXXX. the new drive flows and cost year are these cash further On second this also of to of be a

full in few and to to Julie greater cover but Turning fourth performance. our performance highlights. detail, our provide financial will year a quarter XXXX

and see the steadily exceeded met strong in In generating services our our improvement, or we and categories. the to quarter, automotive revenue recovered and by for annual advertising marketing continue ad year-over-year has growth metrics. trends services, driven sixth guidance X fourth sequential consecutive First, all Auto is of 'XX largest full quarter. year improving

portfolio some got portfolio that This leverage regions earlier. of aired which stations I stations, X Big the in are geographic Bowl the We've large market big XXXX our and states. that events CBS our highlighted Super of recently right includes in

This summer, for the a Olympic our largest is which largest for audience. affiliate And we're in NBC. for thrilled, NBC Europe, us. affording great live another coverage The reminder, across NBC -- portfolio timezone affiliate our event stations, as with partner a of they'll big the be Games we're

political play at marketing level. races, national continue political, XXXX fundamental to for the role whether our strategies state or all large for as in Now, a stations

in Michigan, are X/X Georgia, Carolina of Pennsylvania. stations North the battleground streets, nearly Arizona, and Our including

a have State. seats and across of competitive house our Pennsylvania, we'll, reason. and including for long Colorado, for you long Maine, I markets, Congress, a list for a Connecticut, As very every list, Oregon, Arizona, races California, Iowa, Ohio, gave in Washington elections That's course, Virginia

if has lot remains of In with than U.S. potentially X considered has are fewer jumping or races of the increase, races here interest spending race just here XXXX the terms also with WSA could boost number But all the XXXX, headquarters And in for our Senate into our currently D.C. with Texas could in our competitive of in Texas seats, close footprint of XX that our governor, XX race, stations in competitive. which recently Republican a -- Maryland benefiting. X-term CBS affiliate Northern just governor Larry Hogan, outside Virginia,

of XX our benefit including New political the a on strong station in glad In highly footprint, in races, Southwestern and the will questions Hampshire, X healthy as in from very past, Portland. Carolina we spending New and Hampshire, out of more Maine and -- because summary, competitive that North are total races in bit. well as be to in take In governor's as our

Now our trends. capitalize and advertising on for strategic to consumer highlight at that TEGNA a efforts few recent actions

Octillion TV local connected from Premion's Both enhances First, capabilities that Octillion platform strengths. in benefit proven will February, serving Media, we in announced the further other's regional of advertisers. and a and each acquisition Premion

product the the boost will brands the you agencies morning through cutting-edge team. to any welcome Cox, and TEGNA Tom marketing to right already of proprietary in Octillion's on Premion platform thrilled restaurants, innovation. the precision and Octillion helping to to our key here categories Digital with consumer and of SVP reports questions Premion. their up like them take them new have and quick-serve future Chief us on this helping and new Premion tech Tom is Officer; right automotive and is reach home Premion's and goods, We're channel platform. Growth

happening we given very are sports in the sports, strong stations distribution. currently sports portfolio well In in shift positioned local of our big markets, for pro

some with Milwaukee out. an for of October, Spurs. completed broadcast Antonio you Look plays the we and stations schedules. games Dallas to as we Diamond As more announced agreements situation some last San to bring recently, recall, come agreement our more the additional the Sports with And Mavericks Bucks to announcements

As daily to we additional ways markets. across newsletters to a each morning brand look City, subscribers on XX also XAM investment different sends reach local closed strategic audiences, in digital that a media local for we

As as in the from and will service. and agreement, business including XAM be our promoting as podcast into locked-on newscast video morning part XAM of integrating local their headlines stations our City stations news well that sports product weather from and our City

it ensuring cultural and serve across teams experiences on all fostering and as business turn chapter the we decision-making inclusion key this a focused imperative our of same We strategic stakeholders. as as to progress as on communities I in a our over TEGNA. inclusive comment and our content on communities. the new are priority, in organization, about is of two embedding perspectives audiences editorial we made and at to on represent this further Julie, we all company, while of before to trust commitments a those an In us enabling embark country, who Finally, many equity our we delivering or remain XXXX,

communities. greater a We are purpose. The purpose company of passion a of good and our with serving the a

want I for do them, to are environment. work newsrooms in one important local challenging doing of Our all very and a very every hard, they everyday. them, thank

you good, which to report find our greater that XXXX you highlights review the all our can impact now website. to on encourage I serve efforts

I'll results that, to the call through more over turn With our walk in Julie you to now detail.

Julie Heskett

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

quarter fourth earlier. reiterate team's Board financial and would XXXX year and focus full our our as discuss I highlighted I allocation, on Dave to ongoing Before results, management like capital

in to us our you've shareholder create As value. past, business we manage from the heard long-term

as ongoing Our to balance return and dividends. dependable share significant as, through flow, predictable well repurchases free generates industry-leading shareholders capital of and cash sheet

shareholders, quickly returning in termination over accumulated million nearly following the which of deal. committed As capital May you $XXX the we the of merger to recall, XXXX, to pendency of

As ASR that of we second when Thursday, $XXX our program million February completed. achieved commitment XX,

XXXX. XX we result, shares since a million of May As of have repurchased XX% or outstanding approximately shares

in addition, March increase, In XX% resulting May in of 'XX. our dividend year, XX% also by last we increased a since

on to the Board basis. revisit dividend our expect regular with We a

may share cash XXXX announce XX% shareholders in free we've and form last are completed Under flow to capital be framework, new repurchases support year, shareholder that remaining bolt-on M&A dividends. our value creation. to we capital preparing future of comprehensive and our we we expect investments, XX% The to the for debt cash XXXX to the long-term and retirement. of new of pleased flows return organic free return this for framework used committed allocation to to Now

the a new To has million program. facilitate X-year share authorized $XXX repurchases, Board repurchase

the addition, X we of expect midpoint capital and we flow outlook cumulatively million allocation share for $XXX over and $XXX the our to range allocation framework, Based are at return free to on million the flow capital to cash of dividends repurchases to cash billion $X.X and X-year announcement, a shareholders new of guidance ranges years. In providing in capital 'XX. next our XXXX free

which also ASR last $XXX million week. program completed XXXX, incremental is the that are the first We to year of committing in to previously approximately announced

to return through the of 'XX. expected date an represents the since midpoint, $X.X shareholders this merger the of capital of at of Altogether, termination billion year-end

our of sale shareholders bolt-on recently $XXX in M&A, acquisition will In received return the recent interest of announced of Media. Octillion pursuit seen cash our pretax to with we proceeds the newly of in capital as of addition, included BMI you've million that from be and/or

discipline, coupled Further, debt with us with our structure, low Xx leverage balance financial manageable and below sheet. position an extremely strong a

on debt half. X.X% facility, and rightsizing includes until amended basis extended 'XX. near-term All our undrawn attractive rate fixed to it January, fees of of In a an is $XXX the reducing weighted balances March of million credit we average maturities our by at bond and and no revolving

a on into Let's results. quarter and provide our comments business performance, metrics. TEGNA's our today of financial operational the focused of non-GAAP exceeded visibility the our the of on XXXX trends fourth are primarily well met now which at guidance drivers with take year or as you performance My look as our basis year to a financial full all consolidated drivers full

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

November finished was aware, are disruption results fourth our fourth XX. distributor impacted began the within you successfully on unexpected quarter on with have met a and service temporary of range. disruption consent and results our in negotiations. January resolved As consensus our quarter large would Absent by the retransmission guidance exceeded service our were during disruption, The XX, or

in political down revenue to for Total cyclical disruption midterm mentioned. revenue absence election due the temporary XXXX, I quarter the from service as primarily the well as, was company XX%, just of

For of finished election at the of total down full the ad XX% $X.X midterm reduction billion, revenue in year-to-year year from XXXX. due the cycle cyclical XXXX, political revenue to

impact the Bowl our also Olympics our the on smallest and XXXX absence large an portfolio [indiscernible] Winter comparison. In versus NBC Bowl, in even-to-odd on year in addition, Super portfolio Fox Super XXXX, the had of

by driven subscriber some additional by disruption line billion increases, details offset rate subscription year the Now service year, our revenue temporary components on partially declines mentioned. revenue. the for more of than XXXX of prior was as with Full as in $X.X well I've of

up service X% revenue would subscription XXXX. been have compared to the disruption, Excluding

call to another XXXX. subscribers, renew of end November's XX% the XX% and earnings traditional approximately at XX% and this since [indiscernible] in At year, of expects

year, of covers the The Beyond TEGNA XX our this, agreement which nearly XXXX million markets than renewed in serve United the January with across we including of XX% XX NBC, U.S. this covers affiliation top and renewed successfully markets the States, households markets. more XX of XX XX

As the is independent of a largest TEGNA owner affiliates. NBC reminder,

fourth Moving categories throughout the quarter to out sequential of trends quarter, advertising fourth entertainment, partially packaged sequential media and the entire automotive, in Nonetheless, quarter and of Premion trends improvement crowd excluding for of digits improvement showed marketing and services, goods. to third fourth showed improvement, Nearly positive continuous due home in tourism, quarter telecom, and the advertising services, trends, retail, XXXX. fourth including compared advertising XXXX. were last the were above year trends in to quarter, the mid-single advertising all up Underlying travel year. political

Now strengthen turning increasingly which to to to allocating advertising. local its who TV position marketplace additional through the dollars convergent advertising, Premion, are advertisers who in streaming continues

their conversion spend. continued outcomes, quarter, to to business demonstrates on advertisers innovate solution link This superior with to Premion's attribution the its enables return ad offering. advertising sales which spend During directly Premion streaming

through. Similar previous the now quarter quarters revenue XXXX, was loss in XXXX, national of a of large Premion account year-over-year, impacted to by which cycled fourth we've throughout down

on focus is OTT growth local fourth However, uniquely in it Premion positioned the primary up year-over-year Premion's win. revenue, to where the local is quarter. revenue was

acquisition local growth and demand-side a strong the Octillion announced for remained finished of double on next-generation advertising. Premion digits revenue and streaming the Media, February, focused platform In closed year. up Premion full on simultaneously local

will at technology Ownership acquisition The within enable combining improve accretive expected cash our product months. Octillion's will be of further capabilities free solutions. cutting-edge accelerated enthusiastic are growth. technologies operational EPS Premion's efficiencies transaction and the TEGNA's to expand is advertising by with drive flow innovation, We these to XX and

to expenses. now Turning

For operating expenses of XXXX. down to the X% million quarter, non-GAAP compared fourth were quarter of $XXX

for cost non-GAAP and XXXX, variable of compared revenue expense costs, programming driven operating management for X% by improvement. quarter down the to operational Excluding expenses sales lower were digital

was $XXX EBITDA margin quarter. million, for a Adjusted producing XX% the

slightly Full revenue costs, of sales year For was offset year-over-year, full year, by non-GAAP higher were improvements. variable programming management operating by driven billion expenses adjusted expense lower of up operational cost producing $XXX mostly EBITDA digital a and $X.X with million, XX% margin.

to year quarter, Xx billion with for continue leverage generate primarily the the and year well free strong year, high-margin $XXX cash continued full management. million We our of of $XXX We and $X.X the million expense Net total revenues subscription guidance. $XXX thoughtful below ended the for ended year durable million. at and driven X.Xx, our flow, cash by debt full

outlook. forward-looking our to Turning

billion providing 'XX. in durability cumulatively This to is guide cash to of mentioned we first I we're flow As free a a XXXX earlier, confidence our for reflect time X-year range and $X.X the providing the million flows. visibility guidance cash are $XXX of X-year and

XX% outlook negligible. forward our long-term XXXX, driving CBS. fees our a late this Super aired some Summer will compensation discuss at subscribers expect XXXX is earlier, in X of stations key election of agreements driven always just Also our presidential network Bowl of markets, year outlook, To network reverse benefiting of the favorable strong Games the that on the to the and mentioned from of of agreements Dave cycle, by robust drivers the under Paris, in be growth with going we Olympic TEGNA, through be renegotiation portfolio Big

tied comprised stability this downside payments EBITDA compensation annuity-like and revenues. revenues are with variable, which TEGNA's The during of total than media majority protection of reverse XX% and cash subscribers, free financial providing evolving high-margin to subscription landscape. our political more our produce flow,

operational initiatives efficiencies Lastly, as are on of to record costs Dave building improve noted, our a transformation operator, best-in-class track our and underway. reduce being

expect occur will We in of continue to XXXX XXXX. half the of and efforts these back through benefits

to coming updates sizing initiatives quarters. in provide will We these of

million guidance full $XX in Depreciation range Corporate projected XXXX $XX of you expense the in range in to Amortization Interest expected elements. of $XX is to the million is range $XX give be million. to $XX million. year be million be expected $XXX the projected to to range of of me in million is $XX million. expense an be to to million. the is Let overview of to $XXX

million. $XX to be tax an expenditures to of capital range effective $XX XX.X%. to forecast We rate of million the expect in in range We XX.X% the

near-term ahead effort with as help end we net our results, below an leverage to Xx. guidance follows. quarter XXXX I'll to Finally, forecast metrics expect provide financial In

operating expect beginning down to distributor subscription quarter which quarter year-over-year with the low- forecast single-digit stock-based to low first of percent range to first increases dark [ lower programming first to the be due in We a at and year. compensation expenses. driven total the XXXX, We compared expenses company by of to for ] quarter being percent revenue includes mid-single-digit revenue, the increase in

we'll that, and your take Q&A now With to turn questions.

Operator

Our Dan Benchmark first comes Kurnos from question with Instructions] [Operator the Company.

Daniel Kurnos

kind guess, guys having attrition general reverse how sub people cash Great. lot all side the here. given look, growth, in unpack compensation rate given of and about X-year variable from net just dynamics color, think kind we versus conversations how here, cash like for here negligible with renewal? on about what Really do said you you A are -- the guys, have and up really the to given the reverse guys and your nature, the of I guide. Julie Dave, given about much unique guide free appreciate

how we political could back of kind year, trends through rates go we since half Olympics, which the the drive guess, core about guys core, we have flagged just in do and the year? up, I thinking of you are on then And as the

David Lougee

Yes.

on I negligible when to was add say side, -- I what we Julie is, So net negligible, negligible, I think don't says I as would that even reverse know, the would you But new comp guide best. -- growth retrans. at being about

rightsizing now of a of have the So we that to relationship size the model.

would what a on that be will us is about and say right, helps a this it basis, net So for as retrans company. go-forward stabilize stable, that I

that put don't guide out one cash model our and and durability again, of relative put, the but that more is internally, it, to -- this of reprice guide we being but don't is So end what the simply obviously at have and retrans, year. toward chances foundations net up we'll huge to of sustainability the we our to that flow -- until subs this half number the of the back year, out we any

let on I'll And core. Julie it take

Julie Heskett

Yes.

far XXXX be advertising throughout year. we the As saw trends, as improving sequentially

seeing that Olympic into national year. as flat Bowl Super first see on are year we and the on throughout as advertising strong will XXXX, some quarter believe side the We of hanging to as local the we're well we marketing [indiscernible] year, advertising, with this both softness events of but see full services really up and the the

David Lougee

add across that, country, us sustainable for entrepreneurship that is midsized and it's continued, as being but company now, growing. the Dan, into and and clearly a services just has in very, it's I'll finding category to -- a we an and arm creation of COVID, healthy businesses Julie small, job the the good, turned them, And engine very just really, just extraordinarily for have business and large mean, I durable great over phenomenon, marketing just spoken economic those services, since has really the an about time, the done

Daniel Kurnos

Premion for doing that Super Dave, about you're but what excited other hear people. leave to with I'll here,

Operator

Wells comes Fargo. next Steven Our from with question Cahall

Steven Cahall

got few. I've a

very won't you're particularly your always commentary maybe reverse agree, your interesting specific variable. to first where has So you of agreements, know any the stuff. I comment X there. on terms with Big on one, I just heavy we thought been but

to that minimal increase also have wondering, reverse numerous that reverse to if expectation just previously able giving comp you been I'm ahead? in variable fixed you've convert as that's others well your been

David Lougee

Steven, yes.

X I say So negotiations individual we agreement with talk would I year. All is, appreciate. so up had last We networks. more never than about

the say variable said of a you've we've us heard before a majority our never we've -- leave tied never subs just You've say to that before But model, we a that. mix. that have it so had heard is I'll at majority me

Steven Cahall

I it enough. can fair there. That's conclude from

I down And It revenue like the should some be that know then seems just blackout on up is of year-on-year. the dragging the QX year-on-year. political guide,

I think you you're to had comp of the some headwinds starting at Premion.

distribution would year-on-year, if total the ex would be blackout? I'm and So year-on-year, revenue up ex up be if the curious blackout,

David Lougee

us total cost on the impact. it's know blackouts. some on advertising the It as those has what for blackout hard is to us a side, revenue, it always little Well, during

And So there's noise of to I'll speak that. bit in a Julie little let retrans.

Julie Heskett

quarter in total low-to-mid blackout that first of guide, include does our range down So the just DIRECTV. again, revenue

would we quarter. you the the first you on that, can Excluding DIRECTV, quarter in heard your fourth do size so assumptions

while Premion, throughout in growth has side year, year, to first through it quarter the advertising those national QX. in the And we necessarily advertising still year, on cycled account always, not of headwinds the being ramp rates expect lowest there our last would quarter the general. large are And

Steven Cahall

dividends midpoint of you'll and million Got it. in just the as then that the If your buybacks, got proceeds capital flow do allocation. over well. finally BMI the take you've And your then $XXX X guide that's and of on percentage cash midpoint free And I years.

would that less that your imply new it's over million, but authorization. still than $XXX So

to correct? Is cash I just correctly. the guidance and get cash authorization, be of all X-year just flow higher of components at then end deployment am that guidance. So And thinking to to about the free all need those your you your

Julie Heskett

M&A our allocation return, which reinforce include predictable returns, line and of does investments, and And Steven, but shareholder Yes, just sight components: clear want of of capital framework, different are think for provide consistent a correctly. it's should it Julie. I you X thinking I organic all that shareholder opportunities. to

return with making we use cost and we the well And look in that remaining and of guidance. what so, if on for debt decisions cash, as smart will XX% do -- we'll our of always as how be investments we always

Operator

Huber Craig Huber from comes question next with Research Partners. Our

Craig Huber

in small Can it segment, that you next about then And just guys, just please? in a it you go technology, follow-up. a to And you did et the have what for little your more to I the acquisition brings depth means What cetera? revenues Premion?

Tom Cox

Sure, morning. Craig. you this all with be This is to good Cox, Tom

about super top. us to off Octillion Premion on I'd brings of mention what A moving forward excited So couple the the side. things

So owning exercise our allows us on technology to delivery control of operational more campaigns. the

advantage. So a that's distinct

greater We're paying Second, innovation it our allows of you're advertisers And not and build to improve relying enables margins for. the are us not third-party overall with and product us third, we expense drive next the vendors. throughput. associated need EBITDA that on third because parties generation to it looking product those our to

growth, history with broadcasting growth advantage I of but cutting-edge our And what great that Octillion small, and marriage rich of and can hometown of say, of into question have well that both bullish year we we're unique a our Premion, But company. would markets, on to integrated much as revenue leveraging for powerful revenue technology, many sales be platform, integrating into this a the our around next. also Octillion EBITDA a you growth, and the expect year. through a this beyond as in company remainder your is do we'll is very once

Craig Huber

and will you how sort of the answer to or it the whoever Premion, revenue sounds on, will depth mouth. think trends it to about this Julie then will year got over wants for improve think again, just Dave, year in here your a more goes little the -- as year? growth I like you It but And in your of phase outlook don't words want the this. put course

Tom Cox

this Craig, is Tom Correct. again. Correct,

will year. revenue We of couple I expect would on the A Premion things mention. the throughout trajectory improve

we that against fully national account. cycled First, have

converged surprising Julie on As is ecosystem isn't sort in alluded, the that that there the from streaming designed Premion national of we're a linear local the seeing plus working remember, advantage of because, perspective the is really we're Premion is business, take do side what to and same in. linear dynamics which

can do the TEGNA that of market. Premion or Premion, bring strongly improve many And as has faster linear throughout more into more innovative today to customers products the expect So improvement we can the that portfolio. We year. the overlap Octillion integrated the revenue we obviously, trajectory revenue have get

Craig Huber

quarter? the go could whole first first just election okay. in What's outlook bit I if through Advertising, a basis? you your X is if just company And the or the Dave, [indiscernible], example, further Bowl of there the just worse the in what versus quarter, there after squeeze or more, benefit on in little in fourth for saw guys that's Super for is fourth auto trends The the a we year-over-year what getting underlying for better quarter? the quarter,

Julie Heskett

Yes, absolutely.

strong. trends not back be So saw continues still... first there quarter, strong, The automotive continues to as as to be but strong we underlying XXXX, in the half of

David Lougee

yes? comps, better against Cycling

Julie Heskett

digits. Yes, but still mid-single up

strong, such are also specifically about also our up revenues talk have services, to as And legal Health services. every we projected single be QX. that favorably We quarter, well. digital services, as trending continue which in home remain categories other is but QX to in also care

in where past, QX, we've approximately it's the approximately Bowl of revenues total of million Super $XX is sized in that incremental point And our percentage X revenue.

David Lougee

that, But I to -- I'll add Craig. say would just

favorable and I think, pretty side before add Premion, local you with We've are trends bit, our noise on would national, advertising, -- little appear for trends we we pretty help. large to But and doesn't us. on obviously the outage a distributor be talked system but XX is on that had an with the we really had underlying good. about for in that days underlying got major a -- the

Craig Huber

Okay.

year? being The think it's it $XX Bowl, million quarter versus my Super on thing Just you're you last saying? the to incremental first what that be Is here. clear, Fox in last

David Lougee

good a That's guide.

Operator

Our comes with from next Goss Barrington Research. question James

James Goss

part churn somewhat to other as the this It faster-growing that subscriber the of Octillion from A now? this of this Octillion. with any involvement an ] relate right connected with area to points so couple to in is Gray this a would of as Okay. partnership also, it you sector And of of TV. well? their And TEGNA clarification Premion, separately? in mentions [ does installation extend or affiliated Is

Tom Cox

James. Correct,

So this thoughts. couple again. of is Tom A

So yes, designed take we Where it's of network very that advantage is strong local leverage or of that is of core. linear The dollars streaming. shift from advertising to the migration change business to Premion that uniquely our are station. positioned in we

So markets us households Octillion's shared to we partner, characterized stations well between what sales on allows in force. the more direct powerful you the the as And Gray be formidable street across in stations, have platform. as very reaching in super bringing Premion that able and TEGNA your the benefits technology Octillion is country. take the sort better that second that all Gray And and and bring sales force, Gray, from. investor deliver I've all a of TEGNA to about force. And strategic we product also Premion's really advantage a benefit sales will feet will past, the yes, of U.S. to as the also to of as excited question, with XX% to innovative And just to as

James Goss

right. All

all available? And options might regulatory basis, change do benefit their you acquisitions, or the at And related Secondly, you of have? that of environment thing the administration? there sort some those was of in in are it's you wondering M&A had if mind did talking potential. a could is would I'm -- if plus think also you're mention about if a on M&A change station bolt-on if if you any Octillion And

David Lougee

is of Yes. those. This take I'll both again. Dave

the that And exactly bolt-on that, can is we that ones to existing -- Octillion businesses, we help talk the like sheet our with about the at something or either M&A, of doesn't Premion really we future. right, flex balance when build type ones organically exactly the drive So all. that, bolt-on

right spot So acquisition relative topic. to bolt-on the that's on, the

see, quite From historically, a regulatory standpoint, opportunity. we'll administrations this they been some ones. think deregulation more Republican change where leave But are potentially And that. particularly the I'll keeping Jim, an and obviously, Democratic administration typically I Democratic or back clearly, at is yes, administration, rigid Democratic has rules this in on particular rolling rules even FCC, were, than it obviously

administration, same the even if be, would change whether was too. be there question the a in might Also there leadership,

at remains But but station we So to conversations, is I cap, wouldn't your never, our to at I we'll think M&A. closely. don't watching where say seen. moment, on the say We're it never are the given focus earlier be

Operator

JPMorgan. from Our next with comes Karnovsky [Operator David Instructions] question

David Karnovsky

Just do on the given visibility side, the of free around advertising? primarily $XXX and range flow on of cash drivers in the your the variability distribution how affiliate for the model variable added Is building million in that guide? think you key

noted recent then And carriage second of question, local a Dave, you've TEGNA's sports.

for footprint. your over that's instance from of in to Some Spurs San Antonio moving RSNs

outsized are through renewals? just As fees this given you've interested looking how all hear how to gone recent distribution at have just the whether at a negotiations, been RSN in I'm MVPDs some that's factor past? content, in

David Lougee

want just to content the put simply any -- Dave. the Yes, first, I'll I'll is consumers. deals, I'll distribution just -- it Look, but way. one to second Obviously, most I take valuable about local this don't talk amongst academically I'll sports

very it's distributors, to relative well. upstream that distributors take just as you valuable to if so And

gap been value a -- paying have distributors between old model. been a the what might had loss There under of in

change -- more standpoint. relates of in kind from some ecosystem distributor think I so to the there's rationalization of this And that

-- value distributors. it So but to has just the certainly answer question it, say and I'll simply

Now some certainly those do But to and know there value could we they distributors and that never might absolutely pay -- has going be off wish fees so. that. anymore, out they

Julie Heskett

multifaceted, economic first it's I'll mostly factors play around And that. And the range the question and would environment. guide cash of our free I say what take about into flow would

be to would would X the continue another years, may trigger But X that. advertising declines. So We for Subscriber impact definitely be that forecast is that that next a do factor trends range. factor. subscriber of

the then third. And

David Lougee

might as too, unlike you large. given Because peers our of know, it's advertising, some a right? XXX-plus in -- of that we more we're in small have markets, Political stations concentrated lot

of our you've election years $XX we So center center might hot million ] when X race up previous what out very so a we've in cold, in candidate can for be. blows Georgia when [ ago, seen direction political range goes we flexed come a up, other significant nowhere cycles, themselves delta, and as the have go sometimes we've X of a runoffs it seen

Operator

to closing remarks. Lougee further turn no over Dave the questions. I'd are call for There back to like

David Lougee

you, everyone, the for operator, and Thank you, call this morning. thank

producing driven are talk -- time, As talking first as look quarters We we the morning, durable everyone, you, good to and to forward now we forward, in ahead is guide more year going sustainable model. Thank day. our a free interest. said very you in have the about results appreciate and our flow your we announcement and that it this by cash business we with the for X-year a

Operator

This for you your the conclude Thank program. does participation.

now may disconnect. You

TEGNA (TGNA) 29 Feb 242023 Q4 Earnings call transcript