Q4 2023 TEGNA Inc Earnings Call

Operator: Good day and welcome to the Q4 and full year 2023 Tegna Inc. earnings conference call. At this time, all participants are listening. Later, we will conduct a question and answer session, and instructions will be given at that time. As a reminder, this call is being recorded. I would now like to turn the call over to Kirk Von Thielen, Vice President and Treasurer. You may begin.

Good day and welcome to the Q4 and full year 2023 technique earnings conference call. At this time, all participants are in listen only mode.

Later, we will conduct a question and answer session and instructions will be given at that time.

As a reminder, this call is being recorded.

Speaker Change: During the call over to Kirk Bond Sealant, Vice President and Treasurer, you may begin.

Kirk Von Thielen: Thank you, operator. Good morning and welcome to our fourth quarter and full year 2023 conference call and webcast. My name is Kirk von Thielen, and I am Tegna's treasurer.

Thank you operator, good morning, and welcome to our fourth quarter and full year 2023 conference call and webcast. My name is Kirk on ceiling and I am taken as treasurer.

Kirk Von Thielen: Today, our President and CEO, Dave Lougee, and our new CFO, Julie Heskett, will review Tegna's financial performance and results and provide Tegna's full year and quarter ahead outlook. After that, we'll open the call for questions. Hopefully, you've had the opportunity to review this morning's press release. If you've not yet seen a copy of the release, it's available at www.Tegna

Speaker Change: Today, our president and CEO, Dave Lucci, and our new CFO, Julie Heskett will review <unk> financial performance and results and provide technical full year and quarter ahead outlook. After that we'll open the call for questions.

Speaker Change: Hopefully you've had the opportunity to review this morning's press release, if you have not yet seen a copy of the release, it's available at <unk> Dot com.

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

Speaker Change: Before we get started I'd like to remind you that this conference call and webcast includes forward looking statements and our actual results may differ.

Speaker Change: Factors that may cause them to differ are outlined in our SEC filings.

Speaker Change: Our presentation also includes certain non-GAAP financial measures, we've provided reconciliations of those measures to the most directly comparable GAAP measures in the press release with that let me turn the call over to Dave.

David T. Lougee: Thank you, Kirk, and good morning, everyone. Coming out of the merger termination last May, we've been laser-focused on returning capital to shareholders, driving increased efficiencies, and evaluating opportunities for future growth. As our announcements this morning show, we have the necessary assets, the team, and the industry-leading balance sheet required. By leveraging the strength of our assets and our culture, we've proven time and time again our ability to navigate challenging market and industry dynamics. We saw the current industry trends coming, and we positioned the company accordingly. Our portfolio of leading local station brands is in predominantly large, economically thriving metropolitan areas. They generate high margin revenues and durable, predictable cash flows. Local broadcasting remains an essential distribution channel for irreplaceable local and national content.

David T. Lougee: Thank you Kirk and good morning, everyone.

David T. Lougee: Coming out of the merger termination last may we've been laser focused on returning capital to shareholders driving increased efficiencies and evaluating opportunities for future growth.

David T. Lougee: As our announcements this morning show, we have the necessary assets the team and the industry leading balance sheet required.

David T. Lougee: By leveraging the strength of our assets and our culture, we've proven time and time again, our ability to navigate challenging market and industry dynamics, we saw the current industry trends coming and we positioned the company accordingly.

David T. Lougee: Our portfolio of leading local station brands are in predominantly large economically thriving metropolitan areas.

David T. Lougee: Generate high margin revenues and durable predictable cash flows.

David T. Lougee: Local broadcasting remains in a central distribution channel channel for irreplaceable local and national content, the vast and powerful reach of our broadcast district distribution is a growing advantage compared to more fragmented competitors in the ecosystem, most specifically cable channels and programmers.

David T. Lougee: The vast and powerful reach of our broadcast distribution is a growing advantage compared to more fragmented competitors in the ecosystem, most specifically cable channels and programmers. As glaring evidence of that, a reminder that the most recent Super Bowl on our CBS stations was the most watched live event since the moon landing, something that's still sinking in even with me.

As glaring evidence of that reminder, that their most recent Super Bowl distributed on our CBS stations was the most watched live event since the Moon landing something that's still sinking uneven with me.

David T. Lougee: We now have network affiliate agreements covering almost all of our Big Four subscribers through late 26 or beyond. The majority of these subscribers are now tied to a variable payment model when it comes to our reverse compensation payments, tying payments to subscriber counts. That fact, combined with the completed renegotiation of retrans agreements for approximately 30% of our traditional subscribers, gives us enhanced visibility into our revenues and future cash flow, which Julie will provide more detail on later. Now, to capital allocation, which has always been a key pillar of our strategy. Following the merger termination last May, you may recall, our board and management team committed to nearly $800 million of share repurchases and increased our dividend by 20 percent. This morning, we're announcing a new, comprehensive capital allocation framework, outlining our capital return commitments with predictable, durable, and sustained shareholder value creation going forward.

David T. Lougee: We now have network affiliate agreements covering almost all of our big four subscribers through late 26 or beyond the majority of these subscribers are now tied to a variable payment model when it comes to a reverse compensation payments tying payments to subscriber counts that fact complete combined with the completed renegotiate.

<unk> of Retrans agreements for approximately 30% of our attrition of traditional subscribers give us enhanced visibility into our revenues and future cash flow, which Julie will provide more detail on later.

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

David T. Lougee: Following the merger termination last May you may recall, our board and management team committed to nearly $800 million of share repurchases and increased our dividend by 20%.

This morning, we're announcing a new comprehensive capital allocation framework outlining our capital return commitments with predictable durable and sustained shareholder value creation going forward.

David T. Lougee: Under this new framework, we expect to return 40% to 60% of free cash flow over the next two years in the form of buybacks and dividends, with the remaining free cash flow expected to be used for organic investments, bolt-on M&A, and to prepare for long-range debt maturities. We expect to maintain our industry-leading balance sheet with no near-term maturities and very attractively priced fixed-rate debt, while continuing to return significant capital to shareholders. As we outlined in our release, based on our current projections, we expect to generate free cash flow in the range of $900 million to $1.1 billion during the periods of 2024-2025. Applying our new capital allocation framework to this guidance, we expect to return $1.3 billion to shareholders since the merger termination last year through 2025. As outlined in our release, Tegna has also received approximately $153 million in pre-tax cash proceeds for our interest in the sale of BMI. While these proceeds are not included in our free cash flow guidance, they will be included under the newly announced capital allocation framework.

David T. Lougee: Under this new framework, we expect to return, 40% to 60% of free cash flow over the next two years in the form of buybacks and dividends with our remaining free cash flow expected to be used for organic investments bolt on M&A and prepare for long range debt maturities, we expect to maintain our industry, leading balance sheet with no near.

David T. Lougee: Term maturities and very attractively priced fixed rate debt, while continuing to return significant capital to shareholders.

David T. Lougee: As we outlined in our release based on our current projections, we expect to generate free cash flow in the range of $900 million to $1 1 billion. During the periods of 2000 2024 25, two year period.

David T. Lougee: Applying our new capital allocation framework to this guidance, we expect to return $1 $3 billion to shareholders since the merger termination last year through 2025.

David T. Lougee: As outlined in our release Tegra <unk> has also received approximately $153 million in pre tax cash proceeds for our interest in the sale of BMI wild.

David T. Lougee: While these proceeds are not included in our free cash flow guidance. They will be included or the newly announced capital allocation framework.

David T. Lougee: On the cost side of our business, we have a proven history of operational excellence and innovation, and that's also a pillar of our durable cash flows going forward. We're leveraging our scale and embracing new technologies like AI to drive new efficiencies across our company, providing further financial flexibility. Initial benefits of these initiatives are expected to occur in the second half of this year and be completed by 2026.

David T. Lougee: On the cost side of our business, we have a proven history of operational excellence and innovation.

David T. Lougee: And Thats also a pillar of our durable cash flows going forward.

David T. Lougee: We're leveraging our scale and embracing new technologies like AI to drive new efficiencies across our company, providing further financial flexibility.

David T. Lougee: Benefits of these initiatives initiatives are expected to occur in the second half of this year and be completed by 2026.

David T. Lougee: Turning to our financial performance, Julie will cover our fourth quarter and full year 2023 performance in greater detail, but to provide a few highlights. First, we met or exceeded all of our full year 2023 annual guidance metrics. In the fourth quarter, advertising and marketing services revenue continued to see sequential improvement, driven by improving trends in automotive and services, our two largest ad categories. Auto has steadily recovered and is generating strong year-over-year growth for the sixth consecutive quarter.

David T. Lougee: Turning to our financial performance Julian will cover our fourth quarter and full year 2023 performance in greater detail, but to provide a few highlights first we met or exceeded all of our full year 'twenty three annual guidance metrics.

David T. Lougee: In the fourth quarter advertising and marketing services revenue continued to see sequential improvement driven by improving trends in automotive and services. Our two largest AD categories auto has steadily recovered and is generating strong year over year growth for the sixth consecutive quarter.

David T. Lougee: We've got some big events in 2024 that leverage our portfolio of large market Big 4 stations that are in the right geographic regions and states. This includes our portfolio of CBS stations, which recently aired the Super Bowl I highlighted earlier. This summer, another big event for us, the NBC Olympic Games across our portfolio of NBC stations, which, as a reminder, is the largest affiliate; we're the largest affiliate partner for NBC. And we're thrilled they'll be in Europe, with a time zone affording great live coverage for our audience. Now as for 2024 politics, our stations continue to play a fundamental role in political marketing strategies for all large races, whether at the national or state level. Our stations are in nearly three quarters of the battleground streets, including Arizona, Georgia, Michigan, North Carolina, and Pennsylvania. As for Congress, we'll, of course, have elections for every House race across our markets, including very competitive seats in Arizona, California, Colorado, Connecticut, Iowa, Maine, Ohio, Oregon, Pennsylvania, Virginia, and Washington State. That's a long list, and I gave you a long list for a reason.

David T. Lougee: We've got some big events in 2024 that leverage our portfolio of large market big four stations that are in the right geographic regions and states. This.

David T. Lougee: This includes our portfolio of CBS stations, which recently entered the Super Bowl I highlighted earlier this summer another big event for us the NBC Olympic games across our portfolio of NBC stations, which as a reminder is the largest affiliate worthy of largest affiliate partner for NBC and we're thrilled they'll be in Europe, or the time zone affording great live coverage for audience.

David T. Lougee: Now as for 2020 for political.

David T. Lougee: Our stations continue to play a fundamental role in political marketing strategies for all large races, whether at the national or state level.

David T. Lougee: Our stations are nearly three quarters of the battleground states, including Arizona, Georgia, Michigan, North Carolina and Pennsylvania.

David T. Lougee: As for Congress will of course have elections, where every house <unk> house races across our markets, including very competitive seats in Arizona, California, Colorado, Connecticut, Iowa, Maine, Ohio, Oregon, Pennsylvania, Virginia, and Washington State. That's a long long list and I gave you a long list for a reason.

David T. Lougee: In terms of competitive U.S. Senate seats, our footprint has fewer races than in 2020 or 2022, with four of the 17 races currently considered competitive. But that number could increase if the race in Texas remains close, with all 11 of our Texas stations potentially benefiting. And here, just outside our headquarters in Northern Virginia, Maryland also has a lot of interest, with two-term Republican Governor Larry Hogan just recently jumping into the race, which could boost spending here for our CBS affiliate WSA in D.C. In the Governor's races, five out of 11 total races are in our footprint, including highly competitive North Carolina and New Hampshire, as well as New Hampshire, which we benefit from because of our strong stations in southwestern Maine and

David T. Lougee: In terms of competitive U S Senate seats, our footprint has fewer races than in 2020 or 2022 with four of the 17 races. Currently consider competitive but that number could increase if the race in Texas remains close.

David T. Lougee: With all 11 of our Texas stations potentially benefit benefiting and hear it here just outside of our headquarters in Northern Virginia, Maryland also has a lot of interest with two term governor.

David T. Lougee: Republican Governor Larry Hogan, just recently jumping into the race, which could boost spending here for our CBS affiliate WSI in D C.

David T. Lougee: And the governors races, five out of 11 total races are in our footprint, including highly competitive North Carolina, and New Hampshire, as well as in New Hampshire, we benefit from because of our strong station in south Western Maine in Portland, and summary, as in the past political spending will be very healthy and glad to take more questions on that.

David T. Lougee: In summary, as in the past, political spending will be very healthy, and I'll be glad to take more questions on that in a bit. Now for a few recent strategic actions at Tegna that highlight our efforts to capitalize on consumer and advertising trends. First, in February, we announced the acquisition of Octillion Media, a proven connected TV platform that further enhances Premion's capabilities in serving local and regional advertisers. Both Premion and Octillion will benefit from each other's strengths.

David T. Lougee: Yes.

David T. Lougee: Now are now for a few recent strategic actions and telling them that highlight our reference to capitalize on consumer and advertising trends first in February we announced the acquisition of Octillion media, a proven connected TV platform that further enhances premiums capabilities in serving local and regional advertisers.

David T. Lougee: Both premium and Actelion will benefit from each other's strengths italian's cutting edge and proprietary tech platform will boost premiums product innovation Octillion is already helping brands and agencies in key categories like home goods automotive and quick serve restaurants, helping them reach the right consumer on the right channel through precision marketing and their platform with <unk>.

David T. Lougee: Octillion's cutting-edge and proprietary tech platform will boost Premion's product innovation. Octillion's already helping brands and agencies in key categories like home goods, automotive, and quick-serve restaurants, helping them reach the right consumer on the right channel through precision marketing and their platform. We're thrilled to welcome them to the Premion and Tegna team.

Really to welcome them to the premium and Technet team premium reports up to Tom Cox, our new SVP of digital and Chief growth Officer, and Toms with US here. This morning to take any questions you have on the on our new future of premium.

David T. Lougee: Premion reports up to Tom Cox, our new SVP of Digital and Chief Growth Officer, and Tom's with us here this morning to take any questions you have on the new future of Premion. In sports, given our portfolio of strong stations in big pro sports markets, we are very well positioned for the shift currently happening in local sports distribution. As you recall, last October, we announced an agreement with the San Antonio Spurs, and more recently, we completed agreements with the Dallas Mavericks and Milwaukee Bucks to bring additional games to some of our station's broadcast schedules.

David T. Lougee: In sports given our portfolio of strong stations in Big Pro Sports markets, we are very well positioned for the for the shift currently happening in local sports distribution as you recall last October we announced an agreement with ascend Tonio Spurs and more recently, we completed agreements with the Dallas Mavericks, and Milwaukee Bucks to bring additional games to some of our <unk>.

David T. Lougee: Look for some more announcements to come as the Diamond Sports situation plays out. As we look for additional ways to reach local audiences, we also closed on a strategic investment in 6AM City, a local media digital brand that sends daily newsletters each morning to subscribers across 26 different markets. As part of the agreement, 6AM City will include news and weather from our stations and their products, as well as promote our station's morning newscast and integrate headlines from our locked-on local podcast and video sports business into that 6AM City service.

David T. Lougee: Patients broadcast schedules look for some more announcements to come as the Diamond sports situation plays out.

David T. Lougee: As we look for additional ways to reach local audiences. We also closed on our strategic investment in <unk> City.

David T. Lougee: Local media digital brand that sense daily newsletters, each morning to subscribers across across 26 different markets.

David T. Lougee: Part of the agreement six am city will be including news and whether from our stations in their products as well as promoting our stations morning newscast in integrating headlines from our locked on local podcast and video sports business into that six am City service.

David T. Lougee: Finally, before I turn it over to Julie, a comment or two about who we are as an organization as we embark on this new chapter of Tegna. We remain focused on delivering on our commitments to all stakeholders. In 2023, we made further progress on embedding equity and inclusion as a cultural and business imperative at our company. Ensuring our content teams and editorial decision making are inclusive is a key strategic priority, enabling us to represent the perspectives and experiences of all of our audiences and the many communities we serve across this country while fostering trust in those same communities. We are a company with a passion and a purpose. The purpose, of serving the greater good of our communities.

Speaker Change: Finally, before I turn it over to Julien a comment or two about who we are as an organization as we embark on this new chapter of Tegra.

Speaker Change: We remain focused on delivering on our commitments to all stakeholders. In 2023, we made further progress on embedding equity and inclusion as a cultural and business imperative at our company.

Julien: Ensuring our content teams an editorial decision, making is inclusive is a key strategic priority, enabling us to represent the perspectives and experiences of all of our audiences and the many communities we serve across this country, while fostering trust in those same communities.

Julien: We are a company with a passion and a purpose.

Julien: The purpose.

Julien: The purpose of serving the greater good of our communities.

Julie Heskett: Our local newsrooms are doing hard, very important work in a very challenging environment, and I want to thank them, every one of them, for all they do every day. I encourage you to review our 2023 impact report that highlights all efforts to serve the greater good, which you can find now on our website. With that, I'll now turn the call over to Julie to walk you through our results in more detail. Dave, good morning everyone, and thank you for joining us.

Our local newsrooms are doing hard very important work in a very challenging environment.

Julien: I want to thank them every one of them for all they do every day.

Julien: I encourage you to review our 2023 impact report that highlights all efforts to serve the greater good which you can find now on our website.

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

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

Julie Heskett: Before I discuss our fourth quarter and full year 2023 financial results, I would like to reiterate our board and management team's ongoing focus on capital allocation, as Dave highlighted earlier. As you've heard from us in the past, we manage our business to create long-term shareholder value. Our predictable and dependable free cash flow as well as industry-leading balance sheet generate a significant return of capital to shareholders through ongoing share repurchases and dividends. As you recall, following the merger termination in May of 2023, we committed to quickly returning nearly $800 million of capital to shareholders, which accumulated over the duration of the deal. As of Thursday, February 22, we achieved that commitment when our second $325 million ASR program completed. As a result, we have repurchased approximately 50 million shares, or 22% of outstanding shares, since May of 2020. In addition, we also increased our dividend by 20% in May last year, resulting in a 63% increase since March 21.

Julie Heskett: Before I discuss our fourth quarter and full year 2023 financial results I would like to reiterate our board and management team's ongoing focus on capital allocation as Dave highlighted earlier.

Julie Heskett: You've heard from us in the past.

Julie Heskett: We manage our business to create long term shareholder value.

Julie Heskett: Predictable and dependable free cash flow as well as industry, leading balance sheet generate significant return of capital to shareholders through ongoing share repurchases and dividends.

Julie Heskett: As you recall following the merger termination in May of 2023, we committed to quickly returning nearly $800 million of capital to shareholders, which accumulated over the pendency of the deal as.

Julie Heskett: As of Thursday February 22nd we achieved that commitment when our second $325 million ASR program completed.

Julie Heskett: As a result, we have repurchased approximately 50 million shares for 22% of outstanding shares since may of 2020.

Julie Heskett: In addition, we also increased our dividend by 20% in May last year, resulting in a 63% increase since March of 'twenty one.

Julie Heskett: We expect to revisit our dividend with the board on a regular basis. Now that we've completed the return of capital we committed to last year, we are pleased to announce our new comprehensive capital allocation framework to support long-term shareholder value creation. Under this new framework, we expect to return 40 to 60 percent of our 2024 and 2025 free cash flows to shareholders in the form of share repurchases and dividends. The remaining free cash flow may be used for organic investments, bolt-on M&A, and preparing for future debt retirement. To facilitate repurchases, the board has authorized a new two-year, $650 million share repurchase program.

Julie Heskett: We expect to revisit our dividend with the board on a regular basis.

Julie Heskett: Now that we've completed the return of capital we committed to last year. We are pleased to announce our new comprehensive capital allocation framework to support long term shareholder value creation.

Under this new framework, we expect to return, 40% to 60% of our 2024 and 2025 free cash flow to shareholders in the form of share repurchases and dividends.

Julie Heskett: The remaining free cash flow may be used for organic investments.

Julie Heskett: Bolt on M&A and preparing for future debt retirement.

Julie Heskett: To facilitate repurchases the board has authorized a new two year $650 million share repurchase program.

Julie Heskett: In addition to the new capital allocation announcement, we are providing a two-year free cash flow guidance range of $900 million to $1.1 billion, cumulatively, for 2024 and 2025. Based on our free cash flow outlook and capital allocation framework, we expect to return, at the midpoint of our ranges, $500 million of capital to shareholders in share repurchases and dividends over the next two years. We are also committing to approximately $350 million in the first year of 2024, which is incremental to the previously announced ASR program that completed last year. Altogether, this represents an expected return of capital to shareholders of $1.3 billion at the midpoint since the date of the merger termination through year-end of 2015. In addition, we recently received $153 million of pre-tax cash proceeds from the sale of our interest in BMI that will be included in the newly announced return of capital to shareholders or pursuit of bolt-on M&A, as you've seen with our recent acquisition of Octillion Media.

Julie Heskett: In addition to the new capital allocation announcement, we are providing a two year free cash flow guidance range of $900 million to $1 $1 billion cumulatively for 2024 and 25.

Based on our free cash flow outlook and capital allocation framework, we expect to return at the mid point of our range is $500 million of capital to shareholders in share repurchases and dividends over the next two years.

Julie Heskett: We are also committing to approximately $350 million in the first year of 2024, which is incremental to the previously announced ASR program that completed last week.

Julie Heskett: All together this represents an expected return of capital to shareholders of $1 3 billion.

Julie Heskett: At the midpoint since the date of the merger termination year end of 'twenty five.

Julie Heskett: In addition.

Julie Heskett: The $153 million of pre tax cash proceeds from the sale of our interest in BMI that will be included in the newly announced return of capital to shareholders and or pursuit of bolt on M&A as you've seen with our recent acquisition of Actelion media.

Julie Heskett: Further, our financial discipline coupled with low leverage below three times and a manageable debt structure positions us with an extremely strong balance. All of our debt is fixed at an attractive 5.2% on a weighted average basis and includes no near-term bond maturities until March of 2016. In January, we amended and extended our revolving credit facility, right-sizing it to $750 million and reducing the fees on undrawn balances by half.

Julie Heskett: Further our financial discipline, coupled with a low leverage below three times and a manageable debt structure position us with an extremely strong balance sheet all of our debt is fixed rate at an attractive five 2% on a weighted average basis and includes no near term.

Julie Heskett: The maturities until March 26.

Julie Heskett: In January we amended and extended our revolving credit facility right sizing it to $750 million and reducing the fees of undrawn balances by half.

Julie Heskett: Let's now take a look at the drivers of our fourth quarter and full year 2023 financial performance, which met or exceeded all of our full year guidance. My comments today are primarily focused on Tegna's performance on a consolidated, non-gap basis to provide you with visibility into the financial drivers of our business trends as well as our operational results. You can find all of our reported data and prior period comparatives in our press release. As you are aware, our fourth quarter results were impacted by the temporary disruption of service with a large distributor during our retransmission consent negotiation. The disruption in service began on November 30th and was successfully resolved on January 13th.

Julie Heskett: Let's now take a look at the drivers of our fourth quarter and full year 2023 financial performance, which met or exceeded all of our full year guidance metrics.

Julie Heskett: My comments today are primarily focused on <unk> performance on a consolidated non-GAAP basis to provide you with the visibility into the financial drivers of our business trends as well as our operational results.

Julie Heskett: You can find all of our reported data and prior period comparisons in our press release.

Julie Heskett: As you are aware our fourth quarter results were impacted by the temporary disruption of service with a large distributor during our retransmission consent negotiations.

Julie Heskett: The disruption in service began on November 30th and was successfully resolved on January 13th apps.

Julie Heskett: Absent the unexpected disruption, our fourth quarter results would have met or exceeded consensus and finished within our guidance range. However, total company revenue for the quarter was down 21%, primarily due to the absence of cyclical political revenue from the midterm election in 2022, as well as the temporary service disruption I just mentioned. For the full year of 2023, total revenue finished at $2.9 billion, down 11% year to year due to the cyclical reduction of political ad revenue from the midterm election cycle in 2022. In addition, the absence of the Winter Olympics and Super Bowl on our large NBC portfolio in 2022 versus the Fox Super Bowl, our smallest portfolio in 2023, also had an impact on the even to odd year comparison.

Julie Heskett: Absent the unexpected disruption our fourth quarter results would have met or exceeded consensus and finished within our guidance range.

Julie Heskett: Total company revenue for the quarter was down 21%, primarily due to the absence of cyclical political revenue from mid term election in 2020, Q as well as the temporary service disruption I just mentioned.

Julie Heskett: For the full year of 2023 total revenue finished at $2 9 billion down.

Julie Heskett: Down 11% year to year due to the cyclical reduction of political AD revenue from the midterm election cycle in 2022.

Julie Heskett: In addition, the absence of Winter Olympics, and Super Bowl weighing on our large NBC portfolio in 2022.

Versus the Fox Super Bowl, our smallest portfolio in 2023 also had an input impact on the even to odd year comparison.

Julie Heskett: Now for some additional details on the components of our revenue. Full year 2023 subscription revenue of more than $1.5 billion was in line with the prior year driven by rate increases, partially offset by subscriber declines, as well as the temporary disruption of service. Excluding the service disruption, subscription revenue would have been up 2% compared to 2020. At this date, approximately 30% of traditional subscribers since November's earning call and expects to renew 20% at the end of this year and another 45% in 2025. Beyond this, 2024, in January of this year, we successfully renewed our affiliation agreement with NBC, which covers 20 Tegna markets across the United States, including 10 of the top 25 markets. The 20 markets renewed serve more than 21 million households and cover nearly 17% of the U.S. As a reminder, Tegna is the largest independent owner of NBC affiliates.

Julie Heskett: Now for some additional details on the components of our revenue.

Julie Heskett: Full year 2023 subscription revenue of more than one 5 billion was in line with prior year driven by rate increases, partially offset by subscriber declines as well as the temporary disruption of service I've mentioned.

Julie Heskett: Excluding the service disruption subscription revenue would have been up 2% compared to 2022.

Julie Heskett: As Dave.

Julie Heskett: Intimately, 30% of traditional subscribers since November, earning call and expects to renew 20% at the end of this year and another 45% in 2025.

Julie Heskett: Beyond this 2024 in January of this year, we successfully renewed our affiliation agreement with NBC, which covers 20, Ted no markets across the United States, including 10 of the top 25 markets.

The 20 markets renewed serve more than 21 million households, and covers nearly 17% of the U S. As a reminder, <unk> is the largest independent owner of NBC affiliate.

Julie Heskett: Moving to advertising and marketing services, advertising trends in the fourth quarter showed sequential improvement compared to the third quarter, partially due to political crowding out in the fourth quarter of 2022. Nonetheless, advertising trends showed continuous sequential improvement throughout the entire year of 2023. Underlying trends excluding premium for the fourth quarter were up mid single digits above last year. Nearly all categories of advertising were positive in the fourth quarter, including automotive, services, retail, home improvement, entertainment, media, and telecom, travel and tourism, and packaged goods.

Julie Heskett: Moving to advertising and marketing services advertising trends in the fourth quarter showed sequential improvement compared to third quarter, partially due to political crowd out in the fourth quarter of 2022, Nonetheless advertising trends showed continuous sequential improvement throughout the entire year of 2023.

Underlying trends, excluding premium <unk> for the fourth quarter were up mid single digits above last year nearly all categories of.

Julie Heskett: Advertising trends were positive in the fourth quarter, including automotive services retail home improvement Entertainment media and telecom.

Julie Heskett: <unk> tourism and packaged goods.

Julie Heskett: Now turning to Premion, which continues to strengthen its position in the convergent TV marketplace through additional local advertising to advertisers who are increasingly allocating dollars to streaming advertising. During the quarter, Premium continued to innovate with its sales conversion attribution offering. This solution enables advertisers to directly link their streaming advertising spend to business outcomes, which demonstrates a premium superior return on ad spend. Similar to previous quarters throughout 2023, Premium Revenue was down year over year impacted by the loss of a large national account in the fourth quarter of 2022, which we've now cycled through. However, Premium Local Revenue was up year over year in the fourth quarter. Premium's primary focus on growth is local OTT revenue, where it is uniquely positioned to win. Premium Local Revenue growth remained strong and finished up double digits for the full year.

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

Julie Heskett: During the quarter premium continue to innovate with its sales conversion attribution offering this solution enables advertisers to directly link their streaming advertising spend to business outcomes, which demonstrates premium superior return on ad spend.

Julie Heskett: Similar to previous quarters throughout 2023 premium revenue was down year over year impacted by the loss of large national account in fourth quarter of 2022, which we've now cycled through however premium local revenue was up year over year in the fourth quarter premiums primary focus on the growth.

Julie Heskett: Local OTT revenue, where it is uniquely positioned to win premium local revenue.

Julie Heskett: Growth remained strong and finished up double digits for the full year.

Julie Heskett: In February, Premion announced and simultaneously closed on the acquisition of Octillion Media, a next-generation demand-side platform focused on local streaming advertising. We are enthusiastic that that acquisition will expand our capabilities by combining Octillion's cutting-edge technology with Premion's advertising solution. Ownership of these technologies will further enable product innovation, improve operational efficiencies, and drive accelerated growth. The transaction is expected to be accretive to Tegna's free cash flow and EPS within 12 months. Turning now to expenses, for the quarter, non-GAAP operating expenses of $577 million were down 2% compared to the fourth quarter of 2021. Including programming costs, non-GAAP operating expenses for the quarter were down 4% compared to 2022, driven by lower variable cost of sales for digital revenue and operational expense management improvements. Adjusted EBITDA was $177 million, producing a 24% margin for the quarter.

Julie Heskett: In February premium announced and simultaneously closed on the acquisition of Actelion media, a next generation demand side platform focused on local streaming advertising. We are enthusiastic at the acquisition will expand our capabilities by combining octillion cutting edge technology with pre.

Julie Heskett: <unk> advertising solution.

Julie Heskett: Ownership of these technologies will further enable product innovation improve operational efficiencies and drive accelerated growth. The transaction is expected to be accretive to <unk> free cash flow and EPS within 12 months.

Turning now to expenses for the quarter non-GAAP operating expenses of $577 million were down 2% compared to fourth quarter of 2022.

Julie Heskett: <unk> programming costs non-GAAP operating expenses for the quarter were down 4% compared to 2022, driven by lower variable cost of sales for digital revenue and operational expense management improvement.

Julie Heskett: Adjusted EBITDA was $177 million, producing a 24% margin for the quarter.

Julie Heskett: For the full year, non-GAAP operating expenses of $2.3 billion were up slightly year over year, driven by higher programming costs, mostly offset by lower variable cost of sales with digital revenue and operational expense management improvements. Full year adjusted EBITDA was $742 million, producing a 26% margin. We continue to generate strong free cash flow, $130 million for the quarter and $459 million for the full year, driven primarily by our high margin, durable subscription revenues and continued thoughtful expense management. We ended the year with total debt of $3.1 billion and cash of $361 million. Net leverage ended the year at 2.8 times, well below our three times full year guidance.

For full year non-GAAP operating expenses of $2 3 billion were up slightly year over year, driven by higher programming costs, mostly offset by lower variable cost of sales with digital revenue and operational expense management improvement.

Julie Heskett: Full year, adjusted EBITDA was $742 million, producing a 26% margin.

Julie Heskett: We continue to generate strong free cash flow of $130 million for the quarter and $459 million for the full year, driven primarily by our high margin variable subscription revenues and continued thoughtful expense management.

Julie Heskett: We ended the year with total debt of $3 1 billion and cash of $361 million net.

Julie Heskett: Net leverage ended the year at two eight times well below our three times full year guidance.

Julie Heskett: Turning to our forward-looking outlook, as I mentioned earlier, we are providing a two-year free cash flow guidance range of $900 million to $1.1 billion cumulatively for 2024 and 2025. This is the first time we're providing a two-year guidance range to reflect confidence in the visibility and durability of our cash flows. To discuss some of the drivers of this outlook, 2024 will be a strong year at Tegna, driven by our favorable portfolio of stations in key markets benefiting from the always robust presidential election cycle, the Summer Olympic Games in Paris, and the Super Bowl that just aired on CBS. Also driving our outlook is the renegotiation of network agreements Dave mentioned earlier. With 93 percent of our Big Four subscribers under long-term network agreements through late 2026, we expect the growth of reverse compensation fees going forward to be negligible. The majority of our reverse compensation payments are variable, tied to subscribers, providing financial stability with downside protection during this evolving media landscape. Tegna's high-margin subscription and political revenues produce annuity-like EBITDA and free cash flow and comprise more than 50% of our total revenue.

Julie Heskett: Turning to our forward looking outlook as I mentioned earlier, we are providing a two year free cash flow guidance range of 900 million to $1 $1 billion cumulatively for 2024 and 25.

Julie Heskett: This is the first time, we're providing a two year guide to reflect confidence in the visibility and durability of our cash flows to.

Julie Heskett: Can you discuss some of the drivers of this outlook 2024 will be a strong year of tenure driven by our favorable portfolio of stations in key markets benefiting from the always robust presidential election cycle. The summer Olympic games in Paris, and Super Bowl that just aired on CBS.

Julie Heskett: Also driving our outlook is the racking is a renegotiation of network agreements, Dave mentioned earlier with 93% of our big four subscribers under long term network agreements through late 2026, we expect the growth of reverse compensation fees going forward to be negligible.

Julie Heskett: The majority of our reverse compensation payments are variable tied to subscribers, providing financial stability with downside protection during this evolving media landscape.

Julie Heskett: As high margin subscription and political revenues produce annuity like EBITDA and free cash flow and comprised more than 50% of our total revenues.

Julie Heskett: Lastly, as Dave noted, building on our track record of being a best-in-class operator, our transformation initiatives to improve operational efficiencies and reduce costs are underway. We expect the benefits of these efforts to occur in the back half of 2024 and will continue through 2025. We will provide updates on the sizing of these initiatives in the coming quarters. Let me give you an overview of the full year 2024 guidance elements. Corporate expense is expected to be in the range of $40 to $45 million, and depreciation is projected to be in the range of $56 to $60 million. Amortization is projected to be in the range of $46 to $48 million, and interest expense is expected to be in the range of $170 to $173 million. We expect capital expenditures to be in the range of $62 to $67 million. We forecast an effective tax rate in the range of 23.5 to 24.5 percent.

Julie Heskett: Lastly, as Dave noted building on our track record of being a best in class operator, our transformation initiatives to improve operational efficiencies and reduce cost are underway. We expect the benefits of these efforts to occur in the back half of 2024 and will continue through 2025.

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

Speaker Change: Let me give you an overview of full year 2024 guidance element corporate expense is expected to be in the range of $40 million to $45 million.

Speaker Change: <unk> is projected to be in the range of $56 million to $60 million.

Speaker Change: Amortization is projected to be in the range of $46 million to $48 million.

Speaker Change: Interest expense is expected to be in the range of $170 million to $173 million.

Speaker Change: We expect capital.

Speaker Change: Expenditures to be in the range of $62 million to $67 million.

Speaker Change: We forecast an effective tax rate in the range of $23 five to 24, 5%.

Julie Heskett: Finally, we expect to end 2024 with net leverage below three times. In an effort to help forecast our near-term results, I'll provide quarterly-ahead financial guidance metrics as follows. We expect first quarter total company revenue to be down low to mid-single-digit percent year-over-year due to lower subscription revenue, which includes being dark with a distributor at the beginning of the year. We forecast operating expenses for the first quarter to increase in the low single-digit percent range compared to the first quarter of 2023, driven by increases in stock-based compensation and programming expenses.

Speaker Change: Finally, we expect to end 2024 with net leverage below three times.

Speaker Change: In an effort to help forecast our near term results I'll provide quarter ahead financial guidance metrics as follows.

Speaker Change: We expect first quarter total company revenue to be down low to mid single digit percent year over year due to lower subscription revenue, which includes being dark with a distributor at the beginning of the year.

Speaker Change: We forecast operating expenses for the first quarter to increase in the low single digit percent range compared to first quarter of 2023, driven by increases in stock based compensation and programming expenses.

Operator: With that, we'll now turn to Q&A and take your questions. Thank you. Thank you. Thank you. Thank you. If you'd like to ask a question, please press star 1. If your question has been answered and you would like to remove yourself from the line, please press star 1 again.

Speaker Change: With that we'll now turn to Q&A and take your question.

Speaker Change: Yes.

Speaker Change: Thank you if you'd like to ask a question. Please press star one one.

Speaker Change: Your question has been answered and you'd like to remove yourself from the queue. Please press star one again, our first question comes from Dan <unk> with the benchmark Company. Your line is open.

Daniel Louis Kurnos: Our first question comes from Dan Kurnos with the Benchmark Company. Your line is open. Great. Thanks. Good morning.

David T. Lougee: Lots to unpack here. I really appreciate all the color guys and really like the two-year cash guide and the free cash guide. Julie and Dave, look, you know, just given what you guys said about, you know, kind of your unique dynamics on the reverse side here with negligible reverse compensation growth, given the variable nature, I guess, how do we think about kind of net in general from here, given, you know, the conversations people are having about rate versus sub attrition and given how much you guys have up for renewal? And then on core, since you guys flagged the Olympics, you know, and we do have politics in the back half of the year, which could drive rates up, I guess, how are we just thinking about kind of core trends as we go through the year? Thanks, Danny. Good morning.

Dan: Great. Thanks, Good morning lots of unpack here really appreciate all the color guys and really like the two year cash guide.

Dan: Free cash guide.

Speaker Change: Julian David.

Given what you guys said about.

Kind of your unique dynamics on the reverse side here with negative negligible reverse compensation growth given the variable nature.

Speaker Change: Yes.

How do we think about kind of net in general from here given.

Speaker Change: The conversations people are having about rate versus sub attrition and given how much you guys have up for renewal and then on core since you guys flagged The Olympics and we do have political in the back half of the year, which could drive rates up I guess, how are we just thinking about kind of core trends as we go through the year.

Speaker Change: Thanks.

David T. Lougee: Yeah, so I took, as you know, we don't guide on new net retrans, but I was, what I would say is, when Julie says about the reverse comp side negligible growth being negligible, and I would even add to that negligible at best. So we now have a right sizing of the relationship to that size of the model. So what I would say about net retrans is that it will be stable, right on a go-forward basis, and that this helps stabilize that for us as a company. So again, we don't guide to it, but simply put, internally, one of our huge foundations relative to the cash flow guide we put out and the durability and sustainability of our model is net retrans. And we'll have more chances to reprice that obviously at the end of this year, but we don't, that number is without any subs being up until the toward the back half of this year. And I'll let Julie take it on core.

Speaker Change: Thanks, Dan and good morning, Yes. So as you know we don't guide on new net Retrans, but I was what I would say is when Julie says about the reverse comp side negligible growth being negligible I would even add to that negligible at best.

Speaker Change: So we now have a.

Speaker Change: Right sizing of the relationship to that size of the model. So what I would say about net retrans is that it will be stable on a go forward basis and that this helped stabilize that for us as a company. So again, we don't guide to it but.

Speaker Change: Simply put internally.

Speaker Change: One of our huge foundations relative to the cash flow guide, we put out and the durability and sustainability of our model is that net retrans and we'll get we'll have more chances to reprice that obviously the end of this year, but that number is without any subs being up until to the towards the back half of this year.

Speaker Change: Hi.

Speaker Change: And I'll tell I'll, let Julia taken encore, yeah as far as the advertising trends.

Julie Heskett: Yeah, as far as advertising trends go, you know, we saw 2023 be sequentially improving throughout the year. We're seeing some softness on the national side as we're into the first quarter of 2024, but we see local hanging on really strong and believe that the full year of advertising, both with the Super Bowl as well as the Olympic tentpole events this year, we will see advertising and marketing services, you know, flat up throughout the year. And Dan, I'll just add to that, as Julie has spoken about over time, really since COVID services have just continued. I mean, it's clearly an economic phenomenon engine across the country, entrepreneurship and the creation of sustainable, small, but really good, healthy, mid-sized businesses in services.

Speaker Change: We saw 2023 be sequentially improving throughout the year.

Speaker Change: We are seeing some softness on the national side as we're into first quarter of 2024, but we see local hanging on really strong and believe that the full year of advertising both with the Super Bowl as well as the Olympic Tentpole events. This year, we will see advertising and marketing services.

Speaker Change: Flat to up throughout the year and Dan I would just add to that as Julie has spoken about over time really since Covid services has just continue I mean, it's clearly an economic.

Speaker Change: Phenomenon engine across the company the entre to country, the entrepreneurship and the creation of sustainable small, but really good healthy mid size business and the services. We have done a great job finding those businesses and be in a marketing arm for them and it's turned into just.

David T. Lougee: We have done a great job finding those businesses and being a marketing arm for them. And it's turned into just, you know, an extraordinarily large category for us now. And that is just very, very durable and growing.

Speaker Change: Extraordinarily large category for us now and that is just very very durable and growing.

Daniel Louis Kurnos: Got it. Super excited to hear about what you're doing with Premium too, Dave, but I'll leave that for other people. Thanks for the caller guys. Appreciate it.

Speaker Change: Got it Super excited to hear about what youre doing with premium to Dave, but I'll leave that for other people. Thanks for the color guys I appreciate it thanks Dan.

Steven Lee Cahall: Thanks, Dan. Thank you. Our next question comes from Steven Cahall with Wells Fargo. Your line is open. Thank you. I've got a few.

Speaker Change: Thank you. Our next question comes from Steven Cahall with Wells Fargo. Your line is open.

Steven Lee Cahall: Thank you.

David T. Lougee: So maybe just first on the reverse stuff. Agree, very interesting commentary there. I know you won't comment on any of your specific terms with your big four agreements, but you're particularly heavy on one where, you know, we thought it had always been variable. I'm just wondering if you've also been able to convert numerous others that have previously been fixed to variable reverse comp as well. That's giving you that, you know, minimal increase in your reverse expectation ahead. As you can appreciate, we never talk about individual negotiations with networks.

Steven Lee Cahall: So maybe just first on the reverse stuff agree very interesting commentary there.

Steven Lee Cahall: I know you won't comment on any of your specific terms with your big four agreements that you are particularly heavy to one where we thought has always been variable.

Steven Lee Cahall: Wondering if you've also been able to convert.

Steven Lee Cahall: Numerous others that have previously been fixed.

Steven Lee Cahall: To variable reverse comp as well, that's giving you that minimal increase in your reverse expectation ahead.

Speaker Change: Hi, Stephen Yes, so as you can.

Speaker Change: I appreciate we never talk about individual negotiations with networks.

David T. Lougee: All I would say is, So we had more than one agreement up last year. You've never heard us say before that the majority is, you know, we've said we've had a mix, but you've never heard me say before that we have a majority of our subs tied to a variable model. So I'll just leave it at that. That's fair enough.

Stephen: All I would say and so we had more than one agreement up last year, you've never heard us say before that the majority.

Stephen: As we've said we've had a mix we've never heard me say before that we have a majority of our subs tied to a variable model. So I'll just leave it at that.

Steven Lee Cahall: I can conclude it from there. And then just on the Q1 guide, you know, I know the blackout is dragging some of the revenue down year on year. But it seems like that, you know, politics should be up year on year.

Speaker Change: That's fair enough I can I can get greater from there.

Speaker Change: Then just on the Q1 guide.

Speaker Change: No. The blackout is dragging some of the revenue down year on year. It seems like that political it should be up year on year, I think youre starting to comp some of the headwinds you had at premier on so.

Julie Heskett: I think you're starting to compare some of the headwinds you had at Premium. So I'm curious if distribution would be up year on year X the blackout and if total revenue would be up year on year X the blackout. Well, on total revenue, on the advertising side, it's a little hard for us to know what the blackout cost us, as it always is during those blackouts. It has some impact, so there's a little bit of noise in that, and I'll let Julie speak about retransfer.

Speaker Change: So I am curious if distribution would be up year on year ex the blackout and if total revenue would be up year on year ex the blackout.

Speaker Change: Well on total revenue on the advertising side, it's a little hard for us to know what the blackout cost us as it always is during those blackouts. It has some impact so there's a little bit of noise in that and I'll, let Julie speak to Retrans.

Steven Lee Cahall: Yeah, so our first quarter guide, just again, total revenue down in that low to mid range does include the blackout of DirecTV. Excluding that, we would size DirecTV, you heard in the fourth quarter, so you can make your assumptions on the first quarter. And Premium, while it cycled the large account last year, there are still headwinds on the national side of advertising in general, and first quarter always being our lowest advertising quarter throughout the year, we would expect those growth rates to ramp up through the year, not necessarily in Q1. And then finally, on capital allocation, if I just take the midpoint of your free cash flow guide and the midpoint of your percentage that you'll do in dividends and buybacks, that's $500 million over two years. And then you've got the BMI proceeds as well. So that would imply, you know, that it's over 600 but still less than your new authorization.

Julie Heskett: So our first quarter guide just again total revenue down in that low to mid range does include the blackout of Directv excluding that we would size Directv you heard in the fourth quarter. So you can do your assumptions on the first quarter.

Julie Heskett: And premium <unk> wallet has cycled the large.

Julie Heskett: Count last year, there are still headwinds on the national side of advertising in general and first quarter always being our lowest advertising quarter throughout the year, we would expect those growth rates to ramp through the year not necessarily in Q1.

Julie Heskett: Okay.

Speaker Change: Got it and then finally on capital allocation, if I just take the midpoint of your free cash flow guide and the midpoint of your percentage that youll do in dividends and buybacks. That's 500 million over two years and then you've got the BMI proceeds as well.

Speaker Change: So that would imply.

Speaker Change: It's over 600, but it's still less than your new authorization. So am I just thinking about all of those components correctly, and then to get to the two year authorization.

Julie Heskett: So am I just thinking about all those components correctly and then to get to the two-year authorization. You know, you just need to be at the higher end of your free cash flow guidance and your cash deployment guidance is all correct. Thank you. Hi Steven, it's Julie.

Speaker Change: Just need to be at the higher end of your free cash flow guidance and your cash deployment guidance is all that correct. Thank you.

Julie Heskett: Yes, I think you are thinking of all of that correctly, and I just want to reinforce our capital allocation framework, which should provide a clear line of sight for consistent and predictable shareholder returns. But it does include three different components, shareholder return, organic investments, and M&A opportunities. And so we will always be smart about how we use our cash, and we will always look for return on investments, as well as the cost of debt, when making decisions about what we do with the remaining 50% of that guide. Thank you. Thank you. Our next question comes from Craig. Partners. Your line is now open.

Speaker Change: Hi, Stephen It's Julie Yes, I think you are thinking of all of that correctly and I just want to reinforce our capital allocation framework, which should provide a clear line of sight for consistent and predictable shareholder returns, but it does include three different components.

Julie Heskett: Shareholder return.

Julie Heskett: Organic investments and M&A opportunities and so if we will always be smart in how we use our cash and we will always look for return on investments as well as cost of debt and making decisions. What we do with the remaining 50% of that guide.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Craig Huber with Huber Research Partners. Your line is open.

Craig Anthony Huber: Great, thank you. Can you just go a little more in depth about this small acquisition you did and what it brings to you guys, technology, et cetera, what it means for your revenue? Sure, Craig. This is Tom Cox. Good to be with you all this morning.

Craig Anthony Huber: Great. Thank you can you just go a little more in depth about the small acquisition you did next to premium on what it brings to you guys.

Craig Anthony Huber: The technology et cetera, and just what it means for your revenues in that segment. Please follow up.

Craig Anthony Huber: Sure Craig This is Tom Cox good to be with you. All this morning, So super excited about what <unk> brings to us moving forward on the premium side.

Tom Cox: So, I'm super excited about what Octillion brings to us moving forward on the Premium side. There are a couple of things I'd mention off the top. So, owning our technology allows us to exercise more operational control on the delivery of campaigns, so that's a distinct advantage. Second, it enables us to drive greater innovation and product throughput. We're not relying on third parties to build the next generation of products that we need and our advertisers are looking for. And third, it allows us to improve our overall EBITDA margins because we're not paying the expense associated with those third-party vendors. I would also say to your question around revenue growth: Octillion's a small but powerful company, and we expect that we'll be integrating Octillion through much of this year.

Tom Cox: Couple of things I had mentioned.

Tom Cox: So.

Tom Cox: Owning our technology allows us to exercise more operational control on the delivery of campaigns.

Tom Cox: A distinct advantage.

Tom Cox: And enables us to drive greater innovation and product throughput, we're not relying on third parties to build the next generation of product that we need.

Tom Cox: Our advertisers are looking for and third it allows us to improve our overall.

Tom Cox: EBITDA margins, because you're not paying the expense associated with those third party vendors I would also say to your question around revenue growth are trillions of small, but powerful company and we expect that we will be integrating octillion through much of this year, but once the company is integrated into Permian.

Tom Cox: But once the company is integrated into Premium, you have a unique marriage of a great sales platform, leveraging our rich broadcasting history and our hometown advantage in many of our markets with cutting-edge technology. And we're very bullish on what that can do both for revenue growth as well as EBITDA growth beyond the remainder of this year and into next. Thank you. And then Julie or Dave, whoever wants to answer this, please, again, just go through a little more depth here about your outlook for revenue growth this year and how you think it'll sort of fade out over the course of the year. It sounds like you think it'll fade in.

Tom Cox: You have a unique marriage of our great sales platform, leveraging our rich broadcasting history in our hometown advantage in many of our markets with a cutting edge technology and we're very bullish on what that can do both for revenue growth as well as EBITDA growth beyond the remainder of this year and into next.

Speaker Change: Thank you for that and then Julia Dave or whoever wants to answer this.

Tom Cox: Premium.

Speaker Change: Got a little more depth here about your outlook for revenue growth. This year, how you think youll sort of phase in over the course of the year. It sounds like you think it would be.

Tom Cox: The trends will improve as the year goes on, but I want to... Correct. Craig, this is Tom again.

Speaker Change: The trends will improve as the year goes on but I want to put words in your mouth. Thank you correct correct. Craig This is Tom again.

Tom Cox: We expect the trajectory on Premion revenue to improve throughout the year. A couple of things I would mention. First, we have fully cycled against that national account.

Speaker Change: Expect the trajectory on premium revenue will improve throughout the year.

Tom Cox: A couple of things I had mentioned first we have fully cycled against that national account as Julie alluded there is.

Tom Cox: As Julie alluded to, there is the same sort of dynamics from a national and local perspective that we're seeing on the linear side in the Premion business, which isn't surprising because, remember, what Premion is really designed to do is take advantage of the converged linear plus streaming ecosystem that we're working in. So many of the big customers that Premion has today overlap strongly with the Tegna linear portfolio. We do expect revenue improvement throughout the year. And obviously, the faster we can get Octillion integrated into Premion, the more that revenue trajectory can improve as we bring more innovative products to market. And if I could just squeeze in one more, if that's okay.

Tom Cox: The same sort of dynamics from a national and local perspective that we're seeing on the linear side.

Tom Cox: In the Permian business, which isn't surprising because remember.

Tom Cox: What <unk> is really designed to do is take advantage of the converged linear plus streaming ecosystem that we work in so many of the customers who <unk> have our has today overlap strongly with.

Tom Cox: Taking the linear portfolio, we do expect revenue improvement throughout.

Tom Cox: The the year.

Tom Cox: And obviously the faster we can get octillion integrated into Permian.

Tom Cox: The more that revenue trajectory can improve as we bring more innovative products to market.

Speaker Change: And then if I could just squeeze in one more if that's okay.

Craig Anthony Huber: Advertising, Dave, I've just told Julie, to the whole company in the first quarter. Just go through a little bit further, what you're doing, will benefit you guys on a year-over-year basis. The underlying trend there is the car getting worse or better, or ask the... Yeah, absolutely. So first quarter automotive continues to be strong, the underlying trends there continue to be strong, not as strong as we saw in the back half of 2020. We also have other categories that continue to remain strong, such as services, which we talk about every single quarter, specifically home services, but also legal services. Health care is also trending favorably in Q1. And our digital revenues are projected to be up in Q1 as well, and the Super Bowl is approximately one percentage point of our total revenues in Q1, or we've sized that in the past, it's approximately $10 million of incremental revenue. But I would say, I'll just add to that, Craig, what you would have added before, is that our underlying trends are pretty good. We've got noise in the system on the national local side that we've talked about a little bit and with premium, but, and we actually had an outage for 45 days with a major distributor that doesn't help.

Speaker Change: <unk>, Dave just truly for.

Speaker Change: For the whole company in the first quarter just go through a little bit further what your outlook is there for the first quarter was the Super Bowl benefit you guys on the year over year basis. The underlying trends there is auto getting worse or better first we saw in the fourth quarter for example, or after the election in the fourth quarter.

David T. Lougee: Yes, absolutely so.

David T. Lougee: First quarter automotive continues to be strong the underlying trends there continues to be strong not as strong as we saw in the back half of 2020.

David T. Lougee: 'twenty, three but still a cyclic cycling against better comps.

David T. Lougee: Fill up mid single digits and we also have other categories that continue to remain strong such as services, which we talk about every single quarter, specifically home services, but also legal services healthcare is also.

David T. Lougee: Trending favorably in Q1.

David T. Lougee: And our digital revenues are projected to be up in Q1 as well.

David T. Lougee: And Super Bowl is.

David T. Lougee: <unk> one percentage point of our total revenues in Q1 or we've sized that in the past, it's approximately $10 million of incremental revenue.

But I would say I'll just add to that Greg I think you had at before is our underlying trends are pretty good we've got noise in the system on the national local side that we've talked about a little bit and with premium, but and we obviously had we had an outage for 45 days with a major distributor that doesn't help it but but on the underlying trends appear to be pretty favorable on advertising writ large for us.

David T. Lougee: But the underlying trends appear to be pretty favorable on advertising writ large for us. Okay, just to be clear, my last thing here, the Super Bowl. Do you think it's 10 million incremental in the first quarter versus... Fox? That's a good guide.

Speaker Change: Okay just to be clear my last thing here at the Super Bowl you think its 10 million incremental in the first quarter versus it being on Fox last year is that what you're saying.

Okay. That's a good that's a good guide.

Craig Anthony Huber: Thank you. Thank you. Our next question comes from James Goss of Barron County. Okay, thanks. A couple of other points of clarification with Kilian. It mentions Connected TV.

Speaker Change: Okay cool thank you guys.

Speaker Change: Thank you. Our next question comes from James Goss with Barrington Research. Your line is open.

James Charles Goss: Okay. Thanks.

James Charles Goss: A couple of other points of clarification with Actelion.

James Charles Goss: And is this somewhat of an installation from a subscriber churn to this faster growing area right now? And also, does this extend to the partnership, like I know Gray is affiliated with you and Premium, so it would relate to any of their involvement? and that sector as well. Is this a part of the plan? separately.

James Charles Goss: Mentioned the connected TV.

James Charles Goss: Is this somewhat of an installation from.

James Charles Goss: Subscriber churn to this faster growing area right now.

James Charles Goss: Also does this extend to the partnership.

James Charles Goss: Gray is affiliated with you and premium so it would relate to any of their involvement in that sector as well.

James Charles Goss: Is this a part of Joanne.

Tom Cox: Correct, Jim. So this is Tom again. A couple of thoughts. So, yes, at its very core, the Premion business is designed to take advantage of the migration of advertising dollars from linear to streaming. Where we are uniquely positioned in that change or that shift is that we leverage our strong network of local stations. So, as I've shared with you all in the past, between the Gray stations, the Tegna stations, as well as Premion's direct sales force, we have what we sort of characterize as a beat on the street and markets reaching about 80% of U.S. households across the country.

Speaker Change: Separately, yes.

Speaker Change: Yes, that's correct.

Speaker Change: Chip. This is Tom again, a couple of thoughts so yes.

Speaker Change: Its very core.

Speaker Change: <unk> business is designed to take advantage of the migration of advertising dollars from linear to streaming.

Tom Cox: We are uniquely positioned in that.

Tom Cox: That change or that shift is that we leverage our strong network of local station. So as I've shared with you all in the past between the gray stations the <unk> stations as well as premium direct sales force, we have what we sort of characterize as feet on the street and markets, reaching about 80% of.

Tom Cox: The us households across the country and that is a formidable and very powerful sales force and really bringing actelion technology, and just allows us to deliver better and more innovative product to that sales force and yes to your second question.

Tom Cox: And that is a formidable and very powerful sales force. And really, bringing Octillion's technology in just allows us to deliver better and more innovative products to that sales force. And yes, to your second question, Gray, as a strategic partner investor in Premion, will also be able to take advantage of the Octillion platform and is super excited to bring to Gray all the benefits that Tegna will also benefit from.

Tom Cox: <unk> as a strategic partner and Investor in premium will also be able to take advantage of the actelion platform and Super excited too to bring to gray.

Tom Cox: The benefits that <unk> will also benefit from.

David T. Lougee: All right, thank you for that. Secondly, you did mention both on M&A potential. And I'm wondering if octillion is the sort of thing you had in mind, or if you're also talking about station acquisitions if any of those are available, and on a related basis, do you think the regulatory environment could change at all if there was a change in administration and would that benefit some of the M&A options you might have? Hey, good morning, Jim. This is Dave.

Speaker Change: Alright, thank you for that.

Speaker Change: Secondly, you did mention.

Speaker Change: Bolt on M&A potential and I'm wondering if it's.

Speaker Change: Yes.

Speaker Change: <unk> is the sort of thing you had in mind or if youre also talking about.

Speaker Change: Station acquisitions, if any of those are available.

Speaker Change: And then a related basis.

Speaker Change: Do you think the regulatory environment.

Speaker Change: Changed at all if there was a change of administration and would that benefit.

David T. Lougee: Again, I'll take both of those. Yeah, so Octillion is exactly the type of bullpond when we talk about bullpond M&A, exactly that, right? Something that doesn't flex the balance sheet really at all and that we can help drive our businesses, either existing ones or other ones that we build organically, like premiums of the future. So that's the right spot on relative to the bullpond acquisition topic. From a regulatory standpoint, we'll see, Jim. Obviously, historically, Republican administrations are typically more deregulation than Democratic ones.

Some of the M&A options you might have.

Speaker Change: Hey, Good morning, Jim This is Dave again, I'll take both of those yes. So actelion is exactly the type of bolt on when we talk about bolt on M&A exactly that right something that doesn't flex the balance sheet really at all.

David T. Lougee: And with that we can help drive our businesses either existing ones are the ones that we build organically like premiums of the future. So that's right.

David T. Lougee: That's right spot on relative to the bolt on acquisition topic from a regulatory standpoint, we'll see Jim obviously, historically Republican administrations are typically more deregulation than democratic ones and clearly this particular Democratic administrations particular Democratic FCC has been.

David T. Lougee: And clearly, this particular Democratic administration, this particular Democratic FCC has been obviously quite rigid on keeping rules or even rolling back rules from where they were, and I'll leave it at that. But yes, I think a change in administration is potentially an opportunity. Also, the question would be, even if it was the same administration, whether there might be a change in leadership too.

David T. Lougee: Obviously quite rigid on keeping rules are even growing backwards from where they were on I'll leave it at that but yes, I think the change in administration has potential and opportunity is also the question would be even if there was the same administration, whether there might be a change in leadership too. So it remains to be seen we are watching closely but to your earlier conversation at the moment I don't.

David T. Lougee: So it remains to be seen. We're watching closely. But in your earlier conversation, at the moment, I don't think we'll ever say never.

James Charles Goss: But given where we are at the cap, I wouldn't say our focus is on Station M&A. All right, thank you. Thanks, Jim. Thank you. As a reminder, if you'd like to ask a question, please press star 1. Our next question comes from David Karnofsky with J.P. Morgan. Your line is open.

David T. Lougee: We'll never say never but given where we are at the cap I wouldn't say our focus is on station M&A.

Speaker Change: Alright, thank you thanks.

Speaker Change: Thanks, Jim.

Speaker Change: Thank you as a reminder, if you'd like to ask a question. Please press star one one.

Speaker Change: Our next question comes from David Karnofsky with Jpmorgan. Your line is open.

David Karnofsky: Thank you. Just given the added visibility and distribution and the variable model on the affiliate side, how do you think of the key drivers of the $200 million? in your free cashflow guide is that primarily building, with variability around advertising. And then the second question, Dave, you've noted Tegna's recent coverage of local sports; some of that's moving over from RSN. Douglas Goss, Craig Huber, Douglas Arthur, Steven Cahall, Daniel Kurnos, Steven Heskett, Tegna Inc., how outside? Yeah, I'll take the second one first, Dave, and good morning to you, too, as well.

David Karnofsky: Alright. Thank you just given the added visibility in distribution in the variable model on the affiliate side. How do you think are the key drivers of the $200 million range in your free cash flow guide is that primarily building in for variability around advertising and then the second question, Dave You've noted <unk> recent carriage in local sports some of Thats moving over from <unk>.

David Karnofsky: <unk> the San Antonio Spurs for instance, in your footprint as you've gone through some recent distribution renewals I'm just interested to hear how mvpds are looking at this content, whether that's a factor at all in negotiations just given how outsize orison fees have been in the past. Thank you.

David T. Lougee: Look, I'll just simply, I don't want to talk about any distribution deals, but I'll just, like, academically, I'll put it this way. Obviously, local sports are amongst the most valuable content to consumers. And so if you just take that upstream relative to distributors, it's very valuable to distributors as well. There might have been a loss of a gap in value between what distributors, you know, had been paying under the old model. And so I think there's this change in ecosystem relates to some kind of rationalization of that from the distributor's standpoint. So, but I'll just simply answer the question and say it certainly has value to distributors. Now, might some out there wish that they could be gone from those fees and never pay anymore?

Speaker Change: Yes, I'll take the second one first Dave and good morning to you too as well look I'll just simply on a talk about any distribution deals, but I'll just academically.

Speaker Change: I'll put it this way obviously local sports is amongst the most valuable content to consumers and so if you just take that upstream relative to distributors, it's very valuable to distributors as well there might have been a loss of a gap in value between what distributors had been paying under the old model and so I think there is.

Speaker Change: This change an ecosystem relates to some kind of more rationalization of that from the distributors standpoint, so but I'll just simply answer the question I would say it certainly has value to distributors now might some out there wish that they could be gone of those fees and never pay anymore, certainly so but they absolutely has value to <unk>.

David T. Lougee: Certainly so. But they absolutely have value to distributors, and we do know that. And I'll take the first question about the range of our free cash flow guide and what factors would play into that. And I would say it's multifaceted, mostly around economic environments. So advertising would be one trigger of that range. Subscriber trends would be another factor. We do continue to forecast subscriber declines. But, you know, for the next two years, that is definitely a factor that may impact that. And then the third would be political advertising, too. So, you know, because, as you know, it's given that, unlike some of our peers and might have, you know, 100 plus stations and a lot of small markets, we're more concentrated and large.

Speaker Change: Distributors and we do know that.

Speaker Change: And I'll take the first question about the range of our free cash flow guide and what factors would play into that.

Speaker Change: I would say, it's multifaceted, mostly around economic environment. So advertising would be one trigger of that range subscriber trends would be another factor. We do continue to forecast subscriber declines but for the next two years that is definitely a factor that.

Speaker Change: May impact that.

Speaker Change: And then the third.

Speaker Change: Political advertising to Empress because as you know it is given.

Speaker Change: Unlike some of our peers that might have.

Speaker Change: 100, plus stations and a lot of small markets were more concentrated in large so our delta as seen in previous election cycles, we flexed up $55 million come out of nowhere for two Senate Runoffs in Georgia.

David T. Lougee: So our Delta, as I've seen in previous election cycles, you know, we flexed up, you know, we had 55 million come out of nowhere for two Senate runoffs in Georgia four years ago. And we've seen it go the other direction when a very hot Senate race goes cold, when a candidate blows themselves up. So we can sometimes have a significant range of what politics might be.

Speaker Change: Four years ago, and we've seen it go the other direction one a very hot Senate race goes cold water candidate blows themself up so we can have sometimes a significant range of what political might be.

David T. Lougee: Thanks Dave. Thank you. There are no further questions. I'd like to turn the call back over to Dave Lougee for closing. Thank you, Operator, and thank you, everyone, for the call this morning. As we said in our announcement this morning, we are now producing, for the first time, a two-year free cash flow guide that is driven by our very sustainable and durable business model. We look forward to talking to you more in the quarters ahead as we discuss results for the year going forward and appreciate your interest. Thank you. And everyone have a good day. Thank you for your participation. This does conclude the program. You may now disconnect.

Speaker Change: Great. Thank you.

Speaker Change: Thanks, Dave.

Speaker Change: Thank you there are no further questions I'd like to turn the call back over to Dave Lougee for closing remarks.

Thank you operator, and thank you everyone for the call. This morning, as we said with our announcement. This morning, we are now producing it for the first time, a two year free cash flow guide that is driven by a very sustainable and durable business model. We look forward to talking to you more in the quarters ahead.

Talking about results on a year going forward and appreciate your interest. Thank you and everyone have a good day.

Speaker Change: Thank you for your participation. This does conclude the program you may now disconnect.

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