Q3 2024 TEGNA Inc Earnings Call

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Speaker Change: Good day, and thank you for standing by and welcome to the check in the third quarter two childhood 24 earnings conference call.

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Speaker Change: After the Speakers' presentation, there'll be a question and answer session.

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Speaker Change: Please be advised that today's conference is being recorded I would now like to turn the conference over to your speaker for today Kirk French Seeley. Please go ahead.

Speaker Change: Thank you good morning, and welcome to our third quarter 2024 conference call and webcast. My name is Kirk bond ceiling and I am technique treasurer.

Speaker Change: Today, our CEO, Mike <unk>, and our CFO, Julie Heskett, who will review <unk> third quarter performance and results.

Speaker Change: <unk> full year and fourth quarter 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.

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 factors that may cause them to differ are outlined in our SEC filings.

Speaker Change: This 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 Mike.

Mike: Thanks, Kirk and good.

Mike: Morning, everybody I'm excited to be here working hard for our shareholders and the communities we serve.

Mike: On the heels of this week's election, I want to commend our team for helping to keep our communities informed and engaged in our democracy local journalism has never been more important in America.

Mike: And as the folks on this call know, it's also never been more challenged as the world has undergone a digital transformation viewers and advertisers have shifted online.

Mike: Since 2021 pay TV homes have been declining 5% to 7% per year with traditional cable and satellite homes declining in the teens, while TV advertising has declined 3% to 5% per year traditional.

Mike: Traditional media and broadcast in particular has fallen behind missing opportunities to evolve the business and take advantage.

Mike: The digital moment.

Mike: But history is not destiny here.

Mike: Local communities continue to strongly value local news, that's 85% telling peered at local news is important and the vast majority reporting that their local media team is doing a good job.

Mike: <unk> brands in particular have strong leadership positions in attractive markets across the U S.

Speaker Change: In this hyper competitive environment, where it is extremely difficult to establish an audience and build trusted brands China has both.

Speaker Change: We reached approximately 100 million people every month across the web mobile app streaming in linear TV or.

Mike: Our brands and our products continue to mean a lot to the people in our local communities.

Mike: Some of the wins jewelry was share with you around political advertising and new sports rights really underlying the resilient value of our television stations.

Mike: At a moment of technological shift where audiences continue to show a boundless appetite for great content on all devices, and where AI is offering massive opportunities to improve products and productivity.

Mike: Now is the moment for a company like <unk> to build a more profitable future on our strong foundation.

Speaker Change: Over the last few years taken has been through a lot with the merger process behind us and our leadership transition complete we are taking a fresh look at how to best leverage our competitive advantages in my first few weeks here I've been spending time at our stations and with key business leaders across the company have come away with an initial set of five potential opportunities that are going on.

Speaker Change: Our focus.

Mike: Number one we are ensuring that we have the team the culture, the accountability and the leadership operating system to move with the urgency and the excellence that this moment demands of us.

Mike: The new huddle offense on the field that taken out from now on.

Mike: Number two we're reviewing org structures and processes across the enterprise to ensure we're doing our jobs as effectively and efficiently as possible.

Mike: Hypothesize that there are synergies across stations that we have not fully exploited.

Mike: Number three we're doing a nose to tail review of every process from content creation to sales and marketing to ensure we are leveraging the power of technology.

Mike: I believe we are underutilized in automation.

Mike: AI to drive efficiency and create a better product.

Mike: Number four we're examining a myriad of opportunities to expand our reach and better serve our users through digital channels today, we generate a sizable online audience, but the amount of engagement per user is well below our potential and we see a path to deepening user engagement and ultimately revenue.

Mike: For our company.

Mike: And number five we are scrutinizing every expense in the company to ensure each dollar is a smart investment.

Mike: Driving audience and driving revenue.

Speaker Change: This is still my first quarter here and I can't tell you exactly what the work is going to yield.

Speaker Change: What I've seen so far it makes me optimistic there is a sense of urgency and energy in the company that is exactly what we need to ensure a bright future protected.

Okay.

Mike: Now before I turn it over I want to welcome our new Chief Legal Officer, Alex Tungsten, Alex is an experienced public company CFO with a deep understanding of our space is a trusted business partner that is comfortable and fast paced dynamic environment.

Mike: The tougher the nails negotiator and a proven winner he is going to be a high impact addition to team <unk>.

Mike: I'll now hand, it over to Julie to provide a more detailed look at our financial results.

Julie Heskett: Thank you Mike Good morning, everyone. We're thrilled to have Mike, leading our team, bringing a fresh perspective, and a sense of urgency to drive our execution forward in just a short time. He has already made an immediate impact energizing our team with a clear focus on accelerating our performance.

Mike: I'll begin today by covering <unk> financial results and capital allocation execution for the third quarter, then provide an update on our cost control initiatives before closing with a review of our guidance.

Mike: My comments today will primarily focus on Tiger performance on a consolidated non-GAAP basis to provide you with visibility into the financial drivers of our business trends and operational results.

Mike: You can find all our reported data and prior period comparative in our press release.

Mike: Here are some headlines.

Speaker Change: Political in premium it is kind of contributing to the rebound in growth in Q4 or if it is all just if it is non political that youre talking about.

Patrick: I'll take that Patrick Hi.

Speaker Change: So from political advertising I think it is still clear that broadcast wins the day and takes the majority share of overall political spending nationwide. Yes. There is a shift to digital in political and yes, CTV is a benefactor.

Speaker Change: Of that shift of U S political spending.

Speaker Change: From a premium perspective premium is able to take some of those national political dollars.

Patrick: With that said I can say that Q4 premiums growth is not isolated just to a political but we do see nonpolitical premium returning to growth in Q4, driven again by local.

Speaker Change: Okay. Thank you.

Oh.

Thank you Mr. Next question.

Okay.

And our next question will be.

Speaker Change: Excuse me will be coming from David Karwowski of J P. Morgan Your line is open.

David Karwowski: Hi, Thank you maybe perhaps on the regulatory pieces I wanted to see if you could expand on what you think is possible in terms of easing rules for either in market or the ownership cap do you think the FCC has room to maneuver independently or will kind of substantial changes require congressional action and then as a second question Mike.

David Karwowski: Once you if you could expand on local sports, especially if more team deals might come available can you say anything about how the deals are kind of structured at a high level are you aiming to be profitable on ads alone or should we look at the game is kind of more broadly in terms of their benefit too.

Speaker Change: Jason fees or even re trends. Thank you.

Speaker Change: Hey, David that our view is that the FCC has the opportunity to drive change here in the duopoly rules and.

Speaker Change: And the national cap in the UHF discount.

Speaker Change: But in fairness I wasn't.

Speaker Change: Hired because I'm the worlds leading expert on this I think I think among the folks on this call you all form sort of more informed opinions on that.

Speaker Change: Secondly on the question of sports.

Speaker Change: We love that these these sports rights have become available to us and as you all know the.

Speaker Change: The <unk> have not been able to deliver the economics and increasingly the reach and with these teams are two things that really matter to them one they want us they want the rights dollars coming in the door, but secondly, they need to reach as large an audience as possible to also drive ticket sales in Jersey sales for many years to come and so.

Speaker Change: <unk> seems to be emerging and Reemerging, if you would.

Speaker Change: As an important component of these local sports rights.

Speaker Change: We like we like these opportunities because keep in your engagement with the with the audience live content is.

Speaker Change: Perfectly suited for linear television. It also will open the doors to a lot more advertiser accounts.

Speaker Change: All that said I think embedded in your in your question is do you run out and do a bunch of rights deals that lose money, hoping you'll make it up in some other way.

Speaker Change: To refer back to the framework I gave on M&A.

Speaker Change: Anything we do in the company as an investment whose job is to look to deliver cash flow returns.

Speaker Change: Cash flow returns at clear, our shareholders and our company's cost of capital.

Speaker Change: When we look at these rates we are looking at ways to get these sports rights to.

Speaker Change: To make money.

Speaker Change: Thank you.

Speaker Change: Thank you and this does conclude today's Q&A session I would like to now turn the call back to Mike for closing remarks. Please go ahead.

Mike: Well thanks, everyone for the questions for your support of the company and I can't tell you how excited I am to be here working with this fantastic team. This important mission and with this very special collection of assets So talk to your honor.

Mike: Folks have questions, we'll talk to you today and we'll be back here next quarter and look forward to working together thanks everybody.

Speaker Change: Thank you for participating in today's conference call you may now disconnect.

Okay.

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