TEGNA INC Q4 FY2023 earnings call

• Returned capital to shareholders, with Board and management team committing to nearly $800 million of share repurchases and increasing dividend by 20% post-merger termination.
• Leveraged assets, with portfolio of leading local station brands in large, economically thriving areas generating high-margin revenues and durable cash flows.
• Implemented operational excellence and innovation, leveraging scale and AI to drive efficiencies.
• Strategic actions: Acquired Octillion Media to enhance Premion's capabilities; completed agreements with Dallas Mavericks, Milwaukee Bucks for sports distribution; invested in 6AM City; focused on embedding equity and inclusion as a cultural and business imperative.

In 2023, full year subscription revenue was over $1.5 billion. Advertising and marketing services revenue saw sequential improvement, with automotive and services, the two largest ad categories, driving growth. Premion's local revenue was up double digits for the full year. Subscription revenue, excluding service disruption, would have been up 2% in 2023. Advertising trends in Q4 showed sequential improvement, with nearly all categories positive.

• Provided 2-year free cash flow guidance of $900 million to $1.1 billion for 2024-'25.
• New capital allocation framework to return 40%-60% of free cash flow over next 2 years in buybacks and dividends.
• Board authorized new 2-year $650 million share repurchase program.
• First quarter 2024 total company revenue expected to be down low to mid-single-digit percent year-over-year due to lower subscription revenue and blackout with a distributor.

• Temporary disruption of service with a large distributor during retransmission consent negotiations impacted Q4 results.
• Economic environment could affect advertising trends.
• Political spending variability, as political revenue can fluctuate based on race dynamics.

Q: Given unique dynamics on reverse side with negligible reverse compensation growth, how to think about net and core trends?

A: David Lougee said net retrans will be stable; Julie Heskett noted advertising trends saw 2023 sequentially improving, with local hanging on strong but national having softness in Q1 2024.

Q: More depth on Octillion acquisition?

A: Tom Cox said Octillion brings operational control, enables innovation, improves EBITDA margins, and integration expected to drive revenue and EBITDA growth.

Q: Super Bowl impact on first quarter revenue?

A: David Lougee said Super Bowl is approximately $10 million incremental in first quarter versus being on Fox last year.

Q: Clarification on Octillion and connected TV, bolt-on M&A potential?

A: Tom Cox said Octillion is core to Premion's connected TV strategy; David Lougee said Octillion is the type of bolt-on M&A, and regulatory environment could be affected by administration change.

Q: Key drivers of free cash flow guide and local sports distribution impact?

A: Julie Heskett said free cash flow guide is multifaceted around economic environment, advertising, subscriber trends; David Lougee said local sports is valuable to consumers and distributors.