• Revenue: Reported at $714 million, down 4% year-over-year, falling short of the estimated $717.96 million.

• Net Income: GAAP net income was $190 million, significantly exceeding the estimated $76.69 million.

• Earnings Per Share (EPS): GAAP EPS at $1.06 and non-GAAP EPS at $0.45; non-GAAP EPS exceeded the estimated $0.43.

• Subscription Revenue: Declined by 9% year-over-year to $375 million, primarily due to subscriber declines and service disruptions.

• Advertising and Marketing Services Revenue: Totaled $299 million, down 3% year-over-year, with local advertising showing positive growth.

• Dividend: Increased the regular quarterly dividend by 10% to 12.5 cents per share, reflecting confidence in financial stability and cash flow.

• Capital Return: More than $100 million returned to shareholders in the quarter through dividends and share repurchases.

• Warning! GuruFocus has detected 5 Warning Signs with TGNA.

On May 8, 2024, TEGNA Inc. (NYSE:TGNA) released its first quarter earnings for the year, reflecting a complex financial landscape marked by both achievements and challenges. The detailed report, available in the company's recent 8-K filing, provides insights into the company's financial health and strategic directions.

Company Overview

TEGNA Inc., a prominent media company, operates a significant portfolio of broadcast stations and digital sites across the U.S. The company owns leading multicast networks such as True Crime Network, Twist, and Quest. Each station under TEGNA's umbrella boasts a strong digital presence, which is crucial in todays media consumption landscape. TEGNA's revenue streams primarily include advertising and marketing services, subscriptions, political advertising, and other services.

Financial Performance Insights

The first quarter of 2024 saw TEGNA achieving a total revenue of $714 million, a decrease of four percent year-over-year, primarily due to a dip in subscription revenue influenced by a temporary service disruption with a distribution partner. This figure slightly missed analyst expectations, which had estimated revenues to be around $717.96 million. Subscription revenues particularly saw a nine percent decline to $375 million, affected by subscriber downturns and the mentioned distribution issues, although partially offset by rate increases.

Advertising and Marketing Services (AMS) revenue was reported at $299 million, down three percent from the previous year. Despite a general softness in national advertising, local advertising displayed resilience with growth in sectors such as automotive and financial services.

Operational expenses on a GAAP basis were $577 million, marking a two percent increase year-over-year. The rise in expenses was mainly attributed to higher compensation costs, somewhat mitigated by reduced programming expenses. GAAP and non-GAAP operating income stood at $138 million and $146 million respectively.

Net income presented a more positive outlook with $190 million on a GAAP basis and $80 million non-GAAP. The GAAP net income included a significant $116 million after-tax gain from the sale of TEGNAs interest in Broadcast Music, Inc.

Strategic and Capital Allocation Updates

TEGNA is actively pursuing a business transformation initiative expected to yield $90-$100 million in annualized cost savings by the end of 2025. The integration of Octillion Media's technology with TEGNAs Premion service is set to enhance local CTV/OTT advertising solutions, promising better revenue growth and performance.

In terms of shareholder returns, TEGNA is on track with its commitment to return approximately $350 million of capital in 2024 through dividends and share repurchases. The company has already returned over $100 million in Q1, including $82 million in share repurchases and $20 million in dividends. Furthermore, the board approved a 10% increase in the regular quarterly dividend, reflecting confidence in TEGNAs financial stability and cash flow.

Forward Outlook and Challenges

Looking ahead, TEGNA anticipates a robust political advertising cycle in 2024, which could bolster its revenue streams. However, the company faces ongoing challenges such as fluctuating subscription numbers and the need to adapt to rapidly changing media consumption patterns. The full-year guidance for 2024 remains reaffirmed, with strategic adjustments to account for the integration of Octillion Media.

Overall, while TEGNA aligns closely with EPS estimates and shows robust capital return strategies, the slight revenue shortfall and ongoing challenges in subscription dynamics underscore the need for strategic agility in a transforming media landscape.

Explore the complete 8-K earnings release (here) from Tegna Inc for further details.

This article first appeared on GuruFocus.