Quick10K

TEGNA

Price	14.74		EPS	1
Shares	218		P/E	16
MCap	3,218		P/FCF	15
Net Debt	4,199		EBIT	400
TEV	7,417		TEV/EBIT	19
TTM 2019-09-30, in MM, except price, ratios

10-Q	2021-03-31	Filed 2021-05-10 Print
10-K	2020-12-31	Filed 2021-03-01 Print
10-Q	2020-09-30	Filed 2020-11-09 Print
10-Q	2020-06-30	Filed 2020-08-10 Print
10-Q	2020-03-31	Filed 2020-05-11 Print
10-K	2019-12-31	Filed 2020-03-02 Print
10-Q	2019-09-30	Filed 2019-11-07 Print
10-Q	2019-06-30	Filed 2019-08-06 Print
10-Q	2019-03-31	Filed 2019-05-09 Print
10-K	2018-12-31	Filed 2019-03-01 Print
10-Q	2018-09-30	Filed 2018-11-08 Print
10-Q	2018-06-30	Filed 2018-08-07 Print
10-Q	2018-03-31	Filed 2018-05-08 Print
10-K	2017-12-31	Filed 2018-03-01 Print
10-Q	2017-09-30	Filed 2017-11-08 Print
10-Q	2017-06-30	Filed 2017-08-07 Print
10-Q	2017-03-31	Filed 2017-05-09 Print
10-K	2016-12-31	Filed 2017-02-28 Print
10-Q	2016-09-30	Filed 2016-11-09 Print
10-Q	2016-06-30	Filed 2016-08-05 Print
10-Q	2016-03-31	Filed 2016-05-04 Print
10-K	2015-12-31	Filed 2016-02-29 Print
10-Q	2015-09-27	Filed 2015-11-06 Print
10-Q	2015-06-28	Filed 2015-08-05 Print
10-Q	2015-03-29	Filed 2015-05-06 Print
10-K	2014-12-28	Filed 2015-02-25 Print
10-Q	2014-09-28	Filed 2014-11-05 Print
10-Q	2014-06-29	Filed 2014-07-30 Print
10-Q	2014-03-30	Filed 2014-05-07 Print
10-K	2013-12-29	Filed 2014-02-27 Print
10-Q	2013-09-29	Filed 2013-11-06 Print
10-Q	2013-06-30	Filed 2013-08-07 Print
10-Q	2013-03-31	Filed 2013-05-08 Print
10-K	2012-12-30	Filed 2013-02-26 Print
10-Q	2012-09-23	Filed 2012-10-31 Print
10-Q	2012-06-24	Filed 2012-08-01 Print
10-Q	2012-03-25	Filed 2012-05-02 Print
10-K	2011-12-25	Filed 2012-02-22 Print
10-Q	2011-09-25	Filed 2011-11-02 Print
10-Q	2011-06-26	Filed 2011-08-03 Print
10-Q	2011-03-27	Filed 2011-05-04 Print
10-K	2010-12-26	Filed 2011-02-23 Print
10-Q	2010-09-26	Filed 2010-11-01 Print
10-Q	2010-06-27	Filed 2010-07-30 Print
10-Q	2010-03-28	Filed 2010-05-04 Print
10-K	2009-12-27	Filed 2010-02-24 Print

8-K	2020-11-09
8-K	2020-10-15
8-K	2020-09-10
8-K	2020-09-08
8-K	2020-09-08
8-K	2020-08-10
8-K	2020-06-11
8-K	2020-05-07
8-K	2020-04-30
8-K	2020-04-20
8-K	2020-04-20
8-K	2020-02-19
8-K	2020-02-11
8-K	2020-01-09
8-K	2020-01-07
8-K	2020-01-07
8-K	2020-01-07
8-K	2019-12-03
8-K	2019-11-07
8-K	2019-09-19
8-K	2019-09-13
8-K	2019-09-11
8-K	2019-09-09
8-K	2019-09-09
8-K	2019-08-21
8-K	2019-08-15
8-K	2019-08-06
8-K	2019-06-10
8-K	2019-05-09
8-K	2019-04-25
8-K	2019-03-20
8-K	2019-03-01
8-K	2018-11-08
8-K	2018-10-08
8-K	2018-09-26
8-K	2018-09-04
8-K	2018-08-07
8-K	2018-07-24
8-K	2018-06-21
8-K	2018-05-08
8-K	2018-04-26
8-K	2018-03-01
8-K	2018-02-22
8-K	2018-01-10

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Balance Sheet	Income Statement	Cash Flow
CopyHistoryView Assets, Equity	CopyHistoryView Rev, G Profit, Net Income	CopyHistoryView Ops, Inv, Fin

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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NOTE 1 – Accounting policies

Basis of presentation: Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting, the instructions for Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all information and footnotes which are normally included in the Form 10-K and annual report to shareholders. In our opinion, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. The condensed consolidated financial statements should be read in conjunction with our (or TEGNA’s) audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. During fiscal year 2020 and continuing into 2021, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) pandemic. The impact of COVID-19 and the extent of its adverse impact on our financial and operating results will be dictated by the length of time that the pandemic continues to affect our advertising customers.

We use the best information available in developing significant estimates inherent in our financial statements, including potential impacts from the COVID-19 pandemic. Actual results could differ from these estimates, and these differences resulting from changes in facts and circumstances could be material. Significant estimates include, but are not limited to, evaluation of goodwill and other intangible assets for impairment, business combinations, fair value measurements, post-retirement benefit plans, income taxes including deferred taxes, and contingencies. The condensed consolidated financial statements include the accounts of subsidiaries we control. We eliminate all intercompany balances, transactions, and profits in consolidation. Investments in entities over which we have significant influence, but do not have control, are accounted for under the equity method. Our share of net earnings and losses from these ventures is included in “Equity (loss) income in unconsolidated investments, net” in the Consolidated Statements of Income.

We operate one operating and reportable segment, which primarily consists of our 64 television stations and two radio stations operating in 51 markets, providing high-quality television programming and digital content. Our reportable segment determination is based on our management and internal reporting structure, the nature of products and services we offer, and the financial information that is evaluated regularly by our chief operating decision maker.

Accounting guidance adopted in 2021: We did not adopt any accounting guidance in 2021 that had a material impact on our consolidated financial statements or disclosures.

New accounting guidance not yet adopted: There is currently no pending accounting guidance that we expect to have a material impact on our consolidated financial statements or disclosures.

Trade receivables and allowances for doubtful accounts: Trade receivables are recorded at invoiced amounts and generally do not bear interest. The allowance for doubtful accounts reflects our estimate of credit exposure, determined principally on the basis of our collection experience, aging of our receivables and any specific reserves needed for certain customers based on their credit risk. Our allowance also takes into account expected future trends which may impact our customers’ ability to pay, such as economic growth, unemployment and demand for our products and services, including the impacts of the COVID-19 pandemic on these trends. We monitor the credit quality of our customers and their ability to pay through the use of analytics and communication with individual customers. As of March 31, 2021, our allowance for doubtful accounts was $7.2 million as compared to $7.0 million as of December 31, 2020.

Redeemable Noncontrolling interest: Our Premion business operates an advertising network for over-the-top (OTT) streaming and connected television platforms. In March 2020, we sold a minority interest in Premion to an affiliate of Gray Television (Gray) and entered into a 3 year commercial reselling agreement with the affiliate. Gray’s investment allows it to sell its interest to Premion if there is a change in control of TEGNA or if the existing commercial agreement terminates. Since redemption of the minority ownership interest is outside our control, Gray’s equity interest is presented outside of the Equity section on the Condensed Consolidated Balance Sheet in the caption “Redeemable noncontrolling interest.”

Revenue recognition: Revenue is recognized upon the transfer of control of promised services to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Amounts received from customers in advance of providing services to our customers are recorded as deferred revenue.

The primary sources of our revenues are: 1) subscription revenues, reflecting fees paid by satellite, cable, OTT (companies that deliver video content to consumers over the Internet) and telecommunications providers to carry our television signals on their systems; 2) advertising & marketing services revenues, which include local and national non-political television advertising,

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digital marketing services (including Premion), and advertising on the stations’ websites, tablet and mobile products, and OTT apps; 3) political advertising revenues, which are driven by even year election cycles at the local and national level (e.g. 2020, 2018) and particularly in the second half of those years; and 4) other services, such as production of programming and advertising material.

Revenue earned by these sources in the first three months of 2021 and 2020 are shown below (amounts in thousands):

Copy History

			Quarter ended Mar. 31,
			2021						2020
Subscription			$	386,737					$	332,802
Advertising & Marketing Services			322,834						295,153
Political			9,428						47,387
Other			8,052						8,847
Total revenues			$	727,051					$	684,189

NOTE 2 – Goodwill and other intangible assets

The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of March 31, 2021 and December 31, 2020 (in thousands):

Copy History

			Mar. 31, 2021												Dec. 31, 2020
			Gross						Accumulated Amortization						Gross						Accumulated Amortization
Goodwill			$	2,981,587					$	—					$	2,968,693					$	—
Indefinite-lived intangibles:
Television and radio station FCC broadcast licenses			2,123,898						—						2,123,898						—
Amortizable intangible assets:
Retransmission agreements			235,215						(146,306)						235,215						(138,928)
Network affiliation agreements			309,503						(78,820)						309,503						(72,694)
Other			71,466						(26,216)						70,610						(23,960)
Total indefinite-lived and amortizable intangible assets			$	2,740,082					$	(251,342)					$	2,739,226					$	(235,582)

Our retransmission agreements and network affiliation agreements are amortized on a straight-line basis over their estimated useful lives. Other intangibles primarily include distribution agreements from our multicast networks acquisition, which are also amortized on a straight-line basis over their useful lives.

On January 27, 2021, we acquired Locked On Podcast Network LLC for $13.3 million cash, which consisted of a base purchase price of $13.8 million and a working capital adjustment of $0.5 million. Locked On produces daily podcasts for every team across the four major professional sports leagues, as well as major college sports teams. In connection with this acquisition, we recorded initial values for goodwill and a tradename of $12.9 million and $0.9 million, respectively. These amounts are based on preliminary valuations, and therefore, these assets are subject to change as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The goodwill is calculated as the excess of the purchase price over the net fair value of the identifiable assets acquired and liabilities assumed, and represents the future economic benefits expected to arise from the acquisition that do not qualify for separate recognition, including assembled workforce, as well as future synergies that we expect to generate. The goodwill recognized is expected to be tax deductible for tax purposes.

Interim impairment assessment

We review our goodwill and intangible assets for impairment at least annually and also when events or changes in circumstances occur that indicate the fair value may be below its carrying amount. As discussed in our 2020 Form 10-K, after completing our annual impairment test in the fourth quarter of 2020, we had one television station FCC license and one radio station FCC license, with a combined carrying value of $67.2 million and individual impairment headroom of less than 5%. Therefore, these two FCC licenses are at a heightened risk of future impairment. During the first quarter, and considering the

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negative effects COVID-19 has had and may continue to have on our AMS revenue and operating cash flows, we assessed whether it was more likely than not that either of these FCC licenses was impaired.

In performing these assessments, we analyzed the significant inputs used in the fair value determination of these FCC license assets. This included reviewing the trends in actual and forecasted advertising revenues and changes in the discount rate, both of which impact the fair value of these licenses. Based on the analysis performed, we concluded that neither of these FCC licenses was more likely than not impaired as of March 31, 2021. However, a sustained economic decline, including one resulting from the COVID-19 pandemic, could result in future non-cash impairment charges of our FCC licenses, and any related impairment could have a material adverse impact on our results of operations.

NOTE 3 – Investments and other assets

Our investments and other assets consisted of the following as of March 31, 2021, and December 31, 2020 (in thousands):

Copy History

			Mar. 31, 2021						Dec. 31, 2020
Cash value life insurance			$	53,143					$	52,883
Equity method investments			30,331						32,067
Other equity investments			16,729						20,271
Deferred debt issuance costs			8,497						9,378
Other long-term assets			20,517						21,620
Total			$	129,217					$	136,219

Cash value life insurance: We are the beneficiary of life insurance policies on the lives of certain employees/retirees, which are recorded at their cash surrender value as determined by the insurance carrier. These policies are utilized as a partial funding source for deferred compensation and other non-qualified employee retirement plans. Gains and losses on these investments are included in “Other non-operating items, net” within our Consolidated Statement of Income and were not material for all periods presented.

Other equity investments: Represents investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control or do not exert significant influence. These investments are recorded at cost less impairments, if any, plus or minus changes in observable prices for those investments. In the first quarter of 2021, we recorded a $1.9 million impairment charge, in “Other non-operating items, net” within our Consolidated Statement of Income, due to the decline in the fair value of one of our investments. No gains or losses were recorded on these investments in the first three months of 2020.

Deferred debt issuance costs: These costs consist of amounts paid to lenders related to our revolving credit facility. Debt issuance costs paid for our term debt and unsecured notes are accounted for as a reduction in the debt obligation.

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NOTE 4 – Long-term debt

Our long-term debt is summarized below (in thousands):

Copy History

			Mar. 31, 2021						Dec. 31, 2020
Borrowings under revolving credit agreement expiring August 2024			$	318,000					$	355,000
Unsecured notes bearing fixed rate interest at 5.500% due September 2024			137,000						137,000
Unsecured notes bearing fixed rate interest at 4.750% due March 2026			550,000						550,000
Unsecured notes bearing fixed rate interest at 7.75% due June 2027			200,000						200,000
Unsecured notes bearing fixed rate interest at 7.25% due September 2027			240,000						240,000
Unsecured notes bearing fixed rate interest at 4.625% due March 2028			1,000,000						1,000,000
Unsecured notes bearing fixed rate interest at 5.00% due September 2029			1,100,000						1,100,000
Total principal long-term debt			3,545,000						3,582,000
Debt issuance costs			(35,507)						(36,595)
Unamortized premiums and discounts, net			7,599						7,815
Total long-term debt			$	3,517,092					$	3,553,220

NOTE 5 – Retirement plans

We have various defined benefit retirement plans. Our principal defined benefit pension plan is the TEGNA Retirement Plan (TRP). The disclosure table below includes the pension expenses of the TRP and the TEGNA Supplemental Retirement Plan (SERP). The total net pension obligations, including both current and non-current liabilities, as of March 31, 2021, were $88.0 million, of which $7.7 million is recorded as a current obligation within accrued liabilities on the Condensed Consolidated Balance Sheet.

Pension costs (income), which primarily include costs for the qualified TRP and the non-qualified SERP, are presented in the following table (in thousands):

Copy History

			Quarter ended Mar. 31,
			2021						2020
Service cost-benefits earned during the period			$	—					$	2
Interest cost on benefit obligation			3,950						4,858
Expected return on plan assets			(8,650)						(7,750)
Amortization of prior service cost			25						(42)
Amortization of actuarial loss			1,200						1,600
Income from company-sponsored retirement plans			$	(3,475)					$	(1,332)

Benefits no longer accrue for substantially all TRP and SERP participants as a result of amendments to the plans in the past years and as such we no longer incur a significant amount of the service cost component of pension expense. All other components of our pension expense presented above are included within the “Other non-operating items, net” line item of the Consolidated Statements of Income.

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NOTE 6 – Accumulated other comprehensive loss

The following table summarizes the components of, and the changes in, Accumulated Other Comprehensive Loss (AOCL), net of tax (in thousands):

Copy History

			Retirement Plans						Foreign Currency Translation												Total
Quarters Ended:
Balance at Dec. 30, 2020			$	(120,979)					$	(97)											$	(121,076)
Other comprehensive loss before reclassifications			—						369												369
Amounts reclassified from AOCL			909						—												909
Total other comprehensive income			909						369												1,278
Balance at Mar. 31, 2021			$	(120,070)					$	272											$	(119,798)
Balance at Dec. 31, 2019			$	(142,398)					$	(199)											$	(142,597)
Other comprehensive loss before reclassifications			—						301												301
Amounts reclassified from AOCL			1,121						—												1,121
Total other comprehensive income			1,121						301												1,422
Balance at Mar. 31, 2020			$	(141,277)					$	102											$	(141,175)

Reclassifications from AOCL to the Consolidated Statements of Income are comprised of pension and other post-retirement components. Pension and other post retirement reclassifications are related to the amortization of prior service costs, and amortization of actuarial losses. Amounts reclassified out of AOCL are summarized below (in thousands):

Copy History

			Quarter ended Mar. 31,
			2021						2020
Amortization of prior service cost (credit), net			$	25					$	(110)
Amortization of actuarial loss			1,200						1,608
Total reclassifications, before tax			1,225						1,498
Income tax effect			(316)						(377)
Total reclassifications, net of tax			$	909					$	1,121

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NOTE 7 – Earnings per share

Our earnings per share (basic and diluted) are presented below (in thousands, except per share amounts):

Copy History

			Quarter ended Mar. 31,
			2021						2020
Net Income			$	112,832					$	86,198
Net (income) loss attributable to the noncontrolling interest			(215)						110
Adjustment of redeemable noncontrolling interest to redemption value			(72)						(203)
Earnings available to common shareholders			$	112,545					$	86,105
Weighted average number of common shares outstanding - basic			220,602						218,277
Effect of dilutive securities:
Restricted stock units			410						284
Performance shares			182						298
Stock options			4						4
Weighted average number of common shares outstanding - diluted			221,198						218,863
Net income per share - basic			$	0.51					$	0.40
Net income per share - diluted			$	0.51					$	0.39

Our calculation of diluted earnings per share includes the dilutive effects for the assumed vesting of outstanding restricted stock units and performance shares.

NOTE 8 – Fair value measurement

We measure and record certain assets and liabilities at fair value in the accompanying condensed consolidated financial statements. U.S. GAAP establishes a hierarchy for those instruments measured at fair value that distinguishes between market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 - Quoted market prices in active markets for identical assets or liabilities;

Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3 - Unobservable inputs developed using our own estimates and assumptions, which reflect those that a market participant would use.

In the first quarter of 2021, we recorded a $1.9 million impairment charge, in “Other non-operating items, net” within our Consolidated Statement of Income, due to the decline in the fair value apparent from an observable price decline of one of our investments (Level 2). We additionally hold other financial instruments, including cash and cash equivalents, receivables, accounts payable and debt. The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values. The fair value of our total debt, based on the bid and ask quotes for the related debt (Level 2), totaled $3.72 billion at March 31, 2021, and $3.79 billion at December 31, 2020.

NOTE 9 – Other matters

Litigation

In the third quarter of 2018, certain national media outlets reported the existence of a confidential investigation by the United States Department of Justice Antitrust Division (DOJ) into the local television advertising sales practices of station owners. We received a Civil Investigative Demand (CID) in connection with the DOJ’s investigation. On November 13 and December 13, 2018, the DOJ and seven other broadcasters settled a DOJ complaint alleging the exchange of competitively sensitive information in the broadcast television industry. In June 2019, we and four other broadcasters entered into a substantially identical agreement with DOJ, which was entered by the court on December 3, 2019. The settlement contains no finding of wrongdoing or liability and carries no penalty. It prohibits us and the other settling entities from sharing certain confidential business information, or using such information pertaining to other broadcasters, except under limited circumstances. The settlement also requires the settling parties to make certain enhancements to their antitrust compliance programs, to continue to cooperate with the DOJ’s investigation, and to permit DOJ to verify compliance. We do not expect the costs of compliance to be material.

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Since the national media reports, numerous putative class action lawsuits were filed against owners of television stations (the Advertising Cases) in different jurisdictions. Plaintiffs are a class consisting of all persons and entities in the United States who paid for all or a portion of advertisement time on local television provided by the defendants. The Advertising Cases assert antitrust and other claims and seek monetary damages, attorneys’ fees, costs and interest, as well as injunctions against the allegedly wrongful conduct.

These cases have been consolidated into a single proceeding in the United States District Court for the Northern District of Illinois, captioned Clay, Massey & Associates, P.C. v. Gray Television, Inc. et. al., filed on July 30, 2018. At the court’s direction, plaintiffs filed an amended complaint on April 3, 2019, that superseded the original complaints. Although we were named as a defendant in sixteen of the original complaints, the amended complaint did not name TEGNA as a defendant. After TEGNA and four other broadcasters entered into consent decrees with the DOJ in June 2019, the plaintiffs sought leave from the court to further amend the complaint to add TEGNA and the other settling broadcasters to the proceeding. The court granted the plaintiffs’ motion, and the plaintiffs filed the second amended complaint on September 9, 2019. On October 8, 2019, the defendants jointly filed a motion to dismiss the matter. On November 6, 2020, the court denied the motion to dismiss. We deny any violation of law, believe that the claims asserted in the Advertising Cases are without merit, and intend to defend ourselves vigorously against them.

We, along with a number of our subsidiaries, also are defendants in other judicial and administrative proceedings involving matters incidental to our business. We do not believe that any material liability will be imposed as a result of any of the foregoing matters.

FCC Broadcast Spectrum Program

In April 2017, the FCC announced the completion of a voluntary incentive auction to reallocate certain spectrum then occupied by television broadcast stations to mobile wireless broadband services, along with a related “repacking” of the television spectrum for remaining television stations. None of our stations relinquished any spectrum rights as a result of the auction. By the end of 2020, all of our impacted stations had completed their repacking transitions to their new channels.

Throughout the repacking project the FCC has been reimbursing us for the costs we have incurred to change channels in the repacking on a lagged basis. During the first quarter of 2021, we received $1.4 million of reimbursements, which were recorded as a contra operating expense within our “Spectrum repacking reimbursements and other, net” line item on our Consolidated Statement of Income and reported as an investing inflow on the Consolidated Statement of Cash Flows. We expect to receive reimbursements for the remaining $3.0 million of our repacking spend upon completion of the FCC’s reimbursement review process.

    

Related Party Transactions

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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