TEGNA Riding the Election Wave – C-Suite Transitions

TEGNA Inc. (TGNA) $16.27

Market Cap: $2.72B

Enterprise Value: $5.49B

Key Insights

• TEGNA is a media company that owns 64 television stations and reached 39% of U.S. television households.
• The company benefits from increased spending during election years and especially during the presidential election cycle.
• TEGNA has been a hot target, with multiple bidders vying for the company. Media mogul Byron Allen, private equity firm Apollo Global Management, and a strategic acquirer like Gray Television showed interest with undisclosed bids. The winner was Standard General with a $24 per share all-cash offer, valuing TEGNA at $5.4 billion.
• The Standard General deal announced in February 2022 was terminated last year after succumbing to an entire year of attempting to clear regulatory hurdles.
• Despite recent mixed results, TEGNA is expected to rebound in the year’s second half with increased political ad revenue and cost-saving measures.
• TEGNA approved a 10% increase in the quarterly dividend in May and this follows a 20% dividend increase last year.
• TEGNA expects to generate free cash flow in the range of $900 million to $1.1 billion during the 2024-2025 period and expects to return $1.3 billion of capital to shareholders through 2025.

Company Profile

Headquartered in Tysons, Virginia, TEGNA is a media company that was created on June 29, 2015, when the Gannett Company split?into two publicly traded companies.

With 64 television stations across 51 U.S. markets, TEGNA reaches about 39% of U.S. television households. TEGNA also owns the leading reality TV networks True Crime Network and Quest. The company allows businesses to connect with consumers through television, digital, and over-the-top (OTT) platforms, including its OTT advertising service, Premion.

Tegna Names New CEO

TEGNA announced that Michael Steib will take over as President, CEO, and Director, replacing David Lougee, on August 12, 2024. Mr. Lougee will retire from these roles and transition to Senior Advisor.

Mr. Steib is currently CEO of Artsy, the world’s largest online platform for discovering and collecting art, after serving as President and CEO of XO Group (XOXO), the parent company of The Knot.

Mr. Steib also spent a decade in executive roles at NBCUniversal and Google, where he launched and scaled advertising-supported businesses. Additionally, Steib is the author of “The Career Manifesto: Discover Your Calling and Create an Extraordinary Life” and a podcaster, hosting an iHeartMedia show called?Office Hours where he interviews some of the?world’s top CEOs. We were relieved to see that he stopped his nascent podcasting career a few months ago.

In addition to Mr. Steib’s appointment, TEGNA’s Board of Directors has appointed two new independent Directors, Catherine Dunleavy and Denmark West.

?CEO David Lougee Sells Shares Worth Over $1.3 Million

Following the transition announcement, current CEO David Lougee executed a significant sale of 98,437 shares totaling $1.37 million. The shares were sold in multiple transactions at prices ranging from $13.88 to $14.24. This is part of a series of high-volume share sales over previous months, all conducted under a Rule 10b5-1 plan implemented on August 30, 2023.

Following the transaction, Lougee retains a significant ownership stake in the company, with 594,401 shares of TEGNA’s common stock held directly. Additionally, he also owns 8,202 shares through a 401(k) plan.

TEGNA Deal Saga With Standard General?

In 2017, Mr. Lougee assumed the CEO position at TEGNA following a decade of serving as President of Tegna Media. The proposed acquisition of Tegna by private equity firm Standard General was halted last year. Standard General’s acquisition of TEGNA (TGNA) was terminated in May 2023 after succumbing to an entire year of regulatory hurdles. Since then, the company had been actively engaged in the succession planning process.

The bidding for TEGNA began way back in 2019 when Apollo Global Management (APO)?approached the company to expand its ownership of television stations. This was followed by TV station operator Gray Television (GTN) making?an offer to acquire TEGNA for approximately $8.5 billion including debt. In September 2021, the company received takeover interest?from media mogul Byron Allen and private equity giant Apollo Global Management.

TEGNA entered into an agreement to be acquired by Standard General in February 2022. The regulatory hurdles preventing the deal from closing began in May 2022.

Political, Sports, and Premion Fuel Tegna’s Momentum (Earnings Call Transcript)

In the recent earnings conference call, CEO Dave Lougee alluded to the significant tailwinds political advertising is likely to provide to the company in the near future:

With the largest portfolio of NBC stations and in a time zone more conducive to live programming and viewing, we expect enormous levels of engagement.- As I shared on our last call, our strong portfolio of stations in big pro sports markets are very well positioned for the shift currently happening in local sports distribution.

TEGNA has been securing agreements with sports teams to broadcast games on their local channels, such as the NHL’s Seattle Kraken and WNBA’s Indiana Fever, featuring Caitlin Clark. With regional sports networks encountering challenges, there’s a trend towards local sports teams opting for broadcast affiliates. Additionally, there are indications of the NBA potentially shifting to NBC, which could enhance live viewership and advertising revenues for TEGNA in the future.

Check out the full article on InsideArbitrage here:

https://www.insidearbitrage.com/2024/07/tegna-riding-the-election-wave-c-suite-transitions/