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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-6961

 

 

TEGNA INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

16-0442930

(State or other jurisdiction of incorporation

or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

 

 

 

 

8350 Broad Street, Suite 2000,

Tysons, Virginia

 

22102-5151

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

 

 

 

(703) 873-6600

 

 

(Registrant's telephone number, including area code)

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock

TGNA

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No

The total number of shares of the registrant’s Common Stock, $1 par value, outstanding as of April 30, 2024 was 169,605,246.

 

 

 

 


 

INDEX TO TEGNA INC.

March 31,2024 FORM 10-Q

 

Item No.

Page

 

PART I. FINANCIAL INFORMATION

 

 

 

 

1.

Financial Statements

 

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

3

 

 

 

 

Consolidated Statements of Income for the Quarters ended March 31, 2024 and 2023

5

 

 

 

 

Consolidated Statements of Comprehensive Income for the Quarters ended March 31, 2024 and 2023

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

7

 

 

 

 

Consolidated Statements of Equity and Redeemable Noncontrolling Interest for the Quarters ended March 31, 2024 and 2023

8

 

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

 

3.

Quantitative and Qualitative Disclosures about Market Risk

26

 

 

 

4.

Controls and Procedures

26

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

1.

Legal Proceedings

26

 

 

 

1A.

Risk Factors

27

 

 

 

2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

 

 

 

3.

Defaults Upon Senior Securities

27

 

 

 

4.

Mine Safety Disclosures

27

 

 

 

5.

Other Information

27

 

 

 

6.

Exhibits

28

 

 

 

 

SIGNATURE

29

 

2


 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

TEGNA Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands of dollars (Unaudited)

 

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

430,764

 

 

$

361,036

 

Accounts receivable, net of allowances of $2,535 and $2,845, respectively

 

604,537

 

 

 

624,445

 

Other receivables

 

11,023

 

 

 

9,299

 

Syndicated programming rights

 

21,281

 

 

 

31,530

 

Prepaid expenses and other current assets

 

28,386

 

 

 

24,008

 

Total current assets

 

1,095,991

 

 

 

1,050,318

 

Property and equipment

 

 

 

 

 

Cost

 

1,082,848

 

 

 

1,078,209

 

Less accumulated depreciation

 

(640,149

)

 

 

(626,029

)

Net property and equipment

 

442,699

 

 

 

452,180

 

Intangible and other assets

 

 

 

 

 

Goodwill

 

3,015,973

 

 

 

2,981,587

 

Indefinite-lived and amortizable intangible assets, less accumulated amortization of $257,433 and $289,949, respectively

 

2,349,712

 

 

 

2,328,972

 

Right-of-use assets for operating leases

 

70,897

 

 

 

73,479

 

Investments and other assets

 

129,388

 

 

 

113,521

 

Total intangible and other assets

 

5,565,970

 

 

 

5,497,559

 

Total assets

$

7,104,660

 

 

$

7,000,057

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

TEGNA Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands of dollars, except par value and share amounts (Unaudited)

 

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

$

80,001

 

 

$

114,950

 

Accrued liabilities

 

 

 

 

 

   Compensation

 

48,271

 

 

 

54,929

 

   Interest

 

11,891

 

 

 

45,144

 

   Contracts payable for programming rights

 

130,298

 

 

 

119,562

 

   Other

 

97,064

 

 

 

82,782

 

Income taxes payable

 

66,453

 

 

 

6,005

 

Total current liabilities

 

433,978

 

 

 

423,372

 

 

 

 

 

 

 

Noncurrent liabilities

 

 

 

 

 

Deferred income tax liability

 

578,244

 

 

 

578,219

 

Long-term debt

 

3,073,692

 

 

 

3,072,801

 

Pension liabilities

 

69,706

 

 

 

70,483

 

Operating lease liabilities

 

70,937

 

 

 

73,733

 

Other noncurrent liabilities

 

61,040

 

 

 

57,765

 

Total noncurrent liabilities

 

3,853,619

 

 

 

3,853,001

 

Total liabilities

$

4,287,597

 

 

$

4,276,373

 

 

 

 

 

 

 

Commitments and contingent liabilities (see Note 10)

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interest (see Note 1)

$

19,174

 

 

$

18,812

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

Common stock of $1 per value per share, 800,000,000 shares authorized, 324,418,632 shares issued

 

324,419

 

 

 

324,419

 

Additional paid-in capital

 

27,941

 

 

 

27,941

 

Retained earnings

 

8,248,066

 

 

 

8,091,245

 

Accumulated other comprehensive loss

 

(118,499

)

 

 

(119,610

)

Less treasury stock at cost, 153,095,072 shares and 144,502,338 shares, respectively

 

(5,684,038

)

 

 

(5,619,123

)

Total equity

 

2,797,889

 

 

 

2,704,872

 

Total liabilities, redeemable noncontrolling interest and equity

$

7,104,660

 

 

$

7,000,057

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

TEGNA Inc.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited, in thousands of dollars, except per share amounts

 

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Revenues

$

714,252

 

 

$

740,327

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Cost of revenues1

 

430,567

 

 

 

426,932

 

Business units - Selling, general and administrative expenses

 

102,260

 

 

 

99,109

 

Corporate - General and administrative expenses

 

14,798

 

 

 

12,100

 

Depreciation

 

14,310

 

 

 

15,049

 

Amortization of intangible assets

 

13,660

 

 

 

13,582

 

Asset impairment and other

 

1,097

 

 

 

 

Total

 

576,692

 

 

 

566,772

 

Operating income

 

137,560

 

 

 

173,555

 

 

 

 

 

 

Non-operating (expense) income:

 

 

 

 

 

Interest expense

 

(42,368

)

 

 

(42,906

)

Interest income

 

5,573

 

 

 

7,573

 

Other non-operating items, net

 

149,758

 

 

 

(2,399

)

Total

 

112,963

 

 

 

(37,732

)

 

 

 

 

 

Income before income taxes

 

250,523

 

 

 

135,823

 

Provision for income taxes

 

61,261

 

 

 

31,819

 

Net income

 

189,262

 

 

 

104,004

 

Net loss attributable to redeemable noncontrolling interest

 

298

 

 

 

299

 

Net income attributable to TEGNA Inc.

$

189,560

 

 

$

104,303

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

$

1.06

 

 

$

0.46

 

Diluted

$

1.06

 

 

$

0.46

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

Basic shares

 

177,823

 

 

 

224,544

 

Diluted shares

 

178,437

 

 

 

224,839

 

 

1 Cost of revenues exclude charges for depreciation and amortization expense, which are shown separately.

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

TEGNA Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited, in thousands of dollars

 

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Net Income

$

189,262

 

 

$

104,004

 

     Recognition of previously deferred post-retirement benefit plan costs

 

1,500

 

 

 

1,450

 

     Income tax effect related to components of other comprehensive income

 

(389

)

 

 

(372

)

Other comprehensive income, net of tax

 

1,111

 

 

 

1,078

 

Comprehensive income

 

190,373

 

 

 

105,082

 

Comprehensive loss attributable to redeemable noncontrolling interest

 

298

 

 

 

299

 

Comprehensive income attributable to TEGNA Inc.

$

190,671

 

 

$

105,381

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

TEGNA Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited, in thousands of dollars

 

 

Three months ended Mar. 31,

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

Net income

$

189,262

 

 

$

104,004

 

Adjustments to reconcile net income to net cash flow from operating activities:

 

 

 

 

 

Depreciation and amortization

 

27,970

 

 

 

28,631

 

Employee stock-based compensation awards

 

11,132

 

 

 

3,688

 

Company stock 401(k) match contributions

 

5,429

 

 

 

5,564

 

Gain on investment sale

 

(152,867

)

 

 

 

Equity loss in unconsolidated investments, net

 

234

 

 

 

237

 

Pension expense, net of employer contributions

 

742

 

 

 

1,416

 

Change in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Decrease in trade receivables

 

22,153

 

 

 

20,615

 

(Decrease) increase in accounts payable

 

(34,950

)

 

 

12,100

 

Increase (decrease) in interest and taxes payable

 

26,958

 

 

 

(1,627

)

(Decrease) increase in deferred revenue

 

(533

)

 

 

1,797

 

Changes in other assets and liabilities, net

 

4,850

 

 

 

(6,038

)

Net cash flow from operating activities

 

100,380

 

 

 

170,387

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(4,911

)

 

 

(2,845

)

Payments for acquisitions of businesses and assets, net of cash acquired

 

(52,799

)

 

 

(1,150

)

Payments for investments

 

(8,985

)

 

 

(163

)

Proceeds from investments

 

152,867

 

 

 

23

 

Proceeds from sale of assets

 

52

 

 

 

13

 

Net cash flow provided by (used for) investing activities

 

86,224

 

 

 

(4,122

)

Cash flows from financing activities:

 

 

 

 

 

Repurchase of common stock

 

(82,394

)

 

 

 

Dividends paid

 

(19,898

)

 

 

(21,360

)

Payments for debt issuance costs

 

(6,448

)

 

 

 

Other, net

 

(8,136

)

 

 

(13,407

)

Net cash flow used for financing activities

 

(116,876

)

 

 

(34,767

)

Increase in cash and cash equivalents

 

69,728

 

 

 

131,498

 

Balance of cash and cash equivalents at beginning of period

 

361,036

 

 

 

551,681

 

Balance of cash and cash equivalents at end of period

$

430,764

 

 

$

683,179

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

Cash paid for income taxes, net of refunds

$

1,044

 

 

$

914

 

Cash paid for interest

$

74,240

 

 

$

73,862

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


 

TEGNA Inc.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

Unaudited, in thousands of dollars, except per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters ended:

Redeemable noncontrolling interest

 

 

 

Common stock

 

Additional paid-in capital

 

Retained earnings

 

Accumulated other comprehensive loss

 

 

Treasury stock

 

 

Total Equity

 

Balance as of Dec. 31, 2023

$

18,812

 

 

 

$

324,419

 

$

27,941

 

$

8,091,245

 

$

(119,610

)

 

$

(5,619,123

)

 

$

2,704,872

 

Net (loss) income

 

(298

)

 

 

 

 

 

 

 

189,560

 

 

 

 

 

 

 

 

189,560

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

1,111

 

 

 

 

 

 

1,111

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

190,671

 

Dividends declared: $0.11375 per share

 

 

 

 

 

 

 

 

 

(19,898

)

 

 

 

 

 

 

 

(19,898

)

Company stock 401(k) match contributions

 

 

 

 

 

 

 

(15,532

)

 

(2,719

)

 

 

 

 

23,680

 

 

 

5,429

 

Stock-based awards activity

 

 

 

 

 

 

 

(54,029

)

 

(9,462

)

 

 

 

 

55,354

 

 

 

(8,137

)

Employee stock-based compensation awards

 

 

 

 

 

 

 

11,132

 

 

 

 

 

 

 

 

 

 

11,132

 

Repurchase of common stock

 

 

 

 

 

 

 

58,029

 

 

 

 

 

 

 

(143,949

)

 

 

(85,920

)

Adjustment of redeemable noncontrolling interest to redemption value

 

660

 

 

 

 

 

 

 

 

(660

)

 

 

 

 

 

 

 

(660

)

Other activity

 

 

 

 

 

 

 

400

 

 

 

 

 

 

 

 

 

 

400

 

Balance as of Mar. 31, 2024

$

19,174

 

 

 

$

324,419

 

$

27,941

 

$

8,248,066

 

$

(118,499

)

 

$

(5,684,038

)

 

$

2,797,889

 

 

 

Redeemable noncontrolling interest

 

 

 

Common stock

 

Additional paid-in capital

 

Retained earnings

 

Accumulated other comprehensive loss

 

 

Treasury stock

 

 

Total Equity

 

Balance as of Dec. 31, 2022

$

17,418

 

 

 

$

324,419

 

$

27,941

 

$

7,898,055

 

$

(125,533

)

 

$

(5,053,160

)

 

$

3,071,722

 

Net (loss) income

 

(299

)

 

 

 

 

 

 

 

104,303

 

 

 

 

 

 

 

 

104,303

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

1,078

 

 

 

 

 

 

1,078

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105,381

 

Dividends declared: $0.095 per share

 

 

 

 

 

 

 

 

 

(21,360

)

 

 

 

 

 

 

 

(21,360

)

Company stock 401(k) match contributions

 

 

 

 

 

 

 

(575

)

 

(14,491

)

 

 

 

 

20,630

 

 

 

5,564

 

Stock-based awards activity

 

 

 

 

 

 

 

(3,425

)

 

(86,253

)

 

 

 

 

76,271

 

 

 

(13,407

)

Employee stock-based compensation awards

 

 

 

 

 

 

 

3,688

 

 

 

 

 

 

 

 

 

 

3,688

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment of redeemable noncontrolling interest to redemption value

 

635

 

 

 

 

 

 

 

 

(635

)

 

 

 

 

 

 

 

(635

)

Other activity

 

 

 

 

 

 

 

312

 

 

 

 

 

 

 

 

 

 

312

 

Balance as of Mar. 31, 2023

$

17,754

 

 

 

$

324,419

 

$

27,941

 

$

7,879,619

 

$

(124,455

)

 

$

(4,956,259

)

 

$

3,151,265

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

8


 

TEGNA Inc.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – Basis of presentation and accounting policies

 

Basis of presentation: Our (or TEGNA’s) 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 audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

 

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. We use the best information available in developing significant estimates inherent in our financial statements. 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, allocation of purchase price to assets and liabilities in 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 were previously included in “Equity loss in unconsolidated investments, net” in the Consolidated Statements of Income, however beginning in the first quarter of 2024 such amounts are now included in “Other non-operating items, net”. Additionally, we now present interest income separately within the Non-operating income (expense) section of our Consolidated Statements of Income. We have recast the prior year amounts to conform to these new presentations.

 

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 2024: We did not adopt any new accounting guidance in 2024 that had a material impact on our condensed consolidated financial statements or disclosures.

 

New accounting guidance not yet adopted: In November 2023, the Financial Accounting Standards Board (FASB) issued new guidance that changes required disclosures related to segment reporting. The guidance will require entities to disclose on a quarterly and annual basis the significant segment expense items that are regularly provided to the entity’s chief operating decision maker (CODM). Entities will also be required to disclose the title and position of their CODM. The new guidance is effective for us beginning in 2024 on an annual basis and the first quarter of 2025 on a quarterly basis, and is to be applied on a retrospective basis. Early adoption of the guidance is permitted. We are currently evaluating the effect this new guidance will have on our disclosures.

 

In December 2023, the FASB issued new guidance that changes certain disclosures related to income taxes. The guidance requires entities to disclose additional quantitative and qualitative information about the reconciliation between their statutory and effective tax rates. Specifically, the guidance requires disaggregation of the reconciling items using standardized categories. This guidance also requires additional disclosure of income taxes paid to now include disaggregation on a federal, state and foreign basis and to specifically include the amount of income taxes paid to individual jurisdictions when they represent five percent or more of total income tax payments. The new guidance is effective for us beginning in 2025 and may be applied on either a prospective or retrospective basis. Early adoption of the guidance is permitted. We are currently evaluating the effect this new guidance will have on our disclosures.

 

In March 2024, the U.S. Securities and Exchange Commission (“SEC”) adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule will require companies to make disclosures about climate-related matters, specifically, it will require the disclosure of:

 

Climate-related risks that are reasonably likely to have a material impact on a company’s business strategy, results of operations or financial condition;
The nature and extent of management’s role in assessing and managing climate-related risks and the board of directors’ oversight of such risks, whether and how climate-related risks are integrated into the company’s overall risk management processes, and any transition plans to manage material transition risks that are part of the company’s risk management strategy;
The processes for identifying, assessing, and managing climate-related risks;

9


 

Any climate-related target or goal that has materially affected or is reasonably likely to materially affect the registrant’s business, results of operations, or financial condition; and
Measures related to greenhouse gas emissions.

 

On April 4, 2024, the SEC stayed these rules due to pending legal challenges.

 

We are currently evaluating the final rule to determine its impact on our future 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 (or declines), unemployment and demand for our products and services. 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, 2024, our allowance for doubtful accounts was $2.5 million as compared to $2.8 million as of December 31, 2023.

 

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 commercial reselling agreement with the affiliate. During the first quarter of 2023, we entered into a multi-year extension of the reselling agreement with Gray. Gray’s investment allows it to sell its interest to Premion if there is a change in control of TEGNA or if the 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 Sheets in the caption “Redeemable noncontrolling interest.” When the redemption or carrying value (the acquisition date fair value adjusted for the noncontrolling interest’s share of net income (loss) and dividends) is less than the recorded redemption value, we adjust the redeemable noncontrolling interest to equal the redemption value with changes recognized as an adjustment to retained earnings. Any such adjustment, when necessary, will be performed as of the applicable balance sheet date.

 

Treasury Stock: We account for treasury stock under the cost method. When treasury stock is re-issued at a price higher than its cost, the difference is recorded as a component of additional paid-in-capital (APIC) in our Condensed Consolidated Balance Sheets. When treasury stock is re-issued at a price lower than its cost, the difference is recorded as a component of APIC to the extent that there are previously recorded gains to offset the losses. If there are no accumulated gains in APIC, the losses upon re-issuance of treasury stock are recorded as a reduction of retained earnings in our Condensed Consolidated Balance Sheets.

 

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, digital marketing services (including Premion), 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. 2022, 2024, etc.) and particularly in the second half of those years; and 4) other services, such as production of programming, tower rentals and distribution of our local news content.

 

Revenue earned by these sources in the first quarter of 2024 and 2023 are shown below (amounts in thousands):

 

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Subscription

$

375,324

 

 

$

414,280

 

Advertising & Marketing Services

 

298,692

 

 

 

307,845

 

Political

 

27,828

 

 

 

5,291

 

Other

 

12,408

 

 

 

12,911

 

Total revenues

$

714,252

 

 

$

740,327

 

 

10


 

 

NOTE 2 – Goodwill and other intangible assets

 

The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of March 31, 2024 and December 31, 2023 (in thousands):

 

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

 

Gross

 

 

Accumulated Amortization

 

 

Gross

 

 

Accumulated Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

$

3,015,973

 

 

$

 

 

$

2,981,587

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Indefinite-lived intangibles:

 

 

 

 

 

 

 

 

 

 

 

Television and radio station FCC broadcast licenses

 

2,124,731

 

 

 

 

 

 

2,124,731

 

 

 

 

Amortizable intangible assets:

 

 

 

 

 

 

 

 

 

 

 

Retransmission agreements

 

101,423

 

 

 

(88,477

)

 

 

113,621

 

 

 

(95,619

)

Network affiliation agreements

 

275,524

 

 

 

(116,239

)

 

 

309,502

 

 

 

(144,834

)

Other

 

105,467

 

 

 

(52,717

)

 

 

71,067

 

 

 

(49,496

)

Total indefinite-lived and amortizable intangible assets

$

2,607,145

 

 

$

(257,433

)

 

$

2,618,921

 

 

$

(289,949

)

 

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. In the first quarter of 2024, gross intangible assets and associated accumulated amortization decreased by $46.2 million, due to certain intangible assets reaching the end of their useful lives.

 

On January 31, 2024, Premion, LLC acquired substantially all the assets of Octillion Media, a next-generation demand-side platform focused on Local Connected TV(CTV)/Over-the-Top (OTT) advertising. The acquisition will expand Premion’s capabilities in the growing CTV marketplace by combining Octillion’s technology with Premion’s local CTV/OTT advertising solution.

 

The base purchase price of the acquisition was $56.0 million plus an adjustment for working capital and a maximum earnout of $14.0 million that the sellers will be entitled to receive if the Octillion Media business achieves certain technological and financial milestones during a defined period following the closing. Through the first quarter of 2024, $52.8 million of the purchase price had been paid.

 

The acquisition was funded with available cash on hand.

 

We are accounting for the acquisition as a business combination, which required us to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of the net assets acquired was recorded as goodwill. We have commenced the appraisals necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed and the amount of goodwill to be recognized. Based on preliminary valuations we have recorded $34.4 million of intangible assets related to acquired technology and customer relationships. We also recorded an additional $34.4 million as goodwill, which 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 and intangible assets are expected to be deductible for tax purposes.

 

The amounts recorded for acquired assets and liabilities are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date.

 

NOTE 3 – Investments and other assets

 

Our investments and other assets consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

 

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

 

 

 

 

 

 

Cash value life insurance

$

51,706

 

 

$

50,865

 

Equity method investments

 

16,520

 

 

 

16,195

 

Other equity investments

 

22,454

 

 

 

19,526

 

Deferred debt issuance costs

 

7,274

 

 

 

 

Prepaid assets

 

8,851

 

 

 

9,878

 

Other long-term assets

 

22,583

 

 

 

17,057

 

Total

$

129,388

 

 

$

113,521

 

 

11


 

 

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 Statements of Income and were not material for all periods presented.

 

Equity method investments: These are investments in entities in which we have significant influence, but do not have a controlling financial interest. Our share of net earnings and losses from these ventures is included in “Other non-operating items, net” in the Consolidated Statements of Income.

 

Other equity investments: Represents investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control and 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 2024 we received $152.9 million of pre-tax cash proceeds upon the completion of the previously announced sale of Broadcast Music, Inc. (BMI) to a private equity firm. The gain associated with this sale is included in “Other non-operating items, net” in the Consolidated Statements of Income. Following this sale we no longer have any ownership interest in BMI.

 

Deferred debt issuance costs: These costs consist of amounts paid to lenders related to our revolving credit facility. On January 25, 2024, we entered into an amendment of our credit facility which resulted in the capitalization of $6.4 million of fees paid to lenders under the new amendment. Additionally, we reclassified approximately $1.1 million of fees under the previous credit facility agreement as non-current deferred debt issuance costs. See Note 4 for additional details of the revolving credit facility amendment. Debt issuance costs paid for our unsecured notes are accounted for as a reduction in the debt obligation.

 

Prepaid assets: These amounts primarily consist of an asset related to a long-term services agreement for IT security.

 

NOTE 4 – Long-term debt

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

 

 

Mar. 31, 2024

 

 

Dec. 31, 2023

 

 

 

 

 

 

 

Unsecured notes bearing fixed rate interest at 4.75% 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

 

3,090,000

 

 

 

3,090,000

 

Debt issuance costs

 

(21,022

)

 

 

(22,226

)

Unamortized premiums and discounts, net

 

4,714

 

 

 

5,027

 

Total long-term debt

$

3,073,692

 

 

$

3,072,801

 

 

On January 25, 2024, we entered into an amendment to our revolving credit facility (the Credit Agreement). Among other things, the amendment amends the revolving credit facility to:

 

Reduce the Five-Year Commitments (as defined in the Credit Agreement) from $1.51 billion to $750 million;
Extend the term of such Five-Year Commitments from August 15, 2024 to January 25, 2029, subject to a 91-day springing maturity date if debt in excess of $300 million (subject to certain exceptions) were to mature before such date;
Add the right to obtain a temporary 0.5x step-up in the Total Leverage Ratio (as defined in the Credit Agreement) after consummating a Qualified Acquisition (as defined in the Credit Agreement);
Increase the amount of Unrestricted Cash (as defined in the Credit Agreement) to $600 million;
Amend the definition of Consolidated EBITDA to include an add-back for certain professional fees and expenses; and
Establish a $50 million swingline facility.

 

Under the amended Credit Agreement, the Company’s maximum Total Leverage Ratio (as defined in the Credit Agreement) will remain unchanged at 4.50x.

 

As of March 31, 2024, cash and cash equivalents totaled $430.8 million and we had $12.7 million of letters of credit outstanding and unused borrowing capacity of $737.3 million under our $750 million revolving credit facility, which now expires in January 2029. We were in compliance with all covenants, including the leverage ratio (our one financial covenant) contained in our debt agreements and revolving credit facility. We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future.

 

 

12


 

NOTE 5 – Retirement plans

 

We have various defined benefit retirement plans. Our principal defined benefit pension plan is the TEGNA Retirement Plan (TRP). The total net pension obligations, including both current and non-current liabilities, as of March 31, 2024, were $75.5 million, of which $5.8 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 TEGNA Supplemental Retirement Plan (SERP), are presented in the following table (in thousands):

 

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Interest cost on benefit obligation

$

5,675

 

 

$

6,150

 

Expected return on plan assets

 

(5,500

)

 

 

(5,225

)

Amortization of prior service cost (credit)

 

25

 

 

 

(125

)

Amortization of actuarial loss

 

1,475

 

 

 

1,575

 

Expense for company-sponsored retirement plans

$

1,675

 

 

$

2,375

 

 

Benefits no longer accrue for TRP and SERP participants as a result of amendments to the plans in past years, and as such we no longer incur a 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.

 

During the three months ended March 31, 2024 and 2023, we did not make any cash contributions to the TRP. We made benefit payments to participants of the SERP of $0.9 million during both of the three month periods ended March 31, 2024 and 2023. Based on actuarial projections and funding levels, we expect to make cash payments of $6.9 million to the TRP in 2024. We expect to make additional cash payments of $4.9 million to our SERP participants during the remainder of 2024.

 

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):

 

 

Retirement
Plans

 

 

Foreign
Currency

 

 

Total

 

Quarters ended:

 

 

 

 

 

 

 

 

Balance as of Dec. 31, 2023

$

(120,142

)

 

$

532

 

 

$

(119,610

)

Amounts reclassified from AOCL

 

1,111

 

 

 

 

 

 

1,111

 

Total other comprehensive income

 

1,111

 

 

 

 

 

 

1,111

 

Balance as of Mar. 31, 2024

$

(119,031

)

 

$

532

 

 

$

(118,499

)

 

 

 

 

 

 

 

 

 

Balance as of Dec. 31, 2022

$

(126,065

)

 

$

532

 

 

$

(125,533

)

Amounts reclassified from AOCL

 

1,078

 

 

 

 

 

 

1,078

 

Total other comprehensive income

 

1,078

 

 

 

 

 

 

1,078

 

Balance as of Mar. 31, 2023

$

(124,987

)

 

$

532

 

 

$

(124,455

)

 

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 amortizations of prior service costs and actuarial losses. Amounts reclassified out of AOCL are summarized below (in thousands):

 

 

Quarter ended Mar. 31,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Amortization of prior service cost (credit), net

$

25