The third quarter earnings parade continued Monday morning with the release of a trio of financial statements for the three-month period ending September 30, and for broadcast TV station owner TEGNA, the “strength and durability” of its business model is what propelled it to “record” single quarter revenue in Q3 2020.
Exceptional political dollars were a critical part of that “record” report card.
Powered by election-related revenue, TEGNA’s Q3 revenue surged by 33.8%, to $738.39 million from $551.86 million.
And, even with a 14.8% rise in expenses, to $510.69 million, net income grew to $132.22 ($0.60 per share) million, from $48.35 million ($0.22).
On a non-GAAP basis, EPS came in at $0.59 in Q3 2020, rising from $0.27, with adjusted EBITDA rising to $220.29 million from $166.94 million.
When breaking out the revenue, it is the political dollar amount that stands out in a bright spotlight: Political dollars came in at $116.49 million, with NBC and FOX affiliates in Phoenix and Tucson; the ABC and NBC affiliates in Jacksonville and the CBS affiliate in Tampa; the NBC affiliate in Atlanta and CBS affiliate in Macon, Ga.; and stations in Cleveland, Columbus and Toledo, Ohio; powering TEGNA in Q3, given their prominence in the 2020 election.
Furthermore, the Georgia duo could see great political dollar intake in December, as two Senate races are heading to a runoff election. Steven Cahall, the Wells Fargo analyst, wanted to know how big those Georgia dollars could be, and asked on TEGNA’s Q3 earnings call. But, President/CEO Dave Lougee couldn’t offer a specific offer, other than “we know that it will be very, very large,” with respect to the coming bonus political benefit in Atlanta and Macon.
Benchmark Company equity analyst Dan Kurnos enjoyed the “positive continuation of results,” while Kyle Evans of Little Rock-based Stephens Inc. discussed the possibilities that will come monetarily from the Supreme Court’s decision to review the FCC’s appeal of the Third Circuit remand of its ownership rule relaxation. With a victory, the Commission could move ahead with its plan for market deregulation, and that could bring incremental revenue in the millions for a company such as TEGNA.
While political dollars were exceptional, automotive has come back strong, he said in response to an analyst query. And, that helped TEGNA in achieving statistically flat Advertising and Marketing Services revenue, moving to $298.61 million from $297.33 million. Also aiding TEGNA: “very strong year-over-year growth of Premion,’ its OTT advertising service.
Excluding political advertising, Q3 revenue grew 14% year-over-year.
Subscription revenue came in at $317 million — up 32% due to rate increases and
acquisitions, reflecting the approximately 50% of subscribers repriced in Q4 2019.
The company formerly known as Gannett was poised to open Monday’s trading at $13.50 — a post COVID-19 high and a level last seen in mid-March. Volume is poised to be exceptionally high, with TEGNA shares go ex-dividend on Dec. 10.
Craig Huber of Huber Research Partners asked the final question on TEGNA’s Monday morning earnings call. He wondered how non-political ad trends were, and President/CEO Dave Lougee said they were trending roughly down 5% — and it is improving. Further, while automotive dollars are down, it is “not much of a drag at all now.”
