What Will TEGNA Look Like After Cars.com Drives Off?


TEGNA, the media company known as Gannett until its newspapers were spun off, is about ready to do another bit of shedding. On May 31, its Cars.com will become a stand-alone company.

The move will see TEGNA Media President Dave Lougee become TEGNA President/CEO as the company’s current leader, Gracia Martore, steps into retirement.

What will TEGNA look like after the Cars.com exit?

Investors got a first-hand peek under the hood at a meeting held today that revealed just what’s ahead for the broadcast TV company.

“As a standalone company, we will continue to produce trusted content, conduct impactful investigations, develop original storytelling and create innovative marketing solutions,” Lougee said. “We are driven by our strongly-held values and desire to serve the greater good of our communities, as well as our focus on the long-term interests of TEGNA and its shareholders.”

A Four-Pillar Growth Strategy

TEGNA detailed a plan for growth that it says is “closely aligned with the evolution of the media and broadcast industry.”

This strategy includes the embrace the changes seen in the industry, and to “expand the markets” it is targeting.

It also seeks to accelerate the growth and monetization of its multi-platform business, and to leverage its scale, locally-relevant content, and programming to grow subscriber revenues across traditional and OTT distribution channels.

Perhaps most telling, TEGNA wishes to diversify its revenue base through “continued investment in new and innovative business models that leverage its strong assets and advantaged scale.”

The company also reiterated that it “continues to assess strategic alternatives for CareerBuilder.”

Over the next two years, the company, on a pro forma basis (excluding Cars.com and CareerBuilder) expects to achieve low to mid-single digit revenue growth in 2017 and in the low to mid-teens in 2018.

EBITDA margins are forecast for between 35%-37% in 2017 and between 39%-42% in 2018.

Including CareerBuilder and excluding Cars.com, 2017 total company revenues, on a pro forma basis, are expected to remain in line with 2016 revenues of $2.7 billion.

TEGNA expects to maintain its existing credit facility following the transaction and expects to target long-term leverage levels in line with its peers.

Additionally, TEGNA intends to use a one-time $650 million tax-free cash distribution from Cars.com and cash flow from operations to reduce leverage and, to that end, will extinguish its current share repurchase program, with plans to reassess in the future.

Lastly, TEGNA expects to pay a regular cash dividend of $0.28 per share annually.