UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 17, 2017
TEGNA INC.
(Exact name of Registrant as Specified in its Charter)
| Delaware | 1-6961 | 16-0442930 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 7950 Jones Branch Drive McLean, Virginia |
22107-0150 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(703) 873-6600
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
| Item 7.01 | Regulation FD Disclosure |
TEGNA Inc. (“TEGNA” or the “Company”) will present an overview of the Company and information related to the previously announced proposed spin-off (the “Spin-Off”) of Cars.com Inc. (“Cars.com”) during an investor and analyst presentation being held on May 17, 2017 at 10:00 a.m. A copy of the presentation slide deck is attached hereto as Exhibit 99.1.
The presentation included 2016 revenue on a pro forma basis. The pro forma basis represented 2016 TEGNA reported GAAP revenues excluding Cars.com revenues. This non-GAAP information was included, as the Spin-Off is expected to be completed on May 31, 2017, and therefore, provides useful information to investors and other stakeholders allowing them to see what 2016 revenues would have been for TEGNA’s ongoing businesses. The below table reconciles TEGNA’s GAAP 2016 revenues to its 2016 revenue on a pro forma basis (in billions of dollars):
| Year ended December 31, 2016 |
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| Operating Revenues - GAAP basis |
$ | 3.3 | ||
| Cars.com 2016 Operating Revenues |
0.6 | |||
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| Operating Revenues - Pro forma basis |
$ | 2.7 | ||
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The information contained in this Current Report on Form 8-K (including Exhibit 99.1) is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” with the U.S. Securities and Exchange Commission (“SEC”) for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be incorporated by reference into any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of general incorporation language in such filing, unless expressly incorporated by reference in such filing.
The furnishing of the information in this Item 7.01 is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information in this Item 7.01 or the exhibit hereto is material information that is not otherwise publicly available.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit |
Description | |
| 99.1 | TEGNA Inc. Investor Presentation, dated May 17, 2017. | |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TEGNA INC. | ||
| By: | /s/ Akin S. Harrison | |
| Akin S. Harrison | ||
| Vice President, Associate General Counsel and Secretary | ||
Date: May 17, 2017
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | TEGNA Inc. Investor Presentation, dated May 17, 2017. | |
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
MARGE
MAGNER
CHAIRMAN OF THE BOARD, TEGNA
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2017 INVESTOR DAY
GRACIA
MARTORE
PRESIDENT & CEO, TEGNA
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2017 INVESTOR DAY
DAVE
LOUGEE
INCOMING PRESIDENT & CEO, TEGNA
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2017 INVESTOR DAY
DAVE LOUGEE 25-Year Industry Career
Broadcasting Hall of Fame Inductee
Joint of Board the National Chair Association of Broadcasters
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
FORWARD LOOKING STATEMENT
Any statements contained in this presentation that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including statements with respect to the potential separation and distribution of TEGNA’s digital automotive marketplace business to its stockholders (the “spin-off ”) and the expected financial results of the company after the spin-off. Any forward-looking statements contained herein are based on our management’s current beliefs and expectations, but are subject to a number of risks, uncertainties and “changes in circumstances, which may cause the company’s actual results or actions to differ materially from what is expressed or implied by these statements. Such risks include, but are not limited to: uncertainties as to the timing of the spin-off or whether it will be completed, the possibility that various closing conditions for the spin-off may not be satisfied or may be waived, the expected tax treatment of the spin-off, the impact of the spin-off on the company’s business and the availability and terms of financing. Economic, competitive, governmental, technological and other factors and risks that may affect the company’s operations or financial results expressed in this presentation are discussed in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and in the company’s subsequent filings with the U.S. Securities and Exchange Commission (SEC). We disclaim any obligation to update these forward-looking statements other than as required by law. This presentation also contains a discussion of a non-GAAP financial measure that the company presents in order to allow investors and analysts to measure, analyze and compare its financial condition and results of operations in a meaningful and consistent manner. A reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure can be found in the Form 8-K.
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2017 INVESTOR DAY
AGENDA
1 INVESTMENT THESIS
2 GROWTH STRATEGY
3 STRATEGIC INITIATIVES
4 REGULATORY ENVIRONMENT
5 CAPITAL ALLOCATION AND FINANCIAL OUTLOOK
6 Q&A
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2017 INVESTOR DAY
TEGNA FOOTPRINT
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2017 INVESTOR DAY
TEGNA FOOTPRINT
46
Stations
38
Markets
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2017 INVESTOR DAY
TEGNA FOOTPRINT
Largest owner of top 4 a?liates in the top 25 markets
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2017 INVESTOR DAY
TEGNA FOOTPRINT
Largest NBC a?liate group
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2017 INVESTOR DAY
TEGNA FOOTPRINT
1/3
of TV Households
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2017 INVESTOR DAY
TEGNA FOOTPRINT
27 20
#1 or #2 in #1 or #2 in late news morning news
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2017 INVESTOR DAY
Trusted Content Original Storytelling Impactful Investigations
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2017 INVESTOR DAY
Marketing Solutions
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2017 INVESTOR DAY
TEGNA PURPOSE
To Serve the Greater Good of our Communities
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2017 INVESTOR DAY
INVESTMENT THESIS
Best-in-Class Operator
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2017 INVESTOR DAY
INVESTMENT THESIS
High-Quality Assets & Strong Cash Flow
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2017 INVESTOR DAY
INVESTMENT THESIS
Innovation
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2017 INVESTOR DAY
INVESTMENT THESIS
Regulatory Changes
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2017 INVESTOR DAY
INVESTMENT THESIS
Capital Allocation Strategy & Strong Balance Sheet
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2017 INVESTOR DAY
GROWTH STRATEGY
Embracing change, growing market share, and expanding the markets we are targeting Accelerating the growth and monetization of our multi-platform businesses Growing subscriber revenues with both traditional cable and satellite operators and new OTT entrants in light of shifting audience preferences Further diversifying our revenue base by investing in new business models that leverage our strong assets and scale
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2017 INVESTOR DAY
CONTENT TRANSFORMATION
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
DIGITAL FOOTPRINT
32M
Across Digital Platform
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2017 INVESTOR DAY
DIGITAL FOOTPRINT
19M
Social Followers
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2017 INVESTOR DAY
DIGITAL FOOTPRINT
+42%
Growth
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2017 INVESTOR DAY
DIGITAL FOOTPRINT
Top 10
Facebook Publisher
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2017 INVESTOR DAY
DIGITAL FOOTPRINT
Video Plays / Month
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2017 INVESTOR DAY
PROGRAMMING
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
STATE OF TV VIEWING
4 Hours
23 Minutes
a day watching live television
Down Only
4 Minutes
a day from the previous year
Source: The Nielsen Total Audience Report, Q4 2016 The Nielsen Company
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2017 INVESTOR DAY
2018 LIVE EVENTS
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POLITICAL ADVERTISING
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2018 ELECTIONS
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2017 INVESTOR DAY
2018 ELECTIONS
36
Governor Races
14
Senate Races
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2018 ELECTIONS
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2017 INVESTOR DAY
84%
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2017 INVESTOR DAY
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
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2017 INVESTOR DAY
360° CLIENT SOLUTIONS
Deep Consumer Insights
Unique Creative Solutions
Customization
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2017 INVESTOR DAY
SUBSCRIBER REVENUE GROWTH
800 ~$720M
600 $582M
$449M
400 $366M
$226M
200 $123M $158M
0
2011P 2012P2013P2014P2015A2016A2017E
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2017 INVESTOR DAY
SUBSCRIBER REVENUE GROWTH
800
$720M 600 $582M $449M
400 $366M +24% $226M
200 $158M $123M
0 2011P 2012P 2013P 2014P 2015A 2016A 2017E
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
OTT PROVIDERS AND SKINNY BUNDLES
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2017 INVESTOR DAY
OTT PROVIDERS AND SKINNY BUNDLES
Abc
Nbc
Cbs
Direct Conversations
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
OTT
Positive Economics Insulate TEGNA from Cord Cutting
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2017 INVESTOR DAY
ED BUSBY
SENIOR VICE PRESIDENT, STRATEGY
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2017 INVESTOR DAY
BUSINESS
DIVERSIFICATION
Intelligent Ad Automation
B2B Marketing Services
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2017 INVESTOR DAY
INTELLIGENT AD AUTOMATION
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2017 INVESTOR DAY
PREMION CONTENT PARTNERS
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2017 INVESTOR DAY
INTELLIGENT AD AUTOMATION
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2017 INVESTOR DAY
PREMION
175
Markets
700
Campaigns per Month
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2017 INVESTOR DAY
PRICING
Big
Data
Machine Learning
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2017 INVESTOR DAY
SOPHISTICATED PRICING PLATFORM
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
B2B MARKETING SERVICES
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2017 INVESTOR DAY
B2B MARKETING SERVICES
Search
Targeted Banner
Social Reputation Management
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2017 INVESTOR DAY
B2B MARKETING SERVICES
Marketing Center of Excellence
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2017 INVESTOR DAY
Advanced
Advertising
4K + High Dynamic Range Resolution
Higher Frame Rate
Virtual Reality
3D Audio
Second Screen Experiences
Mobile
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
REGULATORY CHANGES
UHF Discount Reinstated
Expected Relaxation of In-Market Rules
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
VICTORIA
HARKER
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
KEY DRIVERS OF VALUE CREATION
Driving Organic Revenue Growth and Strong Cash Flow
Content and Sales Innovation
High
Impact
Acquisitions and
New
Growth
Opportunities
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TEGNA
2017 INVESTOR DAY
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MEDIA RESULTS
2017 INVESTOR DAY
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2017 INVESTOR DAY
FINANCIAL UPDATE: TEGNA MEDIA
2016 Total Revenue:
$1.9B+
• Pro forma basis, excluding Cars.com and CareerBuilder
• Excludes future acquisitions
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2017 INVESTOR DAY
FINANCIAL UPDATE: TEGNA MEDIA
2017 Revenue:
Low to Mid Single Digits
• Pro forma basis, excluding Cars.com and CareerBuilder
• Excludes future acquisitions
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2017 INVESTOR DAY
FINANCIAL UPDATE: TEGNA MEDIA
2017 EBITDA Margin:
35-37%
• Pro forma basis, excluding Cars.com and CareerBuilder
• Excludes future acquisitions
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2017 INVESTOR DAY
FINANCIAL UPDATE: TEGNA MEDIA
2018 Revenue:
Low to Mid Teens
2018 EBITDA Margin:
39-42%
• Pro forma basis, excluding Cars.com and CareerBuilder
• Excludes future acquisitions
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2017 INVESTOR DAY
BEST IN CLASS MARGINS
Impact of scale and strength of footprint in negotiations
Portfolio of strong stations and leading a?liate positions
Pursue e?ciencies through centralization and automation
Culture of ?nancial accountability
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
FOCUS ON DEBT REDUCTION HAS YIELDED INDUSTRY-LOW LEVERAGE LEVELS
Leverage Levels on Par with Peers
Total Debt / (Average 2016+2017 EDITDA)
6.0x Total Debt / (Average 2016+2017 EDITDA)
5.6x
5.0x 4.7x
3.9x ~ 4.1x
1.7x
Tribune Gray Tribune Nexstar Sinclair E.W. TEGNA Media Television, Media + Media Group, Broadcast Scripps (post spin) [3] Company Inc. Sinclair [1] Inc. [2] Group, Inc.
Note: Calendarized to 12/31 year-end
[1] Less than 5.0x leverage on a blended 2016/2017 EBITDA basis at 12/31/17, including synergies per investor presentation on 5/8/2017 [2] Pro forma for merger with Media General; leverage per Nexstar Q1 press release [3] Assumes $650M dividend from Cars.com
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2017 INVESTOR DAY
OTHER KEY FINANCIAL METRICS
2017E 2018E
Depreciation $50M—$52M $50M—$52M Amortization $22M—$24M $20M—$22M
Interest Expense $200M—$205M $175M—$180M
Total
TEGNA Leverage Ratio ~ 4.1x 3.6x—3.8x
Corporate Expenses Mid $50M ~ $50M
Capital Expenditures $30M—$35M $30M—$35M E?ective Tax Rate 34%—35% 35%—36%
• Pro forma basis excluding Cars.com and CareerBuilder
• Excludes future acquisitions
• Capital expenditure in 2018 excludes gross expenditure of ~$15M related to the anticipated spectrum repacking (13 markets), part of which we expect government to reimburse as part of repacking proceeds. Also, 2018 excludes about $10M of corporate headquarter building expenditure which will be partly offset by a landlord tenant improvement allowance.
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2017 INVESTOR DAY
FINANCIAL UPDATE: TOTAL COMPANY WITH CAREERBUILDER EXCLUDING CARS.COM
2016 REVENUE: $2.7B
(PRO FORMA BASIS)
2017 REVENUE: In-Line
(PRO FORMA BASIS) with 2016
• Pro forma represents TEGNA reported GAAP revenues of $3.3B less $0.6B of Cars.com revenues. Cars.com is expected to be spun on May 31, 2017.
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2017 INVESTOR DAY
CAPITAL ALLOCATION STRATEGY
Invest in growth through organic expansion
Opportunistically reduce debt, increasing firepower and flexibility for future investments Consider M&A and investment opportunities in-line with our integrated strategy Return capital to shareholders from free cash flow Dividends $0.28 per share/per year Extinguishing share repurchase program and will assess reinitiating in the future
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2017 INVESTOR DAY
WELL POSITIONED FOR M&A: HEADROOM
27% against the cap
Ample headroom to pursue vertical opportunities
Potential for in-market consolidation opportunities within existing TEGNA footprint
U.S. TV Household Reach
70%
With UHF Total Reach FCC Household Cap
39% 38% 37% 37%
23%
19% 18%
42% 16%
11% 11% 10%
26% 22% 24% 21% 7% 20% 13% 11% 10%
6% 6% 7% 4%
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2017 INVESTOR DAY
WELL POSITIONED FOR M&A: SYNERGIES
TEGNA achieves considerable cost and mechanical synergies
TEGNA’s strategic initiatives deliver additional synergies
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2017 INVESTOR DAY
EXCEPTIONAL ACQUISITION AND INTEGRATION TRACK RECORD
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2017 INVESTOR DAY
EXCEPTIONAL ACQUISITION AND INTEGRATION TRACK RECORD
EXPECTATIONS:
• $175M of EBITDA synergies within ? three years?
• Non-GAAP EPS accretion of $0.43 ? per share for the ? ?rst 12 months
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2017 INVESTOR DAY
EXCEPTIONAL ACQUISITION AND INTEGRATION TRACK RECORD
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2017 INVESTOR DAY
EXCEPTIONAL ACQUISITION AND INTEGRATION TRACK RECORD
EXPECTATIONS:
• Annual revenue ? of $50M
• Accretive to Non-? GAAP EPS within ? 12 months
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2017 INVESTOR DAY
EXCEPTIONAL ACQUISITION AND INTEGRATION TRACK RECORD
ACHIEVED:
EXCEEDED TARGETS— WELL AHEAD
OF TIME
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2017 INVESTOR DAY
IN-MARKET CONSOLIDATION OPPORTUNITY
Represents substantial opportunity to create value Not yet occurred in majority of mid to large markets where TEGNA operates Achievable through variety of structures Substantial mechanical synergies
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2017 INVESTOR DAY
IN-MARKET CONSOLIDATION OPPORTUNITY:? EBITDA MARGIN POTENTIAL
Potential to Duplicate
Cost
Deliver 10—15 Expense
E?ciencies
Percentage Point Reductions Increase in EBITDA Margin on the Acquired Incremental
Revenue
Station Upside
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TEGNA
2017 INVESTOR DAY
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2017 INVESTOR DAY
INVESTMENT THESIS
High-Quality
Best-in-Class Assets & Innovation Operator Strong Cash Flow
Capital Allocation
Regulatory Strategy & Changes Strong
Balance Sheet
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Q & A
2017 INVESTOR DAY
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TEGNA
2017 INVESTOR DAY