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Over the past three months, the stock price of TEGNA moved down 44.06% compared with the Zacks categorized Broadcast Radio and Television industry’s gain of 0.34%.
We believe that TEGNA’s consistent loss in digital business might hurt its long-term operations. In the last reported first-quarter 2017, total revenue of TEGNA’s digital business was $332.2 million, down 1.7% year over year. Operating income was $28.8 million, declining 39.1% year over year. Adjusted EBITDA was $65.6 million, down 15.4% year over year.
The U.S. broadcast TV industry has long been grappling with declining advertising revenues (advertisement revenues were $2.2 million in first-quarter 2017, down a whopping 86.3% year over year) and global economic volatility. In addition, the broadcast TV industry is categorized as an intensely competitive one. TEGNA’s major competitors include CBS Corp. , Gray Television Inc. (GTN - Free Report) and Entercom Communications Corp. , to name a few.
Soft advertising market is also a near-term headwind for the company. Meanwhile, the media and entertainment industry is one of the rapidly changing industries in terms of technical changes in content creation, aggregation, and distribution platforms. Such technological changes and their latest upgrades add to the company’s programming costs and expenses, which are likely to affect the bottom line.
On the flip side, TEGNA offers a dynamic portfolio of media and digital businesses in the U.S. Presently, the company’s media division owns 46 television stations in 38 markets and is the largest independent television station group of major network affiliates in the top 25 markets. Being focused more on content creation rather than TV broadcasting, the media division shelters the company from the prevailing cord-cutting threats in the pay-TV industry.
On Jun 1, 2017, TEGNA completed the spin-off of Cars.com, into two publicly traded companies: TEGNA and Cars.com, a leading digital automotive marketplace. Stockholders will retain their TEGNA shares and receive one share of Cars.com for every three shares of TEGNA stock they owned on the Record Date. The planned spin-off will help TEGNA and Cars.com to take advantage of differentiated opportunities in the rapidly evolving broadcast TV and digital landscapes. The spin-off is expected to be tax-free to TEGNA shareholders. Both entities will have balance sheets and capital return policies in accordance with their specific business characteristics. This will increase growth opportunities and appropriate market valuations.
Based on this spin-off, the company has also raised its financial outlook for the full-year 2017 and 2018. On a pro forma basis, excluding Cars.com and CareerBuilder, TEGNA expects to achieve EBITDA margins 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 also expects to pay a regular cash dividend of 28 cents per share annually.
TEGNA also continues to evaluate strategic alternatives for its job-hunting unit, CareerBuilder. Both broadcast TV and digital platforms are rapidly expanding. Management has decided to widen its core broadcast TV business.
We are impressed with TEGNA’s board of directors’ decision to reward its stockholders with a dividend of 7 cents per share, payable on Jul 3, 2017, to stockholders of record as of the closure of business on Jun 9, 2017.
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Here's Why You Should Sell TEGNA (TGNA) Despite Prospects
On Jun 5, 2017, Virginia-based, publicly-traded broadcast and digital media company, TEGNA Inc. (TGNA - Free Report) was downgraded to Zacks Rank #5 (Strong Sell) from Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past three months, the stock price of TEGNA moved down 44.06% compared with the Zacks categorized Broadcast Radio and Television industry’s gain of 0.34%.
We believe that TEGNA’s consistent loss in digital business might hurt its long-term operations. In the last reported first-quarter 2017, total revenue of TEGNA’s digital business was $332.2 million, down 1.7% year over year. Operating income was $28.8 million, declining 39.1% year over year. Adjusted EBITDA was $65.6 million, down 15.4% year over year.
The U.S. broadcast TV industry has long been grappling with declining advertising revenues (advertisement revenues were $2.2 million in first-quarter 2017, down a whopping 86.3% year over year) and global economic volatility. In addition, the broadcast TV industry is categorized as an intensely competitive one. TEGNA’s major competitors include CBS Corp. , Gray Television Inc. (GTN - Free Report) and Entercom Communications Corp. , to name a few.
Soft advertising market is also a near-term headwind for the company. Meanwhile, the media and entertainment industry is one of the rapidly changing industries in terms of technical changes in content creation, aggregation, and distribution platforms. Such technological changes and their latest upgrades add to the company’s programming costs and expenses, which are likely to affect the bottom line.
On the flip side, TEGNA offers a dynamic portfolio of media and digital businesses in the U.S. Presently, the company’s media division owns 46 television stations in 38 markets and is the largest independent television station group of major network affiliates in the top 25 markets. Being focused more on content creation rather than TV broadcasting, the media division shelters the company from the prevailing cord-cutting threats in the pay-TV industry.
On Jun 1, 2017, TEGNA completed the spin-off of Cars.com, into two publicly traded companies: TEGNA and Cars.com, a leading digital automotive marketplace. Stockholders will retain their TEGNA shares and receive one share of Cars.com for every three shares of TEGNA stock they owned on the Record Date. The planned spin-off will help TEGNA and Cars.com to take advantage of differentiated opportunities in the rapidly evolving broadcast TV and digital landscapes. The spin-off is expected to be tax-free to TEGNA shareholders. Both entities will have balance sheets and capital return policies in accordance with their specific business characteristics. This will increase growth opportunities and appropriate market valuations.
Based on this spin-off, the company has also raised its financial outlook for the full-year 2017 and 2018. On a pro forma basis, excluding Cars.com and CareerBuilder, TEGNA expects to achieve EBITDA margins 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 also expects to pay a regular cash dividend of 28 cents per share annually.
TEGNA also continues to evaluate strategic alternatives for its job-hunting unit, CareerBuilder. Both broadcast TV and digital platforms are rapidly expanding. Management has decided to widen its core broadcast TV business.
We are impressed with TEGNA’s board of directors’ decision to reward its stockholders with a dividend of 7 cents per share, payable on Jul 3, 2017, to stockholders of record as of the closure of business on Jun 9, 2017.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>