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Tegna (TGNA) Set to be Acquired by Standard General in 2023

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Tegna (TGNA - Free Report) is set to be acquired by Standard General in February 2023. The $5.4 billion deal received approval from Team Telecom last month. However, it still awaits confirmation from the Federal Communication Commission (FCC), which has shown concern over the proposed merger's impact on jobs and retransmission-consent negotiations.

To address the concerns, Standard General told the FCC that it would not try to apply retransmission consent agreements and will also not conduct any journalism or newsroom staffing layoffs for at least the next two years. It has shown interest in engaging with the labor unions to discuss any existing or outstanding grievances that they might have regarding their current agreements.

Standard General believes that its plans to increase station news content at Tegna will, on the contrary, bolster the number of journalists and newsroom employees at the stations.

These conditions proposed by Standard General should help in the smooth acquisition of Tegna as the deal is reaching its final innings.

Both Tegna and Standard General to Benefit From This Deal

The good that comes to Tegna with the deal is that its high debt, which accounts for almost $3.2 billion, will be cleared once the acquisition is closed.

Dave Lougee, the CEO of Tegna has cherished this agreement as he believes that Standard General’s investments in the television broadcasting industry will evolve Tegna’s portfolio and widen its reach.

Investors too look positively on this deal as the share price for Tegna has risen 11.6% year to date compared with the Zacks Consumer Discretionary sector, which fell 36.2% in the same time frame.

Despite Tegna's high leverage, it has been an attractive acquisition for Standard General, given its 66 television stations in 54 U.S. markets that have been benefiting the company’s top line.

Total revenues for Tegna were at $803 million, up 6% year over year in third-quarter fiscal 2022, of which subscriptions showed growth of 2.4% despite the absence of last year’s summer Olympics.
 

TEGNA Inc. Price and Consensus

TEGNA Inc. Price and Consensus

TEGNA Inc. price-consensus-chart | TEGNA Inc. Quote

This growth could be attributed to the success of its various divisions like its Locked On Podcast Network, whose monthly audience of audio downloads and video views grew to more than 20 million per month in the discussed quarter.

Along with this, Verify, Tegna’s national brand that combats disinformation, saw video views growth of 104% on VerifyThis.com and more than 74% on YouTube compared to the previous quarter.

The bolstering user base signifies strength in Tegna, which could serve as a potential source to expand the business for Standard General. Hence, the latter is fighting with determination to close the acquisition and is positive about the results.

Zacks Rank & Stocks to Consider

Tegna currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same sector are Liberty Media (FWONK - Free Report) , Hilton Grand Vacations (HGV - Free Report) and Virco Manufacturing (VIRC - Free Report) each sporting a Zacks Rank #1 (Strong Buy).

Liberty Media’s share price decreased 5.3% year to date compared with the consumer discretionary sector, which declined 36.4%. The Zacks Consensus Estimate for earnings is pegged at 10 cents, which has moved up by 42% over the past 30 days.

Hilton Grand Vacations lost 25.2% of its share price year to date. Its earnings estimate is pegged at 77 cents, which has been constant over the past month.

Virco Manufacturing’s share price has increased 42.9% year to date. Its earnings estimate is pegged at 47 cents, which has been constant over the past month.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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