Good day, and thank you for standing by. Welcome to the Q4 2024 TEGNA Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kirk von Seelen, TEGNA's Treasurer. Please go ahead.

Thank you. Good morning, and welcome to our fourth quarter and full year 2024 conference call and webcast. My name is Kirk von Seelen, and I am TEGNA's Treasurer. Today, our CEO, Mike Steib, and our CFO, Julie Heskett, will review TEGNA's financial performance and results and provide TEGNA's full year and first quarter outlook. After that, we'll open the call for questions. Hopefully, you've had the opportunity to review this morning's press release. If you have not yet seen a copy of the release, it's available at tegna.com. Before we get started, I'd like to remind you that this conference call and webcast includes forward-looking statements and our actual results may differ. Factors that may cause them to differ are outlined in our SEC Filings. This presentation also includes certain non-GAAP financial measures. We have provided reconciliations of those measures to the most directly comparable GAAP measures in the press release. With that, let me turn the call over to Mike.

Thanks, Kirk. Morning, everyone, and thank you for joining us. In my first six months here at TEGNA, the team and I have been working closely with our stations and our business leaders to assess our operations, strategic focus, and untapped opportunities. There are a lot of exciting things happening at the company. We have strong local news teams, trusted brands, and deep ties to our communities and our local advertisers. We're building a better future for TEGNA. And as I mentioned last quarter, the team and I have identified five key areas of opportunity that have urgent focus across the company. Number one, building a world-class team, culture, and company operating system that unlocks high-impact execution. Number two, leveraging TEGNA's strengths across our stations, improving performance through better resource sharing. Number three, fully deploying technology automation, and AI to run a more efficient and effective operation. Number four, growing digital revenue by deepening engagement with our digital audience. And number five, scrutinizing every dollar we spend ensuring time and resources are maximally focused on audience and revenue growth. Today, I'd like to share some early progress we've made in each of these areas. Number one, building a high-performance team and culture. We're rolling out unified values and expectations across our stations to drive a culture of rigorous performance management and ensure A-plus talent. We are elevating our best people into key roles where they can have the biggest impact. Headlining this effort, Tom Cox, Chief Growth Officer, is expanding his role to lead our network affiliation and distribution partnerships. Tom is a strategic leader who will help strengthen the media ecosystem and ensure a bright future for local news and the communities we serve. We are also continuing to attract top-tier talent. I want to welcome Danusha Sabaji, our new Chief Experience Officer, owning marketing and consumer digital products. Danusha is a world-class brand builder who has led industry-dominant products. Notably, I worked closely with Danusha at The Knot. We're seeing the team turn the company around achieving 95% brand awareness at a product NPS over 70. She is a winner, and we are thrilled to have her on board. And just last week, we announced the addition of news veteran, Adrian Werk, as our new Chief Content Officer. Adrian brings sharp editorial and operational expertise, a history of rapid innovation across TV and digital, and the kind of high-intensity high-velocity leadership that fits perfectly with our team. We're very excited for her to join the team next month. Number two, improving execution through resource sharing. One example of the opportunities we see here is we recently consolidated marketing operations across our stations into a centralized team. This structure enables us to leverage cutting-edge marketing technologies and best practices to execute more effective campaigns for our stations and for our advertisers. This move is contributing to the $90 to $100 million savings target that Julie will outline further in her comments. Number three, we're deploying technology to run better stations. We spent this quarter designing from the studs up the TV station of the future. Using modern cloud-based technology, AI automation, virtual sets, and more. We will be piloting this in two markets in the coming quarters. And our expectation is that it will increase capabilities and operational savings across our station portfolio. Number four, winning in digital. We see a sizable revenue opportunity in engaging a large audience we already reach through digital channels. To that end, we have shipped or are in the process of shipping three pilots designed to test new engagement-driving features for our local users. More important than the launches themselves, we're bringing an entrepreneurial tech startup mindset and user-driven development of new features and products to the company. It's a necessary first step in winning in digital. Finally, number five, scrutinizing every dollar we spend. We are zero-basing costs and questioning every expense. Just one example, our current office space in Tysons Corner is larger and nicer than we need to get the job done. We're exiting the building at the earliest opportunity, and we'll be moving to a more cost-effective space. In addition, Julie and I are personally reviewing every vendor contract across the company. Reducing the number of consultants, ensuring every dollar we spend is aligned with our strategic priorities. Our mission is to build a sustainable future for local news. And we're taking the necessary steps to ensure that TEGNA thrives in this rapidly evolving industry. Now I want to spend just a moment on the regulatory environment, and the opportunities that potentially create for TEGNA. The regulatory landscape under new FCC leadership is evolving and talk of M&A has increased since the presidential election and inauguration. Time will tell if deregulation occurs to the extent most are forecasting, but here's what we know. Local broadcast is critical to our communities, that the current regulatory rules are antiquated. Our consumers have infinite options, and advertisers can reach audiences online, on air, on streaming, on cable, on social media, in print, billboards, and so on. We are up against enormous unregulated tech companies like Meta and Google, leaving an uneven playing field for broadcasters. And to compete, we need the ability to get bigger and stronger. I think we at TEGNA are best positioned for any outcome. With a strong balance sheet affording us optionality towards the best opportunities for value creation. If the right opportunity presents itself, we will be part of the discussion. Our job is to be efficient allocators of capital. We will continue to make disciplined capital deployment decisions that prioritize long-term value creation. Finally, I want to take a moment, and I want to congratulate KXTV in Sacramento for receiving the prestigious 2025 Alfred DuPont Columbia University Award. Honoring excellence in journalism for their investigation into questionable practices in the Sacramento school system. Congratulations to investigative reporter, Andy Judson, producer Sabrina Sanchez, Mike Bunnell, executive producer, Gonzalo Magana, and along with photojournalists, Tyler Horst, Vanessa Bozuto, Rachel Boyang Kim, and Xavier. What we do here matters. It makes our communities better, holds people in power accountable, it changes laws, it saves lives. In closing, the key focus areas I outlined in some of the early efforts are complete transformation of how we operate as a company. There's an opportunity in us executing better and more efficiently. Elevating our news products and capturing our content's full value across all our platforms. We are leaning on our strong stations and brands in the content and distribution ecosystem and are laser-focused on growing digital revenue, activating technology to reduce costs across TEGNA. This is going to be a big year. I appreciate the hard work on the team, and I'm pleased that we have such strong assets that delivered solid 2024 results. I'll now hand it over to Julie to provide a more detailed look at our financial results.

Thanks, Mike. We are pleased to report that our fourth quarter and full year results aligned with our guidance. Reflecting TEGNA's solid foundation and market leadership with a strong portfolio of stations. Mike's leadership continues to bring fresh perspective and urgency to our energizing our team with a clear focus on accelerating performance. I'll begin today by covering TEGNA's financial results and capital allocation execution for both the fourth quarter and full year 2024, then provide an update on our business operational initiatives, before closing with a review of our guidance. My comments today will primarily focus on TEGNA's performance on a consolidated non-GAAP basis, to provide you with visibility into the financial drivers of our business trends, and operational results. You can find all of our reported data and prior period comparatives in our press release. Total company revenue for the fourth quarter increased 20% year over year to $871 million in line with our outlook of 19% to 21% growth. This performance was primarily driven by political advertising revenue, and what proved to be another strong election cycle across the third and fourth quarters. For the full year, total company revenue grew 7% to $3.1 billion resulting in $931 million of adjusted EBITDA reflecting the strength of our high-quality broadcast assets in key markets and successful execution. The fourth quarter capped off a strong year for political advertising as we generated $373 million for full year 2024. As mentioned last quarter, this year's performance nearly matched our 2020 results excluding the Georgia senate runoff despite having fewer competitive senate and house races. This underscores the durability of political advertising on broadcast and the strategic value of our footprint in key battleground states. Advertising and marketing services revenue or AMS faced expected pressure in the fourth quarter due to political displacement and continued softness from national accounts. Finishing 11% below last year. Due to our focused efforts, we are encouraged by our digital advertising performance with digital revenue growing year over year. Performance from TEGNA's owned and operated suite of digital products more than offset a slight decline in premium revenue, which continues to see softness from national advertising. As Mike highlighted, we are capitalizing on our digital product portfolio consisting of web solutions, mobile and streaming apps, as well as local CTV advertising, all of which are slated to be key growth drivers of our digital advertising revenue for the foreseeable future. We are laser-focused on areas we can drive results. And our digital businesses are a prime example. The momentum we saw in the fourth quarter across our digital suite of products demonstrates the early success of that strategy. Turning to subscription revenue, we successfully completed renewals for approximately 20% of our traditional MVPD subscribers at the end of 2024. Fourth quarter subscription revenue was $357 million, up 5% year over year. This increase was driven by three factors: MVPD contract renewals during the quarter, contractual rate increases, and a favorable comparison to a disruption of service, with the partially offset by subscriber decline. For the full year, subscription revenue totaled $1.5 billion. Looking ahead, we have approximately 45% of our traditional subscribers up for renewal in 2025, providing us with additional opportunities to capture appropriate value for our content. Moving to our core operational cost-cutting initiatives, we continue to drive significant improvements to our cost structure and are on track to hit our goal. As Mike referenced earlier, examples of resource sharing like centralized marketing, deploying technology to run our stations better, and scrutinizing every dollar we spend by zero-basing costs of our core operations. Allows us to streamline processes while maintaining our high standards of execution. We believe this provides a clearer picture of our efficiency efforts while we continue to make strategic investments in areas that strengthen our market position. We achieved approximately $50 million in annualized savings by the end of the year 2024. This represents roughly 50% of our goal to generate $90 million to $100 million in core non-programming annualized savings as we exit 2025. Fourth quarter expenses finished 2% higher than last year, driven by programming expenses, which include local sports rights. All other expenses finished 3% below last year continuing the sequential improvement of our structural cost reduction efforts. Turning to capital allocation, a year ago, we committed to returning 40% to 60% of adjusted free cash flow to shareholders over the 2024, 2025 two-year period. We are on track to deliver this commitment. In 2024, we returned capital with our target range returning $356 million to shareholders through a combination of dividends and share repurchases. Cash and cash equivalents totaled $693 million at year-end, and our net leverage finished at 2.7 times. Comfortably below our three times annual guidance. Our commitment remains steadfast in strategically allocating capital with efficiency and discipline always prioritizing long-term value creation. With an industry-leading balance sheet and consistent free cash flow, we are best positioned as we look forward. We maintain significant financial flexibility with a robust cash position and modest leverage to navigate the evolving market landscape with confidence. Now let's turn to our financial guidance element. As we noted in our press release this morning, we are reaffirming our combined 2024 and 2025 guidance. We expect adjusted EBITDA to be in the range of $1 billion to $1.1 billion. Please refer to our press release to see other full year 2025 guidance elements such as corporate expenses, depreciation, amortization, interest, capital expenditures, and effective tax rate. Regarding the first quarter of 2025, we expect total company revenue to be down in the 4% to 7% range year over year. Primarily reflecting lower political revenue consistent with cyclical odd to even year comparisons. And we expect non-GAAP operating expenses to be flat to up slightly compared to Q1 of 2024 driven by higher programming expenses, offset by the core operational cost reductions previously discussed. In closing, our fourth quarter and full year results demonstrate the strength of TEGNA's market position and our solid foundation that we are strengthening through the work Mike outlined in his remarks. We maintain a healthy balance sheet that provides financial flexibility and we believe our financial strength provides us a distinct competitive advantage as industry dynamics continue to unfold. We remain focused on disciplined execution capturing organizational and operational synergies and strategically allocating capital to drive long-term shareholder value. With that, operator, please open the line for questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Steven Cahall of Wells Fargo. Your line is now open.

Thank you. Maybe first, Mike, you know, TEGNA was a seller not too long ago. There's a lot happening as you talked about, with potential deregulation and the M&A opportunities that that presents. Also, your retrans has continued to move up since then. So how should we think about TEGNA in terms of more likely being a buyer or more likely being a seller over the next few years on deregulation? And then, Julie, was wondering if you could just touch a little more on the Q1 expense guide. You mentioned programming was one of the reasons that non-GAAP OpEx has guided to flat to up. As I recall, historically, you've had a lot more variable reverse comp compensation, and so it doesn't tend to have as much upward pressure as some of your peers. So I was wondering if you could just speak to some of the dynamics of expenses and whether or not those flatten out as we get through the year. Thank you.

Thanks, Steve. We are disciplined capital allocators. Our job is to create value for our shareholders. I can't tell you more about deals until we know deals and prices, right? Which is going to create the most value for our shareholders? We know that we have really attractive assets in great markets, great teams, and a terrific financial profile. And we know that we've got a great balance sheet. It gives us a lot of optionality. What I'm excited about for us and for the industry is that if this much overdue deregulation comes through, the value unlock through synergies for the industry broadly is really significant. And so I'm as you guys are, I'm looking forward to getting more clarity there, and I think we'll see a lot of exciting things happen.

And on the expense side, Steven, what you've seen in the pattern of our expenses in 2024, the expenses had been very controlled to your point, including programming with the shift of reverse comp. What has happened in the fourth quarter when you saw our actual expenses being up 2%, programming was up 7%, and that is driven by sports rights. So you'll recall that we announced NBA and NHL deals in the third quarter of last year. So those expenses you're going to continue to see in Q4 and Q1 through those seasons. If you exclude the programming expenses, those core operations reductions that we've been focused on are seeing sequential improvement each quarter where fourth quarter was down minus three. So looking at Q1, you would expect similar trends. Again, sequential improvement for that non-programming, but programming is going to be similar in Q1 than you saw in Q4 because of the investments we're making in programming with sports rights. That will not continue throughout the year. Once we lap into the latter half, you know, second, third, and fourth quarter, you will not see those increases in programming.

Thank you. Maybe just a quick follow-up, Julie. Do you expect those sports rights to be breakeven or profitable for the year, or are they a bit of a loss leader early on?

Yes. The sports rights are profitable. We are very disciplined in looking at all of those opportunities which we love having the sports rights from an audience engagement perspective, so they add value. But they are profitable for the year.

Thank you. Thank you.

Our next question comes from the line of Craig Huber of Huber Research Partners. Your line is now open.

Great. Thank you. I got a few questions. Maybe we'll just do them one at a time to make it easier for you. Can you just talk a little bit further about how first quarter core advertising your TV stations is pacing, I guess, with and without premium? I'd love to hear that first, thank you.

So, Craig, first quarter, our AMS started sluggish. And has improved throughout the quarter. We are seeing pacings in first quarter down low single digits. There is one caveat to call out that is substantial to our portfolio is the change in the Super Bowl programming, where last year, it was on CBS, which is a much larger piece of our portfolio versus Fox, which is our smallest portfolio. That is a delta, which I have sized in the past of approximately $10 million. You adjust for Super Bowl, our advertising and marketing services is up slightly on a year-over-year basis.

Great. Thank you for that. And then can you just talk with the auto category, how that's trending in the first quarter and maybe how it trended in the fourth quarter post-election.

Yeah. So automotive continues to be challenged, Craig. It did sequentially improve throughout fourth quarter with the political displacement being more substantial in October and November, but the turn of January was equally as soft. But that too has improved. So we've seen a little bit of improvement, but auto is challenged, and it is challenged mostly in tier one and tier two. Tier three has held up a little bit better, but it is down across the board.

Okay. Appreciate that. Mike, can you just specify a little bit further about the 45% of your retrans subs up for renewal in 2025 to help with modeling. How does that sort of is there some heavy concentrations at various parts of the year? How would you categorize that, please?

Yeah. The vast majority of them are up at the end of the year, Craig. There is one that is up during the year, but we do not give into specific expiration dates across our deals.

Okay. My last question, I promise, is there's an ongoing debate with investors out there about the FCC. Who has the final say here on TV station ownership rules here? Are you waiting just on the FCC, or do you think Congress needs to weigh in here on potentially changing the 39% ownership cap? What do you and your legal folks think on that front?

I think there's real clarity that FCC has full authority over in-market regulation. There's not clarity as to whether or not the FCC has the authority on the national cap. Do remember though that there's the UHF discount in there which sits with the FCC today already. And there is room for a lot of broadcasters under the current rules and the current national cap without congressional action. So in-market, the FCC can make the moves for the national cap. There are different opinions.

Okay. Great. Thanks. Thanks, both of you.

Thank you. Our next question comes from the line of Patrick Sholl of Barrington Research. Your line is now open.

Hi. I was wondering if you could provide a little bit more detail on premium. I'm sorry if I misheard. I think you said, like, continued national weakness. I was just wondering what some of the challenges within that one are.

I'll take that one to start with, and then Mike can add if necessary. What premium is continues to be a very strong local tool for us to go to market with CTV advertising. It is well regarded and on the local side of the equation has continued to grow double digits throughout all of calendar year 2024 and did so again in fourth quarter. The challenges that we've seen on the national side is just a change from some large national holding companies, changing their position to different CTV more programmatic, which is not the competitive advantage that Premion brings to the table. So in general, you know, Premium grows for TEGNA. CTV continues to grow for TEGNA. When you exclude political, it is roughly a flattish business for us, and that has been the case that we've seen in the last year and we anticipate that, you know, going forward, that local will continue to grow, but national is more of the challenge there for a flattish to up slightly. Going forward.

Yeah. And I would just note when you talk to the local advertisers and you talk to our local sales teams, they love the product. It gives them the ability to reach audiences beyond the cable satellite and broadcast ecosystem. It gives them advanced targeting capabilities which really comes into play for almost all of our categories. And it's something that we're leaning into at the stations, both in terms of sort of top-level support for the product, but also the incentive structure for the sales teams.

Okay. Thank you.

Thank you.

Our next question comes from the line of Marlene Perrero of Bank of America. Your line is now open.

Good morning, and thank you for taking the question. Curious when you know, how and when you would expect to address the 2026 bond, is that something you'd still consider, you know, kind of paying down with cash or cash from operations, or you're looking to maybe, you know, maintain some, you know, cash for, you know, potential, you know, M&A or some other opportunity that might present itself.

Yeah. You know, Marlene, thanks for the question. First one, we announced last year our capital allocation framework, there was an element in there where we have a strong balance sheet and growing cash balance is that we would use a portion of that for debt preparedness knowing that the 2026 were coming up. In the current state that we see today, we're still committed to return a portion of our free cash flow between the range of 40% to 60% to shareholders and that's not changing. We are optimistic about the strategic growth opportunities of the marketplace in front of us today. And if those opportunities are compelling for shareholders, then we definitely want to be a part of those conversations. And we have the cash to pay off those 2026 bonds at any given time. And we are looking at all of those pieces together collectively to have the best disciplined capital deployment that we have.

And it's hard to predict interest rates a year from now right now. So as we have more data and we see how the landscape evolves both on the interest rate front, but also in the strategic front if you would. Well, we've got a lot of options.

Great. That's all I have. Thank you.

Thank you. As a reminder, to ask a question, you will need to press star one one. Our next question comes from the line of Dan Kurnos of The Benchmark Company. Your line is now open.

Yeah. Thanks. Good morning. Mike, I'm intrigued by some of the comments around the evolution of the TV station. Obviously, you know, people don't think of TV stations as evolving, but you know, you bring your renewed focus and some of these ideas. I would say core has probably lagged in general. I wonder how much of what you're doing is from an expense perspective or how much is to kind of reinvigorate core? And there's a lot of, you know, targeted ROI stuff you talked about internally, but it feels like there's an opportunity to kind of reinvigorate the top line there, understanding you cannot control what the national market does.

Sure. When we talk about the sort of strategic pillars that the team is focused on right now, the two I'll lean on this in this conversation first. There are significant synergies across the organization that we haven't fully untapped as a company that is the consequence of a roll-up of different station groups. We see TV stations operating differently across the footprint. Using different technology, different equipment at the stations. And as you do the six-segment and review on how people are spending their time, we see a lot of time being spent on activities that can be automated, that can be fixed with technology. The second component of that then is you free up resources in the organization. And freeing up resources in the organization does one of two things for us. One, it either allows us to lean into in the case of sales if I've automated a bunch of back-office tasks that were affecting our account execs, they can just see more clients. Seeing more clients means more dollars at the end of the day. Or in the case of a reporter, if I freed up time for a reporter, she or he can spend can bang out an eight-hour story in six hours and then have two more hours to generate social media content, digital content, etcetera. So that would be a driver of revenue performance. On the other hand, if we don't see that freeing up those resources drive more revenue, then we've unlocked costs. I think it will depend sort of department by department. I touched on in my prepared remarks. We saw this opportunity with marketing where we had a lot of people doing repetitive tasks across the station footprint. And by centralizing that group, I believe we will ultimately get better product out of the marketing team. But immediately, we saw substantial cost savings that contribute to Julie's $90 to $100 million cost target.

Got it. That's super helpful. And then just to double click on premium for a second, I mean, you know, following CTV super closely, we know all of the major players are starting to shift towards a more open programmatic environment. You know, for Premion, I understand local is doing super well and it's national. It's kind of the headwind, but now that you're layering in Octillion and other kind of improvements underlying, is there further evolution for Premion to kind of improve the growth trajectory?

There are a number of potential growth drivers for Premion. The most important one is getting the sales team expert, motivated, and aggressively selling it to our customer base. We have deep relationships. It's a real advantage. And I talk a lot about how disadvantaged our industry is against the giant tech companies. This is one place where we have an edge. We have human beings with relationships with the local car dealer and furniture store and so on. And so that team has historically been sort of built around television. And we're making sure that we tool up that team and we incentivize them properly so that they bring the full suite of TEGNA products to our local advertisers. It's better for the advertiser and for us, it's better for performance.

Got it. Thanks, Mike.

Thank you.

I am showing no further questions at this time. I would now like to turn it back to Mike Steib for closing remarks.

Well, thanks everyone for your questions and interest in support of the company. As you guys know, we've got these key strategic areas that we're really excited about, and I think it's going to be a big year for TEGNA and for the industry.

Alright. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.