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DATE
Aug. 7, 2025, 3:00 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Mike Steib
Chief Financial Officer — Julie Heskett
Chief Operating Officer — Lynn Beale
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RISKS
Persistent macroeconomic headwinds led to a 4% decline in Advertising and Marketing Services (AMS) revenue in Q2 2025, with underlying AMS revenue down 2% year over year, excluding the Premion-related change.
Gray Media’s exit from its Premion reseller partnership reduced AMS revenue growth by approximately 200 basis points in Q2 2025, with negative effects expected to continue for the next three quarters.
TEGNA expects total revenue to decline 18%-20% year over year in Q3 2025 due to the cyclical absence of political and Summer Olympic advertising.
Advertising is expected to be in the low double to mid-teen percentage range, per Heskett’s statement: "advertising is going to be in that low doubles to mid-teens range."
TAKEAWAYS
Total Revenue-- $675 million total company revenue for Q2 2025, representing a 5% year-over-year decrease driven mainly by lower political advertising and softer advertising and marketing services.
Advertising and Marketing Services (AMS) Revenue-- $288 million, down 4% year over year, reflecting macroeconomic caution and delayed spending by advertisers.
Premion and Gray Media-- Gray Media’s shift to a non-advertising agreement for Premion reduced AMS revenue by approximately 200 basis points, with impact continuing for three more quarters.
Owned and Operated Digital Products Growth-- Achieved strong double-digit year-over-year growth for the third consecutive quarter in Q2 2025.
Distribution Revenue-- $370 million, flat year over year, as subscriber declines were offset by contractual rate increases.
Distribution Renewal Cycle-- Approximately 35% of traditional subscribers are up for renewal at year-end 2025, following a 10% renewal of MVPD subscribers in Q1 2025.
Cost Cutting Progress-- Non-GAAP expenses fell 3% year over year, primarily from compensation and outside service reductions, partially offset by higher local sports rights programming costs.
Programming Expenses-- All non-programming costs declined 6% year over year (non-GAAP); TEGNA achieved 80% of its 2025 target for $90 million-$100 million in annualized core non-programming savings as of Q2 2025.
Adjusted EBITDA-- Adjusted EBITDA was $151 million, down 14% year over year, impacted by declines in high-margin political and AMS revenues.
Cash Position-- Cash and cash equivalents totaled $757 million at quarter-end, net leverage finished at 2.8 times.
Debt Reduction-- $250 million par value of senior notes due March 2026 was called on July 2, reducing outstanding senior notes to $300 million as of July 2, 2025, and lowering full-year 2025 interest expense guidance to $160-$165 million.
Adjusted Free Cash Flow Guidance-- Reaffirmed adjusted free cash flow guidance range of $900 million-$1.1 billion over 2024-2025 combined.
Shareholder Returns-- $20 million in dividends paid, with commitment to return 40%-60% of adjusted free cash flow to shareholders over the two-year period of 2024 and 2025.
Third-Quarter Revenue Guidance-- TEGNA expects total revenue to decline 18%-20% year over year, citing cyclical non-recurring events from the prior year.
SUMMARY
TEGNA(TGNA -5.26%) reported a 5% year-over-year revenue decline to $675 million, driven by cyclical and macroeconomic factors. Management confirmed the negative impact of Gray Media’s Premion exit on revenue, which began in Q2 2025 and will continue for the next three quarters. The company cited its digital strategy delivering strong double-digit year-over-year growth among owned and operated digital properties for a third consecutive quarter. Management reaffirmed adjusted free cash flow guidance of $900 million to $1.1 billion for the combined 2024-2025 period, and announced the successful partial redemption of $250 million in senior notes on July 2, 2025, lowering ongoing interest expense projections. Total non-GAAP costs were reduced by 3% year over year, with 80% of targeted annualized cost savings already achieved.
Advertising is expected to be in the low double to mid-teen percentage range, with July and August weaker but September "in a positive direction and pacing up."
CEO Steib described ongoing distribution agreement renewals, noting that approximately 35% of traditional subscribers are up for renewal at year-end.
The Q2 call included explicit commitment to cost discipline, digital acceleration, and opportunistic capital deployment as part of a broader transformation strategy.
Reverse compensation costs are currently "flattish as we look at year-over-year trends" following previous periods of rapid programming fee growth.
INDUSTRY GLOSSARY
Advertising and Marketing Services (AMS): TEGNA’s revenue category that includes advertising and marketing activities across both linear and digital channels.
Premion: TEGNA’s over-the-top (OTT) advertising network, enabling targeted advertising placements across streaming and connected TV environments.
MVPD: Multichannel Video Programming Distributor, referring to cable, satellite, or streaming service providers carrying broadcast content.
Reverse Compensation: Payments from broadcast affiliates to television networks for the right to broadcast network content, often a significant programming expense line item.
Full Conference Call Transcript
Julie Heskett: We had anticipated advertising softness to persist during the second quarter. As a result, our teams continued to take a proactive approach to advancing our broad transformation agenda, which is generating top-line growth from various revenue streams. I am thankful for all of our employees for their ongoing focus and execution as we work to build a more sustainable and growth-oriented future at TEGNA. I will begin today by covering our second quarter financial results, then provide an update on our operational initiatives and capital allocation priorities, before closing with a review of our guidance.
Total company revenue for the second quarter decreased 5% year over year to $675 million, in line with our outlook range of down 4% to 7%. The decrease was primarily due to lower political advertising revenue, which is consistent with cyclical even-to-odd year comparisons, and softer advertising and marketing services, which was expected going into the quarter. AMS revenue declined 4% year over year to $288 million in the second quarter, reflecting ongoing macroeconomic headwinds. Amid economic uncertainty and softening consumer confidence, some advertisers remained cautious and delayed spending, contributing to weaker AMS performance within the quarter.
As disclosed in our 10-Q filing, Gray Media, a reseller partner of Premion, exited its equity position and shifted to a non-advertising agreement. This change is reducing Premion-related revenue and, therefore, negatively impacting year-over-year AMS comparisons by approximately 200 basis points, which began in the second quarter and will continue for the next three quarters. Excluding this impact, underlying AMS revenue declined 2% year over year in the quarter. Despite near-term market pressures, we are encouraged by the continued growth of our owned and operated digital products, which delivered strong double-digit growth year over year for the third consecutive quarter. We remain focused on accelerating digital initiatives where we have a clear competitive advantage.
As Mike discussed earlier, our digital strategy remains on track with our underlying business performing in line with expectations, and we believe the long-term growth opportunity ahead is substantial. Moving to distribution, distribution revenue in the second quarter was flat year over year at $370 million due to subscriber declines partially offset by contractual rate increases. In terms of the distribution renewal cycle, approximately 35% of traditional subscribers are up for renewal at the end of this year. This comes after successfully renewing roughly 10% of our traditional MVPD subscribers at the end of the first quarter. In 2026, we have approximately 30% of traditional subscribers up for renewal at year-end.
During the quarter, we reached a comprehensive multiyear agreement with Fox Corporation that renews station affiliations for six of our markets. These FOX markets cover approximately 7% of our TEGNA households, which is our smallest affiliate portfolio. Moving on to cost-cutting initiatives, we continue to drive significant improvements to our cost structure. As we have highlighted in recent calls, we're aggressively deploying technology to our stations more effectively and cutting all unnecessary spending. It's important to note these improvements focus on our core operations, allowing us to streamline processes while maintaining our high standards of execution. This enables us to provide higher quality journalism at faster speeds and lower cost.
Second quarter non-GAAP expenses finished down 3% year over year due to these operational cost-cutting initiatives, primarily seen in compensation and outside services, partially offset by an increase in programming expense driven by local sports rights. All other expenses outside of programming finished down 6% below last year, continuing the sequential improvement of structural cost reduction efforts. We remain on track to achieve our goal of generating $90 to $100 million in annualized core non-programming savings as we exit 2025. At the end of the second quarter, we've achieved 80% of our target. Our cost reduction program is more than just a target. It's a zero-waste, zero-based budgeting approach.
We're scrutinizing every dollar we spend to ensure resources are aligned with our strategic priorities, opportunities that a) enhance the quality and reach of our content, or b) drive sustainable revenue growth.
As a result, our total adjusted EBITDA in the second quarter decreased 14% year over year to $151 million based on the previously discussed declines of high-margin political and AMS revenues, partially offset by continued cost-cutting initiatives I just spoke about. Turning to capital allocation, we remain committed to returning 40% to 60% of our adjusted free cash flow to shareholders over the two-year period of 2024 and 2025. We paid $20 million in dividends to our shareholders in the second quarter. On July 2, we called $250 million par value of TEGNA's outstanding $550 million senior notes due in March 2026 and a partial redemption with cash on hand, which leaves $300 million in par value outstanding.
Cash and cash equivalents totaled $757 million at quarter-end, and our net leverage finished at 2.8 times. We continue to take a disciplined approach to capital deployment to ensure we are investing for growth in all avenues we believe will create the most value for shareholders.
Now let's turn to our financial guidance elements. As we noted in our press release this morning, we are reaffirming our adjusted free cash flow guidance of $900 million to $1.1 billion over the combined two-year 2024-2025 period. You can see all of our full-year guidance metrics in our earnings release. We are lowering our full-year 2025 interest expense guidance range to $160 million to $165 million, reflecting the $250 million par value partial redemption of our senior notes due in March that I just mentioned. Our financial guidance for the third quarter is as follows: We expect total company revenue to decline 18% to 20% year over year, in line with expectations given the cyclical nature of our business, specifically the shift from an even year with significant political and Summer Olympic advertising to an odd year without those revenue drivers, to decline 2% to 3% year over year.
Before I close, I want to take a moment to recognize an extraordinary leader, our Chief Operating Officer, Lynn Beale. As Mike already said, she's retiring at the end of the month. I have seen firsthand the commanding and lasting impact she has had not just here at TEGNA, where she spent more than thirty-five years shaping our culture, operations, and success, but also across the entire industry. She has elevated the standard for excellence in local media. On a personal note, Lynn is the person who hired me into this industry and has been a tremendous mentor and coach for more than two decades. I'm deeply grateful for her guidance, friendship, and unwavering commitment to developing those around her.
On behalf of all of us at TEGNA, thank you, Lynn. We wish you the very best in your well-earned retirement.
In closing, our strong brands, robust local presence, a growing digital-focused workforce, and industry-leading balance sheet position us well to invest in internal growth opportunities and those that arise from potential deregulation. We continue to generate results in line with expectations and in our people. With that, operator, let's open the call for questions.
Operator: 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 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Daniel Kurnos: Mike, I guess, to I know you did NBC last year, but, obviously, they've come under some more scrutiny from Chairman Carr. And given how much they're continuing to shift, exclusively onto Peacock, I just wonder if you think that anything might evolve in terms of the structure of that deal or if you're just simply locked in because of the deal that you did last year. And then secondarily, I know that you have a lot of wood to chop, you've done a great job kind of reorganizing the business towards internal growth initiatives.
I'm just kinda curious where your head is at in terms of a sense of urgency from an M&A perspective, especially since you've got, you know, both in-market and out-of-market opportunities. You don't have quite the same duopoly portfolio that others have. And so it kind of broadens the spectrum for how you can attack the M&A landscape. So I'll just stick with those two, because that's probably already a mouthful.
Mike Steib: Thank you, Dan. So I'll start with NBC. First, it's important to say that the network affiliate relationship is important, and it is symbiotic. And we value our network partners, and we approach those partnerships with a constructive mindset, in particular around the preservation of the linear bundle, which has served this industry so well for such a long time. I'm also grateful that Chairman Carr is so focused on the good work that local broadcast local communities and is looking to continue to help us uphold our public interest to those communities. Beyond that, there's nothing to comment on in our network relationships.
You saw that we had a constructive engagement with Fox this quarter, and you should continue to expect to see us continue to work collaboratively with our network partners.
Your second question, specifically, you asked how much urgency we feel. I'll forgive me for being repetitive, but I'll come back to it. First, we believe that deregulation is necessary, important, and coming. Our industry is up against big tech competitors who have absolutely no encumbrances in how they compete across the country and in our markets. Secondly, we believe that when the if were to create a significant profit pool for the broadcast industry, and we have every expectation that we will participate. We've told you that we are either a buyer or seller depending upon how the opportunities present themselves.
And you've already heard in the last few weeks from some of our peers in the industry about swaps, which are great opportunities to be both the buyer and the seller for parties. We believe that it's a great opportunity, but we also have a strong balance sheet and a great set of assets, and we are going to be disciplined in how we approach this. And so we are continuing to take that approach. We're excited about the possibilities. And the team is doing their work.
Daniel Kurnos: Okay. Thanks, Mike. I appreciate it.
Operator: Thank you. Our next question comes from the line of Craig Huber with Huber Research Partners LLC. Your line is now open.
Craig Huber: Yeah. Hi there. Thank you. I got a couple of questions. Maybe I'll start with the first one. You've spoken a lot over almost the last year now about significant cost savings at TEGNA using technology. Can you give us some of the biggest areas where you've used AI and technology to take out costs? What have been some of the biggest wins you've had on taking costs out using technology? Just some examples, please.
Mike Steib: Sure, Craig. I'll do higher-level examples, but I won't for today's call, contextualize those in Julie's sort of specific cost-saving numbers that she's been saving with you. First, I'll make an important distinction. Often think about AI's involvement in the content creation itself, and that's not where we are playing. We believe you need good journalists are getting sold in global markets. Oh, yeah. So half of them then we have done. Do we have an audio problem? Julie little choppy.
Julie Heskett: Yep. It was a little choppy. If you wanna try again, it's intermittent. Mike, try again.
Mike Steib: I'm sorry about that. So let me come back to the examples. We do we want specific specifications, and we to wing analysis of the workflows of every person and every business process in the company. That there are a number of activities that are rote and could be automated, and we're looking and we're looking for opportunities to automate those. One example is transcription. We've had a lot of journalists who finish an interview and then handwrite the interview. Another example is video editing. It takes a lot of time to edit videos, and we have found ways to deploy AI to do the video editing. Another is identifying new stories before the team gets to the office.
We receive lots of emails from sources, and those can be summarized and presented to the team so that they can jump on the hottest opportunities. We see opportunities on the sales and go-to-market side as well. Creating draft campaigns for prospects, warming up leads with new advertisers through email campaigns and others. It's not one or two or even three potential AI automation initiatives. It's a full company mindset around demanding that our people spend their time on the high leverage activities that only good smart people can do and have an expectation that when they can offload rogue tasks, they will.
Julie Heskett: Appreciate that one. Would add, Frank. This is Julie. Just on the cost side and future leveraging cost of capital coming down both from a technology perspective. As well as space as real estate. And we're finding really good progress on building, if you will, stations of the future, which is a smaller footprint from a square footage perspective, spending potentially 80% less in CapEx utilizing the new technology and the virtual technology that is available to us. And also identifying about 50% less in operating expenses by taking advantage of these opportunities.
Craig Huber: Great. Appreciate that. Also, I want to ask you, can you talk a little further about your outlook for core advertising here in the third quarter year over year. What's it trending like right now, please?
Mike Steib: Yeah. Let me I'll touch this first on the sort of macro piece of that is, you know, as we look at it, the economy seems to be strong. The, you know, but choppy insofar as first quarter was close to flat year over year growth. Second quarter, you saw a spike to 3% growth and tariffs certainly played a role in all that. As we look to Q3, the blue chip consensus was for GDP growth around 1% and the Atlanta Fed outlook based on the latest data is about two and a half. So overall, we think the economy is heading in the right direction.
At the same time, and as I've shared with you all on these calls before, my experience is that uncertainty in the economy is not good for collecting advertising revenue. The advertisers tend to sit on the sidelines a little longer they feel confident. In the direction of the economy. It's also been my experience that they always come back and you get to reclaim the, the dollars you didn't take when advertisers were feeling that uncertainty. So at a high level, we sort of understand that the ad market might be a little bit softer right now relative to our view of the macro economy.
It's also been my experience that the advertisers tend to catch up with, you know, tend to catch up, and they tend to catch up with more in their pockets from the money that they kept on the sidelines. The previous quarter or quarters.
Julie Heskett: Yeah. I agree with that, Mike. And I would add, Craig, another thing that is specific to TEGNA, a couple things. One is Q3 is a tougher comp with our NBC portfolio being the largest NBC affiliate group up against the Summer Olympics last year. So that is unique to our Q3 advertising trends. It's probably a disproportionate impact. Second thing is as I said in my remarks, is the change of our premium reseller partnership, which is also impacting our AMS trends going forward that began in Q2, and now it will take three additional quarters to lap that. That was also about 200 basis points.
I'm positive, growth in digital of our owned and owned properties continues to ramp up, and, you know, our go-to-market strategy of training up on capitalizing on the digital growth area is continuing to improve on a sequential basis. And then I would say while July and August are substantially weaker because of more of the Olympic and the trickle-down of the tariffs. I can tell you exiting Q3, know, September is in a positive direction and pacing up on a year-over-year basis.
Craig Huber: So when you roll that all together, Julie, where is it? Overall quarter looking like advertising might end up being? The core advertising? What percent change, I guess, down year over year?
Julie Heskett: Yeah. So we don't guide to advertising specific. You saw the comments of total revenue is projected to be down 18% to 20% And I would say, advertising is going to be in that low doubles to mid-teens range.
Craig Huber: Very good. Thank you.
Operator: Thank you. Our next question comes from the line of Steven Cahall with Wells Fargo. Your line is now open.
Steven Cahall: Thanks. So Mike, helpful comments about how you kind of think about the M&A market and I know there's a lot of options there between being a buyer as seller. You know, one of your peer CEOs is just you know, saying that everybody's talking to everybody right now. So I was wondering if you could give us some perspective as to whether or not you think this is more of a buyer's market or more of a seller's market. When I kinda look at things, it seems like there are quite a few things maybe for sale. Not that many with at least cash for purchasing. Which may skew those conversations in a particular direction.
But just wanted to know if that's correct or if some things that maybe we've missed in that characterization. And, again, I know whatever deals you do will be subject to those exact terms. And then maybe just secondly on reverse comp, are you seeing any sort of paradigm shifts in the way that these are done? Whether it's the pricing algorithm, fixed versus variable, you know, I know the renewal you did was relatively small in terms of your household, but just wondering if there's any trends that you've seen in reverse you think are sort of bigger picture for the next few years? Thank you.
Mike Steib: Thank you for the first on the first question. I can't answer the market. I can only answer the market through our perspective. And our perspective is we have a strong balance sheet and strong relative to the market and we have great assets. It should create significant value creation opportunities for our shareholders. And so we're engaged in the market as you would expect us to be seeking to identify the way to create the most value for our shareholders. And as we've noted, there are acquisition swap and sale opportunities that can benefit across the board. We have a wide aperture on this.
And at the end of the day, it is our job to be dispassionate capital allocators and do what's best for the shareholders.
Julie Heskett: The second question, Julie, do you wanna jump on the of reverse retrans?
Julie Heskett: Yeah. So, Steven, I'll take that one. If you recall last year, I think we were one of the initial companies to identify a bend in the curve of what used to be a steep growth expense line item of programming fees with the networks is as they come up for renewal, there are opportunities to renegotiate and have favorable terms for both parties quite frankly, on the partnership of those deals. So that continues to play out. Our reverse comp programming fee line item continues to be flattish as we look at year-over-year trends of each of those agreements.
Steven Cahall: Great. Thank you all for the color.
Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. Our next question comes from the line of Patrick Sholl with Barrington Research. Your line is now open.
Patrick Sholl: I just had a follow-up question on Premion. Just with the exiting of the reseller relationship, are you just maybe talk about, like, just the overall how advertisers view that product? Was that kind of just focused more on the TEGNA footprint? And, you know, any just sort of broader impact that might have within, like, net for national advertisers or, you know, wider political buys.
Mike Steib: On Premion, something I've shared with you all before, I've spent a lot of time with our sales team and our customers on Premion, and it is a real value to local advertisers who have a relationship with our sales teams. And trust our sales teams. And have had that consultative partnership in helping them to reach their audience and to reach their business objectives on television. Half of the audience left the traditional linear television bundle and went to streaming. And we're able to go to those advertisers and offer them not only the reach that they've gotten historically by buying TV, because now they can buy from us both TV and connected TV streaming.
But in addition, a layer of demographic psychographic, and location-based targeting helps them to enhance their buy and improve their return on investment. The Premion business is also highly synergistic with the efforts we've leaned into very hard this year around our owned and operated streaming apps. It's driving significant growth in our total digital unique audience and minutes streamed every month. And just creating a real and significant opportunity for us on both fronts. So we are excited about Premion. It is and we're engaged in conversations with folks around expanding the expanding the premium service. As you can imagine, we had a good and constructive partnership with Gray, and we're keen to have more like that.
Operator: Okay. Thank you. Thank you. I'm showing no further questions at this time. I would now like to turn it back to Mike Steib for closing remarks.
Mike Steib: Well, just as always, everyone for your interest. You know, we're a year into this journey right now, and I want to reiterate, I'm extremely proud of the team. It is difficult to change the strategic and operational and pace of execution in the way that's necessary to capture this moment of opportunity. But the gang has really stepped up and I'm really excited about the future. So I'd like to thank everybody for your engagement as always, and talk to you next quarter.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.