TEGNA reports higher digital revenue for full year 2015 due to Cars.com ownership
The former broadcast division of Gannett reports lower media and digital revenue in the final quarter of 2015
When Gannett split into two companies – TEGNA for broadcast, and Gannett for newspapers – the CEO of the company went with the broadcast arm, and made sure the digital goodies went with her.
Despite the fact that these digital properties were tied to the classified departments of the newspapers, TEGNA got to keep them, and as a result, Gannett is stuck selling into Cars.com rather than building a competitive service.
This ownership by TEGNA is why the company was able to report that digital sales for full year 2015 were up over 40 percent. The growth is totally artificial now that the company has cycled on itself. As a result, TEGNA today reported that full year digital revenue was up 46.5 percent, but for Q4 actually fell a tad. The company also reported that its media sales were down 6.6 percent, as well.
The new year will be an interesting one for the new media company. Presidential elections usually bring a windfall of TV advertising. But will much of this advertising shift to digital? Further, TEGNA will, like other media companies, be facing a slowing economy. Ad budgets, already squeezed, are getting squeezed even more.
Here is TEGNA fourth quarter earnings announcement:
MCLEAN, Va. – February 16, 2016 — TEGNA Inc. today reported non-GAAP earnings per diluted share from continuing operations of $0.53 for the fourth quarter of 2015, an increase of 8.2 percent compared to $0.49 for the fourth quarter of 2014.
Gracia Martore, president and chief executive officer, said, “We are very pleased with our tremendous progress in our first six months operating as a highly-focused media and digital company. During that time, TEGNA Media successfully negotiated long-term network affiliation agreements and several carriage agreements, providing us with certain revenue streams for years to come. In TEGNA Digital, Cars.com achieved solid organic revenue growth driven by the success of several new products and CareerBuilder’s ongoing shift toward Software as a Service solutions helped fuel double-digit revenue growth for its SaaS products.”
Martore continued, “We have accomplished a great deal over the last six months and we are well on our way to achieving the objectives we set forth at our Investor Day in June. We are more certain than ever that we have built a strong foundation for long-term growth and success. This, coupled with tail winds associated with the upcoming elections and 2016 Olympic Games, are expected to result in a banner year for TEGNA.”
In our ongoing effort to focus and streamline our operations, during the quarter we divested substantially all of the businesses in the Other Segment, primarily Clipper Magazine. As a result, the Other Segment is now reflected as Discontinued Operations in our Statements of Income for all periods presented. In addition, the sale of PointRoll was completed on November 12, 2015. PointRoll’s results are included in the Digital Segment.
Beginning with 2016, we converted to a calendar fiscal year from a 52-week fiscal year to better reflect our media and digital peer group. In order to effectuate the change, the fourth quarter in 2015 was extended four days to December 31, 2015. Operating results in our Media Segment were impacted by the extra days.
On October 2, 2015, we announced the completion of the sale of our corporate headquarters for $270 million. We will continue to occupy a portion of the building rent-free for 18 months. During the fourth quarter, we renewed retransmission agreements with DISH and DirecTV and AT&T U-verse. We also executed long-term affiliation agreements with CBS and NBC. The outcome of all these significant negotiations was well within the parameters of the long-term plan we presented at our Investor Day in June of 2015.
The results for the fourth quarter of 2015 and the year-to-date period include results for Cars.com, which we fully acquired on October 1, 2014. The prior year year-to-date period does not include results for Cars.com for the first nine months, impacting the year-over-year comparisons for the year-to-date periods.