TGNA – Market expectations are for Uniform ROA to erode, but management is confident about OTT advertising, cost control, and sports betting legalization

April 19, 2021

  • TEGNA Inc. (TGNA:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 12.2x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, but management is confident about OTT advertising revenues, cost control initiatives, and the potential of sports betting legalization
  • Specifically, management is confident they have been diligent about cost containment efforts and capital management, 2021 capex will be in the range of $64 million to $69 million, and that their Multichannel Video Programming Distributor (MVPD) contract renewals will drive subscription revenue growth. In addition, they are confident they executed on accelerating Premion adoption, they are focused on connecting local advertisers to over-the-top viewers through Premion, and that OTT advertising revenues will compose a large part of the business. Furthermore, management is confident advertising budgets are shifting from TV to digital and automotive advertising has started to improve significantly. Moreover, they are confident an increasing number of states are legalizing and taxing sports betting and that programming in their multicast networks will come from off-the-shelf library content