x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 16-0442930 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
7950 Jones Branch Drive, McLean, Virginia | 22107-0150 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Item No. | Page | |
PART I. FINANCIAL INFORMATION | ||
1. | Financial Statements | |
2. | ||
3. | ||
4. | ||
PART II. OTHER INFORMATION | ||
1. | ||
1A. | ||
2. | ||
3. | ||
4. | ||
5. | ||
6. | ||
Sept. 30, 2018 | Dec. 31, 2017 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 23,766 | $ | 98,801 | |||
Accounts receivable, net of allowances of $3,806 and $3,266, respectively | 407,078 | 406,852 | |||||
Other receivables | 32,937 | 32,442 | |||||
Programming rights | 47,322 | 37,758 | |||||
Prepaid expenses and other current assets | 19,790 | 61,070 | |||||
Total current assets | 530,893 | 636,923 | |||||
Property and equipment | |||||||
Cost | 831,994 | 782,602 | |||||
Less accumulated depreciation | (477,352 | ) | (447,262 | ) | |||
Net property and equipment | 354,642 | 335,340 | |||||
Intangible and other assets | |||||||
Goodwill | 2,596,863 | 2,579,417 | |||||
Indefinite-lived and amortizable intangible assets, less accumulated amortization | 1,534,124 | 1,273,269 | |||||
Investments and other assets | 156,217 | 137,166 | |||||
Total intangible and other assets | 4,287,204 | 3,989,852 | |||||
Total assets | $ | 5,172,739 | $ | 4,962,115 |
Sept. 30, 2018 | Dec. 31, 2017 | ||||||
(Unaudited) | |||||||
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 65,309 | $ | 52,992 | |||
Accrued liabilities | |||||||
Compensation | 40,010 | 54,088 | |||||
Interest | 53,713 | 39,217 | |||||
Contracts payable for programming rights | 121,270 | 105,040 | |||||
Other | 64,835 | 58,196 | |||||
Dividends payable | 15,147 | 15,173 | |||||
Current portion of long-term debt | 162 | 646 | |||||
Total current liabilities | 360,446 | 325,352 | |||||
Noncurrent liabilities | |||||||
Income taxes | 12,414 | 20,203 | |||||
Deferred income taxes | 401,155 | 382,310 | |||||
Long-term debt | 2,989,435 | 3,007,047 | |||||
Pension liabilities | 122,489 | 144,220 | |||||
Other noncurrent liabilities | 81,217 | 87,942 | |||||
Total noncurrent liabilities | 3,606,710 | 3,641,722 | |||||
Total liabilities | 3,967,156 | 3,967,074 | |||||
Shareholders’ equity | |||||||
Common stock of $1 par value per share, 800,000,000 shares authorized, 324,418,632 shares issued | 324,419 | 324,419 | |||||
Additional paid-in capital | 306,078 | 382,127 | |||||
Retained earnings | 6,283,775 | 6,062,995 | |||||
Accumulated other comprehensive loss | (122,913 | ) | (106,923 | ) | |||
Less treasury stock at cost, 109,116,622 shares and 109,487,979 shares, respectively | (5,585,776 | ) | (5,667,577 | ) | |||
Total equity | 1,205,583 | 995,041 | |||||
Total liabilities and equity | $ | 5,172,739 | $ | 4,962,115 |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | $ | 538,976 | $ | 464,264 | $ | 1,565,146 | $ | 1,412,703 | |||||||
Operating expenses: | |||||||||||||||
Cost of revenues, exclusive of depreciation | 271,156 | 235,474 | 793,943 | 696,565 | |||||||||||
Business units - Selling, general and administrative expenses, exclusive of depreciation | 76,639 | 70,914 | 229,193 | 214,645 | |||||||||||
Corporate - General and administrative expenses, exclusive of depreciation | 17,593 | 12,881 | 41,522 | 42,462 | |||||||||||
Depreciation | 14,262 | 15,186 | 41,594 | 41,721 | |||||||||||
Amortization of intangible assets | 8,047 | 5,395 | 22,791 | 16,172 | |||||||||||
Asset impairment and other (gains) charges | (3,005 | ) | 7,553 | (9,331 | ) | 11,086 | |||||||||
Total | 384,692 | 347,403 | 1,119,712 | 1,022,651 | |||||||||||
Operating income | 154,284 | 116,861 | 445,434 | 390,052 | |||||||||||
Non-operating income (expense): | |||||||||||||||
Equity income (loss) in unconsolidated investments, net | 771 | 866 | 15,080 | (1,549 | ) | ||||||||||
Interest expense | (48,226 | ) | (51,855 | ) | (145,055 | ) | (162,113 | ) | |||||||
Other non-operating items, net | (214 | ) | (3,671 | ) | (13,005 | ) | (26,853 | ) | |||||||
Total | (47,669 | ) | (54,660 | ) | (142,980 | ) | (190,515 | ) | |||||||
Income before income taxes | 106,615 | 62,201 | 302,454 | 199,537 | |||||||||||
Provision for income taxes | 13,789 | 11,447 | 61,929 | 54,855 | |||||||||||
Net Income from continuing operations | 92,826 | 50,754 | 240,525 | 144,682 | |||||||||||
Income (loss) from discontinued operations, net of tax | 4,325 | (10,803 | ) | 4,325 | (233,261 | ) | |||||||||
Net income (loss) | 97,151 | 39,951 | 244,850 | (88,579 | ) | ||||||||||
Net loss attributable to noncontrolling interests from discontinued operations | — | 2,806 | — | 58,698 | |||||||||||
Net income (loss) attributable to TEGNA Inc. | $ | 97,151 | $ | 42,757 | $ | 244,850 | $ | (29,881 | ) | ||||||
Earnings from continuing operations per share - basic | $ | 0.43 | $ | 0.24 | $ | 1.11 | $ | 0.67 | |||||||
Earnings (loss) from discontinued operations per share - basic | 0.02 | (0.04 | ) | 0.02 | (0.81 | ) | |||||||||
Net income (loss) per share – basic | $ | 0.45 | $ | 0.20 | $ | 1.13 | $ | (0.14 | ) | ||||||
Earnings from continuing operations per share - diluted | $ | 0.43 | $ | 0.23 | $ | 1.11 | $ | 0.66 | |||||||
Earnings (loss) from discontinued operations per share - diluted | 0.02 | (0.04 | ) | 0.02 | (0.80 | ) | |||||||||
Net income (loss) per share – diluted | $ | 0.45 | $ | 0.19 | $ | 1.13 | $ | (0.14 | ) | ||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic shares | 216,015 | 215,863 | 216,210 | 215,558 | |||||||||||
Diluted shares | 216,348 | 218,095 | 216,617 | 217,827 | |||||||||||
Dividends declared per share | $ | 0.07 | $ | 0.07 | $ | 0.21 | $ | 0.28 |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income (loss) | $ | 97,151 | $ | 39,951 | $ | 244,850 | $ | (88,579 | ) | ||||||
Redeemable noncontrolling interests (earnings not available to shareholders) | — | 36 | — | (2,797 | ) | ||||||||||
Other comprehensive income, before tax: | |||||||||||||||
Foreign currency translation adjustments | (31 | ) | 24,764 | 551 | 34,126 | ||||||||||
Recognition of previously deferred post-retirement benefit plan costs | 1,276 | 2,201 | 3,827 | 6,603 | |||||||||||
Pension payment timing related charges | 1,198 | — | 7,498 | — | |||||||||||
Unrealized gains on available for sale investment during the period | — | — | — | 1,776 | |||||||||||
Other comprehensive income, before tax | 2,443 | 26,965 | 11,876 | 42,505 | |||||||||||
Income tax effect related to components of other comprehensive income | (615 | ) | (752 | ) | (3,021 | ) | (2,445 | ) | |||||||
Other comprehensive income, net of tax | 1,828 | 26,213 | 8,855 | 40,060 | |||||||||||
Comprehensive income (loss) | 98,979 | 66,200 | 253,705 | (51,316 | ) | ||||||||||
Comprehensive income attributable to noncontrolling interests, net of tax | — | 1,360 | — | 55,676 | |||||||||||
Comprehensive income attributable to TEGNA Inc. | $ | 98,979 | $ | 67,560 | $ | 253,705 | $ | 4,360 |
Nine months ended Sept. 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 244,850 | $ | (88,579 | ) | ||
Adjustments to reconcile net income to net cash flow from operating activities: | |||||||
Depreciation and amortization | 64,385 | 117,762 | |||||
Stock-based compensation | 12,292 | 14,189 | |||||
Loss on write down of CareerBuilder | — | 342,900 | |||||
Other (gains) losses on sales of assets and impairment charges | (6,991 | ) | 19,803 | ||||
Equity (income) losses in unconsolidated investments, net | (15,080 | ) | 1,488 | ||||
Pension contributions, net of expense | (39,932 | ) | (12,547 | ) | |||
Spectrum channel share agreement proceeds | — | 32,588 | |||||
Change in other assets and liabilities, net | 73,136 | (75,865 | ) | ||||
Net cash flow from operating activities | 332,660 | 351,739 | |||||
Cash flows from investing activities: | |||||||
Purchase of property and equipment | (35,281 | ) | (63,846 | ) | |||
Reimbursement from spectrum repacking | 5,057 | — | |||||
Payments for acquisitions of businesses, net of cash acquired | (328,433 | ) | — | ||||
Payments for investments | (11,309 | ) | (2,778 | ) | |||
Proceeds from sale of CareerBuilder, net of $36,581 cash transferred | — | 198,342 | |||||
Proceeds from investments | 1,224 | 15,989 | |||||
Proceeds from sale of assets and businesses | 16,335 | 5,659 | |||||
Net cash flow (used for) provided by investing activities | (352,407 | ) | 153,366 | ||||
Cash flows from financing activities: | |||||||
Proceeds (payments) of borrowings under revolving credit facilities, net | 72,000 | (635,000 | ) | ||||
Proceeds from Cars.com borrowings | — | 675,000 | |||||
Debt repayments | (95,985 | ) | (99,185 | ) | |||
Payments of debt issuance costs | (5,269 | ) | (6,208 | ) | |||
Dividends paid | (45,219 | ) | (75,109 | ) | |||
Repurchases of common stock | (5,831 | ) | (8,453 | ) | |||
Distributions to noncontrolling membership interests | — | (22,980 | ) | ||||
Cash transferred to the Cars.com business | — | (20,133 | ) | ||||
Other, net | (4,224 | ) | (5,180 | ) | |||
Net cash flow used for financing activities | (84,528 | ) | (197,248 | ) | |||
(Decrease) increase in cash and cash equivalents | (104,275 | ) | 307,857 | ||||
Cash, cash equivalents and restricted cash from continuing operations, beginning of period | 128,041 | 44,076 | |||||
Cash, cash equivalents and restricted cash from discontinued operations, beginning of period | — | 61,041 | |||||
Balance of cash and cash equivalents, beginning of period | 128,041 | 105,117 | |||||
Cash, cash equivalents and restricted cash from continuing operations, end of period | 23,766 | 412,974 | |||||
Cash, cash equivalents and restricted cash from discontinued operations, end of period | — | — | |||||
Balance of cash and cash equivalents, end of period | $ | 23,766 | $ | 412,974 |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Advertising & Marketing Services | $ | 264,852 | $ | 277,817 | $ | 829,638 | $ | 843,175 | |||||||
Subscription | 207,463 | 177,692 | 622,382 | 540,344 | |||||||||||
Political | 60,410 | 3,783 | 93,725 | 13,387 | |||||||||||
Other | 6,251 | 4,972 | 19,401 | 15,797 | |||||||||||
Total revenues | $ | 538,976 | $ | 464,264 | $ | 1,565,146 | $ | 1,412,703 |
Sept. 30, 2018 | Dec. 31, 2017 | ||||||||||||||
Gross | Accumulated Amortization | Gross | Accumulated Amortization | ||||||||||||
Goodwill | $ | 2,596,863 | $ | — | $ | 2,579,417 | $ | — | |||||||
Indefinite-lived intangibles: | |||||||||||||||
Television and radio station FCC licenses | 1,384,186 | — | 1,191,950 | — | |||||||||||
Amortizable intangible assets: | |||||||||||||||
Retransmission agreements | 121,594 | (74,972 | ) | 110,191 | (62,355 | ) | |||||||||
Network affiliation agreements | 110,390 | (27,712 | ) | 43,485 | (19,371 | ) | |||||||||
Other | 28,865 | (8,227 | ) | 15,763 | (6,394 | ) | |||||||||
Total indefinite-lived and amortizable intangible assets | $ | 1,645,035 | $ | (110,911 | ) | $ | 1,361,389 | $ | (88,120 | ) |
Sept. 30, 2018 | Dec. 31, 2017 | ||||||
Cash value life insurance | $ | 51,442 | $ | 51,188 | |||
Equity method investments | 32,651 | 27,098 | |||||
Cost method investments | 24,212 | 17,374 | |||||
Deferred debt issuance cost | 10,029 | 6,048 | |||||
Other long term assets | 37,883 | 35,458 | |||||
Total | $ | 156,217 | $ | 137,166 |
Sept. 30, 2018 | Dec. 31, 2017 | ||||||
Unsecured floating rate term loan due quarterly through August 2018 | $ | — | $ | 20,500 | |||
VIE unsecured floating rate term loans due quarterly through December 2018 | 162 | 646 | |||||
Unsecured floating rate term loan due quarterly through June 2020 | 70,000 | 100,000 | |||||
Unsecured floating rate term loan due quarterly through September 2020 | 180,000 | 225,000 | |||||
Borrowings under revolving credit agreement expiring June 2023 | 72,000 | — | |||||
Unsecured notes bearing fixed rate interest at 5.125% due October 2019 | 320,000 | 320,000 | |||||
Unsecured notes bearing fixed rate interest at 5.125% due July 2020 | 600,000 | 600,000 | |||||
Unsecured notes bearing fixed rate interest at 4.875% due September 2021 | 350,000 | 350,000 | |||||
Unsecured notes bearing fixed rate interest at 6.375% due October 2023 | 650,000 | 650,000 | |||||
Unsecured notes bearing fixed rate interest at 5.50% due September 2024 | 325,000 | 325,000 | |||||
Unsecured notes bearing fixed rate interest at 7.75% due June 2027 | 200,000 | 200,000 | |||||
Unsecured notes bearing fixed rate interest at 7.25% due September 2027 | 240,000 | 240,000 | |||||
Total principal long-term debt | 3,007,162 | 3,031,146 | |||||
Debt issuance costs | (16,766 | ) | (20,551 | ) | |||
Other (fair market value adjustments and discounts) | (799 | ) | (2,902 | ) | |||
Total long-term debt | 2,989,597 | 3,007,693 | |||||
Less current portion of long-term debt maturities | 162 | 646 | |||||
Long-term debt, net of current portion | $ | 2,989,435 | $ | 3,007,047 |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Service cost-benefits earned during the period | $ | 3 | $ | 218 | $ | 9 | $ | 654 | |||||||
Interest cost on benefit obligation | 5,721 | 5,990 | 15,945 | 17,971 | |||||||||||
Expected return on plan assets | (8,218 | ) | (6,580 | ) | (23,148 | ) | (19,741 | ) | |||||||
Amortization of prior service cost | 42 | 159 | 126 | 476 | |||||||||||
Amortization of actuarial loss | 1,271 | 2,081 | 3,814 | 6,242 | |||||||||||
Pension payment timing related charges | 1,198 | — | 7,498 | — | |||||||||||
Expense for company-sponsored retirement plans | $ | 17 | $ | 1,868 | $ | 4,244 | $ | 5,602 |
TEGNA Inc. Shareholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||
Balance at Dec. 31, 2017 | $ | 995,041 | $ | — | $ | 995,041 | |||||
Comprehensive income: | |||||||||||
Net income | 244,850 | — | 244,850 | ||||||||
Other comprehensive income | 8,855 | — | 8,855 | ||||||||
Total comprehensive income | 253,705 | — | 253,705 | ||||||||
Dividends declared | (45,193 | ) | — | (45,193 | ) | ||||||
Stock-based compensation | 12,292 | — | 12,292 | ||||||||
Treasury shares acquired | (5,831 | ) | — | (5,831 | ) | ||||||
Impact from adoption of new revenue standard | (3,724 | ) | — | (3,724 | ) | ||||||
Other activity, including shares withheld for employee taxes | (707 | ) | — | (707 | ) | ||||||
Balance at Sept. 30, 2018 | $ | 1,205,583 | $ | — | $ | 1,205,583 | |||||
Balance at Dec. 31, 2016 | $ | 2,271,418 | $ | 281,587 | $ | 2,553,005 | |||||
Comprehensive income: | |||||||||||
Net loss | (29,881 | ) | (58,698 | ) | (88,579 | ) | |||||
Redeemable noncontrolling interests (income not available to shareholders) | — | (2,797 | ) | (2,797 | ) | ||||||
Other comprehensive income | 34,241 | 5,819 | 40,060 | ||||||||
Total comprehensive income (loss) | 4,360 | (55,676 | ) | (51,316 | ) | ||||||
Dividends declared | (60,121 | ) | — | (60,121 | ) | ||||||
Stock-based compensation | 14,189 | — | 14,189 | ||||||||
Treasury shares acquired | (8,453 | ) | — | (8,453 | ) | ||||||
Spin-off of Cars.com | (1,510,851 | ) | — | (1,510,851 | ) | ||||||
Deconsolidation of CareerBuilder | — | (225,911 | ) | (225,911 | ) | ||||||
Other activity, including shares withheld for employee taxes | (4,667 | ) | — | (4,667 | ) | ||||||
Balance at Sept. 30, 2017 | $ | 705,875 | $ | — | $ | 705,875 |
Retirement Plans | Foreign Currency Translation | Other | Total | ||||||||||||
Quarters Ended: | |||||||||||||||
Balance at June 30, 2018 | $ | (125,288 | ) | $ | 547 | $ | — | $ | (124,741 | ) | |||||
Other comprehensive income before reclassifications | — | (23 | ) | — | (23 | ) | |||||||||
Amounts reclassified from AOCL | 1,851 | — | — | 1,851 | |||||||||||
Total other comprehensive income | 1,851 | (23 | ) | — | 1,828 | ||||||||||
Balance at Sept. 30, 2018 | $ | (123,437 | ) | $ | 524 | $ | — | $ | (122,913 | ) | |||||
Balance at June 30, 2017 | $ | (124,632 | ) | $ | (23,608 | ) | $ | 2,364 | $ | (145,876 | ) | ||||
Other comprehensive income before reclassifications | — | 1,428 | — | 1,428 | |||||||||||
Amounts reclassified from AOCL | 1,351 | 22,024 | — | 23,375 | |||||||||||
Other comprehensive income | 1,351 | 23,452 | — | 24,803 | |||||||||||
Balance at Sept. 30, 2017 | $ | (123,281 | ) | $ | (156 | ) | $ | 2,364 | $ | (121,073 | ) | ||||
Retirement Plans | Foreign Currency Translation | Other | Total | ||||||||||||
Nine Months Ended: | |||||||||||||||
Balance at Dec. 31, 2017 | $ | (107,037 | ) | $ | 114 | $ | — | $ | (106,923 | ) | |||||
Other comprehensive income before reclassifications | — | 410 | — | 410 | |||||||||||
Amounts reclassified from AOCL | 8,445 | — | — | 8,445 | |||||||||||
Total other comprehensive income | 8,445 | 410 | — | 8,855 | |||||||||||
Reclassification of stranded tax effects to retained earnings | (24,845 | ) | — | — | (24,845 | ) | |||||||||
Balance at Sept. 30, 2018 | $ | (123,437 | ) | $ | 524 | $ | — | $ | (122,913 | ) | |||||
Balance at Dec. 31, 2016 | $ | (127,341 | ) | $ | (28,560 | ) | $ | (5,672 | ) | $ | (161,573 | ) | |||
Other comprehensive income (loss) before reclassifications | — | 6,380 | (1,707 | ) | 4,673 | ||||||||||
Amounts reclassified from AOCL | 4,060 | 22,024 | 9,743 | 35,827 | |||||||||||
Other comprehensive income | 4,060 | 28,404 | 8,036 | 40,500 | |||||||||||
Balance at Sept. 30, 2017 | $ | (123,281 | ) | $ | (156 | ) | $ | 2,364 | $ | (121,073 | ) | ||||
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Amortization of prior service (credit) cost | $ | (101 | ) | $ | 16 | $ | (302 | ) | $ | 48 | |||||
Amortization of actuarial loss | 1,376 | 2,185 | 4,129 | 6,555 | |||||||||||
Reclassification of CareerBuilder foreign currency translation | — | 22,024 | — | 22,024 | |||||||||||
Reclassification of available for sale investment | — | — | — | 9,743 | |||||||||||
Pension payment timing related charges | 1,198 | — | 7,498 | — | |||||||||||
Total reclassifications, before tax | 2,473 | 24,225 | 11,325 | 38,370 | |||||||||||
Income tax effect | (622 | ) | (850 | ) | (2,880 | ) | (2,543 | ) | |||||||
Total reclassifications, net of tax | $ | 1,851 | $ | 23,375 | $ | 8,445 | $ | 35,827 |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income from continuing operations | $ | 92,826 | $ | 50,754 | $ | 240,525 | $ | 144,682 | |||||||
Income (loss) from discontinued operations, net of tax | 4,325 | (10,803 | ) | 4,325 | (233,261 | ) | |||||||||
Net loss attributable to noncontrolling interests from discontinued operations | — | 2,806 | — | 58,698 | |||||||||||
Net income (loss) attributable to TEGNA Inc. | $ | 97,151 | $ | 42,757 | $ | 244,850 | $ | (29,881 | ) | ||||||
Weighted average number of common shares outstanding - basic | 216,015 | 215,863 | 216,210 | 215,558 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Restricted stock units | 167 | 828 | 116 | 880 | |||||||||||
Performance share units | — | 721 | 72 | 674 | |||||||||||
Stock options | 166 | 683 | 219 | 715 | |||||||||||
Weighted average number of common shares outstanding - diluted | 216,348 | 218,095 | 216,617 | 217,827 | |||||||||||
Earnings from continuing operations per share - basic | $ | 0.43 | $ | 0.24 | $ | 1.11 | $ | 0.67 | |||||||
Earnings (loss) from discontinued operations per share - basic | 0.02 | (0.04 | ) | 0.02 | (0.81 | ) | |||||||||
Net income (loss) per share - basic | $ | 0.45 | $ | 0.20 | $ | 1.13 | $ | (0.14 | ) | ||||||
Earnings from continuing operations per share - diluted | $ | 0.43 | $ | 0.23 | $ | 1.11 | $ | 0.66 | |||||||
Earnings (loss) from discontinued operations per share - diluted | 0.02 | (0.04 | ) | 0.02 | (0.80 | ) | |||||||||
Net income (loss) per share - diluted | $ | 0.45 | $ | 0.19 | $ | 1.13 | $ | (0.14 | ) |
Sept. 30, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | Dec. 31, 2016 | ||||||||||||
Cash and cash equivalents included in: | |||||||||||||||
Continuing operations | $ | 23,766 | $ | 98,801 | $ | 383,354 | $ | 15,879 | |||||||
Discontinued operations | — | — | — | 61,041 | |||||||||||
Restricted cash equivalents included in: | |||||||||||||||
Prepaid expenses and other current assets | — | 29,240 | — | — | |||||||||||
Investments and other assets | — | — | 29,620 | 28,197 | |||||||||||
Cash, cash equivalents and restricted cash | $ | 23,766 | $ | 128,041 | $ | 412,974 | $ | 105,117 |
Nine months ended Sept. 30, | |||||||
2018 | 2017 | ||||||
Supplemental cash flow information: | |||||||
Cash paid for income taxes, net of refunds | $ | 51,325 | $ | 104,422 | |||
Cash paid for interest | $ | 121,616 | $ | 133,752 |
Quarter ended Sept. 30, 2017 (1) | Nine months ended Sept. 30, 2017 (1) | ||||||
Revenues | $ | 54,874 | $ | 647,021 | |||
Operating expenses | 58,429 | 925,056 | |||||
Loss from discontinued operations, before income taxes | (2,908 | ) | (279,113 | ) | |||
(Provision) benefit for income taxes | (7,895 | ) | 45,852 | ||||
Income from discontinued operations, net of tax | (10,803 | ) | (233,261 | ) | |||
Net loss attributable to noncontrolling interests from discontinued operations | $ | 2,806 | $ | 58,698 |
Nine Months ended Sept. 30, 2017 (1) | |||
Depreciation | $ | 19,569 | |
Amortization of intangible assets | 40,300 | ||
Capital expenditures | $ | 37,441 |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Revenues | $ | 538,976 | $ | 464,264 | 16 | % | $ | 1,565,146 | $ | 1,412,703 | 11 | % | |||||||||
Operating expenses: | |||||||||||||||||||||
Cost of revenues, exclusive of depreciation | 271,156 | 235,474 | 15 | % | 793,943 | 696,565 | 14 | % | |||||||||||||
Business units - Selling, general and administrative expenses, exclusive of depreciation | 76,639 | 70,914 | 8 | % | 229,193 | 214,645 | 7 | % | |||||||||||||
Corporate - General and administrative expenses, exclusive of depreciation | 17,593 | 12,881 | 37 | % | 41,522 | 42,462 | (2 | %) | |||||||||||||
Depreciation | 14,262 | 15,186 | (6 | %) | 41,594 | 41,721 | 0 | % | |||||||||||||
Amortization of intangible assets | 8,047 | 5,395 | 49 | % | 22,791 | 16,172 | 41 | % | |||||||||||||
Asset impairment and other (gains) charges | (3,005 | ) | 7,553 | *** | (9,331 | ) | 11,086 | *** | |||||||||||||
Total operating expenses | $ | 384,692 | $ | 347,403 | 11 | % | $ | 1,119,712 | $ | 1,022,651 | 9 | % | |||||||||
Total operating income | $ | 154,284 | $ | 116,861 | 32 | % | $ | 445,434 | $ | 390,052 | 14 | % | |||||||||
Non-operating expenses | (47,669 | ) | (54,660 | ) | (13 | %) | (142,980 | ) | (190,515 | ) | (25 | %) | |||||||||
Provision for income taxes | 13,789 | 11,447 | 20 | % | 61,929 | 54,855 | 13 | % | |||||||||||||
Net income from continuing operations | $ | 92,826 | $ | 50,754 | 83 | % | $ | 240,525 | $ | 144,682 | 66 | % | |||||||||
Earnings from continuing operations per share - basic | $ | 0.43 | $ | 0.24 | 79 | % | $ | 1.11 | $ | 0.67 | 66 | % | |||||||||
Earnings from continuing operations per share - diluted | $ | 0.43 | $ | 0.23 | 87 | % | $ | 1.11 | $ | 0.66 | 68 | % | |||||||||
*** Not meaningful |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Advertising & Marketing Services | $ | 264,852 | $ | 277,817 | (5 | %) | $ | 829,638 | $ | 843,175 | (2 | %) | |||||||||
Subscription | 207,463 | 177,692 | 17 | % | 622,382 | 540,344 | 15 | % | |||||||||||||
Political | 60,410 | 3,783 | *** | 93,725 | 13,387 | *** | |||||||||||||||
Other | 6,251 | 4,972 | 26 | % | 19,401 | 15,797 | 23 | % | |||||||||||||
Total revenues | $ | 538,976 | $ | 464,264 | 16 | % | $ | 1,565,146 | $ | 1,412,703 | 11 | % | |||||||||
*** Not meaningful |
• | Operating asset impairment and other net gains primarily consists of a gain recognized on the sale of real estate in Houston and gains due to reimbursements from the FCC for required spectrum repacking. These gains are partially offset by an early lease termination payment; |
• | Severance charges which included payroll and related benefit costs due to restructuring at our DMS business and at our corporate headquarters; |
• | Other non-operating items associated with business acquisition and integration costs, and a charitable donation made to the TEGNA Foundation; |
• | Pension payment timing related charges related to the acceleration of previously deferred pension costs as a result of lump sum SERP payments made to certain former executives. |
• | A gain recognized in our equity income in unconsolidated investments, related to our share of CareerBuilder’s gain on the sale of its EMSI business; |
• | Tax provision impacts related to our acquisition of KFMB; and |
• | Deferred tax benefits related to adjusting the provisional tax impacts of tax reform (enacted in December 2017) and a partial capital loss valuation allowance release, both resulting from the completion of our 2017 federal income tax return in the third quarter of 2018. |
• | Operating asset impairment and other charges related to damage caused by Hurricane Harvey and the consolidation of office space at corporate headquarters and at our DMS business; |
• | Other non-operating items associated with costs of the spin-off of our Cars.com business unit, a charitable donation made to the TEGNA Foundation, and non-cash asset impairment charges associated with write off of a note receivable associated with an equity method investment; |
• | Special tax benefit related to deferred tax remeasurement attributable to the spin-off of our Cars.com business unit and a deferred tax adjustment related to a previously-disposed business; and |
• | Severance charges which included payroll and related benefit costs. |
Special Items | ||||||||||||||||||||||||
Quarter ended September 30, 2018 | GAAP measure | Operating asset impairment and other | Severance expense | Pension payment timing related charge | Special tax benefit | Non-GAAP measure | ||||||||||||||||||
Cost of revenues, exclusive of depreciation | $ | 271,156 | $ | — | $ | (931 | ) | $ | — | $ | — | $ | 270,225 | |||||||||||
Business units - Selling, general and administrative expenses, exclusive of depreciation | 76,639 | — | (875 | ) | — | — | 75,764 | |||||||||||||||||
Corporate - General and administrative expenses, exclusive of depreciation | 17,593 | — | (5,481 | ) | — | — | 12,112 | |||||||||||||||||
Asset impairment and other (gains) | (3,005 | ) | 3,005 | — | — | — | — | |||||||||||||||||
Operating expenses | 384,692 | 3,005 | (7,287 | ) | — | — | 380,410 | |||||||||||||||||
Operating income | 154,284 | (3,005 | ) | 7,287 | — | — | 158,566 | |||||||||||||||||
Other non-operating items | (214 | ) | — | — | 1,198 | — | 984 | |||||||||||||||||
Total non-operating expense | (47,669 | ) | — | — | 1,198 | — | (46,471 | ) | ||||||||||||||||
Income before income taxes | 106,615 | (3,005 | ) | 7,287 | 1,198 | — | 112,095 | |||||||||||||||||
Provision for income taxes | 13,789 | (800 | ) | 1,714 | 301 | 9,657 | 24,661 | |||||||||||||||||
Net income from continuing operations | 92,826 | (2,205 | ) | 5,573 | 897 | (9,657 | ) | 87,434 | ||||||||||||||||
Net income from continuing operations per share-diluted (a) | $ | 0.43 | $ | (0.01 | ) | $ | 0.03 | $ | — | $ | (0.04 | ) | $ | 0.40 | ||||||||||
(a) Per share amounts do not sum due to rounding. | ||||||||||||||||||||||||
Special Items | ||||||||||||||||||||||||
Quarter ended September 30, 2017 | GAAP measure | Operating asset impairment and other | Other non-operating items | Special tax benefit | Non-GAAP measure | |||||||||||||||||||
Asset impairment and other charges | $ | 7,553 | $ | (7,553 | ) | $ | — | $ | — | $ | — | |||||||||||||
Operating expenses | 347,403 | (7,553 | ) | — | — | 339,850 | ||||||||||||||||||
Operating income | 116,861 | 7,553 | — | — | 124,414 | |||||||||||||||||||
Other non-operating items | (3,671 | ) | — | 2,688 | — | (983 | ) | |||||||||||||||||
Total non-operating expense | (54,660 | ) | — | 2,688 | — | (51,972 | ) | |||||||||||||||||
Income before income taxes | 62,201 | 7,553 | 2,688 | — | 72,442 | |||||||||||||||||||
Provision for income taxes | 11,447 | 2,780 | 629 | 8,086 | 22,942 | |||||||||||||||||||
Net income from continuing operations | 50,754 | 4,773 | 2,059 | (8,086 | ) | 49,500 | ||||||||||||||||||
Net income from continuing operations per share-diluted (a) | $ | 0.23 | $ | 0.02 | $ | 0.01 | $ | (0.04 | ) | $ | 0.23 | |||||||||||||
(a) Per share amounts do not sum due to rounding. |
Special Items | ||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2018 | GAAP measure | Severance expense | Operating asset impairment and other | Pension payment timing related charges | Other non-operating items | Net gain on equity method investment | Special tax benefit | Non-GAAP measure | ||||||||||||||||||||||||||
Cost of revenues, exclusive of depreciation | $ | 793,943 | $ | (931 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 793,012 | |||||||||||||||||
Business units - Selling, general and administrative expenses, exclusive of depreciation | 229,193 | (875 | ) | — | — | — | — | — | 228,318 | |||||||||||||||||||||||||
Corporate - General and administrative expenses, exclusive of depreciation | 41,522 | (5,481 | ) | — | — | — | — | — | 36,041 | |||||||||||||||||||||||||
Asset impairment and other (gains) | (9,331 | ) | — | 9,331 | — | — | — | — | — | |||||||||||||||||||||||||
Operating expenses | 1,119,712 | (7,287 | ) | 9,331 | — | — | — | — | 1,121,756 | |||||||||||||||||||||||||
Operating income | 445,434 | 7,287 | (9,331 | ) | — | — | — | — | 443,390 | |||||||||||||||||||||||||
Equity income in unconsolidated investments, net | 15,080 | — | — | — | — | (16,758 | ) | — | (1,678 | ) | ||||||||||||||||||||||||
Other non-operating items | (13,005 | ) | — | — | 7,498 | 15,184 | — | — | 9,677 | |||||||||||||||||||||||||
Total non-operating expense | (142,980 | ) | — | — | 7,498 | 15,184 | (16,758 | ) | — | (137,056 | ) | |||||||||||||||||||||||
Income before income taxes | 302,454 | 7,287 | (9,331 | ) | 7,498 | 15,184 | (16,758 | ) | — | 306,334 | ||||||||||||||||||||||||
Provision for income taxes | 61,929 | 1,714 | (798 | ) | 1,909 | 2,178 | (4,216 | ) | 7,007 | 69,723 | ||||||||||||||||||||||||
Net income from continuing operations | 240,525 | 5,573 | (8,533 | ) | 5,589 | 13,006 | (12,542 | ) | (7,007 | ) | 236,611 | |||||||||||||||||||||||
Net income from continuing operations per share-diluted (a) | $ | 1.11 | $ | 0.03 | $ | (0.04 | ) | $ | 0.03 | $ | 0.06 | $ | (0.06 | ) | $ | (0.03 | ) | $ | 1.09 | |||||||||||||||
(a) Per share amounts do not sum due to rounding. | ||||||||||||||||||||||||||||||||||
Special Items | ||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2017 | GAAP measure | Severance expense | Operating asset impairment | Other non-operating items | Special tax benefit | Non-GAAP measure | ||||||||||||||||||||||||||||
Cost of revenues, exclusive of depreciation | $ | 696,565 | $ | (522 | ) | $ | — | $ | — | $ | — | $ | 696,043 | |||||||||||||||||||||
Business units - Selling, general and administrative expenses, exclusive of depreciation | 214,645 | (1,471 | ) | — | — | — | 213,174 | |||||||||||||||||||||||||||
Corporate - General and administrative expenses, exclusive of depreciation | 42,462 | (1,060 | ) | — | — | — | 41,402 | |||||||||||||||||||||||||||
Asset impairment and other charges | 11,086 | — | (11,086 | ) | — | — | — | |||||||||||||||||||||||||||
Operating expenses | 1,022,651 | (3,053 | ) | (11,086 | ) | — | — | 1,008,512 | ||||||||||||||||||||||||||
Operating income | 390,052 | 3,053 | 11,086 | — | — | 404,191 | ||||||||||||||||||||||||||||
Other non-operating items | (26,853 | ) | — | — | 31,991 | — | 5,138 | |||||||||||||||||||||||||||
Total non-operating expense | (190,515 | ) | — | — | 31,991 | — | (158,524 | ) | ||||||||||||||||||||||||||
Income before income taxes | 199,537 | 3,053 | 11,086 | 31,991 | — | 245,667 | ||||||||||||||||||||||||||||
Provision for income taxes | 54,855 | 1,174 | 4,104 | 6,921 | 11,724 | 78,778 | ||||||||||||||||||||||||||||
Net income from continuing operations | 144,682 | 1,879 | 6,982 | 25,070 | (11,724 | ) | 166,889 | |||||||||||||||||||||||||||
Net income from continuing operations per share-diluted | $ | 0.66 | $ | 0.01 | $ | 0.03 | $ | 0.12 | $ | (0.05 | ) | $ | 0.77 |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Advertising & Marketing Services | $ | 264,852 | $ | 277,817 | (5 | %) | $ | 829,638 | $ | 843,175 | (2 | %) | |||||||||
Subscription | 207,463 | 177,692 | 17 | % | 622,382 | 540,345 | 15 | % | |||||||||||||
Political | 60,410 | 3,783 | *** | 93,725 | 13,386 | *** | |||||||||||||||
Other | 6,251 | 4,972 | 26 | % | 19,401 | 15,797 | 23 | % | |||||||||||||
Total revenues (GAAP basis) | $ | 538,976 | $ | 464,264 | 16 | % | $ | 1,565,146 | $ | 1,412,703 | 11 | % | |||||||||
Factors impacting comparisons: | |||||||||||||||||||||
Estimated net incremental Olympic and Super Bowl | $ | — | $ | — | — | % | $ | (24,000 | ) | $ | (323 | ) | *** | ||||||||
Political | (60,410 | ) | (3,783 | ) | *** | (93,725 | ) | (13,386 | ) | *** | |||||||||||
Discontinued digital marketing services | — | — | *** | — | (16,673 | ) | *** | ||||||||||||||
Total company adjusted revenues (non-GAAP basis) | $ | 478,566 | $ | 460,481 | 4 | % | $ | 1,447,421 | $ | 1,382,321 | 5 | % | |||||||||
*** Not meaningful |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Net income from continuing operations (GAAP basis) | $ | 92,826 | $ | 50,754 | 83 | % | $ | 240,525 | $ | 144,682 | 66 | % | |||||||||
Provision for income taxes | 13,789 | 11,447 | 20 | % | 61,929 | 54,855 | 13 | % | |||||||||||||
Interest expense | 48,226 | 51,855 | (7 | %) | 145,055 | 162,113 | (11 | %) | |||||||||||||
Equity (income) loss in unconsolidated investments, net | (771 | ) | (866 | ) | (11 | %) | (15,080 | ) | 1,549 | *** | |||||||||||
Other non-operating items | 214 | 3,671 | (94 | %) | 13,005 | 26,853 | (52 | %) | |||||||||||||
Operating income (GAAP basis) | 154,284 | 116,861 | 32 | % | 445,434 | 390,052 | 14 | % | |||||||||||||
Severance expense | 7,287 | — | *** | 7,287 | 3,053 | *** | |||||||||||||||
Asset impairment and other (gains) charges | (3,005 | ) | 7,553 | *** | (9,331 | ) | 11,086 | *** | |||||||||||||
Adjusted operating income (non-GAAP basis) | 158,566 | 124,414 | 27 | % | 443,390 | 404,191 | 10 | % | |||||||||||||
Depreciation | 14,262 | 15,186 | (6 | %) | 41,594 | 41,721 | — | % | |||||||||||||
Amortization of intangible assets | 8,047 | 5,395 | 49 | % | 22,791 | 16,172 | 41 | % | |||||||||||||
Adjusted EBITDA (non-GAAP basis) | 180,875 | 144,995 | 25 | % | 507,775 | 462,084 | 10 | % | |||||||||||||
Corporate - General and administrative expense, exclusive of depreciation (non-GAAP basis) | 12,112 | 12,881 | (6 | %) | 36,041 | 41,402 | (13 | %) | |||||||||||||
Adjusted EBITDA, excluding Corporate (non-GAAP basis) | $ | 192,987 | $ | 157,876 | 22 | % | $ | 543,816 | $ | 503,486 | 8 | % | |||||||||
*** Not meaningful |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
Net cash flow from operating activities | $ | 332,660 | $ | 351,739 | |||
Purchase of property and equipment | (35,281 | ) | (63,846 | ) | |||
Free cash flow | $ | 297,379 | $ | 287,893 |
• | In the fourth quarter of 2018, we expect total revenue will increase 30% to 32% year-over-year, driven by continued strong political advertising and subscription revenue growth. Political revenue is expected to be $144 million for the fourth quarter and approximately $238 million for the full year (up from our previous guidance of $180 million to $200 million), reflecting the central role our strong TEGNA stations play in all local political marketing strategies. Adjusted revenue, excluding political advertising, is expected to be up mid-single digits despite being negatively impacted by political displacement. |
• | Premion remains on pace to achieve full-year revenue guidance of $75 million, excluding Premion political revenue, which is included in total reported political revenue. |
• | We expect fourth quarter non-GAAP operating expenses will increase percentage-wise in the mid-teens year-over-year due to continued growth in programming fees and Premion reinvestments, as well as the fact that the majority of political advertising revenue will be recognized in the fourth quarter of 2018. |
• | We expect our full year Adjusted EBITDA margin to be toward the high end of the previously guided range of 36% to 38%, excluding corporate expenses. |
Nine months ended Sept. 30, | |||||||
2018 | 2017 | ||||||
Cash, cash equivalents and restricted cash from continuing operations, beginning of period | $ | 128,041 | $ | 44,076 | |||
Cash, cash equivalents and restricted cash from discontinued operations, beginning of period | — | 61,041 | |||||
Balance of cash, cash equivalents and restricted cash beginning of the period | 128,041 | 105,117 | |||||
Operating activities: | |||||||
Net income (loss) | 244,850 | (88,579 | ) | ||||
Depreciation, amortization and other non-cash adjustments | 54,606 | 496,142 | |||||
Pension (contributions), net of expense | (39,932 | ) | (12,547 | ) | |||
Spectrum channel share agreement proceeds | — | 32,588 | |||||
Other, net | 73,136 | (75,865 | ) | ||||
Net cash flows from operating activities | 332,660 | 351,739 | |||||
Net cash (used for) provided by investing activities | (352,407 | ) | 153,366 | ||||
Net cash used for financing activities | (84,528 | ) | (197,248 | ) | |||
(Decrease) increase in cash and cash equivalents | (104,275 | ) | 307,857 | ||||
Cash, cash equivalents and restricted cash from continuing operations, end of period | 23,766 | 412,974 | |||||
Cash, cash equivalents and restricted cash from discontinued operations, end of period | — | — | |||||
Balance of cash, cash equivalents and restricted cash end of the period | $ | 23,766 | $ | 412,974 |
Exhibit Number | Description | Location | ||
3-1 | Third Restated Certificate of Incorporation of TEGNA Inc. | |||
3-1-1 | Amendment to Third Restated Certificate of Incorporation of TEGNA Inc. | |||
3-1-2 | Amendment to Third Restated Certificate of Incorporation of TEGNA Inc. | |||
3-2 | By-laws, as amended through July 24, 2018. | |||
31-1 | Rule 13a-14(a) Certification of CEO. | |||
31-2 | Rule 13a-14(a) Certification of CFO. | |||
32-1 | Section 1350 Certification of CEO. | |||
32-2 | Section 1350 Certification of CFO. | |||
101 | The following financial information from TEGNA Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, formatted in XBRL includes: (i) Condensed Consolidated Balance Sheets at September 30, 2018 and December 31, 2017, (ii) Consolidated Statements of Income for the quarter and year-to-date periods ended September 30, 2018 and 2017, (iii) Consolidated Statements of Comprehensive Income for the quarter and year-to-date periods ended September 30, 2018 and 2017, (iv) Condensed Consolidated Cash Flow Statements for the year-to-date periods ended September 30, 2018 and 2017, and (v) the notes to unaudited condensed consolidated financial statements. |
Date: November 8, 2018 | TEGNA INC. |
/s/ Clifton A. McClelland III | |
Clifton A. McClelland III | |
Senior Vice President and Controller | |
(on behalf of Registrant and as Chief Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of TEGNA Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ David T. Lougee |
David T. Lougee |
President and Chief Executive Officer |
(principal executive officer) |
Date: November 8, 2018 |
1. | I have reviewed this quarterly report on Form 10-Q of TEGNA Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Victoria D. Harker |
Victoria D. Harker |
Chief Financial Officer (principal financial officer) |
Date: November 8, 2018 |
(1) | the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TEGNA. |
/s/ David T. Lougee |
David T. Lougee |
President and Chief Executive Officer |
(principal executive officer) |
November 8, 2018 |
(1) | the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TEGNA. |
/s/ Victoria D. Harker |
Victoria D. Harker |
Chief Financial Officer (principal financial officer) |
November 8, 2018 |
Document and Entity Information |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
Document and Entity Information [Abstract] | |
Entity Registrant Name | TEGNA INC |
Entity Central Index Key | 0000039899 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2018 |
Amendment Flag | false |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q3 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock Shares Outstanding | 215,302,010 |
Trading Symbol | TGNA |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 3,806 | $ 3,266 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, Authorized shares | 800,000,000 | 800,000,000 |
Common stock, Issued shares | 324,418,632 | 324,418,632 |
Treasury stock, shares | 109,116,622 | 109,487,979 |
Condensed Consolidated Statements of Cash Flows Condensed Consolidation Statements of Cash Flows (Parenthetical) $ in Thousands |
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Statement of Cash Flows [Abstract] | |
Cash transferred in deconsolidation | $ 36,581 |
Accounting Policies |
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Accounting Policies | Accounting Policies Basis of presentation: Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting, the instructions for Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all information and footnotes which are normally included in the Form 10-K and annual report to shareholders. In our opinion, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of results for the interim periods presented. The condensed consolidated financial statements should be read in conjunction with our (or “TEGNA’s”) audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Significant estimates include, but are not limited to, evaluation of goodwill and other intangible assets for impairment, business combinations, fair value measurements, post-retirement benefit plans, income taxes including deferred taxes, and contingencies. The condensed consolidated financial statements include the accounts of subsidiaries we control and variable interest entities (VIEs) if we are the primary beneficiary. We eliminate all intercompany balances, transactions, and profits in consolidation. Investments in entities over which we have significant influence, but do not have control, are accounted for under the equity method. Our share of net earnings and losses from these ventures is included in “Equity income (loss) in unconsolidated investments, net” in the Consolidated Statements of Income. In addition, certain reclassifications have been made to prior year’s consolidated financial statements to conform to the current year’s presentation, specifically as it relates to our presentation of Investments and other assets in Note 3 of the condensed consolidated financial statements. On May 31, 2017, we completed the spin-off of our digital automotive marketplace business, Cars.com. In addition, on July 31, 2017, we completed the sale of our majority ownership stake in CareerBuilder. As a result of these strategic actions, we have disposed of substantially all of our former Digital Segment business and have therefore classified its historical financial results as discontinued operations in our Consolidated Statements of Income. See Note 12, “Discontinued operations,” for further details regarding the spin-off of Cars.com and the sale of CareerBuilder and the impact of each transaction on our condensed consolidated financial statements. As a result, we operate one operating and reportable segment, which primarily consists of our 47 television stations operating in 39 markets, offering high-quality television programming and digital content. Our reportable segment determination is based on our management and internal reporting structure, the nature of products and services we offer, and the financial information that is evaluated regularly by our chief operating decision maker. Accounting guidance adopted in 2018: In May 2014, the Financial Accounting Standards Board (FASB) issued new guidance related to revenue recognition. Under the new guidance, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the guidance requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the guidance beginning January 1, 2018 using the modified retrospective method. We began recognizing revenue under this new guidance in the first quarter of 2018 and did not restate prior years. We applied the standard to all contracts open as of January 1, 2018. The cumulative prior period effect of applying the guidance was $3.7 million which was recorded as a decrease to retained earnings upon adoption. This adjustment represents a deferral of revenue associated with certain performance obligations that were not fully completed as of the reporting date. In addition, with the adoption of the new guidance, we have determined that certain barter revenue and expense related to syndicated programming will no longer be recognized. The revenue and expense previously recognized for this type of barter transaction would have been approximately $0.5 million in the third quarter of 2018 and $1.5 million in the nine months ended 2018. Other than these two items, there were no other changes to the timing and amount of revenue recognition for our contracts. For contracts with an effective term of less than one year, and for our subscription revenue contracts, we applied certain of the standard’s practical expedients relating to disclosure that permit the exclusion of quantifying and disclosing unsatisfied performance obligations. In addition, the adoption of this standard did not result in significant changes to our accounting policies, business processes, systems or controls. See discussion of our revenue policy below. In August 2016, the FASB issued new guidance which clarifies several specific cash flow classification issues. The objective of the new guidance is to reduce the existing diversity in practice in how these cash flows are presented in the Statement of Cash Flows. The guidance updated the classification in the Statement of Cash Flows in several areas. The most relevant updates for us are the following: 1) payments made for premiums, fees paid to lenders and other related third party costs when debt is repaid early will each be classified as financing cash outflows (we have historically classified these types of cash payments as operating outflows), 2) contingent consideration payments made for acquisitions will be classified as either operating, investing, or financing cash outflows depending on the timing and nature of the payment, 3) cash receipts received due to the settlement of insurance claims will be classified as either operating or investing cash inflows, depending on the nature of the underlying loss, 4) proceeds received from trust owned life insurance policies will be classified as investing cash inflows (we have historically classified these types of cash receipts as operating inflows), and 5) distributions received from equity method investments will be classified as either operating or investing cash inflows, depending on the amount of cash received as compared to the amount of inception to date earnings recognized on the individual investment. We adopted the guidance retrospectively beginning in the first quarter of 2018. As a result of adopting this guidance, we reclassified approximately $0.9 million of life insurance proceeds received in the first nine months of 2017 from operating to investing inflows. In January 2016, the FASB issued new guidance that amended several elements surrounding the recognition and measurement of financial instruments. Most notably for our company, the new guidance requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation) to be measured at fair value with changes in fair value recognized in net income. For equity investments that do not have readily determinable prices, those investments may be recorded at cost less impairments, if any, plus or minus changes in observable prices for those investments. This new guidance requires us to adjust the value of our cost method investments to account for any observable price changes in those investments. Cost method investments had previously been recorded at cost, less any impairments. We adopted the new guidance in the first quarter of 2018 and the provision discussed above has been adopted on a prospective basis. There was no impact to our financial statements as a result of adopting this new guidance. In February 2018, the FASB issued guidance on accounting for certain tax effects that resulted from the Tax Cuts and Jobs Act (the Tax Act), that was enacted into law as of December 22, 2017. The guidance addresses the accounting for amounts that had previously been recorded in accumulated other comprehensive income on a net tax basis, using the tax rate that was in effect at the time. Due to the reduction in the tax rates under the Tax Act, certain tax effects were “stranded” in accumulated other comprehensive income. This new guidance allows these stranded tax effects to be reclassified from accumulated other comprehensive income to retained earnings. Other tax amounts stranded in accumulated other comprehensive income due to reasons other than the Tax Act may not be reclassified. As a result of adopting this guidance, in the first quarter of 2018, we reclassified approximately $24.8 million from accumulated other comprehensive income to retained earnings. We believe that reclassifying these amounts more accurately presents the balance of accumulated other comprehensive loss. In November 2016, the FASB issued guidance on the presentation of restricted cash which requires that on the statement of cash flows, amounts generally described as restricted cash or restricted cash equivalents should be included within the beginning and ending balances of cash and cash equivalents. We adopted this guidance in the first quarter of 2018 on a retrospective basis. As a result, restricted cash amounts that have historically been included in prepaid expenses and other current assets and investments and other assets on our Consolidated Balance Sheets are now included with cash and cash equivalents on the Consolidated Statements of Cash Flows. We did not have any restricted cash as of September 30, 2018, however, these restricted cash balances totaled $29.2 million as of December 31, 2017, $29.6 million as of September 30, 2017 and $28.2 million as of December 31, 2016. Our restricted cash was used to pay deferred compensation and TEGNA Supplemental Retirement Plan (SERP) obligations. The adoption of this standard did not change our balance sheet presentation. See Note 10 for additional information about our restricted cash balances. New accounting guidance not yet adopted: In February 2016, the FASB issued new guidance related to leases which will require lessees to recognize assets and liabilities on the balance sheet for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP—which requires only capital leases (renamed financing leases under the new guidance) to be recognized on the balance sheet—the new guidance will require both finance and operating leases to be recognized on the balance sheet. The new guidance will be effective for TEGNA beginning in the first quarter of 2019. In July 2018, the FASB issued an amendment giving companies the option to apply the requirements of the standard in the period of adoption (January 1, 2019), with no restatement of prior periods. A cumulative effect of applying the guidance would be recorded to the opening balance of retained earnings. We plan to utilize this adoption method. We have formed a cross-functional team to oversee the implementation of the new guidance. Our ongoing implementation efforts include the review of our lease contracts, review of service contracts for embedded leases, and the deployment of a new lease software solution. In conjunction with adopting the new guidance, we are evaluating any changes needed to our current lease accounting policies and business practices. Based on the work performed to date, we currently estimate that our total assets and liabilities as presented on our Condensed Consolidated Balance Sheet as of September 30, 2018, will increase by less than 5% as a result of adopting this standard. We do not expect the standard to have a material impact on our Consolidated Statements of Income. Additionally, we do not expect there to be a significant difference in our pattern of lease expense recognition under the new standard. In June 2016, the FASB issued new guidance related to the measurement of credit losses on financial instruments. The new guidance changes the way credit losses on accounts receivable are estimated. Under current GAAP, credit losses on accounts receivable are recognized once it is probable that such losses will occur. Under the new guidance, we will be required to estimate credit losses based on the expected amount of future collections which may result in earlier recognition of doubtful accounts. The new guidance is effective for public companies beginning in the first quarter of 2020 and will be adopted using a modified retrospective approach. We are currently evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures. Revenue recognition: Revenue is recognized upon the transfer of control of promised services to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Amounts received from customers in advance of providing services to our customers are recorded as deferred revenue. Our primary source of revenue is earned through the sale of advertising and marketing services (AMS). This revenue stream includes all sources of our traditional television and radio advertising, as well as digital revenues including Premion, our digital marketing services (DMS) business unit and other digital advertising across our platforms. Contracts within this revenue stream are short-term in nature (most often three months or less). Contracts generally consist of multiple deliverables, such as television commercials, or digital advertising solutions, that we have identified as individual performance obligations. Before performing under the contract we establish the transaction price with our customer based on the agreed upon rates for each performance obligation. There is no material variability in the transaction price during the term of the contract. Revenue is recognized as we deliver our performance obligations to our customers. For our AMS revenue stream, we measure our performance based on the airing of the individual television commercials or display of digital advertisements. This measure is most appropriate as it aligns our revenue recognition with the value we are providing to our customers. The price of each individual commercial and digital advertisement is negotiated with our customer and is determined based on multiple factors, including, but not limited to, the programming and day-part selected, supply of available inventory, our station’s viewership ratings and overall market conditions (e.g., timing of the year and strength of U.S. economy). Customers are billed monthly and payment is generally due 30 days after the date of invoice. Commission costs related to these contracts are expensed as incurred due to the short term nature of the contracts. We also earn subscription revenue from retransmission consent contracts with multichannel video programming distributors (e.g., cable and satellite providers) and over the top providers (companies that deliver video content to consumers over the Internet). Under these multi-year contracts, we have performance obligations to provide our customers with our stations’ signals, as well as our consent to retransmit those signals to their customers. Subscription revenue is recognized in accordance with the guidance for licensing intellectual property utilizing a usage based method. The amount of revenue earned is based on the number of subscribers to which our customers retransmit our signal, and the negotiated fee per subscriber included in our contract agreement. Our customers submit payments monthly, generally within 60-90 days after the month that service was provided. Our performance obligations are satisfied, and revenue is recognized, as we provide our consent for our customers to retransmit our signal. This measure toward satisfaction of our performance obligations and recognition of revenue is the most appropriate as it aligns our revenue recognition with the value that we are delivering to our customers through our retransmission consent. We also generate revenue from the sale of political advertising. Contracts within this revenue stream are short term in nature (typically weekly or monthly buys during political campaigns). Customers pre-pay these contracts and we therefore defer the associated revenue until the advertising has been delivered, at which time we have satisfied our performance obligations and recognize revenue. Commission costs related to these contracts are expensed as incurred due to the short term nature of the contracts. Our remaining revenue is comprised of various other services, primarily production services (for news content and commercials) and sublease rental income. Revenue is recognized as these various services are provided to our customers. In instances where we sell services from more than one revenue stream to the same customer at the same time, we recognize one contract and allocate the transaction price to each deliverable element (e.g. performance obligation) based on the relative fair value of each element. Revenue earned by categories in the third quarter and nine months of 2018 and 2017 are shown below (amounts in thousands):
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Goodwill and Other Intangible Assets |
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Goodwill and other intangible assets | Goodwill and other intangible assets The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of September 30, 2018 and December 31, 2017 (in thousands):
Our retransmission consent contracts and network affiliation agreements are amortized on a straight-line basis over their estimated useful lives. Other intangibles primarily include customer relationships and favorable lease agreements which are amortized on a straight-line basis over their useful lives. On February 15, 2018 we acquired a business consisting of assets in San Diego: KFMB-TV (the CBS affiliated station), KFMB-D2 (the CW station), and radio stations KFMB-AM and KFMB-FM (collectively KFMB). The purchase price was $328.4 million, which included a final working capital payment of $2.5 million that we made to the sellers in the third quarter of 2018. The purchase price was paid in cash and funded through the use of available cash and borrowings under our revolving credit facility. In connection with this acquisition, we recorded indefinite lived intangible assets for FCC licenses of $192.2 million and amortizable intangible assets of $91.4 million, primarily related to retransmission consent contracts and network affiliation agreements. The amortizable assets will be amortized over a weighted average period of 10 years. We also recognized goodwill of $17.4 million as a result of the acquisition. We completed purchase accounting for the transaction in the third quarter of 2018, which resulted in an increase to our goodwill balance of $0.3 million in comparison with what we had previously disclosed. |
Investments and Other Assets |
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Investments and other assets | Investments and other assets Our investments and other assets consisted of the following as of September 30, 2018, and December 31, 2017 (in thousands):
Cash value life insurance: We are the beneficiary of life insurance policies on the lives of certain employees/retirees, which are recorded at their cash surrender value as determined by the insurance carrier. These policies are utilized as a partial funding source for deferred compensation and other non-qualified employee retirement plans. Gains and losses on these investments are included in Other non-operating expenses within our Consolidated Statement of Income and were not material for all periods presented. Equity method investments: We hold several strategic equity method investments. Our largest equity method investment is our ownership in CareerBuilder, of which we own approximately 17% (or approximately 10% on a fully-diluted basis), representing an investment balance of $21.6 million as of September 30, 2018. On May 14, 2018, CareerBuilder sold its subsidiary, Economic Modeling LLC (also known as EMSI). As a result, we received a dividend of $9.9 million in connection with the sale commensurate with our equity ownership in CareerBuilder. Our share of CareerBuilder’s gain on the sale of EMSI was approximately $16.8 million which is included in Equity income (loss) in unconsolidated investments, net, on our Consolidated Statements of Income. During the nine months ended September 30, 2018, we recorded $15.7 million in equity income from our CareerBuilder investment. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was approximately $9.7 million as of September 30, 2018, and $10.7 million as of December 31, 2017. The amount of accrued interest and penalties payable related to unrecognized tax benefits was $1.4 million as of September 30, 2018, and $1.6 million as of December 31, 2017. It is reasonably possible that the amount of unrecognized benefits with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months. These changes may be the result of settlement of ongoing audits, lapses of statutes of limitations or other regulatory developments. At this time, we estimate the amount of gross unrecognized tax positions may be reduced by up to approximately $3.9 million within the next 12 months primarily due to lapses of statutes of limitations and settlement of ongoing audits in various jurisdictions. As discussed in Note 1, the Tax Act, was enacted into law as of December 22, 2017. Among other provisions, the Tax Act reduced the federal tax rate to 21% effective for us as of January 1, 2018. On the same date, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. We recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these amounts in our consolidated financial statements for the year ended December 31, 2017. We completed our 2017 U.S. federal return during the third quarter of 2018 and recorded measurement period adjustments for the revaluation of deferred tax assets and liabilities at the reduced 21% federal tax rate that reduced tax expense by $5.3 million and our third quarter effective income tax rate by five percentage points. We will continue to analyze the effects of the Tax Act on our consolidated financial statements when state corporate income tax returns are filed in late 2018. Any additional impacts from the enactment will be recorded as they are identified during the measurement period as provided for in Staff Accounting Bulletin No. 118. |
Long-Term Debt |
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Long-term debt | Long-term debt Our long-term debt is summarized below (in thousands):
On June 21, 2018, we entered into an amendment of our Amended and Restated Competitive Advance and Revolving Credit Agreement. Under the amended terms, the $1.51 billion of revolving credit commitments and letter of credit commitments have been extended until June 21, 2023. The amendment also extended our permitted total leverage ratio to remain at 5.0x through June 30, 2019, reducing to 4.75x for the fiscal quarter ending September 30, 2019 through the end of the fiscal quarter ending June 30, 2020, and then reducing to 4.50x for the fiscal quarter ending September 30, 2020 and thereafter. As of September 30, 2018, we had unused borrowing capacity of $1.42 billion under our revolving credit facility. |
Retirement Plans |
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Retirement plans | Retirement plans Our principal defined benefit pension plan is the TEGNA Retirement Plan (TRP). The disclosure table below includes the pension expenses of the TRP and the Supplemental Retirement Plan (SERP). In connection with our acquisition of KFMB, we assumed its preexisting pension plan which, as of the acquisition date, had a total net pension obligation of $7.3 million. All plan participants’ benefits were frozen prior to the acquisition date. During the second quarter of 2018, the KFMB pension plan was merged into the TRP. The total net pension obligations, including both current and non-current liabilities, as of September 30, 2018, were $130.9 million ($8.4 million is recorded as a current obligation within accrued liabilities on the Condensed Consolidated Balance Sheet). Our pension costs, which primarily include costs for the qualified TRP and the non-qualified SERP, are presented in the following table (in thousands):
The service cost component of our pension expense is recorded within the operating expense line items Cost of revenue, Business units - Selling, general and administrative, and Corporate - General and administrative within the Consolidated Statements of Income. All other components of our pension expense are included within the Other non-operating items line item of the Consolidated Statements of Income. During the nine months ended September 30, 2018 we made $11.1 million in cash contributions to the TRP. No additional contributions are expected for the remainder of 2018. We made $10.9 million in cash contributions to the TRP during the nine months ended September 30, 2017. During the nine months ended September 30, 2018 and 2017, we made benefit payments to participants of the SERP of $32.9 million and $7.2 million, respectively. In the first and third quarters of 2018, we accelerated the recognition of previously deferred pension costs as a result of lump sum SERP payments made to certain former executives. The first and third quarter charges were $6.3 million and $1.2 million, respectively, and were reclassified from accumulated other comprehensive income (loss) into net periodic benefit cost. |
Supplemental Equity Information |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental equity information | Supplemental equity information The following table summarizes equity account activity for the nine months ended September 30, 2018 and 2017 (in thousands):
The following table summarizes the components of, and the changes in, Accumulated Other Comprehensive Loss (AOCL), net of tax and noncontrolling interests (in thousands):
Reclassifications from AOCL to the Statement of Income are comprised of pension and other post-retirement components. Pension and other post retirement reclassifications are related to the amortization of prior service costs, amortization of actuarial losses, and pension payment timing related charges related to our SERP plan. Amounts reclassified out of AOCL are summarized below (in thousands):
Performance Share Award Program During the first quarter of 2018, the Leadership Development and Compensation Committee (LDCC) of the Board of Directors established new performance metrics for long-term incentive awards for our executives under the Company’s 2001 Omnibus Incentive Compensation Plan (Amended and Restated as of May 4, 2010), as amended, designed to better reflect TEGNA as a pure-play broadcaster. On March 1, 2018, we granted certain employees performance share awards (PSAs) reflecting these new metrics with aggregate target awards of approximately 0.6 million shares of our common stock. The number of shares earned under the March 1 PSAs will be determined based on the achievement of certain financial performance criteria (adjusted EBITDA and free cash flow as defined by the PSA) over a two-year cumulative financial performance period. If the financial performance criteria are met and certified by the LDCC, the shares earned under the PSA will be subject to an additional one year service period before the common stock is released to the employees. The PSAs do not pay dividends or allow voting rights during the performance period. Therefore, the fair value of the PSA is the quoted market value of our stock on the grant date less the present value of the expected dividends not received during the relevant performance period. The PSA provides the LDCC with limited discretion to make adjustments to the financial targets to ensure consistent year-to-year comparison for the performance criteria. For expense recognition, in the period it becomes probable that the minimum performance criteria specified in the PSA will be achieved, we will recognize expense for the proportionate share of the total fair value of the shares subject to the PSA related to the vesting period that has already lapsed. Each reporting period we will adjust the fair value of the PSAs to the quoted market value of our stock price. In the event we determine it is no longer probable that we will achieve the minimum performance criteria specified in the PSA, we will reverse all of the previously recognized compensation expense in the period such a determination is made. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | Earnings per share Our earnings per share (basic and diluted) are presented below (in thousands of dollars, except per share amounts):
Our calculation of diluted earnings per share includes the impact of the assumed vesting of outstanding restricted stock units, performance share units, and the exercise of outstanding stock options based on the treasury stock method when dilutive. The diluted earnings per share amounts exclude the effects of approximately 189,000 and 235,000 stock awards for the three and nine months ended September 30, 2018, respectively; and 96,000 and 142,000 for the three and nine months ended September 30, 2017, respectively, as their inclusion would be accretive to earnings per share. |
Fair Value Measurement |
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Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement | Fair value measurement We measure and record in the accompanying condensed consolidated financial statements certain assets and liabilities at fair value. U.S. GAAP establishes a hierarchy for those instruments measured at fair value that distinguishes between market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 - Quoted market prices in active markets for identical assets or liabilities; Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 - Unobservable inputs developed using our own estimates and assumptions, which reflect those that a market participant would use. Our deferred compensation investments were valued using Level 1 inputs with a fair value of $14.6 million as of December 31, 2017. Our deferred compensation assets were invested in a fixed income mutual fund. During the first quarter of 2018, we liquidated the deferred compensation investment to cover payments made to SERP participants (see Note 6). Cost method investments in private companies are recorded at cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. The carrying value of these investments was $24.2 million as of September 30, 2018 and $17.4 million as of December 31, 2017. During the nine months ended September 30, 2018 there were no events or changes in circumstance that suggested an impairment or an observable price change to any of these investments. The cost method investments are classified in Level 3 of the fair value hierarchy. We additionally hold other financial instruments, including cash and cash equivalents, receivables, accounts payable and debt. The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values. The fair value of our total debt, based on the bid and ask quotes for the related debt (Level 2), totaled $3.06 billion at September 30, 2018, and $3.16 billion at December 31, 2017. |
Supplemental Cash Flow Information |
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Supplemental cash flow information | Supplemental cash flow information The following table provides a reconciliation of cash and cash equivalents, as reported on our Condensed Consolidated Balance Sheets, to cash, cash equivalents, and restricted cash, as reported on our Condensed Consolidated Statement of Cash Flows (in thousands):
Our restricted cash equivalents consist of highly liquid investments that were held within a rabbi trust and were used to pay our deferred compensation and SERP obligations. The following table provides additional information about cash flows related to interest and taxes (in thousands):
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Other Matters |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other matters | Other matters Commitments, contingencies and other matters In the third quarter of 2018, certain national media outlets reported the existence of a confidential investigation by the United States Department of Justice Antitrust Division (DOJ) into the local television advertising sales practices of station owners. We have received a Civil Investigative Demand (CID) in connection with the DOJ’s investigation. The investigation is ongoing. Since the national media reports, numerous putative class action lawsuits have been filed against owners of television stations (the advertising cases) in different jurisdictions. The advertising cases assert antitrust and other claims and seek monetary damages, attorneys’ fees, costs and interest, as well as injunctions against the allegedly wrongful conduct. We have been named as a defendant in sixteen of the advertising cases. The advertising cases are in the very early stages, and have been consolidated into a single proceeding in the United States District Court for the Northern District of Illinois. We deny any violation of law, believe that the claims asserted in the advertising cases are without merit, and intend to defend ourselves vigorously against them. We, along with a number of our subsidiaries, also are defendants in other judicial and administrative proceedings involving matters incidental to our business. We do not believe that any material liability will be imposed as a result of any of the foregoing matters. FCC Broadcast Spectrum Program In April 2017, the FCC announced the completion of a voluntary incentive auction to reallocate certain spectrum currently occupied by television broadcast stations to mobile wireless broadband services, along with a related “repacking” of the television spectrum for remaining television stations. None of our stations will relinquish any spectrum rights as a result of the auction, and accordingly we will not receive any incentive auction proceeds. The FCC has, however, notified us that 13 of our stations will be repacked to new channels. In general, television stations moving channels may have smaller service areas and/or experience additional interference; however, based on our transition planning to date, we do not expect the repacking to have any material effect on the geographic areas or populations served by our repacked full-power stations’ over-the-air signals. The legislation authorizing the incentive auction and repacking established a $1.75 billion fund for reimbursement of costs incurred by stations required to change channels in the repacking. Subsequent legislation enacted on March 23, 2018, appropriated an additional $1 billion for the repacking fund, of which up to $750 million may be made available to repacked full power and Class A television stations and multichannel video programming distributors. Other funds are earmarked to assist affected low power television stations, television translator stations, and FM radio stations, as well for consumer education efforts. Some of our television translator stations have been or will be displaced as a result of the repacking, and thus are eligible under the new repacking funds appropriation to seek reimbursement for costs incurred as a result of such displacement (subject to the translator locating an available alternative channel, which is not guaranteed). The repacking process is scheduled to occur over a 39-month period, divided into ten phases. Our full power stations have been assigned to phases two through nine, and a majority of our capital expenditures in connection with the repack will occur in 2018 and 2019. To date, we have incurred approximately $7.9 million in capital expenditures for the spectrum repack project (of which $6.6 million was paid during the first nine months of 2018). We have received FCC reimbursements of approximately $5.1 million through September 30, 2018. The reimbursements were recorded as a contra operating expense within our asset impairment and other (gains) charges line item on our Consolidated Statement of Income and reported as an investing inflow on the Consolidated Statement of Cash Flows. Each repacked full power commercial television station, including each of our 13 repacked stations, has been allocated a reimbursement amount equal to approximately 92.5% of the station’s estimated repacking costs, as verified by the FCC’s fund administrator. Although we expect the FCC to make additional allocations from the fund, it is not guaranteed that the FCC will approve all reimbursement requests necessary to completely reimburse each repacked station for all amounts incurred in connection with the repack. Reduction in Force Programs During the third quarter of 2018, we initiated reduction in force programs at our corporate headquarters and our DMS business unit, which resulted in a total severance charge of $7.3 million. The corporate headquarters reductions were part of our ongoing consolidations of our corporate structure following our strategic transformation into a pure play broadcast company. The reduction in force at our DMS unit is a result of a rebranding of our service offerings and unification of our sales strategy to better serve our customers. A majority of the employees impacted by these reductions will receive lump sum severance payments. The severance payments from these programs will be paid by the end of the third quarter of 2019. |
Discontinued Operations |
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Discontinued Operations | Discontinued operations Cars.com spin-off On May 31, 2017, we completed the previously announced spin-off of Cars.com. The spin-off was effected through a pro rata distribution of all outstanding common shares of Cars.com to TEGNA stockholders of record at the close of business on May 18, 2017 (the Record Date). Stockholders retained their TEGNA shares and received one share of Cars.com for every three shares of TEGNA stock they owned on the Record Date. Cars.com began “regular way” trading on the New York Stock Exchange on June 1, 2017 under the symbol “CARS”. CareerBuilder Sale On July 31, 2017, we sold our majority ownership interest in CareerBuilder to an investor group led by investment funds managed by affiliates of Apollo Global Management, LLC, a leading global alternative investment manager, and the Ontario Teachers’ Pension Plan Board. Our share of the pre-tax net cash proceeds from the sale was $198.3 million. As part of the agreement, we remain an ongoing partner in CareerBuilder, retaining an approximately 17% interest (or approximately 10% on a fully-diluted basis) and two seats on CareerBuilder’s 10 person board. Following the sale, CareerBuilder is no longer consolidated within our reported operating results. Our remaining ownership interest is being accounted for as an equity method investment. In the first nine months of 2018, we recorded $15.7 million of equity earnings from our remaining interest in CareerBuilder. Financial Statement Presentation of Digital Segment As a result of the Cars.com and CareerBuilder transactions described above, the operating results of our former Digital Segment have been included in discontinued operations in the Consolidated Statements of Income for the prior year period. In the third quarter of 2018, we recorded a tax benefit from discontinued operations of $4.3 million. The tax benefit primarily relates to updating the 2017 income tax provision estimates for CareerBuilder and Cars.com to the 2017 federal tax return completed during the third quarter of 2018. The following table presents the 2017 financial results of discontinued operations (in thousands):
(1) The quarter and nine months ended September 30, 2017 include CareerBuilder’s operations through the date of sale on July 31, 2017. Cars.com operations are included in the nine months ended September 30, 2017 through the date of spin-off on May 31, 2017. The financial results reflected above may not represent our former Digital stand alone operating results, as the results reported within income from discontinued operations, net, include only certain costs that are directly attributable to those businesses and exclude certain corporate overhead costs that were previously allocated. For earnings per share information on discontinued operations, see Note 8. In our Condensed Consolidated Statement of Cash Flows, the cash flows from discontinued operations are not separately classified, but supplemental cash flow information for these business units is presented below. The depreciation, amortization, and significant cash investing items of the discontinued operations were as follows (in thousands):
(1) The nine months ended September 30, 2017 includes Cars.com through the spin-off date of May 31, 2017 and CareerBuilder’s operations through the date of sale on July 31, 2017. |
Accounting Policies (Policies) |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation: Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting, the instructions for Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all information and footnotes which are normally included in the Form 10-K and annual report to shareholders. In our opinion, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of results for the interim periods presented. The condensed consolidated financial statements should be read in conjunction with our (or “TEGNA’s”) audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. |
Use of estimates | The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Significant estimates include, but are not limited to, evaluation of goodwill and other intangible assets for impairment, business combinations, fair value measurements, post-retirement benefit plans, income taxes including deferred taxes, and contingencies. |
Consolidation | The condensed consolidated financial statements include the accounts of subsidiaries we control and variable interest entities (VIEs) if we are the primary beneficiary. We eliminate all intercompany balances, transactions, and profits in consolidation. Investments in entities over which we have significant influence, but do not have control, are accounted for under the equity method. Our share of net earnings and losses from these ventures is included in “Equity income (loss) in unconsolidated investments, net” in the Consolidated Statements of Income. In addition, certain reclassifications have been made to prior year’s consolidated financial statements to conform to the current year’s presentation, specifically as it relates to our presentation of Investments and other assets in Note 3 of the condensed consolidated financial statements. |
Recent accounting standards | Accounting guidance adopted in 2018: In May 2014, the Financial Accounting Standards Board (FASB) issued new guidance related to revenue recognition. Under the new guidance, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the guidance requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the guidance beginning January 1, 2018 using the modified retrospective method. We began recognizing revenue under this new guidance in the first quarter of 2018 and did not restate prior years. We applied the standard to all contracts open as of January 1, 2018. The cumulative prior period effect of applying the guidance was $3.7 million which was recorded as a decrease to retained earnings upon adoption. This adjustment represents a deferral of revenue associated with certain performance obligations that were not fully completed as of the reporting date. In addition, with the adoption of the new guidance, we have determined that certain barter revenue and expense related to syndicated programming will no longer be recognized. The revenue and expense previously recognized for this type of barter transaction would have been approximately $0.5 million in the third quarter of 2018 and $1.5 million in the nine months ended 2018. Other than these two items, there were no other changes to the timing and amount of revenue recognition for our contracts. For contracts with an effective term of less than one year, and for our subscription revenue contracts, we applied certain of the standard’s practical expedients relating to disclosure that permit the exclusion of quantifying and disclosing unsatisfied performance obligations. In addition, the adoption of this standard did not result in significant changes to our accounting policies, business processes, systems or controls. See discussion of our revenue policy below. In August 2016, the FASB issued new guidance which clarifies several specific cash flow classification issues. The objective of the new guidance is to reduce the existing diversity in practice in how these cash flows are presented in the Statement of Cash Flows. The guidance updated the classification in the Statement of Cash Flows in several areas. The most relevant updates for us are the following: 1) payments made for premiums, fees paid to lenders and other related third party costs when debt is repaid early will each be classified as financing cash outflows (we have historically classified these types of cash payments as operating outflows), 2) contingent consideration payments made for acquisitions will be classified as either operating, investing, or financing cash outflows depending on the timing and nature of the payment, 3) cash receipts received due to the settlement of insurance claims will be classified as either operating or investing cash inflows, depending on the nature of the underlying loss, 4) proceeds received from trust owned life insurance policies will be classified as investing cash inflows (we have historically classified these types of cash receipts as operating inflows), and 5) distributions received from equity method investments will be classified as either operating or investing cash inflows, depending on the amount of cash received as compared to the amount of inception to date earnings recognized on the individual investment. We adopted the guidance retrospectively beginning in the first quarter of 2018. As a result of adopting this guidance, we reclassified approximately $0.9 million of life insurance proceeds received in the first nine months of 2017 from operating to investing inflows. In January 2016, the FASB issued new guidance that amended several elements surrounding the recognition and measurement of financial instruments. Most notably for our company, the new guidance requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation) to be measured at fair value with changes in fair value recognized in net income. For equity investments that do not have readily determinable prices, those investments may be recorded at cost less impairments, if any, plus or minus changes in observable prices for those investments. This new guidance requires us to adjust the value of our cost method investments to account for any observable price changes in those investments. Cost method investments had previously been recorded at cost, less any impairments. We adopted the new guidance in the first quarter of 2018 and the provision discussed above has been adopted on a prospective basis. There was no impact to our financial statements as a result of adopting this new guidance. In February 2018, the FASB issued guidance on accounting for certain tax effects that resulted from the Tax Cuts and Jobs Act (the Tax Act), that was enacted into law as of December 22, 2017. The guidance addresses the accounting for amounts that had previously been recorded in accumulated other comprehensive income on a net tax basis, using the tax rate that was in effect at the time. Due to the reduction in the tax rates under the Tax Act, certain tax effects were “stranded” in accumulated other comprehensive income. This new guidance allows these stranded tax effects to be reclassified from accumulated other comprehensive income to retained earnings. Other tax amounts stranded in accumulated other comprehensive income due to reasons other than the Tax Act may not be reclassified. As a result of adopting this guidance, in the first quarter of 2018, we reclassified approximately $24.8 million from accumulated other comprehensive income to retained earnings. We believe that reclassifying these amounts more accurately presents the balance of accumulated other comprehensive loss. In November 2016, the FASB issued guidance on the presentation of restricted cash which requires that on the statement of cash flows, amounts generally described as restricted cash or restricted cash equivalents should be included within the beginning and ending balances of cash and cash equivalents. We adopted this guidance in the first quarter of 2018 on a retrospective basis. As a result, restricted cash amounts that have historically been included in prepaid expenses and other current assets and investments and other assets on our Consolidated Balance Sheets are now included with cash and cash equivalents on the Consolidated Statements of Cash Flows. We did not have any restricted cash as of September 30, 2018, however, these restricted cash balances totaled $29.2 million as of December 31, 2017, $29.6 million as of September 30, 2017 and $28.2 million as of December 31, 2016. Our restricted cash was used to pay deferred compensation and TEGNA Supplemental Retirement Plan (SERP) obligations. The adoption of this standard did not change our balance sheet presentation. See Note 10 for additional information about our restricted cash balances. New accounting guidance not yet adopted: In February 2016, the FASB issued new guidance related to leases which will require lessees to recognize assets and liabilities on the balance sheet for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP—which requires only capital leases (renamed financing leases under the new guidance) to be recognized on the balance sheet—the new guidance will require both finance and operating leases to be recognized on the balance sheet. The new guidance will be effective for TEGNA beginning in the first quarter of 2019. In July 2018, the FASB issued an amendment giving companies the option to apply the requirements of the standard in the period of adoption (January 1, 2019), with no restatement of prior periods. A cumulative effect of applying the guidance would be recorded to the opening balance of retained earnings. We plan to utilize this adoption method. We have formed a cross-functional team to oversee the implementation of the new guidance. Our ongoing implementation efforts include the review of our lease contracts, review of service contracts for embedded leases, and the deployment of a new lease software solution. In conjunction with adopting the new guidance, we are evaluating any changes needed to our current lease accounting policies and business practices. Based on the work performed to date, we currently estimate that our total assets and liabilities as presented on our Condensed Consolidated Balance Sheet as of September 30, 2018, will increase by less than 5% as a result of adopting this standard. We do not expect the standard to have a material impact on our Consolidated Statements of Income. Additionally, we do not expect there to be a significant difference in our pattern of lease expense recognition under the new standard. In June 2016, the FASB issued new guidance related to the measurement of credit losses on financial instruments. The new guidance changes the way credit losses on accounts receivable are estimated. Under current GAAP, credit losses on accounts receivable are recognized once it is probable that such losses will occur. Under the new guidance, we will be required to estimate credit losses based on the expected amount of future collections which may result in earlier recognition of doubtful accounts. The new guidance is effective for public companies beginning in the first quarter of 2020 and will be adopted using a modified retrospective approach. We are currently evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures. Revenue recognition: Revenue is recognized upon the transfer of control of promised services to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Amounts received from customers in advance of providing services to our customers are recorded as deferred revenue. Our primary source of revenue is earned through the sale of advertising and marketing services (AMS). This revenue stream includes all sources of our traditional television and radio advertising, as well as digital revenues including Premion, our digital marketing services (DMS) business unit and other digital advertising across our platforms. Contracts within this revenue stream are short-term in nature (most often three months or less). Contracts generally consist of multiple deliverables, such as television commercials, or digital advertising solutions, that we have identified as individual performance obligations. Before performing under the contract we establish the transaction price with our customer based on the agreed upon rates for each performance obligation. There is no material variability in the transaction price during the term of the contract. Revenue is recognized as we deliver our performance obligations to our customers. For our AMS revenue stream, we measure our performance based on the airing of the individual television commercials or display of digital advertisements. This measure is most appropriate as it aligns our revenue recognition with the value we are providing to our customers. The price of each individual commercial and digital advertisement is negotiated with our customer and is determined based on multiple factors, including, but not limited to, the programming and day-part selected, supply of available inventory, our station’s viewership ratings and overall market conditions (e.g., timing of the year and strength of U.S. economy). Customers are billed monthly and payment is generally due 30 days after the date of invoice. Commission costs related to these contracts are expensed as incurred due to the short term nature of the contracts. We also earn subscription revenue from retransmission consent contracts with multichannel video programming distributors (e.g., cable and satellite providers) and over the top providers (companies that deliver video content to consumers over the Internet). Under these multi-year contracts, we have performance obligations to provide our customers with our stations’ signals, as well as our consent to retransmit those signals to their customers. Subscription revenue is recognized in accordance with the guidance for licensing intellectual property utilizing a usage based method. The amount of revenue earned is based on the number of subscribers to which our customers retransmit our signal, and the negotiated fee per subscriber included in our contract agreement. Our customers submit payments monthly, generally within 60-90 days after the month that service was provided. Our performance obligations are satisfied, and revenue is recognized, as we provide our consent for our customers to retransmit our signal. This measure toward satisfaction of our performance obligations and recognition of revenue is the most appropriate as it aligns our revenue recognition with the value that we are delivering to our customers through our retransmission consent. We also generate revenue from the sale of political advertising. Contracts within this revenue stream are short term in nature (typically weekly or monthly buys during political campaigns). Customers pre-pay these contracts and we therefore defer the associated revenue until the advertising has been delivered, at which time we have satisfied our performance obligations and recognize revenue. Commission costs related to these contracts are expensed as incurred due to the short term nature of the contracts. Our remaining revenue is comprised of various other services, primarily production services (for news content and commercials) and sublease rental income. Revenue is recognized as these various services are provided to our customers. In instances where we sell services from more than one revenue stream to the same customer at the same time, we recognize one contract and allocate the transaction price to each deliverable element (e.g. performance obligation) based on the relative fair value of each element. |
Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Revenue earned by categories in the third quarter and nine months of 2018 and 2017 are shown below (amounts in thousands):
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Goodwill and Other Intangible Assets (Tables) |
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Schedule of Intangible Assets and Goodwill | The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of September 30, 2018 and December 31, 2017 (in thousands):
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Investments and Other Assets (Tables) |
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Schedule of Other Assets | Our investments and other assets consisted of the following as of September 30, 2018, and December 31, 2017 (in thousands):
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Long-term debt | Our long-term debt is summarized below (in thousands):
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Retirement Plans (Tables) |
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Benefit costs | Our pension costs, which primarily include costs for the qualified TRP and the non-qualified SERP, are presented in the following table (in thousands):
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Supplemental Equity Information (Tables) |
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Schedule of Equity | The following table summarizes equity account activity for the nine months ended September 30, 2018 and 2017 (in thousands):
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Schedule of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the components of, and the changes in, Accumulated Other Comprehensive Loss (AOCL), net of tax and noncontrolling interests (in thousands):
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Reclassification out of Accumulated Other Comprehensive Income | Amounts reclassified out of AOCL are summarized below (in thousands):
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Our earnings per share (basic and diluted) are presented below (in thousands of dollars, except per share amounts):
|
Supplemental Cash Flow Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures | The following table provides additional information about cash flows related to interest and taxes (in thousands):
The following table provides a reconciliation of cash and cash equivalents, as reported on our Condensed Consolidated Balance Sheets, to cash, cash equivalents, and restricted cash, as reported on our Condensed Consolidated Statement of Cash Flows (in thousands):
|
Discontinued Operations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations | In our Condensed Consolidated Statement of Cash Flows, the cash flows from discontinued operations are not separately classified, but supplemental cash flow information for these business units is presented below. The depreciation, amortization, and significant cash investing items of the discontinued operations were as follows (in thousands):
(1) The nine months ended September 30, 2017 includes Cars.com through the spin-off date of May 31, 2017 and CareerBuilder’s operations through the date of sale on July 31, 2017. he following table presents the 2017 financial results of discontinued operations (in thousands):
(1) The quarter and nine months ended September 30, 2017 include CareerBuilder’s operations through the date of sale on July 31, 2017. Cars.com operations are included in the nine months ended September 30, 2017 through the date of spin-off on May 31, 2017. |
Accounting Policies - Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 538,976 | $ 464,264 | $ 1,565,146 | $ 1,412,703 |
Advertising & Marketing Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 264,852 | 277,817 | 829,638 | 843,175 |
Subscription | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 207,463 | 177,692 | 622,382 | 540,344 |
Political | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 60,410 | 3,783 | 93,725 | 13,387 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 6,251 | $ 4,972 | $ 19,401 | $ 15,797 |
Goodwill and Other Intangible Assets - Additional (Details) - KFMB - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Feb. 15, 2018 |
Sep. 30, 2018 |
|
Business Acquisition [Line Items] | ||
Estimated consideration transferred | $ 328.4 | |
Working capital adjustment | $ 2.5 | |
Finite-lived intangible assets, remaining amortization period | 10 years | |
Goodwill, acquired during period | $ 17.4 | |
Increase in goodwill | $ 0.3 | |
Licensing Agreements | ||
Business Acquisition [Line Items] | ||
Indefinite-lived intangible assets acquired | 192.2 | |
Retransmission And Network Affiliation Agreements | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible assets acquired | $ 91.4 |
Investments and Other Assets - Components of Investments and Other Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Investments, All Other Investments [Abstract] | ||
Cash value life insurance | $ 51,442 | $ 51,188 |
Equity method investments | 32,651 | 27,098 |
Cost method investments | 24,212 | 17,374 |
Deferred debt issuance cost | 10,029 | 6,048 |
Other long term assets | 37,883 | 35,458 |
Total | $ 156,217 | $ 137,166 |
Investments and Other Assets - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
May 14, 2018 |
Jul. 31, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Schedule of Equity Method Investments [Line Items] | |||||||
Equity method investments | $ 32,651 | $ 32,651 | $ 27,098 | ||||
Equity income (loss) in unconsolidated investments, net | 771 | $ 866 | $ 15,080 | $ (1,549) | |||
CareerBuilder | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Equity method investment retained after disposal, ownership interest (as a percent) | 17.00% | 17.00% | |||||
Equity method investment retained after disposal, fully diluted ownership interest (as a percent) | 10.00% | 10.00% | |||||
Equity method investments | $ 21,600 | $ 21,600 | |||||
Proceeds from dividends received | $ 9,900 | ||||||
Gain on sale of equity method investment | $ 16,800 | ||||||
Equity income (loss) in unconsolidated investments, net | $ 15,700 |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits that, if recognized, would impact effective tax rate | $ 9.7 | $ 10.7 |
Accrued interest and penalties payable related to unrecognized tax benefits | 1.4 | $ 1.6 |
Estimated decrease in gross unrecognized tax positions within the next 12 months, maximum | 3.9 | |
Reduction in tax expense from change in federal tax rate | $ 5.3 | |
Reduction of effective income tax rate | 5.00% |
Retirement Plans - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | |||||
Additional cash contribution to TRP for the remainder of the year | $ 0 | $ 0 | |||
Pension lump-sum payment charge | 1,200,000 | $ 6,300,000 | |||
Retirement Plans | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Net pension plan obligation | 130,900,000 | 130,900,000 | |||
Contributions to plan | 11,100,000 | $ 10,900,000 | |||
Pension lump-sum payment charge | 1,198,000 | $ 0 | 7,498,000 | 0 | |
SERP | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Contributions to plan | 32,900,000 | $ 7,200,000 | |||
Accrued Liabilities | Retirement Plans | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Net pension plan obligation | 8,400,000 | 8,400,000 | |||
KFMB | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Net pension plan obligation | $ 7,300,000 | $ 7,300,000 |
Retirement Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Company's pension costs | |||||
Pension payment timing related charges | $ 1,200 | $ 6,300 | |||
Retirement Plans | |||||
Company's pension costs | |||||
Service cost-benefits earned during the period | 3 | $ 218 | $ 9 | $ 654 | |
Interest cost on benefit obligation | 5,721 | 5,990 | 15,945 | 17,971 | |
Expected return on plan assets | (8,218) | (6,580) | (23,148) | (19,741) | |
Amortization of prior service cost | 42 | 159 | 126 | 476 | |
Amortization of actuarial loss | 1,271 | 2,081 | 3,814 | 6,242 | |
Pension payment timing related charges | 1,198 | 0 | 7,498 | 0 | |
Expense for company-sponsored retirement plans | $ 17 | $ 1,868 | $ 4,244 | $ 5,602 |
Supplemental Equity Information - Additional (Details) shares in Millions |
Mar. 01, 2018
shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance period to earn shares | 2 years |
Additional performance period to earn shares | 1 year |
Performance share units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Grants in period (in shares) | 0.6 |
Earnings Per Share - Narrative (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Anti-dilutive stock options outstanding excluded from diluted earnings per share (in shares) | 189,000 | 96,000 | 235,000 | 142,000 |
Fair Value Measurement - Narrative (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cost method investments | $ 24,212 | $ 17,374 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation investments | 14,600 | |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of total long-term debt | $ 3,060,000 | $ 3,160,000 |
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Condensed Cash Flow Statements, Captions [Line Items] | ||||
Continuing operations | $ 23,766 | $ 383,354 | $ 98,801 | $ 15,879 |
Discontinued operations | 0 | 0 | 0 | 61,041 |
Cash, cash equivalents and restricted cash | 23,766 | 412,974 | 128,041 | 105,117 |
Supplemental Cash Flow Information [Abstract] | ||||
Cash paid for income taxes, net of refunds | 51,325 | 104,422 | ||
Cash paid for interest | 121,616 | 133,752 | ||
Continuing Operations | Prepaid expenses and other current assets | ||||
Condensed Cash Flow Statements, Captions [Line Items] | ||||
Restricted cash equivalents | 0 | 0 | 29,240 | 0 |
Continuing Operations | Investments and other assets | ||||
Condensed Cash Flow Statements, Captions [Line Items] | ||||
Restricted cash equivalents | $ 0 | $ 29,620 | $ 0 | $ 28,197 |
Other Matters - Narrative (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |
---|---|---|---|---|
Apr. 30, 2017
USD ($)
station
phase
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
Mar. 23, 2018
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Number of stations assigned new channels | station | 13 | |||
Authorized reimbursement amount | $ 1,750,000,000.00 | |||
Authorized reimbursement amount, repacking fund | $ 1,000,000,000 | |||
Authorized reimbursement amount, repacking fund, full power, class a stations and multichannel distributors | $ 750,000,000 | |||
Repacking period | 39 months | |||
Number of repacking phases | phase | 10 | |||
Capital expenditures incurred | $ 7,900,000 | |||
Amount purchased | 6,600,000 | |||
FCC reimbursements received | $ 5,100,000 | |||
Amounts reimbursed as a percentage of total costs | 92.50% | |||
Severance charges | $ 7,300,000 |
Discontinued Operations - Financial Results (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
(Provision) benefit for income taxes | $ 4,300 | |||
Income from discontinued operations, net of tax | $ 4,325 | $ (10,803) | $ 4,325 | $ (233,261) |
Net loss attributable to noncontrolling interests from discontinued operations | 2,806 | 58,698 | ||
Digital | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 54,874 | 647,021 | ||
Operating expenses | 58,429 | 925,056 | ||
Loss from discontinued operations, before income taxes | (2,908) | (279,113) | ||
(Provision) benefit for income taxes | (7,895) | 45,852 | ||
Income from discontinued operations, net of tax | $ (10,803) | $ (233,261) |
Discontinued Operations - Cash Flows (Details) - Digital $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Depreciation | $ 19,569 |
Amortization of intangible assets | 40,300 |
Capital expenditures | $ 37,441 |
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