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TEGNA (TGNA) Announces Closing of $1B Senior Note Offering

Zacks Equity Research

TEGNA TGNA recently announced the successful completion of its $1 billion private placement eight-year senior note offering, which was announced on Jan 7, 2020 at an interest rate of 4.625%.                             

The company intends to use the net proceeds from the offering to repay the remaining $310 million principal amount of its 5.125% senior notes (due 2020), $650 million principal amount of its 6.375% senior notes (due 2023), and borrowings under its revolving credit agreement.

Meanwhile, the company expects to meet or exceed its 2019 guidance for revenues, adjusted EBITDA and free cash flow. Moreover, revenues are expected to be in the range of $2.29-$2.30 billion, while adjusted EBITDA is expected to be in the range of $703-$708 million.

Further, TEGNA provided an initial 2020 guidance. Subscription revenue growth percentage is expected to be in the mid-twenties, while free cash flow, as part of revenues, is expected to be 19-20%.
 

TEGNA Inc. Price and Consensus

TEGNA Inc. Price and Consensus

TEGNA Inc. price-consensus-chart | TEGNA Inc. Quote

Strong Portfolio Aids Subscriber Growth

TEGNA’s focus on strengthening its stations portfolio is aiding subscriber growth. Throughout 2019, the company acquired a number a number of stations, including 11 stations that were acquired on Sep 19, 2019.

The acquisitions add complementary markets to the company’s existing portfolio of top network affiliates, including four affiliates in election battleground states. TEGNA now owns or operates 62 television stations across 51 markets, reaching more than 38% of U.S. television households.

The company also renewed its station affiliation agreements with Fox Corporation FOXA for six TEGNA markets, including three stations acquired from Nexstar Media Group NXST, on Oct 28, 2019.

The new agreement includes full carriage of the FOX broadcast network, including NFL on FOX, the MLB World Series, WWE Friday Night SmackDown, The Masked Singer, 9-1-1 and Prodigal Son.

Moreover, successful retransmission negotiations in late fourth-quarter 2019 are expected to drive subscription revenues in 2020.

Additionally, stronger Advertising and Marketing revenues across TEGNA’s portfolio of stations are expected to boost the top line in 2020.

Notably, political advertising spending, which began earlier than expected, is likely to be a key catalyst. Per GroupM data, US political ad spending is expected to hit $9.8 billion or more in 2020 due to the presidential election.

Zacks Rank & Another Stock to Consider

Currently, TEGNA sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Another similar-ranked stock in the broader consumer discretionary sector is Activision ATVI .

The long-term earnings growth rate for Activision is currently pegged at 13.1%.

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