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Actionable news in GCI: GANNETT CO. Inc,

Gannett: Tuesday, October 20, 2015

The following excerpt is from the company's SEC filing.

TEGNA Inc. Reports a 28 percent Increase in 2015 Third Quarter Non-GAAP Earnings per Share from Continuing Operations and a 22 percent Increase in Adjusted EBITDA

Highlights for the quarter include the following:

Earnings from continuing operations of $0.37 per diluted share on a non-GAAP basis, a 28 percent year-over-year increase driven by strong Digital Segment results

Overall company revenue growth of 19 percent, also driven by strong Digital Segment results and despite the absence of significant political spending in the same quarter last year

Digital Segment revenue increased 72 p ercent due to the acquisition of and substantially better results at Cars.com

Adjusted EBITDA totaled $267 million, a 22 percent year-over-year increase

McLEAN, VA - TEGNA Inc. (NYSE: TGNA) today reported non-GAAP earnings per diluted share from continuing operations of $0.37 for the third quarter of 2015 compared to $0.29 for the third quarter of 2014. The 27.6 percent increase was driven by strong results in the Digital Segment. Digital Segment results reflect the acquisition of and substantially higher organic growth at Cars.com. Solid Media Segment results were impacted by the absence of $40 million of political spending that benefited the third quarter in 2014.

Gracia Martore, president and chief executive officer, said, “We are pleased that TEGNA has capped off its first quarter following the close of our separation on such a strong footing, with company-wide revenue up nearly 20 percent. TEGNA Media revenue continued its strong trajectory despite the absence of approximately $40 million in political spending in the third quarter of 2014 - which speaks to strong growth in retransmission revenue, online revenue and core advertising during the quarter. In TEGNA Digital, revenue increased substantially to more than $350 million - an increase of 72 percent - as we continue to generate strong organic growth at Cars.com while shifting CareerBuilder’s focus toward higher-margin software as a service solutions. We expect that the momentum we’ve seen this past quarter puts us in a very strong position as we continue to execute TEGNA’s more focused strategy going forward. Beyond this, we expect to see even greater impact as the nation’s political races begin to heat up into 2016.”

The results for the third quarter of 2015 and the year-to-date periods include results for Cars.com, which we acquired on October 1, 2014. The prior year periods do not include results for Cars.com, impacting the year-over-year comparisons.

On the first day of our fiscal third quarter, we completed the spin-off of our publishing businesses. The publishing businesses are now reflected as Discontinued Operations in our Statements of Income.

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On October 2, 2015, we announced the successful completion of the sale of our corporate headquarters for $270 million to Tamares, a private investment group with holdings in the United States and Europe. In addition, we completed our CBS affiliate and DISH renewals. The outcome of each negotiation was consistent with the long-term plan we presented at our investor day in June of this year.

CONTINUING OPERATIONS

Company-wide operating revenues in the third quarter totaled $807.1 million, an increase of 18.5 percent compared to $681.0 million in the third quarter of 2015. Revenue growth of 71.6 percent in the Digital Segment primarily reflected the acquisition of and strong organic growth at Cars.com. Media Segment revenues were 2.4 percent lower as double-digit growth in retransmission revenue and digital revenue was offset by the absence of political spending that benefited the third quarter in 2014.

Net income from continuing operations attributable to TEGNA in the third quarter of 2015 was $90.6 million which includes a $6.0 million special tax credit. On a non-GAAP basis, excluding the tax credit, net income from continuing operations was $84.6 million, an increase of 24.1 percent compared to the third quarter in 2014.

Operating income totaled $216.4 million and was 17.6 percent higher than $184.0 million in the third quarter last year due primarily to the substantial growth in profitability in the Digital Segment. On a pro forma basis, non-GAAP operating income was up 7.4 percent. Adjusted EBITDA (a non-GAAP term detailed in Table 4) totaled $266.6 million, an increase of 22.2 percent. On a pro forma basis, the increase was 4.5 percent. The Adjusted EBITDA margin in the third quarter was 33.0 percent, an increase of 100 basis points compared to the third quarter last year.

Special items in the third quarter of 2015 primarily included a spin-related tax credit of $6.0 million ($0.02 per share). Special items in the third quarter of 2014 included $20.5 million ($0.07 per share) of non-operating expenses reflecting primarily spin and transaction-related costs.

Operating expenses were $590.7 million in the quarter compared to $497.0 million in the third quarter of 2014, an increase of 18.9 percent primarily reflecting the acquisition of Cars.com. Pro forma non-GAAP operating expenses were 1.8 percent lower compared to the third quarter in 2014 reflecting lower corporate expenses and a decline in Digital Segment expenses.

Corporate expenses for the third quarter of 2015 were $12.9 million compared to $18.2 million in 2014. The decrease was driven by the resizing of the company’s footprint. In addition, third quarter 2015 corporate expenses included the benefit of $1.8 million related to the elimination of depreciation resulting from the sale of the company’s McLean, VA headquarters. As previously disclosed, the annual run rate for corporate expenses is expected to be in the range of $55 million to $60 million by mid-2016.

TEGNA MEDIA

Broadcasting Segment revenues totaled $406.4 million compared to $416.5 million in the third quarter of 2014. The 2.4 percent decline year-over-year reflects the absence of $33.9 million of net political spending which more than offset significant increases in retransmission revenue and online revenue as well as higher core advertising.

The following table summarizes the year-over-year changes in select Broadcasting Segment revenue categories.

Broadcasting Revenue Detail

(Dollars in thousands)

Thirteen

weeks ended

Sep. 27, 2015

Percentage change

from thirteen weeks

ended Sep. 28, 2014

Core (Local & National)

254,243

Political

Retransmission (a)

109,012

29,415

406,445

(a) Reverse compensation to networks is included as part of programming costs and therefore not included in this line.

Core advertising was up just over 1 percent in the quarter. Retransmission revenues totaled $109.0 million and were 18.6 percent higher compared to the third quarter in 2014 while digital revenues in the Media Segment were up 13.1 percent reflecting continued growth in digital marketing services revenue.

Media Segment operating expenses were $247.9 million, an increase of 3.9 percent compared to the third quarter of 2014 due, in part, to higher reverse network compensation. Operating income totaled $158.6 million while Adjusted EBITDA was $177.0 million.

Based on current trends, we expect to see growth in core advertising in the fourth quarter. However, the fourth quarter of 2014 benefited from a record $92 million of politically related advertising. As a result, we expect the percentage decline in total television revenues for the fourth quarter of 2015 to be in the mid to high-single digits due to the challenging year-over-year comparison.

DIGITAL

Digital Segment operating revenues of $351.1 million were significantly higher in the third quarter, up 71.6 percent driven by the acquisition of and continued strong organic growth at Cars.com. On a pro forma basis, Digital Segment revenues grew 5.3 percent reflecting a mid-twenties percent increase in revenue at Cars.com.

Revenue growth at Cars.com reflects continued growth across all sales channels. Direct sales, on a pro forma basis, were up 11.4 percent reflecting an increase in revenue per dealer driven by new product sales. National revenue, primarily display advertising sold to auto manufacturers, was 13.8 percent higher due, in part, to strong growth in mobile traffic. Affiliate revenue...


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