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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-Q
_______________________
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-6961
___________________________
TEGNA INC.
(Exact name of registrant as specified in its charter)
___________________________
Delaware
16-0442930
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   8350 Broad Street, Suite 2000, Tysons, Virginia 22102-5151
(Address of principal executive offices) (Zip Code)
(703) 873-6600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock TGNA New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No

The total number of shares of the registrant’s Common Stock, $1 par value, outstanding as of October 31, 2022 was 223,293,327.



INDEX TO TEGNA INC.
September 30, 2022 FORM 10-Q
 
Item No.   Page
PART I. FINANCIAL INFORMATION
1. Financial Statements
3
5
6
7
8
2.
3.
4.
PART II. OTHER INFORMATION
1.
1A.
2.
3.
4.
5.
6.
2


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

TEGNA Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands of dollars (Unaudited)
Sept. 30, 2022 Dec. 31, 2021
ASSETS
Current assets
Cash and cash equivalents $ 376,641  $ 56,989 
Accounts receivable, net of allowances of $5,154 and $4,371, respectively
589,510  642,280 
Other receivables 9,447  15,496 
Syndicated programming rights 55,759  53,100 
Prepaid expenses and other current assets 39,694  19,724 
Total current assets 1,071,051  787,589 
Property and equipment
Cost 1,055,616  1,053,851 
Less accumulated depreciation (599,102) (586,656)
Net property and equipment 456,514  467,195 
Intangible and other assets
Goodwill 2,981,587  2,981,587 
Indefinite-lived and amortizable intangible assets, less accumulated amortization of $333,157 and $298,593, respectively
2,396,536  2,441,488 
Right-of-use assets for operating leases 81,385  87,279 
Investments and other assets 137,059  152,508 
Total intangible and other assets 5,596,567  5,662,862 
Total assets $ 7,124,132  $ 6,917,646 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3


TEGNA Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands of dollars, except par value and share amounts (Unaudited)
Sept. 30, 2022 Dec. 31, 2021
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current liabilities
Accounts payable $ 83,813  $ 72,996 
Accrued liabilities
   Compensation 53,736  55,179 
   Interest 12,441  45,905 
   Contracts payable for programming rights 131,454  98,534 
   Other 109,598  91,098 
Income taxes payable 3,989  11,420 
Total current liabilities 395,031  375,132 
Noncurrent liabilities
Deferred income tax liability 555,455  548,374 
Long-term debt 3,068,446  3,231,970 
Pension liabilities 53,073  58,063 
Operating lease liabilities 82,387  88,970 
Other noncurrent liabilities 74,393  79,102 
Total noncurrent liabilities 3,833,754  4,006,479 
Total liabilities 4,228,785  4,381,611 
Commitments and contingent liabilities (see Note 9)
Redeemable noncontrolling interest (see Note 1) 17,092  16,129 
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 27,941  27,941 
Retained earnings 7,704,358  7,459,380 
Accumulated other comprehensive loss (110,262) (97,216)
Less treasury stock at cost, 101,191,494 shares and 103,012,455 shares, respectively
(5,068,201) (5,194,618)
Total equity 2,878,255  2,519,906 
Total liabilities, redeemable noncontrolling interest and equity $ 7,124,132  $ 6,917,646 
The accompanying notes are an integral part of these condensed consolidated financial statements.


4


TEGNA Inc.
CONSOLIDATED STATEMENTS OF INCOME
Unaudited, in thousands of dollars, except per share amounts
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 2022 2021
Revenues $ 803,111  $ 756,487  $ 2,362,115  $ 2,216,446 
Operating expenses:
Cost of revenues1
428,891  399,751  1,260,576  1,191,561 
Business units - Selling, general and administrative expenses
98,582  100,425  300,136  286,700 
Corporate - General and administrative expenses
13,367  11,891  48,299  51,944 
Depreciation
15,219  16,792  46,058  48,526 
Amortization of intangible assets
14,953  15,774  44,952  47,307 
Spectrum repacking reimbursements and other, net
(159) 504  (322) (2,394)
Total 570,853  545,137  1,699,699  1,623,644 
Operating income 232,258  211,350  662,416  592,802 
Non-operating (expense) income:
Equity loss in unconsolidated investments, net (178) (1,790) (4,225) (5,716)
Interest expense
(43,406) (46,477) (129,976) (139,571)
Other non-operating items, net 1,310  2,486  16,764  4,340 
Total (42,274) (45,781) (117,437) (140,947)
Income before income taxes 189,984  165,569  544,979  451,855 
Provision for income taxes 43,827  36,870  132,595  103,470 
Net Income
146,157  128,699  412,384  348,385 
Net income attributable to redeemable noncontrolling interest (92) (419) (516) (861)
Net income attributable to TEGNA Inc. $ 146,065  $ 128,280  $ 411,868  $ 347,524 
Earnings per share:
Basic $ 0.65  $ 0.58  $ 1.84  $ 1.57 
Diluted $ 0.65  $ 0.58  $ 1.83  $ 1.56 
Weighted average number of common shares outstanding:
Basic shares 223,968  221,805  223,456  221,314 
Diluted shares 224,921  222,799  224,221  222,172 
1 Cost of revenues exclude charges for depreciation and amortization expense, which are shown separately above.
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


TEGNA Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited, in thousands of dollars
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 2022 2021
Net income $ 146,157  $ 128,699  $ 412,384  $ 348,385 
Other comprehensive income, before tax:
Foreign currency translation adjustments —  (53) 142  698 
Pension and other post retirement benefit items
Recognition of previously deferred post-retirement benefit plan costs 1,031  1,290  3,092  3,869 
Pension payment timing related charge —  946  —  946 
Pension and other postretirement benefit items 1,031  2,236  3,092  4,815 
Unrealized gain on available-for-sale investment during the period —  54,354  —  54,354 
Realized gain on available-for-sale investment during the period —  —  (20,800) — 
Other comprehensive income (loss), before tax 1,031  56,537  (17,566) 59,867 
Income tax effect related to components of other comprehensive income (265) (14,626) 4,520  (15,484)
Other comprehensive income (loss), net of tax 766  41,911  (13,046) 44,383 
Comprehensive income 146,923  170,610  399,338  392,768 
Comprehensive income attributable to redeemable noncontrolling interest (92) (419) (516) (861)
Comprehensive income attributable to TEGNA Inc. $ 146,831  $ 170,191  $ 398,822  $ 391,907 
The accompanying notes are an integral part of these condensed consolidated financial statements.

6


TEGNA Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited, in thousands of dollars


Nine months ended Sept. 30,
2022 2021
Cash flows from operating activities:
Net income $ 412,384  $ 348,385 
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization 91,010  95,833 
Stock-based compensation 23,625  23,137 
     Company stock 401(k) contribution 14,343  13,575 
Gains on assets, net (18,308) — 
Equity losses from unconsolidated investments, net 4,225  5,716 
Pension contributions including income, net of expense (1,697) (14,821)
Change in other assets and liabilities, net of acquisitions:
Decrease (increase) in trade receivables 51,986  (49,687)
Increase (decrease) in accounts payable 10,817  (11,716)
Decrease in interest and taxes payable, net (23,104) (76,372)
Increase in deferred revenue 22,181  1,784 
Change in other assets and liabilities, net 13,243  6,770 
Net cash flow from operating activities 600,705  342,604 
Cash flows from investing activities:
Purchase of property and equipment (35,527) (39,418)
Reimbursements from spectrum repacking 322  5,030 
Payments for acquisitions of businesses —  (13,335)
Purchases of investments (4,715) (1,023)
Proceeds from investments 3,451  3,094 
Proceeds from sale of assets 407  296 
Net cash flow used for investing activities (36,062) (45,356)
Cash flows from financing activities:
Payments under revolving credit facilities, net (166,000) (219,000)
Dividends paid (63,533) (57,435)
 Other, net (15,458) (10,567)
Net cash flow used for financing activities (244,991) (287,002)
Increase in cash 319,652  10,246 
Balance of cash, beginning of period 56,989  40,968 
Balance of cash, end of period $ 376,641  $ 51,214 
Supplemental cash flow information:
Cash paid for income taxes, net of refunds $ 124,206  $ 146,600 
Cash paid for interest $ 158,293  $ 165,824 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7


TEGNA Inc.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
Unaudited, in thousands of dollars, except per share data
Quarters ended: Redeemable noncontrolling interest Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total Equity
Balance at June 30, 2022 $ 16,765  $ 324,419  $ 27,941  $ 7,583,436  $ (111,028) $ (5,083,045) $ 2,741,723 
Net income 92  —  —  146,065  —  —  146,065 
Other comprehensive income, net of tax —  —  —  —  766  —  766 
Total comprehensive income 146,831 
Dividends declared: $0.095 per share
—  —  —  (21,203) —  —  (21,203)
Company stock 401(k) contribution —  —  (6,328) (3,486) —  14,229  4,415 
Stock-based awards activity —  —  (397) (219) —  615  (1)
Stock-based compensation —  —  6,416  —  —  —  6,416 
Adjustment of redeemable noncontrolling interest to redemption value 235  —  —  (235) —  —  (235)
Other activity —  —  309  —  —  —  309 
Balance at Sept. 30, 2022 $ 17,092  $ 324,419  $ 27,941  $ 7,704,358  $ (110,262) $ (5,068,201) $ 2,878,255 
Redeemable noncontrolling interest Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total Equity
Balance at June 30, 2021 $ 15,523  $ 324,419  $ 27,941  $ 7,249,257  $ (118,604) $ (5,224,057) $ 2,258,956 
Net income 419  —  —  128,280  —  —  128,280 
Other comprehensive income, net of tax —  —  —  —  41,911  —  41,911 
Total comprehensive income 170,191 
Dividends declared: $0.095 per share
—  —  —  (21,008) —  —  (21,008)
Company stock 401(k) contribution —  —  (6,763) (5,219) —  16,173  4,191 
Stock-based awards activity —  —  (545) —  —  498  (47)
Stock-based compensation —  —  6,965  —  —  —  6,965 
Adjustment of redeemable noncontrolling interest to redemption value (116) —  —  116  —  —  116 
Other activity —  —  343  —  —  —  343 
Balance at Sept. 30, 2021 $ 15,826  $ 324,419  $ 27,941  $ 7,351,426  $ (76,693) $ (5,207,386) $ 2,419,707 
8


TEGNA Inc.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NON-CONTROLLING INTEREST
Unaudited, in thousands of dollars, except per share data
Nine months ended:
Redeemable noncontrolling interest Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total
Balance at Dec. 31, 2021 $ 16,129  $ 324,419  $ 27,941  $ 7,459,380  $ (97,216) $ (5,194,618) $ 2,519,906 
Net income 516  —  —  411,868  —  —  411,868 
Other comprehensive income, net of tax —  —  —  —  (13,046) —  (13,046)
Total comprehensive income 398,822 
Dividends declared: $0.285 per share
—  —  —  (63,533) —  —  (63,533)
Company stock 401(k) contribution —  —  (12,655) (19,571) —  46,569  14,343 
Stock-based awards activity —  —  (11,967) (83,339) —  79,848  (15,458)
Stock-based compensation —  —  23,625  —  —  —  23,625 
Adjustment of redeemable noncontrolling interest to redemption value 447  —  —  (447) —  —  (447)
Other activity —  —  997  —  —  —  997 
Balance at Sept. 30, 2022 $ 17,092  $ 324,419  $ 27,941  $ 7,704,358  $ (110,262) $ (5,068,201) $ 2,878,255 
Redeemable noncontrolling interest Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury
stock
Total
Balance at Dec. 31, 2020 $ 14,933  $ 324,419  $ 113,267  $ 7,075,640  $ (121,076) $ (5,334,155) $ 2,058,095 
Net income 861  —  —  347,524  —  —  347,524 
Other comprehensive income, net of tax —  —  —  —  44,383  —  44,383 
Total comprehensive income 391,907 
Dividends declared: $0.26 per share
—  —  —  (57,435) —  —  (57,435)
Company stock 401(k) contribution —  —  (24,437) (14,271) —  52,283  13,575 
Stock-based awards activity —  —  (85,054) —  —  74,486  (10,568)
Stock-based compensation —  —  23,137  —  —  —  23,137 
Adjustment of redeemable noncontrolling interest to redemption value 32  —  —  (32) —  —  (32)
Other activity —  —  1,028  —  —  —  1,028 
Balance at Sept. 30, 2021 $ 15,826  $ 324,419  $ 27,941  $ 7,351,426  $ (76,693) $ (5,207,386) $ 2,419,707 
The accompanying notes are an integral part of these condensed consolidated financial statements.

9


TEGNA Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – Basis of presentation, merger agreement and 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 statement of the 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, 2021.

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. We use the best information available in developing significant estimates inherent in our financial statements. Actual results could differ from these estimates, and these differences resulting from changes in facts and circumstances could be material. Significant estimates include, but are not limited to, evaluation of goodwill and other intangible assets for impairment, 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. 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 loss in unconsolidated investments, net” in the Consolidated Statements of Income.

We operate one operating and reportable segment, which primarily consists of our 64 television stations and two radio stations operating in 51 markets, providing 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.

Merger Agreement: On February 22, 2022, we entered into an Agreement and Plan of Merger (as amended, the Merger Agreement), with Teton Parent Corp., a newly formed Delaware corporation (Parent), Teton Merger Corp., a newly formed Delaware corporation and an indirect wholly owned subsidiary of Parent (Merger Sub), and solely for purposes of certain provisions specified therein, other subsidiaries of Parent, certain affiliates of Standard General L.P., a Delaware limited partnership (Standard General) and CMG Media Corporation, a Delaware corporation (CMG), and certain of its subsidiaries. Parent, Merger Sub, the other subsidiaries of Parent, those affiliates of Standard General, CMG and those subsidiaries of CMG, are collectively, referred to as the “Parent Restructuring Entities.”

The Merger Agreement provides, among other things and subject to the terms and conditions set forth therein, that Merger Sub will be merged with and into TEGNA (the Merger), with TEGNA continuing as the surviving corporation and as an indirect wholly owned subsidiary of Parent. The Merger Agreement provides that each share of common stock, par value $1.00 per share, TEGNA (the Common Stock) outstanding immediately prior to the effective time of the Merger (the Effective Time), other than certain excluded shares, will at the Effective Time automatically be converted into the right to receive (i) $24.00 per share of Common Stock in cash, without interest, plus (ii) additional amounts in cash, without interest, if the Merger does not close within a certain period of time after the date of the Merger Agreement. TEGNA shareholders will receive additional cash consideration in the form of a “ticking fee” of $0.00167 per share per day (or $0.05 per month) if the closing occurs between the 9- and 12-month anniversary of signing, increasing to $0.0025 per share per day (or $0.075 per month) if the closing occurs between the 12- and 13-month anniversary of signing, $0.00333 per share per day (or $0.10 per month) if the closing occurs between the 13- and 14-month anniversary of signing, and $0.00417 per share per day (or $0.125 per month) if the closing occurs on or after the 14-month anniversary of signing.

The Merger Agreement contains certain termination rights and provides that, upon termination of the Merger Agreement under certain specified circumstances, TEGNA will be required to pay Parent a termination fee of $163.0 million, and Parent will be required to pay TEGNA a termination fee of either $136.0 million or $272.0 million.

TEGNA has made customary representations, warranties and covenants in the Merger Agreement. If the Merger is consummated, the Common Stock will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934.

On March 10, 2022, TEGNA, Parent, Merger Sub, and, solely for purposes of certain provisions specified therein, the other Parent Restructuring Entities, entered into an amendment to the Merger Agreement (the Amendment). The Amendment provides, among other things and subject to the terms and conditions set forth therein, that certain regulatory efforts covenants will apply with respect to certain station transfers from Parent or an affiliate of Parent to CMG or an affiliate of CMG that are contemplated to be consummated as of immediately following the Effective Time.


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On May 17, 2022 the stockholders of TEGNA voted to adopt the Merger Agreement.

The Merger is subject to the satisfaction of customary closing conditions, including receipt of applicable regulatory approvals, and is still expected to close in the second half of 2022.

Accounting guidance adopted in 2022: We did not adopt any new accounting guidance in 2022 that had a material impact on our consolidated financial statements or disclosures.

New accounting guidance not yet adopted: There is currently no pending accounting guidance that we expect to have a material impact on our consolidated financial statements or disclosures.

Trade receivables and allowances for doubtful accounts: Trade receivables are recorded at invoiced amounts and generally do not bear interest. The allowance for doubtful accounts reflects our estimate of credit exposure, determined principally on the basis of our collection experience, aging of our receivables and any specific reserves needed for certain customers based on their credit risk. Our allowance also takes into account expected future trends which may impact our customers’ ability to pay, such as economic growth (or declines), unemployment and demand for our products and services. We monitor the credit quality of our customers and their ability to pay through the use of analytics and communication with individual customers. As of September 30, 2022, our allowance for doubtful accounts was $5.2 million as compared to $4.4 million as of December 31, 2021.

Redeemable Noncontrolling interest: Our Premion business operates an advertising network for over-the-top (OTT) streaming and connected television platforms. In March 2020, we sold a minority interest in Premion to an affiliate of Gray Television (Gray) and entered into a 3 year commercial reselling agreement with the affiliate. Gray’s investment allows it to sell its interest to Premion if there is a change in control of TEGNA or if the existing commercial agreement terminates. Since redemption of the minority ownership interest is outside our control, Gray’s equity interest is presented outside of the Equity section on the Condensed Consolidated Balance Sheet in the caption “Redeemable noncontrolling interest.”

Treasury Stock: We account for treasury stock under the cost method. When treasury stock is re-issued at a price higher than its cost, the difference is recorded as a component of additional paid-in-capital (APIC) in our Condensed Consolidated Balance Sheets. When treasury stock is re-issued at a price lower than its cost, the difference is recorded as a component of APIC to the extent that there are previously recorded gains to offset the losses. If there are no treasury stock gains in APIC, the losses upon re-issuance of treasury stock are recorded as a reduction of retained earnings in our Condensed Consolidated Balance Sheets.

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.

The primary sources of our revenues are: 1) subscription revenues, reflecting fees paid by satellite, cable, OTT (companies that deliver video content to consumers over the Internet) and telecommunications providers to carry our television signals on their systems; 2) advertising & marketing services revenues, which include local and national non-political television advertising, digital marketing services (including Premion), advertising on the stations’ websites, tablet and mobile products, and OTT apps; 3) political advertising revenues, which are driven by even-year election cycles at the local and national level (e.g. 2022, 2020 etc.) and particularly in the second half of those years; and 4) other services, such as production of programming, tower rentals and distribution of our local news content.

Revenue earned by these sources in the third quarter and first nine months of 2022 and 2021 are shown below (amounts in thousands):
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 2022 2021
Subscription $ 377,368  $ 368,672  $ 1,158,101  $ 1,130,490 
Advertising & Marketing Services 320,764  364,234  1,010,490  1,027,957 
Political 92,904  15,010  161,727  34,019 
Other 12,075  8,571  31,797  23,980 
Total revenues $ 803,111  $ 756,487  $ 2,362,115  $ 2,216,446 

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NOTE 2 – Goodwill and other intangible assets
The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of September 30, 2022 and December 31, 2021 (in thousands):
Sept. 30, 2022 Dec. 31, 2021
Gross Accumulated Amortization Gross Accumulated Amortization
Goodwill $ 2,981,587  $ —  $ 2,981,587  $ — 
Indefinite-lived intangibles:
Television and radio station FCC broadcast licenses 2,123,898  —  2,123,898  — 
Amortizable intangible assets:
Retransmission agreements 224,827  (178,149) 235,215  (168,439)
Network affiliation agreements 309,503  (115,547) 309,503  (97,195)
Other 71,465  (39,461) 71,465  (32,959)
Total indefinite-lived and amortizable intangible assets $ 2,729,693  $ (333,157) $ 2,740,081  $ (298,593)

Our retransmission agreements and network affiliation agreements are amortized on a straight-line basis over their estimated useful lives. Other intangibles primarily include distribution agreements from our multicast networks acquisition, which are also amortized on a straight-line basis over their useful lives. In the third quarter of 2022, gross retransmission agreement intangible assets and associated accumulated amortization decreased by $10.4 million due to certain retransmission intangible assets reaching the end of their useful lives.

NOTE 3 – Investments and other assets

Our investments and other assets consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):
Sept. 30, 2022 Dec. 31, 2021
Cash value insurance $ 48,487  $ 53,189 
Available-for-sale debt security —  23,800 
Equity method investments 16,973  21,986 
Other equity investments 20,158  20,331 
Deferred debt issuance costs 3,133  5,805 
Long-term contract assets 18,981  — 
Other long-term assets 29,327  27,397 
Total $ 137,059  $ 152,508 

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 items, net” within our Consolidated Statement of Income and were not material for all periods presented.

Available-for-sale debt security: We previously held a debt security investment issued by MadHive, Inc. (MadHive), that we classified as an available-for-sale investment. Available-for-sale debt securities are required to be carried at their fair value, with unrealized gains and losses (net of income taxes) that are considered temporary in nature recorded in “Accumulated other comprehensive loss” on the Condensed Consolidated Balance Sheet. In the first quarter of 2022, we amended the terms of the debt security, which became effective on January 3, 2022, in parallel with an amendment and extension of our commercial agreements with MadHive. The amendments modified several items, including the conversion rights as well as the maturity date of the note. In exchange for the convertible debt modifications, we received favorable terms in our renewed commercial agreements with MadHive. As a result of these amendments, in the first quarter of 2022 we recognized a previously unrecognized gain of $20.8 million. The gain was recorded in “Other non-operating items, net” within our Consolidated Statement of Income. The debt matured in June 2022 at which time the principal balance of $3.0 million plus accrued interest was paid to
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us. The $3.0 million principal balance was classified as “Proceeds from investments” within our Consolidated Statement of Cash Flow”. See Note 9 for additional information regarding our related party transactions with MadHive.

Other equity investments: Represents investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control or do not exert significant influence. These investments are recorded at cost less impairments, if any, plus or minus changes in observable prices for those investments. In the first quarter of 2022, we recorded a $2.5 million impairment charge, in “Other non-operating items, net” within our Consolidated Statement of Income, due to the decline in the fair value of one of our investments.

Deferred debt issuance costs: These costs consist of amounts paid to lenders related to our revolving credit facility. Debt issuance costs paid for our term debt and unsecured notes are accounted for as a reduction in the debt obligation.

Long-term contract assets: These amounts primarily consist of an asset related to a long-term services agreement for IT security and an asset representing the long-term portion of a contract asset that was recognized as a result of the $20.8 million gain discussed above related to favorable rates obtained on recent commercial agreements with Madhive. This gain resulted in a contract asset which was recognized in January 2022 and is being amortized over two years (through December 2023). See Note 9 for additional details.
NOTE 4 – Long-term debt
Our long-term debt is summarized below (in thousands):
Sept. 30, 2022 Dec. 31, 2021
Borrowings under revolving credit agreement expiring August 2024 $ —  $ 166,000 
Unsecured notes bearing fixed rate interest at 4.75% due March 2026
550,000  550,000 
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 
Unsecured notes bearing fixed rate interest at 4.625% due March 2028
1,000,000  1,000,000 
Unsecured notes bearing fixed rate interest at 5.00% due September 2029
1,100,000  1,100,000 
Total principal long-term debt 3,090,000  3,256,000 
Debt issuance costs (28,072) (31,378)
Unamortized premiums 6,518  7,348 
Total long-term debt $ 3,068,446  $ 3,231,970 
As of September 30, 2022, cash and cash equivalents totaled $376.6 million and we had unused borrowing capacity of $1.49 billion under our $1.51 billion revolving credit facility, which expires in August 2024. We were in compliance with all covenants, including the leverage ratio (our one financial covenant) contained in our debt agreements and revolving credit facility. We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future.

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NOTE 5 – Retirement plans

We have various defined benefit retirement plans. Our principal defined benefit pension plan is the TEGNA Retirement Plan (TRP). The disclosure table below primarily includes the pension expenses of the TRP and the TEGNA Supplemental Retirement Plan (SERP). The total net pension obligations, including both current and non-current liabilities, as of September 30, 2022, were $59.1 million, of which $6.0 million is recorded as a current obligation within accrued liabilities on the Condensed Consolidated Balance Sheet.

Pension costs (income), which primarily include costs for the qualified TRP and the non-qualified SERP, are presented in the following table (in thousands):
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 2022 2021
Service cost-benefits earned during the period $ —  $ $ —  $
Interest cost on benefit obligation 4,270  3,969  12,811  11,907 
Expected return on plan assets (4,876) (8,670) (14,627) (26,010)
Amortization of prior service (credit) cost (119) 23  (361) 68 
Amortization of actuarial loss 1,150  1,223  3,452  3,669 
Pension payment timing related charge —  946  —  946 
Expense (income) from company-sponsored retirement plans $ 425  $ (2,508) $ 1,275  $ (9,418)

Benefits no longer accrue for substantially all TRP and SERP participants as a result of amendments to the plans in past years, and as such we no longer incur a significant amount of the service cost component of pension expense. All other components of our pension expense presented above are included within the “Other non-operating items, net” line item of the Consolidated Statements of Income.

During the nine months ended September 30, 2022 and 2021, we did not make any cash contributions to the TRP. We made benefit payments to participants of the SERP of $2.9 million and $5.3 million during the nine months ended September 30, 2022 and 2021, respectively. Based on actuarial projections and funding levels, we do not expect to make any cash payments to the TRP in 2022 (as none are required based on our current funding levels). We expect to make additional cash payments of $2.5 million to our SERP participants during the remainder of 2022.
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NOTE 6 – Accumulated other comprehensive loss

The following table summarizes the components of, and the changes in, Accumulated Other Comprehensive Loss (AOCL), net of tax (in thousands):
Retirement Plans Foreign Currency Translation Available-For-Sale Investment Total
Quarters ended:
Balance at June 30, 2022 $ (111,560) $ 532  $ —  $ (111,028)
Amounts reclassified from AOCL 766  —  —  766 
Total other comprehensive income 766  —  —  766 
Balance at Sept. 30, 2022 $ (110,794) $ 532  $ —  $ (110,262)
Balance at June 30, 2021 $ (119,065) $ 461  $ —  $ (118,604)
Other comprehensive loss before reclassifications —  (39) 40,293  40,254 
Amounts reclassified from AOCL 1,657  —  —  1,657 
Total other comprehensive income 1,657  (39) 40,293  41,911 
Balance at Sept. 30, 2021 $ (117,408) $ 422  $ 40,293  $ (76,693)
Retirement Plans Foreign Currency Translation Available-For-Sale Investment Total
Nine months ended:
Balance at Dec. 31, 2021 $ (113,090) $ 455  $ 15,419  $ (97,216)
Other comprehensive income before reclassifications —  77  —  77 
Amounts reclassified from AOCL 2,296  —  (15,419) (13,123)
Total other comprehensive income (loss) 2,296  77  (15,419) (13,046)
Balance at Sept. 30, 2022 $ (110,794) $ 532  $ —  $ (110,262)
Balance at Dec. 31, 2020 $ (120,979) $ (97) $ —  $ (121,076)
Other comprehensive income before reclassifications —  519  40,293  40,812 
Amounts reclassified from AOCL 3,571  —  —  3,571 
Total other comprehensive income 3,571  519  40,293  44,383 
Balance at Sept. 30, 2021 $ (117,408) $ 422  $ 40,293  $ (76,693)

Reclassifications from AOCL to the Consolidated Statements of Income are comprised of recognition of a realized gain on an available-for-sale investment as well as pension and other post-retirement components. Pension and other post retirement reclassifications are related to the amortizations of prior service costs and actuarial losses. Amounts reclassified out of AOCL are summarized below (in thousands):
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 2022 2021
Amortization of prior service credit, net $ (106) $ (120) $ (354) $ (361)
Amortization of actuarial loss 1,137  1,410  3,446  4,230 
Pension payment timing related charge —  946  —  946 
Realized gain on available-for-sale investment —  —  (20,800) — 
Total reclassifications, before tax 1,031  2,236  (17,708) 4,815 
Income tax effect (265) (579) 4,585  (1,244)
Total reclassifications, net of tax $ 766  $ 1,657  $ (13,123) $ 3,571 

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NOTE 7 – Earnings per share

Our earnings per share (basic and diluted) are presented below (in thousands, except per share amounts):
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 2022 2021
Net Income $ 146,157  $ 128,699  $ 412,384  $ 348,385 
Net income attributable to the noncontrolling interest (92) (419) (516) (861)
Adjustment of redeemable noncontrolling interest to redemption value (235) 116  (447) (32)
Earnings available to common shareholders $ 145,830  $ 128,396  $ 411,421  $ 347,492 
Weighted average number of common shares outstanding - basic
223,968  221,805  223,456  221,314 
Effect of dilutive securities:
Restricted stock units 621  749  469  626 
Performance shares 332  245  296  231 
Stock options —  —  — 
Weighted average number of common shares outstanding - diluted 224,921  222,799  224,221  222,172 
Earnings per share - basic $ 0.65  $ 0.58  $ 1.84  $ 1.57 
Earnings per share - diluted $ 0.65  $ 0.58  $ 1.83  $ 1.56 

Our calculation of diluted earnings per share includes the dilutive effects for the assumed vesting of outstanding restricted stock units and performance shares.

NOTE 8 – Fair value measurement

We measure and record certain assets and liabilities at fair value in the accompanying condensed consolidated financial statements. 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.

In the first quarter of 2022, we recorded a $2.5 million impairment charge, in “Other non-operating items, net” within our Consolidated Statement of Income, due to the decline in the fair value of one of our investments. The fair value was determined using a market approach which was based on significant inputs not observable in the market, and thus represented a Level 3 fair value measurement. We also 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 $2.88 billion at September 30, 2022, and $3.40 billion at December 31, 2021.

NOTE 9 – Other matters

Litigation

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 received a Civil Investigative Demand (CID) in connection with the DOJ’s investigation. On November 13 and December 13, 2018, the DOJ and seven other broadcasters settled a DOJ complaint alleging the exchange of competitively sensitive information in the broadcast television industry. In June 2019, we and four other broadcasters entered into a substantially identical agreement with DOJ, which was entered by the court on December 3, 2019. The settlement contains no finding of wrongdoing or liability and carries no penalty. It prohibits us and the other settling entities from sharing certain confidential business information, or using such information pertaining to other broadcasters, except under limited circumstances. The settlement also requires the settling parties to make certain enhancements to their antitrust compliance programs, to continue to
16


cooperate with the DOJ’s investigation, and to permit DOJ to verify compliance. The costs of compliance have not been material, nor do we expect future compliance costs to be material.

Since the national media reports, numerous putative class action lawsuits were filed against owners of television stations (the Advertising Cases) in different jurisdictions. Plaintiffs are a class consisting of all persons and entities in the United States who paid for all or a portion of advertisement time on local television provided by the defendants. 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.

These cases have been consolidated into a single proceeding in the United States District Court for the Northern District of Illinois, captioned Clay, Massey & Associates, P.C. v. Gray Television, Inc. et. al., filed on July 30, 2018. At the court’s direction, plaintiffs filed an amended complaint on April 3, 2019, that superseded the original complaints. Although we were named as a defendant in sixteen of the original complaints, the amended complaint did not name TEGNA as a defendant. After TEGNA and four other broadcasters entered into consent decrees with the DOJ in June 2019, the plaintiffs sought leave from the court to further amend the complaint to add TEGNA and the other settling broadcasters to the proceeding. The court granted the plaintiffs’ motion, and the plaintiffs filed the second amended complaint on September 9, 2019. On October 8, 2019, the defendants jointly filed a motion to dismiss the matter. On November 6, 2020, the court denied the motion to dismiss. On March 16, 2022, the plaintiffs filed a third amended complaint, which, among other things, added ShareBuilders, Inc., as a named defendant. ShareBuilders filed a motion to dismiss on April 15, 2022, which was granted by the court without prejudice on August 29, 2022. TEGNA has filed its answer to the third amended complaint denying any violation of law and asserting various affirmation defenses. We believe that the claims asserted in the Advertising Cases are without merit, and intend to defend ourselves vigorously against them.

Litigation Relating to the Merger

As of November 9, 2022, seven lawsuits have been filed by purported TEGNA stockholders in connection with the Merger. The lawsuits have been filed against TEGNA and the current members of the Board of Directors of TEGNA (the Board of Directors). The complaints generally allege that the preliminary proxy statement filed by TEGNA with the SEC on March 25, 2022 in connection with the Merger contained alleged material misstatements and/or omissions in violation of federal law. Plaintiffs in the complaints generally seek, among other things, to enjoin TEGNA from consummating the Merger, or in the alternative, rescission of the Merger and/or compensatory damages, as well as attorneys’ fees. As of November 9, 2022, all but one of those lawsuits have been voluntarily dismissed.

In addition, as of November 9, 2022, TEGNA received four demand letters from purported TEGNA shareholders in connection with TEGNA’s filing of a definitive proxy statement with the SEC on April 13, 2022 relating to the Merger (the “definitive proxy statement”). Each letter alleged deficiencies in the definitive proxy statement that were similar to the deficiencies alleged in the complaints referenced above.

We believe that the claims asserted in the complaints and letters described above are without merit and no additional disclosures were or are required under applicable law. However, to moot the unmeritorious disclosure claims, to avoid the risks of the actions described above delaying or adversely affecting the Merger and to minimize the costs, risks and uncertainties inherent in litigation, without admitting any liability or wrongdoing, TEGNA voluntarily made supplemental disclosures to the definitive proxy statement as described in the Form 8-K filed by TEGNA with the SEC on May 9, 2022. Additional lawsuits arising out of the Merger may also be filed in the future.

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.

Related Party Transactions

We have an equity investment in MadHive which is a related party of TEGNA. In addition to our investment, we also have a commercial agreement with MadHive, under which MadHive supports our Premion business in acquiring over-the-top advertising inventory and delivering corresponding advertising impressions. In the third quarter and first nine months of 2022, we incurred expenses of $30.4 million and $86.3 million, respectively, as a result of the commercial agreement with MadHive. In the third quarter and first nine months of 2021, we incurred expenses of $19.7 million and $62.1 million, respectively, as a result of the commercial agreement with MadHive. As of September 30, 2022, and December 31, 2021 we had accounts payable and accrued liabilities associated with the MadHive commercial agreements of $19.4 million and $8.9 million, respectively.

In December 2021, we renewed our two existing commercial agreements with MadHive. Simultaneously with the commercial agreement renewals, we also amended the terms of our then outstanding available-for-sale convertible debt security that we held as discussed in Note 3. In exchange for the convertible debt modifications, we received favorable terms in our renewed commercial agreements. We estimated the fair value of our available-for-sale security at December 31, 2021 using a market fair value approach based on the cash we expect to receive upon maturity of the note and the estimated cash savings that the favorable contract terms will provide over the term of the commercial agreements. In January 2022, we recorded an intangible contract asset for $20.8 million (equal to the estimated cash savings), and are amortizing this asset on a straight-line
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basis over the noncancellable term of the commercial agreements of two years. This non-cash expense is recorded within “Cost of revenues,” within our Consolidated Statement of Income. The debt matured in June 2022 at which time the principal balance of $3.0 million plus accrued interest was paid to us.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Company Overview

We are an innovative media company serving the greater good of our communities. Across platforms, we tell empowering stories, conduct impactful investigations and deliver innovative marketing services. With 64 television stations and two radio stations in 51 U.S. markets, we are the largest owner of top four network affiliates in the top 25 markets among independent station groups, reaching approximately 39% of all U.S. television households. We also own leading multicast networks True Crime Network, Twist and Quest. Each television station also has a robust digital presence across online, mobile, connected television and social platforms, reaching consumers on all devices and platforms they use to consume news content. We have been consistently honored with the industry’s top awards, including Edward R. Murrow, George Polk, Alfred I. DuPont and Emmy Awards. Through TEGNA Marketing Solutions (TMS), our integrated sales and back-end fulfillment operations, we deliver results for advertisers across television, digital and over-the-top (OTT) platforms, including Premion, our OTT advertising network.

We have one operating and reportable segment. The primary sources of our revenues are: 1) subscription revenues, reflecting fees paid by satellite, cable, OTT (companies that deliver video content to consumers over the Internet) and telecommunications providers to carry our television signals on their systems; 2) advertising & marketing services (AMS) revenues, which include local and national non-political television advertising, digital marketing services (including Premion), and advertising on the stations’ websites, tablet and mobile products and OTT apps; 3) political advertising revenues, which are driven by even year election cycles at the local and national level (e.g. 2022, 2020, etc.) and particularly in the second half of those years; and 4) other services, such as production of programming, tower rentals, and distribution of our local news content.

Merger Agreement

On February 22, 2022, we entered into the Merger Agreement with Parent, Merger Sub, and solely for purposes of certain provisions specified therein, other subsidiaries of Parent, certain affiliates of Standard General and CMG, and certain of its subsidiaries. We still expect the closing of the transaction, which is subject to regulatory approvals, and other customary closing conditions, to occur in the second half of 2022. See Notes 1 and 9 to the condensed consolidated financial statements for further information about the Merger Agreement, the pending Merger and related matters.

We plan to continue to pay our regular quarterly dividend of $0.095 per share through the closing of the Merger, which is the maximum rate and frequency permitted by the Merger Agreement. As a result of the pending transaction, we suspended share repurchases under our previously announced share repurchase program.

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Consolidated Results from Operations

The following discussion is a comparison of our consolidated results on a GAAP basis. The year-to-year comparison of financial results is not necessarily indicative of future results. In addition, see the section titled “Results from Operations - Non-GAAP Information” for additional tables presenting information which supplements our financial information provided on a GAAP basis.

Our operating results are subject to significant fluctuations across yearly periods (primarily driven by even-year political election cycles). As such, in addition to prior year comparisons, our management team and Board of Directors also review quarterly and year-to-date operating results compared to the same periods two years ago (e.g., 2022 vs. 2020). We believe these additional comparisons provide useful information to investors and therefore, have supplemented our prior year comparisons of consolidated results with comparisons against third quarter and nine months ended September 30, 2020 results (through operating income).

Our consolidated results of operations on a GAAP basis were as follows (in thousands, except per share amounts):
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 Change from 2021 2020 Change from 2020 2022 2021 Change from 2021 2020 Change from 2020
Revenues $ 803,111  $ 756,487  % $ 738,389  % $ 2,362,115  $ 2,216,446  % $ 2,000,205  18  %
Operating expenses:
Cost of revenues 428,891  399,751  % 379,185  13  % 1,260,576  1,191,561  % 1,103,920  14  %
Business units - Selling, general and administrative expenses 98,582  100,425  (2  %) 89,943  10  % 300,136  286,700  % 267,919  12  %
Corporate - General and administrative expenses 13,367  11,891  12  % 11,263  19  % 48,299  51,944  (7  %) 61,289  (21  %)
Depreciation 15,219  16,792  (9  %) 16,086  (5  %) 46,058  48,526  (5  %) 49,697  (7  %)
Amortization of intangible assets 14,953  15,774  (5  %) 17,113  (13  %) 44,952  47,307  (5  %) 50,577  (11  %)
Spectrum repacking reimbursements and other, net (159) 504  *** (2,902) (95  %) (322) (2,394) (87  %) (10,533) (97  %)
Total operating expenses $ 570,853  $ 545,137  % $ 510,688  12  % $ 1,699,699  $ 1,623,644  % $ 1,522,869  12  %
Total operating income $ 232,258  $ 211,350  10  % $ 227,701  % $ 662,416  $ 592,802  12  % $ 477,336  39  %
Non-operating expenses (42,274) (45,781) (8  %) (53,464) (21  %) (117,437) (140,947) (17  %) (169,596) (31  %)
Provision for income taxes 43,827  36,870  19  % 41,967  % 132,595  103,470  28  % 69,699  90  %
Net income 146,157  128,699  14  % 132,270  10  % 412,384  348,385  18  % 238,041  73  %
Net (income) loss attributable to redeemable noncontrolling interest (92) (419) (78  %) (51) 80  % (516) (861) (40  %) 433  ***
Net income attributable to TEGNA Inc. $ 146,065  $ 128,280  14  % $ 132,219  10  % $ 411,868  $ 347,524  19  % $ 238,474  73  %
Earnings per share - basic $ 0.65  $ 0.58  12  % $ 0.60  % $ 1.84  $ 1.57  17  % $ 1.08  70  %
Earnings per share - diluted $ 0.65  $ 0.58  12  % $ 0.60  % $ 1.83  $ 1.56  17  % $ 1.08  69  %
*** Not meaningful

Revenues

Our Subscription revenue category includes revenue earned from cable and satellite providers for the right to carry our signals and the distribution of TEGNA stations on OTT streaming services. Our AMS category includes all sources of our traditional television advertising and digital revenues including Premion and other digital advertising and marketing revenues across our platforms.

Our revenues and operating results are subject to seasonal fluctuations. Generally, our second and fourth quarter revenues and operating results are stronger than those we report for the first and third quarter. This is driven by the second quarter reflecting increased spring seasonal advertising, while the fourth quarter typically includes increased advertising related to the
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holiday season. In addition, our revenue and operating results are subject to significant fluctuations across yearly periods resulting from political advertising. In even numbered years, political spending is usually significantly higher than in odd numbered years due to advertising for the local, state and national elections. Additionally, every four years, we typically experience even greater increases in political advertising in connection with the presidential election. The strong demand for advertising from political advertisers in these even years can result in the significant use of our available inventory (leading to a “crowd out” effect), which can diminish our AMS revenue in the even year of a two year election cycle, particularly in the fourth quarter of those years.

The following table summarizes the year-over-year changes in our revenue categories (in thousands):
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 Change from 2021 2020 Change from 2020 2022 2021 Change from 2021 2020 Change from 2020
Subscription $ 377,368  $ 368,672  % $ 316,677  19  % $ 1,158,101  $ 1,130,490  % $ 972,954  19  %
Advertising & Marketing Services 320,764  364,234  (12) % 298,605  % 1,010,490  1,027,957  (2) % 822,841  23  %
Political 92,904  15,010  *** 116,494  (20) % 161,727  34,019  *** 181,425  (11) %
Other 12,075  8,571  41  % 6,613  83  % 31,797  23,980  33  % 22,985  38  %
Total revenues $ 803,111  $ 756,487  % $ 738,389  % $ 2,362,115  $ 2,216,446  % $ 2,000,205  18  %
*** Not meaningful

2022 vs. 2021

Total revenues increased $46.6 million in the third quarter of 2022 and $145.7 million in the first nine months of 2022 compared to the same periods in 2021. The net increases were primarily due to growth in political revenue ($77.9 million third quarter, $127.7 million first nine months) due to contested primaries and the run up to the mid-term elections which will occur in the fourth quarter. Also contributing to the increase was growth in subscription revenue ($8.7 million third quarter, $27.6 million first nine months) primarily due to annual rate increases under existing agreements, partially offset by declines in subscribers. Partially offsetting these increases was a decline in AMS revenue ($43.5 million third quarter, $17.5 million first nine months). The decline in third quarter revenue was partially due to the crowd out effect of political revenue as well as the absence of last year’s Olympics. Additionally, macroeconomic headwinds negatively impacted AMS revenue in both current year periods.

2022 vs. 2020

Total revenues increased $64.7 million in the third quarter of 2022 and $361.9 million in the first nine months of 2022 compared to the same periods in 2020. The net increases were primarily due to growth in subscription revenue ($60.7 million third quarter, $185.1 million first nine months) mainly due to annual rate increases under existing and newly renegotiated retransmission agreements, partially offset by declines in subscribers. Also contributing was growth in AMS revenue ($22.2 million third quarter, $187.6 million first nine months) reflecting higher demand for advertising despite current macroeconomic headwinds in 2022 (as fiscal year 2020 was adversely impacted by reduced demand due to the COVID-19 pandemic). These increases were partially offset by a decrease in political revenue ($23.6 million third quarter, $19.7 million first nine months) primarily due to 2020 being a presidential election year.

Cost of revenues

2022 vs. 2021

Cost of revenues increased $29.1 million in the third quarter of 2022 and $69.0 million in the first nine months of 2022 compared to the same periods in 2021. The increases were partially due to higher digital expenses ($14.7 million third quarter, $26.4 million first nine months) driven by growth in Premion. Growth in programming costs ($11.8 million third quarter, $34.2 million first nine months) driven by rate increases under existing affiliation agreements also contributed to the increases.

2022 vs. 2020

Cost of revenues increased $49.7 million in the third quarter of 2022 and $156.7 million in the first nine months of 2022 compared to the same periods in 2020. The increases were partially due to growth in programming costs ($30.9 million third quarter, $94.9 million first nine months) driven by rate increases under existing and newly renegotiated affiliation agreements and growth in subscription revenue (certain programming costs are linked to such revenues). Higher digital expenses ($9.9 million third quarter, $40.4 million first nine months) driven by growth in Premion also contributed to the increases.

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Business units - Selling, general and administrative expenses

2022 vs. 2021

Business unit selling, general and administrative expenses decreased $1.8 million in the third quarter of 2022 and increased $13.4 million in the first nine months of 2022 compared to the same periods in 2021. The decrease for the quarter was primarily due to a $3.0 million decline in professional fees. This decline was partially offset by the absence in 2022 of a $0.7 million reduction in bad debt expense that occurred in 2021 which was primarily attributable to improved collection trends. The increase in the first nine months was primarily due to a $13.7 million increase in sales commissions and payroll costs driven by growth in digital revenue. Also contributing to the increase was a $2.6 million absence in 2022 of a reduction in bad debt expense primarily attributed to improved collection trends which occurred in 2021. These increases were partially offset by an $8.8 million decline in professional fees.

2022 vs. 2020

Business unit SG&A expenses increased $8.6 million in the third quarter of 2022 and $32.2 million in the first nine months of 2022 compared to the same periods in 2020. The increases were primarily due to higher sales commissions and payroll costs (together, $8.7 million third quarter, $26.9 million first nine months) driven by growth in AMS revenue.

Corporate - General and administrative expenses

Our corporate costs are separated from our business expenses and are recorded as general and administrative expenses in our Consolidated Statement of Income. This category primarily consists of broad corporate management functions including Legal, Human Resources, and Finance, as well as activities and costs not directly attributable to the operations of our media business.

2022 vs. 2021

Corporate general and administrative expenses increased $1.5 million in the third quarter of 2022 and decreased $3.6 million in the first nine months of 2022 compared to the same periods in 2021. The increase for the quarter was primarily driven by $3.7 million M&A-related costs mainly incurred in support of the regulatory review of the Merger. The decrease for the first nine months was primarily driven by the absence in 2022 of $16.6 million of advisory fees incurred in 2021 related to activism defense and a $3.5 million decline in professional fees, partially offset by $18.1 million of M&A-related costs incurred in 2022.

2022 vs. 2020

Corporate general and administrative expenses increased $2.1 million in the third quarter of 2022 and decreased $13.0 million in the first nine months of 2022 compared to the same periods in 2020. The increase for the quarter was primarily driven by $3.7 million of M&A-related costs incurred in support of the regulatory review of the Merger. The decrease for the first nine months was primarily driven by the absence in 2022 of $23.1 million of advisory fees and $4.6 million of M&A due diligence costs incurred in 2020, partially offset by $18.1 million of M&A-related costs incurred in 2022.

Depreciation

2022 vs. 2021

Depreciation expense decreased by $1.6 million in the third quarter of 2022 and $2.5 million in the first nine months of 2022 compared to the same periods in 2021. The decreases were due to certain assets reaching the end of their assumed useful lives.

2022 vs. 2020

Depreciation expense decreased by $0.9 million in the third quarter of 2022 and $3.6 million in the first nine months of 2022 compared to the same periods in 2020. The decreases were due to certain assets reaching the end of their assumed useful lives.

Amortization of intangible assets

2022 vs. 2021

Amortization expense decreased $0.8 million in the third quarter of 2022 and $2.4 million in the first nine months of 2022 compared to the same periods in 2021. The decreases were due to certain assets reaching the end of their assumed useful lives and therefore becoming fully amortized.

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2022 vs. 2020

Amortization expense decreased $2.2 million in the third quarter of 2022 and $5.6 million in the first nine months of 2022 compared to the same periods in 2020. The decreases were due to certain assets reaching the end of their assumed useful lives and therefore becoming fully amortized.

Spectrum repacking reimbursements and other, net

2022 vs. 2021

Spectrum repacking reimbursements and other net gains were $0.2 million in the third quarter of 2022 compared to net losses of $0.5 million in the same period in 2021 and net gains of $0.3 million in the first nine months of 2022 compared to $2.4 million in the same period in 2021. The 2022 activity is related to reimbursements received from the Federal Communications Commission (FCC) for required spectrum repacking. The 2021 activity is primarily related to reimbursements from spectrum repacking ($0.6 million third quarter, $5.0 million first nine months), partially offset by a $1.5 million contract termination fee which was incurred in the second quarter of 2021 and a $1.1 million write off of certain assets which impacted both prior year periods.

2022 vs. 2020

Spectrum repacking reimbursements and other net gains were $0.2 million in the third quarter of 2022 compared to net gains of $2.9 million in the same period in 2020 and $0.3 million in the first nine months of 2022 compared to $10.5 million in the same period in 2020. The 2022 activity consists of the reimbursements discussed above. The 2020 activity primarily consists of reimbursements received from the FCC for required spectrum repacking ($2.9 million third quarter, $12.7 million first nine months), partially offset by $2.1 million impairment charge which occurred in the second quarter of 2020 due to the retirement of a brand name.

Operating income

2022 vs. 2021

Operating income increased $20.9 million in the third quarter of 2022 and $69.6 million in the first nine months of 2022 compared to the same periods in 2021. The increases were driven by the changes in revenue and expenses discussed above, most notably the increase in political revenue.

2022 vs. 2020

Operating income increased $4.6 million in the third quarter of 2022 and $185.1 million in the first nine months of 2022 compared to the same periods in 2020. The increases were driven by the changes in revenue and expenses discussed above, most notably the increases in subscription and AMS revenues as well as programming expense.

Non-operating (expense) income

Non-operating expenses decreased $3.5 million in the third quarter of 2022 compared to the same period in 2021. This decrease was primarily due to a $3.1 million decrease in interest expense driven by lower average outstanding debt partially offset by a higher weighted average interest rate. Total average outstanding debt was $3.09 billion for the third quarter of 2022, compared to $3.37 billion in the same period of 2021. The weighted average interest rate on outstanding debt was 5.27% for the third quarter of 2022, compared to 5.18% in the same period of 2021.

In the first nine months of 2022, non-operating expenses decreased $23.5 million compared to the same period in 2021. This decrease was primarily due to a $20.8 million gain recognized on our available for sale investment in MadHive (see Note 3 to the condensed consolidated financial statements). Further, interest expense decreased $9.6 million driven by lower average outstanding debt partially offset by a higher weighted average interest rate. The average debt outstanding was $3.12 billion for the first nine months of 2022, compared to $3.46 billion in the same period of 2021. The weighted average interest rate on outstanding debt was 5.25% for the first nine months of 2022, compared to 5.13% in the same period of 2021.

Provision for income taxes

Income tax expense increased $7.0 million in the third quarter of 2022 compared to the same period in 2021. Income tax expense increased $29.1 million in the first nine months of 2022 compared to the same period in 2021. The increases were primarily due to increases in net income before tax. Our effective income tax rate was 23.1% for the third quarter of 2022, compared to 22.3% for the third quarter of 2021. The tax rate for the third quarter of 2022 is higher than the comparable rate in 2021 primarily due to discrete tax benefits realized related to a previously-disposed business in 2021 and nondeductible M&A-related transaction costs incurred. Our effective income tax rate was 24.4% for the first nine months of 2022, compared to 22.9% for the same period in 2021. The tax rate for the first nine months of 2022 is higher than the comparable amount in 2021 primarily due to a valuation allowance recorded on a minority investment, nondeductible M&A-related transaction costs incurred,
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and net deferred tax benefits as a result of state tax planning strategies implemented in 2021. Partially offsetting the increase were tax benefits from the utilization of capital loss carryforwards in connection with certain transactions and the release of the associated valuation allowance.

Net income attributable to TEGNA Inc.

Net income attributable to TEGNA Inc. was $146.1 million, or $0.65 per diluted share, in the third quarter of 2022 compared to $128.3 million, or $0.58 per diluted share, during the same period in 2021. For the first nine months of 2022, net income attributable to TEGNA Inc. was $411.9 million, or $1.83 per diluted share, compared to $347.5 million, or $1.56 per diluted share, for the same period in 2021. Both income and earnings per share were affected by the factors discussed above.

The weighted average number of diluted common shares outstanding in the third quarter of 2022 and 2021 were 224.9 million and 222.8 million, respectively. The weighted average number of diluted shares outstanding in the first nine months of 2022 and 2021 was 224.2 million and 222.2 million, respectively.
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Results from Operations - Non-GAAP Information

Presentation of Non-GAAP information

We use non-GAAP financial performance measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the related GAAP measures, nor should they be considered superior to the related GAAP measures, and should be read together with financial information presented on a GAAP basis. Also, our non-GAAP measures may not be comparable to similarly titled measures of other companies.

Management and our Board of Directors use non-GAAP financial measures for purposes of evaluating company performance. Furthermore, the Leadership Development and Compensation Committee of our Board of Directors uses non-GAAP measures such as Adjusted EBITDA, non-GAAP net income, non-GAAP EPS and free cash flow to evaluate management’s performance. Therefore, we believe that each of the non-GAAP measures presented provides useful information to investors and other stakeholders by allowing them to view our business through the eyes of management and our Board of Directors, facilitating comparisons of results across historical periods and focus on the underlying ongoing operating performance of our business. We also believe these non-GAAP measures are frequently used by investors, securities analysts and other interested parties in their evaluation of our business and other companies in the broadcast industry.

We discuss in this Form 10-Q non-GAAP financial performance measures that exclude from our reported GAAP results the impact of “special items” which are described in detail below in the section titled “Discussion of Special Charges and Credits Affecting Reported Results.” We believe that such expenses and gains are not indicative of normal, ongoing operations. While these items may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses and gains in the future, we believe that removing these items for purposes of calculating the non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.

We discuss Adjusted EBITDA (with and without corporate expenses), a non-GAAP financial performance measure that we believe offers a useful view of the overall operation of our businesses. We define Adjusted EBITDA as net income attributable to TEGNA before (1) net income attributable to redeemable noncontrolling interest, (2) income taxes, (3) interest expense, (4) equity loss in unconsolidated investments, net, (5) other non-operating items, net, (6) M&A-related costs, (7) advisory fees related to activism defense, (8) spectrum repacking reimbursements and other, net, (9) depreciation and (10) amortization. We believe these adjustments facilitate company-to-company operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, and the age and book appreciation of property and equipment (and related depreciation expense). The most directly comparable GAAP financial measure to Adjusted EBITDA is Net income attributable to TEGNA. Users should consider the limitations of using Adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternate to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. In particular, Adjusted EBITDA is not intended to be a measure of cash flow available for management’s discretionary expenditures, as this measure does not consider certain cash requirements, such as working capital needs, capital expenditures, contractual commitments, interest payments, tax payments and other debt service requirements.

We also discuss free cash flow, a non-GAAP performance measure that the Board of Directors uses to review the performance of the business. Free cash flow is reviewed by the Board of Directors as a percentage of revenue over a trailing two-year period (reflecting both an even and odd year reporting period given the political cyclicality of our business). The most directly comparable GAAP financial measure to free cash flow is Net income attributable to TEGNA. Free cash flow is calculated as non-GAAP Adjusted EBITDA (as defined above), further adjusted by adding back (1) stock-based compensation, (2) non-cash 401(k) company match, (3) syndicated programming amortization, (4) dividends received from equity method investments, (5) reimbursements from spectrum repacking and (6) proceeds from company-owned life insurance policies. This is further adjusted by deducting payments made for (1) syndicated programming, (2) pension, (3) interest, (4) taxes (net of refunds) and (5) purchases of property and equipment. Like Adjusted EBITDA, free cash flow is not intended to be a measure of cash flow available for management’s discretionary use.
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Discussion of Special Charges and Credits Affecting Reported Results

Our results included the following items we consider “special items” that, while at times recurring, can vary significantly from period to period:

Quarter and nine months ended September 30, 2022:

Spectrum repacking reimbursements and other, net consisting of gains due to reimbursements from the FCC for required spectrum repacking;
M&A-related costs;
Other non-operating items consisting of a gain recognized on an available-for-sale investment and an impairment charge related to another investment; and
Tax expense, net, associated with establishing a valuation allowance on a deferred tax asset related to an equity method investment.

Quarter and nine months ended September 30, 2021:

Spectrum repacking reimbursements and other, net consisting of gains due to reimbursements from the FCC for required spectrum repacking, a contract termination fee, and the write off of certain fixed assets;
Advisory fees related to activism defense;
Other non-operating items consisting of a gain due to an observable price increase in an equity investment; and
Net deferred tax benefits as a result of state tax planning strategies implemented during the second quarter of 2021 and deferred tax benefits related to partial capital loss valuation allowance release.

Reconciliations of certain line items impacted by special items to the most directly comparable financial measure calculated and presented in accordance with GAAP on our Consolidated Statements of Income follow (in thousands, except per share amounts):
Special Items
Quarter ended Sept. 30, 2022 GAAP
measure
M&A-related costs Spectrum repacking reimbursements and other Special tax item Non-GAAP measure
Corporate - General and administrative expenses $ 13,367  $ (3,701) $ —  $ —  $ 9,666 
Spectrum repacking reimbursements and other, net (159) —  159  —  — 
Operating expenses 570,853  (3,701) 159  —  567,311 
Operating income 232,258  3,701  (159) —  235,800 
Income before income taxes 189,984  3,701  (159) —  193,526 
Provision for income taxes 43,827  47  (37) 2,588  46,425 
Net income attributable to TEGNA Inc. 146,065  3,654  (122) (2,588) 147,009 
Earnings per share - diluted (a)
$ 0.65  $ 0.02  $ —  $ (0.01) $ 0.65 
(a) Per share amounts do not sum due to rounding.
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Special Items
Quarter ended Sept. 30, 2021 GAAP
measure
Spectrum repacking reimbursements and other Other non-operating items Special tax items Non-GAAP measure
Spectrum repacking reimbursements and other, net $ 504  $ (504) $ —  $ —  $ — 
Operating expenses 545,137  (504) —  —  544,633 
Operating income 211,350  504  —  —  211,854 
Other non-operating items, net 2,486  —  (1,941) —  545 
Income before income taxes 165,569  504  (1,941) —  164,132 
Provision for income taxes 36,870  115  (502) 4,347  40,830 
Net income attributable to TEGNA Inc. 128,280  389  (1,439) (4,347) 122,883 
Earnings per share - diluted $ 0.58  $ —  $ (0.01) $ (0.02) $ 0.55 
Special Items
Nine months ended Sept. 30, 2022 GAAP
measure
M&A-related costs Spectrum repacking reimbursements and other Other non-operating items Special tax item Non-GAAP measure
Corporate - General and administrative expenses $ 48,299  $ (18,147) $ —  $ —  $ —  $ 30,152 
Spectrum repacking reimbursements and other, net (322) —  322  —  —  — 
Operating expenses 1,699,699  (18,147) 322  —  —  1,681,874 
Operating income 662,416  18,147  (322) —  —  680,241 
Other non-operating items, net 16,764  —  —  (18,308) —  (1,544)
Total non-operating expenses (117,437) —  —  (18,308) —  (135,745)
Income before income taxes 544,979  18,147  (322) (18,308) —  544,496 
Provision for income taxes 132,595  85  (78) 168  (4,529) 128,241 
Net income attributable to TEGNA Inc. 411,868  18,062  (244) (18,476) 4,529  415,739 
Net income per share-diluted $ 1.83  $ 0.08  $ —  $ (0.08) $ 0.02  $ 1.85 
26


Special Items
Nine months ended Sept. 30, 2021 GAAP
measure
Advisory fees related to activism defense Spectrum repacking reimbursements and other Other non-operating items Special tax items Non-GAAP measure
Corporate - General and administrative expenses $ 51,944  $ (16,611) $ —  $ —  $ —  $ 35,333 
Spectrum repacking reimbursements and other, net (2,394) —  2,394  —  —  — 
Operating expenses 1,623,644  (16,611) 2,394  —  —  1,609,427 
Operating income 592,802  16,611  (2,394) —  —  607,019 
Equity income (loss) in unconsolidated investments, net (5,716) —  —  —  —  (5,716)
Other non-operating items, net 4,340  —  —  (1,941) —  2,399 
Total non-operating expenses (140,947) —  —  (1,941) —  (142,888)
Income before income taxes 451,855  16,611  (2,394) (1,941) —  464,131 
Provision for income taxes 103,470  4,291  (626) (502) 7,144  113,777 
Net income attributable to TEGNA Inc. 347,524  12,320  (1,768) (1,439) (7,144) 349,493 
Net income per share-diluted $ 1.56  $ 0.06  $ (0.01) $ (0.01) $ (0.03) $ 1.57 

Adjusted EBITDA - Non-GAAP

Reconciliations of Adjusted EBITDA to net income presented in accordance with GAAP on our Consolidated Statements of Income are presented below (in thousands):
Quarter ended Sept. 30, Nine months ended Sept. 30,
2022 2021 Change 2022 2021 Change
Net income attributable to TEGNA Inc. (GAAP basis) $ 146,065  $ 128,280  14  % $ 411,868  $ 347,524  19  %
Plus: Net income attributable to redeemable noncontrolling interest 92  419  (78  %) 516  861  (40  %)
Plus: Provision for income taxes 43,827  36,870  19  % 132,595  103,470  28  %
Plus: Interest expense 43,406  46,477  (7  %) 129,976  139,571  (7  %)
Plus: Equity loss in unconsolidated investments, net 178  1,790  (90  %) 4,225  5,716  (26  %)
Less: Other non-operating items, net (1,310) (2,486) (47  %) (16,764) (4,340) ***
Operating income (GAAP basis) 232,258  211,350  10  % 662,416  592,802