Broadcasting and digital media company TEGNA (NYSE: TGNA) met Wall Street’s revenue expectations in Q1 CY2025, with sales falling 4.8% year on year to $680 million. Its non-GAAP EPS of $0.37 per share was 12.9% above analysts’ consensus estimates.

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StockStory’s Take

TEGNA’s first-quarter results were shaped by continued cost discipline, shifts in advertising demand, and a cyclical decline in political ad revenue. CEO Michael Steib emphasized the company’s efforts to streamline operations, noting “significant changes” in people, culture, and strategy. Management highlighted the impact of macroeconomic headwinds, including cautious advertiser sentiment and the Super Bowl airing on a competing network. CFO Julie Heskett pointed to digital advertising as a relative bright spot, with owned and operated digital products gaining traction even as traditional advertising softened. The company’s resource sharing and technology investments, especially in AI for newsrooms, were cited as key operational changes aimed at supporting future performance.

Looking ahead, TEGNA’s guidance reflects uncertainty in the advertising environment, with management citing potential headwinds from global trade dynamics and ongoing macroeconomic volatility. CFO Julie Heskett stated that “consumer confidence is obviously lower now,” signaling that advertisers may delay spending in the near term. CEO Michael Steib described the company’s strategy as focused on capturing value from upcoming distribution renewals, growing digital engagement, and maintaining financial flexibility for potential mergers and acquisitions. Management believes that cost control, digital growth, and potential regulatory changes could unlock new opportunities, but noted that the timing and magnitude of these factors remain difficult to predict.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to lower political ad spending, cautious advertising demand, and ongoing operational cost reductions, while highlighting progress in digital products and technology initiatives.

• Political advertising decline: First-quarter revenue was affected by a typical drop in political ad bookings, which is common in odd-numbered years, resulting in a year-over-year decrease.
• Advertising and marketing services softness: Advertising and marketing services revenue declined due to weaker economic sentiment and the Super Bowl airing on a network with limited TEGNA affiliation, but local sports rights advertising helped offset some of this decline.
• Digital ad segment gains: Digital advertising revenue grew year over year, driven by expanded engagement with digital audiences and continued momentum from TEGNA’s owned and operated products, including web and mobile platforms.
• Cost-cutting and operational efficiency: Non-GAAP expenses were flat, with higher programming costs from local sports rights offset by structural cost reductions, supporting margin preservation despite revenue pressures. Management reported being 60% toward its $90–100 million annualized core nonprogramming savings goal.
• AI and technology deployment: TEGNA continued to invest in proprietary AI systems for newsrooms and launched pilots for new digital apps, aiming to boost local journalism quality and operational efficiency.

Drivers of Future Performance

TEGNA expects ongoing economic uncertainty, evolving regulatory conditions, and continued cost controls to shape its outlook for the remainder of the year.

• Macroeconomic and advertising headwinds: Management cited weaker consumer confidence and potential impacts from global trade policy changes as risks that may cause advertisers to delay or reduce spending, which could put further pressure on core advertising revenue.
• Distribution renewals and subscriber trends: With nearly half of traditional subscriber contracts up for renewal in 2025, TEGNA sees opportunities to capture higher rates, though secular declines in subscribers remain a headwind for distribution revenue.
• Digital product focus and efficiency gains: The company aims to grow digital ad revenue and deepen audience engagement while pursuing AI-driven newsroom efficiencies and structural cost reductions, with a target of $90–100 million in annualized nonprogramming savings by year-end.

Catalysts in Upcoming Quarters

In the months ahead, the StockStory team will be monitoring (1) the pace and effectiveness of cost reduction initiatives relative to the company’s $90–100 million annualized savings target, (2) the outcome of key distribution contract renewals, which could impact revenue stability, and (3) developments in the regulatory landscape that may open up M&A opportunities. Additionally, the trajectory of digital ad revenue growth and the impact of AI-driven newsroom initiatives will be important to track.

TEGNA currently trades at a forward P/E ratio of 7.9×. In the wake of earnings, is it a buy or sell? See for yourself in our full research report (it’s free).

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