TGNA Q2 Deep Dive: Digital Growth and Cost Discipline Offset Advertising Softness

Broadcasting and digital media company TEGNA (NYSE:TGNA) beat Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 5% year on year to $675 million. On the other hand, next quarter’s revenue guidance of $653.5 million was less impressive, coming in 2.6% below analysts’ estimates. Its non-GAAP profit of $0.44 per share was 20.5% above analysts’ consensus estimates.

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StockStory’s Take

TEGNA’s second quarter results elicited a negative market reaction, driven by a combination of lower year-over-year revenue and a cautious outlook from management on advertising trends. Management attributed the decline primarily to reduced political advertising, cyclical industry pressures, and persistent softness in advertising and marketing services. CFO Julie Heskett specifically cited the impact of macroeconomic uncertainty on advertiser demand and highlighted that changes in the company’s Premion reseller relationship negatively affected core advertising revenue. To offset these pressures, TEGNA continued its focus on operational cost reductions and digital product expansion.

Looking ahead, TEGNA’s guidance reflects ongoing headwinds from a tough comparison to last year’s significant political and Olympic ad revenue, as well as continued challenges in core advertising. CEO Michael Steib pointed to regulatory developments and the company’s ongoing investment in automation, AI, and digital content as key to future growth. Heskett noted that cost savings will be reinvested specifically into content quality and digital initiatives, while also mentioning that advertising should improve as macroeconomic uncertainty eases. Management remains focused on capitalizing on digital audience engagement and new content formats to drive longer-term revenue growth.

Key Insights from Management’s Remarks

Management highlighted several dynamics affecting the quarter, including ongoing softness in advertising, cost reductions through automation, and digital initiatives that partially offset revenue pressure.

• Advertising softness persists: Management noted that advertising and marketing services continued to face headwinds from cautious advertiser spending and broader economic uncertainty, causing delays in campaigns and a decline in core revenue streams.
• Premion partnership shift: The transition of Gray Media from an equity partner to a nonexclusive advertising agreement with Premion reduced AMS revenue and negatively affected year-over-year comparisons, a trend expected to continue for several quarters.
• Digital revenue acceleration: Despite broader advertising challenges, TEGNA reported strong double-digit growth in its owned-and-operated digital products for the third consecutive quarter, reflecting a shift in consumer viewing habits to streaming and connected TV platforms.
• Operational cost-cutting progress: The company made significant strides in its cost reduction program, achieving 80% of its annualized target by deploying automation and AI to streamline production and administrative tasks, such as automated video editing and transcription.
• Leadership transition: The planned retirement of Chief Operating Officer Lynn Beall marks a significant leadership change, with Steib and Heskett both recognizing her role in shaping TEGNA’s growth strategy and operational culture over several decades.

Drivers of Future Performance

Management expects ongoing advertising headwinds and regulatory developments to shape near-term results, while digital and cost-efficiency investments remain central to the company’s outlook.

• Regulatory landscape in flux: CEO Michael Steib emphasized that potential FCC deregulation could expand TEGNA’s options for mergers, acquisitions, or market swaps, directly affecting the company’s competitive positioning and scale in local markets.
• Continued digital investment: The company will prioritize digital content expansion—including new streaming local news programming and enhanced AI-driven content production—to meet changing viewer preferences and capture new revenue streams.
• Cost discipline and reinvestment: Management expects to complete its cost reduction program this year, with savings earmarked for content and digital product upgrades. CFO Julie Heskett noted that these investments are intended to support sustainable long-term revenue growth despite near-term margin pressure.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will watch (1) the pace of digital revenue growth and the impact of new streaming and AI-driven content initiatives, (2) progress on cost-reduction targets and how savings are reinvested, and (3) developments in FCC deregulation that could influence TEGNA’s strategic options for consolidation or market expansion. The evolution of advertising demand as macroeconomic uncertainty abates will also be critical.

TEGNA currently trades at $19.98, up from $16.40 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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