TEGNA INC.
7950 JONES BRANCH DR.
MCLEAN, VA 22107
WWW.TEGNA.COM
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People.
Products.
Performance.
2016 ANNUAL REPORT
Shareholder
Services
TEGNA STOCK
TEGNA Inc. shares are traded on the New York Stock Exchange under the symbol TGNA. The
company’s transfer agent and registrar is Wells Fargo Bank, N.A. General inquiries and requests
for enrollment materials for the programs described below should be directed to Wells Fargo
Shareowner Services, P.O. Box 64854, St. Paul, MN 55164-0854 or by telephone at 1-800-778-3299
or at www.shareowneronline.com.
DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan (DRP) provides TEGNA shareholders the opportunity to purchase
additional shares of the company’s common stock free of brokerage fees or service charges through
automatic reinvestment of dividends and optional cash payments. Cash payments may range from a
minimum of $10 to a maximum of $5,000 per month.
AUTOMATIC CASH INVESTMENT SERVICE FOR THE DRP
This service provides a convenient, no-cost method of having money automatically withdrawn
from your checking or savings account each month and invested in TEGNA stock through your
DRP account.
THIS REPORT WAS WRITTEN
AND PRODUCED BY
EMPLOYEES OF TEGNA.
Vice President & Controller
Cam McClelland
Assistant Controller
James Reynolds
Corporate Consolidations Team
Dimeterice Chandler
Ben Fernando
Varun Kanwar
Suzanne Kuo
Lorraine Licayan
Mark Ramsey
Patrick Ray
Evan Strong
DIRECT DEPOSIT SERVICE
TEGNA shareholders may have their quarterly dividends electronically credited to their checking or
savings accounts on the payment date at no additional cost.
Manager/Corporate
Communications
Steve Kidera
ANNUAL MEETING
The annual meeting of shareholders will be held at 10 a.m. (E.T.), Thursday, May 4, 2017, at TEGNA
headquarters.
CORPORATE GOVERNANCE
We have posted on the Corporate Governance page under the “Investors” menu of our web site
(www.tegna.com) our principles of corporate governance, ethics policy, related person transaction
policy and the charters for the audit, nominating and public responsibility and executive compen-
sation committees of our board of directors, and we intend to post updates to these corporate
governance materials promptly if any changes (including through any amendments or waivers of the
ethics policy) are made. This site also provides access to our annual report on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K as filed with the SEC. Our chief executive
officer and our chief financial officer have delivered, and we have filed with our 2016 Form 10-K, all
certifications required by the rules of the SEC. Complete copies of our corporate governance
materials and our Form 10-K may be obtained by writing our Secretary at our corporate headquarters.
In accordance with the rules of the New York Stock Exchange, our chief executive officer has
certified, without qualification, that such officer is not aware of any violation by TEGNA of the
NYSE’s corporate governance listing standards.
FOR MORE INFORMATION
News and information about TEGNA is available on our web site. Quarterly earnings information
will be available in late April, July and October 2017. Shareholders who wish to contact the company
directly about their TEGNA stock should call Shareholder Services at TEGNA headquarters,
703-873-6677.
TEGNA Headquarters
7950 Jones Branch Drive, McLean, VA 22107 • 703-873-6600
Creative Director/Designer
Michael Abernethy
Printing
Action Printing, Fond du Lac, WI
Printed on recycled paper.
This report was printed using
soy-based inks. The entire report
contains 10% total recovered fiber/
all post-consumer waste.
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Company
Profile
TEGNA Inc. is
comprised of a
dynamic portfolio of media and digital
businesses that provide content that
matters and brands that deliver.
TEGNA delivers highly relevant,
useful and smart content, when and
how people need it, to make the best
decisions possible. Our agile and
forward-thinking portfolio of television
and digital businesses comprise one
of the largest, most geographically
diverse broadcasters in the U.S. and
top digital companies, Cars.com,
CareerBuilder and G/O Digital.
TEGNA Media includes 46 television
stations (including those serviced by
TEGNA) and is the largest independent
station group of major network affiliates
in the top 25 markets. TEGNA Media
reaches approximately one-third of all
television households nationwide and
represents the #1 NBC affiliate group,
#2 CBS affiliate group and #5 ABC affil-
iate group (excluding owner-operators).
Millions of consumers turn to TEGNA
Media throughout their day to navigate
their world more successfully. Our
journalists take their First Amendment
responsibilities seriously and deliver
relevant, innovative and impactful con-
tent. Combined, TEGNA’s TV stations,
across 23 states, are renowned for their
outstanding journalism and have been
recognized with numerous national
honors including Edward R. Murrow,
Alfred I. duPont, George Foster
Peabody, National Headliner, George
Polk and Emmy awards.
On the digital side, Cars.com is the
leading online destination for auto-
motive consumers offering credible,
objective information about car shop-
ping, selling and servicing. With an
average of 35 million monthly visits to
its web properties, Cars.com leverag-
es its large consumer audience to help
automotive marketers more effective-
ly reach car buyers and sellers, as well
as those looking for trusted service
providers. CareerBuilder is a global
leader in human capital solutions,
helping the world’s top employers
attract great talent. CareerBuilder
provides services ranging from labor
market intelligence to talent manage-
ment software and other recruitment
solutions. It is one of the largest online
job sites in North America, measured
both by traffic and revenue, and has
a presence in more than 60 markets
worldwide. Together, Cars.com and
CareerBuilder provide TEGNA’s
advertising partners with access to
two very important categories – auto-
motive and human capital solutions.
Also part of this powerful digital mix
is G/O Digital, a one-stop shop for local
businesses looking to connect with
consumers through digital marketing,
from search to social and everything in
between. For brands and agencies,
G/O Digital delivers local digital activa-
tion at scale. G/O Digital partners with
top brands and retailers and works with
more than 4,000 local businesses.
Combined, TEGNA’s brands have
tremendous reach across broadcast
and digital media, empowering those
we serve to act with conviction and
navigate their world successfully.
TABLE OF CONTENTS
2016 Financial Summary ........................................................................................ 1
Letter to Shareholders ............................................................................................ 2
Board of Directors ..................................................................................................... 7
Company and Divisional Officers .....................................................................8
Form 10-K
Financial
Summary
In thousands, except per share amounts
Operating revenues, in millions
15
16
$3,051
$3,341
Adjusted net income attributable to TEGNA Inc., in millions(1)
15
16
$330
Adjusted net income per diluted share(1)
15
16
$1.44
$511
$2.33
2016
Change
9.5%
Operating revenues ....................... $ 3,341,198 $ 3,050,945
Operating income .......................... $ 972,074 $ 913,158
6.5%
Adjusted EBITDA (1) ..................... $ 1,234,550 $ 1,054,244 17.1%
Net income from continuing
operations attributable to
TEGNA Inc. ................................... $ 444,171 $ 357,458 24.3%
2015
Net income per share from
continuing operations – diluted ...... $
Net income attributable to
TEGNA Inc. before asset
impairment and other special
items (2)......................................... $ 510,885 $ 330,344 54.7%
2.02 $
29.5%
1.56
Net income per diluted share
before asset impairment and
other charges (2) ........................... $
2.33 $
1.44
61.8%
Free cash flow (3) .......................... $ 588,633 $ 532,464 10.5%
Working capital .............................. $ 171,507 $ 198,376 (13.5%)
(3.0%)
Long-term debt .............................. $ 4,042,749 $ 4,169,016
0.4%
Total assets ................................... $ 8,542,725 $ 8,505,958
Capital expenditures ...................... $
94,796 $ 118,767 (20.2%)
Shareholders’ equity ...................... $ 2,271,418 $ 2,191,971
Dividends declared per share ........ $
0.68 (17.6%)
0.56 $
3.6%
Weighted average common
shares outstanding – diluted .........
219,681
229,721
(4.4%)
(1) See page 25 of TEGNA’s Form 10-K for reconciliation of Adjusted EBITDA, and adjusted net income (non-GAAP financial measures), to net income from continu-
ing operations attributable to TEGNA.
(2) Results for 2016 exclude special items charges of $67 million after tax or $.31 per share. Results for 2015 exclude special items benefits of $27 million after tax or
$.12 per share. These special items are more fully discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations and
the Consolidated Financial Statement sections of this report.
(3) See page 67 of TEGNA’s Form 10-K for a reconciliation of free cash flow, a non-GAAP financial measure, to net cash flow from operating activities.
ANNUAL 1 REP ORT
Letter to
Shareholders
Dear Fellow Shareholders:
2016 was another record-setting year for TEGNA.
As part of our ongoing transformation strategy,
we continued to evolve to meet the constantly
changing needs of our consumers, clients and
customers. We launched new, innovative products,
told impactful, meaningful stories that made a
difference and announced strategic decisions to
drive the company forward. Every strategic move
positioned our company for success, now and in
the future.
The most significant announcement was our
intent to spin-off Cars.com, which will create two
independent, publicly-traded companies. Upon its
completion, both TEGNA and Cars.com will be more
sharply focused companies, providing greater stra-
tegic flexibility and terrific competitive positioning.
The strategic decision to separate these businesses,
enabling each to leverage unique opportunities in the
rapidly evolving broadcast and digital landscapes,
represents the culmination of our relentless focus
on innovating our business over the last five years.
Moreover, it was made possible by the hard work
and unflagging dedication of our more than 10,000
employees.
As we continue to transform our company, we
remain well-positioned for success in the digital age.
We constantly provide value to shareholders and
have outpaced the S&P 500 since we announced
our strategic growth plan in February 2012, with
total shareholder return for the five years ending
December 2016 of 131 percent versus 98 percent
for the S&P. In 2016, overall company revenue was
$3.3 billion. Adjusted EBITDA totaled $1.2 billion,
growth of more than 17 percent despite an
unpredictable election season. Both revenue and
profitability were substantially higher in 2016 than in
2015. We also achieved non-GAAP EPS of $2.33 per
diluted share, 62% year-over-year growth. We are
very pleased to have ended 2016 on a high note as
TEGNA and Cars.com get set to embark on their
next chapters as independent companies later
this year.
ANNUAL 2 REP ORT
Empowering Our People
The commitment, dedication and hard work by our employees are key to TEGNA’s success. We
take our responsibility to inform and empower seriously and what we do has a positive impact in
our communities. Our television stations raised more than $130 million to help local charities in
2016. On Make A Difference Day, a TEGNA sponsored day of service, more than 80,000 volunteers
from across the country came together with a common mission – to improve the lives of others
through volunteerism. TEGNA also embraces and encourages diversity, inclusion and equality.
We were named a top place to work for LGBTQ employees after receiving a perfect score from
the Human Rights Campaign Foundation on their 2017 Corporate Equality Index.
TEGNA Media: Relentless Innovation
It was an exciting and empowering year across TEGNA
Media. Despite a highly unusual election season, 2016
was a record year for revenue, a record year for ad-
justed EBITDA and we achieved record revenue share
for our division. Our geographic footprint in several
swing states enabled us to capture a substantial share
of political spend. We also leveraged our strong standing
as the number one NBC affiliate group, excluding owner-
operators, on the way to record Olympic advertising
revenue during the summer games in Rio De Janeiro.
A key to our success has been the relentless pursuit
of innovation. We continually find ways to redefine
journalism, and our business, in this digital age. From
transforming our local content to launching new,
innovative products, to reinventing our sales approach,
we continue to remain relevant and are evolving at a
rapid rate to meet the constantly changing needs of
those we serve.
In 2016, we launched Premion, an industry-first
company that provides local and regional advertisers
with access to long-form over-the-top (OTT) content
through one streamlined solution. A new division
of TEGNA Media, Premion will help us find more
effective and efficient marketing solutions for our
partners in the growing OTT market. TEGNA also
made strategic investments in Kin Community, the
premier home-focused content brand and creator
community that inspires and informs women, and
Whistle Sports, a network of next-generation athletes
and video creators who produce content and build
communities in new and innovative ways. Investing
in these innovative, digital-first companies allows
TEGNA to reach new audiences and continue to
create content and advertising solutions that are
unique, original and shareable.
On the content side, our scale affords us the
opportunity to invest in new initiatives that connect
with our audiences and tell meaningful stories. We can
easily take what is working in one market and quickly
apply it across the company. We are also focused on a
data-driven editorial process, creative new storytelling
formats and innovative visuals that help deliver
content to audiences how and when they want it.
ANNUAL 3 REP ORT
Making A Difference
As TEGNA Media continues to innovate and evolve,
this remains constant: we bring communities together
through impactful storytelling that makes a difference.
We remain committed to empowering our stations
with the resources needed to deliver quality,
meaningful, innovative journalism.
One example is the series “Mission Charlie Foxtrot”,
a multi-episode, digital-first docu-series that examined
the impact of war, the mental health of soldiers return-
ing home from battle and current military policies.
Every TEGNA Media station ran a portion of the series
on-air and in its entirety across its digital platforms.
They also localized the story, showing the direct impact
government policies are having on service members
in their community. As a result, a bill was signed into
law that will help address the issues highlighted in the
series, perhaps the most compelling evidence that
what we do positively affects our communities. TEGNA
Media’s KARE in Minneapolis was also the only televi-
sion broadcaster to win a George Polk Award for 2016.
Their investigation into the Department of Veterans
Affairs resulted in many veterans receiving proper
treatment after initially being misdiagnosed by unquali-
fied medical personnel.
We are proud to be advocates for those we serve
not only through investigative journalism and quality
reporting, but also through our stations’ food drives,
fundraisers and other service-driven initiatives. Com-
bined across TEGNA Media, our stations raised more
than $130 million to help local charities and organi-
zations in their communities. We also collected thou-
sands of toys, clothes and supplies for those in need.
This is all in addition to TEGNA’s annual Make
A Difference Day, one of the largest single days of
volunteering nationwide. Sponsored and organized
by TEGNA, more than 80,000 volunteers, including
participation from TEGNA’s operations, came
together in October with a common mission – to
improve the lives of others through a wide range
of community-driven service projects. Make A
Difference Day captures TEGNA’s company ethos:
we are a partner in people’s lives, committed to
making a difference and positive impact every day.
ANNUAL 4 REP ORT
Product Innovation
TEGNA is reinventing our business through innovation. This strategy enables us to remain relevant
while constantly evolving to meet the ever-changing needs of those we serve. We have transformed
our sales approach, developing a proprietary software solution that gives us a competitive advantage.
We launched Premion, an industry-first company that will help TEGNA find more effective and
efficient marketing solutions for advertisers in the growing OTT market. Investments in digital
content companies like Whistle Sports and Kin Community help us reach new audiences across
platforms. We also remain focused on developing creative and innovative new storytelling formats
that connect with audiences in new ways, like our digital-first docu-series “Mission Charlie Foxtrot”.
Charlie
Foxtrot
Taking Control of the Wheel
Our two core digital businesses, Cars.com and
CareerBuilder, are in the midst of exciting transition
periods that will accelerate growth and keep them
ahead of competitors and industry trends.
In the more than two years since we acquired full
ownership of Cars.com, the business has evolved
from an aggregator of auto classified ads into a pure-
play, online automotive and consumer technology
company offering comprehensive resources
for buying, selling and maintaining a car. In 2016,
Cars.com acquired DealerRater, one of the industry’s
largest automotive consumer review websites. The
transaction created one of the largest dealer review
platforms in the automotive sector and added
meaningful value to Cars.com moving forward.
Today, Cars.com is a leader in share of audience
and one of the most trusted platforms in the space.
In the months ahead, we believe Cars.com will
capture a greater share of ready-to-transact shop-
pers by empowering consumers, providing retailers
with more profitable connections with shoppers
and leveraging its leading technology platform and
mobile-centric focus.
When Cars.com becomes an independent
company later this year, it will be strongly positioned
to pursue organic growth plans and have increased
flexibility to make value-enhancing investments,
ultimately maximizing the opportunities afforded by
a growing auto advertising vertical with more dollars
being spent on digital solutions.
The Business of People
Like Cars.com, CareerBuilder had a very productive
year. CareerBuilder has developed an unmatched end-
to-end human capital solution, with the most innovative
pre-hire platform in the market. The transition into a
Software-as-a-Service (SaaS) business has resulted in
growth and accelerated sales. This year, CareerBuilder
also acquired WORKTERRA, a leading innovator in
cloud-based benefits administration and talent man-
agement. The transaction opens up additional revenue
streams and provides customers innovative solutions
across the pre-hire and post-hire process.
ANNUAL 5 REP ORT
Peak Performance
TEGNA remains well-positioned for success and growth now
and in the future. From our impactful, award-winning journalism
to innovative, industry-leading new products, TEGNA provides
incredible value to our shareholders. Since January 2012, we
have outpaced the S&P 500 with total shareholder return
through December 2016 of 131 percent versus 98 percent
for the S&P. We have strong growth, high-margin businesses,
consistently substantial and dependable cash flows, top
performing assets and scale, financial discipline and a share-
holder-focused capital structure. We continue to maximize our
strengths and remain an industry leader through innovation,
investment and strong leadership.
* Total Shareholder Return from Jan. 2012 – Dec. 2016.
Please see Financial Summary on page 1 for more detail.
businesses better than anyone else.
These core differentiators will not fade when the
businesses separate. In fact, they will only strengthen.
Both TEGNA and Cars.com will continue to maximize
return for investors, create compelling and innovative
content for viewers and consumers, provide unbeatable
solutions to our advertising and marketing partners
and offer opportunities for growth to our employees.
It was another exciting year at TEGNA and we
thank you for sharing it with us. We deeply appreciate
your loyalty and trust. We are enthusiastic about our
future and know we are well-positioned for growth and
success in 2017 and beyond.
Sincerely,
Marjorie Magner, Chairman of the Board
Gracia Martore, President and Chief Executive Officer
10%
OPERATING
REVENUES
17%
ADJUSTED
EBITDA
62% 131%
*
NON-GAAP
EPS
5YR RETURN TO
SHAREHOLDERS
In addition to the anticipated spin-off of Cars.com,
we are currently in the process of evaluating strategic
alternatives for CareerBuilder, including a possible sale.
TEGNA owns a majority 53 percent stake in the com-
pany. We are confident, along with our partners, that
we will find a solution that maximizes value for share-
holders while putting CareerBuilder in the best position
to succeed for its customers and its employees.
Competitive Advantages
As we embark on a new journey, both TEGNA and
Cars.com will have similar competitive advantages.
Both are strong growth, high-margin businesses with
consistently substantial and dependable cash flows.
Both will have balance sheets and capital return
policies tailored to their specific business needs,
which are expected to result in increased growth
opportunities and appropriate market valuations.
Additionally, upon completion of the spin, each will
benefit from the strong leadership of their experi-
enced and highly respected CEOs (Dave Lougee at
TEGNA; Alex Vetter at Cars.com) who know these
ANNUAL 6 REP ORT
(a) Member of Audit Committee.
(b) Member of Executive Committee.
(c) Member of Executive Compensation Committee.
(d) Member of Nominating and Public Responsibility Committee.
(e) Member of TEGNA Leadership Team.
Board of
Directors
MAGNER
MARTORE
DULSKI
ELIAS
FONSECA
GREENTHAL
MCCUNE
MCGEE
NESS
NOLOP
SHAPIRO
Marjorie Magner
Chairman, TEGNA Inc. and managing partner,
Brysam Global Partners, a private equity firm
investing in financial services with a focus on
consumer opportunities in emerging markets.
Formerly: Chairman and CEO, Citigroup’s
Global Consumer Group. Other directorships:
Accenture; Ally Financial Inc. Age 67. (a,b,c)
Gracia C. Martore
President and chief executive officer.
Formerly: President and chief operating offi-
cer, Gannett Co., Inc. (2010-2011); Executive
vice president and chief financial officer,
Gannett Co., Inc. (2006-2010); Senior vice
president and chief financial officer, Gannett
Co., Inc. (2003-2006). Other directorships
and trusteeships: WestRock Company;
FM Global; The Associated Press; and the
Board of Trustees of Wellesley College.
Age 65. (b,e)
Jennifer Dulski
President of Change.org. Formerly: Global
Head of Product Management, Shopping &
Product, Google Inc. Other directorships:
Little Passports; She++. Age 45. (c)
Howard D. Elias
President, Dell EMC Services and IT. Formerly:
President and chief operating officer, EMC
Global Enterprise Services. Age 59. (b,c)
Lidia Fonseca
Senior vice president and chief information
officer, Quest Diagnostics. Formerly: Senior
vice president and chief information officer,
Laboratory Corporation of America.
Age 48. (c)
Jill Greenthal
Senior advisor, Private Equity Group of
Blackstone Group, L.P. Formerly: Senior
managing director, Blackstone’s Advisory
Group. Other directorships: Akamai Tech-
nologies, Inc.; Houghton Mifflin Harcourt; The
Weather Channel. Age 60. (a)
Scott K. McCune
Founder, McCune Sports and Entertainment
Ventures, a firm focused on creating new
business value for brands, rights holders,
countries and startups. Formerly: Vice pres-
ident, Global Partnerships and Experiential
Marketing, The Coca-Cola Company. Age
60. (c)
Henry W. McGee
Senior lecturer, Harvard Business School.
Formerly: President, HBO Home
Entertainment. Other directorships:
AmerisourceBergen Corporation. Age 64. (d)
Susan Ness
Senior fellow, Center for Transatlantic Rela-
tions at Johns Hopkins University’s School
of Advanced International Studies (SAIS),
and Principal, Susan Ness Strategies, a
communications policy consulting firm.
Other directorships: Vital Voices Global
Partnership. Age 68. (a,d)
Bruce P. Nolop
Former Executive vice president and chief
financial officer of E*TRADE Financial
Corporation. Formerly: Executive vice presi-
dent and chief financial officer, Pitney Bowes
Inc. Other directorships: Marsh & McLennan
Companies, Inc.; On Deck Capital, Inc.
Age 66. (a,b)
Neal Shapiro
President and chief executive officer,
WNET.org. Other directorships and
trusteeships: Public Broadcasting Service
(PBS); The Institute for Non-profit News;
childobesity180; and the Board of Trustees,
Tufts University. Age 59. (b,d)
ANNUAL 7 REP ORT
Company
& Divisional
Officers
TEGNA’s principal management group is the TEGNA Leadership Team, which coordi-
nates overall management policies for the company.
The managers of the company’s various local operating units enjoy substantial
autonomy in local policy, operational details and content. TEGNA’s headquarters staff
includes specialists who provide advice and assistance to the company’s operating
units in various phases of the company’s operations.
Included is a listing of the officers of the company. Information about one officer who
serves as a director (Gracia C. Martore) can be found on page 7.
Lynn Beall, Executive Vice President,
TEGNA Media. Age 56.
Michael A. Hart, Vice President and
Treasurer. Age 71.
William A. Behan, Senior Vice President,
Labor Relations. Age 58. •
David T. Lougee, President, TEGNA
Media. Age 58. •
Tom R. Cox, Vice President, Corporate
Development. Age 39.
Peter Diaz, Executive Vice President,
TEGNA Media. Age 60.
Victoria D. Harker, Executive Vice
President and Chief Financial Officer.
Age 52. •
Todd A. Mayman, Executive Vice
President, Chief Legal and Administrative
Officer. Age 57. •
Clifton A. McClelland III, Vice President
and Controller. Age 47.
John A. Williams, President, TEGNA Digital.
Age 66. •
Akin S. Harrison, Vice President, Associate
General Counsel and Secretary. Age 44.
• Member of the TEGNA Leadership Team.
ANNUAL 8 REP ORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-6961
TEGNA INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
16-0442930
(I.R.S. Employer Identification No.)
7950 Jones Branch Drive, McLean, Virginia
(Address of principal executive offices)
22107-0150
(Zip Code)
Registrant’s telephone number, including area code: (703) 873-6600
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, par value $1.00 per share
The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
No
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 and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K (Check box if no delinquent filers).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the voting common equity held by non-affiliates of the registrant based on the closing sales
price of the registrant’s Common Stock as reported on The New York Stock Exchange on June 30, 2016, was $4,949,634,035.
The registrant has no non-voting common equity.
As of January 31, 2017, 214,716,069 shares of the registrant’s Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement relating to the registrant’s Annual Meeting of Shareholders to be held on May 4, 2017, is
incorporated by reference in Part III to the extent described therein.
INDEX TO TEGNA INC.
2016 FORM 10-K
Part I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . .
Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part III
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part IV
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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PART I
ITEM 1. BUSINESS
Overview
Our company is comprised of a dynamic portfolio of media
and digital businesses that provide content that matters and
brands that deliver. We deliver highly relevant, useful and
smart content, when and how people need it, to make the best
decisions possible. Our agile and forward-thinking portfolio is
comprised of one of the largest, most geographically diverse
television broadcasters in the U.S. and two leading digital
companies, Cars.com and CareerBuilder. Combined,
TEGNA’s brands have tremendous reach.
Our high margin operations generate strong and
dependable cash flows and we are very financially disciplined.
In addition, our strong balance sheet provides us the flexibility
to invest in our businesses and to capitalize on opportunities
for organic and acquisition-related growth while returning
value to shareholders through dividends and share
repurchases.
On September 7, 2016, we announced two strategic
actions related to our Digital Segment. These strategic
decisions, which are part of our ongoing transformation, are
intended to enable us to continue to deliver value to
shareholders and position us for future success. First, we
announced our intention to spin-off our Cars.com business
unit into a separate stand-alone public company. The spin-off
will create two independent, publicly traded companies:
TEGNA, the largest independent broadcast station group of
major network affiliates in the top 25 markets, and Cars.com,
a top online destination in the digital automotive marketplace.
We expect to complete the spin-off in the first half of 2017.
When we announced our intention to spin-off of Cars.com, we
also declared our plans to conduct a strategic review of our
53% ownership interest in CareerBuilder, including a possible
sale of it in conjunction with the other owners’ interests. We
expect to complete our strategic review during the first half of
2017.
The strategic actions are part of our ongoing
transformation. We believe the spin-off of Cars.com will
provide each company with greater flexibility to invest in
organic growth and pursue value enhancing investments and
acquisitions. Both companies possess strong balance sheets
and generate strong cash flow. When the spin is completed,
each company will have tailored capital structures and
shareholder return policies aligned with their distinctive
businesses.
We believe that CareerBuilder’s breadth, scale, brand
recognition, and continued successful transition as well as
focus on fast-growing, higher-margin software as a service
(SaaS) businesses offers a compelling value proposition. If
CareerBuilder is divested, and upon completion of the
anticipated spin-off of Cars.com, both TEGNA and Cars.com
would become separate standalone businesses, one
operating exclusively in broadcasting and the other in the
digital automotive space. Should there be a sale of
CareerBuilder, any transaction proceeds would provide
TEGNA with even further financial flexibility.
We will maintain the current operating and reporting
structure for both businesses and will continue to report their
financial results in our continuing operations until the
anticipated spin-off transaction is complete and during our
strategic review of CareerBuilder. As such, we continue to
operate the following two reportable segments:
3
TEGNA Media (Media Segment) - includes 46 television
stations (including one station under service agreements) in
38 markets. We are the largest independent station group of
major network affiliates in the top 25 markets, covering
approximately one-third of all television households
nationwide (more than 36 million households per Nielsen). We
represent the #1 NBC affiliate group, #2 CBS affiliate group
and #5 ABC affiliate group (excluding owner-operators). Each
television station also has a robust digital presence across
online, mobile and social, reaching consumers whenever,
wherever they are across platforms. Throughout 2016,
approximately 63 million visitors accessed our Media
Segment’s digital properties each month (according to Adobe).
Social media is now at the core of all we do and we have over
18 million social subscribers to our station accounts. Our
stations keep viewers informed and engaged throughout the
day. Along with the advantages associated with our scale, we
are ratings leaders well-positioned to continue to take market
share. We believe that content comes first, resulting in award-
wining local programming and a unique bond with the
communities we serve. We continue to make top-notch,
innovative programming a priority and invest in local news and
other special programming to ensure we stay connected to our
audiences and empower them throughout the day.
TEGNA Digital (Digital Segment) - which primarily consists
of the Cars.com, CareerBuilder, and G/O Digital businesses.
Cars.com is a leading online destination for automotive
consumers offering credible, objective information about car
shopping, selling and servicing. Cars.com averaged
approximately 35 million visits each month during 2016,
approximately 52% of which are mobile, and according to
comScore, an average of approximately 11.8 million unique
monthly visitors over the same time period. Leveraging its
market-leading position and large audience, Cars.com also
informs digital marketing strategies through consumer insights
and innovative products, helping automotive dealers and
manufacturers to reach in-market car shoppers more
effectively.
In addition, we own a controlling 53% interest in
CareerBuilder, a global, end-to-end human capital solutions
company focused on helping employers find, hire and manage
great talent. Combining advertising, software and services,
CareerBuilder is an industry leader in recruiting solutions,
employment screening and human capital management.
CareerBuilder operates one of the largest job sites in North
America, measured both by traffic and revenue, and has a
presence in more than 60 markets worldwide. Together,
Cars.com and CareerBuilder provide our advertising partners
with access to two very important categories - automotive and
human capital solutions.
Our Digital Segment also includes G/O Digital, a one-stop
shop for digital marketing services for local businesses. As
consumers conduct more of their daily lives and day-to-day
business online, our digital assets position us well, providing a
vast footprint available for our advertisers.
In addition to the above reportable segments, our
corporate category includes activities that are not directly
attributable or allocable to a specific reportable segment. 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 a
particular segment.
General Company Information
TEGNA was founded by Frank E. Gannett and associates in
1906 and was incorporated in 1923. We listed shares publicly
for the first time in 1967 and reincorporated in Delaware in
1972. Our approximately 215 million outstanding shares of
common stock are held by approximately 6,600 shareholders
of record as of December 31, 2016. Our headquarters is
located at 7950 Jones Branch Drive, McLean, VA, 22107. Our
telephone number is (703) 873-6600 and our website home
page is www.tegna.com. We make our website content
available for information purposes only. It should not be relied
upon for investment purposes, nor is it incorporated by
reference into this Annual Report on Form 10-K (Form 10-K).
Our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, proxy statements for
our annual stockholders’ meetings and amendments to those
reports are available free of charge on our investor website,
www.investors.tegna.com as soon as reasonably practical
after we electronically file the material with, or furnish it to, the
Securities and Exchange Commission (SEC). In addition,
copies of our annual reports will be made available, free of
charge, upon written request. The SEC also maintains a
website at www.sec.gov that contains reports, proxy
statements and other information regarding SEC registrants,
including TEGNA Inc.
Business Segments
We operate two business segments: Media and Digital. We
organize our business segments based on management and
internal reporting structure, the nature of products and services
offered by the businesses within the segments, and the financial
information that is evaluated regularly by our chief operating
decision maker. Financial information for each of our reportable
segments can be found under Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and Item 8 “Financial Statements and
Supplementary Data” of this Form 10-K.
Media Segment
In 2016, our Media Segment generated net revenues of
$1.93 billion, which represented 58% of our total
consolidated net revenues. We have a presence in almost
one-third of U.S. television households with a total market
coverage throughout 2016 of more than 36 million
households according to Nielsen reports. Our station portfolio
includes 46 full-power stations including one station we
service through services arrangements. We are diversified by
region and network affiliation and are a leading company in
the industry. Other than the three major networks (ABC,
CBS, and NBC) themselves, we are the largest owner of
stations affiliated with each of these three major networks in
the top 25 markets.
The primary sources of our Media Segment’s revenues are:
1) core advertising which includes local and national non-
political advertising; 2) political advertising revenues which
are driven by elections and peak in even years (e.g. 2016,
2014) and particularly in the second half of those years; 3)
retransmission revenues representing fees paid by satellite
and cable operators and telecommunications companies to
carry our television signals on their systems; 4) digital
revenues which encompass digital marketing services and
advertising on the stations’ websites, tablet and mobile
products; and 5) other services, such as production of
programming from third parties and production of advertising
material.
The advertising revenues generated by a station’s local
news programs make up a significant part of its total
advertising revenues. Advertising rates are influenced by the
demand for advertising time. This demand is influenced by a
variety of factors, including the size and demographics of the
local populations, the concentration of businesses, local
economic conditions in general, and the popularity of the
station’s programming. As the market fluctuates with supply
and demand, so does the station’s pricing. Almost all national
advertising is placed through independent advertising
representatives. Local advertising time is sold by each
station’s own sales force.
Generally, a network provides programs to its affiliated
television stations and the network sells commercial
advertising for certain of the available advertising spots
within the network programs, while our television stations sell
the remaining available commercial advertising spots. Our
television stations also produce local programming such as
news, sports, and entertainment.
Broadcast affiliates and their network partners continue to
have the broadest appeal in terms of household viewership,
viewing time and audience reach. The overall reach of
events such as the Olympics and NFL Football, along with
our extensive local news and non-news programming,
continues to surpass the reach in viewership of individual
cable channels. Our ratings and reach are driven by the
quality of programs we and our network partners produce
and by the strong local connections we have to our
communities, which gives us a unique position among the
numerous program choices viewers have, regardless of
platform.
Media’s entire portfolio of NBC, CBS, ABC and FOX
stations are under long-term affiliation agreements.
Additionally, there are several initiatives underway that we
expect to contribute additional revenue and cash flow growth
in the coming years to offset the impact of increasing
programming fees.
Strategy: Our Media Segment’s quality and scale drives
its success. Our television stations empower the people we
serve, delivering highly relevant, useful and smart content.
From our successful renewals of retransmission agreements
and the creation of original, innovative programming to
expanded coverage and increased focus on our communities,
we had a very strong year in 2016. We initiated significant
efforts to transform our content and connect with audiences in
new, powerful ways. With increased alignment between our
digital and linear television properties as well as increased
focus on station-to-station content sharing, we delivered more
cross-platform reporting than ever before.
4
Our continued focus and investment in innovation for 2017
and beyond is key to our financial results and growth in the
future. Innovations like Hatch, our centralized marketing
solutions group, combined with our new Pricing and Business
Intelligence team, a comprehensive content innovation plan,
and Premion, our newly launched over-the-top (OTT)
advertising service, are all positively impacting our business
and advancing the way we meet our consumers and our
customers’ needs. Key elements of our Media Segment’s
strategy are as follows:
Continue to invest in quality content. Our scale has allowed
us to invest in comprehensive content and digital innovation
initiatives. Our focus on data-driven editorial processes, new
storytelling formats, unique visual presentations and more are
all helping to deliver content audiences demand. During 2016,
we saw audience gains from new talent-driven shows focused
on authentic personalities and informal presentations. We saw
significant gains in market share from new production styles
on digital and social media platforms. We also saw ratings
gains from new data-driven processes that brought our
storytellers and consumers closer than ever before.
Increase engagement across all platforms. Our Media
Segment continues to focus on increasing engagement on all
platforms with local customers, including digital marketing
services and advertising on the stations’ desktop, tablet and
mobile products. In this regard, 2016 was a pivotal year in
our Media Segment’s digital development. Several significant
product, technology, monetization and staffing building
blocks were put in place to position us to capitalize on key
trends in the fast-moving and evolving digital landscape.
• The first trend was a move to embrace a SaaS approach
to digital product development. Rather than building all
technologies in-house and incurring significant staffing
and capital expenses, we began to leverage best-in-class
SaaS providers to rapidly enable and iterate on new
features and functionalities while augmenting critical
components with a small internal team to create unique
opportunities and differentiated experiences. This allowed
our Media Segment to optimize user experience and
create personalized content.
• The second key trend is our continued development of
products based on the movement of audiences to mobile
and off-platform channels such as social and Internet-
enabled television services commonly referred to as “over
the top” or “OTT”. We have made significant strides
engaging consumers based on these new digital content
consumption patterns measured by number of Facebook
video plays and social interactions according to
CrowdTangle and Omniture.
• The third trend is around monetization as our Media
Segment has effectively optimized its programmatic
advertising scale and efficiencies. We believe these key
initiatives in 2016 along with the hiring of digital executive
leadership have our Media Segment well positioned for
an exciting 2017.
Enhance our digital product offerings to further increase
traffic. Our television stations continue to experience strong
demand for digital product offerings and product
improvements continue to be favorably received by
consumers. In 2016, total video plays increased 9% from
2015 on our own platforms while off platform (primarily
Facebook and YouTube) surpassed 2 billion video plays
(according to Facebook Insights and YouTube Analytics).
Usage of our mobile and tablet apps, as well as mobile web,
continues to be strong. Product enhancements to both the
desktop and mobile digital products occur every year and are
part of a continuous cycle of improving the customer
experience and increasing consumer engagement.
Capitalize on growth in social media. Our Media Segment
is positioned to maximize engagement through social media.
There is a strong synergistic relationship between social
media and television and we continue to explore ways to
socially engage consumers on all screens for all types of
programs, from major sporting events such as the Super Bowl,
March Madness, and the Olympics to signature television
events such as the Grammys and Academy Awards. Our
social media reach grew over 40% in 2016 and now totals
over 18 million followers on Twitter, Facebook and Instagram
(according to CrowdTangle).
Retransmission consent agreements: Pursuant to
Federal Communications Commission (FCC) rules, every
three years a local television station must elect to either (1)
require cable and/or direct broadcast satellite operators to
carry the station’s signal or (2) require such cable and satellite
operators to negotiate retransmission consent agreements to
secure carriage. At present, we have retransmission consent
agreements with the majority of cable operators and satellite
providers for carriage of our television stations. We also have
retransmission agreements with major telecommunications
companies. Revenue from television retransmission fees has
increased steadily in the last several years, better reflecting
the value of the content that our Media Segment provides.
While television spot advertising still represents a majority of
Media Segment revenues (approximately 62% in 2016), the
contribution from retransmission revenues continues to grow.
In 2016, our Media Segment renegotiated several new
retransmission agreements with major carriers. We believe
our content and scale will allow us to grow market share and
secure further retransmission fee revenue growth in 2017 and
beyond, as we work over the coming years to close the
economic gap between the value we provide and the fees that
we are currently receiving from many carriers.
Programming and production: The costs of locally
produced and purchased syndicated programming is a
significant portion of television operating expenses.
Syndicated programming costs are determined based on
several market factors, including demand from the
independent and affiliated stations within the market. In recent
years, our television stations have expanded our locally
produced news and entertainment programming in an effort to
provide programs that distinguish the stations from the
competition and to be more cost effective. Due to our scale,
we provide stations additional resources from other markets to
cover major breaking news stories which gives us a
competitive advantage.
5
Competition: Our Media Segment competes for audience
share and advertising revenues primarily with other local
television broadcasters (including network-affiliated and
independent) and with other advertising media, such as radio
broadcasters, multichannel video programming distributors
(MVPDs), newspapers, magazines, direct mail and Internet
media. Other sources of competition for our media stations
include home video and audio recorders and players, direct
broadcast satellite, low power television, internet radio, video
offerings (both wire line and wireless) of telephone companies
as well as developing video services. Within their respective
Designated Market Area (DMA), our stations compete for
audience share and audience composition which is largely
driven by program popularity. Our share of the DMA has a
direct effect on the rates we are able to charge advertisers.
MVPDs can also increase competition by bringing additional
cable network channels and content into the DMA.
The advertising industry is dynamic and rapidly evolving.
Our stations compete in the emerging local electronic media
space, which includes the Internet or Internet-enabled
devices, handheld wireless devices such as mobile phones
and tablets, social media platforms, digital spectrum
opportunities and OTT. The technology that enables
consumers to receive news and information continues to
evolve.
Regulation: Our television stations are operated under the
authority of the Federal Communications Commission (FCC or
Commission), the Communications Act of 1934, as amended
(Communications Act), and the rules and policies of the FCC
(FCC regulations). As a result, our television stations are
subject to a variety of obligations, such as restrictions on the
broadcast of material deemed “indecent” or “profane,”
requirements to provide or pass through closed captioning for
most programming, rules requiring the public disclosure of
certain information about our stations’ operations, and the
obligation to offer programming responsive to the needs and
interests of our stations’ communities. The FCC may alter or
add to these requirements, and any such changes may affect
the performance of our business. Certain significant elements
of the FCC’s current regulatory framework for broadcast
television are described in further detail below.
Television broadcast licenses generally are granted for
periods of eight years. They are renewable upon application
to the FCC and usually are renewed except in rare cases in
which a petition to deny, a complaint or an adverse finding as
to the licensee’s qualifications results in loss of the license.
We believe we are in substantial compliance with the
applicable provisions of the Communications Act and FCC
regulations.
FCC regulations limit the concentration of broadcasting
control and regulate network and local programming
practices. FCC regulations governing media ownership limit,
or in some cases prohibit, the common ownership or control
of most communications media serving common market
areas (for example, television and radio; television and daily
newspapers; or radio and daily newspapers). FCC
regulations permit common ownership of two television
stations in the same market in certain defined circumstances,
including situations where at least one of the commonly
owned stations is not among the top four rated stations in the
market at the time of acquisition and at least eight
independently owned television stations would remain after
the acquisition. The Communications Act includes a national
ownership cap for broadcast television stations that prohibits
any one person or entity from having, in the aggregate,
6
market reach of more than 39% of all U.S. television
households. Until recently, FCC regulations permitted
stations to discount the market reach of stations that
broadcast on UHF channels by 50% (the UHF discount). In
September 2016, however, the FCC adopted an order
repealing the UHF discount, which has been challenged at
the FCC and in court. Our 45 television stations (excluding
the station we currently service under a services
arrangement) reach approximately 27% of U.S. television
households when the UHF discount is applied and
approximately 32% without the UHF discount.
The FCC is required under the Communications Act to
review its media ownership rules every four years. In an
August 2016 order concluding its most recent quadrennial
review, the FCC decided to retain in large part its existing
limits on television ownership and cross-ownership. In
addition, the order readopted rules - previously struck down by
the U.S. Court of Appeals for the Third Circuit - that make
certain television joint sales agreements (JSAs) attributable in
calculating compliance with the local television ownership
limits. The order included a grandfathering provision, so that
any such JSAs in effect as of March 31, 2014, may remain in
place and be assigned or transferred through September 30,
2025. The FCC also will require the disclosure of shared
services agreements (SSAs) in stations’ online public
inspection files, though these agreements generally are not
deemed to be attributable ownership interests. We are party to
a transition services agreement (which is similar to, but more
limited than, the typical shared services agreement) and a JSA
with a third party that owns a television station in Tucson,
where we also own a television station. Our JSA is subject to
the FCC’s grandfathering provision and, if attributed, would
have an insignificant impact on our overall attributable
ownership interest. We are not party to any other JSAs or
SSAs. The FCC’s recent quadrennial review order is being
challenged at the FCC and in court. If upheld, the order could
restrict our ability to enter into future transactions and may
require us to disclose more information about our station
operations.
In 2015, the FCC adopted new rules required by the
STELA Reauthorization Act of 2014 that prohibit same-market
television broadcast stations from coordinating or jointly
negotiating for retransmission consent unless they are under
common control. Congress also directed the FCC to
commence a rulemaking to “review its totality of the
circumstances test for good faith [retransmission consent]
negotiations.” The Commission conducted the required
proceeding but did not adopt any additional rules concerning
these negotiations. Separately, in March 2014, the FCC put
forward a proposal to eliminate the Commission’s network
non-duplication and syndicated exclusivity rules, which
provide television stations with the right to enforce exclusivity
rights that prohibit cable operators and direct broadcast
satellite systems from importing out-of-market television
stations with duplicating programming during a retransmission
consent dispute or otherwise. To date, the FCC has taken no
action on this proposal. If such changes were adopted, they
could give cable and satellite operators leverage against
broadcasters in retransmission consent negotiations and, as a
result, adversely impact our revenue from retransmission and
advertising.
Congress authorized the FCC to conduct a voluntary
incentive auction to reallocate certain spectrum currently
occupied by television broadcast stations to mobile wireless
broadband services, along with a related “repacking” of the
television spectrum for remaining television stations. The
repacking will require that certain television stations move to
different channels, and some stations may have smaller
service areas and/or experience additional interference.
Congress has required that the FCC make “all reasonable
efforts” to preserve the coverage area and population served
of full-power and Class A television stations. The legislation
authorizing the incentive auction and repacking establishes a
$1.75 billion fund for reimbursement of costs incurred by
stations required to change channels in the repacking.
Between January 12, 2016, and February 6, 2017, a “quiet
period” under the FCC’s auction rules prohibited broadcast
television licensees eligible to participate in the reverse-
auction phase of the incentive auction from directly or
indirectly communicating with each other or with forward-
auction applicants regarding licensees’ bids or bidding
strategies in the incentive auction. On January 18, 2017, the
FCC announced that the necessary conditions had been met
for the auction to close once the current round of bidding for
wireless licenses is complete, and on February 6, 2017, the
FCC waived the quiet-period rules as they applied to
discussions of broadcast television licensees’ reverse-auction
bids and bidding strategies. None of our stations will relinquish
any spectrum rights as a result of the auction, and accordingly
we will not receive any incentive auction proceeds. The FCC
has notified us that 13 of our stations will be repacked to new
channels; we will be eligible to seek reimbursement for costs
associated with implementing these changes. In addition, a
station that is not required to move channels may be eligible to
apply for an alternate post-auction channel or expanded
facilities in the event the station is predicted to experience
increased interference resulting in a greater than one percent
loss in population served, although costs associated with such
changes would not be eligible for reimbursement. We also
own various low-power television stations, which are not
entitled to repacking protection and may be displaced. Any
such displaced low-power stations either would need to cease
operations or be relocated to a new channel (if one is
available) at our expense. It is still too early to predict the
ultimate impact of the incentive auction and repacking upon
our business, as this impact will depend upon numerous
factors, including the results of the incentive auction and
repacking with respect to other television stations in our
markets and adjacent markets. The FCC will publicly release
the full auction results, including a complete list of all stations
repacked to new channels, at a later date.
In December 2014, the FCC proposed to expand the
definition of “MVPD” to include certain “over-the-top”
distributors of video programming that stream content to
consumers over the Internet. If the FCC adopts this proposal,
it could result in changes to how our stations’ signals are
distributed, as well as how our video programming
competitors reach viewers. We are unable to predict at this
time whether the FCC will adopt this proposal or what the
effect on our retransmission and advertising revenues would
be, if any.
Digital Segment
Our Digital Segment is comprised of three business units:
Cars.com, CareerBuilder, and G/O Digital. In December 2016
we sold our Cofactor business unit. In 2016, our Digital
Segment generated net revenues of $1.41 billion, which
represented 42% of our total consolidated net revenues.
Cars.com offers credible and easy-to-understand
information from consumers and experts that help car buyers
to price and find new and used vehicles and car owners to find
qualified service and repair providers. Additionally, Cars.com
operates Auto.com, DealerRater.com, NewCars.com and
PickupTrucks.com, specialized websites directed towards
different consumer segments. Leveraging its market-leading
position and growing audience, Cars.com also informs digital
marketing strategies through consumer insights and
innovative products, helping automotive dealers and
manufacturers to reach in-market car shoppers more
effectively.
Cars.com generates revenues through the sale of online
subscription advertising products targeting car dealerships
through its own direct sales force as well as its affiliate sales
channels. Cars.com hosts approximately 4.7 million vehicle
listings at any given time and serves approximately 20,000
franchise and independent car dealers throughout all 50
states. Cars.com also generates revenue through the sale of
display advertising to national advertisers. In January 2015,
Cars.com expanded into the area of service, introducing
RepairPal Certified, a solution that provides information about
reputable certified repair shops and allows consumers to get
estimates on potential vehicle repairs. In August 2016, TEGNA
acquired DealerRater, the industry’s largest automotive
consumer review website, which is consolidated into our
Digital Segments results. With nearly 2.8 million consumer
reviews of local dealers, DealerRater harnesses the power of
social media to help consumers decide which person to ask
for advice when they call or arrive at a dealership.
CareerBuilder offers a wide array of solutions that help
employers around the world match the right candidate to the
right opportunity at the right cost. CareerBuilder has been
executing a strategic shift from an advertising-driven business
to a business focused on SaaS for human capital. During this
transformation, CareerBuilder has built an integrated software
platform to handle all aspects of the candidate lifecycle and
employee lifecycle, leveraging its existing job advertising and
other assets to extend capabilities into a full service software
platform.
CareerBuilder has built a pre-hire software platform,
providing everything from high-powered candidate sourcing
and mass job distribution to talent and labor market analysis,
candidate tracking and automatic candidate relationship
management - all in one place. Through its technology,
constant innovation and customer care delivered at every
touch point, CareerBuilder is helping employers hire the best
talent, faster.
Revenues are generated by providing recruitment
solutions, employment screening and human capital
management solutions, and through sales of employment
advertising placed with CareerBuilder’s owners’ affiliated
media organizations.
7
Supplement organic growth with selective
acquisitions. Cars.com believes it will be well-positioned to
pursue value-enhancing investments and acquisitions in the
increasingly competitive digital automotive marketplace
industry. Cars.com will be both opportunistic and disciplined in
its acquisition strategy.
CareerBuilder had a very productive year, returning to
revenue growth and accelerating sales across all its human
capital solutions. CareerBuilder’s pre-hire platform has proven
to be one of most innovative offerings on the market, enabling
CareerBuilder to offer a mix of recruitment advertising and
SaaS solutions, which has resulted in time and cost savings
for customers.
CareerBuilder has continued its transformation into a
global HR SaaS leader, combining its advertising products
with software and services to create a single unified solution
for recruiters and employers. The SaaS platform is in addition
to CareerBuilder’s existing product line, and not a departure
from the core business. CareerBuilder continues to grow its
SaaS product offering, achieving SaaS revenues of $162
million in 2016, up 8% from 2015. CareerBuilder is also
moving into post-hire solutions with its recent acquisition of
Workterra which we anticipate will open up new revenue
streams and serve our customers in an even more robust way.
Also, in November 2016, CareerBuilder announced it is
collaborating with Google and plans to use the Google Cloud
Jobs API to power job search on the site. CareerBuilder has
begun leveraging Google’s extensive search and machine-
learning capabilities to make job search results faster and
more relevant.
Competition: Our Digital Segment faces significant
competition from other websites offering integrated Internet
products and services, networking websites and e-commerce
websites. Several competitors offer online services and/or
content in a manner similar to us that competes for the
attention of the users of our offerings and advertisers.
Specifically, Cars.com competes for a share of total digital
advertising spend in the U.S. automotive market. The digital
automotive industry is constantly evolving. Low barriers to
entry allow new competitors to enter the market with new
products, possibly putting pressure on Cars.com’s pricing
structure.
In recent years, dealers have shifted an increasing portion
of their advertising budgets to new entrants with niche
advertising products. Dealers also continue to invest in search
engine marketing to drive traffic directly to their own websites,
bypassing third-party sites while still investing in traditional
media such as television, radio and newspapers. Cars.com
has maintained a leadership position through its award-
winning site and through innovative new products for its
advertisers, and it believes that as the competitive climate
evolves, the need to innovate and to connect an advertiser’s
investment to eventual sales at a local level will be of
increasing importance.
CareerBuilder made two strategic acquisitions during 2016.
First, on March 1, 2016, it acquired Aurico, a provider of
background screening and drug testing, which expanded the
pre-hire employer service offerings. Second, on September 2,
2016, it acquired a 75% interest in Workterra, a cloud-based
human capital management platform that provides
onboarding, benefits administration, wellness and compliance
solutions to employers, a move that expanded CareerBuilder’s
suite of software solutions into the post-hire sector.
CareerBuilder serves both U.S. and international
customers. Through its websites and partnerships,
CareerBuilder has a presence in more than 60 countries
worldwide, including Europe, Canada, Asia, and Australia. In
2016, U.S. customers accounted for 89% and international
customers accounted for 11% of CareerBuilder’s net revenue.
In addition, our Digital Segment includes our G/O Digital
business which is a one-stop-shop for local businesses
looking to connect with media consumers through digital
marketing, including via search, social and email advertising.
Strategy: The Digital Segment is driving significant growth
as our businesses meet evolving consumer demand.
Cars.com’s strategy is to offer an innovative mix of
complementary products and services that create seamless
and confident car buying experiences for consumers and
efficient marketing solutions for advertisers. Key elements of
Cars.com’s strategy to achieve these objectives are as
follows:
Leverage competitive strengths to provide targeted,
integrated solutions to advertisers. Cars.com intends to
leverage its many competitive advantages including its
innovative digital advertising services products and brand
recognition as a trusted, unbiased third-party research
platform to create tailored media and marketing plans that
efficiently target in-market consumers, drive dealership car
buyer traffic and reinforce advertisers’ message and digital
presence. Cars.com is a highly attractive advertising and
marketing resource due to its offering of thoughtfully-crafted
digital strategies that meet the unique needs of automobile
industry marketers and advertisers.
Expand into new markets and continue to offer new
complementary products and services. Cars.com believes that
there are significant opportunities to expand into adjacent
markets in the automotive industry and potentially enter into
new industry verticals. As indicated by Cars.com’s successful
launches of Sell & Trade and Event Positions, its partnership
with RepairPal Certified and the recent acquisition of
DealerRater, Cars.com believes its expertise in dealer
operations and the retail automotive industry, along with its
ability to manage data and develop technological solutions,
can be leveraged to provide solutions to the challenges that
consumers, retailers, manufacturers and advertisers face in
other aspects of the automotive and ancillary industries.
Increase mobile solutions to further drive car buyer
traffic. Cars.com believes that on-the-go mobile device car
buying research and comparison applications have been
playing and will continue to play an increasingly important role
in the digital automotive marketplace industry. Cars.com has
seized on the opportunities presented by this trend. Visits to
Cars.com from smartphones have continued to increase, and
at the end of 2016, approximately 52% of total Cars.com
shoppers visit the Cars.com sites from mobile devices
(according to Adobe Analytics). Cars.com’s user-friendly
mobile applications provide in-market car shoppers with real-
time, credible research and price comparison tools while they
are on the lot and actively engaged in the car buying process.
8
For CareerBuilder, the market for online recruitment
solutions is highly competitive with a multitude of online and
offline competitors. Competitors include other employment
related websites, general classified advertising websites,
professional networking and social networking websites,
traditional media companies, Internet portals, search engines
and blogs. The barriers to entry into the online recruitment
market are relatively low and new competitors continue to
emerge. Recent trends include the rising popularity of
professional and social media networking websites and job
aggregation sites which have gained traction with employer
advertisers. The number of niche job boards targeting specific
industry verticals has also continued to increase.
CareerBuilder’s ability to maintain its existing customer base
while generating new customers depends, to a significant
degree, on the quality of its services, pricing, product
innovation and reputation among customers and potential
customers.
For G/O Digital, the market for digital marketing services is
highly competitive and fragmented. On a local level, we face
increased competition from a wide range of companies
offering similar tools and systems for managing and optimizing
advertising campaigns.
Regulation and legislation (impacting Digital Segment
businesses and digital operations associated with Media
businesses): The U.S. Congress has passed legislation which
regulates certain aspects of the Internet, including content,
copyright infringement, taxation, access charges, liability for
third-party activities and jurisdiction. Federal, state, local and
foreign governmental organizations have enacted and also are
considering other legislative and regulatory proposals that
would regulate the Internet. Areas of potential regulation
include, but are not limited to, user privacy, data security, and
intellectual property ownership. With respect to user privacy,
the legislative and regulatory proposals could regulate
behavioral advertising, which specifically refers to the use of
user behavioral data for the creation and delivery of more
relevant, targeted Internet advertisements. With respect to our
international operations, we are also closely monitoring
developments regarding regulations relating to the transfer of
personal data from Europe to the U.S. Some of our digital
properties utilize certain aspects of user behavioral and
personal data in their advertising solutions to customers.
Employees
At the end of 2016, TEGNA and its subsidiaries employed
approximately 10,100 full-time and part-time people, including
approximately 3,300 at CareerBuilder.
2016
4,908
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,014
Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
199
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,121
2015
5,020
4,785
215
10,020
Approximately 6% of our employees in the U.S. are
represented by labor unions. They are represented by 24 local
bargaining units, most of which are affiliated with one of four
international unions under collective bargaining agreements.
These agreements conform generally with the pattern of labor
agreements in the broadcasting industry. We do not engage in
industry-wide or company-wide bargaining. All of our union
employees are employed by our Media Segment.
9
Environmental and Sustainability Initiatives
We are committed to managing our environmental impact
responsibly and protecting the environment through our media
programs and our charitable endeavors.
Our television stations regularly cover environmental and
sustainability issues that affect their communities. In 2016, we
focused particular attention on water safety. KPNX in Phoenix
reported on high uranium levels in the water of a rural,
majority Native American community that had not been
disclosed to residents. Authorities in Arizona subsequently
announced enhanced notification measures in the event of
future water quality violations. KBMT in Beaumont also
addressed water quality concerns in their region, exposing
unsafe contaminant levels in local water as well as the
inadequacy of current testing programs. Our station in
Spokane, KREM, investigated the testing for water
contamination at schools in the Inland Northwest. That report
identified a gap in the water testing program that could result
in exposure of children to drinking water with elevated levels
of lead and copper. In addition, KING in Seattle reported on
several ecological issues impacting the Pacific Northwest.
KING filmed Washington Department of Fish and Wildlife boat
patrols aimed at preventing halibut poaching. In another story,
KING covered the release of nine orphaned bears into the wild
after lengthy care at a wildlife center. The station also aired
reports on the rehabilitation of an endangered sea turtle,
which included a hyperbaric treatment used for the first time
on an animal as well as a Coast Guard flight from Seattle to
San Diego.
We are focused on energy efficiency and reducing our
carbon footprint. We sold our corporate headquarters facility in
the fourth quarter of 2015, and will be relocating to leased
office space of much reduced size in a new, energy-efficient
(LEED NC Certified Gold) office building. In connection with
this move, we initiated a digitization project to convert paper
files to digital files, which will help us reduce our paper storage
and usage and further shrink our real estate footprint. We
have also installed more energy efficient systems and
appliances at some of our facilities. For example, KARE and
KREM initiated a LED lighting project and KSDK completed a
boiler replacement project resulting in a reduction of electrical
and heating costs. WUSA9-TV recently finished the
installation of new state-of-the-art solar panels at its
Washington, DC studio building, becoming the first local
television station to create its own renewable source of
electricity to reduce its carbon footprint. Other LED lighting
projects are scheduled for 2017.
TEGNA employees and their families took part in nearly 50
Make A Difference Day projects in 2016. Make A Difference
Day is one of the largest annual single-days of service
nationwide. Since 1992, volunteers and communities have
come together on Make A Difference Day with a single
purpose: to improve the lives of others. Volunteer efforts often
include environmentally beneficial projects such as planting
trees or gardens, cleaning up trash and planting sod.
The TEGNA Foundation supports nonprofit activities in
communities where we do business and contributes to a
variety of charitable causes through its Community Grant
Program. One of the TEGNA Foundation’s community action
grant priorities is environmental conservation.
MARKETS WE SERVE
TELEVISION STATIONS AND AFFILIATED DIGITAL PLATFORMS
State/District of
Columbia
Arizona
Arkansas
California
Colorado
District of
Columbia
Florida
Georgia
Idaho
Kentucky
Louisiana
Maine
Michigan
Minnesota
Missouri
New York
North Carolina
Ohio
Oregon
South Carolina
Tennessee
Texas
Virginia
Washington
City
Flagstaff
Phoenix
Tucson
Little Rock
Sacramento
Denver
Washington
Jacksonville
Station/web site
KNAZ-TV: 12news.com
KPNX-TV: 12news.com
KMSB-TV: tucsonnewsnow.com
KTTU-TV(1): tucsonnewsnow.com
KTHV-TV: thv11.com
KXTV-TV: abc10.com
KTVD-TV: my20denver.com
KUSA-TV: 9news.com
WUSA-TV: wusa9.com
WJXX-TV: firstcoastnews.com
WTLV-TV: firstcoastnews.com
Tampa-St. Petersburg WTSP-TV: wtsp.com
Atlanta
Macon
Boise
Louisville
New Orleans
Bangor
Portland
Grand Rapids
Minneapolis-St. Paul
St. Louis
Buffalo
Charlotte
Greensboro
Cleveland
Portland
Columbia
Knoxville
Abilene-Sweetwater
Austin
Beaumont-Port Arthur
Corpus Christi
Dallas/Ft. Worth
Houston
San Angelo
San Antonio
Tyler-Longview
Waco-Temple-College
Station
Hampton/Norfolk
Seattle/Tacoma
Spokane
WATL-TV: myatltv.com
WXIA-TV: 11alive.com
WMAZ-TV: 13wmaz.com
KTVB-TV(3): ktvb.com
WHAS-TV: whas11.com
WWL-TV: wwltv.com
WUPL-TV(4): wupltv.com
WLBZ-TV: wlbz2.com
WCSH-TV: wcsh6.com
WZZM-TV: wzzm13.com
KARE-TV: kare11.com
KSDK-TV: ksdk.com
WGRZ-TV: wgrz.com
WCNC-TV: wcnc.com
WFMY-TV: wfmynews2.com
WKYC-TV: wkyc.com
KGW-TV(2): kgw.com
WLTX-TV: wltx.com
WBIR-TV: wbir.com
KXVA-TV: myfoxzone.com
KVUE-TV: kvue.com
KBMT-TV: 12newsnow.com
KIII-TV: kiiitv.com
WFAA-TV: wfaa.com
KHOU-TV: khou.com
KIDY-TV: myfoxzone.com
KENS-TV: kens5.com
KYTX-TV: cbs19.tv
KCEN-TV: kcentv.com
WVEC-TV: 13newsnow.com
KING-TV: king5.com
KONG-TV: king5.com
KREM-TV: krem.com
KSKN-TV: spokanescw22.com
Channel/
Network
Ch. 2/NBC
Ch. 12/NBC
Ch. 11/FOX
Ch. 18/MNTV
Ch. 11/CBS
Ch. 10/ABC
Ch. 20/MNTV
Ch. 9/NBC
Ch. 9/CBS
Ch. 25/ABC
Ch. 12/NBC
Ch. 10/CBS
Ch. 36/MNTV
Ch. 11/NBC
Ch. 13/CBS
Ch. 7/NBC
Ch. 11/ABC
Ch. 4/CBS
Ch. 54/MNTV
Ch. 2/NBC
Ch. 6/NBC
Ch. 13/ABC
Ch. 11/NBC
Ch. 5/NBC
Ch. 2/NBC
Ch. 36/NBC
Ch. 2/CBS
Ch. 3/NBC
Ch. 8/NBC
Ch. 19/CBS
Ch. 10/NBC
Ch. 15/FOX
Ch. 24/ABC
Ch. 12/ABC
Ch. 3/ABC
Ch. 8/ABC
Ch. 11/CBS
Ch. 6/FOX
Ch. 5/CBS
Ch. 19/CBS
Ch. 9/NBC
Ch. 13/ABC
Ch. 5/NBC
Ch. 16/IND
Ch. 2/CBS
Ch. 22/CW
Affiliation
Agreement
Expires in
Market TV
Households
(5)
Founded
2021
2021
2019
2018
2019
2018
2018
2021
2019
2018
2021
2019
2018
2021
2019
2021
2018
2019
2018
2021
2021
2018
2021
2021
2021
2021
2019
2021
2021
2019
2021
2017
2018
2018
2018
2018
2019
2017
2019
2019
2021
2018
2021
N/A
2019
2021
(6)
1,890,100
425,860
425,860
547,950
1,379,770
1,630,380
1,630,380
2,476,680
688,500
688,500
1,908,590
2,412,730
2,412,730
232,910
270,200
662,170
641,620
641,620
133,310
383,700
709,670
1,742,530
1,215,570
596,710
1,189,950
690,050
1,498,960
1,143,670
400,790
514,610
113,080
771,210
165,120
209,760
2,713,380
2,450,800
56,680
938,660
265,690
357,720
717,170
1,808,530
1,808,530
422,550
422,550
1970
1953
1967
1984
1955
1955
1988
1952
1949
1989
1957
1965
1954
1948
1953
1953
1950
1957
1955
1954
1953
1962
1953
1947
1954
1967
1949
1948
1956
1953
1956
2001
1971
1961
1964
1949
1953
1984
1950
2008
1953
1953
1948
1997
1954
1983
(1) We service this station under service arrangements.
(2) We also own KGWZ-LD, a low power television station in Portland, OR.
(3) We also own KTFT-LD (NBC), a low power television station in Twin Falls, ID.
(4) We also own WBXN-CA, a Class A television station in New Orleans, LA.
(5) Market TV households is number of television households in each market, according to 2016-2017 Nielsen figures.
(6) KNAZ weekly audience is reported as part of KPNX.
Regional news channel, Northwest Cable News (NWCN) in Seattle/Tacoma, WA, was shut down on January 6, 2017. We operate two local
news channels, 24/7 NewsChannel in Boise, ID and NewsWatch on Channel 15 in New Orleans, LA. These operations provide news coverage
and certain other programming in a comprehensive 24-hour a day format using the resources of our television stations in several markets.
10
DIGITAL
Cars.com: www.cars.com
Headquarters: Chicago, IL
CareerBuilder: www.careerbuilder.com
Headquarters: Chicago, IL
G/O Digital: www.godigitalmarketing.com
Headquarters: Phoenix, AZ
INVESTMENTS
We have non-controlling ownership interests in the following companies:
4Info: www.4info.com
Captivate: www.captivate.com
Gannett Co., Inc.: www.gannett.com
Kin Community: www.kincommunity.com
Livestream: www.livestream.com
RepairPal: www.repairpal.com
Topix: www.topix.com
Video Call Center: www.thevideocallcenter.com
Whistle Sports: www.whistlesports.com
WinnersView: www.winnersview.com
TEGNA ON THE NET: News and information about us is available on our web site, www.TEGNA.com. In addition to news and other
information about us, we provide access through this site to our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current
reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after we file or furnish them electronically to the
Securities and Exchange Commission (SEC). Certifications by our Chief Executive Officer and Chief Financial Officer are included as exhibits
to our SEC reports (including to this Form 10-K). We also provide access on this web site to our Principles of Corporate Governance, the
charters of our Audit, Executive Compensation and Nominating and Public Responsibility Committees and other important governance
documents and policies, including our Ethics and Inside Trading Policies. Copies of all of these corporate governance documents are available
to any shareholder upon written request made to our Secretary at the headquarters address. We will disclose on this web site changes to, or
waivers of, our corporate Ethics Policy.
11
Certain factors affecting forward-looking statements
Certain statements in this Annual Report on Form 10-K
contain certain forward-looking statements regarding business
strategies, market potential, future financial performance and
other matters. The words “believe,” “expect,” “estimate,”
“could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,”
“project” and similar expressions, among others, generally
identify “forward-looking statements”. These forward-looking
statements are subject to certain risks and uncertainties that
could cause actual results and events to differ materially from
those anticipated in the forward-looking statements.
Our actual financial results may be different from those
projected due to the inherent nature of projections. Given
these uncertainties, forward-looking statements should not be
relied on in making investment decisions. The forward-looking
statements contained in this Form 10-K speak only as of the
date of its filing. Except where required by applicable law, we
expressly disclaim a duty to provide updates to forward-
looking statements after the date of this Form 10-K to reflect
subsequent events, changed circumstances, changes in
expectations, or the estimates and assumptions associated
with them. The forward-looking statements in this Form 10-K
are intended to be subject to the safe harbor protection
provided by the federal securities laws.
ITEM 1A. RISK FACTORS
An investment in our common stock involves risks and
uncertainties and investors should consider carefully the
following risk factors before investing in our securities. We
seek to identify, manage and mitigate risks to our business,
but risk and uncertainty cannot be eliminated or necessarily
predicted. The risks described below may not be the only risks
we face. Additional risks that we do not yet perceive or that we
currently believe are immaterial may adversely affect our
business and the trading price of our securities.
Changes in economic conditions in the U.S. markets we
serve may depress demand for our products and services
We generate a significant portion of our revenues in our Media
Segment from the sale of advertising at our television stations.
Expenditures by advertisers tend to be cyclical, reflecting
overall economic conditions, as well as budgeting and buying
patterns. As a result, our operating results depend on the
relative strength of the economy in our principal television and
digital markets as well as the strength or weakness of regional
and national economic factors. A decline in economic
conditions in the U.S. could have a significant adverse impact
on our businesses and could significantly impact all key
advertising revenue categories. In addition, declining
economic conditions could adversely affect employment
conditions and consumer sentiment, reducing demand for the
product offerings of CareerBuilder and Cars.com, which could
impair our ability to maximize the value to our shareholders of
these assets or to grow our Digital revenues.
Competition from alternative forms of media may impair
our ability to grow or maintain revenue levels in core and
new businesses
Advertising produces the majority of our revenues from our
Media Segment, with our stations’ affiliated desktop, mobile
and tablet advertising revenues being an important
component. Technology, particularly new video formats,
streaming and downloading capabilities via the Internet, video-
on-demand, personal video recorders and other devices and
12
technologies used in the entertainment industry continues to
evolve rapidly, leading to alternative methods for the delivery
and storage of digital content. These technological
advancements have driven changes in consumer behavior
and have empowered consumers to seek more control over
when, where and how they consume news and entertainment,
including through so-called “cutting the cord” and other
consumption strategies. These innovations may affect our
ability to generate television audience, which may make our
television stations less attractive to both household audiences
and advertisers. This competition may make it difficult for us to
grow or maintain our Media Segment revenues.
Our Media Segment is dependent on advertising
revenues, which, in turn, depend on a number of factors,
many of which are beyond our control
In fiscal year 2016, 69% of our Media Segment’s revenues
were derived from television spot and digital advertising.
Demand for advertising is highly dependent upon the strength
of the U.S. economy, both in the markets our stations serve
and in the nation as a whole. During an economic downturn,
demand for advertising may decrease. Our Media Segment’s
advertising revenues can also vary substantially from year to
year, driven by the political election cycle (e.g., even years);
the ability and willingness of candidates and political action
committees to raise and spend funds on television and digital
advertising, and the competitive nature of the elections
impacting viewers within our stations’ markets.
In addition, shifting viewer preferences could cause
our advertising revenues to decline as a result of changes to
the ratings of our programming, which may materially
negatively affect our business and results of operations.
The value of our assets or operations may be diminished
if our information technology systems fail to perform
adequately or if we are the subject of a data breach or
cyber attack
Our information technology systems are critically important to
operating our business efficiently and effectively. We rely on
our information technology systems to manage our business
data, communications, news and advertising content, digital
products, order entry, fulfillment and other business
processes. The failure of our information technology systems
to perform as we anticipate could disrupt our business and
could result in transaction errors, processing inefficiencies,
broadcasting disruptions, and loss of sales and customers,
causing our business and results to be impacted.
Furthermore, attempts to compromise information
technology systems occur regularly across many industries
and sectors, and we may be vulnerable to security breaches
beyond our control. We invest in security resources and
technology to protect our data and business processes
against risk of data security breaches and cyber-attack, but
the techniques used to attempt attacks are constantly
changing. A breach or successful attack could have a negative
impact on our operations or business reputation. We maintain
cyber risk insurance, but this insurance may be insufficient to
cover all of our losses from any future breaches of our
systems.
As has historically been the case in the broadcast sector,
loss of or changes in affiliation agreements or
retransmission consent agreements could adversely
affect operating results for our Media Segment’s stations
Most of our stations have network affiliation agreements with
the major broadcast television networks (ABC, CBS, NBC,
and Fox). These television networks produce and distribute
programming in exchange for each of our stations’
commitment to air the programming at specified times and for
commercial announcement time during the programming. In
most cases, we also make cash payments to the networks.
Each of our affiliation agreements has a stated expiration
date. If renewed, our network affiliation agreements may be
renewed on terms that are less favorable to us. The non-
renewal or termination of any of our network affiliation
agreements would prevent us from being able to carry
programming of the affiliate network. This loss of programming
would require us to obtain replacement programming, which
may involve higher costs and/or which may not be as
attractive to our audiences, resulting in reduced revenues.
In recent years, the networks have streamed their
programming on the Internet and other distribution platforms,
in some cases within a short period of the original network
programming broadcast on local television stations, including
those we own. An increase in the availability of network
programming on alternative platforms that either bypass or
provide less favorable terms to local stations - such as cable
channels, the Internet and other distribution vehicles - may
dilute the exclusivity and value of network programming
originally broadcast by the local stations and could adversely
affect the business, financial condition and results of
operations of our stations.
Our retransmission consent agreements with major cable,
satellite and telecommunications service providers permit
them to retransmit our stations’ signals to their subscribers in
exchange for the payment of compensation to us. As is the
case in the broadcast television industry generally, if we are
unable to renegotiate these agreements on favorable terms, or
at all, the failure to do so could have an adverse effect on our
business, financial condition, and results of operations.
The proposed separation of our Cars.com business unit
from our Digital businesses is subject to various risks
and uncertainties, and may not be completed on the
terms or timeline currently contemplated, if at all.
On September 7, 2016, we announced our intention to spin-off
our Cars.com business unit within our Digital Segment. The
separation, which is expected to be completed in the first half
of 2017, is subject to final approval of our Board of Directors.
In addition, unanticipated developments, regulatory approvals
or clearances and uncertainty in the financial markets, could
delay or prevent the completion of the proposed separation or
cause the proposed separation to occur on terms or conditions
that are different from those currently anticipated. As a result,
we cannot assure that we will be able to complete the
proposed separation on the terms or the timeline that we
announced, if at all.
The proposed Cars.com separation may not achieve
some or all of the anticipated benefits
Executing the proposed separation of Cars.com will require us
to incur costs as well as time and attention from our senior
management and key employees, which could distract them
from operating our business, disrupt operations, and result in
the loss of business opportunities, which could adversely
affect our business, financial condition, and results of
operations. We may also experience increased difficulties in
attracting, retaining and motivating key employees during the
pendency of the separation and following its completion, which
could harm our business. Even if the proposed separation is
completed, we may not realize some or all of the anticipated
benefits from the separation and the separation may in fact
adversely affect our business. As independent, publicly traded
companies, both TEGNA and Cars.com will be smaller, less
diversified companies with a narrower business focus and
may be more vulnerable to changing market conditions and
competitive pressures, which could materially and adversely
affect their respective businesses, financial condition and
results of operations. There can be no assurance that the
combined value of the common stock of the two publicly
traded companies following the completion of the proposed
separation will be equal to or greater than what the value of
our common stock would have been had the proposed
separation not occurred.
The strategic review of CareerBuilder business unit is
subject to various risks and uncertainties
On September 7, 2016, we also announced that we will
conduct a strategic review of our CareerBuilder business unit
within our Digital Segment, including a possible sale. There
can be no assurance of the terms, timing or structure of any
transaction involving such business, or whether any such
transaction will take place at all, and any such transaction is
subject to risks and uncertainties.
There could be significant liability if the spin-off of the
publishing businesses is determined to be a taxable
transaction
In June 2015, we spun off our former publishing businesses,
Gannett Co. Inc. (Gannett). In connection with the Gannett
spin-off, we received an opinion from outside tax counsel to
the effect that the requirements for tax-free treatment under
Section 355 of the Internal Revenue Code were satisfied. The
opinion relies on certain facts, assumptions, representations
and undertakings from TEGNA and Gannett regarding the
past and future conduct of the companies’ respective
businesses and other matters. If any of these facts,
assumptions, representations or undertakings is incorrect or
not satisfied, TEGNA and its stockholders may not be able to
rely on the opinion of tax counsel and could be subject to
significant tax liabilities.
Notwithstanding the opinion of tax counsel, the Internal
Revenue Service could determine on audit that the Gannett
separation is taxable if it determines that any of these facts,
assumptions, representations or undertakings were incorrect
or have been violated or if it disagrees with the conclusions in
the opinion, or for other reasons, including as a result of
certain significant changes in the share ownership of TEGNA
or Gannett after the separation. If the Gannett separation is
determined to be taxable for U.S. federal income tax
purposes, TEGNA and its stockholders that are subject to U.S.
federal income tax could incur significant U.S. federal income
tax liabilities.
13
Volatility in the U.S. credit markets could significantly
impact our ability to obtain new financing to fund our
operations and strategic initiatives or to refinance our
existing debt at reasonable rates and terms as it matures
At December 31, 2016, we had approximately $4.08 billion in
debt and approximately $844 million of undrawn additional
borrowing capacity under our revolving credit facility that
expires in 2020. This debt matures at various times during the
years 2017-2027. While our cash flow is expected to be
sufficient to pay amounts when due, if operating results
deteriorate significantly, a portion of these maturities may
need to be refinanced. Access to the capital markets for
longer-term financing is unpredictable and volatile credit
markets could make it harder for us to obtain debt financings
generally.
Changes in the regulatory environment could encumber
or impede our efforts to improve operating results or the
value of assets
Our media and digital operations are subject to government
regulation. Changing regulations, particularly FCC regulations
which affect our television stations, may impair or reduce our
leverage in negotiating affiliation or retransmission
agreements, adversely affecting our revenues, or result in
increased costs, reduced valuations for certain broadcasting
properties or other impacts, all of which may adversely impact
our future profitability. All of our television stations are required
to hold television broadcasting licenses from the FCC; when
granted, these licenses are generally granted for a period of
eight years. Under certain circumstances, the FCC is not
required to renew any license and could decline to renew
future license applications.
The value of our existing intangible assets may become
impaired, depending upon future operating results
Goodwill and other intangible assets were approximately
$7.08 billion at December 31, 2016, representing
approximately 83% of our total assets. These assets are
subject to annual impairment testing and more frequent testing
upon the occurrence of certain events or significant changes
in circumstance that indicate all or a portion of their carrying
values may no longer be recoverable in which case a non-
cash charge to earnings may be necessary, as occurred in
2014-2016 (see Notes 4 and 12 to the consolidated financial
statements). We may subsequently experience market
pressures which could cause future cash flows to decline
below our current expectations, or volatile equity markets
could negatively impact market factors used in the impairment
analysis, including earnings multiples, discount rates, and
long-term growth rates. Any future evaluations requiring an
asset impairment charge for goodwill or other intangible
assets would adversely affect future reported results of
operations and shareholders’ equity, although such charges
would not affect our cash flow.
Our strategic acquisitions, investments and partnerships
could pose various risks, increase our leverage and may
significantly impact our ability to expand our overall
profitability
Acquisitions involve inherent risks, such as increasing
leverage and debt service requirements and combining
company cultures and facilities, which could have a material
adverse effect on our results of operations or cash flow and
could strain our human resources. We may be unable to
successfully implement effective cost controls, achieve
14
expected synergies or increase revenues as a result of an
acquisition. Acquisitions may result in us assuming
unexpected liabilities and in management diverting its
attention from the operation of our business. Acquisitions may
result in us having greater exposure to the industry risks of the
businesses underlying the acquisition. Strategic investments
and partnerships with other companies expose us to the risk
that we may be unable to control the operations of our
investee or partnership, which could decrease the amount of
benefits we realize from a particular relationship. We are
exposed to the risk that our partners in strategic investments
and infrastructure may encounter financial difficulties which
could disrupt investee or partnership activities, or impair
assets acquired, which would adversely affect future reported
results of operations and shareholders’ equity. The failure to
obtain regulatory approvals may prevent us from completing
or realizing the anticipated benefits of acquisitions.
Furthermore, acquisitions may subject us to new or different
regulations which could have an adverse effect on our
operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Media Segment
Our media facilities are adequately equipped with the
necessary television digital broadcasting equipment. We own
or lease 49 transmitter facilities. All of our stations have
converted to digital television operations in accordance with
applicable FCC regulations. Our broadcasting facilities are
adequate for present purposes. A listing of television station
locations can be found on page 10.
Digital Segment
Generally, our digital businesses lease their facilities. This
includes facilities for executive offices, sales offices and data
centers. Our facilities are adequate for present operations. We
believe that suitable additional or alternative space, including
those under lease options, will be available at commercially
reasonable terms for future expansion. A listing of our
significant Digital facilities can be found on page 11.
Corporate facilities
In October 2015, we sold our corporate headquarters in
McLean, VA for a purchase price of $270 million. Since the
sale, we have been leasing a portion of the facility pursuant to
a lease which runs through January 2019.
ITEM 3. LEGAL PROCEEDINGS
Information regarding legal proceedings may be found in Note
13 of the Notes to consolidated financial statements.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our shares are traded on the New York Stock Exchange (NYSE) with the symbol TGNA. Information regarding outstanding
shares, shareholders and dividends may be found on pages 1, 4 and 15 of this Form 10-K. Information about debt securities
sold in private transactions may be found on page 28 of this Form 10-K.
TEGNA Common Stock Prices
High-low range by fiscal quarters based on NYSE-composite prices. On June 29, 2015, the first day of the fiscal third quarter, we
completed the separation of our publishing business (Gannett) through a spin-off transaction. TEGNA’s common stock prices in
and after the third quarter of 2015 reflect the price impact of the spin-off transaction.
Year
2016
Quarter
First. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
First. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends Paid
Per Share
Common Stock
Prices
$0.14
$0.14
$0.14
$0.14
$0.56
$0.20
$0.20
$0.20
$0.14
$0.74
Low
$21.37
$21.77
$20.16
$18.02
$18.02
$29.62
$34.27
$22.42
$21.85
$21.85
High
$25.08
$24.30
$25.00
$23.25
$25.08
$36.56
$38.01
$32.97
$28.68
$38.01
Following the Gannett spin-off on June 29, 2015, we announced that we would begin paying a regular quarterly cash dividend of
$0.14 per share. We paid dividends totaling $121.6 million in 2016 and $167.5 million in 2015 (excluding the special spin-off
distribution of our publishing businesses). We expect to continue paying comparable regular cash dividends in the future. The
rate and frequency of future dividends will depend on future earnings, capital requirements and financial condition and other
factors considered relevant by our Board of Directors.
Purchases of Equity Securities
Period
Total Number
of Shares
Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced
Program
Approximate Dollar
Value of Shares
that May Yet Be
Repurchased
Under the Program
10/1/16 - 10/31/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11/1/16 - 11/30/16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12/1/16 - 12/31/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Fourth Quarter 2016 . . . . . . . . . . . . . . . . . . . . . . .
—
143,428
354,193
497,621
—
$21.47
$22.29
$22.05
—
143,428
354,193
497,621
$478,143,186
$475,063,548
$467,169,358
$467,169,358
In 2015, our Board of Directors approved an $825 million share repurchase program to be completed over a three-year period
ending June 2018. We spent $161.9 million in 2016 to repurchase 7.0 million of our shares, at an average price per share of
$23.18. Under the program, management has discretion to determine the dollar amount of shares to be repurchased and the
timing of any repurchases in compliance with applicable law and regulation. As of December 31, 2016, approximately $467
million remained under this authorization.
15
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the years 2012 through 2016 is
contained under the heading “Selected Financial Data” on
page 67 and is derived from our audited financial statements
for those years.
The information contained in the “Selected Financial Data”
is not necessarily indicative of the results of operations to be
expected for future years, and should be read in conjunction
with “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included in Item 7 and
the consolidated financial statements and related notes
thereto included in Item 8 of this Form 10-K.
Comparison of shareholder return – 2012 to 2016
The following graph compares the performance of our
common stock during the period December 25, 2011, to
December 31, 2016, with the S&P 500 Index, and a peer
group index we selected.
Our peer group includes Angie’s List Inc., CBS Corp.,
Constant Contact Inc., Discovery Communications Inc., E.W.
Scripps Company, Gray Television Inc., Groupon Inc., Harte
Hanks Inc., IAC/InterActiveCorp, LinkedIn Corp., Media
General, Inc., Meredith Corp., Monster Worldwide Inc.,
Nexstar Broadcasting Group Inc., Sinclair Broadcast Group
Inc., Tribune Media Company, Yahoo Inc., and Yelp Inc.
(collectively, the “Peer Group”). Our Peer Group reflects our
business segments and includes both media and digital
companies.
The S&P 500 Index includes 500 U.S. companies in the
industrial, utilities and financial sectors and is weighted by
market capitalization. The total returns of the Peer Group also
are weighted by market capitalization.
The graph depicts representative results of investing $100
in our common stock, the S&P 500 Index, and the Peer Group
index at closing on December 25, 2011. It assumes that
dividends were reinvested monthly with respect to our
common stock (including, as it relates to the Gannett spin-off,
the aggregate value of the former publishing businesses as
distributed to our shareholders), daily with respect to the S&P
500 Index and monthly with respect to each Peer Group
company.
2011
2012
2013
2014
2015
2016
TEGNA Inc. . . . . $ 100 $141.43 $239.70 $265.70 $287.36 $230.73
S&P 500 Index. . $ 100 $116.00 $153.57 $174.60 $177.01 $198.18
Peer Group . . . . $ 100 $112.13 $200.96 $194.96 $153.84 $170.34
16
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Consolidated Results from Operations
A consolidated summary of our results is presented below.
Executive Summary
Our company is comprised of a dynamic portfolio of media
and digital businesses that provide content that matters and
brands that deliver. Our media business includes 46 television
stations operating in 38 markets, offering high-quality
television programming and digital content. Our digital
business primarily consists of our Cars.com and CareerBuilder
business units that operate in the automotive and human
capital solutions industries. Cars.com is a leading online
destination for automotive consumers offering credible,
objective information about car shopping, selling and
servicing. CareerBuilder helps companies target, attract and
retain workforce talent through an array of product offerings
including talent management software and other advertising
and recruitment solutions.
On September 7, 2016, we announced our intention to
spin-off the Cars.com business unit into a separate stand-
alone public company and we also announced our plans to
conduct a strategic review of our 53% ownership interest in
CareerBuilder. While we perform the necessary steps to
complete the spin and strategic review, we will maintain the
current operating and reporting structure and will continue to
report the financial results of both entities in continuing
operations within our Digital Segment.
Fiscal year: Beginning in fiscal year 2015, we changed
our financial reporting cycle to a calendar year-end.
Accordingly, our 2015 fiscal year began on December 29,
2014 (the day after the end of the 2014 fiscal year) and ended
on December 31, 2015. Historically, our fiscal year was a
52-53 week fiscal year that ended on the last Sunday of the
calendar year. As a result, our 2015 fiscal year had two more
days than fiscal year 2016. The impact of the extra days in
2015 did not have a material impact on our financial
statements; and therefore, we have not restated the historical
results.
In millions of dollars
Operating revenues:
2016 Change
2015 Change
2014
Media . . . . . . . . . . . . . . $ 1,934
15% $ 1,682
Digital . . . . . . . . . . . . . .
1,408
3%
1,369
(1%)
47%
$ 1,692
934
Total . . . . . . . . . . . . . . . . $ 3,341
10% $ 3,051
16% $ 2,626
Operating expenses:
Cost of revenues. . . . . . . $ 1,039
13% $ 923
(3%)
$ 955
Selling, general and
admin. expenses . . . . . .
1,094
2%
1,068
39%
Depreciation . . . . . . . . . .
90
(1%)
91
6%
Amortization of
intangible assets . . . . . . .
Asset impairment and
facility consolidation
charges (gains) . . . . . . . .
115
1%
114
73%
32
***
(59)
***
767
86
66
45
Total . . . . . . . . . . . . . . . . $ 2,369
11% $ 2,138
11% $ 1,919
Operating income . . . . . . $ 972
6%
$ 913
29% $ 707
Non-operating expense . $ (260)
(10%)
$ (290)
***
$ 283
Provision for income
taxes . . . . . . . . . . . . . . . . $ 217
Net income attributable
to noncontrolling
interests . . . . . . . . . . . . . $ (51)
Net income from
continuing operations
attributable to TEGNA. . . $ 444
Earnings from continuing
operations per share -
basic . . . . . . . . . . . . . . . . $ 2.05
Earnings from continuing
operations per share -
diluted . . . . . . . . . . . . . . . $ 2.02
7%
$ 202
(14%)
$ 234
(19%)
$ (63)
(7%)
$ (68)
24% $ 357
(48%)
$ 688
29% $ 1.59
(48%)
$ 3.04
29% $ 1.56
(47%)
$ 2.97
Note: Numbers may not sum due to rounding.
Consolidated Operating Revenue
Operating revenues increased $290 million, or 10%, in 2016
as compared to 2015. This increase is comprised of a $252
million increase from our Media Segment and a $39 million
increase at our Digital Segment. Record Media Segment
revenues of $1.93 billion were driven by political advertising
revenue of $155 million, record Summer Olympics revenue of
$56 million in the third quarter of 2016, and a substantial
increase of retransmission revenue of $133 million and online
revenue of $13 million. These increases were partially offset
by a $20 million decrease in core advertising due in part to
election year political displacement. Increases in the Digital
Segment were driven by continued revenue growth at
Cars.com of $37 million, G/O Digital of $28 million and
CareerBuilder of $16 million. These increases at the Digital
Segment were partially offset by the absence of $32 million of
revenue contributed in 2015 by our PointRoll business, which
was sold in November 2015.
17
Operating revenues increased $425 million, or 16%, in
2015 as compared to 2014. This increase comprised a $435
million increase from our Digital Segment, partially offset by a
$10 million decline at our Media Segment. Media Segment
revenues for 2015 decreased 1% to $1.68 billion, as growth in
retransmission revenue of $87 million, online revenue of $15
million, and higher core revenue of $26 million were offset by a
decline of political advertising revenue of $138 million (from
the record level of political advertising revenue of $159 million
achieved in 2014). Digital Segment revenues totaled $1.37
billion for 2015, an increase of 47%. The increase reflects the
impact of the Cars.com acquisition (acquired on October 1,
2014) as well as the strong organic growth of Cars.com
revenue, as well as price increases for affiliates implemented
October 1, 2014, resulting in an increase in revenue of $451
million in 2015. Partially offsetting the revenue increase at
Cars.com, was a decrease of $20 million as a result of a
decline in revenue and sale of our PointRoll business in
November 2015.
Costs of Revenue
Cost of revenue increased $116 million, or 13%, in 2016 as
compared to 2015. This increase was primarily due to an $89
million increase in programming costs incurred by the Media
Segment. In addition, our 2016 business acquisitions
contributed $17 million to the increase, and cost increases at
Cars.com added $11 million to our cost of revenue (primarily
due to higher traffic acquisition costs and increased
compensation costs).
Cost of revenue decreased $32 million, or 3%, in 2015 as
compared to 2014. This decrease was due to a $25 million
decrease at CareerBuilder primarily due to the expiration and
non-renewal of certain revenue-share arrangements.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses increased $26
million, or 2%, in 2016 as compared to 2015. The increase
was primarily driven by the 2016 business acquisitions of
Aurico, DealerRater, and Workterra, which increased selling,
general, and administrative expenses by $18 million. In
addition, severance expense increased $9 million year-over-
year driven by a voluntary retirement program in our Media
Segment completed in 2016. Our 2016 expenses also
increased due to the absence of rental income at our
corporate headquarters, which was $5 million in 2015,
resulting from our sale of the building in the fourth quarter of
2015.
Selling, general, and administrative expenses increased
$301 million, or 39%, in 2015 as compared to 2014. The
majority of the increase was due to the October 2014
acquisition of the remaining ownership of Cars.com which
resulted in a year over year increase in selling, general and
administrative expenses of $217 million.
Depreciation Expense
Depreciation expense decreased $1 million, or 1%, in 2016 as
compared to 2015. This decrease is primarily due to a $5
million decline in depreciation at Corporate, primarily driven by
the October 2015 sale of our corporate headquarters building
that resulted in a year-over-year decrease in depreciation
expense of $4 million. The decrease was also driven by the
sale of our PointRoll business in November 2015, which led to
a year-over-year decline in depreciation expense of $3 million.
These decreases were partially offset by a $5 million increase
in CareerBuilder’s depreciation, which was due to the
acquisition of new computer equipment, an increase in
internally developed software and new leasehold
improvements.
Depreciation expense increased $5 million, or 6%, in 2015
as compared to 2014. The increase was due to the acquisition
of Cars.com in October 2014 which resulted in a year over
year increase in depreciation expense of $6 million.
Intangible Asset Amortization Expense
Intangible asset amortization expense increased by less than
$1 million, or less than 1%, in 2016 as compared to 2015. The
increase was primarily driven by the 2016 acquisitions, which
was substantially offset by a decline in amortization expense
associated with previous acquisitions as a result of reaching
the end of their useful lives.
Intangible asset amortization expense increased $48
million, or 73%, in 2015 as compared to 2014. The October
2014 acquisition of Cars.com resulted in amortization expense
in 2015 and 2014 of $73 million and $18 million, respectively.
This increase was partially offset by a $7 million reduction in
amortization expense related to certain intangible assets in
2015 as a result of reaching the end of their useful lives.
Asset impairment and Facility Consolidation Charges
(Gains)
Asset impairment and facility consolidation charges (gains)
fluctuated $91 million from a gain of ($59) million in 2015 to a
charge of $32 million in 2016. The fluctuation was mainly due
to the absence of the $90 million net gain from the sale of our
corporate headquarters building in 2015. The 2016 charges
were comprised of a goodwill impairment charge of $15 million
incurred in the third quarter of 2016, a $6 million impairment
related to a programming asset, a $5 million impairment
charge related to a long-lived-asset, and a $5 million lease
related charge.
Asset impairment and facility consolidation charges (gains)
fluctuated $104 million from charges of $45 million in 2014 to
a gain of ($59) million in 2015. The year-over-year fluctuation
was driven by the $90 million net gain from the sale of our
corporate headquarters building in 2015, and by non-cash
impairment charges of $31 million in 2014 related to certain
reporting units within our Digital Segment (primarily PointRoll,
ShopLocal and BLiNQ).
18
Operating Income
Operating income increased $59 million, or 6%, in 2016 as
compared to 2015. The increase was driven by the changes in
revenue and operating expenses described above. Further,
the increase in 2016 was partially offset by the absence of the
$90 million gain on the sale of our corporate headquarters
building in 2015. Our consolidated operating margins were
lower at 29% in 2016 compared to 30% in 2015, primarily
driven by the absence in 2016 of the net gain on the sale of
our corporate headquarters building reported in 2015.
Operating income increased $206 million, or 29%, in 2015
as compared to 2014, primarily driven by the acquisition of
Cars.com which contributed $180 million of the increase. Our
consolidated operating margins improved to 30% in 2015
compared to 27% in 2014 driven by improvement in margins
from our Digital Segment as well as the net gain on the sale of
our corporate headquarters building, partially offset by the
impact from the absence of Winter Olympics and political
spending in 2014.
Payroll expense trends: Payroll expense is the largest
element of our normal operating expenses, and is summarized
below, expressed as a percentage of total pre-tax operating
expenses. Payroll expense as a percentage of total pre-tax
operating expenses decreased in 2016, reflecting that total
operating expenses grew at a faster rate than payroll expense.
Payroll costs . . . . . . . . . . . . . . . . . . . . . . . . 35.8% 41.1% 41.0%
2016
2015
2014
Non-operating income and expense
Equity earnings (losses): This income statement
category reflects earnings or losses from our equity method
investments. Equity losses increased $2 million, or 42% in
2016 as compared to 2015. The increased losses were
primarily due to ($4 million) of impairment charges related to
two equity method investments recorded in 2016. These
impairment losses were partially offset by a year over year
improvement in results for other equity method investments.
Equity earnings (losses) fluctuated $156 million from a
$151 million gain in 2014 to a ($5 million) loss in 2015. This
fluctuation was primarily due to the absence of a $148 million
gain on the sale of Apartments.com by Classified Ventures in
2014.
Interest expense: Interest expense decreased $42 million,
or 15%, in 2016 as compared to 2015, primarily due to lower
average outstanding total debt balance and a lower average
interest rate, reflecting the extinguishment of higher cost debt
in 2015 and 2016, including the 10% senior notes and 7.125%
notes that we repaid in April and November of 2016,
respectively. The total average outstanding debt was $4.25
billion in 2016 compared to $4.37 billion in 2015. The weighted
average interest rate on total outstanding debt was 5.29% in
2016, compared to 5.98% in 2015.
Interest expense increased $1 million, or less than 1%, in
2015 as compared to 2014, due to a higher average debt level
of $4.37 billion in 2015 compared to $3.85 billion in 2014. The
higher average debt level was related to additional borrowing
related to both the Belo and Cars.com acquisitions in 2013
and 2014, respectively, partly offset by a lower average
interest rate. The weighted average interest rate on total
outstanding debt was 5.98% in 2015, compared to 6.65% in
2014.
19
A further discussion of our borrowing and related interest
cost is presented in the “Liquidity and capital resources”
section of this report beginning on page 26 and in Note 7 to
the consolidated financial statements.
Other non-operating items: Other non-operating items
fluctuated $9 million from a loss of $12 million in 2015 to a
loss of $20 million in 2016. The 2016 non-operating loss
primarily consisted of $24 million in costs associated with the
spin-off of our Cars.com business unit, the strategic review of
CareerBuilder, and acquisition related costs. Our 2015 non-
operating loss consisted of $45 million in costs related to the
spin-off of our former publishing business and $9 million in
costs incurred in connection with the early extinguishment of
debt. These costs in 2015 were offset by a gain of $44 million
on the sale of a business.
Other non-operating items in 2014 represented a net gain
of $404 million, with the majority related to the write-up of our
prior 27% investment in Cars.com to fair value post-acquisition
and a gain related to required accounting for the pre-existing
affiliate agreement between Cars.com and us. This gain was
partially offset by acquisition costs and expenses incurred for
the spin-off of our publishing businesses completed in 2015.
Provision for income taxes
We reported pre-tax income from continuing operations
attributable to TEGNA of $661 million for 2016. The effective
tax rate on pre-tax income was 32.8%.
We reported pre-tax income from continuing operations
attributable to TEGNA of $560 million for 2015. The effective
tax rate on pre-tax income was 36.1%.
The 2016 effective tax rate decreased as compared to
2015 primarily due to a decrease in TEGNA’s state effective
tax rate applied to our deferred tax items. This reduction of our
state effective tax rate was driven by various tax planning
initiatives, in particular a state income tax project that was
concluded in the fourth quarter of 2016. When these tax items
are reported on our future state tax returns, they will be
subject to a lower tax rate than had been recorded previously,
which created a deferred tax benefit in 2016 that reduced our
effective tax rate. In addition, in the first quarter of 2016 we
early adopted the Financial Accounting Standards Board
(FASB) guidance on employee share-based payments that
requires all excess tax benefits and tax deduction shortfalls to
be recognized as an income tax benefit or expense in the
income statement. As a result in 2016, we realized an excess
tax benefit with respect to our employee share-based
payments, which reduced our effective tax rate by 1% as
compared to 2015. This FASB guidance will continue to apply
in the future; however, among other factors, the amount of the
income tax benefit or expense will be dependent on our future
stock price, which cannot be accurately predicted.
We reported pre-tax income from continuing operations
attributable to TEGNA of $922 million for 2014. The provision
for income taxes reflects a special net tax benefit from the sale
of a non-strategic subsidiary at a loss, for which a partial tax
benefit was recognized. The effective tax rate in 2014 was
25.4%.
Further information concerning income tax matters is
contained in Note 6 of the consolidated financial statements.
Net income from continuing operations attributable to
TEGNA Inc.
Net income from continuing operations attributable to
TEGNA Inc. and related per share amounts are presented in
the table below.
In millions of dollars, except per share amounts
2016 Change
2015 Change
2014
Net income from
continuing operations
attributable to TEGNA Inc. $ 444
24% $ 357
(48%)
$ 688
Per basic share . . . . . . . . . $ 2.05
29% $ 1.59
(48%)
$ 3.04
Per diluted share . . . . . . . . $ 2.02
29% $ 1.56
(47%)
$ 2.97
Net income from continuing operations attributable to
TEGNA Inc. consists of net income from continuing operations
reduced by net income attributable to noncontrolling interests,
from CareerBuilder and its subsidiaries. We reported net
income from continuing operations attributable to TEGNA of
$444 million or $2.02 per diluted share for 2016 compared to
$357 million or $1.56 per diluted share for 2015.
Net income attributable to noncontrolling interests was $51
million in 2016, $63 million in 2015 and $68 million in 2014.
Earnings per share benefited from a net decrease of
approximately ten million diluted shares from December 31,
2015 to December 31, 2016, and approximately two million
dilutive shares from December 31, 2014, to December 31,
2015, as a result of share repurchases, which were partially
offset by share issuances under our stock-based award
programs.
Outlook for 2017: Based on current trends, we expect
Media Segment revenue in the first quarter of 2017 to be flat
to slightly above the first quarter of 2016. The year-over-year
comparison will be unfavorably impacted by substantially
lower political advertising revenue ($16 million in the first
quarter of 2016) and the move of the Super Bowl to our 3
small FOX stations in 2017 from our 11 CBS stations in 2016.
Excluding the unfavorable impact of the Super Bowl shift
(approximately $9 million) and lower politically-related
advertising, the percentage increase in Media Segment
revenues is expected to be in the mid-single digits in the first
quarter of 2017 compared to the first quarter of 2016.
In addition, beginning in January 2017, 11 of our NBC
stations will be making reverse compensation payments for
the first time. As such, 2017 will be a unique year as there will
be an unfavorable gap between the increase in retransmission
revenue we earn from multichannel video programming
distributors (MVPD), compared to the increase in reverse
compensation we will pay our affiliates. At the end of 2016, we
renegotiated several new retransmission agreements with
major MVPD carriers, and as a result, we have reduced our
net retransmission gap in 2017 to approximately $25 million to
$30 million. Further, we expect our strategic initiatives
launched in 2016 (as discussed in our Media Segment section
within Item 1 Business) will more than offset the remaining net
retransmission gap in 2017.
For Cars.com, we are expecting modest single-digit
revenue growth in the first quarter of 2017. We expect to see
revenue growth in Cars.com national and major accounts
businesses, but at a lower rate than during the same quarter
last year primarily related to reduction in spending at two
national accounts due to a transition to an advertising agency
and a change in placement strategy during the first quarter.
Once these transitions are completed, we expect these two
national accounts to increase their spending as we progress
throughout the year.
Excluding the impact of these two accounts, we expect
Cars.com national and major accounts to be up in the range of
12% to 15% in the first quarter of 2017. While Cars.com is
taking steps to improve, and in some cases restructure, the
relationships with our affiliates, we expect a mid single-digit
revenue decline in the first quarter of 2017 for affiliate
revenues.
20
The following is a discussion of operating results of our
Media and Digital Segments:
Media Segment
At the end of 2016, our Media operations included 46
television stations either owned or serviced through shared
service agreements or other similar agreements. Media
Segment revenues accounted for approximately 58% of our
consolidated operating revenues for 2016.
A summary of our Media Segment results is presented
below:
In millions of dollars
Operating revenues. . . . . $ 1,934
15% $ 1,682
(1%)
$ 1,692
2016 Change
2015 Change
2014
Operating expenses
Operating expenses (a) .
1,045
18%
886
4%
Depreciation . . . . . . . . .
52
2%
51
(2%)
Amortization of
intangible assets. . . . . .
Asset impairment and
facility consolidation
charges . . . . . . . . . . . .
Operating expenses(a) . . .
22 —%
22
(24%)
9
1,127
13%
16%
8
(43%)
968
2%
851
52
29
14
945
Operating income . . . . . . $ 806
13% $ 714
(4%)
$ 747
Note: Numbers may not sum due to rounding.
(a) Our 2016 operating expenses include special items of $19 million
primarily related to severance expenses associated with our voluntary
retirement program. Our 2015 operating expenses include a $13 million
gain on the sale of a building.
Media Segment revenues are grouped into five categories:
Core (Local and National), Political, Retransmission, Digital
and Other. The following table summarizes the year-over-year
changes in these select revenue categories.
In millions of dollars
2016 Change
2015 Change
2014
Core (Local & National) . . $ 1,053
155
Political . . . . . . . . . . . . . .
Retransmission (a) . . . . . .
582
126
Digital . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . .
18
Total . . . . . . . . . . . . . . . . $ 1,934
(a) Reverse compensation to network affiliates is included as part of
programming costs and therefore is excluded from this line.
$ 1,072
(2%)
21
***
449
30%
113
12%
(33%)
27
15% $ 1,682
3 % $ 1,046
$ 159
24 % $ 362
98
15 % $
27
0 % $
$ 1,692
(87%)
(1%)
Media Segment results 2016-2015: Media Segment
revenues increased $251 million, or 15%, to a record high in
2016 as compared to 2015. The increase was driven by
political advertising, a record level of Summer Olympics
advertising, and a substantial increase in retransmission
revenues. Core advertising revenues, which consist of local
and national non-political advertising (and includes Olympics
advertising), decreased $20 million or 2%, mostly due to:
political advertising displacement; softer markets in the
insurance and retail categories; and an $8 million impact
related to two fewer days in 2016 as compared to 2015 as a
result of the fiscal year-end change. These decreases were
partially offset by a record $56 million Summer Olympics
advertising revenue in the third quarter of 2016 which was up
over 20% compared to the last Summer Olympics in 2012.
Political advertising revenue increased $133 million due to the
presidential election year political spending. Political revenues
are cyclical and higher in even years (e.g. 2014, 2016).
Retransmission revenues increased $133 million or 30% in
2016, reflecting retransmission agreements renewed at the
end of last year, as well as annual rate increases for existing
agreements. Digital revenues within our Media Segment
increased $13 million or 12% primarily due to continued
growth of digital marketing services products.
Media Segment operating expenses increased $159
million or 16% in 2016 as compared to 2015. The increase
was mainly due to an increase of $89 million in programming
costs (primarily associated with reverse compensation to
network affiliates related to retransmission revenue) as well as
investments in growth initiatives, $19 million primarily related
to severance charges incurred with the voluntary early
retirement program and the absence of a $13 million building
sale gain in the first quarter of 2015.
Asset impairment charges recognized in 2016 primarily
relate to a $6 million charge associated with an internally
produced program and a $2 million impairment of a long-lived
asset that is now classified as held for sale and was written
down to its fair value in 2016.
Excluding the impacts of the voluntary early retirement
program expense and asset impairment charges in 2016 and
the building sale gain in 2015, Media Segment operating
expenses increased 14% in 2016.
As a result of all of these factors, Media Segment
operating income increased to $806 million in 2016 from $714
million in 2015.
21
Media Segment results 2015-2014: Media Segment
revenues decreased $10 million to $1.68 billion or 1% in 2015
as compared to 2014. The decrease was primarily due to the
absence of record level of political advertising revenue of $159
million and $41 million in Winter Olympics advertising revenue
achieved during 2014. The change to a calendar year-end
reporting cycle extended our fiscal 2015 by four extra days
which increased Media Segment revenue by $11 million. Core
advertising revenues increased $26 million or 3% in 2015.
Political advertising revenue declined $138 million to $21
million in 2015. Retransmission revenues increased $87
million or 24% in 2015 resulting from newly negotiated
agreements and annual rate increases. Within the Media
Segment, digital revenue increased $15 million or 15%
compared to 2014, reflecting continued growth from digital
marketing services products.
Media Segment operating expenses increased $23 million
or 2% in 2015. The increase was primarily due to an increase
of $22 million in programming costs as well as a $16 million
increase in cost of digital initiatives, partially offset by a $13
million building sale gain in the first quarter of 2015.
As a result of all of these factors, Media Segment
operating income decreased to $714 million in 2015 from $747
million in 2014.
Digital Segment
Our Digital Segment includes results for our stand-alone
digital subsidiaries including Cars.com, CareerBuilder, G/O
Digital and Cofactor (also operating as ShopLocal) business
units. In December 2016, we sold our Cofactor business unit.
In November 2015, we sold our PointRoll business unit which
was previously part of Cofactor.
Many of our other digital offerings are highly integrated
within our Media Segment offerings; therefore, the results of
these integrated digital offerings are reported within the
operating results of our Media Segment.
A summary of our Digital Segment results is presented
below:
In millions of dollars
Operating revenues . . . . . . $1,408
3%
$1,369
47% $ 934
2016 Change
2015 Change
2014
Operating expenses
Operating expenses . . . .
1,027
Depreciation . . . . . . . . . .
Amortization of intangible
assets . . . . . . . . . . . . . . .
Asset impairment and
facility consolidation
charges . . . . . . . . . . . . . .
Operating expenses . . . . . .
3%
9%
1%
993
33
92
38%
44%
***
36
93
21
(5%)
22
(29%)
722
23
37
31
1,177
3%
1,139
40%
814
Operating income. . . . . . . . $ 230 —% $ 229
91% $ 120
Note: Numbers may not sum due to rounding.
Digital Segment results 2016-2015: Our 2016 Digital
Segment revenue was $1.41 billion, a record high. Digital
Segment revenues increased $39 million, or 3%, in 2016 as
compared to 2015. The increase was driven by continued
revenue growth at Cars.com of $37 million, or 6%, G/O Digital
of $28 million or 94% (due to combination of a new
commercial agreement which started in mid 2015 and organic
growth) and CareerBuilder of $16 million, or 2%. These
increases were partially offset by the sale of our former
PointRoll business which contributed $32 million of revenue in
2015. The increase in Cars.com revenues was due to an
increase in retail revenue (driven by increased subscription
package volume and upsells and the acquisition of
DealerRater) and higher national advertising purchased by
auto manufacturers. The increase in CareerBuilder revenue
was driven by $40 million of increases from employer services
(driven by the acquisition of Aurico and higher revenue across
sales channels due), $12 million of increased resume
database revenues (due to sales and renewals of its new
Recruitment Edge product) and $12 million from continued
growth in software as a service (SaaS) revenues. These
increases at CareerBuilder were partially offset by lower job
site revenue of $48 million (due to lower job postings and
competitive pricing pressure).
22
Digital Segment expenses increased $38 million or 3% in
Operating results non-GAAP information
2016 as compared to 2015. This increase was driven by
higher expenses at CareerBuilder of $47 million, primarily due
to the acquisition of Aurico and Workterra. Also impacting the
increase in 2016 was an increase in G/O Digital operating
expenses of $24 million (due to a new commercial agreement
which started in mid 2015) and an increase at Cars.com of
$14 million (consistent with revenue growth). These increases
are partially offset by the sale of our PointRoll business which
resulted in a decline in operating expenses of $36 million, and
the absence of $8 million of costs associated with our former
BLiNQ business which was shut down in the second quarter of
2015.
As a result of these factors, Digital Segment operating
income increased to $230 million in 2016.
Digital Segment results 2015-2014: Digital Segment
revenues increased $435 million, or 47%, in 2015 as
compared to 2014. The increase was driven by the $451
million incremental full year impact of the Cars.com acquisition
on October 1, 2014, partially offset by a decrease of revenues
at CareerBuilder of $15 million, or 2%. The decrease in
CareerBuilder revenues in 2015 was driven by the strategic
shift in focus in its product offerings. During 2015,
CareerBuilder continued its transition toward higher-margin
software-as-a-service solutions, including its pre-hire platform
and new recruitment software products. As a result, SaaS
revenues increased $35 million, or 30%. These revenue
increases were offset by declines from lower-margin,
transactional source and screen arrangements and other
transactional offerings totaling approximately $56 million, as
CareerBuilder moved away from these product offerings to
focus on the SaaS platform solutions. In addition, 2015
revenue increased $26 million due to G/O Digital (due to
combination of a new commercial agreement which started in
mid 2015 and organic growth), which was offset by 2015
declines in revenue of $24 million from various other digital
business units (primarily PointRoll).
Digital Segment expenses in 2015 increased $325 million,
or 40%, primarily due to the $271 million incremental full year
impact of the Cars.com acquisition and G/O Digital increase of
$21 million (due to combination of a new commercial
agreement in mid 2015 and organic growth). These increases
were offset by a decrease in CareerBuilder expenses of $14
million, or 2%, (reflecting lower revenue and strategic shift in
focus on its product offerings), and a $13 million reduction in
expenses in the BLiNQ business, which was shut down in the
second quarter of 2015.
As a result of these factors, Digital Segment operating
income increased by $109 million or 91% in 2015.
Presentation of non-GAAP information: We use non-
GAAP financial performance and liquidity 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 the non-
GAAP financial measures for purposes of evaluating business
unit and consolidated company performance. Furthermore, the
Executive 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 discuss in this Form 10-K non-GAAP financial
performance measures that exclude from our reported GAAP
results the impact of “special items” consisting of severance
expense, impairment charges on operating assets and equity
investments, facility consolidation charges, gains related to
building sales, gains/losses related to business disposals,
expenses related to business acquisitions, costs associated
with the company’s spin-off transactions, and benefits to our
income tax provision. We also adjust net income attributed to
noncontrolling interests to the extent any of the above items
are related to our CareerBuilder business unit. We believe that
such expenses, charges and gains are not indicative of
normal, ongoing operations. Such items vary from period to
period and are significantly impacted by the timing and nature
of these events. Therefore, while we may incur or recognize
these types of expenses, charges 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.
23
We discuss Adjusted EBITDA, a non-GAAP financial
performance measure that we believe offers a useful view of
the overall operation of its businesses. The Company defines
Adjusted EBITDA as net income from continuing operations
attributable to TEGNA before (1) net income attributable to
noncontrolling interests, (2) interest expense, (3) income
taxes, (4) equity income (losses) in unconsolidated investees,
net, (5) other non-operating items such as spin-off transaction
expense, investment income and currency gains and losses,
(6) severance expense, (7) facility consolidation charges, (8)
impairment charges, (9) depreciation and (10) amortization.
When Adjusted EBITDA is discussed in reference to
performance on a consolidated basis, the most directly
comparable GAAP financial measure is Net income from
continuing operations attributable to TEGNA. We do not
analyze non-operating items such as interest expense and
income taxes on a segment level; therefore, the most directly
comparable GAAP financial measure to Adjusted EBITDA
when performance is discussed on a segment level is
Operating income. 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 alternative 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 free 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 liquidity
measure (see Selected Financial Data on page 67). Free cash
flow is defined as “net cash flow from operating activities” as
reported on the statement of cash flows reduced by “purchase
of property and equipment”. We believe that free cash flow is a
useful measure for management and investors to evaluate the
level of cash generated by operations and the ability of its
operations to fund investments in new and existing
businesses, return cash to shareholders under the company’s
capital program, repay indebtedness, add to our cash balance,
or use in other discretionary activities. We use free cash flow
to monitor cash available for repayment of indebtedness and
in discussions with the investment community. Like Adjusted
EBITDA, free cash flow is not intended to be a measure of
cash flow available for management’s discretionary use.
Discussion of special charges and credits affecting
reported results: Our results for the fiscal year ended
December 31, 2016, included the following items we consider
“special items” and are not indicative of our normal ongoing
operations:
• Severance charges primarily related to a voluntary
retirement program at our Media Segment (which includes
payroll and related benefit costs);
• Non-cash asset impairment and facility consolidation
charges primarily associated with goodwill, operating
assets, and an operating lease;
• Non-operating costs primarily associated with the
anticipated spin-off of our Cars.com business unit, strategic
review of CareerBuilder, acquisition related costs and
equity method investment impairments;
•
Impact of special items on our net income attributable to
noncontrolling interests; and
• Special tax benefit related to the release of a portion of our
capital loss valuation allowance due to the sale of certain
deferred compensation plan investments.
Results for the fiscal year ended December 31, 2015, included
the following special items:
• Costs associated with workforce restructuring;
• Non-cash asset impairment and facility consolidation
charges primarily related to reducing the carrying value of
certain assets to fair value, a goodwill impairment charge,
and shut down costs associated with our former BLiNQ
business;
• Gains on building sales, primarily from the sale of our
corporate headquarters building;
• Non-operating items related to the spin-off of our former
publishing businesses, a gain related to the sale of
Gannett Healthcare Group, and other miscellaneous non-
operating expenses; and
• Special tax benefit primarily related to the restructuring of
our legal entities in advance of the spin-off of our
publishing
24
Below are 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:
In millions of dollars (except per share
amounts)
Fiscal Year Ended Dec. 31, 2016
GAAP
measure
Severance
expense
Special Items
Other non-
operating
items and
equity
investment
impairments
Asset
impairment
and facility
consolidation
charges
Impact of
special
items
attributable
to NCI
Special
tax
benefit
Non-
GAAP
measure
Operating expenses . . . . . . . . . . . . . . . . . . . . .
$ 2,369.1
$
(25.9)
$
(32.1)
$
— $
— $
— $ 2,311.1
Operating income . . . . . . . . . . . . . . . . . . . . . . .
Equity loss in unconsolidated investments, net
Other non-operating expense (income) . . . . . .
972.1
(7.2)
(20.4)
Total non-operating expense . . . . . . . . . . . . . .
(259.6)
Income before income taxes . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . .
712.5
217.0
Net income from continuing operations
attributable to TEGNA . . . . . . . . . . . . . . . . .
444.2
Net income from continuing operations per
25.9
—
—
—
25.9
9.8
16.1
32.1
—
—
—
32.1
12.5
19.7
—
3.9
29.1
33.0
33.0
(1.8)
34.8
—
—
—
—
—
(0.3)
—
—
—
—
—
3.3
1,030.1
(3.3)
8.7
(226.6)
803.5
240.5
(0.4)
(3.3)
510.9
share - diluted . . . . . . . . . . . . . . . . . . . . . . .
$
2.02
$
0.07
$
0.09
$
0.16
$
— $
(0.02)
$
2.33
Note: Totals may not sum due to rounding.
In millions of dollars (except per share
amounts)
Fiscal Year Ended Dec. 31, 2015
GAAP
measure
Severance
expense
Special Items
Gain on sale
of Corporate
HQ building,
net and other
building sale
gain
Asset
impairment
and facility
consolidation
charges
Other non-
operating
items
Special
tax
benefit
Non-
GAAP
measure
Operating expenses . . . . . . . . . . . . . . . . . . . . .
$ 2,137.8
$
(7.6)
$
(31.0)
$
102.6
$
— $
— $ 2,201.8
Operating income . . . . . . . . . . . . . . . . . . . . . . .
Other non-operating expense . . . . . . . . . . . . . .
913.2
(11.5)
Total non-operating expense . . . . . . . . . . . . . .
(290.2)
Income before income taxes . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . .
622.9
202.3
Net income from continuing operations
attributable to TEGNA . . . . . . . . . . . . . . . . .
357.5
Net income from continuing operations per
7.6
—
—
7.6
2.9
4.7
31.0
—
—
31.0
9.2
21.9
(102.6)
—
—
(102.6)
(39.7)
—
10.3
10.3
10.3
(2.3)
—
—
—
—
3.3
849.2
(1.2)
(279.9)
569.2
175.7
(62.9)
12.6
(3.3)
330.3
share - diluted . . . . . . . . . . . . . . . . . . . . . . .
$
1.56
$
0.02
$
0.10
$
(0.27)
$
0.05
$
(0.01)
$
1.44
Note: Totals may not sum due to rounding.
25
Non-GAAP consolidated results
The following is a comparison of our as adjusted non-GAAP
financial results between 2016 and 2015. Changes between
the periods are driven by the same factors summarized above
in the “Results of Operations” section within Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
Adjusted EBITDA increased $180 million or 17% to $1.23
billion in 2016 from $1.05 billion in 2015. The increase was
driven by in an increase of $121 million or 15% in the Media
Segment and the absence of $52 million in publishing-related
unallocated costs that occurred in 2015. As a result, Adjusted
EBITDA margins increased to 36.9% in 2016 from 34.6% in
2015.
FINANCIAL POSITION
Liquidity and capital resources
Our strong cash generation capability and financial condition,
together with our significant borrowing capacity under our
revolving credit agreement, are sufficient to fund our capital
expenditures, interest, dividends, share repurchases,
investments in strategic initiatives and other operating
requirements. Over the longer term, we expect to continue to
fund debt maturities, acquisitions and investments through a
combination of cash flows from operations, borrowings under
our revolving credit agreement and funds raised in the capital
Our strong operating cash flows enabled our Board of
Directors to approve two key capital allocation initiatives
following the spin-off of our publishing businesses in 2015.
First, we began paying a regular quarterly cash dividend of
$0.14 per share. We paid dividends totaling $122 million in
2016 and $168 million in 2015 (excluding the special spin-off
distribution of our publishing businesses). Second, in 2015,
our Board of Directors also approved an $825 million share
repurchase program to be completed over a three-year period
ending June 2018. See the “Capital stock” section below for
more information on the share repurchase
As of December 31, 2016, our total long-term debt
was $4.04 billion. Cash and cash equivalents as of December
31, 2016 totaled $77 million.
Our operations have historically generated strong positive
cash flow which, along with bank revolving credit availability,
has provided adequate liquidity to meet our internal
investment requirements, as well as acquisitions. Our financial
and operating performance, as well as our ability to generate
sufficient cash flow to maintain compliance with credit facility
covenants, are subject to certain risk factors; see Item 1A -
Risk Factors for further discussion.
In millions of dollars, except per share amounts
2016
Change
2015
Adjusted operating expenses. . . . . . . . . . . $ 2,311
5%
$ 2,202
Adjusted operating income . . . . . . . . . . . .
1,030
21%
849
Adjusted equity loss in unconsolidated
investments, net . . . . . . . . . . . . . . . . . . . . .
Adjusted other non-operating expense
(income), net . . . . . . . . . . . . . . . . . . . . . . .
(3)
(40%)
9
***
(5)
(1)
Adjusted total non-operating expense . . . .
(227)
(19%)
(280)
Adjusted income before income taxes . . . .
Adjusted provision for income taxes . . . . .
Adjusted net income from continuing
operations attributable to TEGNA . . . . . . .
803
241
41%
37%
511
55%
569
176
330
Adjusted net income from continuing
operations per share - diluted . . . . . . . . $
2.33
62% $
1.44
Adjusted EBITDA - Non-GAAP
Reconciliations of Adjusted EBITDA to net income from
continuing operations attributable to TEGNA Inc. presented in
accordance with GAAP on our Consolidated Statements of
Income is presented below:
In millions of dollars
2016
Change
2015
Net income from continuing operations
attributable to TEGNA (GAAP basis) . . . . . $
444
24% $
357
Net income attributable to noncontrolling
interests . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . .
Equity loss in unconsolidated
investments, net
. . . . . . . . . . . . . . . . . . .
Other non-operating expense, net . . . . . .
Operating income (GAAP basis) . . . . . . . . $
Severance expense . . . . . . . . . . . . . . . . .
Asset impairment and facility
consolidation charges . . . . . . . . . . . . . . .
Gain on sale of Corporate HQ building,
net and other building sale gain. . . . . . . .
51
(19%)
217
232
7
20
972
26
7%
(15%)
40%
67%
6%
***
32
3%
63
202
274
5
12
$
913
8
31
—
***
(103)
Adjusted operating income
(non-GAAP basis) . . . . . . . . . . . . . . . . . . . $ 1,030
21% $
Depreciation . . . . . . . . . . . . . . . . . . . . . .
90
(1%)
Amortization of intangible assets . . . . . . .
115
1%
849
91
114
Adjusted EBITDA
(non-GAAP basis) . . . . . . . . . . . . . . . . . . . $ 1,235
17% $ 1,054
Note: Numbers may not sum due to rounding.
Starting in the second quarter of 2016, we revised the method for
computing Adjusted EBITDA to no longer treat non-cash rent as a
reconciling item. Our 2015 Adjusted EBITDA was updated to conform to
this new method that resulted in a reduction for the twelve months ended
Dec. 31, 2015 by $1.6 million.
26
Investing Activities
2016 compared to 2015: Net cash used by investing
activities was $273 million in 2016 compared to cash provided
by investing activities of $217 million in 2015. The difference
between periods was primarily attributable to proceeds
received in 2015 of $411 million related to sales of assets
(primarily the sales of our corporate headquarters and Seattle
broadcast buildings) and the sale of businesses (primarily
Gannett Healthcare, Clipper and PointRoll). The year over
year change was also attributable to the increase in cash paid
for acquisitions from $54 million in 2015 to $206 million in
2016 (which includes DealerRater, Aurico, and Workterra - see
Note 3 to the consolidated financial statements).
2015 compared to 2014: Net cash provided by investing
activities was $217 million for 2015 compared to cash used by
investing activities of $1.66 billion in 2014. In 2015, we
received proceeds of $411 million related to sales of assets
and the sale of businesses. This compares to payments for
acquisitions of approximately $1.99 billion (primarily Cars.com,
London Broadcasting and Broadbean) in 2014. Capital
expenditures amounted to $119 million in 2015 and $150
million in 2014.
Financing Activities
2016 compared to 2015: Net cash used for financing
activities was $462 million in 2016 compared to $858 million in
2015. The difference between periods is primarily due to 2016
decreases in: debt repayments of $170 million; repurchases of
our common stock of $109 million; and a one-time cash
transfer in 2015 of $63 million to our former publishing
businesses in connection with the spin-off.
2015 compared to 2014: Net cash used for financing
activities was $858 million in 2015 compared to net cash
provided by financing activities of $464 million in 2014. The
difference between periods is primarily due to receiving less
proceeds from the issuance of debt, increased repurchases of
our common stock in 2015, increased debt repayments in
2015, and a one-time cash transfer in 2015 of $63 million to
our former publishing businesses in connection with the
Gannett spin-off.
The following table provides a summary of our cash flow
information followed by a discussion of the key elements of
our cash flows:
In millions of dollars
2016
2015
2014
Cash and cash equivalents at beginning of
year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 129 $ 118 $ 469
Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash adjustments . . . . . . . . . . . . . . .
Changes in working capital. . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . .
488
291
(61)
(34)
523
195
1,130
(163)
(65)
(123)
(2)
4
Net cash flows from operating activities . . . .
683
651
848
Net cash (used for) provided by investing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used for) provided by financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(273)
217 (1,662)
(462)
(858)
464
Net change in cash and cash equivalents . .
(52)
11
(351)
Cash and cash equivalents at end of year . . $
77 $ 129 $ 118
Note: Numbers may not sum due to rounding.
Operating Activities
2016 compared to 2015: Our net cash flow from operating
activities was $683 million in 2016, compared to $651 million
in 2015. Operating cash flow in 2016 increased due to the
absence of any pension contributions to our principal
retirement plan (we made a $100 million contribution in 2015).
In addition, operating cash flow increased due to higher
revenue in 2016. Partially offsetting these increases in cash
flow from operating activities was a $101 million increase in
income tax payments (due to higher taxable income), and the
absence of our former publishing businesses which generated
approximately $27 million of operating cash flow in the first
half of 2015 (through the spin-off date of June 29, 2015).
2015 compared to 2014: Our net cash flow from operating
activities was $651 million in 2015 compared to $848 million in
2014. The decrease was due to the relative absence of $200
million of political and Olympic revenue achieved in 2014, the
absence of our publishing businesses in the third and fourth
quarters of 2015, a $23 million increase in pension payments
in 2015, the timing of certain reverse network compensation
payments, payments related to previously accrued expenses
for the shutdown of USA Weekend and routine changes in
working capital. The increase in pension payments in 2015
was primarily due to a $100 million voluntary contribution we
made in 2015 to our principal retirement plan prior to the spin-
off of our publishing businesses. Cash paid for income taxes
were lower in 2015 by $101 million compared to 2014,
primarily due to the tax benefit received on the voluntary
pension payment and the decrease in net income compared to
the prior year.
27
We also have an effective shelf registration statement
under which an unspecified amount of securities may be
issued, subject to a $7.0 billion limit established by the Board
of Directors. Proceeds from the sale of such securities may be
used for general corporate purposes, including capital
expenditures, working capital, securities repurchase
programs, repayment of debt and financing of acquisitions.
We may also invest borrowed funds that are not required for
other purposes in short-term marketable securities.
Our debt maturities may be repaid with cash flow from
operating activities, by accessing capital markets or a
combination of both. The following schedule of annual
maturities of the principal amount of total debt assumes we
use available capacity under our revolving credit agreement to
refinance unsecured floating rate term loans and fixed rate
notes due in 2017 through 2018. Based on this refinancing
assumption, all of the obligations other than the VIE
unsecured floating rate term loan due prior to 2019 are
reflected as maturities for 2019 and beyond.
In thousands of dollars
646
2017 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
646
2018 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
700,000
2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,612,100
2020 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
350,000
2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,415,000
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,078,392
(1) Amortization of term debt due in 2017 and 2018 is assumed to be repaid with
funds from the revolving credit agreement, which matures in 2020. Excluding our
ability to repay funds with the revolving credit agreement, contractual debt
maturities are $132 million and $121 million in 2017 and 2018, respectively.
(2) Assumes current revolving credit agreement borrowings comes due in 2020 and
credit facility is not extended.
Long-term debt
As of December 31, 2016, our outstanding debt, net of
unamortized discounts and deferred financing costs,
amounted to $4.04 billion and mainly is in the form of fixed
rate notes and borrowings under a revolving credit facility. See
“Note 7 Long-term debt” to our consolidated financial
statements for a table summarizing the components of our
long-term debt. As of December 31, 2016, we were in
compliance with all covenants contained in our debt and credit
agreements.
Below is a summary of our 2016 debt activity:
• On April 1, 2016 our unsecured notes bearing a fixed rate
of 10% became due, and therefore, we made a debt
maturity payment of approximately $203 million (comprised
of principal and accrued interest). The payment was made
using borrowings from our revolving credit facility.
• On September 30, 2016, we borrowed $300 million under
a new four-year term loan due in 2020. The interest rate on
the term loan is equal to the same interest rates as
borrowings under the Amended and Restated Competitive
Advance and Revolving Credit Agreement discussed
below. Both the revolving credit agreement and the term
loan are guaranteed by a majority of our wholly-owned
material domestic subsidiaries. We used substantially all of
the proceeds from the new term loan to repay a portion of
the outstanding obligation under our revolving credit
facility.
• On November 1, 2016, we redeemed the remaining $70
million of 7.125% unsecured notes due in September 2018
at par, using available cash on hand. This redemption will
result in a total net reduction of interest expense of
approximately $5 million over the next two years.
• As of December 31, 2016, we had unused borrowing
capacity of $844 million under our revolving credit facility.
In 2015, we entered into an agreement to amend and
extend our existing revolving credit facility with one expiring on
June 29, 2020 (the Amended and Restated Competitive
Advance and Revolving Credit Agreement). As a result, the
maximum total leverage ratio permitted by the new agreement
is 5.0x through June 30, 2017, after which, as amended, it is
reduced to 4.75x through June 30, 2018, and then to 4.50x
thereafter. Commitment fees on the revolving credit
agreement are equal to 0.25% - 0.40% of the undrawn
commitments, depending upon our leverage ratio, and are
computed on the average daily undrawn balance under the
revolving credit agreement and paid each quarter. Under the
Amended and Restated Competitive Advance and Revolving
Credit Agreement, we may borrow at an applicable margin
above the Eurodollar base rate (LIBOR loan) or the higher of
the Prime Rate, the Federal Funds Effective Rate plus 0.50%,
or the one month LIBOR rate plus 1.00% (ABR loan). The
applicable margin is determined based on our leverage ratio
but differs between LIBOR loans and ABR loans. For LIBOR-
based borrowing, the margin varies from 1.75% to 2.50%. For
ABR-based borrowing, the margin will vary from 0.75% to
1.50%. On September 26, 2016, we amended the Amended
and Restated Competitive Advance and Revolving Credit
Agreement to increase the capacity of the facility by $103
million. Total commitments under the Amended and Restated
Competitive Advance and Revolving Credit Agreement are
$1.5 billion.
28
Contractual obligations and commitments
The following table summarizes the expected cash outflows
resulting from financial contracts and commitments as of the
end of 2016.
Contractual
obligations
Payments due by period
Total
2017 2018-19 2020-21 Thereafter
1,415
821 $ 1,710 $
416
350
118
61
6
69
In millions of dollars
Long-term debt (1) . . . . . $4,078 $ 132 $
Interest payments (2) . . .
Operating leases (3). . . .
Purchase obligations (4).
Programming
contracts (5) . . . . . . . . . .
Other noncurrent
liabilities (6) . . . . . . . . . .
Total . . . . . . . . . . . . . . . $7,152 $ 861 $ 2,080 $ 2,221 $
1
34
1,990
1,182
259
165
184
43
71
232
37
19
1,356
377
112
767
211
54
12
12
(1) Long-term debt includes scheduled principal payments only. See Note 7 to
the consolidated financial statements for further information.
(2) We have $635 million of outstanding borrowings under our revolving credit
facility as of Dec. 31, 2016. We have not included estimated interest
payments since payments into and out of the credit facility change daily.
Interest on the senior notes is based on the stated cash coupon rate and
excludes the amortization of debt issuance discount. The term loan interest
rates are based on the actual rates as of Dec. 31, 2016.
(3) See Note 13 to the consolidated financial statements.
(4) Includes purchase obligations related to capital projects, interactive
marketing agreements and other legally binding commitments. Amounts
which we are liable for under purchase orders outstanding at Dec. 31, 2016,
are reflected in the Consolidated Balance Sheets as accounts payable and
accrued liabilities and are excluded from the table above.
(5) Programming contracts include television station commitments to purchase
programming to be produced in future years. This also includes amounts
related to our network affiliation agreements.
(6) Other noncurrent liabilities consist of both unfunded and under-funded
postretirement benefit plans. Unfunded plans include the TEGNA
Supplemental Executive Retirement Plan and the TEGNA Retiree Welfare
Plan. Employer contributions, which equal the expected benefit payments,
are reflected in the table above over the next ten-year period. Our under-
funded plans include the TEGNA Retirement Plan and the G.B. Dealey
Retirement Plan (merged into the TEGNA Retirement Plan effective Dec.
31, 2015). We expect contributions to the TEGNA Retirement Plan in 2017
of $22.3 million. TEGNA Retirement Plan contributions beyond the next
fiscal year are excluded due to uncertainties regarding significant
assumptions involved in estimating these contributions, such as interest
rate levels as well as the amount and timing of invested asset returns.
Due to uncertainty with respect to the timing of future cash
flows associated with unrecognized tax benefits at December
31, 2016, we are unable to make reasonably reliable
estimates of the period of cash settlement. Therefore,
approximately $17 million of unrecognized tax benefits have
been excluded from the contractual obligations table above.
See Note 6 to the consolidated financial statements for a
further discussion of income taxes.
Capital stock
In 2015, our Board of Directors approved an $825 million
share repurchase program to be completed over a three-year
period ending June 2018. As of December 31, 2016, we have
$467 million remaining under this authorization. The table
below summarizes our share repurchases during the past
three years.
Stock repurchases
Repurchases made in fiscal year
In millions
Number of shares purchased . . . .
2016
7.0
2015
9.6
Dollar amount purchased . . . . . . . $
162 $
271 $
2014
2.7
76
The shares may be repurchased at management’s
discretion, either in the open market or in privately negotiated
block transactions. Management’s decision to repurchase
shares will depend on price and other corporate
developments. In connection with our announcement to spin-
off our Cars.com business unit, we temporarily suspended
repurchasing shares starting in July 2016 through early
November 2016. Purchases may occur from time to time and
no maximum purchase price has been set. Certain of the
shares we previously acquired have been reissued in
settlement of employee stock awards.
Our common stock outstanding at December 31, 2016,
totaled 214,487,800 shares, compared with 219,754,180
shares at December 31, 2015.
Effects of inflation and changing prices and other matters
Our results of operations and financial condition have not
been significantly affected by inflation. The effects of inflation
and changing prices on our property and equipment and
related depreciation expense have been reduced as a result of
an ongoing capital expenditure program and the availability of
replacement assets with improved technology and efficiency.
We are minimally exposed to foreign exchange rate risk
primarily due to our majority ownership of CareerBuilder which
uses several currencies but primarily the Canadian Dollar,
British Pound Sterling and Euro as its functional currencies,
which are then translated into U.S. dollars. Our foreign
currency translation adjustment, related principally to
CareerBuilder and reported as part of shareholders’ equity,
totaled $29 million at December 31, 2016.
Critical accounting policies and the use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions about future
events that affect the amounts reported in the financial
statements and accompanying notes. Actual results could
differ significantly from those estimates. We believe the
following discussion addresses our most critical accounting
policies, which are those that are important to the presentation
of our financial condition and results of operations and require
management’s most subjective and complex judgments. This
commentary should be read in conjunction with our financial
statements, selected financial data and the remainder of this
Form 10-K.
29
Revenue Recognition: We generate revenue from a
diverse set of product and service offerings which include
advertising, retransmission consent fees, and software and
recruitment services. Revenue is recognized when persuasive
evidence of an arrangement exists, performance under the
contract has begun, the contract price is fixed or determinable
and collectibility of the related transaction price is reasonably
assured. Revenue from sales agreements that contain
multiple deliverables is allocated to each element based on
the relative best estimate of selling price. Elements are treated
as separate units of accounting if there is standalone value
upon delivery. Amounts received from customers in advance
of revenue recognition are deferred as liabilities. Below is a
detail discussion of revenue by our two reportable segments.
Media Segment: The primary source of revenue for our
Media Segment is through the sale of advertising time on its
television stations. Advertising revenues are recognized, net of
agency commissions, in the period when the advertisements
are aired. Our Media Segment also earns revenue from
retransmission consent arrangements. Under these
agreements, we receive cash consideration from multichannel
video programming distributors (e.g., cable and satellite
providers) in return for our consent to permit the cable/satellite
operator to retransmit our television signal. Retransmission
consent fees are recognized over the contract period based
on a negotiated fee per subscriber. Retransmission consent
fee revenues have increased as a percentage of overall Media
Segment revenue in recent years. In 2016, those revenues
accounted for approximately 30% of overall Media Segment
revenue compared to 18% in 2013. In addition, our Media
Segment also generates online advertising revenue through
the display of digital advertisements across its various digital
platforms. Online advertising agreements typically take the
form of an impression-based contract, fixed fee time-based
contract or transaction based contract. The customers are
billed for impressions delivered or click-throughs on their
advertisements. An impression is the display of an
advertisement to an end-user on the website and is a measure
of volume. A click-through occurs when an end-user clicks on
an impression. Revenue is recognized evenly over the
contract term for fixed fee contracts where a minimum number
of impressions or click-throughs is not guaranteed. Revenue is
recognized as the service is delivered for transaction-based
contracts.
Digital Segment: The primary source of revenue for our
Digital Segment is through the sale of online subscription
advertising products. Cars.com sells subscription advertising
products to car dealerships, and CareerBuilder earns revenue
through various types of recruitment subscription products.
The transaction price for the subscription products is
recognized on a straight-line basis over the contract term as
the service is provided to our customers.
Revenue is recognized for our Digital Segment’s online
display advertising arrangements (which includes Cars.com,
CareerBuilder and G/O Digital) in the same manner as
described above for Media Segments online advertising
revenue.
CareerBuilder service offerings include human capital
SaaS and various other recruitment solutions (employment
branding services and access to online resume databases).
Generally, the human capital SaaS offering and access related
to resume databases are subscription-based contracts for
which revenue is recognized ratably over the subscription
period. SaaS contracts are generally two to three year
contracts. Recruitment solutions (which include sourcing and
screening services) are more transactional based contracts;
and therefore, revenue is recognized as delivery occurs.
Goodwill: As of December 31, 2016, our goodwill balance
was $4.07 billion and represented approximately 48% of our
total assets. Goodwill represents the excess of acquisition
cost over the fair value of assets acquired, including
identifiable intangible assets, net of liabilities assumed.
Goodwill is tested for impairment on an annual basis (first day
of our fourth quarter) or between annual tests if events or
changes in circumstances occurred that indicate the fair value
of a reporting unit may be below its carrying amount.
Our goodwill has been allocated to and is tested for
impairment at a level referred to as the reporting unit. The
level at which we test goodwill for impairment requires us to
determine whether the operations below the business
segment level constitute a business for which discrete
financial information is available and segment management
regularly reviews the operating results. For Media, goodwill is
tested at the segment level. For Digital, the reporting units are
the stand-alone digital businesses such as Cars.com and
CareerBuilder. The following table shows the aggregate
goodwill balance for these units summarized at the segment
level:
In millions of dollars
Segment
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Goodwill Balance
2,579
1,488
Before performing the annual two-step goodwill impairment
test, we first have the option to perform a qualitative
assessment to determine if the two-step quantitative test must
be completed. The qualitative assessment considers events
and circumstances such as macroeconomic conditions,
industry and market conditions, cost factors and overall
financial performance, as well as company and specific
reporting unit specifications. If after performing this
assessment, we conclude it is more likely than not that the fair
value of a reporting unit is less than its carrying amount, then
we are required to perform a two-step quantitative test.
Otherwise, the two-step test is not required. In 2016, we
elected not to perform the optional qualitative assessment of
goodwill and instead performed the quantitative impairment
test.
When performing the first step of the quantitative test, we
determine the fair value of each reporting unit and compare it
to the carrying amount, including goodwill. If the carrying
amount of the reporting unit exceeds the fair value of the
reporting unit, we perform the second step of the impairment
test, as this is an indication that the reporting unit goodwill
may be impaired. In the second step of the impairment test,
we determine the implied fair value of the reporting unit’s
goodwill. If the carrying value of a reporting unit’s goodwill
exceeds its implied fair value, then an impairment of goodwill
has occurred and we must recognize an impairment loss for
the difference between the carrying amount and the implied
fair value of goodwill.
30
We estimate the fair value of each reporting unit using a
combination of an income approach using the discounted cash
flow (DCF) analysis and a market-based valuation
methodology using comparable public company trading
values. Determining fair value requires the exercise of
significant judgment, including the amount and timing of
expected future cash flows, long-term growth rates, discount
rates and relevant comparable public company earnings
multiples. The cash flows employed in the DCF analysis are
based on our best estimate of future sales, earnings and cash
flows after considering factors such as general market
conditions and recent operating performance. The discount
rates utilized in the DCF analysis are based on the respective
reporting unit’s weighted average cost of capital, which takes
into account the relative weights of each component of its
capital structure (equity and debt) and represents the
expected cost of new capital, adjusted as appropriate to
consider the risk inherent in future cash flows of the respective
reporting unit.
During the third quarter of 2016, we performed an interim
impairment test for a small reporting unit within our Digital
Segment, and as a result recorded a non-cash impairment
charge of $15.2 million within asset impairment and facility
consolidation charges (gains) in the accompanying
Consolidated Statements of Income. See Note 4 to the
consolidated financial statements for further discussion.
In the fourth quarter of 2016, we completed our annual
goodwill impairment test for each of our reporting units. The
results of these tests indicated that the estimated fair values of
all of our reporting units significantly exceeded their carrying
values.
For the Media Segment, a single reporting unit, the
estimated value would need to decline by over 40% to fail step
one of the quantitative goodwill impairment test. The Digital
Segment balance represents primarily Cars.com and
CareerBuilder. For both of these reporting units, the estimated
value would need to decline by more than 20% to fail step one
of the quantitative goodwill impairment test. We do not believe
that any of our reporting units are currently at risk of incurring
a goodwill impairment in the foreseeable future.
Impairment assessment inherently involves management
judgments regarding a number of assumptions described
above. Fair value of the reporting units also depends on the
future strength of the economy in our principal media and
digital markets. New and developing competition as well as
technological change could also adversely affect future fair
value estimates. Due to the many variables inherent in the
estimation of a reporting unit’s fair value and the relative size
of our recorded goodwill, differences in assumptions could
have a material effect on the estimated fair value of one or
more of our reporting units and could result in a goodwill
impairment charge in a future period.
Indefinite Lived Intangibles: This asset grouping consists
of FCC broadcast licenses related to our acquisitions of
television stations, and trade names from the Cars.com and
CareerBuilder acquisitions. As of December 31, 2016,
indefinite lived intangible assets were $2.12 billion and
represented approximately 25% of our total assets.
Indefinite lived assets are not subject to amortization and,
as a result, they are tested for impairment annually (on the
first day of our fourth quarter), or more frequently if events or
changes in circumstances suggest that the asset might be
impaired. We have the option to first perform a qualitative
assessment to determine if it is more likely than not that the
fair value of the indefinite lived asset is more than its carrying
amount. If that is the case, then we would not have to perform
the quantitative analysis. The qualitative assessment
considers events and circumstances such as macroeconomic
conditions, industry and market conditions, cost factors and
overall financial performance of the indefinite lived asset. In
2016, we elected not to perform the optional qualitative
assessment; and instead, we performed the quantitative
impairment test.
The fair value of each FCC broadcast license was
determined using an income approach referred to as the
Greenfield method. This method requires multiple
assumptions relating to the future prospects of each individual
television station including, but not limited to: (i) expected
long-term market growth characteristics, (ii) station revenue
shares within a market for a new entrant, (iii) future expected
operating expenses, (iv) costs of capital and (v) appropriate
discount rates. We performed a quantitative analysis on all of
our FCC licenses on the impairment testing date and each fair
value exceeded the carrying value by more than 30%, and
therefore, concluded that no impairment existed.
We completed our acquisition of Belo in late 2013 and
London Broadcasting in mid-2014 and as a result recorded
FCC licenses for all stations acquired. As these FCC licenses
were recorded at fair value on the date of acquisition, any
future declines in the fair value of the FCC license could result
in an impairment charge. Factors that could cause the fair
value to decline would be negative changes in any of the
assumptions described in the above Greenfield method. The
discount rate used generally has a significant impact to the
valuation. For our 2016 impairment testing date, the discount
rate had declined from when we completed our acquisition of
Belo and London Broadcasting (2.0% for Belo and 1.5% for
London Broadcasting). Future increases in the discount rate
assumptions could cause a decline in the fair value of our
FCC licenses which may result in an impairment charge.
The estimates of fair value for the trade names are
determined using the “relief from royalty” methodology, which
is a variation of the income approach. Discount rate
assumptions are based on an assessment of the risk inherent
in the projected future cash flows generated by the intangible
asset. Also subject to judgment are assumptions about royalty
rates, which are based on the estimated rates at which similar
trade names are being licensed in the marketplace. We
completed our annual impairment testing of trade names and
determined each fair value exceeded the carrying value by
more than 10%, and therefore, concluded that no impairments
existed. Although our trade name assets are not currently
impaired, changes in future market rates or decreases in
future cash flows and growth rates could result in an
impairment charge in a future period.
31
primarily related to federal and state capital losses, and state
net operating losses available for carry forward to future years.
Although realization is not assured, we believe it is more likely
than not that all other deferred tax assets for which no
valuation allowances have been established will be realized.
This conclusion is based on our history of cumulative income
in recent years and review of historical and projected future
taxable income.
We determine whether it is more likely than not that a tax
position will be sustained upon examination by the appropriate
taxing authorities before any part of the benefit is recorded in
our financial statements. A tax position is measured as the
portion of the tax benefit that is greater than 50% likely to be
realized upon settlement with a taxing authority (that has full
knowledge of all relevant information). We may be required to
change our provision for income taxes when the ultimate
treatment of certain items is challenged or agreed to by taxing
authorities, when estimates used in determining valuation
allowances on deferred tax assets significantly change, or
when receipt of new information indicates the need for
adjustment in valuation allowances. Future events, such as
changes in tax laws, tax regulations, or interpretations of such
laws or regulations, could have an impact on the provision for
income tax and the effective tax rate. Any such changes could
significantly affect the amounts reported in the consolidated
financial statements in the year these changes occur.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Market risk is the potential gain/loss arising from changes in
market rates and prices, such as interest rates, foreign
currency exchange rates and changes in the market value of
financial instruments. Our main exposure to market risk
relates to interest rates. We have $1.11 billion in floating
interest rate obligations outstanding on December 31, 2016,
and therefore are subject to changes in the amount of interest
expense we might incur. A 50 basis point increase or decrease
in the average interest rate for these obligations would result
in an increase or decrease in annual interest expense of $6
million. Refer to Note 7 to the consolidated financial
statements for information regarding the fair value of our long-
term debt.
We believe that our market risk from financial instruments,
such as accounts receivable, accounts payable and debt, is
not material. We also have limited exposure to foreign
exchange rate risk related to CareerBuilder’s international
operations, primarily the Canadian Dollar, British pound
Sterling, and Euro. While foreign exchange rates experienced
higher volatility during 2016, given our limited exposure, we
incurred currency transaction losses of just $2 million for the
year ended December 31, 2016. If the price of the above
currencies against the U.S. dollar had been 10% more or less
than the actual price, operating income would have increased
or decreased less than 1% in 2016.
Other Long-Lived Assets (Property and Equipment and
Amortizable Intangible Assets): As of December 31, 2016,
other long-lived assets were $1.3 billion and represented
approximately 16% of our total assets. Property and
equipment are recorded at cost and depreciated on a straight-
line method over the estimated useful lives of such assets.
Changes in circumstances, such as technological advances or
changes to our business model or capital strategy, could result
in actual useful lives differing from our estimates. In cases
where we determine the useful life of buildings and equipment
should be shortened, we would, after evaluating for
impairment, depreciate the asset over its revised remaining
useful life thereby increasing depreciation expense.
If an indicator is present, we review our property and
equipment assets for potential impairment at the asset group
level (generally at the local business level) by comparing the
carrying value of such assets with the expected undiscounted
cash flows to be generated by those asset groups/local
business units. Due to expected continued cash flow in excess
of carrying value from its businesses, no property or
equipment assets were considered impaired.
Our amortizable intangible assets consist mainly of
customer relationships, acquired technology and
retransmission agreements. These asset values are amortized
ratably over their estimated useful lives. An impairment test of
these assets would be triggered if the undiscounted cash
flows from the related asset group (business unit) were to be
less than the asset carrying value.
We do not believe that any of our larger amortizable
intangible assets (those with book values over $10 million) are
at risk of requiring an impairment in the foreseeable future.
Income Taxes: Our annual tax rate is based on our
income, statutory tax rates, and tax planning opportunities
available in the various jurisdictions in which we operate.
Significant judgment is required in determining our annual tax
expense and in evaluating our tax positions.
Tax law requires certain items to be included in our tax
returns at different times than when the items are reflected in
the financial statements. The annual tax expense reflected in
the Consolidated Statements of Income is different than that
reported in our tax returns. Some of these differences are
permanent (for example, expenses recorded for accounting
purposes that are not deductible in the returns such as non-
deductible goodwill) and some differences are temporary and
reverse over time, such as depreciation expense. Temporary
differences create deferred tax assets and liabilities. Deferred
tax liabilities generally represent tax expense recognized in
the financial statements for which payment has been deferred,
or expense for which a deduction has been taken already in
the tax return but the expense has not yet been recognized in
the financial statements. Deferred tax assets generally
represent items that can be used as a tax deduction or credit
in tax returns in future years for which a benefit has already
been recorded in the financial statements. Valuation
allowances are established when necessary to reduce
deferred income tax assets to the amounts we believe are
more likely than not to be recovered. In evaluating the amount
of any such valuation allowance, we consider the existence of
cumulative income or losses in recent years, the reversal of
existing temporary differences, the existence of taxable
income in prior carry back years, available tax planning
strategies and estimates of future taxable income for each of
our taxable jurisdictions. The latter two factors involve the
exercise of significant judgment. As of December 31, 2016,
deferred tax asset valuation allowances totaled $210 million,
32
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets at December 31, 2016 and 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for each of the three fiscal years in the period ended December 31, 2016 . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for each of the three fiscal years in the period ended December 31, 2016 .
Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended December 31, 2016 . . . . . . . . . .
Consolidated Statements of Equity for each of the three fiscal years in the period ended December 31, 2016 . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data (Unaudited)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quarterly Statements of Income (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUPPLEMENTARY DATA
OTHER INFORMATION
Page
34
35
37
38
39
40
41
67
69
33
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders of TEGNA Inc.:
We have audited the accompanying consolidated balance
sheets of TEGNA Inc. as of December 31, 2016 and 2015,
and the related consolidated statements of income,
comprehensive income, cash flows, and equity for each of the
three fiscal years in the period ended December 31, 2016.
These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of TEGNA Inc. at December 31, 2016 and
2015, and the consolidated results of its operations and its
cash flows for each of the three fiscal years in the period
ended December 31, 2016, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United
States), TEGNA Inc.’s internal control over financial reporting
as of December 31, 2016, based on criteria established in
Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) and our report dated
February 27, 2017, included in Item 9A, expressed an
unqualified opinion thereon.
/s/ Ernst & Young LLP
McLean, Virginia
February 27, 2017
34
TEGNA Inc.
CONSOLIDATED BALANCE SHEETS
In thousands of dollars
Assets
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Trade receivables, net of allowances of $9,837 and $9,092, respectively . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current discontinued operations assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dec. 31,
2016
2015
76,920 $
595,893
25,953
91,922
—
129,200
556,351
18,738
94,262
6,608
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
790,688
805,159
Property and equipment
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment, furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74,747
293,244
633,559
13,192
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,014,742
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(564,726)
450,016
76,089
272,862
604,839
30,395
984,185
(525,866)
458,319
Intangible and other assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indefinite-lived and amortizable intangible assets, less accumulated amortization of $324,416 and
$220,662, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent discontinued operation assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,067,529
3,919,726
3,013,432
3,065,107
221,060
—
256,990
657
Total intangible and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,302,021
7,242,480
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,542,725 $
8,505,958
35
TEGNA Inc.
CONSOLIDATED BALANCE SHEETS
In thousands of dollars, except par value and share amounts
Liabilities and equity
Dec. 31,
2016
2015
Current liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
120,911 $
124,654
Accrued liabilities
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current discontinued operations liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103,590
42,413
194,497
30,178
13,478
113,468
646
—
619,181
22,644
929,184
115,679
49,835
131,301
31,033
15,742
132,650
646
5,243
606,783
18,191
883,141
Long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,042,749
4,169,016
Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
187,290
142,407
5,324,274
5,943,455
178,844
168,573
5,417,765
6,024,548
Redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,265
24,666
Commitments and contingent liabilities (see Note 13)
Equity
TEGNA Inc. shareholders’ equity
Common stock, par value $1: Authorized, 800,000,000 shares: Issued, 324,418,632 shares . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
324,419
473,742
324,419
539,505
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,384,556
7,111,129
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(161,573)
(130,951)
Less treasury stock at cost, 109,930,832 shares and 104,664,452 shares, respectively . . . . . . . . . . .
(5,749,726)
(5,652,131)
Total TEGNA Inc. shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,271,418
2,191,971
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
281,587
264,773
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,553,005
2,456,744
Total liabilities, redeemable noncontrolling interests and equity . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,542,725 $
8,505,958
The accompanying notes are an integral part of these consolidated financial statements.
36
TEGNA Inc.
CONSOLIDATED STATEMENTS OF INCOME
In thousands of dollars, except per share amounts
Fiscal years ended
Dec. 31, 2016 Dec. 31, 2015 Dec. 28, 2014
Operating Revenues:
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Cost of revenues, exclusive of depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses, exclusive of depreciation . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairment and facility consolidation charges (gains) (see Note 12) . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-operating (expense) income
Equity (loss) income in unconsolidated investments, net (see Note 5). . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-operating items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to TEGNA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Earnings from continuing operations per share - basic. . . . . . . . . . . . . . . . . . . . . . . . . . $
Earnings (loss) from discontinued operations per share - basic . . . . . . . . . . . . . . . . . . .
Net income per share - basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Earnings from continuing operations per share - diluted . . . . . . . . . . . . . . . . . . . . . . . . $
Earnings from discontinued operations per share - diluted. . . . . . . . . . . . . . . . . . . . . . .
Net income per share - diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted average number of common shares outstanding:
Basic shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
The accompanying notes are an integral part of these consolidated financial statements.
1,933,579 $
1,407,619
1,682,144 $
1,368,801
1,691,866
934,275
3,341,198
3,050,945
2,626,141
1,038,667
1,093,837
89,531
114,959
32,130
2,369,124
972,074
923,336
1,068,221
90,803
114,284
(58,857)
2,137,787
913,158
(7,170)
(232,013)
(20,439)
(259,622)
712,452
216,979
495,473
(7,474)
487,999
(51,302)
436,697 $
2.05 $
(0.03)
2.02 $
2.02 $
(0.03)
1.99 $
(5,064)
(273,629)
(11,529)
(290,222)
622,936
202,314
420,622
102,064
522,686
(63,164)
459,522 $
1.59 $
0.45
2.04 $
1.56 $
0.44
2.00 $
954,990
766,854
85,866
65,971
44,961
1,918,642
707,499
151,462
(272,668)
404,403
283,197
990,696
234,471
756,225
374,235
1,130,460
(68,289)
1,062,171
3.04
1.65
4.69
2.97
1.61
4.58
216,358
219,681
224,688
229,721
0.56 $
0.68 $
226,292
231,907
0.80
37
TEGNA Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
In thousands of dollars
Fiscal years ended
Dec. 31, 2016 Dec. 31, 2015 Dec. 28, 2014
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
487,999 $
522,686 $
1,130,460
Redeemable noncontrolling interests (income not available to shareholders) . . . . . . . .
(4,511)
(1,796)
(3,420)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15,938)
(8,235)
(43,766)
Pension and other postretirement benefit items:
Recognition of previously deferred post-retirement benefit plan costs . . . . . . . . . .
Actuarial loss arising during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interim remeasurement of post-retirement benefits liability. . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and other postretirement benefit items . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (losses) gains on available for sale investment during the period . . . . . . .
Other comprehensive (loss) income before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax effect related to components of other comprehensive income (loss) . . . . . .
Other comprehensive (loss) income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to noncontrolling interests, net of tax. . . . . . . . . . .
8,068
(21,337)
—
—
(13,269)
(11,346)
(40,553)
5,066
(35,487)
448,001
(39,284)
32,533
(40,069)
79,184
(355)
71,293
3,311
66,369
(28,289)
38,080
558,970
(55,099)
42,407
(428,496)
—
(10,279)
(396,368)
—
(440,134)
147,718
(292,416)
834,624
(57,167)
Comprehensive income attributable to TEGNA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . $
408,717 $
503,871 $
777,457
The accompanying notes are an integral part of these consolidated financial statements.
38
TEGNA Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands of dollars
Fiscal years ended
Dec. 31, 2016 Dec. 31, 2015 Dec. 28, 2014
Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjustments to reconcile net income to operating cash flows:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension expense (benefit), net of contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity loss (income) in unconsolidated investees, net . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on Cars.com acquisition, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, including losses (gains) on sale of assets and impairments . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:
Decrease (increase) in trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in interest and taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in other assets and liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for acquisitions, net of cash acquired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of businesses and assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used for) provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities
(Payments of) proceeds from borrowings under revolving credit facilities, net . . . . . . . .
Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of debt issuance and financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net settlement of stock for tax withholding and proceeds from stock option exercises .
Distributions to noncontrolling membership interests . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred payments for acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash transferred to the Gannett Co., Inc. business . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used for) provided by financing activities. . . . . . . . . . . . . . . . . . . . . . . . .
Effect of currency exchange rate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents from continuing operations, beginning of year . . . . . . . . .
Cash and cash equivalents from discontinued operations, beginning of year . . . . . . .
Balance of cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . .
Cash and cash equivalents from continuing operations, end of year . . . . . . . . . . . . .
Cash and cash equivalents from discontinued operations, end of year. . . . . . . . . . . .
Balance of cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . $
Supplemental cash flow information:
Cash paid for income taxes, net of refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-cash investing and financing activities
Non-monetary exchange of investment for acquisition . . . . . . . . . . . . . . . . . . . . . . $
Assets-held-for-sale proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Escrow deposit disbursement related to London Broadcasting Company
television stations acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
The accompanying notes are an integral part of these consolidated financial statements.
39
487,999 $
522,686 $
1,130,460
89,531
114,959
17,590
16,535
3,257
7,170
—
42,067
(32,046)
—
(1,506)
(7,771)
(20,004)
(34,352)
683,429
(94,796)
(206,078)
(20,797)
39,954
8,441
(273,276)
(85,000)
300,000
(352,590)
(1,684)
(121,639)
(161,891)
(20,352)
(18,840)
(437)
—
(462,433)
—
(52,280)
129,200
—
129,200
76,920
—
76,920 $
140,954
121,290
26,344
100,202
(122,376)
(5,743)
—
(65,496)
32,787
1,807
(57,643)
(46,411)
4,822
(1,992)
651,231
(118,767)
(53,656)
(33,715)
12,402
411,012
217,276
80,000
200,000
(587,509)
(7,619)
(167,508)
(271,030)
(6,841)
(24,783)
(9,136)
(63,365)
(857,791)
—
10,716
110,305
8,179
118,484
129,200
—
129,200 $
185,868
79,856
33,882
1,200
(111,194)
(167,319)
(285,860)
100,159
(1,514)
10,032
66,740
(193,274)
(5,353)
3,857
847,540
(150,354)
(1,990,877)
(7,026)
180,809
305,347
(1,662,101)
640,000
666,732
(537,490)
(10,548)
(181,328)
(75,815)
331
(22,072)
(15,687)
—
464,123
(281)
(350,719)
455,023
14,180
469,203
110,305
8,179
118,484
206,271 $
225,462 $
105,581 $
265,174 $
207,038
242,190
— $
— $
— $
— $
(34,403) $
— $
—
146,428
— $
— $
(134,908)
(11,520)
TEGNA Inc.
CONSOLIDATED STATEMENTS OF EQUITY
In thousands of dollars, except per share data
TEGNA Inc. Shareholders’ Equity
Common
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Noncontrolling
Interests
Total
Balance at Dec. 29, 2013 . . . . . . . . . . . . $ 324,419 $ 552,368 $7,720,903 $
Net Income . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interest . . . . .
Other comprehensive loss, net of tax . . . .
1,062,171
(494,055) $(5,410,537) $
(284,714)
Total comprehensive income
Dividends declared: $0.80 per share . . . .
Distributions to noncontrolling
membership shareholders . . . . . . . . . . . .
(180,705)
Treasury stock acquired . . . . . . . . . . . . . .
Stock-based awards activity . . . . . . . . . . .
Stock-based compensation. . . . . . . . . . . .
Tax benefit from settlement of stock
awards . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other activity . . . . . . . . . . . . . . . . . . . . . . .
Balance at Dec. 28, 2014 . . . . . . . . . . . . $ 324,419 $ 546,406 $8,602,369 $
Net Income . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interest . . . . .
(52,988)
33,882
459,522
12,437
707
(75,815)
47,127
(286)
(778,769) $(5,439,511) $
201,695 $2,894,793
1,130,460
(3,420)
(292,416)
68,289
(3,420)
(7,702)
834,624
(180,705)
(22,072)
(22,072)
(75,815)
(5,861)
33,882
12,437
(2,431)
(2,010)
234,359 $3,489,273
522,686
(1,796)
63,164
(1,796)
44,349
(6,269)
38,080
(153,022)
(1,797,740)
603,469
Other comprehensive income (loss), net
of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income . . . . . . . . . .
Dividends declared: $0.68 per share . . . .
Distributions to noncontrolling
membership shareholders . . . . . . . . . . . .
Spin-off of Publishing businesses . . . . . . .
Treasury stock acquired . . . . . . . . . . . . . .
Stock-based awards activity . . . . . . . . . . .
Stock-based compensation. . . . . . . . . . . .
Tax benefit from settlement of stock
awards . . . . . . . . . . . . . . . . . . . . . . . . . . .
(52,436)
26,344
20,439
(1,248)
Other activity . . . . . . . . . . . . . . . . . . . . . . .
Balance at Dec. 31, 2015 . . . . . . . . . . . . $ 324,419 $ 539,505 $7,111,129 $
Net Income . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interests . . . .
Other comprehensive loss, net of tax . . . .
Total comprehensive income . . . . . . . . . .
Dividends declared: $0.56 per share . . . .
Adjustments related to the spin-off of
Publishing businesses (see Note 8 and
Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . .
(120,784)
(42,486)
436,697
(271,030)
42,620
15,790
(130,951) $(5,652,131) $
(27,980)
558,970
(153,022)
(23,550)
(23,550)
(1,194,271)
(271,030)
(9,816)
26,344
20,439
(1,135)
13,407
264,773 $2,456,744
487,999
(4,511)
(35,487)
448,001
(120,784)
51,302
(4,511)
(7,507)
(2,642)
(45,128)
Distributions to noncontrolling
membership shareholders . . . . . . . . . . . .
Treasury stock acquired . . . . . . . . . . . . . .
Stock-based awards activity . . . . . . . . . . .
Stock-based compensation. . . . . . . . . . . .
Other activity . . . . . . . . . . . . . . . . . . . . . . .
Balance at Dec. 31, 2016 . . . . . . . . . . . . $ 324,419 $ 473,742 $7,384,556 $
(84,648)
17,590
1,295
(161,891)
64,296
(161,573) $(5,749,726) $
The accompanying notes are an integral part of these consolidated financial statements.
(18,840)
(18,840)
(161,891)
(20,352)
17,590
(2,335)
281,587 $2,553,005
(3,630)
40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
Description of business, basis of presentation and
summary of significant accounting policies
Description of business: Our Company is comprised of a
dynamic portfolio of media and digital businesses that provide
content that matters and brands that deliver. Our media
business includes 46 television stations operating in 38
markets, offering high-quality television programming and
digital content. Our digital business primarily consists of our
Cars.com and CareerBuilder business units that operate in the
automotive and human capital solutions industries. The
Cars.com website provides credible and easy-to-understand
information from consumers and experts to provide car buyers
with greater control over the car buying and servicing process.
CareerBuilder helps companies target, attract and retain
workforce talent through an array of product offerings
including talent management software and other advertising
and recruitment solutions.
Fiscal year: Beginning in fiscal year 2015, we changed our
financial reporting cycle to a calendar year-end. Accordingly,
our 2015 fiscal year began on December 29, 2014 (the day
after the end of the 2014 fiscal year) and ended on December
31, 2015. Historically, our fiscal year was a 52-53 week fiscal
year that ended on the last Sunday of the calendar year. As a
result, our 2015 fiscal year had two and four more days than
fiscal years 2016 and 2014, respectively. The impact of the
extra days did not have a material impact on our financial
statements, and therefore, we have not restated the historical
results.
Use of estimates: The financial statements have been
prepared in accordance with U.S. generally accepted
accounting principles (GAAP). In doing so, we are required to
make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and
accompanying notes. Actual results could differ from these
estimates. Significant estimates include, but are not limited to,
evaluation of goodwill and other intangible assets for
impairment, fair value measurements, postretirement benefit
plans, income taxes including deferred tax assets, and
contingencies.
Basis of Presentation: The consolidated financial
statements include the accounts of subsidiaries we control
and variable interest entities if we are the primary beneficiary.
We eliminate all intercompany balances, transactions, and
profits in consolidation. Investments in entities for 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) income in unconsolidated investees, net” in the
Consolidated Statements of Income. In addition, certain
reclassifications have been made to prior years’ consolidated
financial statements to conform to the current year’s
presentation.
On September 7, 2016, we announced plans to spin-off
our Cars.com business unit into a separate stand-alone public
company. At that time, we also announced our plans to
conduct a strategic review of our 53% ownership interest in
CareerBuilder. While we perform the necessary steps to
complete the spin and strategic review, we have maintained
the current operating and reporting structure and continue to
report the financial results of these businesses in continuing
operations. See Note 2 for additional information related to
these strategic actions.
Segment presentation: We classify our operations into
two reportable segments: Media Segment: consisting of 46
television stations and Digital Segment: consisting of our
Cars.com, CareerBuilder and G/O Digital business units. Our
reportable segments have been determined based on
management and internal reporting structure, the nature of
products and services offered by the businesses within the
segments, and the financial information that is evaluated
regularly by our chief operating decision maker.
Digital Segment revenues exclude online/digital revenues
generated by digital platforms that are associated with our
Media Segment’s properties. Such amounts are reflected
within our Media Segment and included within media
revenues in the Consolidated Statements of Income.
Noncontrolling interests presentation: Noncontrolling
interests are presented as a component of equity on the
Consolidated Balance Sheet. This balance primarily relates to
the noncontrolling owners of CareerBuilder that own a 47%
interest. Net income in the Consolidated Statements of
Income reflects 100% of CareerBuilder’s results as we hold
the controlling interest. Net income is subsequently adjusted
to remove the noncontrolling interest to arrive at Net income
attributable to TEGNA Inc.
In addition, CareerBuilder has made three strategic
acquisitions in which they own a controlling financial interest
(see Note 3). The minority shareholders of these acquired
businesses hold put rights that permit them to put their equity
interest to CareerBuilder. Since redemption of the
noncontrolling interest is outside of our control, the minority
shareholders’ equity interest is presented on the consolidated
balance sheet in the caption “Redeemable noncontrolling
interests”. We recognize changes in the fair value of the
minority interests redemption value as they occur.
Redeemable noncontrolling interests was approximately $46.3
million and $24.7 million as of December 31, 2016 and 2015,
respectively. The increase in the current year is primarily due
to the acquisition of Workterra (see Note 3).
Cash and cash equivalents: Cash and cash equivalents
consist of cash and highly liquid short-term investments with
original maturities of three months or less. Cash and cash
equivalents are carried at cost plus accrued interest, which
approximates fair value.
41
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. Bad
debt expense, which is included in cost of revenues on our
Consolidated Statements of Income, was $11.3 million in
2016, $6.9 million in 2015 and $4.1 million in 2014. Write-offs
of trade receivables (net of recoveries) were $8.5 million in
2016, $6.0 million in 2015 and $4.3 million in 2014.
Property and equipment: Property and equipment are
recorded at cost, and depreciation is provided generally on a
straight-line basis over the estimated useful lives of the
assets. The estimated useful lives are generally: buildings and
improvements, 10 to 40 years; and machinery, equipment and
fixtures, 3 to 25 years. Changes in the estimated useful life of
an asset, which, for example, could happen as a result of
facility consolidations, can affect depreciation expense and net
income. Major building and leasehold improvements and
interest incurred during the construction period of major
additions are capitalized. Expenditures for maintenance and
repairs are expensed as incurred.
Valuation of long-lived assets: We review the carrying
amount of long-lived assets (mostly property and equipment
and definite-lived intangible assets) for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. Once an indicator of potential
impairment has occurred, the impairment test is based on
whether the intent is to hold the asset for continued use or to
hold the asset for sale. If the intent is to hold the asset for
continued use, the impairment test first requires a comparison
of projected undiscounted future cash flows against the
carrying amount of the asset group. If the carrying value of the
asset group exceeds the estimated undiscounted future cash
flows, the asset group would be deemed to be potentially
impaired. The impairment, if any, would be measured based
on the amount by which the carrying amount exceeds the fair
value. Fair value is determined primarily using the projected
future cash flows, discounted at a rate commensurate with the
risk involved. Losses on long-lived assets to be disposed of
are determined in a similar manner, except that fair values are
reduced for the cost to dispose. We recognized impairment
charges each fiscal year presented related to long-lived
assets. See Note 12 for further discussion.
Goodwill and indefinite-lived intangible assets:
Goodwill represents the excess of acquisition cost over the fair
value of assets acquired, including identifiable intangible
assets, net of liabilities assumed. Goodwill is tested for
impairment on an annual basis (first day of our fourth quarter)
or between annual tests if events or changes in circumstances
indicate that the fair value of a reporting unit may be below its
carrying amount.
Before performing the annual two-step goodwill impairment
test, we first have the option to perform a qualitative
assessment to determine if the two-step quantitative test must
be completed. The qualitative assessment considers events
and circumstances such as macroeconomic conditions,
industry and market conditions, cost factors and overall
financial performance, as well as company and specific
reporting unit specifications. If after performing this
assessment, we conclude it is more likely than not that the fair
value of a reporting unit is less than its carrying amount, then
we are required to perform the two-step quantitative test.
Otherwise, the two-step quantitative test is not required. In
2016, we elected not to perform the optional qualitative
assessment of goodwill and instead performed the quantitative
impairment test.
Our goodwill has been allocated to and is tested for
impairment at a level referred to as the reporting unit. The
level at which we test goodwill for impairment requires us to
determine whether the operations below the operating
segment level constitute a business for which discrete
financial information is available and segment management
regularly reviews the operating results. For Media, goodwill is
accounted for at the segment level. For Digital, the reporting
units are the stand-alone digital businesses such as Cars.com
and CareerBuilder.
When performing the first step of the quantitative test, we
determine the fair value of each reporting unit and compare it
to the carrying amount, including goodwill. If the carrying
amount of the reporting unit exceeds the fair value of the
reporting unit, we perform the second step of the impairment
test, as this is an indication that the reporting unit goodwill
may be impaired. In the second step of the impairment test,
we determine the implied fair value of the reporting unit’s
goodwill. If the carrying value of a reporting unit’s goodwill
exceeds its implied fair value, then an impairment of goodwill
has occurred and we must recognize an impairment loss for
the difference between the carrying amount and the implied
fair value of goodwill.
We estimate the fair value of each reporting unit using a
combination of an income approach using the discounted cash
flow (DCF) analysis and a market-based valuation
methodology using comparable public company trading
values. Determining fair value requires the exercise of
significant judgment, including the amount and timing of
expected future cash flows, long-term growth rates, discount
rates and relevant comparable public company multiples. The
cash flows employed in the DCF analysis are based on our
best estimate of future sales, earnings and cash flows after
considering factors such as general market conditions and
recent operating performance. The discount rates utilized in
the DCF analysis are based on the respective reporting unit’s
weighted average cost of capital, which takes into account the
relative weights of each component of its capital structure
(equity and debt) and represents the expected cost of new
capital, adjusted as appropriate to consider the risk inherent in
future cash flows of the respective reporting unit.
During the third quarter of 2016, we performed an interim
impairment test for a small reporting unit within our Digital
Segment, and as a result recorded a non-cash impairment
charge of $15.2 million within asset impairment and facility
consolidation charges in the accompanying Consolidated
Statements of Income. See Note 4 for further discussion.
In the fourth quarter of 2016, we completed our annual
goodwill impairment test for each of our reporting units. The
results of these tests indicated that the estimated fair values of
all of our reporting units significantly exceed their carrying
values.
We also have intangible assets with indefinite lives
associated with FCC broadcast licenses related to our
acquisitions of television stations, and trade names from the
Cars.com and CareerBuilder acquisitions. Intangible assets
with indefinite lives are tested annually, or more often if
circumstances dictate, for impairment and written down to fair
value as required. The estimates of fair value for the trade
names are determined using the “relief from royalty”
methodology, which is a variation of the income approach.
42
Discount rate assumptions are based on an assessment of the
risk inherent in the projected future cash flows generated by
the intangible asset.
To estimate the fair values for the FCC broadcast licenses,
we apply an income approach, using the Greenfield method.
The Greenfield method involves a DCF model that
incorporates several variables, including market revenues,
long-term growth projections, estimated market share for a
typical market participant, and estimated profit margins based
on market size and station type.
The results of our 2016 annual impairment test of indefinite
lived intangible assets indicated the fair values exceed their
carrying amounts; and therefore, no impairment charge was
recorded.
Investments and other assets: Investments where we
have significant influence are recorded under the equity
method of accounting. We recognized impairment charges in
2014 and 2016 related to such investments. See Note 5 for
additional information.
Investments in non-public businesses in which we do not
have control or do not exert significant influence are carried at
cost and losses resulting from periodic evaluations of the
carrying value of these investments are included as a non-
operating expense. At December 31, 2016, such investments
totaled approximately $21.8 million and at December 31,
2015, they totaled approximately $8.6 million.
Our television stations are party to program broadcasting
contracts which provide the Media Segment with rights to
broadcast syndicated programs, original series and films.
These contracts are recorded at the gross amount of the
related liability when the programs are available for
telecasting. The related assets are recorded at the lower of
cost or estimated net realizable value. Program assets are
classified as current (as a prepaid expense) or noncurrent (as
an other asset) in the Consolidated Balance Sheets, based
upon the expected use of the programs in succeeding years.
The amount charged to expense appropriately matches the
cost of the programs with the revenues associated with them.
The liability for these contracts is classified as current or
noncurrent in accordance with the payment terms of the
contracts. The payment period generally coincides with the
period of telecast for the programs, but may be shorter.
Revenue recognition: We generate revenue from a
diverse set of product and service offerings which include
advertising, retransmission consent fees, and software and
recruitment services. Revenue is recognized when persuasive
evidence of an arrangement exists, performance under the
contract has begun, the contract price is fixed or determinable
and collectibility of the related fee is reasonably assured.
Revenue from sales agreements that contain multiple
deliverable elements is allocated to each element based on
the relative best estimate of selling price. Elements are treated
as separate units of accounting if there is standalone value
upon delivery. Amounts received from customers in advance
of revenue recognition are deferred as liabilities. Below is a
detailed discussion of revenue by our two reportable
segments.
Media Segment: The primary source of revenue for our
Media Segment is through the sale of advertising time on its
television stations. Advertising revenues are recognized, net of
agency commissions, in the period when the advertisements
are aired. Our Media Segment also earns revenue from
retransmission consent arrangements. Under these
agreements, we receive cash consideration from multichannel
video programming distributors (e.g., cable and satellite
providers) in return for our consent to permit the cable/satellite
provider to retransmit our television signal. Retransmission
consent fees are recognized over the contract period based
on a negotiated fee per subscriber. Retransmission consent
fees revenues have increased as a percentage of overall
Media Segment revenue in recent years. In 2016, such
revenues accounted for approximately 30% of overall Media
Segment revenue compared to 27% in 2015. In addition, our
Media Segment also generates online advertising revenue
through the display of digital advertisements across its various
digital platforms. Online advertising agreements typically take
the form of an impression-based contract, fixed fee time-
based contract or transaction based contract. The customers
are billed for impressions delivered or click-throughs on their
advertisements. An impression is the display of an
advertisement to an end-user on the website and is a measure
of volume. A click-through occurs when an end-user clicks on
an advertisement. Revenue is recognized evenly over the
contract term for fixed fee contracts where a minimum number
of impressions or click-throughs is not guaranteed. Revenue is
recognized as the service is delivered for transaction based
contracts.
Digital Segment: The primary source of revenue for our
Digital Segment is through the sale of online subscription
advertising products. Cars.com sells subscription advertising
products to car dealerships, and CareerBuilder earns revenue
through various types of recruitment subscription products.
The transaction price for the subscription products is
recognized on a straight-line basis over the contract term as
the service is provided to our customers.
Revenue is recognized for our Digital Segment’s online
display advertising arrangements (which includes Cars.com,
CareerBuilder and G/O Digital) in the same manner as
described above for the Media Segment’s online advertising
revenue.
CareerBuilder service offerings also includes human
capital software as a service (SaaS) and various other
recruitment solutions (employment branding services and
access to online resume databases). Generally, the human
capital SaaS offering and access related to resume databases
are subscription-based contracts for which revenue is
recognized ratably over the subscription period. SaaS
contracts are generally two to three-year contracts.
Recruitment solutions (which include sourcing and screening
services) are more transactional based contracts, and
therefore, revenue is recognized as delivery occurs.
43
Retirement plans: Certain employees are covered by
defined benefit pension plans and we provide certain medical
and life insurance benefits to eligible retirees (collectively
postretirement benefit plans). The amounts we record related
to our postretirement benefit plans are computed using
actuarial valuations that are based in part on certain key
economic assumptions we make, including the discount rate,
the expected long-term rate of return on plan assets and other
actuarial assumptions including mortality estimates, health
care cost trend rates and employee turnover, each as
appropriate based on the nature of the plans. Depending on
the timing of the estimated payments, we recognize the
funded status of our postretirement benefit plans as a current
or non-current liability within our Consolidated Balance
Sheets. There is a corresponding non-cash adjustment to
accumulated other comprehensive loss, net of tax benefits,
recorded in the Consolidated Statements of Equity. The
funded status is measured as the difference between the fair
value of the plan’s assets and the benefit obligation of the
plan.
Stock-based employee compensation: We grant
restricted stock units (RSU) and performance shares to
employees as a form of compensation. The expense for such
awards is based on the grant date fair value of the award and
is generally recognized on a straight-line basis over the
requisite service period, which is typically a four-year period
for RSUs and a three-year period for performance shares.
Performance share expense for participants meeting certain
retirement eligible criteria as defined in the plan is recognized
using the accelerated attribution method. See Note 10 for
further discussion.
Advertising and marketing costs: We expense
advertising and marketing costs as they are incurred.
Advertising expense was $161.3 million in 2016, $173.3
million in 2015 and $110.1 million in 2014, and are included in
selling, general and administrative expenses on the
Consolidated Statements of Income.
Income taxes: Income taxes are presented on the
consolidated financial statements using the asset and liability
method, under which deferred tax assets and liabilities are
recognized based on the future tax consequences attributable
to temporary differences that exist between the financial
statement carrying amount of assets and liabilities and their
respective tax basis, as well as from operating loss and tax
credit carry-forwards. Deferred income taxes reflect expected
future tax benefits (i.e. assets) and future tax costs (i.e.
liabilities). The tax effect of net operating loss, capital loss and
general business credit carryovers result in deferred tax
assets. We measure deferred tax assets and liabilities using
the enacted tax rate expected to apply to taxable income in
the years in which those temporary differences are expected
to be recoverable or settled. We recognize the effect on
deferred taxes of a change in tax rates in income in the period
that includes the enactment date. Valuation allowances are
established if, based upon the weight of available evidence,
management determines it is “more likely than not” that some
portion or all of the deferred tax asset will not be realized.
We periodically assess our tax filing exposures related to
periods that are open to examination. Based on the latest
available information, we evaluate our tax positions to
determine whether it is more likely than not the position will be
sustained upon examination by the relevant taxing authority. If
we cannot reach a more likely than not determination, no
benefit is recorded. If we determine the tax position is more
likely than not to be sustained, we record the largest amount
of benefit that is more likely than not to be realized when the
tax position is settled. We record interest and penalties related
to income taxes as a component of income tax expense on
our Consolidated Statements of Income. Interest and penalties
were not material in each year presented.
Foreign currency translation: The income statements of
foreign operations have been translated to U.S. dollars using
the average currency exchange rates in effect during the
relevant period. The balance sheets have been translated
using the currency exchange rate as of the end of the
accounting period. The impact of currency exchange rate
changes on the translation of the balance sheets are included
in other comprehensive income (loss) in the Consolidated
Statement of Comprehensive Income and are classified as
accumulated other comprehensive income (loss) in the
Consolidated Balance Sheet and Consolidated Statement of
Equity.
Loss contingencies: We are subject to various legal
proceedings, claims and regulatory matters, the outcomes of
which are subject to significant uncertainty. We determine
whether to disclose or accrue for loss contingencies based on
an assessment of whether the risk of loss is remote,
reasonably possible or probable, and whether it can be
reasonably estimated. We accrue for loss contingencies when
such amounts are probable and reasonably estimable. If a
contingent liability is only reasonably possible, we will disclose
the potential range of the loss, if material and estimable.
Discontinued operations: In determining whether a group
of assets is disposed (or to be disposed) should be presented
as a discontinued operation, we analyze whether the group of
assets being disposed of represented a component of the
entity; that is, whether it had historic operations and cash
flows that were clearly distinguished (both operationally and
for financial reporting purposes). In addition, we consider
whether the disposal represents a strategic shift that has or
will have a major effect on our operations and financial results.
We concluded that both the spin-off of our former
publishing businesses on June 29, 2015, and the sale of our
businesses constituting our former Other Segment during the
fourth quarter of 2015 met all of the criteria to be presented as
discontinued operations. As such, for all periods presented,
we have recast our financial information to present the
financial position and results of operations of the former
publishing businesses and Other Segment as discontinued
operations in the accompanying consolidated financial
statements, with the exception of the Consolidated Statements
of Cash Flows (which include the cash flows from both
continuing and discontinuing operations). See Note 14 for
more information.
Accounting guidance adopted in 2016: In April 2015, the
Financial Accounting Standards Board (FASB) issued
guidance that changed the way companies present debt
issuance costs on the balance sheet. Under the new
guidance, debt issuance costs are reported as a direct
deduction from the carrying amount of the debt liability, similar
to debt discounts, rather than as an asset as recorded under
the previous standard. Amortization of the costs will continue
to be reported as interest expense. We adopted this guidance
in the first quarter of 2016 and have applied the new guidance
on a retrospective basis, wherein the balance sheet for each
date presented is adjusted to reflect the effects of applying the
new guidance. As disclosed in Note 7, as of December 31,
2016, and 2015, we had $27.6 million and $31.8 million,
respectively, in debt issuance costs related to our term debt
which was recorded as a direct deduction to the carrying
44
amount of the associated debt liability. Debt issuance costs
related to our revolving credit facility remained in non-current
assets on our balance sheet as permitted under the new
guidance.
In September 2015, the FASB issued guidance that
requires an acquirer to recognize adjustments to provisional
amounts recorded in a business combination in the reporting
period in which the adjustments are determined. Recognizing
the entire impact of a measurement period adjustment in a
single reporting period may introduce earnings volatility and
reduces comparability between periods when the adjustments
are material. Past measurement period adjustments for us
have not been material. We adopted and applied this
guidance in the first quarter of 2016, our required adoption
period, with no material impact on our consolidated financial
statements.
In March 2016, the FASB issued guidance that changes
certain aspects of the accounting for employee share-based
payments. The FASB permitted early adoption of this
guidance, and we elected to early adopt in the first quarter of
2016. We believe the new guidance reduces the complexity of
accounting for share-based payments which, in turn, improves
the usefulness of the information provided to the users of our
financial statements. Below is a summary of the most
significant changes:
• All excess tax benefits and tax deduction shortfalls will be
recognized as income tax benefit or expense in the income
statement (under the prior guidance these amounts were
generally recognized in additional paid-in capital on the
balance sheet). The tax effects of exercised or vested
awards will be treated as discrete items in the reporting
period in which they occur. This guidance was applied
prospectively beginning in the first quarter of 2016. The
adoption of this element of the accounting standard
reduced our income tax provision for the year ended
December 31, 2016, by $6.4 million and the tax rate for the
same period by approximately one percentage point,
resulting in an increase to basic and diluted EPS of
approximately $0.03. The reduction to the tax provision
predominantly occurred in the first quarter of 2016 in
connection with the settlement of performance share unit
awards and the fourth quarter of 2016 in connection with
the settlement of restricted stock units.
• The guidance updated the classification in the Statement
of Cash Flows in two areas: 1) excess tax benefits will now
be classified along with other income tax cash flows as an
operating activity (under prior guidance it was separated
from operating activities and presented as a financing
activity), and 2) cash paid by an employer to taxing
authorities when directly withholding shares for tax
withholding purposes will be classified as a financing
activity (prior to our adoption of the new guidance, we
classified such payments as cash outflow from operating
activities). Changes to the classification of the
Consolidated Statement of Cash Flows were made on a
retrospective basis, wherein each period presented was
adjusted to reflect the effects of applying the new
guidance.
The following table details the impact of adopting this element
of the standard on our Consolidated Statement of Cash Flows
(in thousands):
Year ended Dec. 31, 2016
Previous
Accounting
Method
As
Currently
Reported
Effect of
Accounting
Change
Change in other assets
and liabilities, net. . . . . . .
Net cash flow from
operating activities . . . .
Net settlement of stock
for tax withholding and
proceeds from stock
option exercises . . . . . . .
Net cash used for
financing activities . . . .
$
$
$
$
(63,359) $ (34,352) $
29,007
654,422
$ 683,429
$
29,007
8,655
$ (20,352) $
(29,007)
(433,426) $ (462,433) $
(29,007)
Year ended Dec. 31, 2015
Previous
Accounting
Method
As
Currently
Reported
Effect of
Accounting
Change
Change in other assets
and liabilities, net. . . . . . .
Net cash flow from
operating activities . . . .
Net settlement of stock
for tax withholding and
proceeds from stock
option exercises . . . . . . .
Net cash used for
financing activities . . . .
$
$
$
$
(40,117) $
(1,992) $
38,125
613,106
$ 651,231
$
38,125
31,284
$
(6,841) $
(38,125)
(819,666) $ (857,791) $
(38,125)
Year ended Dec. 28, 2014
Previous
Accounting
Method
As
Currently
Reported
Effect of
Accounting
Change
Change in other assets
and liabilities, net. . . . . . .
Net cash flow from
operating activities . . . .
Net settlement of stock
for tax withholding and
proceeds from stock
option exercises . . . . . . .
Net cash used for
financing activities . . . .
$
$
$
$
(22,484) $
3,857
821,199
$ 847,540
26,672
$
331
490,464
$ 464,123
$
$
$
$
26,341
26,341
(26,341)
(26,341)
In May 2015, FASB issued new guidance that exempts
investments measured using the net asset value (NAV) as a
practical expedient from categorization within the fair value
hierarchy. The guidance requires retrospective application and
is effective for public business entities after December 15,
2015. Accordingly, the standard was retrospectively applied
resulting in such investments no longer being reflected within
the fair value hierarchy table in Note 9. However, the assets
measured using the NAV are presented below the fair value
table in Note 9 to permit reconciliation of the fair value
hierarchy to the line items presented in the statements of net
assets available for benefits.
45
New accounting pronouncements not yet adopted: In
May 2014, the FASB issued a new standard related to
revenue recognition. Under the standard, recognition of
revenue occurs when a customer obtains control of promised
goods or services in an amount that reflects the consideration
which the entity expects to receive in exchange for those
goods or services. In addition, the standard requires
disclosure of the nature, amount, timing, and uncertainty of
revenue and cash flows arising from contracts with customers.
The FASB has recently issued several amendments to the
standard, including clarification on accounting for licenses of
intellectual property and identifying performance obligations.
We will adopt the standard beginning January 1, 2018. The
two permitted transition methods are the full retrospective
method, in which case the standard would be applied to each
prior reporting period presented and the cumulative effect of
applying the standard would be recognized at the earliest
period shown; and the modified retrospective method, in which
case the cumulative effect of applying the standard would be
recognized at the date of initial application. We currently
anticipate adopting the standard using the modified
retrospective method.
While we continue to evaluate the full impact of the
standard, after our initial evaluation, we do not believe the
standard will have a material impact on our consolidated
financial statements. Below is a summary of our evaluation by
reportable segment:
Media Segment: While our assessment is ongoing, we
currently do not expect a material change to our television
advertising revenue, which comprised approximately 60% of
2016 Media Segment revenue. Generally, our television spot
advertisement contracts are short term in nature with
transaction price consideration agreed upon in advance. We
expect revenue will continue to be recognized when
commercials are aired. Further, we expect that revenue
earned under retransmission agreements will be recognized
under the licensing of intellectual property guidance in the
standard, which will not have a material change to our current
revenue recognition. Retransmission revenue comprised
approximately 30% of 2016 Media Segment revenue. We
continue to evaluate the impact to Media’s online digital and
other services revenue.
Digital Segment: Our Digital Segment is primarily
comprised of our Cars.com and CareerBuilder business units.
Cars.com’s primary source of revenue is through the sale of
online subscription advertising products to car dealerships.
We currently do not expect the standard to have a material
impact on this revenue stream, which will continue to be
recognized on a straight-line basis over the contract term as
the service is provided to our customers. CareerBuilder’s
sources of revenue include various types of recruitment
solutions which consist primarily of advertisements, access to
CareerBuilder’s online resume database and SaaS. Generally,
advertising revenue is recognized once delivery has occurred,
and revenue related to access to the online resume database
and SaaS is recognized ratably over the subscription
period. Contracts with customers range from one to three
years. We are evaluating the impact, if any, of the new
standard on some of the features of CareerBuilder’s revenue
streams, such as multi-year contracts and the combination of
recruitment solutions.
In January 2016, the FASB issued new guidance that
amended several elements surrounding the recognition and
measurement of financial instruments. Most notably for our
company, the new guidance requires equity investments
(except those accounted for under the equity method of
accounting, or those that result in consolidation) to be
measured at fair value with changes in fair value recognized in
net income. Under current GAAP, changes in fair value for our
investment in Gannett, our only available-for-sale equity
investment, are recorded as unrealized gains or losses
through other comprehensive income until such investment is
sold. The new guidance is effective for public companies
beginning in the first quarter of 2019 and will be adopted using
a cumulative-effect adjustment through retained earnings.
Early adoption is permitted. We recorded approximately $11.3
million in unrealized losses on our available for sale
investment in the Consolidated Statements of Comprehensive
Income for the year ended December 31, 2016. Losses of this
nature in the future will be recorded within the Consolidated
Statements of Income under this new guidance.
In February 2016, the FASB issued new guidance related
to leases which will require lessees to recognize assets and
liabilities on the balance sheet for leases with lease terms of
more than 12 months. Consistent with current GAAP, the
recognition, measurement, and presentation of expenses and
cash flows arising from a lease by a lessee primarily will
depend on its classification as a finance or operating lease.
However, unlike current GAAP—which requires only capital
leases to be recognized on the balance sheet—the new
guidance will require both types of leases to be recognized on
the balance sheet. The new guidance is effective for us
beginning in the first quarter of 2019 and will be adopted using
a modified retrospective approach. We are evaluating the
effect it is expected to have on our consolidated financial
statements and related disclosures. Currently all of our leases
are classified as operating leases, and our future
commitments under our operating leases are located at Note
13.
In June 2016, the FASB issued new guidance related to
the measurement of credit losses on financial instruments.
The new guidance changes the way credit losses on accounts
receivable are estimated. Under current GAAP, credit losses
on trade accounts receivable are recognized once it is
probable that such losses will occur. Under the new guidance,
we will be required to estimate credit losses based on the
expected amount of future collections which may result in
earlier recognition of allowance for doubtful accounts. The
new guidance is effective for public companies beginning in
the first quarter of 2020 and will be adopted using a modified
retrospective approach. We are currently evaluating the effect
this new guidance will have on our consolidated financial
statements and related disclosures.
In January 2017, the FASB issued guidance that eliminates
the requirement to calculate the implied fair value of goodwill
(i.e., Step 2 of today’s goodwill impairment test) to measure a
goodwill impairment charge. Instead, companies will record an
impairment charge based on the excess of a reporting unit’s
carrying amount over its fair value (i.e., measure the charge
based on Step 1 of the impairment test). The standard has
tiered effective dates, starting in 2020. Early adoption is
permitted for interim and annual goodwill impairment testing
dates after January 1, 2017.
46
NOTE 2
Strategic actions
Spin-off of Cars.com: On September 7, 2016, we
announced our intention to spin-off our Cars.com business
unit, which is currently reported within our Digital Segment.
Cars.com’s 2016 annual revenue was approximately $633
million and it has approximately 1,275 employees. The
expected separation will be implemented through a tax-free
distribution of shares in a new entity formed to hold the assets
of Cars.com to our shareholders. We expect to complete the
transaction in the first half of 2017, subject to a number of
conditions, including final approval of our Board of Directors,
receipt of an opinion from tax counsel regarding the tax-free
nature of the distribution, the effectiveness of a Form 10
registration statement filed with the SEC, and other customary
matters. There can be no assurance regarding the ultimate
timing of the proposed transaction or that it will be completed.
While we perform the necessary steps to complete the spin-
off, we will maintain the current operating and reporting
structure and will continue to report the financial results of
Cars.com in our continuing operations until the spin-off
transaction is complete.
Strategic Review of CareerBuilder: On September 7,
2016, we also announced that we will conduct a strategic
review of our 53% ownership interest in CareerBuilder,
including a possible sale of it in conjunction with the other
owners’ interests. CareerBuilder’s 2016 annual revenue was
approximately $714 million and it has approximately 3,300
employees. CareerBuilder’s operations are included within our
Digital Segment. At this time, there can be no guarantee that
any of the options under review will result in a transaction. We
expect to complete our strategic review during the first half of
2017. While we perform our strategic review for CareerBuilder,
we will maintain the current operating and reporting structure
and will continue to report the financial results of
CareerBuilder in our continuing operations.
NOTE 3
Acquisitions, investments and dispositions
We made the following acquisitions, investments and
dispositions during 2014 through 2016:
Acquisitions
2016: On March 1, 2016, CareerBuilder acquired 100% of
Aurico Inc. (Aurico), a provider of background screening and
drug testing which serves both U.S. and international
customers. CareerBuilder funded the acquisition with cash on
hand. Aurico expands CareerBuilder’s product line to include
another critical step in the job hiring process, which will be
sold across its sales channels.
On August 1, 2016, we acquired 100% of DMR Holdings,
Inc. (DealerRater), a leading automotive dealer review
website. We funded the acquisition with a combination of
borrowing under our revolving credit facility and cash on hand.
DealerRater is combined into our Cars.com business unit
within our Digital Segment. We expect the addition of
DealerRater will further strengthen Cars.com’s position as a
leader in online automotive reviews.
On September 2, 2016, CareerBuilder acquired 75% of
Employee Benefit Specialists, Inc. d/b/a WORKTERRA
(Workterra), a cloud-based human capital management
platform. CareerBuilder funded the acquisition with cash on
hand. The acquisition will expand CareerBuilder’s product
offering beyond recruitment into post-hire solutions.
Workterra’s cloud-based solution provides onboarding,
benefits administration, wellness and compliance solutions to
more than 600,000 employees.
2015: In July 2015, CareerBuilder acquired a majority
stake in Textkernel, a leading-edge software company
providing semantic recruitment technology to the global
market. Textkernel is based in Amsterdam.
In March 2015, CareerBuilder increased its controlling
interest in EMSI by 11% from 74% to 85%. EMSI is an
economic software firm that specializes in employment data
and labor market analysis. EMSI collects and interprets large
amounts of labor data, which is used in workforce
development and talent strategy.
On December 3, 2015, we acquired three television
stations KGW in Portland, Oregon; WHAS in Louisville,
Kentucky; and KMSB in Tucson, Arizona, following approval
from the Federal Communications Commission. Since 2013,
we had consolidated these three television stations as they
were VIEs and we were the primary beneficiary.
2014: On October 1, 2014, we acquired the remaining 73%
interest in Cars.com (formerly known as Classified Ventures,
LLC) for $1.83 billion. We funded the acquisition with
additional borrowings and cash on hand. As part of the
acquisition, Cars.com entered into new five-year affiliation
agreements with each of the former newspaper investors at
economic terms much more favorable to Cars.com.
47
In 2014, we recognized a $476.7 million pre-tax non-cash
gain ($285.9 million after-tax) on the acquisition of Cars.com,
which is comprised of a $396.7 million gain on the write-up of
our prior 27% investment in Cars.com to fair value and an
$80.0 million gain related to the required accounting for the
pre-existing affiliate agreement between us and Cars.com.
The net gain is included in Other non-operating items on the
Consolidated Statements of Income. The impact to our
Consolidated Statements of Income, net of intersegment
eliminations, from October 1, 2014, the acquisition date to
December 28, 2014 was $129.0 million of revenue and $33.6
million of operating income.
Pro forma information. The following table sets forth
unaudited pro forma results of operations, assuming that the
Cars.com acquisition, along with transactions necessary to
finance the acquisition, occurred at the beginning of 2014:
In thousands of dollars
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,987,058
2014
Net income attributable to TEGNA Inc. . . . . . . . . . . . . . . . $ 754,851
Unaudited
This pro forma financial information is based on historical
results of operations, adjusted for the allocation of the
purchase price and other acquisition accounting adjustments,
and is not necessarily indicative of what our results would
have been had we operated the businesses since the
beginning of the annual period presented. The pro forma
adjustments reflect amortization of intangibles and
unfavorable contracts related to the fair value adjustments of
the assets and liabilities acquired, additional interest expense
related to the financing of the transactions, alignment of
accounting policies and the related tax effects of the
adjustments. Changes in affiliation agreements between
Cars.com and its former investors that went into effect on
October 1, 2014, were excluded from the pro forma
adjustments. The pro forma table excludes adjustments for
any other acquisitions in 2014.
We incurred and expensed a total of $9.3 million of
acquisition costs related to Cars.com for the year ended
December 28, 2014. Such costs were reflected in Other non-
operating items in the Consolidated Statements of Income.
These acquisition costs and the $285.9 million after-tax gain
on the acquisition of Cars.com are not included in the pro
forma amounts above as they are specifically related to the
acquisition.
In April 2014, CareerBuilder acquired Broadbean.
Broadbean is a leading international job distribution, candidate
sourcing and big data analytics software company. Broadbean
is headquartered in London, United Kingdom and has offices
in the U.S., France, Germany, the Netherlands and Australia.
In July 2014, we acquired six London Broadcasting
Company television stations in Texas for approximately $215.0
million in an all-cash transaction. We used proceeds of $134.9
million from the sale of the Phoenix and St. Louis stations to
partially pay for the London Broadcasting Company stations
via a tax-efficient exchange. The acquisition included KCEN
(NBC) in Waco-Temple-Bryan, KYTX (CBS) in Tyler-Longview,
KIII (ABC) in Corpus Christi, KBMT (ABC) and its digital sub-
current KJAC (NBC) in Beaumont-Port Arthur, KXVA (FOX) in
Abilene-Sweetwater and KIDY (FOX) in San Angelo.
Dispositions
2016: On December 15, 2016, we sold our Cofactor
business to Liquidus LLC. Cofactor had previously been
included in the Digital Segment.
On March 18, 2016, we sold Sightline Media Group
(Sightline) to Regent Companies LLC. Our Sightline business
unit was previously classified as held for sale as of the end of
fiscal year 2015; and as a result, the operating results of
Sightline have been included in discontinued operations in our
consolidated financial statements for all periods presented.
See Note 14 for further discussion.
2015: On June 29, 2015, we completed the spin-off of our
publishing businesses and began trading as TEGNA on the
New York Stock Exchange under the symbol TGNA. See Note
14 for further details regarding the spin-off.
On December 29, 2014, which was the first day of our
2015 fiscal year, we completed our sale of Gannett Healthcare
Group (GHG), to OnCourse Learning. GHG provides
continuing education, certification test preparation, online
recruitment, digital media, publications and related services for
nurses and other healthcare professionals in the U.S.
On November 5, 2015, we also sold our subsidiaries
Clipper Magazine (Clipper), a direct mail advertising magazine
business, and Mobestream Media (Mobestream), maker of a
mobile rewards/coupon platform, to Valassis Direct Mail, Inc.
The Clipper and Mobestream business units represented
substantially all of the operations of our former Other
Segment. As a result, the operating results of our Other
Segment have been included in discontinued operations in our
consolidated financial statements (see Note 14 for more
information).
On November 12, 2015, we sold PointRoll which was part
of our Cofactor business unit within our Digital Segment to
Sizmek Technologies, Inc.
2014: In February 2014, we along with Sander Media,
LLC, completed the sale of KMOV in St. Louis, MO, to
Meredith Corporation, following regulatory approval. As a
condition of the sale, Sander Media conveyed to Meredith
Corporation substantially all of its assets used to operate
KMOV, which Sander Media acquired when the Gannett-Belo
transaction closed on December 23, 2013. We conveyed
certain other assets needed to provide services to KMOV,
which we also acquired from Belo.
In June 2014, we, along with Sander Media, LLC,
completed the sale of KTVK and KASW in Phoenix, AZ, to
Meredith Corporation. As part of the sale, Sander Media
conveyed to Meredith substantially all of its assets used in the
operation of both stations, which Sander Media acquired when
the Belo transaction was completed in December 2013. We
also conveyed certain other assets we used to provide
services to both stations, which we acquired from the Belo
transaction. At the closing, Meredith simultaneously conveyed
KASW to SagamoreHill of Phoenix, LLC, which through its
affiliates, owns and operates two television stations in two
markets. The total sale price of the Phoenix and St. Louis
stations was $407.5 million plus working capital.
In March 2014, Classified Ventures, in which we owned a
27% interest, agreed to sell Apartments.com to CoStar Group,
Inc. for $585 million. This transaction closed on April 1, 2014.
As a result of our ownership stake, we received a $154.6
million distribution from Classified Ventures after the close of
the transaction.
48
NOTE 4
Goodwill and other intangible assets
The following table displays goodwill, indefinite-lived intangible
assets, and amortizable intangible assets at December 31,
2016 and December 31, 2015.
In thousands of dollars
Dec. 31, 2016
Gross
Accumulated
Amortization
Net
Goodwill . . . . . . . . . . . . . . . . . $ 4,067,529 $
— $ 4,067,529
Indefinite-lived intangibles: . . .
Television station FCC
licenses . . . . . . . . . . . . . . .
1,191,950
Trade names . . . . . . . . . . . .
925,171
Amortizable intangible assets:
Customer relationships . . . .
Other . . . . . . . . . . . . . . . . . .
929,852
290,875
— 1,191,950
—
925,171
The following table shows the projected annual
amortization expense, as of December 31, 2016, related to
our existing amortizable intangible assets:
In thousands of dollars
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 114,557
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 111,789
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 107,234
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 101,906
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
90,498
The following table shows the changes from 2015 to 2016
in the carrying amount of goodwill by reportable segment.
In thousands of dollars
(210,691)
719,161
Goodwill
(113,725)
177,150
Gross balance at Dec. 28, 2014 . $ 2,578,601 $ 1,503,141 $ 4,081,742
Media
Digital
Total
Total . . . . . . . . . . . . . . . . . . . . $ 7,405,377 $
(324,416) $ 7,080,961
Accumulated impairment losses .
— (166,971)
(166,971)
Dec. 31, 2015
Net balance at Dec. 28, 2014 . . . $ 2,578,601 $ 1,336,170 $ 3,914,771
Goodwill . . . . . . . . . . . . . . . . . $ 3,919,726 $
— $ 3,919,726
Acquisitions & adjustments . . . . .
817
25,667
26,484
Indefinite-lived intangibles: . . .
Television station FCC
licenses . . . . . . . . . . . . . . .
1,191,950
Trade names . . . . . . . . . . . .
925,019
Amortizable intangible assets:
Customer relationships . . . .
Other . . . . . . . . . . . . . . . . . .
903,652
265,148
— 1,191,950
—
925,019
Dispositions . . . . . . . . . . . . . . . . .
Impairment
. . . . . . . . . . . . . . . . .
Foreign currency exchange rate
changes . . . . . . . . . . . . . . . . . . . .
—
—
—
(252)
(252)
(8,000)
(8,000)
(13,277)
(13,277)
Balance at Dec. 31, 2015 . . . . . . $ 2,579,418 $ 1,340,308 $ 3,919,726
(145,398)
758,254
Gross balance at Dec. 31, 2015 .
2,579,418
1,515,279
4,094,697
(75,264)
189,884
Accumulated impairment losses .
— (174,971)
(174,971)
Total . . . . . . . . . . . . . . . . . . . . $ 7,205,495 $
(220,662) $ 6,984,833
Net balance at Dec. 31, 2015 . . . $ 2,579,418 $ 1,340,308 $ 3,919,726
Customer relationships, which include subscriber lists and
advertiser relationships, are amortized on a straight-line basis
over their useful lives. Other intangibles primarily include
retransmission agreements, network affiliations, developed
technology, and patents and are amortized on a straight-line
basis over their useful lives.
In connection with the purchase accounting for the Aurico
transaction, we recorded intangible assets of $14.1 million,
related to technology, customer relationships and trade name,
which will be amortized over a weighted-average period of 8
years.
In connection with the purchase accounting for the
DealerRater acquisition, we recorded customer relationships
of $24.7 million and other intangible assets of $14.1 million,
related to trade name, technology and content library which
will be amortized over a weighted average period of 10 years.
In connection with our preliminary purchase accounting
related to the Workterra acquisition, we recorded other
intangible assets of $13.7 million, related to technology, and
customer relationships which will be amortized over a
weighted average period of 8 years.
Acquisitions & adjustments . . . . .
Impairment
. . . . . . . . . . . . . . . . .
Foreign currency exchange rate
changes . . . . . . . . . . . . . . . . . . . .
—
—
—
176,775
176,775
(15,218)
(15,218)
(13,754)
(13,754)
Balance at Dec. 31, 2016 . . . . . . $ 2,579,418 $ 1,488,111 $ 4,067,529
Gross balance at Dec. 31, 2016 .
2,579,418
1,678,300
4,257,718
Accumulated impairment losses .
— (190,189)
(190,189)
Net balance at Dec. 31, 2016 . . . $ 2,579,418 $ 1,488,111 $ 4,067,529
In the third quarter of 2016, based on continued adverse
business trends and changes in our strategic plans, we
concluded it was more likely than not that the fair value of a
small reporting unit within our Digital Segment was lower than
its carrying value, and accordingly we performed an interim
goodwill impairment test for this reporting unit. As a result of
this test, we recorded a non-cash goodwill impairment charge
of $15.2 million in the third quarter of 2016, representing the
full amount of goodwill associated with this reporting unit. This
impairment charge is recorded within asset impairment and
facility consolidation charges in the accompanying
Consolidated Statements of Income.
49
NOTE 5
NOTE 6
Other assets and investments
Our investments and other assets consisted of the following
as of December 31, 2016 and December 31, 2015:
Income taxes
The provision (benefit) for income taxes from continuing
operations consists of the following:
In thousands of dollars
Dec. 31, 2016 Dec. 31, 2015
Cash value life insurance . . . . . . . . . . $
64,134 $
Deferred compensation investments .
Equity method investments. . . . . . . . .
Available for sale investment . . . . . . .
Deferred debt issuance cost . . . . . . . .
Other long-term assets . . . . . . . . . . . .
52,273
19,970
16,744
9,856
58,083
68,332
77,199
27,824
28,090
13,620
41,925
Total
$
221,060 $
256,990
Deferred compensation: Employee compensation related
investments consist of debt and equity securities which are
classified as trading securities and fund our deferred
compensation plan liabilities (See Note 9 for further discussion
on how fair value is determined). Net gains on trading
securities in 2016, 2015, and 2014 were $3.2 million, $0.5
million and $2.9 million. Gains and losses on these
investments are included in Other non-operating items within
our Consolidated Statement of Income.
Equity method investments: Investments where we have
the ability to exercise significant influence, but do not control,
are accounted for under the equity method of accounting.
Significant influence typically exists if we have a 20% to 50%
ownership interest in the investee. Under this method of
accounting, our share of the net earnings or losses of the
investee is included in non-operating income, on our
Consolidated Statements of Income. We evaluate our equity
method investments for impairment whenever events or
changes in circumstances indicate that the carrying amounts
of such investments may be impaired. If a decline in the value
of an equity method investment is determined to be other than
temporary, a loss is recorded in earnings in the current period.
Certain differences exist between our investment carrying
value and the underlying equity of the investee companies
principally due to fair value measurement at the date of
investment acquisition and due to impairment charges we
recorded for certain of the investments. Pre-tax impairments
on equity method investments were $3.9 million in 2016 and
$3.0 million in 2014 and were recorded in equity loss in
unconsolidated investments, net, in the accompanying
Consolidated Statements of Income. No material impairments
were recorded in 2015.
For the year ended December 28, 2014, the net gain in
Equity income in unconsolidated investees of $151.5 million
was primarily related to a pre-tax gain of $148.4 million related
to the sale of our investment in Apartments.com by Classified
Ventures.
Cost method investments: The carrying value of cost
method investments at December 31, 2016, was $21.8 million
and $8.6 million at December 31, 2015, and is included within
other long-term assets in the table above. The increase is
primarily due to our new investments in WhistleSports and Kin
Community during 2016.
50
In thousands of dollars
2016
Federal . . . . . . . . . . . . . . . . . . $ 189,900 $
Current
State and other . . . . . . . . . . . .
13,107
Deferred
Total
25,854 $ 215,754
1,030
(12,077)
Foreign . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . $ 204,544 $
1,537
(1,342)
195
12,435 $ 216,979
In thousands of dollars
2015
Federal . . . . . . . . . . . . . . . . . . $ 114,161 $
Current
State and other . . . . . . . . . . . .
12,795
Deferred
Total
76,816 $ 190,977
10,548
(2,247)
Foreign . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . $ 128,805 $
1,849
(1,060)
789
73,509 $ 202,314
In thousands of dollars
2014
Federal . . . . . . . . . . . . . . . . . . $ 139,710 $
Current
State and other . . . . . . . . . . . .
23,114
Foreign . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . $ 163,924 $
1,100
Deferred
Total
51,245 $ 190,955
43,346
20,232
(930)
170
70,547 $ 234,471
The components of income from continuing operations
attributable to TEGNA Inc. before income taxes consist of the
following:
In thousands of dollars
Domestic . . . . . . . . . . . . . . . . . $ 667,556 $ 568,534 $ 927,453
2016
2015
2014
Foreign . . . . . . . . . . . . . . . . . .
(5,046)
Total . . . . . . . . . . . . . . . . . . . . $ 661,150 $ 559,772 $ 922,407
(6,406)
(8,762)
The provision for income taxes varies from the U.S. federal
statutory tax rate as a result of the following differences:
U.S. statutory tax rate. . . . . . . . . . . . . . .
Increase (decrease) in taxes resulting
from:
State taxes (net of federal income
tax benefit) . . . . . . . . . . . . . . . . . . .
Domestic Manufacturing
Deduction . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions,
settlements and lapse of statutes
of limitations . . . . . . . . . . . . . . . . . .
Net deferred tax write offs and
deferred tax rate adjustments . . . .
Non-deductible transactions costs .
Loss on sale of subsidiary . . . . . . .
Non-deductible goodwill . . . . . . . . .
Net excess benefits on share-
based payments . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate. . . . . . . . . . . . . . . . . .
2016
35.0%
2015
2014
35.0% 35.0%
2.8
3.2
2.4
(2.8)
(2.0)
(1.6)
(0.3)
(0.2)
(0.3)
(1.2)
(1.6)
0.5
—
—
(1.0)
(0.2)
0.5
—
0.4
—
0.8
(0.3)
0.7
(12.6)
3.0
—
(0.9)
32.8%
36.1% 25.4%
Deferred income taxes reflect temporary differences in the
As of December 31, 2016, we had approximately $388.9
recognition of revenue and expense for tax reporting and
financial statement purposes. Deferred tax liabilities and
assets are adjusted for changes in tax laws or tax rates of the
various tax jurisdictions as of the enacted date.
Deferred tax liabilities and assets were composed of the
following at the end of December 31, 2016 and December 31,
2015:
In thousands of dollars
Dec. 31, 2016 Dec. 31, 2015
Liabilities
Accelerated depreciation . . . . . . . . . $
Accelerated amortization of
deductible intangibles . . . . . . . . . . .
Partnership investments including
impairments . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . .
80,101 $
55,783
667,015
663,545
309,515
7,570
282,784
9,057
Total deferred tax liabilities. . . . . . . .
1,064,201
1,011,169
Assets
Accrued compensation costs . . . . . .
Pension and postretirement medical
and life . . . . . . . . . . . . . . . . . . . . . . .
Loss carryforwards. . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . .
Valuation allowance . . . . . . . . . . . . .
Total net deferred tax (liabilities) . . . $
32,361
28,119
78,318
197,812
36,465
344,956
209,939
73,470
184,117
26,735
312,441
184,413
(929,184) $
(883,141)
million of capital loss carryforwards for federal and state
purposes which can only be utilized to the extent capital gains
are recognized. Losses of $361.5 million will expire if not used
prior to 2020, while the remaining losses will expire if not used
prior to 2022. As of December 31, 2016, we also had
approximately $17.7 million of state net operating loss
carryovers that, if not utilized, will expire in various amounts
beginning in 2017 through 2036.
Included in total deferred tax assets are valuation
allowances of approximately $209.9 million as of December
31, 2016 and $184.4 million as of December 31, 2015,
primarily related to federal and state capital losses and state
net operating losses available for carry forward to future years.
The increase in the valuation allowance from 2015 to 2016
is primarily related to additional federal and state capital loss
carryforwards generated on the sale of certain capital assets
during the year, as well as certain non-broadcast minority
investments that would generate a capital loss if they were to
be sold. If, in the future, we believe that it is more-likely-than-
not that these deferred tax benefits will be realized, the
valuation allowances will be reversed in the Consolidated
Statement of Income.
Realization of deferred tax assets for which valuation
allowances have not been established is dependent upon
generating sufficient future taxable income. We expect to
realize the benefit of these deferred tax assets through future
reversals of our deferred tax liabilities, through the recognition
of taxable income in the allowable carryback and carryforward
periods, and through implementation of future tax planning
strategies. Although realization is not assured, we believe it is
more likely than not that all deferred tax assets for which
valuation allowances have not been established will be
realized.
Tax Matters Agreement
Prior to the June 29, 2015 spin-off of our publishing
businesses, we entered into a Tax Matters Agreement with
Gannett Co., Inc. that governs each company’s respective
rights, responsibilities, and obligations with respect to tax
liabilities and benefits, tax attributes, tax contests and other
matters regarding income taxes, non-income taxes and related
tax returns. The agreement provides that we will generally
indemnify Gannett Co., Inc. against taxes attributable to
assets or operations for all tax periods or portions thereof prior
to the spin-off date including separately-filed U.S., state, and
foreign taxes.
51
Uncertain Tax Positions
The following table summarizes the activity related to
unrecognized tax benefits, excluding the federal tax benefit of
state tax deductions:
NOTE 7
Long-term debt
Our long-term debt is summarized below (in thousands):
In thousands of dollars
Change in unrecognized tax benefits
2016
2015
2014
Unsecured floating rate term loan due
quarterly through August 2018 . . . . . . . . $
52,100 $
83,700
Dec. 31, 2016 Dec. 31, 2015
VIE unsecured floating rate term loans
due quarterly through December 2018 . .
Unsecured floating rate term loan due
quarterly through June 2020 . . . . . . . . . .
Unsecured floating rate term loan due
quarterly through September 2020 . . . . .
Borrowings under revolving credit
agreement expiring June 2020 . . . . . . . .
Unsecured notes bearing fixed rate
interest at 10% due April 2016 . . . . . . . .
Unsecured notes bearing fixed rate
interest at 7.125% due September 2018.
Unsecured notes bearing fixed rate
interest at 5.125% due October 2019 . . .
Unsecured notes bearing fixed rate
interest at 5.125% due July 2020 . . . . . .
Unsecured notes bearing fixed rate
interest at 4.875% due September 2021.
Unsecured notes bearing fixed rate
interest at 6.375% due October 2023 . . .
Unsecured notes bearing fixed rate
interest at 5.50% due September 2024. .
Unsecured notes bearing fixed rate
interest at 7.75% due June 2027 . . . . . .
Unsecured notes bearing fixed rate
interest at 7.25% due September 2027. .
1,292
1,938
140,000
180,000
285,000
—
635,000
720,000
—
—
193,429
70,000
600,000
600,000
600,000
600,000
350,000
350,000
650,000
650,000
325,000
325,000
200,000
200,000
240,000
240,000
Total principal long-term debt . . . . . . . . .
4,078,392
4,214,067
Debt issuance costs . . . . . . . . . . . . . . . .
(27,615)
(31,800)
Other (fair market value adjustments
and discounts) . . . . . . . . . . . . . . . . . . . . .
(7,382)
(12,605)
Total long-term debt . . . . . . . . . . . . . . . .
4,043,395
4,169,662
Less current portion of long-term debt
maturities of VIE loans . . . . . . . . . . . . . .
646
646
Long-term debt, net of current portion. . . $
4,042,749 $
4,169,016
Balance at beginning of year . . . . . . . . . . $ 19,491 $ 58,886 $ 57,324
Additions based on tax positions related
to the current year . . . . . . . . . . . . . . . . . .
Additions for tax positions of prior years. .
213
162
6,095
12,426
853
868
Reductions for tax positions of prior years
(1,214)
(24,858)
(4,563)
Settlements . . . . . . . . . . . . . . . . . . . . . . .
—
—
(129)
Reductions for transfers to Gannett Co.,
Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to lapse of statutes of
limitations . . . . . . . . . . . . . . . . . . . . . . . . .
— (18,804)
—
(1,352)
(2,681)
(7,040)
Balance at end of year . . . . . . . . . . . . . . . $ 17,300 $ 19,491 $ 58,886
The total amount of unrecognized tax benefits that, if
recognized, would impact the effective tax rate was $10.8
million as of December 31, 2016, and $12.5 million as of
December 31, 2015. This amount includes the federal tax
benefit of state tax deductions.
We recognize interest and penalties related to
unrecognized tax benefits as a component of income tax
expense. We also recognize interest income attributable to
overpayment of income taxes and from the reversal of interest
expense previously recorded for uncertain tax positions which
are subsequently released as a component of income tax
expense. We recognized expense from interest for uncertain
tax positions of $0.7 million in 2016 while recording income of
$0.4 million in 2015 and $3.4 million in 2014. The amount of
accrued interest expense and penalties payable related to
unrecognized tax benefits was $1.5 million as of December
31, 2016 and $1.7 million as of December 31, 2015.
We file income tax returns in the U.S. and various state
jurisdictions. The 2013 through 2016 tax years remain subject
to examination by the Internal Revenue Service and state
authorities. Tax years before 2013 remain subject to
examination by certain states due to ongoing audits.
It is reasonably possible that the amount of unrecognized
benefit with respect to certain of our unrecognized tax
positions will increase or decrease within the next 12 months.
These changes may be the result of settlement of ongoing
audits, lapses of statutes of limitations or other regulatory
developments. At this time, we estimate the amount of our
gross unrecognized tax positions may decrease by up to
approximately $1.8 million within the next 12 months primarily
due to lapses of statutes of limitations and settlement of
ongoing audits in various jurisdictions.
52
We also have an effective shelf registration statement on
Form S-3 on file with the U.S. Securities and Exchange
Commission under which an unspecified amount of securities
may be issued, subject to a $7.0 billion limit established by the
Board of Directors. Proceeds from the sale of such securities
may be used for general corporate purposes, including capital
expenditures, working capital, securities repurchase
programs, repayment of debt and financing of acquisitions.
We may also invest borrowed funds that are not required for
other purposes in short-term marketable securities.
Our debt maturities may be repaid with cash flow from
operating activities, accessing capital markets or a
combination of both. The following schedule of annual
maturities of the principal amount of total debt assumes we
use available capacity under our revolving credit agreement to
refinance unsecured floating rate term loans and fixed rate
notes due in 2017 through 2018. Based on this refinancing
assumption, all of the obligations other than the VIE
unsecured floating rate term loan due prior to 2019 are
reflected as maturities for 2019 and beyond.
In thousands of dollars
2017 (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2018 (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
646
646
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
700,000
2020 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,612,100
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
350,000
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,415,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,078,392
(1) Amortization of term debt due in 2017 and 2018 is assumed to be
repaid with funds from the revolving credit agreement, which
matures in 2020. Excluding our ability to repay funds with the
revolving credit agreement, contractual debt maturities are $132
million and $121 million in 2017 and 2018, respectively.
(2) Assumes current revolving credit agreement borrowings comes
due in 2020 and credit facility is not extended.
On April 1, 2016 our unsecured notes bearing a fixed rate
of 10% became due, and therefore, we made a debt maturity
payment of approximately $203.1 million (comprised of
principal and accrued interest). The payment was made using
borrowings from our revolving credit facility.
On September 30, 2016, we borrowed $300 million under
a new four-year term loan due in 2020. The interest rate on
the term loan is equal to the same interest rates as borrowings
under the Amended and Restated Competitive Advance and
Revolving Credit Agreement. Both the revolving credit
agreement and the term loan are guaranteed by a majority of
our wholly-owned material domestic subsidiaries. We used
substantially all of the proceeds from the new term loan to
repay a portion of the outstanding obligation under our
revolving credit facility.
On November 1, 2016, we redeemed the remaining $70
million of 7.125% unsecured notes due in September 2018 at
par.
In 2015, we entered into an agreement to amend and
extend our existing revolving credit facility with one expiring on
June 29, 2020 (the Amended and Restated Competitive
Advance and Revolving Credit Agreement). As a result, the
maximum total leverage ratio permitted by the new agreement
is 5.0x through June 30, 2017, after which, as amended, it is
reduced to 4.75x through June 30, 2018, and then to 4.50x
thereafter. Commitment fees on the revolving credit
agreement are equal to 0.25% - 0.40% of the undrawn
commitments, depending upon our leverage ratio, and are
computed on the average daily undrawn balance under the
revolving credit agreement and paid each quarter. Under the
Amended and Restated Competitive Advance and Revolving
Credit Agreement, we may borrow at an applicable margin
above the Eurodollar base rate (LIBOR loan) or the higher of
the Prime Rate, the Federal Funds Effective Rate plus 0.50%,
or the one month LIBOR rate plus 1.00% (ABR loan). The
applicable margin is determined based on our leverage ratio
but differs between LIBOR loans and ABR loans. For LIBOR-
based borrowing, the margin varies from 1.75% to 2.50%. For
ABR-based borrowing, the margin will vary from 0.75% to
1.50%. On September 26, 2016, we amended the Amended
and Restated Competitive Advance and Revolving Credit
Agreement to increase the capacity of the facility by $103
million. Total commitments under the Amended and Restated
Competitive Advance and Revolving Credit Agreement are
$1.5 billion. As of December 31, 2016, we had unused
borrowing capacity of $844 million under our revolving credit
facility.
53
NOTE 8
Retirement plans
We have various defined benefit retirement plans, including
plans established under collective bargaining agreements. Our
principal retirement plan is the TEGNA Retirement Plan (TRP).
The TRP was formed in connection with the spin-off of our
former publishing businesses. The TRP assumed certain
assets and liabilities from the Gannett Retirement Plan, with
the remaining pension obligations being retained by Gannett.
The G. B. Dealey Retirement Pension Plan (Dealey Plan), a
pension plan covering former Belo employees, merged with
the TRP plan as of December 31, 2015.
The disclosure tables below include the assets and
obligations of the TRP and the TEGNA Supplemental
Retirement Plan (SERP). We use a December 31
measurement date convention for our retirement plans.
Substantially all participants in the TRP and SERP had their
benefits frozen before 2009.
Our pension costs, which include costs for our qualified
and non-qualified plans, are presented in the following table:
In thousands of dollars
2016
2015
2014
Service cost—benefits earned during the
period . . . . . . . . . . . . . . . . . . . . . . . . . . . $
816 $
920 $
812
Interest cost on benefit obligation . . . . . .
26,111
23,800
23,558
Expected return on plan assets . . . . . . . .
(26,764)
(31,464)
(28,697)
Amortization of prior service costs. . . . . .
670
673
599
Amortization of actuarial loss. . . . . . . . . .
7,615
6,335
4,003
Total pension expense for company-
sponsored retirement plans . . . . . . . . . . . $ 8,448 $
264 $
275
The following table provides a reconciliation of pension
benefit obligations (on a projected benefit obligation
measurement basis), plan assets and funded status of
company-sponsored retirement plans, along with the related
amounts that are recognized in the Consolidated Balance
Sheets.
In thousands of dollars
Change in benefit obligations
Dec. 31, 2016 Dec. 31, 2015
Benefit obligations at beginning of year . $
586,624 $
566,224
Service cost . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss (gain) . . . . . . . . . . . . . . . .
816
26,111
17,755
Gross benefits paid . . . . . . . . . . . . . . . .
(38,532)
920
23,800
(12,514)
(34,401)
Adjustment due to spin-off of publishing
businesses . . . . . . . . . . . . . . . . . . . . . . .
13,639
42,595
Benefit obligations at end of year . . . . . . $
606,413 $
586,624
Change in plan assets
Fair value of plan assets at beginning of
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
400,193 $
387,626
Actual return on plan assets. . . . . . . . . .
Employer contributions. . . . . . . . . . . . . .
21,316
5,191
Gross benefits paid . . . . . . . . . . . . . . . .
(38,532)
Transfers . . . . . . . . . . . . . . . . . . . . . . . .
—
(725)
12,008
(34,401)
35,685
Fair value of plan assets at end of year . $
388,168 $
400,193
Funded status at end of year . . . . . . . . . $
(218,245) $
(186,431)
Amounts recognized in Consolidated Balance Sheets
Accrued benefit cost—current . . . . . . . . $
(30,955) $
(7,587)
Accrued benefit cost—noncurrent . . . . . $
(187,290) $
(178,844)
54
In 2016, we identified certain actuarial discrepancies in
participant data that resulted in an overstatement of the
postretirement benefits liabilities transferred to our former
publishing businesses in conjunction with the spin-off. Based
on our assessment of qualitative and quantitative factors, the
impact of these discrepancies was not considered material to
the consolidated financial statements for the prior periods. The
correction of these discrepancies resulted in an increase in
pension liabilities of $13.6 million (which is shown in the table
above) and postretirement medical and life insurance liabilities
of $3.1 million. The increase in postretirement benefits
liabilities was offset by a reduction in retained earnings of $7.7
million, a $2.6 million increase, net of taxes, in accumulated
other comprehensive loss, and an increase in deferred tax
assets of $6.4 million.
The funded status (on a projected benefit obligation basis)
of our principal retirement plans at December 31, 2016, is as
follows:
In thousands of dollars
Fair Value of
Plan Assets
Benefit
Obligation
Funded
Status
TRP . . . . . . . . . . . . . . . . . . . . . . $
SERP (a)
. . . . . . . . . . . . . . . . . .
All other . . . . . . . . . . . . . . . . . . .
388,168 $ 502,922 $ (114,754)
—
—
102,856
(102,856)
635
(635)
Total . . . . . . . . . . . . . . . . . . . . . $
388,168 $ 606,413 $ (218,245)
(a) The SERP is an unfunded, unsecured liability
The accumulated benefit obligation for all defined benefit
pension plans was $601.4 million at December 31, 2016 and
$576.3 million at December 31, 2015. Based on actuarial
projections, contributions of $53.3 million are expected to be
made to our retirement plans during the year ended December
31, 2017.
The following table presents information for our retirement
plans for which accumulated benefits exceed assets:
In thousands of dollars
Accumulated benefit obligation . . . . . . . $
601,430 $
Fair value of plan assets . . . . . . . . . . . . $
388,168 $
576,333
400,193
Dec. 31, 2016 Dec. 31, 2015
The following table presents information for our retirement
plans for which projected benefit obligations exceed assets:
In thousands of dollars
Projected benefit obligation . . . . . . . . . $
606,413 $
Fair value of plan assets . . . . . . . . . . . $
388,168 $
586,624
400,193
Dec. 31, 2016 Dec. 31, 2015
The following table summarizes the amounts recorded in
accumulated other comprehensive income (loss) that have not
yet been recognized as a component of pension expense as
of the dates presented (pre-tax):
In thousands of dollars
Dec. 31, 2016 Dec. 31, 2015
Net actuarial losses . . . . . . . . . . . . . . . $
(204,761) $
(184,808)
Prior service cost . . . . . . . . . . . . . . . . .
(2,717)
(3,367)
Amounts in accumulated other
comprehensive income (loss) . . . . . . . $
(207,478) $
(188,175)
The actuarial loss amounts expected to be amortized from
accumulated other comprehensive income (loss) into net
periodic benefit cost in 2017 are $8.0 million. The prior service
cost amounts expected to be amortized from accumulated
other comprehensive income (loss) into net periodic benefit
cost in 2017 are $0.6 million.
Other changes in plan assets and benefit obligations
recognized in other comprehensive income (loss) consist of
the following for continuing operations only:
In thousands of dollars
2016
Current year actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . $ (23,203)
Amortization of previously deferred actuarial loss . . . . . . . .
Amortization of previously deferred prior service costs. . . . .
Adjustment due to spin-off of publishing businesses . . . . . .
7,615
670
(4,386)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (19,304)
Pension costs: The following assumptions were used to
determine net pension costs:
Discount rate . . . . . . . . . . . . . . . . . . . . .
4.46% 4.19% 4.84%
Expected return on plan assets . . . . . . .
7.00% 8.00% 8.00%
Rate of compensation increase . . . . . . .
3.00% 3.00% 3.00%
2016
2015
2014
The expected return on plan assets assumption was
determined based on plan asset allocations, a review of
historic capital market performance, historical plan asset
performance and a forecast of expected future plan asset
returns.
Benefit obligations and funded status: The following
assumptions were used to determine the year-end benefit
obligations:
Discount rate . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . .
4.12%
3.00%
4.46%
3.00%
Dec. 31, 2016 Dec. 31, 2015
Plan assets: The asset allocation for the TRP at the end of
2016 and 2015, and target allocations for 2017, by asset
category, are presented in the table below:
Target Allocation Allocation of Plan Assets
Equity securities . . . . . . . .
Debt securities . . . . . . . . .
Other . . . . . . . . . . . . . . . .
2017
60%
25
15
2016
59%
34
7
2015
58%
35
7
Total . . . . . . . . . . . . . . . . .
100%
100%
100%
The primary objective of company-sponsored retirement
plans is to provide eligible employees with scheduled pension
benefits. Consistent with prudent standards for preservation of
capital and maintenance of liquidity, the goal is to earn the
highest possible total rate of return while minimizing risk. The
principal means of reducing volatility and exercising prudent
investment judgment is diversification by asset class and by
investment manager; consequently, portfolios are constructed
to attain prudent diversification in the total portfolio, each asset
class, and within each individual investment manager’s
portfolio. Investment diversification is consistent with the intent
to minimize the risk of large losses. All objectives are based
upon an investment horizon spanning five years so that
interim market fluctuations can be viewed with the appropriate
perspective. The target asset allocation represents the long-
term perspective. Retirement plan assets will be rebalanced
periodically to align them with the target asset allocations.
Risk characteristics are measured and compared with an
appropriate benchmark quarterly; periodic reviews are made
of the investment objectives and the investment managers.
Our actual investment return on our TRP assets was 7.4% for
2016, 1.0% for 2015 and 8.2% for 2014.
Cash flows: We estimate we will make the following
benefit payments (from either retirement plan assets or
directly from our funds), which reflect expected future
employee service, as appropriate:
In thousands of dollars
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 62,588
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,675
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,514
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,030
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,272
2022-2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 196,925
401(k) savings plan
Substantially all our employees (other than those covered by a
collective bargaining agreement) are eligible to participate in
our principal defined contribution plan, The TEGNA 401(k)
Savings Plan. Employees can elect to save up to 50% of
compensation on a pre-tax basis subject to certain limits.
For most participants, the plan’s matching formula is 100%
of the first 5% of employee contributions. We also make
additional employer contributions on behalf of certain long-
term employees. Compensation expense related to 401(k)
contributions was $15.5 million in 2016, $18.2 million in 2015
and $19.3 million in 2014. We settle the 401(k) employee
company stock match obligation by buying our stock in the
open market and depositing it in the participants’ accounts.
55
Multi-employer plan
We contribute to the AFTRA Retirement Plan (AFTRA Plan), a
multi-employer defined benefit pension plan, under the terms
of collective-bargaining agreements (CBA) that cover our
union-represented employees. The risks of participating in this
multi-employer plan are different from single-employer plans in
the following aspects:
• We play no part in the management of plan investments or
any other aspect of plan administration.
• Assets contributed to the multi-employer plan by one
employer may be used to provide benefits to employees of
other participating employers.
•
•
If a participating employer stops contributing to the plan,
the unfunded obligations of the plan may be borne by the
remaining participating employers.
If we choose to stop participating in some of our multi-
employer plans, we may be required to pay those plans an
amount based on the unfunded status of the plan, referred
to as withdrawal liability.
The Employee Identification Number (EIN) and three-digit
plan number of the AFTRA Plan is 13-6414972/001.
The AFTRA Plan has a certified green zone status as of
November 30, 2014. The zone status is based on information
that we received from the plan and is certified by the plan’s
actuary. Among other factors, plans in the red zone are
generally less than 65% funded; plans in the orange zone are
both a) less than 80% funded and b) have an accumulated/
expected funding deficiency in any of the next six plan years,
net of any amortization extensions; plans in the yellow zone
meet either one of the criteria mentioned in the orange zone;
and plans in the green zone are at least 80% funded. A
financial improvement plan or a rehabilitation plan is neither
pending nor has one been implemented.
We make all required contributions to the plan as
determined under the respective CBAs. We contributed $1.8
million in 2016, $1.1 million in 2015 and $1.0 million in 2014.
Our contribution to the AFTRA Retirement Plan represented
less than 5% of total contributions to the plan. This calculation
is based on the plan financial statements issued for the period
ending November 30, 2015. At the date we issued our
financial statements, Forms 5500 were unavailable for the
plan years ending after November 30, 2015.
Expiration dates of the CBAs in place range from April 16,
2017 to February 23, 2019.
The AFTRA Plan has elected to utilize special amortization
provisions provided under the Preservation of Access to Care
for Medicare Beneficiaries and Pension Relief Act of 2010.
We incurred no expenses for multi-employer withdrawal
liabilities for the years ended December 31, 2016 and 2015.
NOTE 9
Fair value measurement
We measure and record certain assets and liabilities at fair
value in the accompanying consolidated financial statements.
U.S. GAAP establishes a fair value hierarchy for those
instruments measured at fair value that distinguishes between
assumptions based on 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.
The financial instruments measured at fair value in the
accompanying Consolidated Balance Sheets consist of the
following:
Company Owned Assets
In thousands of dollars
Fair value measurement as of Dec. 31, 2016
Assets:
Level 1 Level 2 Level 3
Total
Deferred compensation
investments . . . . . . . . . . . . $ 28,558 $ — $ — $ 28,558
Available for sale
investment . . . . . . . . . . . . .
— 16,744
16,744
—
Total. . . . . . . . . . . . . . . . . . . $ 45,302 $ — $ — $ 45,302
Deferred compensation investments valued using net
asset value as a practical expedient:
Interest in registered investment companies . . . . . . . . . . $ 10,140
13,575
Fixed income fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investments at fair value . . . . . . . . . . . . . . . . . . . . . . $ 69,017
In thousands of dollars
Fair value measurement as of Dec. 31, 2015
Level 1 Level 2 Level 3
Total
Assets:
Deferred compensation
investments
Available for sale
investment . . . . . . . . . . . . .
$ 27,770 $ — $ — $ 27,770
28,090
—
— 28,090
Total. . . . . . . . . . . . . . . . . . . $ 55,860 $ — $ — $ 55,860
Deferred compensation investments valued using net
asset value as a practical expedient:
Interest in registered investment companies . . . . . . . . . . $ 36,114
13,315
Fixed income fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investments at fair value . . . . . . . . . . . . . . . . . . . . . . $ 105,289
56
Pension Plan Assets
In thousands of dollars
Fair value measurement as of Dec. 31, 2016
Assets:
Level 1
Level 2
Level 3
Total
Corporate stock . . . . . . . . .
Cash and other . . . . . . . . . $ 2,206 $ — $ — $
2,206
— 60,730
60,730
Total. . . . . . . . . . . . . . . . . . . $ 62,936 $ — $ — $ 62,936
Pension plan investments valued using net asset value
as a practical expedient:
—
Common collective trust - equities . . . . . . . . . . . . . . . . . . $ 167,647
Common collective trust - fixed income . . . . . . . . . . . . . .
Hedge funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partnership/joint venture interests . . . . . . . . . . . . . . . . . .
Interest in registered investment companies . . . . . . . . . .
127,043
14,754
8,985
6,803
Total fair value of plan assets. . . . . . . . . . . . . . . . . . . . . . . $ 388,168
In thousands of dollars
Fair value measurement as of Dec. 31, 2015
Level 1 Level 2 Level 3
Total
Assets:
Cash and other . . . . . . . . . $ 1,098 $ — $ — $
Corporate stock . . . . . . . . .
58,291
Corporate bonds . . . . . . . .
—
Total. . . . . . . . . . . . . . . . . . . $ 59,389 $
—
1,098
— 58,291
99
99
—
99 $ — $ 59,488
Pension plan investments valued using net asset value
as a practical expedient:
Common collective trust - equities . . . . . . . . . . . . . . . . . . $ 172,046
Common collective trust - fixed income . . . . . . . . . . . . . .
Hedge funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partnership/joint venture interests . . . . . . . . . . . . . . . . . .
Interest in registered investment companies . . . . . . . . . .
135,914
14,290
11,796
6,659
Total fair value of plan assets. . . . . . . . . . . . . . . . . . . . . . . $ 400,193
Valuation methodologies used for assets and liabilities
measured at fair value are as follows:
Corporate stock classified as Level 1 is valued primarily at
the closing price reported on the active market on which the
individual securities are traded.
Deferred compensation investments as of December 31,
2016 and 2015 were $28.6 million and $27.8 million,
respectively. These investments consist of mutual funds which
have publicly quoted prices and are therefore classified as
Level 1 assets. The available for sale investment is our
investment in Gannett, which has been classified as a Level 1
asset as the shares are listed on the New York Stock
Exchange. Interest in registered investment companies are
valued using the net asset values as quoted through publicly
available pricing sources and investments are redeemable on
request. These investments include one fund which invests in
intermediate-term investment grade bonds and a fund which
invests in equities listed predominantly on European and Asian
exchanges. The fixed income fund is valued using the net
asset value provided monthly by the fund company and shares
are generally redeemable on request. There are no unfunded
commitments to these investments as of December 31, 2016.
In addition to the financial instruments listed in the table
above, we 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 long-term debt, determined
based on the bid and ask quotes for the related debt (Level 2),
totaled $4.19 billion at December 31, 2016 and $4.31 billion at
December 31, 2015.
In 2016, 2015 and 2014, we recorded non-cash goodwill
impairment charges of $15.2 million, $8.0 million and $30.3
million in connection with our interim and annual goodwill
impairment test. The fair value determination of goodwill was
determined using a combination of an income approach (DCF
valuation analysis) and market-based approach (guideline
public company analysis) and was classified as a Level 3 fair
value measurement due to the significance of the
unobservable inputs used. See Note 1 and 12 for further
information on the non-cash goodwill impairment charges and
our valuation methodologies.
57
The investments in Level 2 are corporate bonds which are
valued based on institutional bid evaluations using proprietary
models, using discounted cash flow models or models that
derive prices based on similar securities.
Interest in common/collective trusts are valued using the
net asset value as provided monthly by the investment
manager or fund company.
Ten of the investments in collective trusts are fixed income
funds, whose strategy is to use individual subfunds to
efficiently add a representative sample of securities in
individual market sectors to the portfolio. The remaining
eleven investments in collective trusts held by the Plan are
invested in equity funds. The strategy of these funds is to
generate returns predominantly from developed equity
markets. These funds are generally redeemable with a short-
term written or verbal notice. There are no unfunded
commitments related to these types of funds.
Interest in registered investment companies is valued using
the published net asset values as quoted through publicly
available pricing sources. The investment strategy of this
company is to generate returns from government issued debt
securities. These investments are redeemable on request.
Investments in partnerships are valued at the net asset
value of our investment in the fund as reported by the fund
managers. The Plan holds investments in two partnerships.
One partnership’s strategy is to generate returns through real
estate-related investments. Certain distributions are received
from this fund as the underlying assets are liquidated. The
other partnership’s strategy is to generate returns through
investment in developing equity markets. This fund is
redeemable with a 30-day notice, subject to a 0.55% charge.
Future funding commitments to our partnership investments
totaled $0.8 million as of December 31, 2016 and $1.0 million
as of December 31, 2015.
As of December 31, 2016, pension plan assets include one
hedge fund which is a fund of hedge funds whose objective is
to produce a return that is uncorrelated with market
movements. Investments in hedge funds are valued at the net
asset value as reported by the fund managers. Shares in the
hedge fund are generally redeemable twice a year or on the
last business day of each quarter with at least 95 days written
notice subject to a potential 5% holdback. There are no
unfunded commitments related to the hedge funds.
We review audited financial statements and additional
investor information to evaluate fair value estimates from our
investment managers or fund administrator.
Our policy is to recognize transfers between levels at the
beginning of the reporting period. There were no transfers
between levels during the period.
NOTE 10
Shareholders’ equity
At December 31, 2016, and 2015, our authorized capital was
comprised of 800 million shares of common stock and 2
million shares of preferred stock. At December 31, 2016,
shareholders’ equity of TEGNA included 215 million shares
that were outstanding (net of 110 million shares of common
stock held in treasury). At December 31, 2015, shareholders’
equity of TEGNA included 220 million shares that were
outstanding (net of 105 million shares of common stock held in
treasury). No shares of preferred stock were issued and
outstanding at December 31, 2016, or 2015.
Capital stock and earnings per share
We report earnings per share on two bases, basic and diluted.
All basic income per share amounts are based on the
weighted average number of common shares outstanding
during the year. The calculation of diluted earnings per share
also considers the assumed dilution from the exercise of stock
options and from performance shares and restricted stock
units.
Our earnings per share (basic and diluted) for 2016, 2015,
and 2014 are presented below:
In thousands, except per share amounts
2016
2015
2014
Income from continuing operations
attributable to TEGNA Inc. . . . . . . . . . $ 444,171 $ 357,458 $ 687,936
Income from discontinued
operations, net of tax . . . . . . . . . . . . .
(7,474)
102,064
374,235
Net income attributable to TEGNA
Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 436,697 $ 459,522 $1,062,171
Weighted average number of
common shares outstanding - basic .
Effect of dilutive securities
Restricted stock . . . . . . . . . . . . . . . . .
Performance Share Units . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . . . .
Weighted average number of
common shares outstanding - diluted
Earnings from continuing operations
per share - basic . . . . . . . . . . . . . . . . $
Earnings from discontinued
operations per share - basic . . . . . . .
216,358
224,688
226,292
1,424
997
902
2,236
1,867
930
2,624
1,999
992
219,681
229,721
231,907
2.05 $
1.59 $
3.04
(0.03)
0.45
Earnings per share - basic . . . . . . . . . $
2.02 $
2.04 $
Earnings from continuing operations
per share - diluted . . . . . . . . . . . . . . . $
Earnings from discontinued
operations per share - diluted . . . . . .
2.02 $
1.56 $
2.97
(0.03)
0.44
Earnings per share - diluted. . . . . . . . $
1.99 $
2.00 $
1.65
4.69
1.61
4.58
Our calculation of diluted earnings per share includes the
dilutive effects for the assumed vesting of outstanding
restricted stock units, performance share units, and exercises
of outstanding stock options based on the treasury stock
method. The diluted earnings per share amounts exclude the
effects of approximately 150,000 stock awards for 2016,
200,000 for 2015 and 800,000 for 2014, as their inclusion
would be anti-dilutive.
58
We also issue stock-based compensation to employees in
the form of restricted stock units (RSUs). These awards
generally entitle employees to receive at the end of a four-year
incentive period one share of common stock for each RSU
granted, conditioned on continued employment for the full
incentive period. For RSU grants after 2014, the grants
generally vest 25% per year. Employees who are granted
RSUs have the right to receive shares of stock after
completion of the incentive period; however, the RSUs do not
pay dividends or carry voting rights during the incentive
period. RSUs are valued based on the fair value of our
common stock on the date of grant less the present value of
the expected dividends not received during the relevant
incentive period. The fair value of the RSU, less estimated
forfeitures, is recognized as compensation expense ratably
over the incentive period. We generally grant both RSUs and
PSUs to employees on January 1.
The Plan also permits us to issue restricted stock.
Restricted Stock is an award of common stock that is subject
to restrictions and such other terms and conditions determined
by the Executive Compensation Committee.
Determining fair value of PSUs
Valuation and amortization method – We determined the
fair value of Performance Shares using the Monte Carlo
valuation model. This model considers the likelihood of the
share prices of our peer group companies’ and our shares
ending at various levels subject to certain price caps at the
conclusion of the three-year incentive period. Key inputs into
the Monte Carlo valuation model include expected term,
expected volatility, risk-free interest rate and expected
dividend yield. Each assumption is discussed below.
Expected term – The expected term represents the period
that our stock-based awards are expected to be outstanding.
The expected term for Performance Share awards is based on
the incentive period.
Expected volatility – The fair value of stock-based awards
reflects volatility factors calculated using historical market data
for our common stock and also our peer group when the
Monte Carlo method is used. The time frame used is equal to
the expected term.
Risk-free interest rate – We base the risk-free interest rate
on the yield to maturity at the time of the award grant on zero-
coupon U.S. government bonds having a remaining life equal
to the award’s expected life.
Expected dividend – The dividend assumption is based on
our expectations about our dividend policy on the date of
grant.
Estimated forfeitures – When estimating forfeitures, we
consider voluntary termination behavior as well as analysis of
actual forfeitures.
Share repurchase program
In 2015, our Board of Directors approved an $825 million
share repurchase program to be completed over a three-year
period ending June 2018. During 2016, 7.0 million shares
were purchased under the current program for $161.9 million.
In connection with our announcement to spin-off our Cars.com
business unit, we temporarily suspended repurchasing shares
starting in July 2016 through early November 2016. In 2015,
9.6 million shares were purchased under the current and a
former program for $271.0 million and in 2014, 2.7 million
shares were purchased under a former program for $75.8
million. Repurchased shares are included in the Consolidated
Balance Sheets as Treasury Stock. As of December 31, 2016,
the value of shares that may be repurchased under the
existing program is $467.2 million.
The shares may be repurchased at management’s
discretion, either in the open market or in privately negotiated
block transactions. Management’s decision to repurchase
shares will depend on price and other corporate needs.
Purchases may occur from time to time and no maximum
purchase price has been set. Certain of the shares we
previously acquired have been reissued in settlement of
employee stock awards.
Stock-Based Compensation Plans
In May 2001, our shareholders approved the adoption of the
2001 Omnibus Incentive Compensation Plan (the Plan). The
Plan is administered by the Executive Compensation
Committee of the Board of Directors and was amended and
restated as of May 4, 2010, to increase the number of shares
reserved for issuance to 60.0 million shares of our common
stock. The Plan provides for the granting of stock options,
stock appreciation rights, restricted stock, restricted stock
units, performance shares and other equity-based and cash-
based awards. Awards may be granted to our employees and
members of the Board of Directors. The Plan provides that
shares of common stock subject to awards granted become
available again for issuance if such awards are canceled or
forfeited.
In 2011, we established a performance share award plan
for senior executives pursuant to which awards were first
made with a grant date of January 1, 2012. Pursuant to the
terms of this award, we may issue shares of our common
stock (Performance Shares) to senior executives following the
completion of a three-year period beginning on the grant date.
Generally, if an executive remains in continuous employment
with us during the full three-year incentive period, the number
of performance share units (PSU) that an executive will
receive will be determined based upon how our total
shareholder return (TSR) compares to the TSR of a peer
group of companies during the three-year period.
We recognize the grant date fair value of each PSU, less
estimated forfeitures, as compensation expense ratably over
the incentive period. Fair value is determined by using a
Monte Carlo valuation model. Each PSU is equal to and paid
in one share of our common stock, but carries no voting or
dividend rights. The number of shares ultimately issued for
each PSU award may range from 0% to 200% of the award’s
target.
59
The following assumptions were used to estimate the fair
value of performance share awards:
PSUs Granted During
Expected term . . . . . . . . . . . . . . . .
2016
3 yrs.
2015
3 yrs.
2014
3 yrs.
Expected volatility . . . . . . . . . . . . .
39.60% 32.00% 39.32%
Risk-free interest rate . . . . . . . . . .
Expected dividend yield . . . . . . . . .
1.31%
2.19%
1.10%
2.51%
0.78%
2.70%
Impact from Publishing Spin on Equity Awards: In
connection with the spin-off of our publishing businesses, and
in accordance with our equity award Plan, the number of stock
options, RSUs and target PSUs outstanding (collectively,
stock awards) on June 29, 2015 (the Distribution Date), and
the exercise prices of such stock options were adjusted with
the intention of preserving the intrinsic value of the awards
prior to the separation. Employees with outstanding stock
awards granted prior to 2015 received one share of an
equivalent Gannett stock award for every two shares of
TEGNA stock award then outstanding. For RSUs and PSUs
granted in 2015 but prior to the Distribution Date, adjustments
were determined by comparing the fair value of such awards
immediately prior to the spin-off to the fair value of such
awards immediately after (the Adjustments).
Accordingly, each stock award granted in 2015 and
outstanding as of the Distribution Date was increased by
multiplying the size of such award by a factor of 1.18. The
Adjustments resulted in an aggregate increase of
approximately 125,000 equity awards (comprised of 75
thousand RSUs and 50 thousand target PSUs) and are
included in the line item “Adjustment due to spin-off of
Publishing” in the tables that follow. These adjustments to our
stock-based compensation awards did not have a material
impact on compensation expense.
Stock-based Compensation Expense: The following
table shows the stock-based compensation related amounts
recognized in the Consolidated Statements of Income for
equity awards:
Restricted Stock and RSUs: As of December 31, 2016,
there was $16.6 million of unrecognized compensation cost
related to non-vested restricted stock and RSUs. This amount
will be adjusted for future changes in estimated forfeitures and
recognized on a straight-line basis over a weighted average
period of 2.4 years. The tax benefit realized from the
settlement of RSUs was $2.3 million in 2016, $5.9 million in
2015 and $9.5 million in 2014.
A summary of restricted stock and RSU awards is
presented below:
2016 Restricted Stock and RSU Activity
Shares
Weighted
average
fair value
Unvested at beginning of year . . . . . . . . . .
2,126,526 $
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settled. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled. . . . . . . . . . . . . . . . . . . . . . . . . . .
616,743 $
(1,277,444) $
(322,404) $
Unvested at end of year . . . . . . . . . . . . . . .
1,143,421 $
21.55
25.08
19.22
22.27
25.66
2015 Restricted Stock and RSU Activity
Shares
Weighted
average
fair value
Unvested at beginning of year . . . . . . . . . .
3,577,598 $
16.97
31.78
14.66
491,690 $
(1,485,735) $
(532,524) $
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.28
75,497
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment due to spin-off of Publishing (a)
Unvested at end of year (a) . . . . . . . . . . . . .
(a) The weighted-average grant date fair value of the RSUs included
in the line item “Adjustment due to spin-off of publishing” is equal to
the weighted-average grant date fair value of the awards at their
respective grant date divided by a factor of approximately 1.18. The
weighted-average grant date fair value of the unvested RSUs as of
Dec. 31, 2015 reflect the adjustment.
2,126,526 $
21.55
2014 Restricted Stock and RSU Activity
Shares
Weighted
average
fair value
Unvested at beginning of year . . . . . . . . . .
4,193,985 $
In thousands, except per share amounts
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016
2015
2014
Settled . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,048,516 $
(1,263,702) $
(401,201) $
13.92
27.26
15.92
16.13
16.97
Restricted stock and RSUs . . . . . . $ 10,607 $
PSUs . . . . . . . . . . . . . . . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . .
6,983
—
8,438 $
10,363
857
8,604
7,517
662
Total stock-based compensation . . $ 17,590 $ 19,658 $ 16,783
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested at end of year. . . . . . . . . . . . . . .
3,577,598 $
60
PSUs: As of December 31, 2016, there was $4.3 million of
unrecognized compensation cost related to non-vested
performance shares. This amount will be adjusted for future
changes in estimated forfeitures and recognized over a
weighted average period of 1.8 years. The tax benefit realized
from the settlement of PSUs was $4.5 million and $11.2 million
in 2016 and 2015, respectively.
Accumulated other comprehensive income (loss)
The elements of our Accumulated Other Comprehensive Loss
(AOCL) principally consisted of pension, retiree medical and
life insurance liabilities and foreign currency translation gains.
The following tables summarize the components of, and
changes in, AOCL (net of tax and noncontrolling interests):
A summary of our performance shares awards is
In thousands of dollars
presented below:
2016 PSUs Activity
Target
number
of shares
Weighted
average
fair value
2016
Retirement
Plans
Foreign
Currency
Translation Other
Total
Balance at beginning
of year . . . . . . . . . . . . . $ (116,496) $
(20,129) $ 5,674 $(130,951)
Unvested at beginning of year. . . . . . . . . . .
1,385,940 $
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
392,589 $
Settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(687,125) $
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . .
(72,454) $
Unvested at end of year . . . . . . . . . . . . . . .
1,018,950 $
29.21
30.69
20.12
34.96
35.60
2015 PSUs Activity
Target
number
of shares
Weighted
average
fair value
Unvested at beginning of year. . . . . . . . . . .
2,100,115 $
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
285,458 $
Settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(925,640) $
20.95
39.47
14.23
29.84
49,628
(123,621) $
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment due to spin-off of Publishing (a) .
Unvested at end of year (a) . . . . . . . . . . . . .
(a) The weighted-average grant date fair value of the PSUs included
in the line item “Adjustment due to spin-off of publishing” is equal to
the weighted-average grant date fair value of the awards at their
respective grant date divided by a factor of approximately 1.18. The
weighted-average grant date fair value of the unvested PSUs as of
Dec. 31, 2015 reflect the adjustment.
1,385,940 $
29.21
Other comprehensive
loss before
reclassifications . . . . . .
Adjustment due to
spin-off of publishing
businesses . . . . . . . . .
Amounts reclassified
from AOCL. . . . . . . . . .
(13,143)
(8,431)
(11,346)
(32,920)
(2,642)
4,940
—
—
—
—
(2,642)
4,940
Balance at end of year $ (127,341) $
(28,560) $ (5,672) $(161,573)
In thousands of dollars
2015
Retirement
Plans
Foreign
Currency
Translation Other
Total
Balance at beginning
of year . . . . . . . . . . . . . $(1,172,245) $
391,113 $ 2,363 $(778,769)
Other comprehensive
income (loss) before
reclassifications . . . . . .
Spin-off publishing
businesses . . . . . . . . .
Amounts reclassified
from AOCL. . . . . . . . . .
23,094
(1,966)
3,311
24,439
1,012,745
(409,276)
— 603,469
19,910
—
—
19,910
Balance at end of year $ (116,496) $
(20,129) $ 5,674 $(130,951)
2014 PSUs Activity
Target
number
of shares
Weighted
average
fair value
In thousands of dollars
Unvested at beginning of year. . . . . . . . . . .
1,760,488 $
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
436,340 $
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . .
(96,713) $
Unvested at end of year . . . . . . . . . . . . . . .
2,100,115 $
16.92
37.31
21.41
20.95
2014
Retirement
Plans
Foreign
Currency
Translation Other
Total
Balance at beginning
of year . . . . . . . . . . . . . $ (923,595) $
427,177 $ 2,363 $(494,055)
Other comprehensive
loss before
reclassifications . . . . . .
Amounts reclassified
from AOCL. . . . . . . . . .
(276,219)
(36,064)
— (312,283)
27,569
—
—
27,569
Balance at end of year $(1,172,245) $
391,113 $ 2,363 $(778,769)
Stock Options: No stock options were granted in 2016,
2015 or 2014. All outstanding options were fully vested as of
December 2015, which we previously recognized as
compensation cost ratably over the four-year incentive period.
At December 31, 2016 and 2015, there were 1.3 million
(weighted average exercise price of $15.26) and 1.7 million
(weighted average exercise price of $16.61) stock options
outstanding. Stock options outstanding at December 31, 2016,
have a weighted average remaining contractual life of
approximately 1.66 years and an aggregate intrinsic value of
$8.2 million.
Stock options exercised totaled 0.2 million in 2016, 0.7
million in 2015, and 1.0 million in 2014. The weighted average
exercise price was $11.03 in 2016, $16.17 in 2015, and
$14.47 in 2014. The tax benefit realized from the stock options
exercised was $0.3 million in 2016, $3.3 million in 2015 and
$3.0 million in 2014. The grant-date fair value of stock options
that vested was $1.0 million in 2015 and $6.0 million in 2014.
No stock options vested in 2016. The intrinsic value of all
stock options exercised was $2.3 million in 2016, $11.4 million
in 2015 and $15.0 million in 2014.
61
AOCL components are included in the computation of net
NOTE 11
periodic post-retirement costs which include pension costs
discussed in Note 8 and our other post-retirement benefits
(health care and life insurance). Reclassifications out of AOCL
related to these post-retirement plans include the following:
In thousands of dollars
Amortization of prior service cost . . . $
96 $ 1,176 $ (4,082)
Amortization of actuarial loss . . . . . .
7,972
31,357
46,489
2016
2015
2014
Total reclassifications, before tax . . .
42,407
(14,838)
Income tax effect . . . . . . . . . . . . . . .
Total reclassifications, net of tax. . . . $ 4,940 $ 19,910 $ 27,569
(12,623)
(3,128)
32,533
8,068
Adjustments related to spin-off of publishing businesses
During 2016, we reduced retained earnings in our
Consolidated Statements of Equity by $42.5 million related to
two adjustments pertaining to the spin-off of our publishing
businesses. The first adjustment reduced retained earnings by
$7.7 million related to discrepancies in participant data in our
post-retirement plans as disclosed in Note 8.
The second adjustment reduced retained earnings by
$34.8 million as a result of adjusting the deferred tax assets
and liabilities that were previously transferred to Gannett on
June 29, 2015. The adjustments were identified as part of our
annual procedure to true-up the 2015 tax provision estimates
to the actual 2015 federal corporate income tax returns filed
during the third quarter of 2016 and the state corporate
income tax returns filed in the fourth quarter of 2016. These
changes in estimates primarily relate to the deferred tax
liability associated with depreciable assets and other 2015 tax
provision to tax return adjustments impacting the previously
estimated deferred taxes for Gannett.
Business operations and segment information
We classify our operations into two reportable segments:
Media: consisting of 46 television stations operating in 38
markets, offering high-quality television programming and
digital content; and Digital: primarily consisting of our
Cars.com and CareerBuilder business units which operate in
the automotive and human capital solutions industries. Our
reportable segments have been determined based on
management and internal reporting structure, the nature of
products and services offered by the businesses within the
segments, and the financial information that is evaluated
regularly by our chief operating decision maker.
The Digital Segment and the digital revenues line exclude
online/digital revenues generated by digital platforms that are
associated with our Media Segment’s operating properties as
such amounts are reflected in the Media Segment.
We generate most of our sales from work performed in the
U.S. Our Digital Segment, principally from the CareerBuilder
business unit, also generates sales from international
operations. International sales totaled approximately $79.0
million in 2016, $76.0 million in 2015 and $75.8 million in
2014. Our long-lived assets in international countries totaled
approximately $192.6 million at December 31, 2016, and
$213.8 million at December 31, 2015.
Separate financial data for each of our business segments
is presented in the table that follows. The accounting policies
of the segments are those described in Note 1. We evaluate
the performance of our segments based on operating income.
Operating income represents total revenue less operating
expenses, including depreciation, amortization of intangibles
and asset impairment and facility consolidation charges.
Operating income by reportable segment does not include
general corporate expenses, interest expense, interest
income, and other income and expense items of a non-
operating nature, as the effects of these items are not
considered as part of management’s evaluation of the
segment’s operating performance.
Corporate assets primarily include cash and cash
equivalents, property and equipment used for corporate
purposes and certain other financial investments.
62
Business segment financial information
In thousands of dollars
Operating revenues
Media . . . . . . . . . . . . . . . . . $ 1,933,579 $ 1,682,144 $1,691,866
2016
2015
2014
Digital . . . . . . . . . . . . . . . . .
934,275
Total . . . . . . . . . . . . . . . . . . $ 3,341,198 $ 3,050,945 $2,626,141
Operating income
Media (2). . . . . . . . . . . . . . . $ 806,411 $
714,237 $ 747,020
1,368,801
1,407,619
Digital (2). . . . . . . . . . . . . . .
230,121
Corporate (1) (2) . . . . . . . . .
(64,458)
229,386
(68,418)
119,908
(71,256)
NOTE 12
Asset impairment and facility consolidation charges
(gains)
For each year presented, we recognized charges related to
facility consolidations efforts, and also recorded non-cash
impairment charges to reduce the book value of goodwill,
other intangible assets and long-lived assets. In 2015, we
recorded a gain on the sale of our headquarters building.
A summary of these items by year is presented below (in
thousands):
2016
Pre-Tax
Amount
Net gain on sale of
corporate building . . . . . . . .
—
89,892
—
Asset impairment and facility consolidation charges:
Goodwill - Digital . . . . . . . . . . . . . . . . . . . . . . . . . $
15,218
Other: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total asset impairment and facility consolidation
charges against operations . . . . . . . . . . . . . . . . . . . $
2015
8,633
5,915
2,364
32,130
Pre-Tax
Amount
Asset impairment and facility consolidation charges (gains):
Goodwill - Digital . . . . . . . . . . . . . . . . . . . . . . . . . $
Other intangibles - Digital . . . . . . . . . . . . . . . . . .
Other: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of corporate headquarters . . . . . . .
Total asset impairment and facility consolidation
charges (gains) against operations . . . . . . . . . . . . . $
8,000
900
8,078
13,095
962
(89,892)
(58,857)
2014
Asset impairment and facility consolidation charges:
Goodwill - Digital . . . . . . . . . . . . . . . . . . . . . . . . . $
Other intangibles - Digital . . . . . . . . . . . . . . . . . .
Other - Media . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total asset impairment and facility consolidation
charges against operations . . . . . . . . . . . . . . . . . . . $
Pre-Tax
Amount
30,271
971
13,719
44,961
Goodwill: In each year presented, we recorded non-cash
goodwill impairment charges for certain reporting units within
our Digital Segment. As disclosed in Note 4, based on an
interim goodwill impairment test performed during the third
quarter of 2016, we recorded a non-cash goodwill impairment
charge of $15.2 million during the third quarter of 2016,
representing the full amount of goodwill for that reporting unit.
In addition, during 2015 and 2014 in connection with
interim and annual goodwill impairment tests, we recorded
non-cash goodwill impairment charges related to certain
reporting units within our Digital Segment (primarily PointRoll,
CoFactor and BLiNQ).
Unallocated (4) . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . $ 972,074 $
Depreciation, amortization, asset impairment and facility
—
(51,939)
(88,173)
913,158 $ 707,499
consolidation charges (gains)
Media (2). . . . . . . . . . . . . . . $
82,639 $
81,665 $
94,129
91,967
10,702
(1,667)
154,370
(1,241)
Digital (2). . . . . . . . . . . . . . .
150,382
146,907
Corporate (1) (2) . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . $ 236,620 $
Equity (losses) income in unconsolidated investments, net
(2,794) $
Media . . . . . . . . . . . . . . . . . $
(3,906) $
(82,342)
3,599
146,230 $ 196,798
Digital . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . $
Capital expenditures
Media . . . . . . . . . . . . . . . . . $
Digital . . . . . . . . . . . . . . . . .
Corporate (1). . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . $
(2,322)
(942)
(2,151)
(119)
(7,170) $
(5,064) $ 151,462
39,136 $
52,141 $
42,147
54,017
1,643
44,903
790
38,549
1,556
94,796 $
97,834 $
82,252
Identifiable assets
Media . . . . . . . . . . . . . . . . . $ 4,786,050 $ 4,799,375
Digital . . . . . . . . . . . . . . . . .
3,649,347
3,529,124
Corporate (1). . . . . . . . . . . .
107,328
170,194
Total (3) . . . . . . . . . . . . . . . . $ 8,542,725 $ 8,498,693
(1) Corporate amounts represent those not directly related to our two
business segments.
(2) Operating income for Media and Digital Segments includes pre-tax
net asset impairment and facility consolidation charges (gains) for
each year presented. See Note 12.
(3) Total of business segment identifiable assets exclude assets
recorded in discontinued operations on the consolidated balance
sheets of $7.3 million at Dec. 31, 2015.
(4) Unallocated expenses represent certain expenses that historically
were allocated to the former Publishing Segment but that could
not be allocated to discontinued operations as they were not
clearly and specifically identifiable to the spun-off businesses.
63
Other Intangibles: During 2015 and 2014, we recorded
non-cash impairment charges within our Digital Segment for
certain intangible assets, principally trade names, after the
qualitative assessments indicated it was more likely than not
that the carrying values exceeded the respective fair values.
Accordingly, we prepared quantitative assessments in both
years which also indicated that impairments existed. As a
result of these assessments, we recorded non-cash
impairment charges to reduce the carrying value of each asset
to its respective fair value. Fair values were determined using
a relief-from-royalty method. The impairments recorded were
principally a result of revenue projections which were lower
than expected. In 2014, the revised revenue projections were
also coupled with a decrease in royalty rates of comparable
arrangements thus negatively impacting our royalty
assumptions.
Other charges (gains): Other charges recorded by Media,
Digital and Corporate during 2016 include: a $4.7 million
impairment associated with a long-lived asset previously used
by Corporate and Media that is now held for sale, and
therefore, was written down to its estimated fair value (which
was determined using comparable market transactions); a
$6.2 million charge associated with an internally produced
program at our Media Segment; a $4.6 million lease exit
accrual at our Digital Segment; and a $1.4 million impairment
associated with a disposal of a long-lived asset at our Digital
Segment.
During the fourth quarter of 2015, we recorded a pre-tax
gain of $89.9 million ($54.9 million after tax) on the sale of our
corporate headquarters building. Other charges recorded at
our Media and Digital Segments during 2015 and 2014
primarily relate to facility consolidation plans which led us to
recognize charges associated with revising the useful lives of
certain assets over a shortened period as well as shutdown
costs.
NOTE 13
Other matters
Litigation: We are defendants in 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 these matters.
Commitments: The following table summarizes the
expected cash outflow related to our unconditional purchase
obligations that are not recorded on our balance sheet as of
December 31, 2016. Such obligations include future payments
related to operating leases, programming contracts and
purchase obligations.
In thousands of dollars
Operating
Leases
Program
Broadcast
Contracts
Purchase
Obligations
2017 . . . . . . . . . . . . . . . . . $
42,971 $
376,623 $
2018 . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . .
35,764
25,172
19,255
18,236
Thereafter. . . . . . . . . . . . .
117,111
431,104
336,191
210,960
535
944
70,881
53,043
15,460
10,387
8,557
6,352
Total . . . . . . . . . . . . . . . . . $
258,509 $ 1,356,357 $
164,680
Leases: Approximate future minimum annual rentals
payable under non-cancelable operating leases, primarily
relate to facilities and equipment, total $258.5 million. Total
minimum annual rentals have not been reduced for future
minimum sublease rentals aggregating $5.9 million. Total
rental expense reflected in 2016 was $46.4 million, $38.1
million in 2015 and $29.5 million in 2014.
Program broadcast contracts: We have $1.36 billion of
commitments under programming contracts that include
television station commitments to purchase programming to
be produced in future years. This also includes amounts
related to our network affiliation agreements.
Purchase obligations: We have commitments under
purchasing obligations totaling $164.7 million related to capital
projects, interactive marketing agreements, licensing fees and
other legally binding commitments. Amounts which we are
liable for under purchase orders outstanding at December 31,
2016, are reflected in the Consolidated Balance Sheet as
accounts payable and accrued liabilities and are excluded
from the $164.7 million.
64
Voluntary Retirement Program: During the first quarter of
NOTE 14
2016, we initiated a Voluntary Retirement Program (VRP)
within our Media Segment. Under the VRP, Media employees
meeting certain eligibility requirements were offered buyout
payments in exchange for voluntarily retiring. Eligible non-
union employees had until April 7, 2016, to retire under the
plan. During 2016, based on acceptances received, we
recorded $16.0 million of severance expense. Upon
separation, employees accepting the VRP received salary
continuation payments primarily based on years of service, the
majority of which will occur evenly over the 12-month period
following the separation date. As of December 31, 2016, we
had approximately $4.6 million of VRP buyout obligation
remaining.
Discontinued operations
On June 29, 2015, we completed the spin-off of our
publishing businesses, creating a new independent publicly
traded company, through the distribution of 98.5% of our
interest in Gannett to holders of our common shares. On June
29, 2015, each of our shareholders of record as of the close of
business on the record date of June 22, 2015, received one
share of Gannett common stock for every two shares of
TEGNA common stock held. Immediately following the
distribution, we owned 1.5% of Gannett’s outstanding common
shares. We will continue to own Gannett shares for a period of
time not to exceed five years after the distribution. In
conjunction with the spin-off of the publishing businesses, we
entered into a separation and distribution agreement with
Gannett and also entered into various other agreements to
effect the separation and provide a framework for a short term
set of transition services as well as a tax matters agreement
and an employee matters agreement.
During the fourth quarter of 2015, we sold our subsidiaries
Clipper Magazine (Clipper), a direct mail advertising magazine
business, and Mobestream Media (Mobestream), maker of a
mobile rewards/coupon platform, to Valassis Direct Mail, Inc.
On March 18, 2016, we sold Sightline Media (Sightline) to
Regent Companies LLC. Our Sightline business unit was
previously included within our Other Segment and was
classified as held for sale as of December 31, 2015. With the
sale of these businesses, we divested all the operations of our
Other Segment. Accordingly, we have presented the financial
condition and results of operations of the former Publishing
and Other Segments as discontinued operations.
65
Financial Statement Presentation
The former publishing businesses and Other Segment are
presented as discontinued operations in our Consolidated
Balance Sheet and the Consolidated Statement of Income. In
our Consolidated Statement of Cash Flows, the cash flows
from discontinued operations are not separately classified, but
supplemental cash flow information for these business units is
presented below.
The financial results of discontinued operations through
December 31, 2016, are presented as a profit (loss) from
discontinued operations, net of income taxes, on our
Consolidated Statements of Income. For earnings per share
information on discontinued operations, see Note 10.
Discontinued operations for 2016 are attributable to operations
of our Sightline business through the date of sale on March
18, 2016, while results for 2015 are comprised of the
operating results of both the Publishing Segment and Other
Segment. The table below presents the financial results of
discontinued operations for 2015 and 2014.
The following table presents the financial results of
discontinued operations:
The financial results reflected above may not represent our
Publishing and Other Segments stand-alone operating results,
as the results reported within income from discontinued
operations, net, include only certain costs that are directly
attributable to those businesses and exclude certain corporate
overhead costs that were previously allocated for each period.
In addition, the 2015 financial results include the pre-tax loss
of $26.3 million ($14.8 million after tax) on the disposal of our
Other Segment. The depreciation, amortization, capital
expenditures and significant cash investing items of the
discontinued operations were as follows:
In thousands
Year ended Dec. 31, 2015
Publishing
Other
Total
Depreciation . . . . . . . . . . . . . . . . . $
49,542 $
725 $
50,267
Amortization . . . . . . . . . . . . . . . . .
7,008
—
7,008
Capital expenditures . . . . . . . . . . .
(20,252)
(681)
(20,933)
Payments for acquisitions, net of
cash acquired . . . . . . . . . . . . . . . .
Payments for investments. . . . . . .
Proceeds from investments. . . . . .
(28,668)
(2,000)
12,402
—
—
—
(28,668)
(2,000)
12,402
In thousands
Year ended Dec. 31, 2015
Publishing
Other
Total
In thousands
Year ended Dec. 28, 2014
Publishing
Other
Total
Depreciation . . . . . . . . . . . . . . . . . $
99,029 $
973 $ 100,002
Amortization . . . . . . . . . . . . . . . . .
13,885
—
13,885
Capital expenditures . . . . . . . . . . .
(79,168)
(454)
(79,622)
Payments for acquisitions, net of
cash acquired . . . . . . . . . . . . . . . .
Payments for investments. . . . . . .
(113)
(2,500)
Proceeds from investments. . . . . .
18,629
—
—
—
(113)
(2,500)
18,629
Operating revenues . . . . . . . . . . . $ 1,400,006 $ 191,025 $1,591,031
Income (loss) from discontinued
operations, before income taxes . .
169,220
(36,068)
133,152
Provision for income taxes . . . . . .
43,735
(12,647)
31,088
Income (loss) from discontinued
operations, net of tax . . . . . . . . . .
125,485
(23,421)
102,064
In thousands
Year ended Dec. 28, 2014
Publishing
Other
Total
Operating revenues . . . . . . . . . . . $ 3,133,861 $ 248,172 $3,382,033
Income (loss) from discontinued
operations, before income taxes . .
372,549
(7,185)
365,364
Provision for income taxes . . . . . .
(11,817)
2,946
(8,871)
Income (loss) from discontinued
operations, net of tax . . . . . . . . . .
384,366
(10,131)
374,235
66
SELECTED FINANCIAL DATA (Unaudited)
(See notes below as well as 'a' and 'b' on page 68)
In thousands of dollars, except per share amounts
2016
Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,341,198
2,369,124
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
972,074
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-operating (expense) income
Equity (loss) income in unconsolidated investments, net . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-operating items (2) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations . . . . . . . . . . . . . . . . . . . .
Income from continuing operations attributable to
noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations attributable to TEGNA
Inc.
Income from continuing operations per share:
(7,170)
(232,013)
(20,439)
(259,622)
712,452
216,979
495,473
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(51,302)
444,171
basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other selected financial data
Dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-GAAP income from continuing operations per diluted
share (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted average number of common shares outstanding
in thousands:
2.05
2.02
0.56
2.33
2015
$ 3,050,945
2,137,787
913,158
Fiscal Year (1)
2014
$ 2,626,141
1,918,642
707,499
2013
$ 1,603,123
1,292,263
310,860
2012
$ 1,631,987
1,284,352
347,635
(5,064)
(273,629)
(11,529)
(290,222)
622,936
202,314
420,622
151,462
(272,668)
404,403
283,197
990,696
234,471
756,225
21,055
(174,818)
(45,279)
(199,042)
111,818
13,122
98,696
11,001
(148,974)
8,086
(129,887)
217,748
91,933
125,815
(63,164)
(68,289)
(57,233)
(50,727)
$
$
$
$
$
357,458
1.59
1.56
0.68
1.44
$
$
$
$
$
687,936
3.04
2.97
0.80
1.22
$
$
$
$
$
41,463
0.18
0.18
0.80
0.34
$
$
$
$
$
75,088
0.32
0.32
0.80
0.71
basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
216,358
219,681
224,688
229,721
226,292
231,907
228,541
234,189
232,327
236,690
Financial position and cash flow
Long-term debt, excluding current maturities (4) . . . . . . . . . . . . . $ 4,042,749
TEGNA Inc. Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . $ 2,271,418
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,542,725
588,633
Free cash flow (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
19.6%
Return on equity (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit ratios
Leverage ratio (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.89x
$ 4,169,016
$ 2,191,971
$ 8,505,958
532,464
$
16.9%
$ 4,488,028
$ 3,254,914
$11,242,195
697,186
$
35.7%
$ 3,707,010
$ 2,693,098
$ 9,240,706
401,081
$
15.4%
$ 1,432,100
$ 2,350,614
$ 6,379,886
664,866
$
18.1%
4.08x
2.96x
3.24x
1.41x
(1) Beginning with our 2015 fiscal year, we changed to a calendar year-end reporting cycle. All fiscal years prior to 2015 included 52 weeks, except for
2012 which included 53 weeks.
(2) Our income from other non-operating items in 2014 included a $476.7 million pre-tax non-cash gain ($285.9 million after-tax) primarily representing
the write-up of our prior 27% investment in Cars.com to fair value following our acquisition of the remaining 73% stake. See Note 3 of the
consolidated financial statements for further information.
(3) See page 25 for a reconciliation of income from continuing operations per share presented in accordance with GAAP.
(4) The increase in our long-term debt in 2014 and 2013 was primarily due to additional borrowings to fund the acquisitions of Cars.com and Belo in
2014 and 2013, respectively. See Note 3 of the consolidated financial statements for further information.
(5) See page 68 for a reconciliation of free cash flow to net cash flow from operating activities, which we believe is the most directly comparable
measure calculated and presented in accordance with GAAP.
(6) Calculated using income from continuing operations attributable to TEGNA Inc. plus earnings from discontinued operations.
(7) The leverage ratio is calculated in accordance with our revolving credit agreement and term loan agreement. Currently, we are required to maintain
a leverage ratio of less than 5.0x. These agreements are described more fully on page 28 in Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
67
NOTES TO SELECTED FINANCIAL DATA (Unaudited)
(a) We have made the significant acquisitions listed below during the period. The results of operations of these acquired businesses are
included in the accompanying financial information from the date of acquisition. See Note 3 of the consolidated financial statements for
further information on the acquisitions.
(b) During the period, we sold or otherwise disposed of substantially all of the assets or capital stock of certain other significant
subsidiaries and divisions of other subsidiaries, which are listed below. See Note 3 and Note 14 of the consolidated financial statements
for further information on the dispositions.
Acquisitions and dispositions occurring during 2016-2012 are shown below:
Acquisitions 2016-2012
Year
2016 Aurico Inc. (Aurico)
Name
DMR Holdings, Inc. (DealerRater)
Employee Benefit Specialists, Inc.
(d/b/a WORKTERRA)
2015 Textkernel
KGW, WHAS and KMSB
2014 Broadbean
London Broadcasting Company
Classified Ventures LLC (d/b/a
Cars.com)
SocialReferral B.V.
2013 Vietnam Online Network
Oil and Gas Job Search
Belo Corp.
2012 Ceviu
Top Language Jobs
BLiNQ Media, LLC
Mobestream Media
Economic Modeling Specialist Intl.
Rovion
Dispositions 2016-2012
Year
Name
2016 Cofactor (ShopLocal)
Sightline Media Group (Sightline)
2015 Gannett Healthcare Group
Gannett Co., Inc.
Clipper Magazine
Mobestream Media
PointRoll
2014 KMOV
KTVK/KASW
2013 Captivate Network, Inc.
Location
Arlington Heights, IL
Waltham, MA
Pleasanton, CA
Description of Business
Provider of background screening and drug testing
Automotive dealer review website
Cloud-based human capital management platform
Amsterdam
Portland, OR, Louisville,
KY and Tucson, AZ
London, United Kingdom
Abilene, Beaumont, Bryan,
Corpus Christi, Longview,
Port Arthur, San Angelo,
Sweetwater, Temple, Tyler,
Waco all in Texas
Chicago, IL
Netherlands
Vietnam
Manchester, England
Arizona, Idaho, Kentucky,
Louisiana, Missouri, North
Carolina, Oregon, Texas,
Virginia, Washington
Brazil
Europe
New York City, NY
Dallas, TX
Moscow, ID
Boston, MA
Software company providing semantic recruitment technology
Television stations
Global recruitment technology company
Television stations
Independent search site for car shoppers
Software to power employee referral programs utilizing social media
Recruitment services and human resource solutions for employers
Online recruitment catering to the oil and gas industry
Owner and operator of 20 television stations in 15 markets across
the U.S.
Information technology job board
Global online jobsite for multi-language jobs and candidates
Social engagement advertising solutions for agencies and brands
Developer of the Key Ring consumer rewards mobile platform
Economic software firm specializing in employment data/analysis
Self-service technology platform for rich media
Location
Chicago, IL
Springfield, VA
Hoffman Estates, IL
McLean, VA
Mountville, PA
Dallas, TX
King of Prussia, PA
St. Louis, MO
Phoenix, AZ
Chelmsford, MA
Description of Business
Marketing and database services company
Weekly and monthly periodicals
Provides continuing education, certification test preparation, online
recruitment, digital media, publications and related services for
nurses and other healthcare professionals
Multi-platform news and information company
Advertising and marketing solutions provider
Developer of the Key Ring consumer rewards mobile platform
Multi-screen digital ad tech and services company
Television station
Television stations
News and entertainment network
Free cash flow reconciliation
Our free cash flow, a non-GAAP liquidity measure, was $588.6 million for the year ended December 31, 2016, compared to $532.5
million for the same period in 2015. Our 2016 free cash flow was higher than 2015 due to the same factors affecting cash flow from
operating activities summarized within “Liquidity and capital resources” in Management’s Discussion and Analysis of Financial Condition
and Results of Operations. Free cash flow, which we reconcile to “Net cash flow from operating activities,” is cash flow from operating
activities reduced by “Purchase of property and equipment” (See page 23 for further description of our presentation of Non-GAAP
information). Free cash flow in 2015 includes approximately $26.7 million of operating cash flows generated by our former publishing
businesses which were spun off on June 29, 2015.
Reconciliations from “Net cash flow from operating activities” to “Free cash flow” follow:
In thousands of dollars
Net cash flow from operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 683,429 $ 651,231 $ 847,540 $
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Free cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 588,633 $ 532,464 $ 697,186 $
(150,354)
(118,767)
(94,796)
2014
2015
2016
2013
511,488 $
(110,407)
401,081 $
2012
756,740
(91,874)
664,866
68
QUARTERLY STATEMENTS OF INCOME (Unaudited)
In thousands of dollars, except per share amounts
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 781,732
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
201,919
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103,410
Net loss from discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to TEGNA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7,474)
(10,492)
85,444
First(1)
Second(2)
$ 811,785
226,594
114,385
—
(14,934)
99,451
Net income per share—basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income per share—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.39
0.38
$
$
0.46
0.45
$
$
2016 Quarters
Third (3)
$ 860,265
Fourth(4)
$ 887,416
279,789
144,243
—
(11,124)
133,119
Total
$ 3,341,198
972,074
495,473
(7,474)
(51,302)
436,697
$
$
0.62
0.61
$
$
2.02
1.99
263,772
133,435
—
(14,752)
118,683
0.55
0.54
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 731,491
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
182,472
84,002
43,481
First(6)
Second(7)
$ 756,672
185,689
54,156
77,337
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(14,590)
(15,624)
Net income attributable to TEGNA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income per share—basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
112,893
0.50
Net income per share—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.49
115,869
0.51
0.50
$
$
2015 Quarters(5)
Third
$ 757,518
218,102
111,059
Fourth(8)
$ 805,264
326,895
171,405
(5,317)
(13,437)
(17,487)
88,255
(15,463)
142,505
Total
$ 3,050,945
913,158
420,622
102,064
(63,164)
459,522
$
$
0.39
0.38
$
$
0.65
0.63
$
$
2.04
2.00
1) Results for the first quarter of 2016 include special items affecting operating income. Special items primarily related to workforce restructuring totaled $7.9 million
($4.8 million after-tax or $0.02 per share).
2) Results for the second quarter of 2016 include special items affecting operating income. Special items primarily related to non-cash impairments on certain long-
lived assets and workforce restructuring totaled $10.6 million ($6.5 million after-tax or $0.03 per share).
3) Results for the third quarter of 2016 include special items affecting operating income. Special items related to a non-cash goodwill impairment and workforce
restructuring charges totaled $18.3 million ($11.1 million after-tax or $0.05 per share). Refer to Notes 4 and 12 of our consolidated financial statements for more
information on the goodwill impairment charge.
4) Results for the fourth quarter of 2016 include special items affecting operating income. Special items consisting of non-cash asset impairments and workforce
restructuring totaled $18.7 million ($11.7 million after-tax or $0.05 per share).
5) Beginning with our 2015 fiscal year, we changed our financial reporting cycle to a calendar year-end reporting cycle and an end-of-month quarterly reporting
cycle. Accordingly, effective starting in the fourth quarter of 2015, our 2015 fourth quarter included the period from September 28, 2015 through Dec. 31, 2015.
6) Results for the first quarter of 2015 include special items affecting operating income. Special items primarily related to transformation costs and accelerated
depreciation on certain assets, totaled $5.9 million ($3.7 million after-tax or $0.02 per share) which was offset by a $12.7 million gain ($7.9 million after tax or
$0.03 per share) from the sale of a building.
7) Results for the second quarter of 2015 include special items affecting operating income. Special items primarily related to non-cash impairments on certain
intangibles totaled $13.7 million ($8.6 million after-tax or $0.04 per share). Refer to Notes 4 and 12 of our consolidated financial statements for more information
on impairment of intangible assets.
8) Results for the fourth quarter of 2015 include special items affecting operating income. Special items consisting primarily of non-cash asset impairments and
workforce restructuring totaled $19.0 million ($14.2 million after-tax or $0.06 per share) which was offset by an $89.9 million gain ($54.9 million after-tax or $0.24
per share) from the sale of our corporate office building.
69
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure
Controls and Procedures
Under the supervision and with the participation of our
management, including our principal executive officer and
principal financial officer, we conducted an evaluation of our
disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (the Exchange Act).
Based on this evaluation, our principal executive officer and
our principal financial officer concluded that our disclosure
controls and procedures were effective as of the end of the
period covered by this annual report.
Management’s Report on Internal Control Over Financial
Reporting
Our management is responsible for establishing and
maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act Rule 13a-15(f). Under
the supervision and with the participation of our management,
including our principal executive officer and principal financial
officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the
framework in Internal Control - Integrated Framework (2013
framework) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our
evaluation, our management concluded that our internal
control over financial reporting was effective as of December
31, 2016.
The effectiveness of our internal control over financial
reporting as of December 31, 2016, has been audited by
Ernst & Young LLP, an independent registered public
accounting firm, as stated in its report which is included
elsewhere in this item.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over
financial reporting that occurred during our fiscal quarter
ended December 31, 2016, that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting.
70
In our opinion, TEGNA Inc. maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2016, based on the COSO criteria.
We also have audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United
States), the 2016 consolidated financial statements of
TEGNA Inc. and our report dated February 27, 2017
expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
McLean, Virginia
February 27, 2017
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders of TEGNA Inc.:
We have audited TEGNA Inc.’s internal control over
financial reporting as of December 31, 2016, based on criteria
established in Internal Control-Integrated Framework issued
by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria).
TEGNA Inc.’s management is responsible for maintaining
effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the
company’s internal control over financial reporting based on
our audit.
We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our
opinion.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
71
PART III
ITEM 11. EXECUTIVE COMPENSATION
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
The information captioned “Your Board of Directors,”
“Information about Directors,” “Committees of the Board of
Directors,” “Committee Charters” and “Ethics Policy” under the
heading “PROPOSAL 1 – ELECTION OF DIRECTORS” and
the information under “SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE” in our 2017 proxy
statement is incorporated herein by reference.
William A. Behan
Senior Vice President, Labor Relations (2010-present).
Age 58.
Victoria D. Harker
Executive Vice President and Chief Financial Officer (June
2015-present). Formerly: Chief Financial Officer (2012-2015),
Executive Vice President, Chief Financial Officer and
President of Global Business Services, AES Corporation
(2006-2012). Age 52.
David T. Lougee
President, TEGNA Media (July 2007-present). Age 58.
Gracia C. Martore
President and Chief Executive Officer (October 2011-present).
Age 65.
Todd A. Mayman
Executive Vice President, Chief Legal and Administrative
Officer (June 2015 - present). Formerly: Senior Vice
President, General Counsel and Secretary (2009-2015).
Age 57.
The information captioned “EXECUTIVE COMPENSATION,”
“DIRECTOR COMPENSATION,” “OUTSTANDING
DIRECTOR EQUITY AWARDS AT FISCAL YEAR-END” AND
“PROPOSAL 1–ELECTION OF DIRECTORS – Compensation
Committee Interlocks and Insider Participation; Related
Transactions” in our 2017 proxy statement is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information captioned “EQUITY COMPENSATION PLAN
INFORMATION” and “SECURITIES BENEFICIALLY OWNED
BY DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL
SHAREHOLDERS” in our 2017 proxy statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information captioned “Director Independence” and
“Compensation Committee Interlocks and Insider
Participation; Related Transactions” under the heading
“PROPOSAL 1 – ELECTION OF DIRECTORS” in our 2017
proxy statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information captioned “PROPOSAL 1 – ELECTION OF
DIRECTORS – Report of the Audit Committee” in our 2017
proxy statement is incorporated herein by reference.
PART IV
John A. Williams
President, TEGNA Digital (January 2008-present). Age 66.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
(a) Financial Statements, Financial Statement Schedules and
Exhibits.
(1) Financial Statements.
As listed in the Index to Financial Statements and
Supplementary Data on page 33.
(2) Financial Statement Schedules.
All schedules are omitted as the required information is not
applicable or the information is presented in the consolidated
financial statements or related notes.
(3) Exhibits.
See Exhibit Index on pages 74-80 for list of exhibits filed
with this Form 10-K. Management contracts and
compensatory plans or arrangements are identified with
asterisks on the Exhibit Index.
ITEM 16. FORM 10-K SUMMARY
None.
72
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Dated: February 27, 2017 /s/ Jennifer Dulski
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 27, 2017 TEGNA Inc. (Registrant)
Jennifer Dulski, Director
Dated: February 27, 2017 /s/ Howard D. Elias
Howard D. Elias, Director
By:
/s/ Victoria D. Harker
Dated: February 27, 2017 /s/ Lidia Fonseca
Victoria D. Harker,
Executive Vice President and
Chief Financial Officer
(principal financial officer)
Lidia Fonseca, Director
Dated: February 27, 2017 /s/ Jill Greenthal
Jill Greenthal, Director
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant in the capacities
and on the dates indicated.
Dated: February 27, 2017 /s/ Marjorie Magner
Marjorie Magner, Director, Chairman
Dated: February 27, 2017
/s/ Gracia C. Martore
Gracia C. Martore,
President and Chief Executive
Officer
(principal executive officer)
Dated: February 27, 2017 /s/ Gracia C. Martore
Gracia C. Martore, Director
Dated: February 27, 2017 /s/ Scott K. McCune
Scott K. McCune, Director
Dated: February 27, 2017
/s/ Victoria D. Harker
Dated: February 27, 2017 /s/ Henry W. McGee
Victoria D. Harker,
Executive Vice President and
Chief Financial Officer
(principal financial officer)
Dated: February 27, 2017
/s/ Clifton A. McClelland III
Clifton A. McClelland III
Vice President and Controller
(principal accounting officer)
Henry W. McGee, Director
Dated: February 27, 2017 /s/ Susan Ness
Susan Ness, Director
Dated: February 27, 2017 /s/ Bruce P. Nolop
Bruce P. Nolop, Director
Dated: February 27, 2017 /s/ Neal Shapiro
Neal Shapiro, Director
73
EXHIBIT INDEX
Exhibit
Number
Exhibit
Location
3-1
Third Restated Certificate of Incorporation of TEGNA Inc.
Incorporated by reference to Exhibit 3-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended April 1, 2007.
3-1-1
3-1-2
3-2
4-1
4-2
4-3
4-4
4-5
4-6
4-7
4-8
4-9
10-1
10-1-1
10-1-2
10-1-3
10-2
10-2-1
10-2-2
Amendment to Third Restated Certificate of Incorporation of
TEGNA Inc.
Incorporated by reference to Exhibit 3-1 to TEGNA Inc.’s
Form 8-K filed on May 1, 2015.
Amendment to Third Restated Certificate of Incorporation of
TEGNA Inc.
Incorporated by reference to Exhibit 3-1 to TEGNA Inc.’s
Form 8-K filed on July 2, 2015.
By-laws, as amended through December 8, 2015.
Incorporated by reference to Exhibit 3-2 to TEGNA Inc.’s
Form 8-K filed on December 11, 2015.
Indenture dated as of March 1, 1983, between TEGNA Inc.
and Citibank, N.A., as Trustee.
Incorporated by reference to Exhibit 4-2 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 29, 1985.
First Supplemental Indenture dated as of November 5,
1986, among TEGNA Inc., Citibank, N.A., as Trustee, and
Sovran Bank, N.A., as Successor Trustee.
Second Supplemental Indenture dated as of June 1, 1995,
among TEGNA Inc., NationsBank, N.A., as Trustee, and
Crestar Bank, as Trustee.
Third Supplemental Indenture, dated as of March 14, 2002,
between TEGNA Inc. and Wells Fargo Bank Minnesota,
N.A., as Trustee.
Fourth Supplemental Indenture, dated as of June 16, 2005,
between TEGNA Inc. and Wells Fargo Bank Minnesota,
N.A., as Trustee.
Fifth Supplemental Indenture, dated as of May 26, 2006,
between TEGNA Inc. and Wells Fargo Bank, N.A., as
Trustee.
Sixth Supplemental Indenture, dated as of June 29, 2007,
between TEGNA Inc. and Wells Fargo Bank, N.A., as
Successor Trustee.
Eleventh Supplemental Indenture, dated as of October 3,
2013, between TEGNA Inc. and U.S. Bank National
Association as Trustee.
Incorporated by reference to Exhibit 4 to TEGNA Inc.’s Form
8-K filed on November 9, 1986.
Incorporated by reference to Exhibit 4 to TEGNA Inc.’s Form
8-K filed on June 15, 1995.
Incorporated by reference to Exhibit 4-16 to TEGNA Inc.’s
Form 8-K filed on March 14, 2002.
Incorporated by reference to Exhibit 4-5 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 26, 2005.
Incorporated by reference to Exhibit 4-5 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 25, 2006.
Incorporated by reference to Exhibit 4-5 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended July 1, 2007.
Incorporated by reference to Exhibit 4-8 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 29, 2013.
Specimen Certificate for TEGNA Inc.’s common stock, par
value $1.00 per share.
Incorporated by reference to Exhibit 2 to TEGNA Inc.’s Form
8-B filed on June 14, 1972.
Supplemental Executive Medical Plan Amended and
Restated as of January 1, 2011.*
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 26, 2010.
Amendment No. 1 to the Supplemental Executive Medical
Plan Amended and Restated as of January 1, 2012.*
Incorporated by reference to Exhibit 10-1-1 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 30, 2012.
Amendment No. 2 to the TEGNA Inc. Supplemental
Executive Medical Plan dated as of June 26, 2015.*
Incorporated by reference to Exhibit 10-6 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
Amendment No. 3 to the TEGNA Inc. Supplemental
Executive Medical Plan effective as of November 1, 2016.*
Attached.
Supplemental Executive Medical Plan for Retired
Executives dated December 22, 2010 and effective January
1, 2011.*
Incorporated by reference to Exhibit 10-2-1 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 26, 2010.
Amendment No. 1 to the TEGNA Inc. Supplemental
Executive Medical Plan for Retired Executives dated as of
June 26, 2015.*
Incorporated by reference to Exhibit 10-7 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
Amendment No. 2 to the TEGNA Inc. Supplemental
Executive Medical Plan for Retired Executives effective as
of November 1, 2016.*
Attached.
74
10-3
TEGNA Inc. Supplemental Retirement Plan Restatement.*
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 30, 2007.
10-3-1
10-3-2
10-3-3
10-4
10-4-1
10-4-2
10-4-3
10-4-4
10-4-5
10-4-6
10-4-7
10-5
Amendment No. 1 to the TEGNA Inc. Supplemental
Retirement Plan dated July 31, 2008 and effective August 1,
2008.*
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 28, 2008.
Amendment No. 2 to the TEGNA Inc. Supplemental
Retirement Plan dated December 22, 2010.*
Incorporated by reference to Exhibit 10-3-2 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 26, 2010.
Amendment No. 3 to the TEGNA Inc. Supplemental
Retirement Plan dated as of June 26, 2015.
Incorporated by reference to Exhibit 10-8 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
TEGNA Inc. Deferred Compensation Plan Restatement
dated February 1, 2003 (reflects all amendments through
July 25, 2006).*
Incorporated by reference to Exhibit 10-4 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 31, 2006.
TEGNA Inc. Deferred Compensation Plan Rules for
Post-2004 Deferrals.*
Incorporated by reference to Exhibit 10-3 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended July 1, 2007.
Amendment No. 1 to the TEGNA Inc. Deferred
Compensation Plan Rules for Post-2004 Deferrals dated
July 31, 2008 and effective August 1, 2008.*
Amendment No. 2 to the TEGNA Inc. Deferred
Compensation Plan Rules for Post-2004 Deferrals dated
December 9, 2008.*
Amendment No. 3 to the TEGNA Inc. Deferred
Compensation Plan Rules for Post-2004 Deferrals dated
October 27, 2009.*
Amendment No. 4 to the TEGNA Inc. Deferred
Compensation Plan Rules for Post-2004 Deferrals dated
December 22, 2010.*
Amendment No. 5 to the TEGNA Inc. Deferred
Compensation Plan Rules for Post-2004 Deferrals dated as
of June 26, 2015.*
Amendment No. 6 to the TEGNA Inc. Deferred
Compensation Plan Rues for Post-2004 Deferrals dated as
of December 8, 2015.*
Amendment to the TEGNA Inc. Deferred Compensation
Plan Restatement Rules for Pre-2005 Deferrals dated as of
June 26, 2015.*
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 28, 2008.
Incorporated by reference to Exhibit 10-4-3 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 28, 2008.
Incorporated by reference to Exhibit 10-4-4 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 27, 2009.
Incorporated by reference to Exhibit 10-4-5 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 26, 2010.
Incorporated by reference to Exhibit 10-10 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
Incorporated by reference to Exhibit 10-4-7 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 31, 2015.
Incorporated by reference to Exhibit 10-9 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
10-6
TEGNA Inc. Transitional Compensation Plan Restatement.*
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 30, 2007.
10-6-1
10-6-2
10-6-3
10-6-4
10-7
10-7-1
Amendment No. 1 to TEGNA Inc. Transitional
Compensation Plan Restatement dated as of May 4, 2010.*
Incorporated by reference to Exhibit 10-3 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended March 28, 2010.
Amendment No. 2 to TEGNA Inc. Transitional
Compensation Plan Restatement dated as of December 22,
2010.*
Incorporated by reference to Exhibit 10-5-2 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 26, 2010.
Amendment No. 3 to TEGNA Inc. Transitional
Compensation Plan Restatement dated as of June 26,
2015.*
Incorporated by reference to Exhibit 10-11 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
Notice to Transitional Compensation Plan Restatement
Participants.*
Incorporated by reference to Exhibit 10-6-4 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 31, 2015.
TEGNA Inc. 2001 Omnibus Incentive Compensation Plan,
as amended and restated as of May 4, 2010.*
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended March 28, 2010.
Amendment No. 1 to the TEGNA Inc. 2001 Omnibus
Incentive Compensation Plan (Amended and Restated as of
May 4, 2010).*
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 8-K filed on February 25, 2015.
75
10-7-2
10-7-3
10-7-4
Amendment No. 2 to the TEGNA Inc. 2001 Omnibus
Incentive Compensation Plan (Amended and Restated as of
May 4, 2010) dated as of June 26, 2015.*
Incorporated by reference to Exhibit 10-12 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
Amendment No. 3 to the TEGNA Inc. 2001 Omnibus
Incentive Compensation Plan (Amended and Restated as of
May 4, 2010) dated as of February 23, 2016.*
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 8-K filed on February 26, 2016.
Amendment No. 4 to the TEGNA Inc. 2001 Omnibus
Incentive Compensation Plan (Amended and Restated as of
May 4, 2010) effective as of November 1, 2016.*
Attached.
10-7-5
Form of Director Stock Option Award Agreement.*
10-7-6
Form of Director Restricted Stock Unit Award Agreement.*
10-7-7
Form of Director Restricted Stock Unit Award Agreement.*
10-7-8
Form of Director Restricted Stock Unit Award Agreement.*
10-7-9
Form of Executive Officer Stock Option Award Agreement.*
Incorporated by reference to Exhibit 10-7-3 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 30, 2007.
Incorporated by reference to Exhibit 10-6-9 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 28, 2014.
Incorporated by reference to Exhibit 10-20 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 27, 2015.
Incorporated by reference to Exhibit 10-3-1 to TEGNA Inc.’s
Form 8-K filed on December 11, 2015.
Incorporated by reference to Exhibit 10-6-5 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 28, 2008.
Form of Executive Officer Restricted Stock Unit Award
Agreement.*
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended March 31, 2013.
Form of Executive Officer Restricted Stock Unit Award
Agreement.*
Incorporated by reference to Exhibit 10-6-10 to TEGNA
Inc.’s Form 10-K for the fiscal year ended December 28,
2014.
Form of Executive Officer Restricted Stock Unit Award
Agreement.*
Incorporated by reference to Exhibit 10-21 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 27, 2015.
Form of Executive Officer Restricted Stock Unit Award
Agreement.*
Incorporated by reference to Exhibit 10-3-2 to TEGNA Inc.’s
Form 8-K filed on December 11, 2015.
Form of Executive Officer Performance Share Award
Agreement.*
Incorporated by reference to Exhibit 10-6-8 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 29, 2013.
10-7-10
10-7-11
10-7-12
10-7-13
10-7-14
10-7-15
Form of Executive Officer Performance Share Award
Agreement. *
10-7-16
Form of Executive Officer Performance Share Award
Agreement.*
Incorporated by reference to Exhibit 10-6-11 to TEGNA
Inc.’s Form 10-K for the fiscal year ended December 28,
2014.
Incorporated by reference to Exhibit 10-6-11 to TEGNA
Inc.’s Form 10-Q for the fiscal quarter ended March 29,
2015.
10-7-17
Form of Executive Officer Performance Share Award
Agreement.*
Incorporated by reference to Exhibit 10-3-3 to TEGNA Inc.’s
Form 8-K filed on December 11, 2015.
76
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 29, 2013.
10-8
Amendment and Restatement Agreement, dated as of
August 5, 2013, to each of (i) the Amended and Restated
Competitive Advance and Revolving Credit Agreement,
dated as of March 11, 2002 and effective as of March 18,
2002, as amended and restated as of December 13, 2004
and effective as of January 5, 2005, as amended by the
First Amendment thereto, dated as of February 28, 2007
and effective as of March 15, 2007, as further amended by
the Second Amendment thereto, dated as of October 23,
2008 and effective as of October 31, 2008, as further
amended by the Third Amendment thereto, dated as of
September 28, 2009, as further amended by the Fourth
Amendment thereto, dated as of August 25, 2010 and as
further amended by the Fifth Amendment and Waiver, dated
as of September 30, 2010 (the “2002 Credit Agreement”),
among TEGNA Inc., a Delaware corporation (“TEGNA”), the
several banks and other financial institutions from time to
time parties to the Credit Agreement (the “2002 Lenders”),
JPMorgan Chase Bank, N.A., as administrative agent (in
such capacity, the “2002 Administrative Agent”), JPMorgan
Chase Bank, N.A. and Citibank, N.A., as syndication agents,
and Barclays Bank PLC, as documentation agent, (ii) the
Competitive Advance and Revolving Credit Agreement,
dated as of February 27, 2004 and effective as of March 15,
2004, as amended by the First Amendment thereto, dated
as of February 28, 2007 and effective as of March 15, 2007,
as further amended by the Second Amendment thereto,
dated as of October 23, 2008 and effective as of October
31, 2008, as further amended by the Third Amendment
thereto, dated as of September 28, 2009, as further
amended by the Fourth Amendment thereto, dated as of
August 25, 2010, and as further amended by the Fifth
Amendment and Waiver, dated as of September 30, 2010
(the “2004 Credit Agreement”), among TEGNA, the several
banks and other financial institutions from time to time
parties to the Credit Agreement (the “2004 Lenders”),
JPMorgan Chase Bank, N.A., as administrative agent (in
such capacity, the “Administrative Agent”), JPMorgan Chase
Bank, N.A. and Citibank, N.A., as syndication agents, and
Barclays Bank PLC and SunTrust Bank, as documentation
agents and (iii) the Competitive Advance and Revolving
Credit Agreement, dated as of December 13, 2004 and
effective as of January 5, 2005, as amended by the First
Amendment thereto, dated as of February 28, 2007 and
effective as of March 15, 2007, as further amended by the
Second Amendment thereto, dated as of October 23, 2008
and effective as of October 31, 2008, as further amended by
the Third Amendment thereto, dated as of September 28,
2009, as further amended by the Fourth Amendment
thereto, dated as of August 25, 2010 and as further
amended by the Fifth Amendment and Waiver, dated as of
September 30, 2010 (the “2005 Credit Agreement” and,
together with the 2002 Credit Agreement and the 2004
Credit Agreement, the “Credit Agreements”), among
TEGNA, the several banks and other financial institutions
from time to time parties to the Credit Agreement (the “2005
Lenders” and, together with the 2002 Lenders and the 2004
Lenders, the “Lenders”), JPMorgan Chase Bank, N.A., as
administrative agent (in such capacity, the “2005
Administrative Agent” and, together with the 2002
Administrative Agent and the 2004 Administrative Agent, the
“Administrative Agent”), JPMorgan Chase Bank, N.A. and
Citibank, N.A., as syndication agents, and Barclays Bank
PLC, as documentation agent, by and between TEGNA, the
Guarantors under the Credit Agreements as of the date
hereof, the Administrative Agent, JPMorgan Chase Bank,
N.A. and Bank of America, N.A., as issuing lenders and the
Lenders party thereto.
77
10-9
10-10
10-11
10-12
10-13
10-14
10-15
10-15-1
Master Assignment and Assumption, dated as of August 5,
2013, by and between each of the lenders listed thereon as
assignors and/or assignees.
Amended and Restated Competitive Advance and
Revolving Credit Agreement, dated as of August 5, 2013, by
and among TEGNA Inc., the several banks and other
financial institutions from time to time parties thereto,
JPMorgan Chase Bank, N.A., as administrative agent, and
JPMorgan Chase Bank, N.A. and Citibank, N.A. as
syndication agents.
Sixth Amendment, dated as of September 24, 2013, to the
Competitive Advance and Revolving Credit Agreement,
dated as of December 13, 2004 and effective as of January
5, 2005, as amended by the First Amendment thereto, dated
as of February 28, 2007 and effective as of March 15, 2007,
as further amended by the Second Amendment thereto,
dated as of October 23, 2008 and effective as of October
31, 2008, as further amended by the Third Amendment
thereto, dated as of September 28, 2009, as further
amended by the Fourth Amendment thereto, dated as of
August 25, 2010, as further amended by the Fifth
Amendment and Waiver, dated as of September 30, 2010,
and as further amended and restated pursuant to the
Amended and Restated Competitive Advance and
Revolving Credit Agreement, dated as of August 5, 2013, by
and among TEGNA Inc., JPMorgan Chase Bank, N.A., as
administrative agent, and the several banks and other
financial institutions from time to time parties thereto.
Seventh Amendment, dated as of February 13, 2015, to the
Competitive Advance and Revolving Credit Agreement,
dated as of December 13, 2004 and effective as of January
5, 2005, as amended and restated as of August 5, 2013 and
as further amended by the Sixth Amendment thereto, dated
as of September 24, 2013, among TEGNA Inc., JPMorgan
Chase Bank, N.A., as administrative agent, and the several
banks and other financial institutions from time to time
parties.
Eighth Amendment, dated as of June 29, 2015, to the
Amended and Restated Competitive Advance and
Revolving Credit Agreement, dated as of December 13,
2004 and effective as of January 5, 2005, as amended and
restated as of August 5, 2013, and as further amended by
the Seventh Amendment thereto dated as of February 13,
2015, and the Sixth Amendment thereto dated September
24, 2013, among TEGNA Inc., JPMorgan Chase Bank N.A.,
as administrative agent, and the several banks and other
financial institutions from time to time parties thereto, as set
forth on Exhibit A to the Eight Amendment.
Ninth Amendment, dated as of September 30, 2016, to the
Amended and Restated Competitive Advance and
Revolving Credit Agreement, dated as of December 13,
2004 and effective as of January 5, 2005, as amended and
restated as of August 5, 2013, and as further amended by
the Eighth Amendment thereto, dated as of June 29, 2015,
the Seventh Amendment thereto, dated as of February 13,
2015, and the Sixth Amendment thereto, dated as of
September 24, 2013, among TEGNA Inc., JPMorgan Chase
Bank, N.A., as administrative agent, and the several banks
and other financial institutions from time to time parties
thereto, as set forth on Exhibit A, to the Ninth Amendment.
Increased Facility Activation Notice, dated September 25,
2013, pursuant to the Amended and Restated Competitive
Advance and Revolving Credit Agreement, dated as of
August 5, 2013, by and among TEGNA Inc., JPMorgan
Chase Bank N.A., as administrative agent, and the several
banks and other financial institutions from time to time
parties thereto.
Increased Facility Activation Notice, dated May 5, 2014,
pursuant to the Amended and Restated Competitive
Advance and Revolving Credit Agreement, dated as of
August 5, 2013, by and among TEGNA Inc., JP Morgan
Chase Bank, N.A., as administrative agent, and the several
banks and other financial institutions from time to time
parties thereto.
78
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 29, 2013.
Incorporated by reference to Exhibit 10-3 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 29, 2013.
Incorporated by reference to Exhibit 10-4 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 29, 2013.
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended March 29, 2015.
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 30, 2016.
Incorporated by reference to Exhibit 10-5 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 29, 2013.
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 29, 2014.
10-15-2
10-15-3
10-16
10-16-1
10-17
10-17-1
10-17-2
10-18
10-19
Increased Facility Activation Notice, dated as of September
23, 2015, pursuant to the Amended and Restated
Competitive Advance and Revolving Credit Agreement,
dated as of August 5, 2013, as amended, by and among
TEGNA Inc., JPMorgan Chase Bank N.A., as administrative
agent, and the several banks and other financial institutions
from time to time parties thereto.
Increased Facility Activation Notice, dated as of September
26, 2016, pursuant to the Amended and Restated
Competitive Advance and Revolving Credit Agreement,
dated as of August 5, 2013, as amended, by and among
TEGNA Inc., JPMorgan Chase Bank N.A., as administrative
agent, and the several banks and other financial institutions
from time to time parties thereto.
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 27, 2015.
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 30, 2016.
Description of TEGNA Inc.’s Non-Employee Director
Compensation.*
Incorporated by reference to Exhibit 10-4 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended March 29, 2015.
Description of TEGNA Inc.’s Non-Employee Director
Compensation.*
Incorporated by reference to Exhibit 10-15 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
Employment Agreement dated February 27, 2007, between
TEGNA Inc. and Gracia C. Martore.*
Incorporated by reference to Exhibit 10-15 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 31, 2006.
Amendment, dated as of August 7, 2007, to Employment
Agreement dated February 27, 2007.*
Incorporated by reference to Exhibit 10-5 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended July 1, 2007.
Amendment, dated as of December 24, 2010, to
Employment Agreement dated February 27, 2007.*
Incorporated by reference to Exhibit 10-14-2 to TEGNA
Inc.’s Form 10-K for the year ended December 26, 2010.
Amendment for Section 409A Plans dated December 31,
2008.*
Incorporated by reference to Exhibit 10-14 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 28, 2008.
Executive Life Insurance Plan document dated December
31, 2008.*
Incorporated by reference to Exhibit 10-15 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 28, 2008.
10-19-1
Amendment No. 1 to the TEGNA Inc. Executive Life
Insurance Plan Document dated as of June 26, 2015.*
Incorporated by reference to Exhibit 10-13 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
10-20
Key Executive Life Insurance Plan dated October 29, 2010.*
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 26, 2010.
10-20-1
Amendment No. 1 to the TEGNA Inc. Key Executive Life
Insurance Plan dated as of June 26, 2015.*
Incorporated by reference to Exhibit 10-14 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended June 28, 2015.
10-21
10-22
10-23
10-24
10-25
Form of Participation Agreement under Key Executive Life
Insurance Plan.*
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.’s
Form 10-Q for the fiscal quarter ended September 26, 2010.
Omnibus Amendment to Terms and Conditions of Restricted
Stock Awards dated as of December 31, 2008.*
Incorporated by reference to Exhibit 10-17 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 28, 2008.
Omnibus Amendment to Terms and Conditions of Stock Unit
Awards dated as of December 31, 2008.*
Incorporated by reference to Exhibit 10-18 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 28, 2008.
Omnibus Amendment to Terms and Conditions of Stock
Option Awards dated as of December 31, 2008.*
Incorporated by reference to Exhibit 10-19 to TEGNA Inc.’s
Form 10-K for the fiscal year ended December 28, 2008.
Omnibus Amendment to Outstanding Award Agreements of
Certain Executives effective as of November 1, 2016.*
Attached.
10-26
TEGNA Inc. 2015 Change in Control Severance Plan.*
10-27
TEGNA Inc. Executive Severance Plan.*
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.'s
Form 8-K filed on December 11, 2015.
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.'s
Form 8-K filed on December 11, 2015.
10-28
10-29
10-30
Letter Agreement dated as of March 1, 2015, by and among
the Icahn Group and TEGNA Inc.
Incorporated by reference to Exhibit 99-2 to TEGNA Inc.'s
Form 8-K filed on March 2, 2015.
Voting and Proxy Agreement, dated as of October 15, 2015,
by and among the Icahn Group and TEGNA Inc.
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.'s
Form 8-K filed on October 16, 2015.
Purchase and Sale Agreement, dated as of June 24, 2015,
by and between GTMP Holdings, LLC and Tamares Tysons
Corner LLC.
Incorporated by reference to Exhibit 10-3 to TEGNA Inc.'s
Form 10-Q for the fiscal quarter ended September 27, 2015.
79
10-30-1
10-30-2
10-31
10-32
10-33
10-34
21
23
31-1
31-2
32-1
32-2
101
First Amendment to Purchase and Sale Agreement, dated
as of July 2, 2015, by and between GTMP Holdings, LLC
and Tamares Tysons Corner LLC.
Incorporated by reference to Exhibit 10-4 to TEGNA Inc.'s
Form 10-Q for the fiscal quarter ended September 27, 2015.
Second Amendment to Purchase and Sale Agreement,
dated as of July 14, 2015, by and between GTMP Holdings,
LLC and Tamares Tysons Corner LLC.
Incorporated by reference to Exhibit 10-5 to TEGNA Inc.'s
Form 10-Q for the fiscal quarter ended September 27, 2015.
Separation and Distribution Agreement, dated as of June
26, 2015, by and between TEGNA Inc. and Gannett Co.,
Inc., formerly known as Gannett SpinCo., Inc.
Incorporated by reference to Exhibit 2-1 to TEGNA Inc.'s
Form 8-K filed on July 2, 2015.
Transition Services Agreement dated as of June 26, 2015,
by and between TEGNA Inc. and Gannett Co., Inc., formerly
known as Gannett SpinCo., Inc.
Incorporated by reference to Exhibit 10-1 to TEGNA Inc.'s
Form 8-K filed on July 2, 2015.
Tax Matters Agreement, dated as of June 26, 2015, by and
between TEGNA Inc. and Gannett Co., Inc., formerly known
as Gannett SpinCo., Inc.
Incorporated by reference to Exhibit 10-2 to TEGNA Inc.'s
Form 8-K filed on July 2, 2015.
Employee Matters Agreement, dated as of June 26, 2015,
by and between TEGNA Inc. and Gannett Co., Inc., formerly
known as Gannett SpinCo., Inc.
Incorporated by reference to Exhibit 10-3 to TEGNA Inc.'s
Form 8-K filed on July 2, 2015.
Subsidiaries of TEGNA Inc.
Attached.
Consent of Independent Registered Public Accounting Firm.
Attached.
Attached.
Attached.
Attached.
Attached.
Attached.
Certification Pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.
Certification Pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.
Section 1350 Certification.
Section 1350 Certification.
The following financial information from TEGNA Inc. Annual
Report on Form 10-K for the year ended December 31,
2016, formatted in XBRL includes: (i) Consolidated Balance
Sheets at December 31, 2016 and December 31, 2015, (ii)
Consolidated Statements of Income for the 2016, 2015 and
2014 fiscal years, (iii) Consolidated Statements of
Comprehensive Income for the 2016, 2015 and 2014 fiscal
years, (iv) Consolidated Cash Flow Statements for the 2016,
2015 and 2014 fiscal years; (v) Consolidated Statements of
Equity for the 2016, 2015 and 2014 fiscal years; and (vi) the
Notes to Consolidated Financial Statements.
For purposes of the incorporation by reference of documents as Exhibits, all references to Form 10-K, 10-Q and 8-K of TEGNA Inc. refer to
Forms 10-K, 10-Q and 8-K filed with the Commission under Commission file number 1-6961.
We agree to furnish to the Commission, upon request, a copy of each agreement with respect to long-term debt not filed herewith in reliance
upon the exemption from filing applicable to any series of debt which does not exceed 10% of our total consolidated assets.
* Asterisks identify management contracts and compensatory plans or arrangements.
80
Shareholder
Services
TEGNA STOCK
TEGNA Inc. shares are traded on the New York Stock Exchange under the symbol TGNA. The
company’s transfer agent and registrar is Wells Fargo Bank, N.A. General inquiries and requests
for enrollment materials for the programs described below should be directed to Wells Fargo
Shareowner Services, P.O. Box 64854, St. Paul, MN 55164-0854 or by telephone at 1-800-778-3299
or at www.shareowneronline.com.
DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan (DRP) provides TEGNA shareholders the opportunity to purchase
additional shares of the company’s common stock free of brokerage fees or service charges through
automatic reinvestment of dividends and optional cash payments. Cash payments may range from a
minimum of $10 to a maximum of $5,000 per month.
AUTOMATIC CASH INVESTMENT SERVICE FOR THE DRP
This service provides a convenient, no-cost method of having money automatically withdrawn
from your checking or savings account each month and invested in TEGNA stock through your
DRP account.
THIS REPORT WAS WRITTEN
AND PRODUCED BY
EMPLOYEES OF TEGNA.
Vice President & Controller
Cam McClelland
Assistant Controller
James Reynolds
Corporate Consolidations Team
Dimeterice Chandler
Ben Fernando
Varun Kanwar
Suzanne Kuo
Lorraine Licayan
Mark Ramsey
Patrick Ray
Evan Strong
DIRECT DEPOSIT SERVICE
TEGNA shareholders may have their quarterly dividends electronically credited to their checking or
savings accounts on the payment date at no additional cost.
Manager/Corporate
Communications
Steve Kidera
ANNUAL MEETING
The annual meeting of shareholders will be held at 10 a.m. (E.T.), Thursday, May 4, 2017, at TEGNA
headquarters.
CORPORATE GOVERNANCE
We have posted on the Corporate Governance page under the “Investors” menu of our web site
(www.tegna.com) our principles of corporate governance, ethics policy, related person transaction
policy and the charters for the audit, nominating and public responsibility and executive compen-
sation committees of our board of directors, and we intend to post updates to these corporate
governance materials promptly if any changes (including through any amendments or waivers of the
ethics policy) are made. This site also provides access to our annual report on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K as filed with the SEC. Our chief executive
officer and our chief financial officer have delivered, and we have filed with our 2016 Form 10-K, all
certifications required by the rules of the SEC. Complete copies of our corporate governance
materials and our Form 10-K may be obtained by writing our Secretary at our corporate headquarters.
In accordance with the rules of the New York Stock Exchange, our chief executive officer has
certified, without qualification, that such officer is not aware of any violation by TEGNA of the
NYSE’s corporate governance listing standards.
FOR MORE INFORMATION
News and information about TEGNA is available on our web site. Quarterly earnings information
will be available in late April, July and October 2017. Shareholders who wish to contact the company
directly about their TEGNA stock should call Shareholder Services at TEGNA headquarters,
703-873-6677.
TEGNA Headquarters
7950 Jones Branch Drive, McLean, VA 22107 • 703-873-6600
Creative Director/Designer
Michael Abernethy
Printing
Action Printing, Fond du Lac, WI
Printed on recycled paper.
This report was printed using
soy-based inks. The entire report
contains 10% total recovered fiber/
all post-consumer waste.
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Company
Profile
TEGNA Inc. is
comprised of a
dynamic portfolio of media and digital
businesses that provide content that
matters and brands that deliver.
TEGNA delivers highly relevant,
useful and smart content, when and
how people need it, to make the best
decisions possible. Our agile and
forward-thinking portfolio of television
and digital businesses comprise one
of the largest, most geographically
diverse broadcasters in the U.S. and
top digital companies, Cars.com,
CareerBuilder and G/O Digital.
TEGNA Media includes 46 television
stations (including those serviced by
TEGNA) and is the largest independent
station group of major network affiliates
in the top 25 markets. TEGNA Media
reaches approximately one-third of all
television households nationwide and
represents the #1 NBC affiliate group,
#2 CBS affiliate group and #5 ABC affil-
iate group (excluding owner-operators).
Millions of consumers turn to TEGNA
Media throughout their day to navigate
their world more successfully. Our
journalists take their First Amendment
responsibilities seriously and deliver
relevant, innovative and impactful con-
tent. Combined, TEGNA’s TV stations,
across 23 states, are renowned for their
outstanding journalism and have been
recognized with numerous national
honors including Edward R. Murrow,
Alfred I. duPont, George Foster
Peabody, National Headliner, George
Polk and Emmy awards.
On the digital side, Cars.com is the
leading online destination for auto-
motive consumers offering credible,
objective information about car shop-
ping, selling and servicing. With an
average of 35 million monthly visits to
its web properties, Cars.com leverag-
es its large consumer audience to help
automotive marketers more effective-
ly reach car buyers and sellers, as well
as those looking for trusted service
providers. CareerBuilder is a global
leader in human capital solutions,
helping the world’s top employers
attract great talent. CareerBuilder
provides services ranging from labor
market intelligence to talent manage-
ment software and other recruitment
solutions. It is one of the largest online
job sites in North America, measured
both by traffic and revenue, and has
a presence in more than 60 markets
worldwide. Together, Cars.com and
CareerBuilder provide TEGNA’s
advertising partners with access to
two very important categories – auto-
motive and human capital solutions.
Also part of this powerful digital mix
is G/O Digital, a one-stop shop for local
businesses looking to connect with
consumers through digital marketing,
from search to social and everything in
between. For brands and agencies,
G/O Digital delivers local digital activa-
tion at scale. G/O Digital partners with
top brands and retailers and works with
more than 4,000 local businesses.
Combined, TEGNA’s brands have
tremendous reach across broadcast
and digital media, empowering those
we serve to act with conviction and
navigate their world successfully.
TEGNA INC.
7950 JONES BRANCH DR.
MCLEAN, VA 22107
WWW.TEGNA.COM
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People.
Products.
Performance.
2016 ANNUAL REPORT