Broadcasting and digital media company TEGNA (NYSE:TGNA) missed analysts' expectations in Q4 FY2023, with revenue down 20.9% year on year to $725.9 million. It made a non-GAAP profit of $0.43 per share, down from its profit of $0.97 per share in the same quarter last year.

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TEGNA (TGNA) Q4 FY2023 Highlights:

• Revenue: $725.9 million vs analyst estimates of $750.8 million (3.3% miss)

• EPS (non-GAAP): $0.43 vs analyst expectations of $0.46 (7.1% miss)

• Free Cash Flow of $130 million, up 74.5% from the previous quarter

• Gross Margin (GAAP): 41.7%, down from 52.8% in the same quarter last year

• Market Capitalization: $2.66 billion

“TEGNA is back on offense, operating from a position of strength. Our new capital allocation framework positions us well to execute our business strategy to drive shareholder value in a continually evolving media landscape,” said Dave Lougee, President and Chief Executive Officer.

Spun out of Gannett in 2015, TEGNA (NYSE:TGNA) is a media company operating a network of television stations and digital platforms, focusing on local news and community content.

Broadcasting

Broadcasting companies have been facing secular headwinds in the form of consumers abandoning traditional television and radio in favor of streaming services. As a result, many broadcasting companies have evolved by forming distribution agreements with major streaming platforms so they can get in on part of the action, but will these subscription revenues be as high quality and high margin as their legacy revenues? Only time will tell which of these broadcasters will survive the sea changes of technological advancement and fragmenting consumer attention.

Sales Growth

A company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one may grow for years. TEGNA's annualized revenue growth rate of 5.7% over the last five years was weak for a consumer discretionary business.

Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. TEGNA's recent history shows a reversal from its already weak five-year trend as its revenue has shown annualized declines of 1.3% over the last two years.

We can dig even further into the company's revenue dynamics by analyzing its most important segments, Subscription and Advertising and Marketing Services, which are 46.7% and 48.5% of revenue. Over the last two years, TEGNA's Subscription revenue (access to content) averaged 2.1% year-on-year growth. On the other hand, its Advertising and Marketing Services revenue (showing advertisements) averaged 4.6% declines.