Attached files
| file | filename |
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| EX-99.1 - EX-99.1 - TEGNA INC | d767952dex991.htm |
| EX-2.1 - EX-2.1 - TEGNA INC | d767952dex21.htm |
| 8-K - FORM 8-K - TEGNA INC | d767952d8k.htm |
    Unlocking Shareholder Value Through
Two Transformative Transactions
August 5, 2014
Exhibit 99.2 |
 1
Forward-Looking Statements
Certain
statements
in
this
presentation
may
be
forward
looking
in
nature
or
“forward-looking
statements”
as
defined
in
the
Private
Securities
Litigation
Reform
Act
of
1995.
The
forward-looking
statements
contained
in
this
presentation
are
subject
to
a
number
of
risks,
trends
and
uncertainties
that
could
cause
actual
performance
to
differ
materially
from
these
forward-looking
statements.
A
number
of
those
risks,
trends
and
uncertainties
are
discussed
in
the
company’s
SEC
reports,
including
the
company’s
annual
report
on
Form
10-K
and
quarterly
reports
on
Form
10-Q.
Any
forward-looking
statements
in
this
presentation
should
be
evaluated
in
light
of
these
important
risk
factors.
Gannett
is
not
responsible
for
updating
or
revising
any
forward-looking
statements,
whether
as
a
result
of
new
information,
future
events
or
otherwise,
except
as
required
by
law.
This
presentation
also
contains
a
discussion
of
certain
non-GAAP
financial
measures
that
Gannett
presents
in
order
to
allow
investors
and
analysts
to
measure,
analyze
and
compare
its
financial
condition
and
results
of
operations
in
a
meaningful
and
consistent
manner.
A
reconciliation
of
these
non-GAAP
financial
measures
to
the
most
directly
comparable
GAAP
measures
can
be
found
in
Gannett’s
publicly
available
reports
filed
with
the
SEC,
all
of
which
are
available
through
the
investor
relations
portion
of
our
website. |
 2
Two Transformative, Highly Strategic Transactions
•
Tax-free separation into two focused public
companies
•
Creates two industry leaders with
significant scale
•
Increases organic growth opportunities
•
Enhances flexibility to pursue strategic priorities
and acquisitions
•
Fuels growth and innovation through tailored
capital structures
•
Acquisition of remaining 73% interest in
Cars.com for $1.8 billion in cash
•
Doubles size of Digital business
•
Adds #2 auto-related site with highly
recognizable brand in business we know well
•
Expected to be highly accretive to free cash
flow, neutral to EPS in 2015, growing thereafter
•
Strong economic benefits from contractual
changes to new affiliation agreements |
 3
Right Next Steps in Ongoing Transformation
•
Bold next steps following 2-1/2 year strategic realignment to meet evolving
audience needs and compete successfully in digital age
•
Successful execution of strategy paved way for today’s announcements:
•
Revitalized Publishing business:
•
Content subscription model and USA TODAY local editions have
attracted new subscribers and increased profitability
•
Developed/delivering compelling content across multiple platforms
•
Rebranded USA TODAY, now #1 in combined print and digital
circulation
•
Enhanced digital usability, USA TODAY app now a top news app
in U.S. with 20+ million downloads
•
Newsquest in the UK marked its fifth straight quarter of circulation
revenue growth in Q2
•
Dramatically expanded scale in higher-growth, higher-margin Broadcasting
and Digital businesses through acquisitions:
•
Broadcasting:
Belo/London Broadcasting acquisitions doubled portfolio; now
reaching nearly one-third of U.S. television households
•
Digital:
Cars.com
doubles
Digital
business |
 4
Value-Creating Spin-Off
Summary
•
Tax-free
spin-off
of
Gannett
publishing
business
to
shareholders
•
Initial
aggregate
dividends
at
least
equal
to
current
$0.20
quarterly
dividend
•
Expected
to
be
completed
in
mid-2015
RemainCo:
Broadcast and
Digital
•
Leading
TV
broadcaster
and
emerging
digital
powerhouse
with
46
broadcast
stations
Gannett
owns
or
services
and
digital
leaders
CareerBuilder
and
Cars.com
•
Will
retain
all
of
Gannett’s
existing
debt
while
maintaining
strong
balance
sheet
•
Strong
cash
flow
enables
debt
repayment
and
return
of
capital
to
shareholders
SpinCo: Gannett
(Publishing)
•
Largest
U.S.
newspaper
publisher
with
81
U.S.
daily
publications
and
more
than
400
non-daily
local
publications
•
Includes
iconic
USA
TODAY
brand
and
UK
regional
leader
Newsquest
•
Expected
to
be
virtually
debt-free
following
close
•
Flexibility
to
complete
strong
accretive
acquisitions
in
a
consolidating
industry |
 5
Compelling Strategic Benefits of Spin-Off
•
Tailored
capital
structures
based
on
profitability,
cash
flow
and
growth
opportunities
at
each
company
•
Greater
opportunity
to
grow
organically
and
pursue
value-enhancing
acquisitions
with
fewer
regulatory
obstacles
in
two
consolidating
industries
•
Enhanced
financial
flexibility
to
drive
innovation
and
further
our
mission
of
delivering
award-winning
journalism
•
Greater
organic
growth
potential
through
enhanced
ability
to
target
resources
in
high
growth/in-demand
areas
that
better
serve
our
communities
•
More
targeted
investment
opportunities
•
Valuations
more
accurately
reflect
distinctive
business
characteristics |
 6
Leading Broadcasting/Digital Company
•
Attractive TV station portfolio with 46 stations covering 30+% or
nearly 35 million households
•
#4 owner of “Big 4”
network affiliates
•
#1 household coverage for NBC and CBS, #4 for ABC
•
Diversified affiliate revenue and earnings
•
Successful integration of former Belo stations
•
Leading digital positions in two major verticals:
•
Recruitment/job seekers through majority-owned CareerBuilder.com
•
Auto through full ownership of Cars.com
•
Continued strong cash flow generation with robust balance sheet
supports debt repayment
•
Committed to disciplined capital allocation policy
•
Led by Gracia Martore and will be headquartered in McLean, Virginia
|
 7
Leading Publishing Company
•
Largest
and
most
diversified
newspaper
company
will
retain
Gannett
name
•
Best-in-class
operator
with
enhanced
strategic
and
financial
flexibility
to
grow
organically
as
well
as
participate
in
industry
consolidation
•
Opportunities
to
further
capitalize
on
USA
TODAY
brand
–
already
#1
in
combined
print
and
digital
circulation
•
Enhanced
ability
to
innovate,
grow
and
better
serve
local
communities
through
81
daily
U.S.
Community
Papers
•
Portfolio
includes
Newsquest,
a
leading
U.K.
news
provider
and
other
related
businesses
in
the
Publishing
segment
•
Well-advanced
digital
strategy
with
established
portfolio
of
local
marketing
solutions
•
Ongoing
market
affiliations
with
Cars.com
and
CareerBuilder.com
and
permissible
shared
service
agreements
with
Broadcasting/Digital
Company
enable
continued
cross-platform
advertising
and
content-sharing
opportunities
•
Virtually
debt-free;
expected
strong
cash
flow
generation
to
be
used
for
accretive
acquisitions
and
return
of
capital
to
shareholders
•
Led
by
Bob
Dickey
and
will
maintain
headquarters
in
McLean,
Virginia |
 8
Doubling Digital Business with Cars.com
Terms
•
$1.8 billion cash consideration for remaining 73% interest
•
New 5-year affiliation arrangements, going to direct sales model
thereafter •
Expected to close in the fourth quarter of 2014
Financially
Compelling
•
Expected to be accretive to free cash flow in 2015, growing thereafter:
•
Approximately $0.43 to free cash flow per share
•
Expected to be neutral to EPS in 2015, growing thereafter
•
High-growth, high-margin business with strong cash flow and revenue
enhancing opportunities
•
Expected to contribute ~$155 million in annual incremental 2014 pro-forma
EBITDA
to
Gannett
(1)
•
Implies 11.7x 2014E EBITDA multiple and 9.2x 2015E EBITDA multiple
•
Better economics to Cars.com with new affiliation agreements
Strategically
Compelling
•
Growing digital business of substantial scale doubles digital business
•
Adds important auto vertical with #2 site
•
Opportunities for new products and expansion through full ownership in a well
understood business
(1) Assumes Cars.com was 100% owned by Gannett for all of 2014 and new affiliation
agreements were in place for all of 2014 |
 9
Transforming Digital Business with Cars.com
•
Secures
long-term
digital
leadership
with
one
of
few
proven
and
established
digital
solutions
of
scale
in
most
important
advertising
category
•
Doubles
Gannett’s
digital
portfolio
and
is
consistent
with
focus
on
local
media
and
marketing
services
•
Full
ownership
provides
greater
control
over
operations
and
product
roadmap
in
business
we
know
very
well
•
Plan
to
reinvest
to
drive
further
growth
through
new
product
launches
and
expansion
into
new
or
adjacent
areas
•
New
opportunities
created
by
leveraging
Gannett’s
broad footprint
•
Will
expand
advertising
to
increase
brand
awareness
•
Potential
for
revenue
uplift
due
to
favorable
economics
of
new
affiliate
agreements
and
cost
reductions
from
more
efficient
and
focused
operations
•
New
affiliation
agreements
entered
into
with
Classified
Ventures
partners
for
five
years,
after
which
business
will
transition
to
direct
sales
model |
 10
Proven Digital Solution of Scale in Automotive Market
•
#2
auto-related
site
with
approximately
10
million
unique
visitors
per
month
•
Provides
online
ad
solution
for
dealers
and
original,
unbiased
content
for
consumers
•
Leader
in
the
fastest
growing
component
of
the
automotive
ad
market
•
Displays
4.3
million
new
and
used
cars
from
nearly
20,000
dealers
•
Strong
growth
in
annual
visits
with
17%
CAGR
from
2008-2013
Leading destination for online car shoppers providing credible,
easy-to- understand information from customers and experts that
affords consumers greater control of the car buying process
Strong
Market Position |
 11
Cars.com: High-Growth Business
Pro forma assumes Cars.com was 100% owned by Gannett for all of 2014 and new
affiliation agreements were in place for all of 2014
Revenue |
 12
Cars.com: High-Margin Business
EBITDA
Pro forma assumes Cars.com was 100% owned by Gannett for all of 2014 and new
affiliation agreements were in place for all of 2014
|
 13
Proven Leader in Driving Consumer Engagement
Source: comScore (June 2014)
Mobile
Desktop
#2 Site for
Combined
Unique Visitors
and Time on
Site for Mobile
and Desktop
Unique Visitors
2014 YTD Monthly Average
Time on Site
2014 YTD Monthly Average
Monthly UVs (000's)
Minutes (MM) |
 14
Strong Growth in Automotive Online Ad Spending
(1)
Per the 2013 NADA Report
Source: Forrester
2018F
2017F
2016F
2015F
2014F
2013E
2012
2011
2010
2009
2008
U.S. Automotive Digital Marketing Spend
(1)
($ in billions)
Automotive Online Ad Spend is Expected to Double in Next Five Years
1.4
1.8
2.3
2.8
3.4
4.1
4.9
5.8
6.7
7.8
1.3
0.0
2.0
4.0
6.0
8.0 |
 15
Key Direct and Affiliate Agreements
•
Sells products through two primary channels:
•
Direct
sales
to
advertisers
with
revenue
recognized
at
retail
rates,
currently
accounts
for
78%
of
total
revenue
•
Sales
to
advertisers
by
affiliates’
sales
force
(e.g.,
Tribune
Media,
McClatchy,
A.H.
Belo,
and
Graham
Holdings),
with
revenue
recognized
at
wholesale
rates
Cars.com
Advertiser (e.g., Car Dealer)
Advertiser (e.g., Car Dealer)
Cars.com
Direct Business Model
Affiliate Business Model
Affiliate (e.g., Democrat and Chronicle)
New affiliate agreements following acquisition will increase Revenue and
EBITDA Cars.com products in
specific markets
Monthly subscription rate
Cars.com products
Wholesale rate
Cars.com products
Monthly subscription rate |
 16
Compelling Financial Impact of Cars.com
•
Gannett
expects
Cars.com
to
be
accretive
to
free
cash
flow
per
share
by
approximately
$0.43
and
EPS
neutral
in
2015,
growing
thereafter
•
Cars.com
is
expected
to
contribute
approximately
$155
million
in
incremental
annual
pro
forma
2014
estimated
EBITDA
to
Gannett,
and
implies
a
multiple
of
11.7x
pro
forma
estimated
EBITDA
•
Will
generate
increased
contractual
revenue
from
new
affiliate
agreements
and
laser
focus
on
operations
•
As
a
result,
expect
multiple
to
be
even
lower
at
9.2x,
based
on
2015
estimated
incremental
EBITDA
Approximately $155mm of annual incremental EBITDA, based on economics of new
affiliate agreements Incremental EBITDA is equal to Cars.com pro forma total
EBITDA less Gannett’s existing Cars.com EBITDA |
 17
Transaction Financing
•
Current debt paydown is ahead of schedule and EBITDA is stronger, resulting in
better leverage ratio position prior to transaction financing
•
Anticipate issuance of approximately $650-$675 million in new senior notes
•
7
and
10
year
tranches
•
Will use $575-$600 million in cash on balance sheet
•
Maintain minimum cash balance of $175 million
•
$600-$625 million draw on existing revolver
•
Currently undrawn
•
Plan to calibrate current capital return program with business results
•
Maintain
and
monitor
quarterly
$0.20
per
share
dividend |
 18
Key Takeaways
•
Key next steps in successful ongoing transformation of Gannett
•
Spin-off creates two industry-leading companies of scale
•
Both companies will have strong, flexible balance sheets and capital
structures tailored to their individual businesses
•
Cars.com doubles rapidly growing digital business
•
Financially and strategically compelling transactions that unlock
significant shareholder value
Publishing
Broadcasting
Digital |