UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-Q

_______________________

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-6961

___________________________

TEGNA INC.

(Exact name of registrant as specified in its charter)

___________________________

Delaware			16-0442930
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
8350 Broad Street, Suite 2000,	Tysons,	Virginia	22102-5151
(Address of principal executive offices)			(Zip Code)

(703)	873-6600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	TGNA	New York Stock Exchange

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

The total number of shares of the registrant’s Common Stock, $1 par value, outstanding as of October 31, 2021 was 221,281,397.

INDEX TO TEGNA INC.

Sept. 30, 2021 FORM 10-Q

Item No.		Page
	PART I. FINANCIAL INFORMATION
1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3
	Consolidated Statements of Income for the Quarters and Nine Months Ended September 30, 2021 and 2020	5
	Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 30, 2021 and 2020	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	7
	Consolidated Statements of Equity and Redeemable Noncontrolling Interest for the Quarters and Nine Months Ended September 30, 2021 and 2020	8
	Notes to Condensed Consolidated Financial Statements	10
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
3.	Quantitative and Qualitative Disclosures about Market Risk	32
4.	Controls and Procedures	32
	PART II. OTHER INFORMATION
1.	Legal Proceedings	33
1A.	Risk Factors	33
2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
3.	Defaults Upon Senior Securities	33
4.	Mine Safety Disclosures	33
5.	Other Information	33
6.	Exhibits	34
SIGNATURE		35

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TEGNA Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands of dollars (Unaudited)

	Sept. 30, 2021		Dec. 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	51,214	$	40,968
Accounts receivable, net of allowances of $6,151 and $7,035, respectively	601,500		550,755
Other receivables	14,688		14,031
Syndicated programming rights	67,723		47,331
Prepaid expenses and other current assets	21,986		19,509
Total current assets	757,111		672,594
Property and equipment
Cost	1,034,017		1,026,459
Less accumulated depreciation	(574,151)		(556,100)
Net property and equipment	459,866		470,359
Intangible and other assets
Goodwill	2,981,587		2,968,693
Indefinite-lived and amortizable intangible assets, less accumulated amortization of $282,889 and $235,582, respectively	2,457,192		2,503,644
Right-of-use assets for operating leases	90,017		97,190
Investments and other assets	184,873		136,219
Total intangible and other assets	5,713,669		5,705,746
Total assets	$	6,930,646	$	6,848,699

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

TEGNA Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands of dollars, except par value and share amounts (Unaudited)

	Sept. 30, 2021		Dec. 31, 2020
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current liabilities
Accounts payable	$	46,333	$	58,049
Accrued liabilities
Compensation	53,970		46,213
Interest	15,565		47,249
Contracts payable for programming rights	143,408		130,522
Other	86,126		78,219
Income taxes payable	5,351		63,923
Total current liabilities	350,753		424,175
Noncurrent liabilities
Income taxes	9,491		7,303
Deferred income tax liability	557,419		530,240
Long-term debt	3,336,878		3,553,220
Pension liabilities	66,405		85,908
Operating lease liabilities	91,790		99,337
Other noncurrent liabilities	82,377		75,488
Total noncurrent liabilities	4,144,360		4,351,496
Total liabilities	4,495,113		4,775,671
Commitments and contingent liabilities (see Note 9)
Redeemable noncontrolling interest (see Note 1)	15,826		14,933
Shareholders’ equity
Common stock of $1 par value per share, 800,000,000 shares authorized, 324,418,632 shares issued	324,419		324,419
Additional paid-in capital	27,941		113,267
Retained earnings	7,351,426		7,075,640
Accumulated other comprehensive loss	(76,693)		(121,076)
Less treasury stock at cost, 103,200,190 shares and 104,918,360 shares, respectively	(5,207,386)		(5,334,155)
Total equity	2,419,707		2,058,095
Total liabilities, redeemable noncontrolling interest and equity	$	6,930,646	$	6,848,699

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

TEGNA Inc.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited, in thousands of dollars, except per share amounts

	Quarter ended Sept. 30,				Nine months ended Sept. 30,
	2021		2020		2021		2020
Revenues	$	756,487	$	738,389	$	2,216,446	$	2,000,205
Operating expenses:
Cost of revenues1	399,751		379,185		1,191,561		1,103,920
Business units - Selling, general and administrative expenses	100,425		89,943		286,700		267,919
Corporate - General and administrative expenses	11,891		11,263		51,944		61,289
Depreciation	16,792		16,086		48,526		49,697
Amortization of intangible assets	15,774		17,113		47,307		50,577
Spectrum repacking reimbursements and other, net	504		(2,902)		(2,394)		(10,533)
Total	545,137		510,688		1,623,644		1,522,869
Operating income	211,350		227,701		592,802		477,336
Non-operating income (expense):
Equity (loss) income in unconsolidated investments, net	(1,790)		(2,529)		(5,716)		8,407
Interest expense	(46,477)		(51,896)		(139,571)		(160,733)
Other non-operating items, net	2,486		961		4,340		(17,270)
Total	(45,781)		(53,464)		(140,947)		(169,596)
Income before income taxes	165,569		174,237		451,855		307,740
Provision for income taxes	36,870		41,967		103,470		69,699
Net Income	128,699		132,270		348,385		238,041
Net (income) loss attributable to redeemable noncontrolling interest	(419)		(51)		(861)		433
Net income attributable to TEGNA Inc.	$	128,280	$	132,219	$	347,524	$	238,474
Net income per share:
Basic	$	0.58	$	0.60	$	1.57	$	1.08
Diluted	$	0.58	$	0.60	$	1.56	$	1.08
Weighted average number of common shares outstanding:
Basic shares	221,805		219,579		221,314		218,997
Diluted shares	222,799		219,977		222,172		219,423
1 Cost of revenues exclude charges for depreciation and amortization expense, which are shown separately above.

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

TEGNA Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited, in thousands of dollars

	Quarter ended Sept. 30,				Nine months ended Sept. 30,
	2021		2020		2021		2020
Net income	$	128,699	$	132,270	$	348,385	$	238,041
Other comprehensive income, before tax:
Foreign currency translation adjustments	(53)		(93)		698		37
Pension and other post retirement benefit items
Recognition of previously deferred post-retirement benefit plan costs	1,290		1,551		3,869		4,653
Pension payment timing related charge	946		—		946		—
Pension and other postretirement benefit items	2,236		1,551		4,815		4,653
Unrealized gain on available-for-sale investment during the period	54,354		—		54,354		—
Other comprehensive income, before tax	56,537		1,458		59,867		4,690
Income tax effect related to components of other comprehensive income	(14,626)		(366)		(15,484)		(1,180)
Other comprehensive income, net of tax	41,911		1,092		44,383		3,510
Comprehensive income	170,610		133,362		392,768		241,551
Comprehensive (income) loss attributable to redeemable noncontrolling interest	(419)		(51)		(861)		433
Comprehensive income attributable to TEGNA Inc.	$	170,191	$	133,311	$	391,907	$	241,984

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

TEGNA Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited, in thousands of dollars

	Nine months ended Sept. 30,
	2021		2020
Cash flows from operating activities:
Net income	$	348,385	$	238,041
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization	95,833		100,274
Stock-based compensation	23,137		12,578
Company stock 401(k) contribution	13,575		13,023
Equity loss (income) from unconsolidated investments, net	5,716		(8,407)
Pension contributions, net of income	(14,821)		(8,144)
Change in other assets and liabilities, net of acquisitions:
(Increase) decrease in trade receivables	(49,687)		73,838
(Decrease) increase in accounts payable	(11,716)		10,636
(Decrease) increase in interest and taxes payable	(76,372)		13,793
Decrease in deferred revenue	1,784		27,706
Change in other assets and liabilities, net	6,770		42,413
Net cash flow from operating activities	342,604		515,751
Cash flows from investing activities:
Purchase of property and equipment	(39,418)		(30,583)
Reimbursements from spectrum repacking	5,030		12,670
Payments for acquisitions of businesses and other assets, net of cash acquired	(13,335)		(15,841)
Purchases of investments	(1,023)		(709)
Proceeds from investments	3,094		5,028
Proceeds from sale of assets and businesses	296		5,023
Net cash flow used for investing activities	(45,356)		(24,412)
Cash flows from financing activities:
Payments under revolving credit facilities, net	(219,000)		(728,000)
Proceeds from borrowings	—		1,550,000
Debt repayments	—		(1,085,000)
Payments for debt issuance costs and early redemption fee	—		(36,896)
Proceeds from sale of minority ownership interest in Premion	—		14,000
Dividends paid	(57,435)		(61,110)
Other, net	(10,567)		(9,151)
Net cash flow used for financing activities	(287,002)		(356,157)
Increase in cash	10,246		135,182
Balance of cash, beginning of period	40,968		29,404
Balance of cash, end of period	$	51,214	$	164,586
Supplemental cash flow information:
Cash paid for income taxes, net of refunds	$	146,600	$	39,872
Cash paid for interest	$	165,824	$	174,575

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

TEGNA Inc.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

Unaudited, in thousands of dollars, except per share data

Quarters Ended:	Redeemable noncontrolling interest		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total Equity
Balance at June 30, 2021	$	15,523	$	324,419	$	27,941	$	7,249,257	$	(118,604)	$	(5,224,057)	$	2,258,956
Net income	419		—		—		128,280		—		—		128,280
Other comprehensive income, net of tax	—		—		—		—		41,911		—		41,911
Total comprehensive income													170,191
Dividends declared: $0.095 per share	—		—		—		(21,008)		—		—		(21,008)
Company stock 401(k) contribution	—		—		(6,763)		(5,219)		—		16,173		4,191
Stock-based awards activity	—		—		(545)		—		—		498		(47)
Stock-based compensation	—		—		6,965		—		—		—		6,965
Adjustment of redeemable noncontrolling interest to redemption value	(116)		—		—		116		—		—		116
Other activity	—		—		343				—		—		343
Balance at Sept. 30, 2021	$	15,826	$	324,419	$	27,941	$	7,351,426	$	(76,693)	$	(5,207,386)	$	2,419,707
	Redeemable noncontrolling interest		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total
Balance at June 30, 2020	$	14,373	$	324,419	$	140,255	$	6,729,896	$	(140,179)	$	(5,379,084)	$	1,675,307
Net income	51		—		—		132,219		—		—		132,219
Other comprehensive income, net of tax	—		—		—		—		1,092		—		1,092
Total comprehensive income													133,311
Dividends declared: $0.07 per share	—		—		—		(15,332)		—		—		(15,332)
Company stock 401(k) contribution	—		—		(21,886)		—		—		26,344		4,458
Stock-based awards activity	—		—		(652)		—		—		596		(56)
Stock-based compensation	—		—		5,010		—		—		—		5,010
Adjustment of redeemable noncontrolling interest to redemption value	229		—		—		(229)		—		—		(229)
Other activity	—		—		(2,933)		—		—		—		(2,933)
Balance at Sept. 30, 2020	$	14,653	$	324,419	$	119,794	$	6,846,554	$	(139,087)	$	(5,352,144)	$	1,799,536

8

TEGNA Inc.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NON-CONTROLLING INTEREST
Unaudited, in thousands of dollars, except per share data
Nine months ended:	Redeemable noncontrolling interest		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total
Balance at Dec. 31, 2020	$	14,933	$	324,419	$	113,267	$	7,075,640	$	(121,076)	$	(5,334,155)	$	2,058,095
Net income	861		—		—		347,524		—		—		347,524
Other comprehensive income, net of tax	—		—		—		—		44,383		—		44,383
Total comprehensive income													391,907
Dividends declared: $0.26 per share	—		—		—		(57,435)		—		—		(57,435)
Company stock 401(k) contribution	—		—		(24,437)		(14,271)		—		52,283		13,575
Stock-based awards activity	—		—		(85,054)		—		—		74,486		(10,568)
Stock-based compensation	—		—		23,137		—		—		—		23,137
Adjustment of redeemable noncontrolling interest to redemption value	32		—		—		(32)		—		—		(32)
Other activity	—		—		1,028		—		—		—		1,028
Balance at Sept. 30, 2021	$	15,826	$	324,419	$	27,941	$	7,351,426	$	(76,693)	$	(5,207,386)	$	2,419,707
	Redeemable noncontrolling interest		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total
Balance at Dec. 31, 2019	$	—	$	324,419	$	247,497	$	6,655,088	$	(142,597)	$	(5,494,030)	$	1,590,377
Net income (loss)	(433)		—		—		238,474		—		—		238,474
Other comprehensive income, net of tax	—		—		—		—		3,510		—		3,510
Total comprehensive income													241,984
Dividends declared: $0.21 per share	—		—		—		(45,922)		—		—		(45,922)
Company stock 401(k) contribution	—		—		(57,606)		—		—		70,629		13,023
Stock-based awards activity	—		—		(80,408)		—		—		71,257		(9,151)
Stock-based compensation	—		—		12,578		—		—		—		12,578
Sale of minority ownership interest in Premion	14,000		—		—		—		—		—		—
Adjustment of redeemable noncontrolling interest to redemption value	1,086		—		—		(1,086)		—		—		(1,086)
Other activity	—		—		(2,267)		—		—		—		(2,267)
Balance at Sept. 30, 2020	$	14,653	$	324,419	$	119,794	$	6,846,554	$	(139,087)	$	(5,352,144)	$	1,799,536

The accompanying notes are an integral part of these condensed consolidated financial statements.

9

TEGNA Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – Accounting policies

Basis of presentation: Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting, the instructions for Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all information and footnotes which are normally included in the Form 10-K and annual report to shareholders. In our opinion, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. The condensed consolidated financial statements should be read in conjunction with our (or TEGNA’s) audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The novel coronavirus (COVID-19) pandemic has resulted, and will continue to result, in significant economic disruption and will likely continue to adversely affect our business. The impact of COVID-19 (including variants) and the extent of its adverse impact on our financial and operating results will be dictated by the length of time that the pandemic continues to affect our advertising customers.

We use the best information available in developing significant estimates inherent in our financial statements, including potential impacts from the COVID-19 pandemic. Actual results could differ from these estimates, and these differences resulting from changes in facts and circumstances could be material. Significant estimates include, but are not limited to, evaluation of goodwill and other intangible assets for impairment, business combinations, fair value measurements, post-retirement benefit plans, income taxes including deferred taxes, and contingencies. The condensed consolidated financial statements include the accounts of subsidiaries we control. We eliminate all intercompany balances, transactions, and profits in consolidation. Investments in entities over 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 investments, net” in the Consolidated Statements of Income.

We operate one operating and reportable segment, which primarily consists of our 64 television stations and two radio stations operating in 51 markets, providing high-quality television programming and digital content. Our reportable segment determination is based on our management and internal reporting structure, the nature of products and services we offer, and the financial information that is evaluated regularly by our chief operating decision maker.

Accounting guidance adopted in 2021: We did not adopt any new accounting guidance in 2021 that had a material impact on our consolidated financial statements or disclosures.

New accounting guidance not yet adopted: There is currently no pending accounting guidance that we expect to have a material impact on our consolidated financial statements or disclosures.

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. Our allowance also takes into account expected future trends which may impact our customers’ ability to pay, such as economic growth, unemployment and demand for our products and services, including the impacts of the COVID-19 pandemic on these trends. We monitor the credit quality of our customers and their ability to pay through the use of analytics and communication with individual customers. As of September 30, 2021, our allowance for doubtful accounts was $6.2 million as compared to $7.0 million as of December 31, 2020.

Available-for-sale investment: We hold a debt security investment issued by MadHive, Inc. (MadHive), that we classify as an available-for-sale investment. Under the terms of our investment agreement, our debt investment may convert into an equity investment either automatically or at our election based on the occurrence of certain specified events. This investment is carried at fair value and is included within the “Investments and other assets” line item on our Condensed Consolidated Balance Sheet. Unrealized gains/losses on this investment are included within “Accumulated other comprehensive loss” on the Condensed Consolidated Balance Sheet. Gains and losses will be recognized in our Consolidated Statements of Income when realized. See Note 3 for additional information.

Redeemable Noncontrolling interest: Our Premion business operates an advertising network for over-the-top (OTT) streaming and connected television platforms. In March 2020, we sold a minority interest in Premion to an affiliate of Gray Television (Gray) and entered into a 3 year commercial reselling agreement with the affiliate. Gray’s investment allows it to sell its interest to Premion if there is a change in control of TEGNA or if the existing commercial agreement terminates. Since redemption of the minority ownership interest is outside our control, Gray’s equity interest is presented outside of the Equity section on the Condensed Consolidated Balance Sheet in the caption “Redeemable noncontrolling interest.”

10

Revenue recognition: Revenue is recognized upon the transfer of control of promised services to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Amounts received from customers in advance of providing services to our customers are recorded as deferred revenue.

The primary sources of our revenues are: 1) subscription revenues, reflecting fees paid by satellite, cable, OTT (companies that deliver video content to consumers over the Internet) and telecommunications providers to carry our television signals on their systems; 2) advertising & marketing services revenues, which include local and national non-political television advertising, digital marketing services (including Premion), advertising on the stations’ websites, tablet and mobile products, and OTT apps; 3) political advertising revenues, which are driven by even year election cycles at the local and national level (e.g. 2020, 2018, etc.) and particularly in the second half of those years; and 4) other services, such as production of programming, tower rentals, and distribution of our local news content.

Revenue earned by these sources in the third quarter and first nine months of 2021 and 2020 are shown below (amounts in thousands):

	Quarter ended Sept. 30,				Nine months ended Sept. 30,
	2021		2020		2021		2020
Subscription	$	368,672	$	316,677	$	1,130,490	$	972,954
Advertising & Marketing Services	364,234		298,605		1,027,957		822,841
Political	15,010		116,494		34,019		181,425
Other	8,571		6,613		23,980		22,985
Total revenues	$	756,487	$	738,389	$	2,216,446	$	2,000,205

NOTE 2 – Goodwill and other intangible assets

The following table displays goodwill, indefinite-lived intangible assets, and amortizable intangible assets as of September 30, 2021 and December 31, 2020 (in thousands):

	Sept. 30, 2021				Dec. 31, 2020
	Gross		Accumulated Amortization		Gross		Accumulated Amortization
Goodwill	$	2,981,587	$	—	$	2,968,693	$	—
Indefinite-lived intangibles:
Television and radio station FCC broadcast licenses	2,123,898				2,123,898
Amortizable intangible assets:
Retransmission agreements	235,215		(161,061)		235,215		(138,928)
Network affiliation agreements	309,503		(91,070)		309,503		(72,694)
Other	71,465		(30,758)		70,610		(23,960)
Total indefinite-lived and amortizable intangible assets	$	2,740,081	$	(282,889)	$	2,739,226	$	(235,582)

Our retransmission agreements and network affiliation agreements are amortized on a straight-line basis over their estimated useful lives. Other intangibles primarily include distribution agreements from our multicast networks acquisition, which are also amortized on a straight-line basis over their useful lives.

On January 27, 2021, we acquired Locked On Podcast Network LLC for $13.3 million, which consisted of a base purchase price of $13.8 million and a working capital adjustment of $0.5 million. Locked On produces daily podcasts for every team across the four major professional sports leagues, as well as for major college sports teams. In connection with this acquisition, we recorded goodwill and trade name assets of $12.9 million and $0.9 million, respectively. The goodwill is calculated as the excess of the purchase price over the net fair value of the identifiable assets acquired and liabilities assumed, and represents the future economic benefits expected to arise from the acquisition that do not qualify for separate recognition, including assembled workforce, as well as future synergies that we expect to generate. The goodwill recognized is deductible for tax purposes.

11

Interim impairment assessment

We review our goodwill and intangible assets for impairment at least annually and also when events or changes in circumstances occur that indicate the fair value may be below its carrying amount. As discussed in our 2020 Form 10-K, after completing our annual impairment test in the fourth quarter of 2020, we had one television station FCC license and one radio station FCC license with a combined carrying value of $67.2 million and individual impairment headroom of less than 5%. As a result, these two FCC licenses are deemed to be heightened risk of future impairment. Given the ongoing COVID-19 impacts on our AMS revenue and operating cash flows, we conducted impairment assessments of these two FCC licenses at the end of the third quarter of 2021 to evaluate whether circumstances occurred that indicate that the fair value may be below the carrying amount.

In performing these assessments, we analyzed factors that impact the fair value determination of FCC license assets. This included reviewing the trends in U.S. gross domestic product, the stock market, unemployment trends, discount rates and individual station performance. Based on the analysis performed, we concluded that no triggering events had occurred that would cause us to perform an interim impairment test for these two FCC licenses. However, a sustained economic decline, including one resulting from the COVID-19 pandemic, could result in future non-cash impairment charges of our FCC licenses, and any related impairment could have a material adverse impact on our results of operations.

NOTE 3 – Investments and other assets

Our investments and other assets consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands):

	Sept. 30, 2021		Dec. 31, 2020
Available-for-sale debt security	$	57,354	$	3,000
Cash value life insurance	52,861		52,883
Equity method investments	25,504		32,067
Other equity investments	19,021		20,271
Deferred debt issuance costs	6,706		9,378
Other long-term assets	23,427		18,620
Total	$	184,873	$	136,219

Available-for-sale debt security: Available-for-sale debt securities are required to be carried at their fair value, with unrealized gains and losses (net of income taxes) that are considered temporary in nature recorded in “Accumulated other comprehensive loss” on the Condensed Consolidated Balance Sheet. In the third quarter of 2021, we recorded an unrealized gain of $54.4 million due to the increase in the fair value of the debt security issued by MadHive that we hold. This available-for-sale debt security includes features that allow us to convert investment into equity ownership upon the occurrence of certain events. The increase in the value of our investment is due to, and calculated based on, the estimated increase in the underlying equity of the investee. The unrealized gain has been recorded in “Accumulated other comprehensive loss” on the Condensed Consolidated Balance Sheet.

Cash value life insurance: We are the beneficiary of life insurance policies on the lives of certain employees/retirees, which are recorded at their cash surrender value as determined by the insurance carrier. These policies are utilized as a partial funding source for deferred compensation and other non-qualified employee retirement plans. Gains and losses on these investments are included in “Other non-operating items, net” within our Consolidated Statement of Income and were not material for all periods presented.

Other equity investments: Represents investments in non-public businesses that do not have readily determinable pricing, and for which we do not have control or do not exert significant influence. These investments are recorded at cost less impairments, if any, plus or minus changes in observable prices for those investments. In the third quarter of 2021, we recognized a $1.9 million gain on one of these investments due to an observable price increase in the fair value of the investment. Additionally, in the first quarter of 2021, we recorded a $1.9 million impairment charge, due to the decline in the fair value of a different investment. Both the gain and impairment charge were recorded in “Other non-operating items, net” within our Consolidated Statement of Income. No gains or losses were recorded on these investments in the first nine months of 2020.

Deferred debt issuance costs: These costs consist of amounts paid to lenders related to our revolving credit facility. Debt issuance costs paid for our term debt and unsecured notes are accounted for as a reduction in the debt obligation.

12

NOTE 4 – Long-term debt

Our long-term debt is summarized below (in thousands):

	Sept. 30, 2021		Dec. 31, 2020
Borrowings under revolving credit agreement expiring August 2024	$	136,000	$	355,000
Unsecured notes bearing fixed rate interest at 5.500% due September 2024	137,000		137,000
Unsecured notes bearing fixed rate interest at 4.750% due March 2026	550,000		550,000
Unsecured notes bearing fixed rate interest at 7.75% due June 2027	200,000		200,000
Unsecured notes bearing fixed rate interest at 7.25% due September 2027	240,000		240,000
Unsecured notes bearing fixed rate interest at 4.625% due March 2028	1,000,000		1,000,000
Unsecured notes bearing fixed rate interest at 5.00% due September 2029	1,100,000		1,100,000
Total principal long-term debt	3,363,000		3,582,000
Debt issuance costs	(33,271)		(36,595)
Unamortized premiums and discounts, net	7,149		7,815
Total long-term debt	$	3,336,878	$	3,553,220

As of September 30, 2021, cash and cash equivalents totaled $51.2 million and we had unused borrowing capacity of $1.35 billion under our $1.51 billion revolving credit facility, which expires in August 2024. We were in compliance with all covenants, including the leverage ratio (our one financial covenant) contained in our debt agreements and revolving credit facility. We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future.

NOTE 5 – Retirement plans

We have various defined benefit retirement plans. Our principal defined benefit pension plan is the TEGNA Retirement Plan (TRP). The disclosure table below includes the pension expenses of the TRP and the TEGNA Supplemental Retirement Plan (SERP). The total net pension obligations, including both current and non-current liabilities, as of September 30, 2021, were $74.2 million, of which $7.8 million is recorded as a current obligation within accrued liabilities on the Condensed Consolidated Balance Sheet.

Pension costs (income), which primarily include costs for the qualified TRP and the non-qualified SERP, are presented in the following table (in thousands):

	Quarter ended Sept. 30,				Nine months ended Sept. 30,
	2021		2020		2021		2020
Service cost-benefits earned during the period	$	1	$	1	$	2	$	5
Interest cost on benefit obligation	3,969		4,868		11,907		14,605
Expected return on plan assets	(8,670)		(7,765)		(26,010)		(23,294)
Amortization of prior service cost	23		23		68		68
Amortization of actuarial loss	1,223		1,541		3,669		4,622
Pension payment timing related charge	946		—		946		—
Income from company-sponsored retirement plans	$	(2,508)	$	(1,332)	$	(9,418)	$	(3,994)

Benefits no longer accrue for substantially all TRP and SERP participants as a result of amendments to the plans in past years, and as such we no longer incur a significant amount of the service cost component of pension expense. All other components of our pension expense presented above are included within the “Other non-operating items, net” line item of the Consolidated Statements of Income.

During the nine months ended September 30, 2021 and 2020, we did not make any cash contributions to the TRP. We made benefit payments to participants of the SERP of $5.3 million and $4.1 million during the nine months ended September 30, 2021 and 2020, respectively. Based on actuarial projections and funding levels, we do not expect to make any cash payments to the TRP in 2021 (as none are required based on our current funding levels). We expect to make additional cash payments of $1.6 million to our SERP participants during the remainder of 2021.

13

In the third quarter of 2021, we accelerated the recognition of previously deferred pension costs as a result of lump sum payments made for the SERP, which resulted in a $0.9 million charge which was reclassified from accumulated other comprehensive loss into net periodic benefit cost.

NOTE 6 – Accumulated other comprehensive loss

The following table summarizes the components of, and the changes in, Accumulated Other Comprehensive Loss (AOCL), net of tax (in thousands):

	Retirement Plans		Foreign Currency Translation		Available-For-Sale Investment		Total
Quarters Ended:
Balance at June 30, 2021	$	(119,065)	$	461	$	—	$	(118,604)
Other comprehensive income before reclassifications	—		(39)		40,293		40,254
Amounts reclassified from AOCL	1,657		—		—		1,657
Total other comprehensive income	1,657		(39)		40,293		41,911
Balance at Sept. 30, 2021	$	(117,408)	$	422	$	40,293	$	(76,693)
Balance at June 30, 2020	$	(140,076)	$	(103)	$	—	$	(140,179)
Other comprehensive loss before reclassifications	—		(69)		—		(69)
Amounts reclassified from AOCL	1,161		—		—		1,161
Total other comprehensive income	1,161		(69)		—		1,092
Balance at Sept. 30, 2020	$	(138,915)	$	(172)	$	—	$	(139,087)
	Retirement Plans		Foreign Currency Translation		Available-For-Sale Investment		Total
Nine months ended:
Balance at Dec. 31, 2020	$	(120,979)	$	(97)	$	—	$	(121,076)
Other comprehensive income before reclassifications	—		519		40,293		40,812
Amounts reclassified from AOCL	3,571		—		—		3,571
Total other comprehensive income	3,571		519		40,293		44,383
Balance at Sept. 30, 2021	$	(117,408)	$	422	$	40,293	$	(76,693)
Balance at Dec. 31, 2019	$	(142,398)	$	(199)	$	—	$	(142,597)
Other comprehensive income before reclassifications	—		27		—		27
Amounts reclassified from AOCL	3,483		—		—		3,483
Total other comprehensive income	3,483		27		—		3,510
Balance at Sept. 30, 2020	$	(138,915)	$	(172)	$	—	$	(139,087)

14

Reclassifications from AOCL to the Consolidated Statements of Income are comprised of pension and other post-retirement components. Pension and other post retirement reclassifications are related to the amortization of prior service costs and amortization of actuarial losses and a pension payment timing related charge. Amounts reclassified out of AOCL are summarized below (in thousands):

	Quarter ended Sept. 30,				Nine months ended Sept. 30,
	2021		2020		2021	2020
Amortization of prior service credit, net	$	(120)	$	(120)