Tegna: The End?
Tegna (ticker: TGNA) has been a portfolio holding since 2023. After several days of media rumors, we were gratified to see the following headline:
August 19, 2025
Nexstar Media Group, Inc. Enters into Definitive Agreement to Acquire TEGNA Inc. For $6.2 Billion – Nexstar will acquire all outstanding shares of TEGNA for $22.00 per share in a cash transaction
The announced buyout of Tegna validated two and a half years of work in an instant.
Tegna is not our biggest winner this year or over its tenure in our portfolio. What makes Tegna exciting is how well it illustrates our investment approach.
Nexstar’s deal is priced at $22 in cash. This has been our minimum estimate for value since the beginning. We’ve followed the story of Tegna since it formed in 2015 when Gannett separated its newspaper and broadcasting assets – not the most exciting area of media to be sure.
In their own words, “TEGNA owns 64 news brands in 51 markets, making us one of the largest and geographically diverse broadcasters in the U.S. We are the largest owner of Big Four affiliates in the top 25 markets among independent station groups and reach approximately 39 percent of all TV households nationwide.”
Last year, TGNA generated almost $700 million in free cash flow – a measure of cash profits. Not bad for a company whose shares were valued at UNDER $3 billion. That’s a free cash flow yield of over 20%. TV broadcasting isn’t a growing industry, but significant cash generation paired with intelligent capital allocation can richly reward shareholders.
We viewed Tegna as a slowly melting business which was throwing off massive cash. Tegna management was allocating that cash well. More on this later. We dubbed Tegna “an iceberg of value at an ice cube price.”
Our work on TEGNA began earnestly in 2023 after a previous takeover of the company was falling apart because of Federal Communication Commission (FCC) opposition. Financing expired and the deal fell through after a year-long wait.
On February 22, 2022, Tegna announced the following:
TEGNA to be Acquired by Standard General for $24.00 Per Share
At the time, TGNA shares traded within shouting distance of $24 a share – the proposed deal price – such was the certainty that the deal would go through. A year later, it was obvious that confidence was gone. The deal was never going to happen and the stock price languished below $16 a share.
Devotion saw an opportunity and if we had issued a press release, our headline would have read:
May 8, 2023
Devotion Capital initiates a position in TGNA shares on behalf of clients below $16 a share
Two weeks later, TGNA management made the official announcement that everyone knew was coming.
May 22, 2023
TEGNA Inc. Announces $300 Million Accelerated Share Repurchase Agreement and Increases Regular Quarterly Dividend by 20% Following Termination of Merger Agreement with Standard General
In an attempt to cushion the blow for beleaguered investors, management announced an increase in the dividend and a huge share repurchase. This was partially funded by a $136 million termination fee to be paid by Standard General – the failed suitor. It was a nice “going away” gift indeed.
Tegna further announced that it had “additional excess capital that accumulated” while the buyout was in limbo.
TGNA shares remained comatose with investors walking away in frustration. In contrast, we believed the franchise value of Tegna’s local broadcast assets, the industry’s consolidation dynamics, and the solid actions of company management supported an intrinsic value of $22+ a share.
For this reason, we continued to buy TGNA shares. Were we to have publicized it, the headline may have read:
June 21, 2023
Devotion ADDS to its TGNA position at a price (still) below $16 a share
Tegna kept buying back shares as evidenced by another release, but it was a broadcast for which few tuned in. Devotion purchased more shares at around $14 a share in October 2023. So was Tegna!
November 2023
TEGNA Inc. Enters Into $325 Million Accelerated Share Repurchase
Despite excellent financial results amid election year broadcast advertising demand, TGNA shares fell below $13 a share in the Summer of 2024. Judging by the stock price, our investment in Tegna was a flop.
Nonentheless, Tegna just kept on making money – lots of it.
In August 2024, Tegna management stated that “The company is reaffirming its expectation of 2024-2025 two-year Adjusted free cash flow guidance range of $900 million-$1.1 billion.” Simple math: that meant the company was expecting cash earnings of $450-$550 million in annual cash profit for 2024 and 2025. Not bad for a company whose total equity value was below $2.5 billion.
Repurchases of company stock were having an impact as well. In ONE YEAR, Tegna reduced their total share count from 218 million to 170 million – a massive 22 percent drop in shares outstanding.
Investor pessimism remained, but being out of step with the wider investment community is not infrequent or uncomfortable for us!
It only took one company and one announcement to validate our investment thesis. Nexstar is another broadcasting giant that wants to gain scale and they see value in Tegna, hence an offer of $22 a share in cash.
Initial estimates are that it will take a year to receive approval for the deal. This doesn’t leave enough incremental upside to justify waiting for the regulatory gauntlet. Nexstar’s footprint pushes well beyond FCC limits, and approval is far from guaranteed. So we exited our Tegna position this week above $21 a share.
Should this Nexstar deal fail under regulatory or financing pressure, Tegna could once again come back into play. Devotion could get another crack at the ball. Not every investment is a home run, but we would be happy with another Tegna Triple.
Our exit here isn’t about doubt in the business, but about discipline. With the upside realized at close to our estimate of fair value, the risk/reward balance tilts toward redeploying capital elsewhere.
Tegna has been a validating investment — a solid hit with corresponding returns for our clients. It confirms the strength of careful analysis and the importance of patience.
Stay tuned…
To all our clients:
Thank you for the trust you have placed in us. It is our privilege and pleasure to invest on your behalf.
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If you know friends or family who might appreciate our approach—or who may be interested in our investment management services—we would be honored if you shared Devotion Capital with them.
To those not yet clients:
We invite you to consider Devotion Capital. We are value investors—independent, disciplined, and long-term in focus—always investing alongside our clients with interests fully aligned.
Henry W. Schacht, CFA
Devotion Capital Management
