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Jax Daily Record Tuesday, Sep. 13, 201612:00 PM EST

Tegna changing direction again

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by: Mark Basch Contributing Writer

Two years after Gannett Co. Inc. decided to split its businesses into separate public companies, one of those two is changing direction again.

Tegna Inc., which became a broadcasting and digital company after the split, is shedding its online businesses. That will make it basically just a television company operating 46 stations, including WTLV TV-12 and WJXX TV-25 in Jacksonville.

Tegna said last week it will spin off Cars.com, an auto shopping website, as a separate public company.

It is also exploring strategic alternatives for its 53 percent interest in job website CareerBuilder.com.

Gannett announced plans to split up in August 2014, with its newspaper businesses remaining under the Gannett name while the broadcasting and digital businesses were bundled together in the company that was named Tegna. It completed that split in June 2015.

CEO Gracia Martore said in a news release the Cars.com spinoff “is the next logical step” for its businesses.

“Each business will have increased strategic, operating and financial flexibility at a time when the broadcast and digital sectors are both rapidly evolving — presenting both companies with a wealth of opportunities,” she said.

“Tegna will have a strong balance sheet and cash flow to continue to pursue investment in organic growth and opportunistic acquisitions and to provide an optimal mix of capital returns to shareholders,“ she said.

Martore also announced she will retire once the spinoff is complete. Dave Lougee, currently the head of Tegna’s broadcasting division, will become CEO.

Moody’s Investors Service took a dim view of Tegna’s plan, announcing it is reviewing the company’s credit rating for a possible downgrade.

“This appears to be an aggressive retrench that runs counter to many of its peers who are investing more heavily in digital assets in an effort to capture the shift in ad share,” the ratings agency said in a news release.

“While these assets generate limited operating synergies and CareerBuilder’s operating performance has been weak, the strength in Cars.com, the combined EBITDA (earnings before interest, taxes, depreciation and amortization) contribution of both assets and the benefits of scale and diversification created by these assets has been a positive rating factor,” Moody’s said.

“Without these assets, which represent close to 40 percent of the company’s current revenue mix, the company will be significantly less diversified, much smaller in scale and likely experience slower top line growth,” the ratings agency said.

IPO window closing soon for ADS

If Advanced Disposal Services Inc. wants to complete its initial public offering this year, it had better move quickly.

Analysts anticipate a post-Labor Day pickup in an IPO market that has been slow this year. However, a Wall Street Journal story suggested the IPO window may close quickly, by mid-October.

As we move closer to Election Day, market uncertainty could make it difficult to launch an IPO, the story said.

After Election Day, investment banks will have little time before Thanksgiving to complete a deal and the holiday season is generally a slow time for IPOs, it said.

IPO research firm Renaissance Capital said in a report before Labor Day weekend that it expects 35 to 45 IPOs to hit the market before the end of the year, which would bring the 2016 total to about 100 deals raising $15 billion.

“Even at the high end of our estimates, the 2016 U.S. IPO market will go down as the least active year since the financial crisis and will most likely trail both 2008 and 2009 in terms of proceeds raised,” the report said.

Advanced Disposal tried to complete its IPO in February but had to pull it off the market because of weak conditions.

The stock market has improved considerably since then, giving it a chance to launch its IPO in the current window.

The waste management company filed an updated IPO registration statement with the Securities and Exchange Commission last month, its first update since February. However, it has not indicated the timing of a potential deal.

Advanced Disposal is headquartered in the Nocatee development in St. Johns County.

No other Northeast Florida-based company is currently in the IPO pipeline.

Ameris Bancorp doubles dividend

Ameris Bancorp’s board of directors last week doubled the company’s quarterly dividend from 5 cents a share to 10 cents.

“We finished the second quarter of 2016 with capital levels and operating ratios at our target levels,” CEO Edwin Hortman said in a news release.

“We are confident that even with this increase in our dividend, we will be able to continue growing capital levels despite the best growth rate in assets that we have seen in some time,” he said.

Ameris is officially headquartered in Moultrie, Ga., but its executive offices are in Jacksonville.

ParkerVision gets favorable ruling

ParkerVision Inc. said Friday it received a favorable preliminary opinion from a Munich court in its patent infringement case against a German subsidiary of LG Electronics Inc.

Jacksonville-based ParkerVision has several infringement cases pending in various courts alleging major electronics manufacturers are illegally using wireless technology patented by the company.

ParkerVision said the Regional Court of Munich’s preliminary opinion indicates “its predisposition toward a finding of infringement” against LG.

However, the case is still scheduled for a hearing in November with a final decision expected in mid-December, it said.

CSX expects lower third-quarter earnings

CSX Corp. Chief Financial Officer Frank Lonegro told investors last week the Jacksonville-based railroad company expects lower third-quarter earnings, which was no surprise.

“Third quarter earnings per share are expected to decline slightly from second quarter levels, based on high single-digit volume reductions that are partially offset by improving efficiency benefits and strong pricing gains that reflect a service product that meets and exceeds customer expectations,” Lonegro said, according to a CSX news release.

CSX reported second-quarter earnings of 47 cents a share, 9 cents lower than the second quarter of 2015. The company earned 52 cents a share in the third quarter of 2015.

Most analysts were already anticipating lower earnings, with forecasts ranging from 43 cents to 47 cents and the average forecast at 45 cents, according to Thomson Financial.

Lonegro also said at the conference in Boston sponsored by Cowen and Co. that global conditions in the coal market have improved modestly, but CSX still expects coal volumes transported by the railroad to decline by 20 percent to 25 percent for the full year.

Coal had historically been CSX’s biggest business before shipments began declining sharply in recent years.

On the positive side, Lonegro said CSX is succeeding in its efficiency initiatives and the company expects efficiency cost savings will exceed $350 million this year.

TapImmune details progress

TapImmune Inc. CEO Glynn Wilson sent an update letter to shareholders last week detailing the progress of several of its immuno-oncology products under development to treat cancer and metastatic disease.

Wilson also said an improvement in the company’s balance sheet has allowed it to apply for a stock listing on the Nasdaq Capital Market.  The stock currently trades on the Over-The-Counter Bulletin Board.

TapImmune raised $6 million in capital when current investors exercised warrants to buy stock and sold an additional $3 million in stock through a private placement. That $9 million in capital, coupled with other balance sheet restructurings, gives the company the opportunity to raise its profile with a Nasdaq listing, Wilson said.

“We look forward to a very active upcoming 18 months in which we anticipate the achievement of numerous clinical and corporate milestones,” he said in the letter.

TapImmune moved its headquarters to Jacksonville last year as the Mayo Clinic began a clinical trial of one of the company’s treatments.

Analyst still likes FIS

Robert W. Baird analyst David Koning said in a research report he recently met with top management of Fidelity National Information Services Inc. (FIS) and he likes what he heard.

“We continue to view the stock as a top idea,” Koning said.

“We like that FIS will likely be the fastest EPS grower of the core processors over the medium term and is in best position to serve larger banks (bank consolidation likely leads to bigger banks over time), yet it currently trades at a significant discount” to its peers in the industry, he said.

Koning expects the Jacksonville-based company, which provides technology for banks, to meet its earnings growth targets.

“Medium-term EPS growth guidance of 13-18 percent seems realistic behind mid-single-digit revenue growth, mild core margin expansion, big expense synergies, and debt paydown. This is well faster than the S&P, and likely the fastest of the core processing group,” he said.

Koning has an “outperform” rating and a $90 price target for the stock, which has been trading close to $80 recently.

Analyst downgrades Rayonier to neutral

Buckingham Research analyst Mark Weintraub last week downgraded his rating on Jacksonville-based Rayonier Inc. from “buy” to “neutral.”

Weintraub did not respond to a request for his report but several financial news sites reported the downgrade was based on Rayonier’s valuation after a run-up in the stock.

Rayonier has risen from a late January low of $17.85 to a recent high of $28.16.

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