CINCINNATI, May 9, 2024
/PRNewswire/ -- The E.W. Scripps Company (NASDAQ: SSP) delivered
$561 million in revenue for the first
quarter of 2024. Loss attributable to the shareholders of Scripps
was $12.8 million or 15 cents per share. Operating results for the
quarter include a pre-tax investment gain of $18.1 million and $5
million of restructuring costs.
Business notes:
- Scripps now believes its 2024 election-year political
advertising revenue will reach the range of $240 million-$270
million. Previously, the company had given a range of
$210 million-$250 million. The increased outlook is being
driven largely by U.S. Senate races in Montana and Ohio as well as controversial ballot issues in
several states.
- The company has begun a public process to explore the sale of
its Bounce television network. Bounce, whose programming is created
for Black audiences, is distributed over the air, on cable and on
most major streaming/FAST platform services. Bounce has grown
viewership and revenue – at a 14% CAGR – since Scripps acquired it
as part of the Katz networks in 2017.
- During the first quarter, our operating performance was aided
by strong Local Media political advertising and distribution
revenues, a lift in direct-response advertising in the Scripps
Networks division, and prudent expense management.
- Scripps Networks held its first major upfront events in many
years in New York, Chicago and Los
Angeles in early April, hosting several hundred advertising
agencies and buyers to showcase Scripps' women's professional
sports programming on ION – the WNBA and the National Women's
Soccer League (NWSL); the popular original show Johnson on Bounce;
and the objective, high-quality journalism produced by its national
network Scripps News.
- The NWSL season kicked off March
16 on ION, and the league is drawing an influx of new
viewers to the network. More than 50% of the NWSL's viewers are new
to ION and also are younger and more affluent than the typical ION
viewer. The first WNBA game of the season on ION on May 17 will provide ample opportunity for
cross-marketing to fans of each league.
From Scripps President and CEO Adam
Symson:
"In the first quarter, we were pleased to deliver strong
operating results that exceeded our expectations due to our close
expense management. Local political is coming on strong. We also
are seeing green shoots in the national direct response advertising
marketplace while scatter market pricing improved in Q1 2024 over
Q1 2023.
"The company is sharply focused on our No.1 priority of bringing
down our debt levels and leverage to a more comfortable place by
year's end. We are optimistic about the sale of a major asset, the
Bounce TV network, as well as some non-strategic real estate
assets. We expect to benefit from robust political advertising, the
early signs of recovery in parts of the national advertising
marketplace, and our expected increase in revenue from the
stability we've seen in the pay TV ecosystem. With careful expense
management, we are committed and confident this will be a
significant year toward our goal.
"We decided to explore a sale of Bounce after receiving
significant inbound interest from potential strategic buyers. We
have thoroughly enjoyed owning Bounce since we acquired it in 2017,
and we know the network plays a special role in Black communities.
Under Scripps' stewardship, the network has doubled its revenue and
continues to see unparalleled audience growth. For the first
quarter, Bounce was up 14% on linear platforms while most other
linear viewership was down. At this point, we believe a strategic
buyer could catalyze Bounce's growth even more.
"We are pleased to see political advertising strengthening,
leading us to raise our full-year guidance range to $240 million-$270
million, with the higher end of that range now above our
2020 results. Strong spending is coming from Montana and Ohio, where U.S. Senators John Tester and Sherrod
Brown are defending their seats against Republican National
Committee spending. The controversial ballot measure in
Florida also provided upside to
our guidance range. We'll know in the coming months how many of the
six other states with Scripps markets, including Arizona, will have similar measures on their
November ballots. Those prospective ballot issues are not yet
factored into our updated guidance."
Operating results
Total first-quarter company revenue was $561
million, an increase of 6.4% or $33.7
million from the prior-year quarter. Costs and expenses for
segments, shared services and corporate were $474 million, up from $455
million in the year-ago quarter.
Loss attributable to the shareholders of Scripps was
$12.8 million or 15 cents per share. The current-year quarter
included an $18.1 million investment
gain and $5 million in restructuring
costs. When taken together, these items decreased the loss
attributable to shareholders by 12
cents per share. In the prior-year quarter, the loss
attributable to shareholders was $31.1
million or 37 cents per share
and included $16.5 million in
restructuring costs, increasing the loss attributable to
shareholders by 15 cents per
share.
First-quarter 2024 results by segment compared to
prior-period amounts:
Local Media
Revenue was $353
million, up 13% from the prior-year quarter.
- Core advertising revenue decreased 3.4% to $136 million.
- Political revenue was $15.2
million, compared to $3.5
million in the prior-year quarter, a non-election year.
- Distribution revenue increased 21% to $197 million.
Segment expenses increased 8% to $287
million. Segment expenses in 2024 reflect additional
programming expense and production costs associated with the sports
rights agreements and airing of games for the National Hockey
League's Vegas Golden Knights and Arizona Coyotes.
Segment profit was $65.6 million,
compared to $45.8 million in the
year-ago quarter.
Scripps Networks
Revenue was $209 million, down 3.3%
from the prior-year quarter. Segment expenses were $160 million, down 3.2%, reflecting a decrease in
costs from the programmatic product we began to sunset in the
second quarter of 2023.
Segment profit was $49.7 million,
compared to $51.5 million in the
year-ago quarter.
Financial condition
On March 31, cash and cash
equivalents totaled $30.2 million,
and total debt was $2.9 billion.
During the first quarter of 2024, we reduced the outstanding
balance on our revolving credit facility by $40 million and made mandatory principal payments
of $3.9 million on our term
loans.
We did not declare or provide payment for the first-quarter 2024
preferred stock dividend. We have sufficient liquidity to pay the
scheduled dividends on the preferred shares; however, this action
provides us better flexibility for accelerating deleveraging and
maximizing the paydown of our traditional bank debt. The dividend
rate on the preferred shares, which compounds quarterly, increased
to 9% per annum and will remain at that rate. At March 31, aggregated undeclared and unpaid
cumulative dividends totaled $13.5
million. Under the terms of Berkshire Hathaway's preferred
equity investment in Scripps, we are prohibited from paying
dividends on or repurchasing our common shares until all preferred
shares are redeemed.
Looking ahead
Comparisons for our segments are to the same period in
2023.
|
|
Second-quarter
2024
|
Local Media
revenue
|
|
Up in the
low-to-mid-single-digit percent range
|
Local Media
expense
|
|
Up in the
low-to-mid-single-digit percent range
|
Scripps Networks
revenue
|
|
Down mid-single-digit
percent range
|
Scripps Networks
expense
|
|
Up low-single-digit
percent range
|
Shared services and
corporate
|
|
About $22
million
|
Conference call
The senior management of The E.W. Scripps Company will discuss the
company's quarterly results during a telephone conference call at
9:30 a.m. Eastern, tomorrow,
May 10. To access the live
webcast, visit http://ir.scripps.com and find the link under
"upcoming events."
To access the conference call by telephone, dial (844) 867-6169
(U.S.) or (409) 207-6975 (international) and give the access
code 4832960 approximately five minutes before the start of the
call. Investors and analysts will need the name of the call
(Scripps earnings call) to be granted access. The public is granted
access to the conference call on a listen-only basis.
A replay line will be open from 12:30
p.m. Eastern time May 10 until
midnight June 11. The domestic number
to access the replay is (866) 207-1041 and the international number
is (402) 970-0847. The access code for both numbers is 7110746.
A replay of the conference call will be archived and available
online for an extended period of time following the call. To
access the audio replay, visit http://ir.scripps.com/ approximately
four hours after the call, and the link can be found on that
page under "audio/video links."
Forward-looking statements
This document contains
certain forward-looking statements related to the company's
businesses that are based on management's current expectations.
Forward-looking statements are subject to certain risks, trends and
uncertainties, including changes in advertising demand and other
economic conditions that could cause actual results to differ
materially from the expectations expressed in forward-looking
statements. Such forward-looking statements are made as of the date
of this document and should be evaluated with the understanding of
their inherent uncertainty. A detailed discussion of principal
risks and uncertainties that may cause actual results and events to
differ materially from such forward-looking statements is included
in the company's Form 10-K, on file with the SEC, in the section
titled "Risk Factors." The company undertakes no obligation to
publicly update any forward-looking statements to reflect events or
circumstances after the date such statements are made.
Media contact: Michael
Perry, The E.W. Scripps Company, (513) 259-4718,
michael.perry@scripps.com
Investor contact: Carolyn
Micheli, The E.W. Scripps Company, (513) 977-3732,
carolyn.micheli@scripps.com
About Scripps
The E.W. Scripps Company (NASDAQ: SSP) is a diversified
media company focused on creating a better-informed world. As one
of the nation's largest local TV broadcasters, Scripps serves
communities with quality, objective local journalism and operates a
portfolio of more than 60 stations in 40+ markets. Scripps reaches
households across the U.S. with national news outlets Scripps News
and Court TV and popular entertainment brands ION, Bounce, Defy TV,
Grit, ION Mystery and Laff. Scripps is the nation's largest holder
of broadcast spectrum. Scripps is the longtime steward of the
Scripps National Spelling Bee. Founded in 1878, Scripps' long-time
motto is: "Give light and the people will find their own way."
THE E.W. SCRIPPS
COMPANY
RESULTS OF
OPERATIONS
|
|
|
|
Three Months
Ended
March 31,
|
(in thousands, except
per share data)
|
|
2024
|
|
2023
|
|
|
|
|
|
Operating
revenues
|
|
$
561,464
|
|
$
527,778
|
Segment, shared
services and corporate expenses
|
|
(474,226)
|
|
(455,346)
|
Restructuring
costs
|
|
(5,015)
|
|
(16,511)
|
Depreciation and
amortization of intangible assets
|
|
(38,688)
|
|
(38,543)
|
Gains (losses), net on
disposal of property and equipment
|
|
(147)
|
|
(896)
|
Operating
expenses
|
|
(518,076)
|
|
(511,296)
|
Operating
income
|
|
43,388
|
|
16,482
|
Interest
expense
|
|
(54,917)
|
|
(48,838)
|
Defined benefit pension
plan income
|
|
177
|
|
134
|
Miscellaneous,
net
|
|
16,821
|
|
(503)
|
Income (loss) from
operations before income taxes
|
|
5,469
|
|
(32,725)
|
Benefit (provision) for
income taxes
|
|
(3,843)
|
|
14,185
|
Net income
(loss)
|
|
1,626
|
|
(18,540)
|
Preferred stock
dividends
|
|
(14,377)
|
|
(12,576)
|
Net loss attributable
to the shareholders of The E.W. Scripps Company
|
|
$
(12,751)
|
|
$
(31,116)
|
|
|
|
|
|
Net loss per diluted
share of common stock attributable to the shareholders of The E.W.
Scripps Company:
|
|
$
(0.15)
|
|
$
(0.37)
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
|
84,891
|
|
83,751
|
See notes to results
of operations.
|
Notes to Results of Operations
1. SEGMENT INFORMATION
We determine our business segments based upon our management and
internal reporting structures, as well as the basis on which our
chief operating decision maker makes resource-allocation decisions.
Our Local Media segment includes more than 60 local television
stations and their related digital operations. It is comprised of
18 ABC affiliates, 11 NBC affiliates, nine CBS affiliates and four
FOX affiliates. We also have seven CW affiliates - four on full
power stations and three on multicast; seven independent stations
and 10 additional low power stations. Our Local Media segment earns
revenue primarily from the sale of advertising to local, national
and political advertisers and retransmission fees received from
cable operators, telecommunications companies, satellite carriers
and over-the-top virtual MVPDs.
Our Scripps Networks segment includes national news outlets
Scripps News and Court TV as well as popular entertainment brands
ION, Bounce, Defy TV, Grit, ION Mystery and Laff. The Scripps
Networks reach nearly every U.S. television home through free
over-the-air broadcast, cable/satellite, connected TV and digital
distribution. These operations earn revenue primarily through the
sale of advertising.
Our respective business segment results reflect the impact of
intercompany carriage agreements between our local broadcast
television stations and our national networks. We also allocate a
portion of certain corporate costs and expenses, including
accounting, human resources, employee benefit and information
technology to our business segments. These intercompany agreements
and allocations are generally amounts agreed upon by management,
which may differ from an arms-length amount.
The other segment caption aggregates our operating segments that
are too small to report separately. Costs for centrally provided
services and certain corporate costs that are not allocated to the
business segments are included in shared services and corporate
costs. These unallocated corporate costs would also include the
costs associated with being a public company. Corporate assets are
primarily cash and cash equivalents, property and equipment
primarily used for corporate purposes and deferred income
taxes.
Our chief operating decision maker evaluates the operating
performance of our business segments and makes decisions about the
allocation of resources to our business segments using a measure
called segment profit. Segment profit excludes interest, defined
benefit pension plan amounts, income taxes, depreciation and
amortization, impairment charges, divested operating units,
restructuring activities, investment results and certain other
items that are included in net income (loss) determined in
accordance with accounting principles generally accepted in
the United States of America.
Information regarding the operating results of our business
segments is as follows:
|
|
Three Months
Ended
March 31,
|
|
|
(in
thousands)
|
|
2024
|
|
2023
|
|
Change
|
|
|
|
|
|
|
|
Segment operating
revenues:
|
|
|
|
|
|
|
Local Media
|
|
$ 352,836
|
|
$ 311,923
|
|
13.1 %
|
Scripps
Networks
|
|
209,278
|
|
216,473
|
|
(3.3) %
|
Other
|
|
4,113
|
|
3,756
|
|
9.5 %
|
Intersegment eliminations
|
|
(4,763)
|
|
(4,374)
|
|
8.9 %
|
Total operating
revenues
|
|
$ 561,464
|
|
$ 527,778
|
|
6.4 %
|
|
|
|
|
|
|
|
Segment profit
(loss):
|
|
|
|
|
|
|
Local Media
|
|
$
65,556
|
|
$
45,843
|
|
43.0 %
|
Scripps
Networks
|
|
49,654
|
|
51,526
|
|
(3.6) %
|
Other
|
|
(6,397)
|
|
(1,532)
|
|
|
Shared services and
corporate
|
|
(21,575)
|
|
(23,405)
|
|
(7.8) %
|
Restructuring
costs
|
|
(5,015)
|
|
(16,511)
|
|
|
Depreciation and
amortization of intangible assets
|
|
(38,688)
|
|
(38,543)
|
|
|
Gains (losses), net on
disposal of property and equipment
|
|
(147)
|
|
(896)
|
|
|
Interest
expense
|
|
(54,917)
|
|
(48,838)
|
|
|
Defined benefit pension
plan income
|
|
177
|
|
134
|
|
|
Miscellaneous,
net
|
|
16,821
|
|
(503)
|
|
|
Income (loss) from
operations before income taxes
|
|
$
5,469
|
|
$ (32,725)
|
|
|
Operating results for our Local Media segment were as
follows:
|
|
Three Months
Ended
March 31,
|
|
|
(in
thousands)
|
|
2024
|
|
2023
|
|
Change
|
|
|
|
|
|
|
|
Segment operating
revenues:
|
|
|
|
|
|
|
Core
advertising
|
|
$ 136,443
|
|
$ 141,313
|
|
(3.4) %
|
Political
|
|
15,166
|
|
3,525
|
|
|
Distribution
|
|
197,499
|
|
163,441
|
|
20.8 %
|
Other
|
|
3,728
|
|
3,644
|
|
2.3 %
|
Total operating
revenues
|
|
352,836
|
|
311,923
|
|
13.1 %
|
Segment costs and
expenses:
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
106,726
|
|
105,714
|
|
1.0 %
|
Programming
|
|
130,744
|
|
118,052
|
|
10.8 %
|
Other
expenses
|
|
49,810
|
|
42,314
|
|
17.7 %
|
Total costs and
expenses
|
|
287,280
|
|
266,080
|
|
8.0 %
|
Segment
profit
|
|
$
65,556
|
|
$
45,843
|
|
43.0 %
|
Operating results for our Scripps Networks segment were as
follows:
|
|
Three Months
Ended
March 31,
|
|
|
(in
thousands)
|
|
2024
|
|
2023
|
|
Change
|
|
|
|
|
|
|
|
Total operating
revenues
|
|
$ 209,278
|
|
$ 216,473
|
|
(3.3) %
|
Segment costs and
expenses:
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
29,981
|
|
30,173
|
|
(0.6) %
|
Programming
|
|
89,162
|
|
87,406
|
|
2.0 %
|
Other
expenses
|
|
40,481
|
|
47,368
|
|
(14.5) %
|
Total costs and
expenses
|
|
159,624
|
|
164,947
|
|
(3.2) %
|
Segment
profit
|
|
$
49,654
|
|
$
51,526
|
|
(3.6) %
|
2. CONDENSED CONSOLIDATED BALANCE SHEETS
(in
thousands)
|
|
As
of
March
31,
2024
|
|
As of
December 31,
2023
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
30,229
|
|
$
35,319
|
Other current
assets
|
|
609,210
|
|
640,774
|
Total current
assets
|
|
639,439
|
|
676,093
|
Investments
|
|
23,689
|
|
23,265
|
Property and
equipment
|
|
457,181
|
|
455,255
|
Operating lease
right-of-use assets
|
|
101,676
|
|
99,194
|
Goodwill
|
|
1,968,574
|
|
1,968,574
|
Other intangible
assets
|
|
1,704,532
|
|
1,727,178
|
Programming
|
|
421,735
|
|
449,943
|
Miscellaneous
|
|
10,999
|
|
10,618
|
TOTAL ASSETS
|
|
$
5,327,825
|
|
$
5,410,120
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
90,969
|
|
$
76,383
|
Unearned
revenue
|
|
13,875
|
|
12,181
|
Current portion of
long-term debt
|
|
15,612
|
|
15,612
|
Accrued expenses and
other current liabilities
|
|
326,345
|
|
373,643
|
Total current
liabilities
|
|
446,801
|
|
477,819
|
Long-term debt (less
current portion)
|
|
2,855,258
|
|
2,896,824
|
Other liabilities (less
current portion)
|
|
863,804
|
|
879,294
|
Total equity
|
|
1,161,962
|
|
1,156,183
|
TOTAL LIABILITIES AND EQUITY
|
|
$
5,327,825
|
|
$
5,410,120
|
3. EARNINGS PER SHARE ("EPS")
Unvested awards of share-based payments with non-forfeitable
rights to receive dividends or dividend equivalents, such as our
RSUs, are considered participating securities for purposes of
calculating EPS. Under the two-class method, we allocate a portion
of net income to these participating securities and, therefore,
exclude that income from the calculation of EPS for common stock.
We do not allocate losses to the participating securities.
The following table presents information about basic and diluted
weighted-average shares outstanding:
|
|
Three Months
Ended
March 31,
|
(in
thousands)
|
|
2024
|
|
2023
|
|
|
|
|
|
Numerator (for basic and diluted earnings
per share)
|
|
|
|
|
Net income
(loss)
|
|
$
1,626
|
|
$ (18,540)
|
Less preferred stock
dividends
|
|
(14,377)
|
|
(12,576)
|
Numerator for basic and
diluted earnings per share
|
|
$ (12,751)
|
|
$ (31,116)
|
Denominator
|
|
|
|
|
Basic weighted-average
shares outstanding
|
|
84,891
|
|
83,751
|
Effect of dilutive
securities
|
|
—
|
|
—
|
Diluted
weighted-average shares outstanding
|
|
84,891
|
|
83,751
|
4. NON-GAAP INFORMATION
In addition to results prepared in accordance with GAAP, this
earnings release discusses adjusted EBITDA, a non-GAAP performance
measure that management and the company's Board of Directors uses
to evaluate the performance of the business. We also believe that
the non-GAAP measure provides useful information to investors by
allowing them to view our business through the eyes of management
and is a measure that is frequently used by industry analysts,
investors and lenders as a measure of valuation for broadcast
companies.
Adjusted EBITDA is calculated as income (loss) from continuing
operations, net of tax, plus income tax expense (benefit),
interest expense, losses (gains) on extinguishment of debt, defined
benefit pension plan expense (income), share-based compensation
costs, depreciation, amortization of intangible assets, impairment
of goodwill, loss (gain) on business and asset disposals,
acquisition and integration costs, restructuring charges and
certain other miscellaneous items. We consider adjusted EBITDA to
be an indicator of our operating performance.
A reconciliation of the adjusted EBITDA measure to the
comparable financial measure in accordance with GAAP is as
follows:
|
|
Three Months
Ended
March 31,
|
(in
thousands)
|
|
2024
|
|
2023
|
|
|
|
|
|
Net income
(loss)
|
|
$
1,626
|
|
$ (18,540)
|
Provision (benefit) for
income taxes
|
|
3,843
|
|
(14,185)
|
Interest
expense
|
|
54,917
|
|
48,838
|
Defined benefit pension
plan income
|
|
(177)
|
|
(134)
|
Share-based
compensation costs
|
|
4,606
|
|
3,475
|
Depreciation
|
|
15,120
|
|
15,053
|
Amortization of
intangible assets
|
|
23,568
|
|
23,490
|
Losses (gains), net on
disposal of property and equipment
|
|
147
|
|
896
|
Restructuring
costs
|
|
5,015
|
|
16,511
|
Miscellaneous,
net
|
|
(16,821)
|
|
503
|
Adjusted
EBITDA
|
|
$
91,844
|
|
$
75,907
|
5. SUPPLEMENTAL CASH FLOW INFORMATION
The following table presents additional information on certain
sources and uses of cash:
|
|
Three Months
Ended
March 31,
|
(in
thousands)
|
|
2024
|
|
2023
|
|
|
|
|
|
Capital
expenditures
|
|
$ (17,897)
|
|
$
(8,296)
|
Preferred stock
dividends paid
|
|
—
|
|
(12,000)
|
Interest
paid
|
|
(67,347)
|
|
(61,973)
|
Income taxes refunded
(paid)
|
|
(182)
|
|
7,679
|
Mandatory contributions
to defined retirement plans
|
|
(297)
|
|
(247)
|
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SOURCE The E.W. Scripps Company