Just how significant was Political revenue for The E.W. Scripps Co. in the third quarter of 2024? The company expects total 2024 presidential-year political advertising revenue in the Local Media division to reach at least $340 million — a record level that far exceeded the guidance the publicly traded company led by President/CEO Adam Symson shared in August.
But, how did the company that’s reinventing its Scripps News brand and building out local sports across its platform of broadcast TV stations perform on the whole in Q3?
The performance was good, but investors were hardly pleased, resulting in a severe drop in value for Scripps’ stock.
For one, net income was seen, coming in at $33.03 million ($0.37 per diluted share) as Scripps swung from a Q3 2023 net loss of $16.23 million (-$0.19).
That fell short of the consensus estimate of $0.56, based on the projections of three analysts polled by Yahoo! Finance. However, it was in line with the consensus estimates shared to StockStory, a financial blog contributing to Yahoo! Finance.
Investors ahead of Monday’s Opening Bell on the Nasdaq market appeared to be more excited about the bonanza of political dollars, with Q3 totals easily surpassing the range of $270 million-$290 million provided three months ago. Thank tight races in Arizona, Michigan, Montana, Ohio, Nevada and Wisconsin for the activity that involved Scripps’ properties in those locales — including flagship WCPO-9 in Cincinnati, an affiliate of ABC.
This propelled Scripps’ Q3 total revenue to $646.3 million, from $566.53 million — easily beating the revenue estimate of $624.67 million from three analysts polled by Yahoo! Finance.
Adjusted EBITDA increased to $176.85 million, from $100.87 million.
Given the strong political in 15 markets, “significant displacement of core advertising” was seen in those locales. In prepared comments, Symson said, “This 2024 level is a testament to the durability of local broadcast programming as the perfect vehicle for massive reach to deliver candidate and political action committee messaging. Our local news has always been a go-to for political advertising. This time around, our sports programming created significant additional opportunities for campaigns to efficiently and effectively reach voters, further boosting our political advertising revenue.”
At the Opening Bell on Monday, “SSP” was at $3.56, up slightly from Friday’s closing price but still down by nearly 56% year-to-date. That excitement fizzled once Scripps’ earnings call commenced an hour later than scheduled due to an outage with conference line provider AT&T’s systems. As the day’s trading progressed, Scripps shares sunk at a break-neck pace, ending Monday at $2.27 — representing a 35.5% decline in value. Some 4.25 million shares were traded against average volume of 656,100 shares.
SCRIPPS’ Q3 IN DEPTH
“Scripps’ record political advertising revenue translated to record third-quarter company revenue this year and combined with prudent expense management to help us significantly exceed expectations for third-quarter EBITDA,” Symson said, noting that the results helped drive the media company’s debt leverage ratio down by to 5.1x as of September 30, compared to 6.0x in the second quarter. “With a strong finish to political and our fourth-quarter performance, we expect to continue to deleverage to the high-4x range by year-end.”
For Scripps, the Local Media segment represents the largest revenue generation arm, and in Q3 Local Media revenue grew to $445.55 million, from $353.06 million. Segment profit came in at $160.69 million, rising from $74.87 million. The Local Media segment includes some 18 ABC affiliates, 11 NBC affiliates, nine CBS affiliates and four FOX affiliates, in addition to 11 independent stations and 10 low-power stations. The Scripps Sports enterprise is housed within the Local Media unit.
At the same time, Scripps Networks suffered a 6.4% revenue decline in Q3, to $201.67 million from $215.39 million. Segment profit was down by 15.3% to $42.06 million, from $49.66 million. The Scripps Networks segment includes Scripps News and Court TV as well as the ION Network, Bounce (which is for sale), and nationally distributed digital multicast offerings Grit, ION Mystery, ION Plus and Laff.
Then, there is an increase in restructuring costs, growing to $12.67 million, from $4.71 million.
Offsetting that are those robust political dollars. For Q3, Political came in at $125.21 million, growing from $9.13 million one year ago, when few election-time races generated big ad spend.
The biggest dollar intake spigot for Scripps remains retransmission consent revenue, with Distribution dollars slipping 5.7% to $186.48 million from $197.84 million.
Those core ad dollars? A 9.2% decline to $129.26 million from $142.3 million was experienced by Scripps in the quarter.
LOOKING AHEAD
Scripps provided some details regarding how it expects the fourth quarter of 2024 to conclude, from a fiscal perspective.
Local Media revenue is expected to finish up in the low-to-mid 30% range, while Scripps Networks revenue is anticipated to be down mid-single-digit percentages.
