Scripps’ Q1 Loss Comes In As Expected By Analysts

Given the tremendous political ad dollars seen across the broadcast television industry in the 2022, it’s been no surprise to analysts and investors that the first quarter earnings reports for 2023 would reflect a year-over-year loss due to bad comps and that pesky “macroeconomic weakness.”

For The E.W. Scripps Co., a swing to a net loss was indeed seen. But, the results were in line with the analysts polled by Yahoo! Finance. And, investors were pleased, sending SSP up nearly 11% in mid-morning trading on Friday.

In Q1, operating revenue slipped to $527.78 million from $565.71 million.

The 5 analysts polled expected revenue of $528.42. However, the high estimate was $531.5 million, while the low estimate was $521 million.

Earnings per share was a beat, moving to -$0.37; analysts anticipated EPS of -$0.38.

The EPS finish was based on a net loss attributable to shareholders in Q1 of $31.12 million, compared to net income in Q1 ’22 of $9.79 million.

Ahead of the company’s earnings call at 9:30am Eastern, Scripps cited inflation and “consumer uncertainty” as factors that continued to contribute to softness in the advertising marketplace during Q1.

Additionally, restructuring costs for the quarter increased the loss attributable to shareholders by 15 cents per share, Scripps noted. On January 5, Scripps initiated a company reorganization that the company believes will result in at least $40
million in annual savings. “The goal of the reorganization is to leverage the company’s strong position in the U.S. television industry and propel its growth across emerging media marketplaces,” Scripps said.

Retransmission consent revenue continues to play a key role for Scripps with respect to dollars and profits. At the end of the first quarter, the company renewed 26% of its pay TV households, “a critical first step” toward the successful renewal of 75% of its pay TV subscriber base this year. Total pay TV households were up 1% in the most recent reporting period, compared to the prior quarter, Scripps said.

But, FAST channel revenue is a potential big-dollar generator for Scripps, given its Q1 prowess. During the first quarter, connected TV revenue for Scripps’ national networks grew 46% over Q1 2022. Scripps Networks brands alongside ION, Bounce, and Grit gained further distribution across all the major streaming services. This, Scripps believes, puts the company on track to generate more than $100 million in networks Connected TV revenue in 2023.

Then, there is Scripps Sports, off to a fast-start with the just-announced TV rights agreement with the Las Vegas Golden Knights NHL club, moving from AT&T SportsNet; and a WNBA Friday night telecast agreement that will see game-day coverage on Ion.

LOCAL MEDIA AT A GLANCE

How did Scripps’ Local Media division perform in Q1, the last quarter in which Brian Lawlor had oversight before shifting 100% of his attention to Scripps Sports?

• Revenue was $312 million, down 4.5% from the prior-year quarter.
  • Core advertising revenue decreased 10% to $141 million.
  • Political revenue was $3.5 million, compared to $5.8 million in the prior-year quarter.
  • Distribution revenue increased 2.4% to $163 million.
• Segment expenses decreased 2.3% to $266 million, reflecting lower rating services costs.
• Segment profit was $45.8 million, compared to $54.4 million in the year-ago quarter.

Quarter highlights, as shared on the Q1 2023 earnings call, include growth in the Home Improvement and Automotive categories.

Dean Littleton is now in charge of Local Media, rising from the top leadership role at KMGH-7 in Denver.

Beyond that, President/CEO Adam Symson took a tone much like that of Nexstar head Perry Sook and Sinclair President/CEO Chris Ripley in noting that the coming years brings enormous potential for riches tied to data distribution via ATSC 3.0 broadcast internet technology. However, there can’t be a dollar put on something that has yet to come to fruition, and as such Wall Street needs to keep its eyes on the future — one that Scripps is convinced will be bright and full of revenue.

On March 31, total debt was $2.9 billion for The E.W. Scripps Co. 

The E.W. Scripps Co. has not seen its stock go ex-dividend since December 2020.

As of 11:10am Eastern, SSP was trading at $8.20, up 10.81% from Thursday.