Count The E.W. Scripps Co. among the broadcast television station ownership groups that proved the naysayers wrong by surpassing the earnings forecast of financial analysts who offered revenue and EPS estimates on the company’s Q1 results.
The company released its fiscal report card late Thursday but waited until Friday morning to discuss its financial health — and its plans when deregulation likely arrives for broadcasters.
For Q4, operating revenue moved to $524.39 million, from $561.46 million. At the same time, operating expenses declined to $496.92 million, from $518.08 million.
Add it up, and The E.W. Scripps Co. widened its Q1 loss to $18.84 million (-$0.22), from $12.75 million (-$0.15).
While that may not sound favorable, five analysts polled by Yahoo! Finance chimed in on earnings, and the high estimate came in at $523 million, making the results an easy beat for the company led by CEO Adam Symson.
The results were released late Thursday ahead of a Friday morning earnings call for analysts and interested shareholders. And, it included the news front-and-center that Scripps on April 10 successfully completed the refinancing of its 2026 term loan, 2028 term loan and revolving credit facility and entered into a new accounts receivable (AR) securitization facility. Thus, Scripps “is committed to proactive management of its remaining debt maturities.”
In prepared comments, Symson added, “Over the past year, we have made significant progress on debt paydown and reducing leverage. Debt paydown remains our highest capital allocation priority. As we move through the first half of this year, we are navigating the headwinds of business uncertainty while maximizing revenue growth in connected TV and sports, delivering on Scripps Networks’ margin expansion and positioning the company to benefit from the new regulatory environment.”
Local Media revenue in Q2 declined 7.8%, to $325 million, as core advertising revenue decreased 3.1% to $132 million. Like several of Scripps’ peers, distribution revenue was $187 million, compared to $197 million in the prior-year quarter, as a result of declining legacy pay TV subscribers. Segment expenses increased 1.1% to $290 million. Segment profit was $34.9 million, compared to $65.6 million in the year-ago quarter.
Looking ahead, Scripps expects Local Media revenue to be down in the high single-digit range while Scripps Networks revenue is projected to be flat.
In Q1, Scripps Networks revenue was $198 million, down 5.4% from the prior-year quarter. Segment expenses were $134 million, down 16.1% from the prior-year quarter. Segment profit was $64.1 million, compared to $49.7 million in the year-ago quarter.
SWAPS AND SELECT SALES ON THE WAY
Speaking Friday morning on the company’s earnings call, “greater scale nationally and greater depth in-market” are the best recipe for Scripps “to take advantage of this moment” when it comes to likely deregulation, with “swaps and select asset sales” the probable path for the company once the ownership caps are thawed by the FCC. The comments came in response to queries from Dan Kurnos of Benchmark.
Craig Huber, founder of Huber Research Partners asked about TV ad categories such as Automotive, Retail and Services. In Q1, local was more stable than national. Automotive and Retail “were the worst performers” in the quarter due to the macroeconomic environment. In general, the Q1 to Q2 performance is “consistent.” Gambling was up in the quarter thanks to local sports deals Scripps has.
The Las Vegas Golden Knights and the Florida Panthers, along with a favorable footprint with ABC affiliates airing the NBA Playoffs, helped in April, driving more advertising across multiple categories. This has helped offset some of the downward pacing for Q2.
Avi Steiner, Managing Director at JPMorgan Chase, also asked about deregulation, and CEO Symson spoke up about the FCC’s investigations against three of the “Big Four” networks. In his view, the Commission is engaging in violations and each of the networks need to step up to defend themselves before the Carr Commission takes action. At the same time, he expressed his concerns regarding “de facto control of the airwaves by the networks” as Commissioner Nate Simington has suggested a 30% cap on reverse retransmission consent payments to networks from affiliates.
