Carolyn Micheli | Scripps
EW Scripps Company (NASDAQ: SSP) reported revenue of $574 million in the second quarter of 2024. Loss attributable to Scripps shareholders was $13 million, or 15 cents per share.
Business notes:
- Scripps now expects its political advertising revenues in the 2024 election year in local media to reach record highs. Even the lower end of the new range, $270 million to $290 million, will be higher than in any previous year. The company had previously given a range of $240 million to $270 million. The higher outlook is mainly due to the Senate elections in Montana and Ohio, as well as contentious voting issues in several states. The new momentum in the presidential race could also hold upside potential.
- The planned divestiture of Scripps’ television network Bounce continues to move forward. Bounce, which has programming designed for a black audience, is distributed over-the-air, on cable and most major streaming/FAST platform services. Since Scripps acquired the network as part of the Katz Networks in 2017, it has grown viewership and revenue at a compound annual growth rate of 14%.
- Scripps Networks’ national advertising upfront sales season is coming to a close, with volumes up by low single digits year-over-year, largely due to the success of the company’s women’s sports strategy.
- WNBA viewership has soared across all media partners, including ION’s Friday night franchise, which has seen three games so far this year with more than 1 million viewers each. Scripps’ revenue for the WNBA is up 85% from the 2023 season.
- On a local level, Scripps Sports recently signed a production, sales and distribution rights deal with the Florida Panthers, the most recent Stanley Cup champions. The Panthers are the third National Hockey League team to partner with Scripps Sports to distribute its broadcast rights. This is Scripps Sports’ first season with the Florida Panthers and Utah Hockey Club, and the second year with the Vegas Golden Knights.
- Thanks to tight cost management, company-wide spending in the second quarter met or exceeded expectations.
Adam Symson, President and CEO of Scripps, said, “In the second quarter, our local media political advertising revenues of $28 million were much stronger than expected, resulting in 40 percent growth in the first half of the year over the same period in 2020 and resulting in some displacement of core local advertising. This start to the year and our recent guidance for the second half of the year prompted us to again raise our expectations for revenues in the 2024 presidential election year.
“Campaign spending for the U.S. Senate races in Montana and Ohio remains stable, and at least four states where we have stations have placed reproductive rights issues on their November ballots. We see additional upside with Vice President Kamala Harris entering the presidential race. Overall, the trajectory of political advertising revenue on broadcast television this year is a testament to our resilience as a brand-safe platform for political candidates and campaigns.”
“While the results of last year’s national advertising campaigns are still driving our quarterly results in the Scripps Networks division, we are seeing better performance in this year’s sales cycle. We delivered year-over-year volume growth in the low single digits thanks to commitments from most of our advertising agency clients. The difference was sports. Our Friday night WNBA franchise on ION has had three games to date where viewership exceeded 1 million, proving to advertisers that ION can expose them to a significantly larger sports audience. Our Saturday night NWSL franchise’s viewership also continues to grow, and we are optimistic that the Summer Olympics in Paris will further increase excitement for women’s soccer – and bring us viewership and revenue.
“As we move into the second half of the year, this management team continues to see a clear path to significant debt reduction by year-end. Our segment profit expectations are driven by the robust outlook for political advertising revenue. We are also prudently managing expenses and making good progress with our efforts to sell the Bounce TV network and certain non-strategic real estate assets. All of these factors give us confidence that we can significantly reduce our debt by 2025.”
Operating result
The company’s total revenues were $574 million in the second quarter, a decrease of 1.6%, or $9.2 million, from the same quarter last year. Segment, shared services and corporate costs and expenses were $479 million, an increase from $471 million in the same quarter last year.
Loss attributable to Scripps shareholders was $13 million, or 15 cents per share. In the year-ago quarter, loss attributable to shareholders was $682 million, or $8.10 per share. Pretax costs for the year-ago quarter included a non-cash impairment of Scripps Networks goodwill of $686 million and a restructuring charge of $8 million, which increased loss attributable to shareholders by $8.01 per share.
Second quarter 2024 results by segment compared to the same period last year:
Local media
Revenue was $365 million, an increase of 3.6% over the same quarter last year.
- Core advertising revenue fell 6.9% to $139 million, partly due to the displacement of political advertising.
- Political revenue was $28.2 million, compared to $3.8 million in the same quarter last year, a year without elections.
- Distribution revenues were $194 million, compared to $195 million in the prior year quarter.
Segment expenses increased 2.1% to $277 million. Segment expenses in 2024 reflect additional programming expenses related to the sports rights agreements for the National Hockey League’s Vegas Golden Knights and the former Arizona Coyotes.
Segment profit was $88.1 million, compared to $81 million in the prior year quarter.
Scripps Networks
Revenue was $209 million, down 9.7% from the prior year quarter. Segment expenses were $171 million, relatively flat from the prior year quarter.
Segment profit was $37.7 million, compared to $60.3 million in the prior year quarter.
Financial situation
As of June 30, total cash and cash equivalents were $26.7 million and total debt was $2.9 billion.
During the first six months of 2024, we reduced the outstanding balance on our revolving credit facility by $40 million and made mandatory principal payments of $7.8 million on our term loans.
We have not declared or paid any of the quarterly preferred stock dividends for 2024. We have sufficient liquidity to pay the planned preferred stock dividends; however, this action provides us with greater flexibility to accelerate deleveraging and maximize repayment of our traditional bank debt. The preferred stock dividend rate, which is compounded quarterly, increased to 9% per year and will remain at that level. As of June 30, aggregate undeclared and unpaid cumulative dividends totaled $27.3 million. Under the terms of Berkshire Hathaway’s preferred stock investment in Scripps, we are prohibited from paying dividends on or repurchasing our common stock until all preferred stock is redeemed.
Operating results since the beginning of the year
The following comparisons refer to the period up to 30 June 2023:
Revenues were $1.1 billion in 2024 and 2023. Political revenues were $45.4 million, compared to $7.4 million the previous year, a year without elections.
Segment, shared services and corporate costs and expenses were $953 million, an increase from $926 million in the prior year period. This increase reflects higher programming and production costs related to the sports rights agreements for both Local Media and Scripps Networks.
Loss attributable to Scripps shareholders was $25.8 million, or 30 cents per share. The 2024 period included an investment gain of $18.1 million and a restructuring charge of $6 million, which reduced loss attributable to shareholders by 11 cents per share. In the prior year, loss attributable to shareholders was $714 million, or $8.49 per share. Pretax charges for the prior year included a non-cash goodwill impairment charge for Scripps Networks of $686 million and a restructuring charge of $24.5 million, which increased loss attributable to shareholders by $8.18 per share.
A look into the future
The comparison of our segments is made with the same period in 2023.
