Scripps reports Q3 2024 financial results

Scripps reports Q3 2024 financial results

Nov. 4, 2024By Carolyn Micheli

CINCINNATI - The E.W. Scripps Company (NASDAQ: SSP) delivered a record $646 million in revenue for the third quarter of 2024, driven by record political advertising revenue. The company expects full-year political advertising revenue to reach at least $340 million, which, combined with determined expense management, is fueling significant debt and leverage reduction this year.

Income attributable to the shareholders of Scripps was $33 million or 37 cents per share.

Business notes:

• 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 of $270-$290 million Scripps issued in August. The results were driven by strong advertising buys with Scripps stations in Arizona, Michigan, Montana, Ohio, Nevada and Wisconsin. The political advertising demand caused significant displacement of core advertising in those 15 markets.
• The record political advertising revenue helped the company achieve record third-quarter revenue of $646 million.
• In the Scripps Networks division, tight expense management resulted in a nearly 4% decline in expenses. For the fourth quarter, Scripps expects an even greater decline in Networks expense, down in the high single-digits percent range, because of reductions at Scripps News and ongoing cost controls.
• This WNBA season, seven of ION's Friday night franchise telecasts surpassed 1 million viewers. The average ratings across the season more than doubled from last year, proving the value of the platform to attract key demos with live sports. ION's top-performing night was Aug. 30, when the Indiana Fever and Chicago Sky played on the national network, drawing about 1.6 million viewers and a peak of nearly 2 million. Scripps' full-season 2024 WNBA revenue was double that of the 2023 season.
• During the third quarter, the company paid down $115 million of debt and ended the quarter with a leverage ratio of 5.1x, a significant improvement from 6.0x at the end of Q2. The company will pay down a total of approximately $300 million in debt this year.

From Scripps President and CEO Adam Symson:
"Scripps' Local Media political advertising revenue came in nearly 30% higher than our last presidential-election year political revenue, which also was a record year. 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.

"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. These results helped drive our leverage ratio down by nearly a full turn, from 6.0x in the second quarter to 5.1x at the end of the third. And 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.

"Through continued expense management and prudent growth initiatives, we expect our operating performance improvement will continue into next year across the enterprise, including a Scripps Networks margin improvement of at least 400-600 basis points in 2025. I hope it's clear that we are effectively executing a plan to improve our operating performance and manage down the company's debt to better position Scripps for future growth."

Operating results
Total third-quarter company revenue was $646 million, an increase of 14% or $79.8 million from the prior-year quarter. Costs and expenses for segments, shared services and corporate were $472 million, up from $469 million in the year-ago quarter.

Income attributable to the shareholders of Scripps was $33 million or 37 cents per share. Pre-tax costs for the quarter included a $12.7 million restructuring charge, decreasing the income attributable to shareholders by 11 cents per share. In the prior-year quarter, the loss attributable to shareholders was $16.2 million or 19 cents per share. The pre-tax costs for the prior-year quarter included $4.7 million in restructuring costs.

Third-quarter 2024 results by segment compared to prior-period amounts:

Local Media
Revenue was $446 million, up 26% from the prior-year quarter.

• Core advertising revenue decreased 9.2% to $129 million, due in part to displacement from political advertising.
• Political revenue was $125 million, compared to $9.1 million in the prior-year quarter, a non-election year.

• Distribution revenue was $186 million, compared to $198 million in the prior-year quarter.

Segment expenses increased 2.4% to $285 million.

Segment profit was $161 million, compared to $75 million in the year-ago quarter.

Scripps Networks
Revenue was $202 million, down 6.4% from the prior-year quarter. Segment expenses were $160 million, down 3.7%, reflecting a decrease in programming expense.

Segment profit was $42.1 million, compared to $49.7 million in the year-ago quarter.

Financial condition
On Sept. 30, cash and cash equivalents totaled $34.6 million, and total debt was $2.8 billion.

During the first nine months of 2024, we reduced the outstanding balance on our revolving credit facility by $155 million and made mandatory principal payments of $11.7 million on our term loans.

We did not declare or provide payment for any of the 2024 quarterly preferred stock dividends. 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 Sept. 30, aggregated undeclared and unpaid cumulative dividends totaled $41.4 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.

Year-to-date operating results
The following comparisons are to the period ending Sept. 30, 2023:

Revenue was $1.8 billion, which compares to revenue of $1.7 billion in 2023. Political revenue was $177 million, compared to $16.5 million in the prior year, a non-election year.

Costs and expenses for segments, shared services and corporate were $1.4 billion, relatively flat from the year-ago period.

Income attributable to the shareholders of Scripps was $7.3 million or 8 cents per share. The 2024 period included an $18.1 million investment gain and an $18.7 million restructuring charge. In the prior year, loss attributable to shareholders was $730 million or $8.67 per share. Pre-tax costs for the prior year included a non-cash goodwill impairment charge for Scripps Networks of $686 million as well as a $29.2 million restructuring charge, increasing the loss attributable to shareholders by $8.21 per share.

Looking ahead
Comparisons for our segments are to the same period in 2023.

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 a.m. Eastern, today, Nov. 4. 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 739969 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 Nov. 4 until midnight Dec. 4. 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 7917219.

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 "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "believe," "anticipate," "intend," "expect," "estimate," "could," "should," "outlook," "guidance," and similar references to future periods. Examples of forward-looking statements include, among others, statements the company makes regarding expected operating results and future financial condition. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management's current beliefs, expectations, and assumptions regarding the future of the industry and the economy, the company's plans and strategies, anticipated events and trends, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties, and changes in circumstance that are difficult to predict and many of which are outside of the company's control. The company's actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause the company's actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: change in advertising demand, fragmentation of audiences, loss of affiliation agreements, loss of distribution revenue, increase in programming costs, changes in law and regulation, the company's ability to identify and consummate strategic transactions, the controlled ownership structure of the company, and the company's ability to manage its outstanding debt obligations. A detailed discussion of such risks and uncertainties is included in the company's Form 10-K, on file with the SEC, in the section titled "Risk Factors."Any forward-looking statement made in this document is based only on currently available information and speaks only as of the date on which it is made. The company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise.

Media contact: Michael Perry, The E.W. Scripps Company, (513) 259-4718, [email protected]
Investor contact: Carolyn Micheli, The E.W. Scripps Company, (513) 977-3732, [email protected]

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, Grit, ION Mystery, ION Plus 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."

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