CINCINNATI – The E.W. Scripps Company (NYSE: SSP) today reported operating results for the first quarter of 2017.
For the quarter, net loss was $1.9 million or 2 cents per share. In the prior-year quarter, the net income was $4.9 million or 6 cents per share.
For the quarter, total revenue was $211 million compared to $209 million in first-quarter 2016.
Business highlights
• The company has closed an offering of $400 million of new senior unsecured notes priced at 5.125 percent and scheduled to mature in 2025. Proceeds from the offering were used to repay the existing $391 million term loan B due in 2020, to pay related fees, and for general corporate purposes.
Since this is a refinancing, the company is not significantly increasing the total amount of debt.
• Retransmission revenue increased 24 percent to $66 million in the first quarter. The increase was driven by the renewal at higher rates of two contracts covering 3 million subscribers during the fourth quarter of 2016.
Retransmission revenue is expected to become about 35 percent of television division revenue this year.
• Digital revenue grew 25 percent in the first quarter, particularly driven by growth at our podcast industry-leading company Midroll.
• Scripps is launching a new daytime television lifestyle talk show featuring country music entertainer Kellie Pickler and Emmy Award-winning New York City journalist Ben Aaron. The show is a partnership with Grammy Award-winning country music artist Faith Hill. It will launch this fall in 20 Scripps TV station markets.
• Scripps received three prestigious Walter Cronkite Awards for Excellence in Television Political Journalism from the Norman Lear Center at University of Southern California. The awards recognized original reporting of the 2016 elections across the company’s 24 news-producing markets and at Newsy; its campaign fact-checking partnership with Politifact and including Newsy; and the work of its Denver station, KMGH, in covering a forgery scandal involving a U.S. Senate race.
Commenting on the first-quarter results, Scripps Chairman, President and CEO Rich Boehne said:
“The first quarter following a presidential election is often the lightest in the four-year cycle that drives our broadcast TV business. Nevertheless, we built advertising revenue as the quarter progressed, and now we’re on to partnering with local advertisers as they refine or recast their businesses.
“Looking ahead to the elections in 2018, we anticipate aggressively contested midterm races, with 16 for governor and 10 for U.S. Senate in Scripps markets as the Democrats mount a rousing offense to regain seats in Congress.
“In our digital division, once again Newsy has received an invitation to tell its story at the interactive advertising industry’s NewFronts. National digital advertising buyers will have the opportunity to meet the content producers and business leaders behind our fast-growing news network for the next generation. Newsy is widely distributed on all the major over-the-top services, a cable system, desktop and mobile, and it garnered 1.3 billion video views across all those platforms in 2016. Newsy made an impressive debut at this prestigious event last year. There’s more and even better to come from Newsy this year.
“Also in our digital division, podcast industry leader Midroll is making strides with owned-and-operated shows on our Stitcher podcast delivery service, including Katie Couric; The Sporkful, a show for eaters; First Day Back, a real-life show about coming back from something that changes you; the hit parenting show The Longest Shortest Time; and the chart-topper Missing Richard Simmons. Our owned-and-operated shows are part of our 300-show national advertising network but allow us to keep more of the ad revenue. Audience and revenue growth are off to a strong start this year at Midroll.”
First-quarter operating results
Revenue was essentially flat at $211 million compared to the first quarter of 2016.
Costs and expenses for segments, shared services and corporate were $195 million, up from $182 million in the year-ago period, primarily driven by higher network programming fees as well as costs in our digital businesses.
First-quarter results by segment compared to prior-period amounts were:
Television
In the first quarter of 2017, revenue from our television group was $180 million, flat compared to the prior-year quarter. Retransmission revenue increased $12.6 million, and political advertising revenue was $1 million in the first quarter of 2017, compared to $9.3 million in the first quarter of last year.
Advertising revenue broken down by category was:
• Local, down 3.3 percent to $78 million
• National, down 7.3 percent to $31 million
• Political, $1 million, compared to $9.3 million in 2016
Our core local and national advertising revenue was down 4.5 percent in the first quarter.
Retransmission revenue was up 24 percent to $66.2 million.
Total segment expenses increased 5 percent to $145 million, driven by increases in programming fees tied to our network affiliation agreements.
First-quarter segment profit in the television division was $34.7 million compared to $41.7 million in the year-ago quarter.
Radio
Radio revenue was $14 million, down from $14.6 million in the 2016 quarter. Expenses were $12.4 million compared to $12.5 million in 2016.
Segment profit in the radio division was $1.6 million in the first quarter, down from $2.1 million in the 2016 quarter.
Digital
Digital revenue was $15.4 million, up 24.6 percent from the prior period. Excluding the impact of Cracked, which was acquired in the second quarter of 2016, total revenue increased 16 percent.
Expenses for the digital group were $21.5 million, an increase of $6.1 million from the prior-year period. Excluding the impact of Cracked, expenses increased about 25 percent.
Reported segment loss in the digital division was $6.2 million in the first quarter, compared to $3.1 million in the 2016 quarter.
Financial condition
On March 31, cash and cash equivalents totaled $132 million while total debt was $395 million.
From Jan. 1 through April 28, we repurchased about 110,000 shares at an average price of $21.92. In November 2016, our board of directors authorized a $100 million share repurchase program that expires at the end of 2018.
Looking ahead
In addition, we now expect that interest expense will be $8 million in the second quarter, including a non-cash charge of $3 million related to the refinancing that closed in April. Full-year interest expense is expected to be approximately $23 million.
Conference call
The senior management of The E.W. Scripps Company will discuss the company’s first-quarter results during a telephone conference call at 9 a.m. (Eastern) today. Scripps will offer a live webcast of the conference call. To access the webcast, visit https://www.scripps.com and click on “investors” and then “investor information.” The webcast link can be found on that page under “upcoming events.”
To access the conference call by telephone, dial (800) 230-1059 (U.S.) or (612) 234-9959 (international) 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. Callers also will be asked to provide their name and company affiliation. The public is granted access to the conference call on a listen-only basis.
A replay line will be open from 11 a.m. Eastern time May 5 until 11:59 p.m. May 19. The domestic number to access the replay is (800) 475-6701 and the international number is (320) 365-3844. The access code for both numbers is 415042.
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 https://www.scripps.com approximately four hours after the call, click on “investors” then “investor information,” and the link can be found on that page under “audio/video links.”
Forward-looking statements
This press release contains certain forward-looking statements related to the company’s businesses that are based on management’s current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The company’s written policy on forward-looking statements can be found in its SEC Form 10-K. The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.
About Scripps
The E.W. Scripps Company (NYSE: SSP) serves audiences and businesses through a growing portfolio of television, radio and digital media brands. Scripps is one of the nation’s largest independent TV station owners, with 33 television stations in 24 markets and a reach of nearly one in five U.S. households. It also owns 34 radio stations in eight markets. Scripps also runs an expanding collection of local and national digital journalism and information businesses, including multi-platform satire and humor brand Cracked, podcast industry leader Midroll Media and over-the-top video news service Newsy. Scripps also produces television shows including “The List” and ”The Now,” runs an award-winning investigative reporting newsroom in Washington, D.C., and serves as the long-time steward of the nation’s largest, most successful and longest-running educational program, the Scripps National Spelling Bee. Founded in 1878, Scripps has held for decades to the motto, “Give light and the people will find their own way.”
Investor contact:
Carolyn Micheli, The E.W. Scripps Company, 513-977-3732, [email protected]
Media contact:
Valerie Miller, The E.W. Scripps Company, 513-977-3023, [email protected]
