Scripps reports first-quarter 2015 results
Fri, May 08, 2015 by Carolyn Micheli
(Note: Since the merger of the company’s broadcast assets with those of Journal Communications and the spinoff of the newspaper business occurred on April 1, 2015, first-quarter results reflect operations of the company prior to the transaction.)
For immediate release
MAY 8, 2015
CINCINNATI – The E.W. Scripps Company (NYSE: SSP) today reported operating results for the first quarter of 2015. Unless otherwise indicated, all operating results comparisons are to the first quarter ended March 31, 2014.
Television operating revenues were up 17 percent in the first quarter to $120 million. Retransmission revenue more than doubled in the quarter to nearly $28 million. In 2014, retransmission agreements covering more than one-third of our subscribers expired, and our 2015 results reflect the renewal of these agreements.
Also contributing to the increase is incremental revenue from the two stations acquired from Granite in the second quarter of 2014.
Television segment profit increased $1.2 million, or nearly 6 percent, to $22.2 million.
Newspaper operating revenues declined 7.1 percent from the year-ago quarter to $91.5 million. However, due to lower newsprint consumption and lower employee-related costs, newspaper segment profit increased $0.5 million to $9.1 million.
On a consolidated basis, the net loss attributable to Scripps was $5.1 million, or 9 cents per share, in the 2015 quarter and $0.6 million, or 1 cent per share, in the 2014 quarter. Acquisition and integration costs for the Journal Communications transaction reduced earnings per share by approximately 7 cents.
Commenting on the results, Scripps Chairman, President and CEO Rich Boehne said:
“The first quarter at Scripps was focused on completing our transaction with Journal Communications, which closed on April 1, creating one of the nation’s largest independent station ownership groups. We now have 33 television stations covering nearly one in five U.S. households as well as 34 radio stations and a complement of strong local and national digital media brands.
“To provide clarity for our investors, beginning in the second quarter we will report results in four segments: television, radio, digital and syndication and other. While local television will account for a large majority of our revenue, we decided it’s important for investors to understand separately the dynamics of our radio group as well as the investments and growing businesses that we manage in our digital operations.
“The first quarter saw strong growth in our television retransmission revenue, which flowed from new agreements covering about a third of our pay TV households. We are already focused on our retransmission opportunity for 2016 as well as the promise of strong election-year spending and the realization of benefits from the Journal stations. We are ramping up to a big year in 2016.”
Consolidated revenues were $215 million, up 5.3 percent or $10.7 million, primarily due to the increase in retransmission revenue and revenue from the two television stations acquired from Granite.
Costs and expenses for segments, shared services and corporate were $198 million, up 5.1 percent, primarily driven by expenses from the two Granite stations and higher network fees.
The company reported a loss from operations before income taxes of $7.8 million in the 2015 quarter, compared to $0.8 million in the 2014 quarter. Included in the first-quarter 2015 pre-tax loss is $6.1 million of acquisition and integration costs.
First-quarter results by segment are as follows:
Television In the first quarter of 2015, revenue from television stations was $120 million, up $17.4 million. The current-year quarter includes $6.1 million of revenue from the two former Granite stations. The 2014 quarter included $1.7 million in incremental Winter Olympics advertising on our three NBC-affiliated stations. Advertising revenue broken down by category was: • Local, up 5.6 percent to $58.8 million • National, up 0.9 percent to $25.6 million • Political, $0.5 million in 2015 compared to $2.7 million in 2014 • Digital, up 21 percent to $5.3 million
Retransmission revenue was up 124 percent to $27.9 million.
Total segment expenses increased 20 percent to $97.3 million, driven by higher network fees as well as higher employee-related costs.
On a same-station basis, total revenue increased 11 percent and total costs and expenses increased 13 percent. Minus the impact of the 2014 Olympics and $1 million of 2015 Super Bowl spending, local and national advertising revenue decreased 1.5 percent.
First-quarter segment profit in the television division was $22.2 million, compared with $21 million in the year-ago quarter.
Newspapers Revenue from newspapers was $91.5 million in the first quarter of 2015, down 7.1 percent.
Advertising and marketing services revenue was $55.1 million, down 8 percent from the 2014 quarter, which is improved from the fourth-quarter decline of 9.7 percent.
Advertising revenue broken down by category was:
• Classified, down 6.2 percent to $16.2 million ̶ Real Estate – up 5.8 percent ̶ Employment – down 13 percent ̶ Automotive – down 11 percent • Local, down 6.9 percent to $18 million • Preprint and other, down 12 percent to $13.8 million • National, down 34 percent to $1 million • Digital, down 1.1 percent to $6.2 million
In the first quarter, subscription revenue declined 3.2 percent to $31.3 million.
Expenses for the newspaper group were $82.4 million, a decrease of 8.4 percent. Employee costs decreased 6.6 percent, primarily due to lower employment levels, and newsprint expense decreased 13 percent, due to lower consumption.
Segment profit in the newspaper division was $9.1 million in the first quarter of 2015, an increase from $8.5 million in the 2014 quarter.
Shared services and corporate The shared services and corporate line of the company’s financial statements includes costs related to digital operations and initiatives that support the television and newspaper segments.
Shared services and corporate expenses were $14.6 million.
Financial condition On March 31, cash and cash equivalents totaled $159 million while total debt was $198 million.
The board authorized a repurchase program in May 2014 for up to $100 million of its Class A common shares. The shares may be repurchased from time to time at management’s discretion, either in the open market, through pre-arranged trading plans or in privately negotiated block transactions. The authorization expires Dec. 31, 2016. With the closing of the merger with Journal Communications, the company can begin repurchasing shares on May 12, 2015.
On April 1, 2015, Scripps entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement, which includes an incremental $200 million term loan, due November 2020, which is in addition to the existing $198 million term loan. The company also increased its revolving credit facility by $25 million to $100 million, which is due November 2018. The proceeds from the incremental $200 million loan were used to pay off the $116 million existing Journal Communications term loan, fund a $60 million special cash dividend to Scripps shareholders and pay transaction expenses.
On April 30, cash and cash equivalents totaled $123 million, while total debt was $409 million.
Supplemental information The company is providing non-GAAP supplemental information to illustrate what the combined Scripps/Journal broadcast operations would have been, given the assumptions outlined in the supplemental materials, on the new segment basis had the transaction been effective at the beginning of 2013. Refer to the “Supplemental Information” section that begins on page E-7 of the attached tables.
Looking ahead Beginning with the second quarter of 2015, the company will report the following segments: Television, Radio, Digital, and Syndication and Other. The digital segment includes revenue and expense from both our local properties and national brands such as Newsy. The table below includes guidance in comparison to the adjusted combined results explained above and outlined beginning on page E-7.
Television revenue Flat
Television expense Up ~10 percent
Radio revenue Flat
Radio expense Up high single digits
Digital revenue Up high teens
Digital expense Up mid teens
Shared services and corporate ~$13 million
Retransmission revenue ~$36 million
12 Months Ended Dec. 31, 2015
TV revenue - Down low single digits TV expenses - Up high single digits Radio revenue - Flat Radio expenses - Up mid single digits Digital revenue - Up high teens Digital expenses - Up mid teens Retransmission revenue - ~$45 million Transaction expenses - ~$35 million* Retransmission revenue - ~$145 million Political revenue - ~$5 million Interest expense - ~$15 million Pension expense - ~$12 million Capex - ~$30 million Depreciation - ~$40 million Amortization - ~$15 million Debt - ~$403 million Shares outstanding were 84.2 million on April 1, 2015 *Will be primarily incurred in the second quarter.
*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 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) 230-1093 (U.S.) or (612) 288-0337 (international) approximately five minutes before the start of the call. Investors and analysts will need the name of the call ("Scripps first-quarter 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 8 until 11:59 p.m. May 22. 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 357750.
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 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 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. When Scripps and the former Journal Communications merged their broadcast assets in early 2015, they also spun off their respective newspapers, creating a new public company, Journal Media Group. Scripps also runs an expanding collection of local and national digital journalism and information businesses, including mobile video news service Newsy and weather app developer WeatherSphere. 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, firstname.lastname@example.org
Media contact: Valerie Miller, The E.W. Scripps Company, 513-977-3023, email@example.com