Scripps reports first-quarter 2016 results
Fri, May 06, 2016 by Carolyn Micheli
CINCINNATI – The E.W. Scripps Company (NYSE: SSP) today reported operating results for the first quarter of 2016. Unless otherwise indicated, all comparisons are to the Scripps historical results for the first quarter of 2015.
For the quarter, net income from continuing operations was $4.9 million or 6 cents per share.
• Revenues from continuing operations were $209 million, up $86 million from last year.
• Retransmission revenue almost doubled in the quarter to $53.6 million. We completed a new agreement in January 2016 with Time Warner Cable covering approximately 3 million households.
• Election-year political advertising ramped up in the first quarter. Candidate and political action committee spending was heavy in the key Scripps states of Ohio, Florida, Michigan, Nevada and Wisconsin and generated $9.3 million of TV political advertising in the first quarter.
• Newsy continued to add distribution and syndication partners, and its content is now available on over-the-top television services including Apple TV, Dish’s Sling TV, Watchable from Comcast, Pluto TV, Roku, Amazon Fire TV and Google Chromecast; on connected television through Xumo; on all major smart phone platforms; and at newsy.com.
• In April, we acquired the multi-platform humor and satire brand Cracked, which informs and entertains millennial audiences with a high-traffic website, original digital video and a popular podcast.
Commenting on the results, Scripps Chairman, President and CEO Rich Boehne said:
“Scripps had a strong quarter, reaching or surpassing our financial targets, and since then we also have further expanded our portfolio of fast-growing businesses.
“Last month, we acquired Cracked, a decades-old company that has transformed itself into a popular multi-platform humor and satire brand. For Scripps, Cracked is the next step in a strategy to build out a portfolio of national brands that take advantage of the quickly developing over-the-top TV and audio marketplaces.
“Cracked’s video content will be a strong adjacency to Newsy, and we also expect to leverage what we are building through our industry-leading podcast business, Midroll, to expand Cracked’s audio storytelling as well.
“While we are enthusiastic broadcasters and continue to look for good opportunities to add to our TV station group, we also recognize that over-the-top digital delivery of both video and audio is creating marketplaces where we can build value for our owners.
“In our television division, the presidential election year – the peak of our four-year cycles – got off to a good start. We saw strong political advertising revenue across our geographic footprint, including earlier-than-expected spending for U.S. Senate races in Ohio, Nevada, Colorado and Wisconsin. These races are expected to be tight and are important contributors to our first-half political revenue.
“We’re preparing now for the presidential campaign to move forward with two candidates, framing the decision for voters and setting up a contest that will be largely waged on television. We continue to be optimistic that the two candidates will require significant television advertising in order to educate and inform voters of their choices. No medium serves this role better than broadcast television.”
First-Quarter Operating Results - Continuing Operations
Revenues increased $86 million, or 70 percent, to $209 million, compared to the first quarter of 2015. The increase was primarily a result of the acquisition of television and radio stations from the former Journal Communications as well as increases in retransmission revenue. Revenue from acquired operations accounted for approximately $68 million of operating revenues in the quarter.
Retransmission revenue almost doubled to $53.6 million. About $9 million of the $25.7 million increase was due to the Journal acquisition. Our 2016 revenue also reflects the new Time Warner agreement.
Costs and expenses for segments, shared services and corporate were $182 million, up from $119 million, primarily driven by expenses from the acquired stations and higher programming fees.
In the first quarter, we adopted a new accounting standard that changes certain aspects of the accounting for employee share-based payments. As a result, all excess tax benefits and tax deduction shortfalls will now be recognized as income tax expense or benefit in the income statement rather than in shareholders’ equity. The adoption of this accounting standard reduced the first-quarter income tax provision by $1.9 million of excess tax benefits associated with stock compensation.
First-Quarter Operating Results - Adjusted Combined Basis
In order to provide more meaningful year-over-year comparisons, we are providing non-GAAP supplemental information for certain revenues and expenses for prior-year periods on an adjusted combined basis.
The adjusted combined revenue and expense information illustrates what the combined Scripps/Journal operations would have been given the assumptions outlined in the supplemental materials and had the transaction been effective at the beginning of 2014. Refer to the “Supplemental Information” section that begins on page E-7 of the attached tables.
Operating revenues increased 14 percent to $209 million. Contributing to this increase were a $14.8 million or 38 percent increase in retransmission revenue, 56 percent growth in digital revenue and an $8.5 million increase in television political advertising during this election year.
Costs and expenses for segments, shared services and corporate were $182 million, up from $160 million, primarily due to higher network programming fees.
First-quarter results by segment compared to prior-period adjusted combined amounts were:
In the first quarter of 2016, revenue from our television group was $180 million, up $21 million. Retransmission revenue increased $14.8 million, and political advertising revenue increased $8.5 million in the presidential election year.
Advertising revenue broken down by category was:
• Local, down 2.2 percent to $80.3 million (on a same-station basis, excluding the 2015 results of our divested Boise station, KNIN)
• National, down 1.6 percent to $33.4 million (on a same-station basis)
• Political, $9.3 million in 2016 compared to $0.8 million in 2015
Retransmission revenue was up 38 percent to $53.6 million.
Total segment expenses increased 14 percent to $138 million, driven by increases in programming fees tied to affiliation agreements. The increases also were affected by strategic investments to maintain and grow strong ratings, especially in the markets where we expect the greatest presidential-election spending.
First-quarter segment profit in the television division was $41.7 million, compared to $37.3 million in the year-ago quarter.
Revenue was $14.6 million, down from $15.3 million in the 2015 quarter. Expenses were $12.5 million compared to $13.3 million in 2015.
Segment profit in the radio division was $2.1 million in the first quarter of 2016, about flat with the 2015 quarter.
Digital revenue was $12.3 million, up $4.4 million from the prior period. Excluding the impact of the Midroll acquisition, revenue increased about 25 percent.
Expenses for the digital group were $15.5 million, an increase of $2.2 million from the prior-year period.
Segment loss in the digital division was $3.1 million in the first quarter of 2016, compared to $5.4 million in the 2015 quarter.
On March 31, cash and cash equivalents totaled $96 million while total debt was $398 million.
From Jan. 1 through April 29, we repurchased about 760,000 shares at an average price of $17.19.
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 http://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 6 until 11:59 p.m. May 20. 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 385051.
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://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.”
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.
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.”
Carolyn Micheli, The E.W. Scripps Company, 513-977-3732, Carolyn.email@example.com
Valerie Miller, The E.W. Scripps Company, 513-977-3023, Valerie.firstname.lastname@example.org