CINCINNATI – The E.W. Scripps Company (NYSE: SSP) today reported operating results for the second quarter of 2016.
For the quarter, net income from continuing operations was $11.5 million or 14 cents per share. In the prior-year period, the net loss from continuing operations was $13 million or 15 cents per share, including costs associated with the Journal transaction in the prior-year period of $15.7 million after-tax.
Second-Quarter Highlights
• Revenues from continuing operations were $228 million, up 15 percent from last year.
• Retransmission revenue was up 46 percent in the quarter to $53.4 million. We completed a new agreement in January 2016 with Time Warner Cable covering approximately 3 million households.
• Election-year TV political advertising was $8.4 million in the second quarter. Candidate and political action committee spending was focused in the key Scripps states of Ohio, Florida, Colorado, Nevada and Wisconsin.
• In April, we acquired digital-media humor brand Cracked, which informs and entertains millennial audiences through its high-traffic website, mobile apps, podcast, social media and digital video. In June, we acquired popular podcast listening service Stitcher, which facilitates discovery and streaming for more than 65,000 podcasts to 8 million registered users.
Commenting on the results, Scripps Chairman, President and CEO Rich Boehne said:
“We are now halfway through a political election year that is different and historic in many ways. It’s in defining moments like these when our local television platforms demonstrate their greatest value, both through skilled storytelling and through the delivery of the candidates’ own messaging.
“More than 80 percent of our potential political revenue is still ahead of us over the next 13 weeks – with about half of our total political ad revenue projected in the fourth quarter. The second quarter started more slowly than we had anticipated, with the Democrats’ Clinton-Sanders race running out longer than most people expected and delaying the start to general-election spending. Republican Donald Trump held back spending while the Democrats duked it out. We expect a more normal pace of spending to set in now that we are through the party conventions, the traditional start of the heavy spending season.
“Of course, the presidential race is typically about 30 percent of our presidential election-year political revenue, and meanwhile, many of our U.S. Senate races continue to be highly competitive, particularly in Arizona, Florida, Indiana, Missouri, Nevada, Ohio and Wisconsin. We also have two competitive governor’s races, in Indiana and Missouri.
“The addition of Cracked in April gives us three strong national digital content brands. Cracked, a longtime humor and satire brand, has tremendous appeal with young audiences and is already well-positioned on desktop and social media outlets. Our plan is to leverage the strong over-the-top television relationships we have built with Newsy to create a second OTT channel for Cracked. Cracked and Newsy are joined by over-the-top audio leader Midroll, to round out a strategy to capture younger, organically growing audiences and others drawn by Internet-delivered content.”
Second-Quarter Operating Results
Revenues increased $29.7 million, or 15 percent, to $228 million, compared to the second quarter of 2015. The increase was primarily a result of increases in retransmission revenue, political advertising revenue and our growing digital businesses.
Retransmission revenue increased 46 percent to $53.4 million. Television division political advertising revenue was $8.4 million in 2016 compared to $2.2 million in 2015.
Costs and expenses for segments, shared services and corporate were $186 million, up from $166 million, primarily driven by expenses from higher programming fees and costs to support our digital businesses.
Second-quarter results by segment compared to prior-period amounts were:
Television
In the second quarter of 2016, revenue from our television group was $192 million, up $24.4 million or 15 percent. Retransmission revenue increased $16.9 million, and political advertising revenue was $8.4 million in the presidential election year compared to $2.2 million in 2015.
Advertising revenue broken down by category was:
• Local, up 2.6 percent to $88.8 million (on a same-station basis, excluding the 2015 results of our divested Boise station, KNIN)
• National, down 2.4 percent to $37.9 million (on a same-station basis)
• Political, $8.4 million in 2016 compared to $2.2 million in 2015
Retransmission revenue was up 46 percent to $53.4 million. Core advertising was up 1.1 percent on a same-station basis.
Total segment expenses increased 13 percent to $138 million, driven by increases in programming fees tied to affiliation agreements. The expense increase also was affected by spending to increase ratings, especially in the markets where we expect the greatest presidential-election spending.
Second-quarter segment profit in the television division was $53.3 million, compared to $44.6 million in the year-ago quarter.
Radio
Revenue was $18.2 million, down from $19.4 million in the 2015 quarter. Expenses were $14.3 million compared to $14.5 million in 2015.
Segment profit in the radio division was $3.9 million in the second quarter of 2016, down from $4.9 million in the 2015 quarter.
Digital
We acquired Midroll in the third quarter of 2015 and Cracked and Stitcher in the second quarter of 2016. Digital revenue was $15.2 million, up $6.6 million from the prior period. Excluding the impact of the acquisitions, revenue increased about 20 percent.
Expenses for the digital group were $19.9 million, an increase of $6.4 million from the prior-year period. Excluding the impact of the acquisitions, expenses increased about 5 percent.
Segment loss in the digital division was $4.7 million in the second quarter of 2016, compared to $4.9 million in the 2015 quarter.
Financial condition
On June 30, cash and cash equivalents totaled $66.5 million while total debt was $397 million.
From Jan. 1 through July 29, we repurchased about 1.3 million shares at an average price of $16.88.
Conference call
The senior management of The E.W. Scripps Company will discuss the company’s second-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) 230-1074 (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 Aug. 5 until 11:59 p.m. Aug. 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 397637.
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]
