CINCINNATI – The E.W. Scripps Company (NASDAQ: SSP) delivered $681 million in revenue and $204 million in segment profit for the fourth quarter of 2022, year-over-year increases of 9.4% and 21% respectively, driven by growth in political advertising and distribution-related revenues.
On Jan. 5, the company announced plans to reorganize, creating a more nimble enterprise that further leverages Scripps’ strong position in the U.S. television ecosystem and propels its growth across emerging media marketplaces. Scripps Networks President Lisa Knutson was promoted to chief operating officer and is leading the reorganization. Scripps expects this work to result in at least $40 million in annual savings and will begin taking restructuring charges this year.
“Since the beginning of this year, Scripps has been engaged in examining the best ways to structure our company so that we are well-positioned to capture the opportunities we see emerging in our industry,” said Adam Symson, Scripps’ president and CEO. “We see those in three key growth areas: the content categories of news, sports and entertainment; TV distribution platforms; and the burgeoning marketplace enabled by ATSC 3.0.
“The reorganization work will include the centralization of some services and the consolidation of layers of management across the company. We expect to realize savings of at least $40 million. Our end goal, however, is not just a more efficient structure but a smarter one, designed to use the breadth of our assets to accelerate the company’s growth.
“As a precursor to our reorganization work, we launched the Scripps Sports division, led by Brian Lawlor, to serve sports teams and leagues left isolated from their fans by the fall-out connected to cord cutting. Through our local station portfolio and the ION network, we have both local market depth and unparalleled national reach over the air, on pay TV and across the important digital platforms — everywhere audiences watch television. We are working with leagues and teams that recognize the way a partnership with Scripps will expand their reach and strengthen their connection with the passionate fans who are so crucial to them.
“As we all bear witness to this country’s ongoing economic uncertainty and its impact on consumer spending, we see even greater opportunity for Scripps through free TV. It is a growth lever that differentiates our story from peers. Given our sizable share of all OTA viewing, we are creating shareholder value by promoting the use of digital antennas and other new ways of accessing our high-quality television programming for free. In addition, we are working with the industry to develop business models made possible through ATSC 3.0 technology. The most promising of these is datacasting – a marketplace quickly moving from the horizon to the foreground, with tremendous opportunity for those who hold broadcast spectrum.”
Total fourth-quarter company revenue was $681 million, an increase of 9.4% or $58.7 million from the prior-year quarter due to higher political and distribution revenue in our Local Media division.
Costs and expenses for segments, shared services and corporate were $477 million, up from $454 million in the year-ago quarter.
Income attributable to the shareholders of Scripps was $73 million or 84 cents per share. The pre-tax costs for the quarter included a $7.4 million gain on extinguishment of debt from the redemption of senior notes. This item increased income attributable to the shareholders by $5.5 million, net of taxes, or 7 cents per share. In the prior-year quarter, income from continuing operations attributable to the shareholders of Scripps was $40.2 million or 43 cents per share. Pre-tax costs for the prior-year quarter included acquisition and related integration costs of $4.8 million and an $1.6 million loss on extinguishment of debt from the redemption of senior notes. These items decreased income from continuing operations by $4.8 million, net of taxes, or 5 cents per share.
Fourth-quarter 2022 results by segment compared to prior-period amounts:
Revenue from Local Media was $433 million, up 24% from the prior-year quarter.
Segment expenses increased 4.9% to $282 million, driven by network affiliation fees and the impact of Scripps employees returning to working in its station buildings.
Segment profit was $152 million, compared to $82.2 million in the year-ago quarter.
Revenue from Scripps Networks was $248 million, down 9.2% from the prior-year quarter, reflecting softness within the national advertising marketplace as a result of macroeconomic challenges.
Segment expenses for Scripps Networks were $168 million, in-line with expenses in the prior-year quarter.
Segment profit was $80 million, compared to $106 million in the year-ago quarter.
On Dec. 31, cash and cash equivalents totaled $18 million and total debt was $2.9 billion.
During 2022, we redeemed a total of $172 million of the outstanding principal on our senior notes, including $48 million in Q4, and we made additional principal payments on our term loan totaling $100 million, including $75 million in Q4. In addition, we made mandatory principal payments of $18.6 million on our term loans in 2022, for a total reduction in gross debt of $290 million.
Preferred stock dividends paid in 2022 were $48 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 for the period ending Dec. 31, 2022:
Total 2022 company revenue was $2.5 billion, an increase of 7.4% or $170 million from the prior year, due to higher political and distribution revenues. Political revenue was $208 million, compared to $22.7 million in the prior year.
Costs and expenses for segments, shared services and corporate were $1.9 billion, up from $1.7 billion in the year-ago period, reflecting costs attributed to our 2021 over-the-air network launches, continued investment in programming, higher affiliation fees and the impact of Scripps employees returning to working in its stations and offices.
Income attributable to the shareholders of Scripps was $145.6 million or $1.62 per share. Pre-tax costs for the 2022 period included $1.6 million of acquisition and related integration costs as well as an $8.6 million gain on extinguishment of debt from the redemption of senior notes. These items increased income attributable to the shareholders by $5.2 million, net of taxes, or 6 cents per share. In the prior-year period, income from continuing operations attributable to the shareholders of Scripps was $66.5 million or 74 cents per share. Pre-tax costs for the prior year included: an $81.8 million gain from the sale of Triton; a $15.3 million loss on extinguishment of debt; a $99.1 million non-cash adjustment due to the increase in the fair value of the outstanding common stock warrant liability; acquisition and related integration costs of $40.4 million; $9.4 million of restructuring costs; and a $32.6 million gain on the sale of our Denver (KMGH) television station building. These items decreased income from continuing operations by $58.8 million, net of taxes, or 67 cents per share.
Comparisons for our segments are to the same period in 2022.
The senior management of The E.W. Scripps Company will discuss the company’s quarterly results during a telephone conference call at 9:30 a.m. Eastern today. 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 4229660 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 1:30 p.m. Eastern time Feb. 24 until midnight March 24. 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 3388176.
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.”
This document 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. Such forward-looking statements are made as of the date of this document and should be evaluated with the understanding of their inherent uncertainty. A detailed discussion of principal risks and uncertainties that may cause actual results and events to differ materially from such forward-looking statements is included in the company’s Form 10-K, on file with the SEC, in the section titled “Risk Factors.” The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date such statements are made.
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]