(Note: During 2019, we acquired eight television stations being divested in the Nexstar/Tribune merger on Sept. 19, 15 television stations from Cordillera on May 1, and three stations from Gray/Raycom on Jan. 1. Results for the Local Media division are presented below both as reported and on an adjusted combined basis as though all of those station acquisitions had closed on Jan. 1, 2018.)
CINCINNATI – The E.W. Scripps Company (NASDAQ: SSP) today reported operating results for the fourth quarter of 2019. Unless otherwise indicated, all operating results comparisons are to the Scripps historical results for the fourth quarter of 2018.
Total revenue was $444 million compared to $368 million in the fourth-quarter 2018.
Income from continuing operations attributable to Scripps was $10.7 million or 13 cents per share. Pre-tax costs for the current quarter included $3.3 million of acquisition and related integration costs that decreased income by $2.5 million, net of taxes, or 3 cents per share. In the prior-year quarter, income from continuing operations was $36 million or 44 cents per share. Pre-tax costs for the prior-year quarter included an $8.9 million non-cash write-down of our former original program “Pickler & Ben” and $3.8 million of acquisition and related integration costs.
Business highlights
Commenting on recent business highlights, Scripps President and CEO Adam Symson said:
“The E.W. Scripps Company has positioned itself exceedingly well to thrive in the media landscape by working a plan dedicated to executing for near-term operating results and long-term value creation. As we turn the page on 2019, we are the fourth-largest independent broadcaster, reaching one in three U.S. television households with a stronger and better-performing portfolio of local television stations. We have the reach and the depth we sought out as a part of our consolidation strategy.
“Last quarter, our national businesses blew past the $100 million milestone in quarterly revenue through strong contributions from Katz, Newsy, Stitcher and Triton. Each of these four businesses is a leader in a fast-growing marketplace and is contributing to expanding division margins and creating new shareholder value by capitalizing on consumers’ changing media behaviors.
“As a result of that repositioning, Scripps will take advantage of the opportunity we see in 2020. Our expanded political advertising footprint sets us up now to even better capture political advertising dollars during what has already proven to be a robustly contested presidential election year. The M&A work of the last year grew the company’s scale just ahead of the reset our Comcast retransmission fees and the renegotiating of another 40% of our cable and satellite subscriber base this spring. We expect our National Media division to run ahead of our previous revenue targets of $500 million in 2021.
“We remain committed to a balanced approach to allocating capital through acquisitions and dividends, and we now have a new share repurchase authorization in place. Looking ahead, we are focused on high cash flow this year as we benefit from the creation of a more durable and better-performing company.”
Fourth-quarter operating results
Revenue was $444 million, an increase of 21% or $76.3 million from the prior-year quarter. That includes incremental revenue from Triton, acquired Nov. 30, 2018, of $7.4 million, and revenues from the television stations acquired from Gray Television/Raycom Media, effective Jan. 1; from Cordillera Communications on May 1; and from the Nexstar transaction with Tribune on Sept. 19, totaling $116 million. Political revenue in the non-election year was $15 million.
Costs and expenses for segments, shared services and corporate were $372 million, up from $276 million in the year-ago period, reflecting the impact of the acquisitions, higher network programming fees and continued investment in programming at the Katz networks and Stitcher.
Fourth-quarter 2019 results by segment compared to prior-period amounts were:
Local Media – As Reported Basis
Revenue from Local Media was $330 million, up 17% from the prior-year quarter.
Retransmission revenue increased 42% to $111 million.
Core advertising revenue increased 67% to $199 million, mainly due to the impact of the television stations acquired from Gray/Raycom, Cordillera and Nexstar/Tribune. Fourth-quarter political revenue was $15 million during the non-election year, compared to $82 million in the prior-year quarter.
Total segment expenses increased 37% to $251 million, primarily driven by increases in programming fees tied to network affiliation agreements and the impact of the television stations acquired from Gray/Raycom, Cordillera and Nexstar/Tribune.
Segment profit was $79.7 million, compared to $98.7 million in the year-ago quarter.
Local Media – 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 the prior-year periods on an adjusted combined basis.
The adjusted combined revenue and expense information illustrates what the historical results of Scripps would have been, given the assumptions outlined in the supplemental materials and had the transactions been effective at the beginning of 2018. Refer to the “Supplemental Information” section that begins on page E-7 of the attached tables.
Adjusted combined revenue from Local Media was $330 million, down $87 million or 21% from the prior-year quarter. Political advertising revenue was $114 million in the fourth quarter of 2018.
Core advertising rose 4.7% and other revenue was up 12%.
Total segment expenses on an adjusted combined basis ecreased 5.4%.
Adjusted combined segment profit was $79.7 million, compared to $152 million in the year-ago quarter.
National Media – As Reported Basis
Revenue from National Media was $113 million, up from $85.5 million in the prior-year period.
Expenses for National Media were $106 million, up from $78.5 million in the prior-year period. The increase was driven by the continued investment and growth of Katz, Stitcher and Newsy as well as the acquisition of Triton, which was completed Nov. 30, 2018.
Segment profit was $7.2 million, compared to $7 million in the 2018 quarter.
Financial condition
On Dec. 31, cash and cash equivalents totaled $33 million while total debt was $1.95 billion.
The company made dividend payments totaling $16 million during 2019.
Year-to-date operating results
The following comparisons are for the period ending Dec. 31, 2019:
In 2019, revenue was $1.4 billion, which compares to revenue of $1.2 billion in 2018. The 2019 period includes incremental revenue from Triton, acquired Nov. 30, 2018, of $37.8 million, and revenues from the television stations acquired from Gray Television/Raycom Media, effective Jan. 1; from Cordillera Communications on May 1; and from Nexstar/Tribune on Sept. 19, totaling $208 million.
Costs and expenses for segments, shared services and corporate were $1.2 billion, up from $1 billion in the year-ago period, reflecting the impact of the acquisitions, higher network programming fees and investment in programming at Katz and Stitcher.
Loss from continuing operations was $18.4 million or 23 cents per share. Pre-tax costs for 2019 included $26.3 million of acquisition and related integration costs and $3.4 million of restructuring charges that increased the loss by $22.3 million, net of taxes, or 28 cents per share. In the prior-year period, income from continuing operations attributable to Scripps was $56.7 million or 68 cents per share. Pre-tax activity in the 2018 period included the non-cash write-down of “Pickler & Ben,” $8.9 million of restructuring charges and $4.1 million of acquisition and related integration costs.
Looking ahead
Comparisons are to the same periods of 2019.
| First-quarter 2020 | |
| Local Media revenue (pro forma) | Up low teens |
| Local Media expense (pro forma) | Up low teens |
| National Media revenue | Between $105-$110 million |
| National Media expense | About $100 million |
| Shared services and corporate | About $19 million |
| Interest expense | About $25 million |
| Pension expense | About $3 million |
| Capex (excluding repack) | Mid-teens millions |
| Depreciation | About $12 million |
| Amortization | About $15 million |
Conference call
The senior management of The E.W. Scripps Company will discuss the company’s fourth-quarter results during a telephone conference call at 9:30 a.m. Eastern today. To access the live webcast, visit Scripps Investor Information and find the link under “upcoming events.”
To access the conference call by telephone, dial (877) 336-4437 (U.S.) or (234) 720-6985 (international) and give the access code 7221941 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 12:30 p.m. Eastern time Feb. 28 until midnight March 13. 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 6793374.
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 Scripps Investor Information approximately four hours after the call, and the link can be found on that page under “audio/video links.”
Forward-looking statements
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 the statement is made.
About Scripps
The E.W. Scripps Company (NASDAQ: SSP) advances understanding of the world through journalism. As the nation’s fourth-largest independent TV station owner, Scripps operates 60 television stations in 42 markets. Scripps empowers the next generation of news consumers with its multiplatform news network Newsy and reaches growing audiences through broadcast networks including Bounce and Court TV. Shaping the future of storytelling through digital audio, Scripps owns top podcast company Stitcher and Triton, the global leader in technology and measurement services. Scripps runs an award-winning investigative reporting newsroom in Washington, D.C., and is the longtime steward of 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:
Kari Wethington, The E.W. Scripps Company, 513-977-3763, [email protected]