(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 third quarter of 2019. Unless otherwise indicated, all operating results comparisons are to the Scripps historical results for the third quarter of 2018.
Total revenue was $350 million compared to $303 million in the third-quarter 2018.
Loss from continuing operations attributable to Scripps was $21.9 million or 27 cents per share. Pre-tax costs for the current quarter included $16.7 million of acquisition and related integration costs that increased the loss by $12.6 million, net of taxes, or 16 cents per share. In the prior-year quarter, income from continuing operations was $20 million or 24 cents per share.
Commenting on recent business highlights, Scripps President and CEO Adam Symson said:
“The third quarter marked the eighth consecutive reporting period in which Scripps has delivered financial results across the company that met or beat expectations, further evidence we are committed to executing our plan to deliver on our operating results while fueling long-term value creation.
“The closing of the Nexstar-Tribune station acquisitions in September was an important milestone as we further reposition Scripps to be a bigger, stronger and more durable company – strengthening our Local Media portfolio to best capture the opportunities coming to us in 2020 while providing excellent return on invested capital.
“In our National Media businesses, we continue to deliver record revenue performance across our businesses, fueled by modest short-term investments that will generate significant long-term value. Our businesses are riding high on a wave of growth in some of the most important emerging media marketplaces, including digital audio and podcasting and over-the-top and over-the-air television. Our strategies to capitalize on the media consumers’ changing habits are a complement to our robust local broadcast business while also creating new shareholder value.
“2020 is just on the horizon, bringing the reset of contracts covering about half of our subscriber households and the opportunity to leverage our exceedingly well-positioned political advertising footprint for next year’s presidential election. Combined with the moves we have made to improve the operating profile of our company, we expect Scripps to generate significantly higher free cash flow in 2020 than we otherwise would have expected.”
Third-quarter operating results
Revenue was $350 million, an increase of 16% or $47.1 million from the prior-year quarter. That includes revenue from Triton, acquired Nov. 30, 2018, of $10 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 $55.3 million.
Costs and expenses for segments, shared services and corporate were $310 million, up from $246 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.
Third-quarter 2019 results by segment compared to prior-period amounts were:
Local Media – As Reported Basis
Revenue from Local Media was $252 million, up 9.4% from the prior-year quarter.
Retransmission revenue increased 21% to $95.2 million.
Core advertising revenue increased 36% to $148 million, mainly due to the impact of the television stations acquired from Gray/Raycom, Cordillera and Nexstar/Tribune. Third-quarter political revenues were $5 million during this non-election year.
Total segment expenses increased 24% to $203 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 $49.7 million, compared to $67.4 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 $305 million, down 12% from the prior-year quarter. Political advertising revenue was $56.7 million in the third quarter of 2018.
Core advertising rose 3.6%, retransmission revenue increased 1.3% and other revenue was up 4.8%.
Total segment expenses on an adjusted combined basis were held flat at $256 million.
Adjusted combined segment profit was $49.1 million, compared to $92 million in the year-ago quarter.
National Media – As Reported Basis
Revenue from National Media was $97.2 million, up from $71.8 million in the prior-year period.
Expenses for National Media were $92 million, up from $68.9 million in the prior-year period. The increase was driven by the acquisition of Triton, which was completed in the fourth quarter of 2018, as well as investments in Court TV at the Katz networks, Stitcher and Newsy.
Segment profit was $5.3 million, compared to $2.8 million in the 2018 quarter.
On Sept. 30, cash and cash equivalents totaled $86.5 million while total debt was $1.98 billion.
No shares were repurchased during the third quarter of 2019. The company share repurchase program has been suspended while it pays down debt. The company made dividend payments totaling $12 million during the first nine months of 2019.
Year-to-date operating results
The following comparisons are for the period ending Sept. 30, 2019:
In 2019, revenue was $979 million, which compares to revenue of $840 million in 2018. The 2019 period includes revenue from Triton, acquired Nov. 30, 2018, of $30.4 million, and revenues from the television stations acquired from Gray Television/Raycom Media, effective Jan. 1; from Cordillera Communications on May 1; and from Nexstar/Tribune on Sept. 19, totaling $92.2 million.
Costs and expenses for segments, shared services and corporate were $871 million, up from $724 million in the year-ago period, reflecting the impact of the acquisitions, higher network programming fees and investment in programming at the Katz networks and Stitcher.
Loss from continuing operations attributable to Scripps was $29.1 million or 36 cents per share. Pre-tax costs for 2019 included $23 million of acquisition and related integration costs and $1.9 million of restructuring charges that increased the loss by $18.7 million, net of taxes, or 23 cents per share. In the prior-year period, income from continuing operations attributable to Scripps was $20.8 million or 25 cents per share. Pre-tax activity in the 2018 period included $7 million of restructuring costs.
Comparisons are to the same periods of 2018.
|Local Media revenue (pro forma)||Down low 20% range|
|Retransmission revenue (pro forma)||Up low-single-digit percentage|
|Local Media expense (pro forma)||Down mid-single-digit percentage|
|National Media revenue||Between $100 million-$105 million|
|National Media expense||High $90 million range|
|Shared services and corporate||About $14 million|
|Interest expense||About $28 million|
|Pension expense||About $2 million|
|Capex (excluding repack)||About $10 million|
|Depreciation||About $12 million|
|Amortization||About $12 million|
The senior management of The E.W. Scripps Company will discuss the company’s third-quarter 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 (800) 230-1092 (U.S.) or (612) 288-0329 (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 11:30 a.m. Eastern time Nov. 8 until 11:59 p.m. Nov. 15. 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 473072.
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 the statement is made.
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.”
Carolyn Micheli, The E.W. Scripps Company, 513-977-3732, Carolyn.firstname.lastname@example.org
Media contact:Kari Wethington, The E.W. Scripps Company, 513-977-3763, Kari.email@example.com