Scripps Targets New Advertisers To Grow Core

The E.W. Scripps Co. continues to point to adding new-to-television advertisers as a driver for growing core local television business. Scripps reported this morning that Local Media division revenue was down 19% to $331 million in the third quarter, owing to the lack of political advertising, but that core advertising rose 10% to $169 million.

“For the third quarter we’re very pleased to be reporting industry-leading Local Media core advertising revenue that even surpassed our performance in the third quarter of 2019,” said Brian Lawlor, president of local media, in the company’s Wall Street conference call.

“This year’s momentum in core advertising accelerated during the quarter, driven by significant new-to-TV advertising, demand for our connected TV advertising product, and the rise of the sports betting category. Excluding auto, all of our top 13 advertising categories saw year-to-year growth. Our largest category, services, was up 13%. Travel and leisure moved to our second-largest category in the quarter, up 220%, due to spending on sports betting. Retail was up 6% and home improvement was up 18%,” Lawlor told the analysts.

“In addition to a strong ad market, our core revenue was being bolstered by our success capturing new-to-TV advertisers. Last quarter we told you we brought in over 1,000 new advertisers. In this quarter we again had over 1,000 new-to-TV businesses advertising, who have been developed by our local sellers over the pandemic. Across our footprint, we are focused on maintaining a strong and consistent effort to bring new business to local television,” he said.

Looking to the current quarter, Scripps CFO Jason Combs told analysts: “We expect total Local Media revenue for the fourth quarter to be down in the mid-20% range. That’s because we took in $137 million of political last Q4. We expect core ad revenues to be up in the mid-single-digit percent range.”

When will auto make a comeback?

“Clearly, the chip shortage is creating inventory challenges, not just for local dealers. The good news is that local dealers in many of our markets are still advertising, whether it’s used cars, or just keeping their brand out there, or pushing the models that they have. We were not far off from flat in the third quarter with the individual dealers. The primary decline is coming from the dealer groups and the manufacturers. I think that will be consistent through the first half of next year,” Lawlor said in the Q&A with analysts.

Meanwhile, Scripps, like other local TV groups, is expecting heavy political advertising in 2022. Lawlor says the Scripps footprint includes hot senate races expected in Arizona, Florida, Nevada, Ohio and Wisconsin, highly competitive governor’s races in eight states — including open seats in Arizona, Kansas, Maryland and Virginia — and at least 20 hot U.S. House races.

Scripps President-CEO Adam Symson was asked whether he’s worried about the impact of sports streaming options on broadcast audiences.

“I’m actually elated by what we see in the new NFL contract, with respect to the way the NFL has sort of engineered their distribution. They’ve configured their distribution so that they can have their cake and eat it too. They’re both going to maximize their distribution opportunity for them financially on digital platforms, and — more importantly for us — bring more football back to broadcast,” he answered.

“First, having more football on ABC is going to be good for Scripps, given our portfolio makeup. That’s just basic. But more broadly, as a company that’s focused on the OTA marketplace, I couldn’t be more excited about the NFL’s decision to maximize their distribution back over the air. The 2023 contract is really going to be a catalyst for the further growth of over-the-air,” Symson said.

According to the CEO, cord-cutters and cord-nevers are going to have two choices for football: “The first choice they’re going to have is to sign up for multiple subscription services and then try to navigate when and where to watch their games on Sunday, Monday and Thursday. We just see that as confusing and clearly economically inefficient. The other option will be for those same consumers to plug in a digital antenna and turn to broadcast TV for free, live HD football,” Symson concluded.