Scripps Seeks Growth Across Three TV Platforms

Speaking to the Bank of America Leveraged Finance Conference in Boca Raton, Fla., on Tuesday, E.W. Scripps Co. CFO Jason Combs detailed for the investor group how the company has been transformed in recent years. He spelled out the company’s strategy for its three distribution methods.

“Pay TV is still the predominant way that viewers access TV programming. We love pay TV. We monetize through retransmission revenues and through advertising — but clearly it is also an ecosystem that is in decline. So I think with any highly profitable ecosystem that is in decline, it’s all about maximizing your yield. You’ve got to find ways to do that and that is our top priority within the pay TV system,” he told the gathering.

“Over-the-air is certainly smaller than the others right now, but it is growing. It continues to grow at a very good clip. Youi see an estimated 44 million households — about a third of all households — have a digital antenna at this point. It’s an easy value proposition for consumers, because it’s free for them to access. And we make money when they watch our viewing. From that standpoint, we’re in a unique position versus some of our peers because of our Scripps Networks brands that we have over-the-air and how heavily viewed they are. OTA we tend to take a 25%-30% share of all viewing, so as that grows that’s good for us,” Combs explained.

“Connected TV has reached near ubiquity as a platform. There’s a lot of complexity, a lot of moving pieces, different revenue models — ad-supported, subscription, linear versus on-demand viewing — but, as you can see here, it is growing,” he said, referencing a slide showing connected TV households projected to rise to 115.9 million by 2025 from the current 105.9 million. Over the same time, OTA is projected to rise to 53.3 million households from 44 million, while pay TV households slip to 59.7 million from 68.5 million.

“When you look across all these platforms — if I asked people in this room, many of you probably use multiple of these platforms. I think that’s why our view is no longer where to focus our attention — it’s an all of the above strategy. We take all of the brands and maximize our monetization in each of these households,” Combs explained.

Returning to the OTA opportunity, Rebecca Riegelsberger, Scripps treasurer and VP, tax, described the campaign the company has underway to introduce cord-cutters to free digital TV.

“When people do unplug from cable only one out of five of them right now are putting in a digital antenna. So we look at that as a major opportunity for us to get in that space. We want to make sure that when people go to unplug that [our stations] have a resource to still capture advertising revenues,” she told the gathering.

The Free TV Project that Scripps launched at the end of 2021 featured consumer advertising and partnerships with antenna manufacturers, retailers and roof-top installers. She said it has resulted in a 30% increase in digital antenna sales in markets where the campaign is active.

Riegelsberger said research found that consumers need to be educated on what type of antenna they need to buy, how to hook it up properly and place it in their home to maximize reception. Otherwise, some cord-cutters were buying a digital antenna, having a bad experience and throwing it away.

“So, we’ve seen from the efforts of Free TV Project that people are getting educated on the antennas — they’re purchasing different antennas — and then we’re able to monetize them through advertising revenue,” she said.

As Scripps reported on Nov. 8, third quarter political revenues came in below expectations, as the distribution of hot political races changed. However, Combs noted that this cycle still set a mid-term election record. The big question for 2024 is on the presidential side — whether President Biden will run for reelection and how active the Republican primary proves to be. But he noted that historically TV has seen political spending grow from each presidential cycle to the next and from each mid-term to the next.

As for the current fourth quarter, Riegelsberger reaffirmed the guidance given in the Nov. 8 conference call.

“Just looking ahead to Q4, local revenues will be [up] in the mid-20% range, driven by political, which Jason just mentioned. $200 million was a record for the company. Scripps Networks revenue is expected to be down in the mid-to-high-single-digit range against Q4 2021 which had especially strong results,” she said.