EARNINGS CALL

Scripps Saw No Impact From GM Strike

“I think we were all nervous about the General Motors strike and that had no impact on us,” Local Media President Brian Lawlor told analysts. In fact, he added, the ad categories of furniture, bedding, travel and leisure, cruises, jewelry, shoes and appliances, all were “up significantly. It really gives us a lot of hope that our local economy and our local markets are very healthy.”

Automotive advertising was down in the low single digits for E.W. Scripps Co. in the third quarter, which Brian Lawlor, president-local media, told analysts today was “a pretty decent quarter.” That included a pleasant surprise.

“I think we were all nervous about the General Motors strike and that had no impact on us,” Lawler said. “There were virtually no cancellations or dealer pullbacks as a result of that. They were able to get it resolved before it meaningfully affected the local dealers.”

And 3Q also delivered other reasons to be upbeat about auto. “Inside of auto, that’s where we saw some excitement. Our domestic dealer groups were up double digit. Foreign dealer groups were about flat. We were able to grow our individual dealers mid-single-digits,” Lawlor said.

Looking ahead, he said it’s very typical for auto to build through the fourth quarter, citing inventory closeouts and promotion of new models. “Obviously, October — with the displacement last year — auto was up significantly and we like the way it’s tracking for the rest of the quarter.”

Apart from the auto category, Lawler told the analysts that the Scripps sales force was doing well in bring in advertisers that meshed with what consumers in local markets were interested in spending on: furniture, bedding, travel and leisure, cruises, jewelry, shoes and appliances. “All of these subcategories are up significantly,” he said. “It really gives us a lot of hope that our local economy and our local markets are very healthy.”

For 3Q, Lawlor said seven of Scripps’ eight largest ad categories grew on a same-station basis. He listed services, retail, home improvement and communications as categories that showed “nice year-to-year growth.” He singled out the home improvement category as continuing to be extremely strong. “It’s also good to see retail performing well as we move into the holiday season,” he added.

BRAND CONNECTIONS

“October finished as one of our strongest ad sales months of the year,” Lawlor said as he provided color on the current quarter. And he added that November has also been a good month.

Off-year political advertising came in stronger than expected, with Scripps stations — some of them newly acquired — benefiting from hot elections in Kentucky, Louisiana and Virginia. “So we now have a steady stream of odd-year political revenue,” Lawlor told analysts.

That sets the stage for the 2020. “We think there’ll be more money in the ecosystem than there’s ever been and I think our footprint is excellent,” Lawlor said. He noted that Scripps has stations in three of the six states expected to have the hottest U.S. Senate races: Arizona, Colorado and Michigan. And Scripps is sitting pretty for the presidential battleground states. “We like our footprint a lot. Florida, Michigan, Arizona, Colorado, Wisconsin, Nevada. And in many of those states we own two or three stations. In Florida we own five.”

Just how much may be spent on the presidential contest may depend on how soon the Democrats narrow the field of candidates and produce a nominee.

“The sooner they can get to one candidate the more revenue upside opportunity we have. If the Democrats drag out to the primaries in June or the convention, we have a short window for the upside on that. But in a perfect scenario, candidates would be secured in a nomination by March or early April. Once those two candidates are determined, then that starts the act of spending,” Lawlor explained.


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