Scripps Open To Further Acquisitions

While it was raking in record amounts of political advertising revenue, The E.W. Scripps Co. was also trading assets like a rug merchant, and may not be done yet. EVP-CFO Lisa Knutson told analysts attending its financial results conference call. “On the acquisition front, it’s been a busy few weeks and we certainly believe we’re not done yet.”

Knutson said that the full-year political total of $140 million in political is a company record, and is 86% better than the its 2014 results — $40 million of the total came in during 3Q. Local Media President Brian Lawlor said that $80 million will be reported in 4Q results.

Brian Lawlor

Political contributed to a 25% gain in advertising across the company’s local television sector during 3Q, according to Lawlor, but displacement was a factor resulting in a 7.5% loss in core advertising.

Lawlor said it was difficult to pin down how core is doing because of displacement, but did say that 3Q core results were “… kind of consistent with what we’ve seen in the past,” commenting that it “… wasn’t so bad.” Looking ahead at 4Q, he added, “what we see is the quarter building.” He said November is better than October, and December is better than November.

“We were ready for midday Tuesday, as soon those last political adds ended, to get right back on pace with our regular advertisers and we see that building,” he concluded.

Retrans income has two big years ahead, according to Lawlor. 42% of the company’s subscribers come up for renewal in 2019, and another 50% come due in 2020.

But M&A has been the hot narrative at Scripps of late. Said President/CEO Adam Symson, a year ago “… we laid out a plan to create a stronger and higher performing company by improving our short-term operating performance and local media market profile while also refocusing for long-term growth.” The plan included cost-cutting, getting out of radio, expanding local broadcast television, and investments in its growing national division.

To that end, the company will soon complete the sale of all of its radio stations, and is working on assimilating two television stations acquired from Raycom and 15 from Cordillera Communications, and is expanding its national group with digital audio audience measurement service Triton.

Five years ago, said Lawlor, Scripps owned only 13 television stations. “When we close on our recent acquisitions, we’ll have 51 stations in 36 markets stretching across the country.” The plan, he said, is to build “… a stronger and more durable station portfolio.”

He said the company will have the No. 1 station in a third of its markets, will increase its number of duopolies and will diversify its network base, including 18 with ABC, 11 with NBC, nine with CW, seven with CBS and two with Fox.

After the Cordillera and Triton deals are closed, Knutson estimates the company’s pro forma leverage will sit at 4.8x. She noted the company is looking to 2020, when it renegotiates its contract with Comcast and will benefit from another infusion of political cash, as an opportunity to delever.

Asked about further plans and a willingness to use equity funding, Symson said, “Certainly don’t count us out. We think that we have the ability to flex out balance sheet a little bit more, as well as using a variety of tools — certainly equity would be one of those that we might be willing to employ.”

Laura Tomlin, SVP national media, said that the company’s assets, which include OTT news outlet Newsy, podcast service Stitcher and four Katz networks, are moving forward at a better-than-expected pace.

According to Symson, the national division is expected to bring home $500 million in revenue by 2021.