Core Advertising Recovery Continues For Scripps
As the E.W. Scripps Co. reported 8% fourth quarter growth in core growth for its local TV business, Brian Lawlor, President of local media, told analysts this morning that strength in its local sales efforts allowed Scripps to capitalize on the recovery in several sectors. He cited services up 14%; travel & leisure up more than 100%; media & communications up 25%; and home improvement up 16%.
“We reached our 2019 core advertising performance in Q4 for the second quarter in a row, despite the headwinds of automotive. In fact, our forecast for the first quarter is that we’ll be up in results for five consecutive quarters of core advertising growth for Scripps, which is remarkable since it includes automotive. We added a meaningful new growth category in sports betting, which provides a perfect match with local broadcast because of our depth in local markets and our ability to educate a broad mainstream audience,” said Lawlor.
Thirty states where Scripps operates now have legalized online sports betting. Lawlor is expecting a big bump from Ohio joining the list this year in time for the NFL season
For the current quarter, CFO Jason Combs outlined growth expectations. “We expect total local media revenue to be up low single digits from the first quarter of 2021. We expect local core ad revenue also to be up low single digits,” the CFO said on the call.
“As we move through 2022, we continue to build on these fundamental pillars in our business. In January, six of our seven largest categories were well into positive year-over-year growth. As for auto what we’re seeing in Q1 is consistent with everything you’re reading right now, and we hope the category will start to improve in the third quarter of this year,” said Lawlor of the current pacings.
And the biggest financial windfall is on the horizon. “Scripps is expecting to reach 2020 political levels this year, even though it’s a mid-term, not presidential election. The growth will be driven by strong statewide senate and governor races,” Lawlor predicted. He noted that Scripps stations will benefit from five competitive senate races, seven governor races, and at least 25 competitive house races.
Lawlor confirmed what’s been mentioned in other calls this quarter that upward pressure for reverse comp is easing. “Over the decades, the largest value of the relationship between the networks and affiliates has been the exclusivity of the programming that we get, and we pay for it in our local markets. In the last two years or so, the launch of the direct-to-consumer products by the networks has really begun to diminish that exclusivity in our local markets. I think the conversation is changing and the result of that diminished exclusivity is forcing a different value in the discussions with the networks,” he said.
In his comments to the Wall Street analysts, Scripps President-CEO Adam Symson announced a $20 million campaign to promote OTA antennas for broadband households.
“Over-the-air television is once again the best and easiest way for consumers to watch the most popular shows, live sports and news for free. So it’s time we let America know. Scripps is launching a consumer marketing campaign to help broadband homes better understand how to get free TV with digital antennas and how much great content is there for them once they do,” Symson explained. And he said the price tag is very reasonable for the value of each new viewer acquired for Scripps’ portfolio of local stations and digital OTA networks.
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