Scripps 1Q Adjusted Station Revenue Up 2.2%

In the first quarter of 2021, The E.W. Scripps Co. completed its acquisition of national broadcast network Ion, sold digital audio firm Triton and announced plans to redeem $400 million in bonds while delivering record company revenue.

First-quarter Local Media (its TV stations and local brands on all platforms) core advertising outperformed expectations, up 2% on an adjusted-combined basis, driven by a rebound in the advertising market and strong sales execution. The top five core advertising categories were up on a year-over-year basis in March.

The new Scripps Networks division (formerly National Media), which now combines Ion with Court TV, Newsy, Bounce, Grit, Laff and Court TV Mystery) met expectations on 1Q revenue, flat to 1Q 2020 on an adjusted-combined basis, with margins of 43%. The networks are having a strong upfront season, attracting new advertisers, and also have seen strong demand and rate growth in direct response advertising. The company says the division is on track to realize the synergies it identified related to the Ion acquisition.

The Local Media division’s 1Q revenue on an adjusted-combined basis totaled $313 million, up 2.2% from the prior-year quarter.

That revenue comprised:

• Core advertising revenue rose 2.3% to $152 million. The COVID-19 pandemic reduced core advertising revenue by about $8 million in the first quarter of 2020.
• Political revenue was $1.3 million, compared to $17.9 million in the prior-year quarter.
• Retransmission revenue increased 15% to $15.2 million. Scripps renegotiated three large retransmission consent contracts in 2020 and received new rates on another beginning Dec. 31, 2019.

Total segment expenses increased 3% to $156 million.

Segment profit was $55.9 million, compared to $56.5 million in the year-ago quarter.

Revenue from Scripps Networks was $214 million. Expenses for Scripps Networks were $121 million. Segment profit was $92.2 million.

For the company as a whole, total revenue was $541 million, up 31% from 1Q 2020, which had included $18.7 million of political revenue.

Costs and expenses for segments, shared services and corporate were $408 million, up from $360 million in the year-ago quarter, reflecting the impact of the Ion acquisition and higher affiliation fees for both our broadcast television stations and national networks.

Loss from continuing operations attributable to the shareholders of Scripps was $8.1 million or 10 cents per share. The current-year quarter included an $81.8 million gain from the sale of Triton, a $67.2 million non-cash adjustment due to the increase in the fair value of the outstanding common stock warrant liability as our stock price rose during the first quarter, acquisition and related integration costs of $28.6 million and $7.1 million of restructuring costs.

These items decreased income from continuing operations by $29.3 million, net of taxes, or 36 cents per share. In the prior-year quarter, loss from continuing operations was $7.2 million or 9 cents per share. Pre-tax costs for the prior-year quarter included $4.9 million of acquisition and related integration costs that increased the loss from continuing operations by $3.7 million, net of taxes, or 5 cents per share.

Commenting on the quarter’s results, Scripps President-CEO Adam Symson said: “In Local Media, service-oriented local business advertising continued its momentum from the end of 2020, and we saw significant growth in advertising tied to the number of states legalizing sports betting as well as meaningful new advertising business developed by our sales teams. The re-opening of economies as Americans receive vaccines for COVID-19 combined with the distribution of federal stimulus dollars is driving activity experts project will fuel ad spending throughout the year.

“Retransmission revenue grew 15% (adjusted combined) as we annualize a big reset in household rates last year and due to stabilization of pay TV household counts in the most recent reporting period.

“In our new Scripps Networks division, we are gaining strong traction in the upfront and scatter markets as well as continued growth in direct response advertising demand and rates. We delivered Q1 margins of more than 40% and expect to maintain margins this year in the 40% range (adjusted combined), other than a dip in the third quarter as we invest in the launch of the new networks Defy TV and True Real and prepare to deploy Newsy over the air.

“The foundation of our acquisition of Ion and the creation of our OTA powerhouse networks portfolio is growth in free, over-the-air television viewing that consumers pair with subscription streaming services. Television is a high-free-cash-flow business, and Scripps is creating value today from our two highly profitable operating divisions even as we prepare to capitalize on future industry growth.”

Read the company’s report here.

Editor’s note: The results for the Local Media division have been changed from an “as-reported” to an “adjusted-combined” basis.