Scripps 2Q Adjusted Local Media Rev Down 12%

E.W. Scripps Co.’s Local Media division (its TV stations and local brands on all platforms) today reported revenue for the second quarter of 2020 of $277 million.

(Note: During 2019, Scripps acquired eight television stations being divested in the Nexstar/Tribune merger on Sept. 19 and 15 television stations from Cordillera on May 1. Results for the Local Media division are presented below both as reported and on an adjusted combined basis as though all of those station acquisitions had closed on Jan. 1, 2019.)

As Reported

• Revenue from Local Media was $277 million, up 17% from the prior-year quarter.
• Retransmission revenue increased 56% to $142 million. During 2020, Scripps renegotiated retransmission consent contracts covering more than 30% of its subscriber households. In addition, on Dec. 31, 2019, the company’s agreement with Comcast reset, covering 5.5 million households.
• Core advertising revenue decreased 17% to $117 million. Weakness in economic conditions that began toward the end of the first quarter, reflecting the impact of the COVID-19 pandemic, negatively affected spending from advertisers. It began to see cancellations late in the first quarter. Second-quarter results were significantly impacted by the economic downturn, with the greatest impact in April. Scripps saw improvements in advertising revenue from April to May and from May to June.
• Second-quarter political revenue was $13.4 million during this election year, compared to $2.1 million in the prior-year quarter.
• Total segment expenses increased 34% to $244 million, primarily driven by increases in programming fees tied to network affiliation agreements and the impact of the television stations acquired from Cordillera and Nexstar/Tribune.
• Segment profit was $32.3 million, compared to $54.3 million in the year-ago quarter.

Adjusted Combined

• Revenue: $277 million, down $35.9 million or 12%.
• Political ad revenue: $13.4 million
• Core advertising: Decreased 39%. Second-quarter results were significantly impacted by the economic downturn, reflecting the impact of the COVID-19 pandemic, with the greatest impact in April. It  saw improvements in advertising revenue from April to May and from May to June.
• Retransmission consent revenue: Up 27%
• Other revenue: Down 5%.
• Segment expenses: Down 3%.
• Adjusted combined segment profit: $32.3 million, compared to $60.5 million in the year-ago quarter.

For the company as a whole, total revenue was $359 million, up 12% from 2Q 2019. Loss from continuing operations was $17.5 million or 22 cents per share. In the prior-year quarter, income from continuing operations was $5.8 million or 7 cents per share. Pre-tax costs for the prior-year quarter included $2.8 million of acquisition and related integration costs and $957,000 of restructuring charges that decreased income from continuing operations by $2.8 million, net of taxes, or 3 cents per share.

Commenting on the quarter’s results, Scripps President-CEO Adam Symson said: “In early March, the onset of a global pandemic caused business disruptions that nearly brought the advertising marketplace to a halt. The death of George Floyd sparked historic levels of public protest and conversation about systemic racism and police conduct. Both of these events created opportunity and challenge for our local and national newsrooms and workforce as they navigated COVID-19 and unrest to deliver important stories to their communities.

“Even in the midst of the pandemic, we continued our work to transform Scripps into a higher performing company focused on shareholder value creation. In mid-July, we announced the sale of our thriving podcast business, Stitcher, as well as of WPIX in New York, we raised our expectations for political-year ad revenue, and we significantly improved our financial profile. We were pleased to deliver second-quarter core ad revenue performance in line with our peers at 37%, if you back out the results of WPIX and the loss of their baseball game revenue. And, most recently, we were forced to go dark on the Dish Network – Scripps’ first distributor blackout. But despite it all, we were well positioned to weather the challenging economic environment because of strategic decisions we had made many months before.

“The sale of Stitcher came after a strategic review process that began last winter as we evaluated the changing podcasting landscape. We came to realize that Stitcher and its employees would best succeed as part of a larger, audio-focused company. Our foresight and vision for Stitcher and the podcast industry resulted in a sale that returns double our total investment in podcasting. The successful sale of Stitcher also is a strong affirmation of our national media strategy, whose paths to value creation have always included organic growth, exits and spinoffs. We remain firmly committed to our National Media strategy, to the five Katz networks, Newsy and Triton, and to the promise that lies ahead in over-the-top and over-the-air television as well as digital audio.

“In addition, our financial durability has been bolstered by our commitment to improving the company’s short-term operating performance as we create long-term value. More than doubling the size of our Local Media portfolio last year means our station group today is more effective, more efficient and operating with greater strength. We expanded our portfolio ahead of the opportunity we knew we would have to renegotiate 40% of our pay TV subscriber households this year. While we have secured contracts with 30% now, our blackout with Dish came before we had even begun to negotiate household rates. Unfortunately, we were left with no recourse. Dish has insisted on replacing standard contract terms with new terms distinctly off-market and in their favor. These new lines in the sand are totally unacceptable, and we hope Dish will soon begin to show concern for its customers and adopt a more reasonable position.”

Read the company’s report here.

Also on Friday, the Scripps board of directors declared a cash dividend for the third quarter of 2020.Scripps shareholders of record as of Sept. 15, will receive 5 cents per share, payable on Sept. 25. The dividend will be paid out of the company’s surplus.