Scripps 3Q Station Adjusted Revenue Up 32%

E.W. Scripps Co.’s Local Media division (its TV stations and local brands on all platforms) today reported revenue for the third quarter of 2020 of $404 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 $404 million, up 60% from the prior-year quarter.
• Retransmission revenue increased 60% to $152 million. During 2020, Scripps has renegotiated three key retransmission consent contracts covering 42% of its subscribers. In addition, on Dec. 31, 2019, the company’s agreement with Comcast reset, covering 5.5 million households.
• Core advertising revenue increased 2.2% to $151 million due to the incremental revenue from the television stations acquired from the Nexstar transaction with Tribune.

• Third-quarter political revenue was $96.4 million during this election year, compared to $5 million in the prior-year quarter.

• Total segment expenses increased 28% to $259 million, primarily driven by increases in programming fees tied to network affiliation agreements and the impact of the television stations acquired from Nexstar/Tribune.
• Segment profit was $145 million, compared to $49.7 million in the year-ago quarter.

Local Media — Adjusted Combined

• Revenue: $404 million, up $98.5 million or 32%
• Political ad revenue: $96.4 million
• Core advertising: Decreased 18%. Excluding the loss of major league baseball games on WPIX in New York, core was down 15%. As the COVID-19 pandemic began to impact advertising markets in mid-March, Scripps began to see ad revenue declines in its local markets. The impact was greatest in April, and the advertising markets have continued to improve since that time. The company expects advertising to continue to recover; however, it expects spending in its local markets to remain below 2019 levels through the remainder of 2020 and into 2021.
• Retransmission consent revenue: Up 39%

• Total segment expenses on an adjusted combined basis increased 1.2% but were down 1% when excluding programming expenses. In response to the weakened economic conditions created by COVID-19, the division implemented various cost-savings initiatives through general expense reductions in areas of travel, entertainment and marketing.

• Adjusted combined segment profit: $145 million, compared to $49.1 million in the year-ago quarter.

For the company as a whole, total revenue was $493 million, up 49% from $331 million in 3Q 2019. Beginning in the second quarter of 2020, Scripps’ Stitcher business was classified as discontinued operations in its consolidated financial statements. All periods have been adjusted to reflect this presentation. The Stitcher sale closed on Oct. 16.

Income from continuing operations was $64 million or 76 cents per share.

Pre-tax costs for the quarter included $10.9 million of acquisition and related integration costs that decreased income by $8.2 million, net of taxes, or 10 cents per share. In the prior-year quarter, loss from continuing operations was $17.3 million or 22 cents per share. Pre-tax costs for the prior-year quarter included $16.7 million of acquisition and related integration costs that increased the loss from continuing operations by $12.6 million, net of taxes, or 16 cents per share.

Commenting on the quarter’s results, Scripps President-CEO Adam Symson said: “Despite the lingering economic disruption, Scripps achieved record political advertising revenue, nearly 40% retransmission revenue growth, a rebound in core advertising, double-digit National Media revenue growth and a return to National division margin expansion.

“We are now on track to end the year at more than $280 million of free cash flow, or at least $3.42 of free cash flow per share, exceeding the $225-$250 million of 2020 free cash flow guidance we set out in 2019.

“We credit this performance to a recovering advertising marketplace combined with our strategies to become a stronger and more durable enterprise. Our recently announced acquisition of ION Media is another step in our systematic plan to improve the financial profile of the company and increase free cash flow, providing a clear path to debt reduction.

“None of this financial success would be possible without the commitment, focus and hard work of our dedicated Scripps team. Our journalists are serving their audiences well, despite facing hostility and physical danger this year covering protests and election events in the midst of this pandemic. Our sales executives have partnered with local and national businesses to restart the economy. We are grateful for the dedication of our employees, and we all remain firmly committed to exercising our First Amendment rights and serving our audiences and communities.”

Read the company’s report here.

Also on Friday, the Scripps board of directors declared a cash dividend. Scripps shareholders of record as of Dec. 15 will receive 5 cents per share, payable on Dec. 24. The dividend will be paid out of the company’s surplus.