Scripps CEO Sees Strike Benefit For Linear TV

Other than delaying the start of the network TV season for his company’s TV stations, E.W. Scripps CEO Adam Symson doesn’t see any immediate impact on his company from the dual writers and actors strikes. But he told analysts that the likely outcome is going to be higher costs for streamers — and that could be good news for the linear TV business.

“I think, ultimately, the strike is going to lead to higher costs for streamers. There’s clearly going to be progress made with respect to residuals on streaming platforms. Our strategy has long been to take the content that we are already paying for and to negotiate for the FAST [free ad-supported streaming TV] rights and to move that content with those linear rights into FAST with no additional cost — for high margin revenue. The other thing I think that will happen will be that as the streamers end up with higher expense structures, even more than they have today, they will continue to look for new ways to offset that expense, or to monetize their own costs. And I think that will open up additional programming opportunities for linear broadcasters like us,” Symson explained.

“I think it’s becoming recognized by the streamers that having distribution on linear, particularly over-the-air, is not cannibalizing their D2C products, it actually can represent a significant opportunity to be a barker channel for their D2C products. And so, we expect to benefit on the content acquisition side in that way too,” the CEO told analysts Friday morning.

Scripps recently added to its ad-supported FAST channel lineup with two streaming channels using content from its Court TV and Laff diginets. Symson points to it as part of Scripps “all of the above” strategy to bring in revenue from linear TV, connected TV, pay TV and streaming.

After reporting second quarter revenues overall down 2% from a year ago, CFO Jason Combs provided guidance for the current third quarter. “In the Scripps Networks division, we expect revenues to be down in the 10% range and expenses to be up low single digits. Our revenue guidance compares against a very strong third quarter last year, when Networks revenue was up 4%,” he said.

“We expect total Local Media revenue to be down in the mid-single-digit range and Q3 Local core ad revenue to also be down mid-single digits,” Combs said.

COO Lisa Knutson pointed to bright spots in the second quarter results for the company’s local TV stations. “We were pleased to realize for the fourth consecutive quarter growth in automotive, which was up 13% in Q2 and made up 17% of our core revenue. Home improvement was up 8%

“And we benefitted from the Denver Nuggets appearance in the NBA Finals this year. Average unit rates for premier sports in our markets can be more than 10 times the average unit rate when we don’t have a local team competing. This dynamic is an important driver in our Scripps Sports strategy,” the COO said.

“Our largest category, services, was down 12% as it continues to be hit by inflationary factors. In addition, we continue to see local advertisers exercise caution and book advertising closer to airtime, giving us less visibility into our outlook,” Knutson added.