Scripps Expects Double Digit 2Q Growth
The E.W. Scripps Co. is signaling Wall Street that even more robust growth is ahead after beating expectations for the first quarter. “Businesses have reopened, mask mandates are loosening and vaccine rates are rising. Americans are coming out of their homes, their wallets a little fatter with federal stimulus dollars, and advertisers are competing to capture them, Scripps President-CEO Adam Symson told analysts Friday morning following release of the company’s first quarter earnings.
“We expect total Local Media [TV stations] revenue for the second quarter to be up in the high-teens percent range. That includes core ad revenue up in the mid-40% range,” CFO Jason Combs told analysts. For the Scripps Networks division — the former Ion operation, Katz Networks and Newsy — revenues are expected to be up about 20%.
“January broke much stronger than usual and each month grew throughout the quarter as the economy began to rebound,” said Brian Lawlor, president of Local Media.
“The first quarter brought together the benefits of our new business development efforts over the last year, with the return of some advertisers who sat dormant for several months of the pandemic,” Lawlor added. “In the first quarter we had more than 800 new-to-TV advertisers across our 41 markets. These new clients are providing added lift to our performance as we welcome back our longstanding clients.
“While these new business dollars span many categories, no category benefitted more from our efforts than services, our largest category, which represented about a third of our total ad dollars in the quarter. Insurance, medical, legal, financial and home services all showed year-to-year growth inside of the services category,” Lawlor told the analysts.
“Looking beyond the services, our other top-5 ad categories all showed year-over-year growth in March. Auto reached positive territory in March for the first time in more than a year. Looking ahead, we expect auto to stay positive through the second quarter, despite the industry’s well-documented supply-chain issues,” he said.
Lawlor also drew attention the travel and leisure category, which grew nearly 100% compared to a year ago. That includes the hot new sports betting ad subcategory,
“Sports betting is a lot like capturing political dollars. It’s geographically based,” said Lawlor. He noted that Scripps has stations in seven of the states which have so far legalized online sports betting.
John Janedis of Wolfe Research wanted to know where those new-to-TV advertisers are coming from.
“We put a lot of focus on new business during the pandemic, as our sales reps were working from home. We put a lot of systems in place to be able to give virtual presentations. We changed our incentive plans to really focus our business on new business. We shared a lot of learnings across our division as we saw specific categories that were dedicating and spending more during the pandemic — and I think we took advantage of all those things,” Lawlor said, as he applauded the efforts of the sales reps.
“Services really benefitted from that focus. People were spending money on their homes. People were taking care of themselves — insurance, medical,” Lawlor added. He noted a lot of money is being spent on home renovation, pools, spas, windows and such.
On the Scripps Networks side, the completed acquisition of Ion Media has resulted in channel lineup changes in many markets. Division President Lisa Knutson says more than 200 channels were transferred from the digital signals of other local broadcasters to the Ion stations in the first quarter.
Three new channel launches are planned later this year, including two reality channels — one aimed at female viewers and one at males — and the Newsy online operation is getting a broadcast component in October.