EARNINGS CALL

Scripps Hails Growth In TV Political Share

Local Media President Brian Lawlor: “The pool of political dollars nationwide is growing tremendously, and local broadcast is taking an even larger share.” The Scripps TV group benefitted from $96.4 million in political spending.

Like other broadcasters, The E.W. Scripps Co. has seen 2020 political ad revenues come in well ahead of expectation. Having projected just under $200 million in political in planning for the year, Scripps now expects to end up around $265 million.

“The pool of political dollars nationwide is growing tremendously, and local broadcast is taking an even larger share. In 2016 $3 billion of political dollars was raised and spent. In 2018 it was $5 billion. This year it was more than $8 billion. In 2016, estimates were that local broadcast television took 45% of that total. This year it looks like it took more than 50% of the larger spend. This is completely to the contrary of the pundits’ views that 2016 had reshaped political spending away from local broadcast,” said Brian Lawlor, president of local media, in the Scripps conference call this morning with Wall Street analysts discussing third quarter results.

The Scripps TV group benefitted from $96.4 million in political spending as it reported third quarter results. CFO Lisa Knutson told analysts that core advertising was down 18%, driven by the COVID-related slowdown. “That number is 15% excluding the results of WPIX [New York], which lost Yankees and Mets baseball in the quarter. We have continued to see significant sequential improvement in core advertising as we have moved throughout the year. And while we expect the fourth quarter to be down 15% from the fourth quarter of 2019, we expect it to be up 10% from the third quarter of this year,” she said.

During the Q&A with analysts, Lawlor provided some more color on which ad categories are strongest. “Obviously there was massive displacement in October. $137 million [in political] in five weeks is a heck of a lot of money, so you can kind of throw October out the window. We had some markets where displacement was as high as 50%. So, if you run that back and start looking at November, I can tell you that auto is having its best month since February. Service, which is our number one category—represents more than 30% of our total—it’s up mid-single-digits for November versus prior year. Home improvement—a little bit smaller, but growing category—is also up mid-single. So, the categories that we can control, especially with our new business [sales efforts], are strong,” Lawlor said.

With Scripps set to expand its national footprint through a $2.65 billion deal to acquire Ion Media, President-CEO Adam Symson is telling Wall Street that Scripps will double its EBITDA. The deal is expected to close in early 2021. The acquisition will give Scripps direct control of over-the-air distribution nationwide for its Katz Broadcasting digital broadcast networks and eliminate having to rent access from other broadcasters. Also, Symson expects continued growth from the Ion network.

“Ion continues to be a leader, as we have said before. It’s the fifth-ranked television network by audience. I think that surprised a lot of people. And it delivers with incredible consistency ratings that come from its programming strategy in the very popular crime and justice genre,” he said.

BRAND CONNECTIONS

“On a go-forward basis, I would tell you with respect to the comments about how these things will perform coming together, we’ve described $500 million of synergies. Those synergies are contractual synergies, mostly in the expense side having to do with distribution. I do believe there will be upside when we bring these businesses together and begin to bundle ad sales.

“The Katz networks have long moved into the national advertising market as a bundled approach. One of the things that Ion hasn’t been able to do, because it’s essentially a single network, has been able to take advantage of participation in bundling. You can see what happens in the cable and the national broadcast networks marketplace when they go to the marketplace with solutions that allow them to take greater share. I expect us to be able to benefit from that,” Symson told Wall Street.


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