Scripps Optimistic Despite Political Coming Up Short

“Political revenue did not meet our very high expectations this year,” E.W. Scripps President-CEO Adam Symson said in kicking off his quarterly conference call with Wall Street analysts after reporting third quarter results.

“Early on, things were lining up in a way that led us to believe our portfolio for the mid-term would attract spending that would beat our record revenue in 2020’s presidential election. But despite a very strong start to the year, with record spending for the first half, dynamics suddenly changed,” Symson explained. Even so, he said the company was still proud to post record political revenues for a mid-term election.

Digging into details, Brian Lawlor, president of local media, said political ads this year hit $200 million, topping the 2018 mid-term record of $194 million.

“We did not reach the 2020 presidential election level as we had hoped for reasons mostly related to our political market footprint and where money was spent on competitive races across the country. Back on our August earnings call, all signs still pointed to meeting our 2020 record number. But then we began to see signs of shifting spending patterns, especially in three key states,” Lawlor said. He listed Sen. Marco Rubio pulling away in the polls in Florida, which had previously been seen as closer, Redistricting resulted in less competitive races in Montana.

“To scale these, Florida and Montana alone accounted for a decline of about $40 million,” he said of the political shift. Lawlor also noted a decline in political spending in Nashville, “as Republicans have gained a solid hold on that state.”

Meanwhile, he said core advertising was right on target with guidance, despite some political displacement and some tough comps with the previous year, such as the Olympics on NBC stations. Third quarter core advertising was down 12% to $147 million.

“Driving the core decline was our services category, which accounts for a third of our core advertising. Services was down 12% in the quarter. Our next-largest categories were actually up — auto and home improvement. Auto was up 5%, due primarily to spending by domestic dealer groups and domestic factories as they began to recover from chip shortages. Home improvement, which has retained its pandemic-level strength, has been a bright spot in U.S. consumer spending. It was up 12%,” Lawler said.

He noted that gambling was down more than 50%, as online betting had launched in several states the previous year. On the horizon, though, both Ohio and Maryland will launch legalized sports betting in January.

Returning to the auto segment in the Q&A, Lawlor noted that momentum for auto advertising grew through the third quarter. “Automotive was down 12% in July, up 4% in August, up 25% in September. And I’ll tell you through October and November we continue to see 20% growth in automotive. That’s one key category that’s now coming back fairly strongly,” he said.

“We’re starting to feel like the greatest pressure from supply chain [problems] is behind us. Not only do we see automotive now gaining momentum, but other categories or subcategories that last year were held back by supply chain issues—like appliances, hot tubs—all those categories are up. They’re up double digits. So we feel like finally the supply is catching up and providing an opportunity,” he concluded.