EARNINGS CALL

Scripps: Recovery Spans Nearly All Ad Categories

Each month of the second quarter was sequentially better, so Local Media President Brian Lawler is optimistic: “We do believe, based on everything we’re seeing now, that August will be better than July, and September will be better than August in terms of year-to-year improvement, in terms of dollar growth,” he said.

Business isn’t yet back to where it was pre-pandemic, but Brian Lawlor, president of local media at The E.W. Scripps Co., told Wall Street analysts Friday morning that July ad sales were down only 15% (excluding baseball at WPIX New York). That’s much stronger than the 37% decline for core (also excluding WPIX baseball) for the second quarter.

Each month of the quarter was sequentially better, so Lawler is optimistic, “We do believe, based on everything we’re seeing now, that August will be better than July, and September will be better than August in terms of year-to-year improvement, in terms of dollar growth,” he said.

“In terms of categories for July, basically every category improved off of June, which improved off of May, which improved off of April. And so, I talked about services being flat in June and we saw that continue in July. About every other category had some degree of improvement. Most are still down year-to-year, but they continue to get closer to flat to up,” he told analysts.

Overall, the Scripps stations saw core decline 48% in April, 43% in May, 27% in June and 15% in July, as mentioned above.

Auto continues to be a challenging category, which Lawlor attributes to lack of inventory for dealers to sell. “I think demand is very high,” Lawlor said, suggesting that consumers are waiting to be “gobbling” new vehicles as factories again produce vehicles and they’re distributed nationwide.

“There’s going to be a lot of momentum in there, and I think there’s going to be a lot of advertising. Dealers are trying to let people know when inventory is hitting their lots. But I’m not sure if they can get enough inventory to push the category positive.” That said, Lawlor is looking for auto to take off in 2021.

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Political, meanwhile, has exceeded expectations in 2020. Scripps reported that political advertising in July exceeded all of the second quarter. Lawlor told analysts he has no worries about any particular campaign becoming less competitive, because the trend has been for the number of hot contests to increase. Scripps stations are in six states with competitive U.S. Senate campaigns.

Lawlor praised the local station sales forces for being aggressive in bringing in new-to-television advertisers, even during the pandemic. He said $15 million of new business aired during the second quarter, with more than $30 million booked for this year.

While local television advertising has suffered during the pandemic, Scripps President-CEO Adam Symson said his company’s Katz Broadcasting digital OTA networks outperformed. “Despite the tremendous headwinds associated with COVID-19, Katz finished the quarter flat. That strength is driven largely by a balance of general market and direct response advertising,” the CEO said.

“Many people wrongly dismiss DR as low-rate, low-quality ads. But the category has grown and changed tremendously in recent years,” Symson told analysts.

Lawlor later added that DR is more profitable to the company because it isn’t posted to Nielsen numbers. And with strong demand from a growing slate of major advertisers, he said some DR advertising is claiming rates higher than the low end of general market advertising. Year-to-date, Lawlor says Katz revenues are up 14%.

The Scripps stations remain off the Dish Network satellite lineup — the first MVPD blackout ever for Scripps. “We just can’t agree to non-standard proposals,” Lawlor said of the standoff with Dish. As such, Scripps isn’t giving Wall Street any guidance on subscriber counts for retrans through the end of this year.


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