Scripps To Meet Or Exceed 2020 Political

Several TV groups have reported political advertising running at record levels, but many CEOs have been reluctant to predict that the final tally will top the 2020 presidential election year. Not so at The E.W. Scripps Co.

“We are now moving into the heart of the political spending season, when we expect to meet or exceed our 2020 presidential year level. With well over $8 billion in the nationwide spending arena season, it should be clear that political revenue defies economic trends,” Scripps President-CEO Adam Symson told analysts in the company’s quarterly conference call Friday morning.

Political revenue for the Scripps Local Media (TV stations) division was $24 million in the second quarter, dwarfing the $3.2 million booked a year earlier. That more than offset a 2% decline in core advertising at $158 million. And retrans rose 9.4% to $171 million.

While Scripps has been managing advertising on its large Ion Network OTA stations as a national network, Lisa Knutson, president of Scripps Networks, revealed to analysts that her team has begun selling local political ads on some Ion stations, inserting them over direct-response national spots to avoid any loss of national ad income.

“Thanks to the strength of our political office and its presence in Washington, D.C., and some really significant technological innovation that Lisa and her team have executed, we are able to generate upside in Networks that we think will add on somewhere between $15 million and $20 million in political revenue on top of the $270 million we’re already talking about in local,” said Symson. He noted the political insertions are at an experimental stage now and could be “quite significant” in 2024.

Looking at the current third quarter, CFO Jason Combs told analysts, “we expect total Local Media Revenue to increase in the low-to-mid 20% range from the third quarter of 2021, when our core advertising revenue benefitted from the Summer Olympics and the late NBA Finals. We expect Local Media political ad revenue to be about where we were in Q3 of 2020, which was the $90 million range. We expect retransmission revenue to be up about 10%.” Meanwhile, he’s projecting another flat revenue quarter for Scripps Networks, as national advertising has been more impacted by the economic slowdown.

“Political advertising results for the first half of the year continued to confirm our expectations that this mid-term election will match the 2020 presidential election cycle,” Brian Lawlor, president of local media, reiterated in his summary.

“Nationwide, fundraising continues at a record pace. Recent U.S. Supreme Court rulings have only increased our inbound calls. We expect the ballot issues to be a big driver for our markets in Kansas, Kentucky and Montana. And in Michigan and Wisconsin the state legislatures are in a toss-up scenario.

“In addition, we expect competitive U.S. Senate races in our states of Arizona, Florida, Nevada, Ohio and Wisconsin — and competitive governor races in Arizona, Kansas, Michigan, Nevada and Wisconsin. We have about 75 competitive U.S. House seats. As we look to the third quarter, we continue to see only positive signs for a heavy political spending cycle,” Lawlor said.

Apart from the political windfall, Lawlor said core advertising held up in the second quarter.

“Our largest category, services, continued to show growth, even amid local business challenges, while maintaining products and employees. Auto, our second-largest category, was down again for the quarter, but up 20% in June after improving each month of the quarter. I’m not expecting auto to continue every month with year-to-year growth, but I do believe we’re starting to see improvement in the auto category. Travel and leisure had a good quarter, up double-digits, as Americans have returned to more active lives and experiences,” he said.

“For the third quarter, we expect core advertising to be down in the low double-digit percentage range, as we’re beginning to experience the displacement from our expected $90 million of political ad revenue,” Lawlor said.

CEO Symson reported that Scripps’ previously announced OTA ad campaign launched last month in 13 test markets, using paid television and digital advertising. The advertising promotes the website TheFreeTVProject.org.

“We remind consumers that they can get live sports, local news and Big 4 network programming — and our premium networks — without having to subscribe to half a dozen subscription streaming services,” the CEO said. Scripps is working with retailers and installers to make it easy to add and OTA antenna to their television and Symson says the campaign will track antenna sales in the markets where it is implemented.