EARNINGS CALL

Cord-Cutting Cuts Into Scripps Retrans Take

Scripps top TV exec Brian Lawlor says retrans-paying cable and satellite subs are down 2%-3%, but that new carriage-fee revenue from OTT skinny bundles should eventually offset the losses. In any event, retrans will grow 15% next year, while net retrans grows in low double digits.

The cord-cutting that has been eating away at cable and satellite operators is beginning to affect broadcasters — or at least E.W. Scripps.

Speaking on an earnings call this morning following release of its third-quarter earnings numbers, Brian Lawlor, president of local media, said that the company has seen a 2%-3% decline in subscribers to MVPDs that carry its TV stations — the source of its vital retransmission consent revenue.

Lawlor said that the lost revenue, which he did not quantify, should be offset by carriage-fee revenue from the OTT streaming bundles or virtual MVPDs, which have “similar net economics for us.”

They include services like Hulu and Google’s YouTube TV.

But that revenue has not yet materialized, he said. “Many of those services just launched over the summer. We’ve started to see some early numbers, but we have yet to be paid for those. So, we are optimistic that some portion of this decline on MVPDs is moving over to these new virtualized MVPDs services.”

Despite the cord-cutting, Lawlor said the outlook for retrans is bright.

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Next year, 36% of Scripps’ cable and satellite subs will “step up” to higher fees, he said, and that should grow total retrans revenue for the year by 15%.

“The great step ups will greatly outpace any decline of subs that we expect to have,” he added.

Net retrans (retrans revenue less reverse comp payment to the networks), he added, should grow in the low double digits next year.

Lawlor said there is a lag between when the MVPDs lose subscribers and when Scripps loses the revenue. The current losses reflect what happened in the second quarter, he said.

Not all the MVPDs have been affected. “Some of them are very much in line from where their subs had been previously and there were a couple that had more dramatic changes.”

Scripps CEO Adam Symson reassured the analysts on the call that Scripps’s strategy is to hedge by exploiting all TV distribution platforms — cable, satellite, OTT and over the air.

“We are really positioning ourselves very well right now by securing shelf space on all of those platforms.”


Comments (7)

Leave a Reply

kendra campbell says:

November 3, 2017 at 3:37 pm

“Net retrans…should grow in the low double digits next year.” Fantasy land.

    Wagner Pereira says:

    November 3, 2017 at 3:51 pm

    From the fingertips of someone who’s never seen a retrans contract.

Fred E Walker says:

November 3, 2017 at 4:00 pm

I don’t think having shelf space is the issue. An infinitely expanding shelf for finite demand is the issue.

alicia farmer says:

November 3, 2017 at 4:17 pm

Scripps’ Lawler, and their fellow group suits have no idea how dissatisfied and angry cable/satellite subscribers are. They will find out over the next couple years.

    Warren Harmon says:

    November 4, 2017 at 2:14 am

    I agree, OTA has really improved the offerings!

Cheryl Thorne says:

November 4, 2017 at 8:03 am

These companies totally misjudged the spectrum $$ and they are again misjudging what is going to happen to their retrans $$..Exactly what do they do all day to continue to look into the future…do proformas ..and calculate wrong consistently.. Shareholders are depending on this info and eventually, it all comes out in the wash ..as they say.. This is financial malfeasance.

Don Thompson says:

November 5, 2017 at 5:01 pm

TV stations are a proxy for the cable bundle. The idea that TV stations are immune to the cord cutting trend that is devastating ESPN, Viacom and Discovery financially is absurd. Please Follow Me On Twitter: @TedatACA or @AmericanCable


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