The E.W. Scripps Co. says its balance sheet is well positioned to make more acquisitions in a deregulated environment if potential stations meet its criteria. But the company also isn’t clamoring to build up to the new cap, wherever that may be, its COO says.
Scripps: Chance Of Acquisitions Possible
The E.W. Scripps Co. is interested in the prospect of building its broadcast portfolio in a more deregulated climate, but it’s not planning a shopping spree.
“We’re definitely not going to be building up to the cap, wherever that caps ends up,” Adam Sysmon, the company’s COO, told an audience at the NAB Show in Las Vegas Tuesday.
Symson said Scripps will take “a hard look” at all opportunities relevant to its traditional criteria. Those criteria tend to fall within DMAs 10-60, though Brian Lawlor, SVP television, allows “for the right kinds of cities we would go all the way down to market 100.”
Those cities tend to be state capitals, military or college towns, which “have enough money in them to generate a good return.”
Scripps’ selectivity doesn’t rule out number three- or four-ranked stations. “There’s some markets where a No. 3 is playing like a No. 2,” he said.
Still, Symson says the spectrum auction has kept Scripps from being more active on the M&A front in the short term. But that doesn’t mean things will stay that way.
“We are really well-poised now to take advantage of a hold-on-to-you-hat environment,” CFO and SVP Tim Wesolowski said.
If Scripps’ M&A outlook is relatively muted, its enthusiasm for ATSC 3.0 isn’t remotely so. Lawlor says the company will start its deployment by the end of the year at some of its more experimental stations with the repack supplying some funding.
It will probably be five years before there’s enough scale for 3.0 to have an impact across the entire industry, Lawlor says, but Scripps is still enthusiastic in equal parts about its consumer experience and business opportunities.
On the consumer side, Lawlor says ATSC 3.0 will dramatically modernize the look of local television with added features and functionality along with mobility. “TV won’t be limited to a screen on the wall that’s plugged in.”
On the business side, the targeted advertising opportunities will open whole new fronts, he says, as will the prospect of having a place on the dashboard of connected cars.
On the retransmission revenue side, Scripps saw a 50% increase in 2016 with guidance calling for a 20% increase this year. Wesolowski says it expects double-digit growth in 2018 and 2019.
The company also has a strong outlook for political advertising, where, despite an unusual 2016, it sees itself in the right markets for a robust 2018 cycle.
“I still believe that there’s a lot of money in this ecosystem,” Lawlor says.
Lawlor defended Scripps’ limited role in the spectrum auction, where he sees a lot of value in the finite resource. In the end, Scripps said that value “dropped dramatically below” where the company saw its worth.
Lawlor also stands by Scripps’ original programming investments. The company now produces three original shows, and today announced it will debut a new lifestyle talk show in September hosted by country music artist Kellie Pickler and journalist Ben Aaron .
“We figured we could always go back and buy syndication,” he says. “But we don’t think there’s a lot of great syndicated out there.”
On the digital front, where Scripps has laid down larger bets with its acquisition of OTT player Newsy, podcaster Midroll and humor site Cracked, Symson hit back against skeptics who may be too impatient for those businesses to turn profitable.
“We believe we’re building businesses of real value,” Symson says, playing up their “organic growth” and the company’s comfort with making reinvestments back into the digital ventures to maintain their growth.
“We are very comfortable dialing our investments back if they are off track,” he says.
Read all of TVNewsCheck‘s NAB 2017 news here.