In today’s call with analysts, CFO Tim Stautberg says retransmission consent revenue “will move the needle for us in 2011.” But at the same time, new affiliation deals will take some of that increase.
EARNINGS CALL
Scripps Forecasts Retrans Gains This Year
Much like its sector peers with broadcast and newspaper operations, the E.W. Scripps Co. saw financial performance gains on the station group side while the print segment continued to struggle despite an improving economy.
Tim Stautberg, Scripps CFO-treasurer, projected ad revenue increases of low single digits for the first half and possibly slightly better performance — low to mid single-digit growth in the second half during the company’s earnings conference call this morning.
Stautberg noted that retrans deals last year that were fairly small revenue contributors “will move the needle for us in 2011.” However, he added, changes in network affiliation fees could limit the needle’s positive movement.
Scripps noted that it signed a five-year affiliation agreement with ABC last year for six of the company’s stations and more recently a five-year extension with NBC for three stations.
A key change: The networks are no longer paying affiliation fees to the stations. Now, Scripps is paying licensing fees to the networks. For the quarter, that translated into a roughly 93% decline in network compensation fees, from $1.5 million to $100,000.
Scripps executives noted that the company’s balance sheet is in good shape: No debt and $200 million in cash.
BRAND CONNECTIONS
That led several callers to question why Scripps hadn’t followed through on a $75 million share repurchase plan when the cash surplus was earning only about 50 basis points, or 0.5%. “Shareholders could probably make more money on that cash,” one called said.
A Scripps executive said the company would have a new stock trading plan in place by the end of the month.
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