Wells Fargo: It’s All Good At Scripps

Marci Ryvicker and her team of analysts at Walls Street left meetings with unnamed E.W. Scripps managers yesterday encouraged by what they heard, according to a note to clients this morning.

“This was a really productive day of meetings, and we get the sense that business is trending better than the market would suggest,” says the note.

According to the note, the addition of Scripps stations to streaming bundles should be “nicely accretive,” retransmission fees are still growing, Scripps is experiencing “no meaningful decline” in retrans-paying subs, core advertising is “pretty consistent,” critical auto advertising is “pretty stable” and political is “already coming in pretty strong.”

Management made clear that it was not a station seller, but is actively looking for “accretive” station deals that should pop up if the FCC relaxes its local ownership rules as expected, the note says.

It is also interested buying more “national digital brands” as part of its diversification in digital, a strategy “we are starting to appreciate,” the note says.

“We have struggled with digital over the years because a) there have been no good comps; b) other broadcasters have failed in this segment; and c) [Scripps’] digital has been a drag on overall profits,” the note says.

The Wells Fargo team now has a “much better appreciation” of milliennial news service Newsy, which “has the most upside;” the Midroll podcasting producer; and the Cracked satire brand, the note says.

Scripps manager also said they were “fully on board” with ATSC 3.0, the note says. “It will cost about $1MM per market to be fully up and running (although a lot of this will be offset by the repack reimbursements). And while not a near-term catalyst, it is probably going to be more incremental than the Street thinks – especially when you think about targeted advertising.“