Scripps Reports 1Q Radio Revenue Drop

The E.W. Scripps Company today reported operating results for the first quarter of 2016. Unless otherwise indicated, all comparisons are to the Scripps historical results for the first quarter of 2015.

For the quarter, net income from continuing operations was $4.9 million or 6 cents per share.

First-Quarter Highlights

• Revenues from continuing operations were $209 million, up $86 million from last year.
• Retransmission revenue almost doubled in the quarter to $53.6 million. We completed a new agreement in January 2016 with Time Warner Cable covering approximately 3 million households.
• Election-year political advertising ramped up in the first quarter. Candidate and political action committee spending was heavy in the key Scripps states of Ohio, Florida, Michigan, Nevada and Wisconsin and generated $9.3 million of TV political advertising in the first quarter.
• Newsy continued to add distribution and syndication partners, and its content is now available on over-the-top television services including Apple TV, Dish’s Sling TV, Watchable from Comcast, Pluto TV, Roku, Amazon Fire TV and Google Chromecast; on connected television through Xumo; on all major smart phone platforms; and at newsy.com.
• In April, we acquired the multi-platform humor and satire brand Cracked, which informs and entertains millennial audiences with a high-traffic website, original digital video and a popular podcast.

Commenting on the results, Scripps Chairman, President and CEO Rich Boehne said:

Rich Boehne

“Scripps had a strong quarter, reaching or surpassing our financial targets, and since then we also have further expanded our portfolio of fast-growing businesses.

“Last month, we acquired Cracked, a decades-old company that has transformed itself into a popular multi-platform humor and satire brand. For Scripps, Cracked is the next step in a strategy to build out a portfolio of national brands that take advantage of the quickly developing over-the-top TV and audio marketplaces.

“Cracked’s video content will be a strong adjacency to Newsy, and we also expect to leverage what we are building through our industry-leading podcast business, Midroll, to expand Cracked’s audio storytelling as well.

“While we are enthusiastic broadcasters and continue to look for good opportunities to add to our TV station group, we also recognize that over-the-top digital delivery of both video and audio is creating marketplaces where we can build value for our owners.

“In our television division, the presidential election year – the peak of our four-year cycles – got off to a good start. We saw strong political advertising revenue across our geographic footprint, including earlier-than-expected spending for U.S. Senate races in Ohio, Nevada, Colorado and Wisconsin. These races are expected to be tight and are important contributors to our first-half political revenue.

“We’re preparing now for the presidential campaign to move forward with two candidates, framing the decision for voters and setting up a contest that will be largely waged on television. We continue to be optimistic that the two candidates will require significant television advertising in order to educate and inform voters of their choices. No medium serves this role better than broadcast television.”

First-Quarter Operating Results - Continuing Operations

• Revenues increased $86 million, or 70 percent, to $209 million, compared to the first quarter of 2015. The increase was primarily a result of the acquisition of television and radio stations from the former Journal Communications as well as increases in retransmission revenue. Revenue from acquired operations accounted for approximately $68 million of operating revenues in the quarter.
• Retransmission revenue almost doubled to $53.6 million. About $9 million of the $25.7 million increase was due to the Journal acquisition. Our 2016 revenue also reflects the new Time Warner agreement.
• Costs and expenses for segments, shared services and corporate were $182 million, up from $119 million, primarily driven by expenses from the acquired stations and higher programming fees.

Television
In the first quarter of 2016, revenue from our television group was $180 million, up $21 million. Retransmission revenue increased $14.8 million, and political advertising revenue increased $8.5 million in the presidential election year.

Advertising revenue broken down by category was:

• Local, down 2.2 percent to $80.3 million (on a same-station basis, excluding the 2015 results of our divested Boise station, KNIN)
• National, down 1.6 percent to $33.4 million (on a same-station basis)
• Political, $9.3 million in 2016 compared to $0.8 million in 2015
• Retransmission revenue was up 38 percent to $53.6 million.

Radio
Revenue was $14.6 million, down from $15.3 million in the 2015 quarter. Expenses were $12.5 million compared to $13.3 million in 2015.
Segment profit in the radio division was $2.1 million in the first quarter of 2016, about flat with the 2015 quarter.