Scripps Earnings Fall Short, Radio Off 5.5%

Six months ago, the E.W. Scripps Co. was expecting a hotly contested presidential race to produce $150 in advertising revenue for its TV, radio and digital media properties.

Now, the estimate is $100 million.

For the quarter, net income from continuing operations was $12.5 million or 15 cents per share. In the prior-year period, the net loss from continuing operations was $24.4 million or 29 cents per share, including a non-cash goodwill and intangible impairment charge of $24.6 million and Journal-related transaction and acquisition integration costs of $4.2 million. As previously reported, the non-cash impairment charge and Journal-related costs reduced net income by $24 million or 31 cents per share in 2015.

Third-Quarter Highlights

• Election-year political advertising for the television division was $26.9 million in the third quarter. We expect full-year political advertising to be about $100 million.
• Digital revenue grew 45 percent, driven by strong organic growth and acquisitions.
• Retransmission revenue increased 46 percent. We are currently negotiating two renewals covering 3 million households, which will help fuel an estimated 20 percent increase in retransmission revenue in 2017.
• The Summer Olympics contributed $10.3 million in revenue to our five NBC stations, with our No. 1 West Palm Beach station garnering the highest ratings in the country for the Rio Opening Ceremonies.
• Newsy delivered 330 million video views and is on track to exceed our 2016 goal of 1 billion video views for the year. Newsy continued to expand its distribution, launching on Hulu as well as its first cable platform, Cincinnati Bell Fioptics.

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

Rich Boehne

“This uncommon – if not downright unique – presidential election, combined with key Senate races in Ohio, Florida, Colorado and Wisconsin becoming far less competitive than forecast, leaves us with much less political advertising revenue than we expected.

“Political spending was healthy further down the ticket and across the country, but presidential spending in some typically crucial swing states was roughly half of what we saw four years ago, reducing the opportunity for some Scripps stations.

“Our local TV newsrooms served communities across the country with unmatched political news coverage. They cut through the noise and helped voters understand issues that could affect their lives for many years to come. We also used the spectacle of this election to boost the brands and audiences of our fast-growing over-the-top video and audio businesses.

“Newsy, aimed at younger viewers, secured a National Emmy nomination for its fact-checking reporting during the presidential primaries and rode this momentum to a long list of new distribution partners in recent months, including Hulu and Cincinnati Bell Fioptics.

“At Midroll, where we own, host, market and distribute some of the most popular podcasts now being heard, we took advantage of this election to reach new audiences with shows including “The David Gregory Show” and “DecodeDC” that provided some of the most compelling commentary during this election cycle.

“And at Cracked, where the brutal absurdities of current events are our currency, the election has been an opportunity to build both brand and reach through clever satire.”

Third-Quarter Operating Results

Revenues increased $43.3 million, or 23 percent, to $233 million, compared to the third quarter of 2015. The increase was primarily a result of increases in retransmission revenue, political advertising revenue and our growing digital businesses.

Television revenue climbed 25% to $197.3 million, as retransmission revenue rose 46%. Political advertising totaled $26.9 million during quarter, compared with $4.3 million in 2015.

Digital revenue surged 45% to $15.8 million, helped by last year’s acquisition of podcast advertising network Midroll Media.

Revenue in company’s radio segment, meanwhile, slipped 5.5%.

Radio Revenue was $19.3 million, down from $20.4 million in the 2015 quarter. Expenses were $16.8 million compared to $16.3 million in 2015. The 2016 expenses include about $500,000 of costs for flood cleanup at our operations in Wichita, Kansas.

Segment profit in the radio division was $2.5 million in the third quarter of 2016, down from $4.1 million in the 2015 quarter.