Friday, February 24, 2017

Scripps: Politicals Drive Revenue, Radio Off Slightly

The E.W. Scripps Company today reported operating results for the fourth quarter of 2016.

For the quarter, net income from continuing operations was $38.3 million or 46 cents per share. In the prior-year period, the net loss from continuing operations was $21.1 million or 25 cents per share, including a non-cash settlement charge of $45.7 million and Journal-related transaction and acquisition integration costs of $1 million. As previously reported, excluding these charges, income from continuing operations would have been $7.8 million or 9 cents per share.

For the quarter, total revenue was $273 million compared to $205 million the prior year. This 33 percent increase is due to the factors noted below.

Business Highlights
• Election-year political advertising revenue for the television division was $56.2 million in the fourth quarter and $100.8 million for the year.
• In 2016, retransmission revenue increased 62 percent to $221 million. During the fourth quarter, we renewed two contracts covering 3 million households, which will help fuel an estimated 20 percent increase in retransmission revenue in 2017.
• Digital revenue grew 42 percent in the fourth quarter, driven by strong organic growth and acquisitions. For the full year, digital segment revenue grew to $62 million, compared to $39 million in 2015.
• RightThisMinute is on track to launch into a seventh season next fall. The ABC-owned station group has renewed the viral video show (a partnership among Scripps, Cox and Raycom) for the 2017-2018 television season. This season, the show is cleared in 94 percent of the country on 212 stations nationwide and one market in Canada.
• Newsy recorded 1.3 billion video views in 2016, an increase of 74 percent above 2015. The increase in viewership was driven primarily by the company’s expansion onto over-the-top television distribution services. These platforms contributed 48 percent of Newsy’s total viewership in the fourth quarter and 29 percent for all of 2016.
• Mary McCabe Peirce, 68, a great-granddaughter of the company’s founder, will retire from the company’s board of directors when her term expires in May. Peirce has served as a director since 2008.

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

“Our broadcast television division delivered record revenue in 2016, despite the headwinds of an uncommon presidential election combined with the short-term absence of some advertisers who avoided jockeying with political campaigns for airtime. While the presidential race spending did not rise to the level we had expected, we were encouraged by the strong spending levels for U.S. Senate and House races in our markets.

“Looking ahead now to the 2018 mid-term election, we are focused on 10 Senate seats up for grabs in our footprint as well as a meaningful gubernatorial year, with 16 governors’ races across the Scripps markets.

Fourth-Quarter Operating Results

Revenues increased $67.9 million, or 33 percent, to $273 million, compared to the fourth quarter of 2015. The increase was primarily a result of increases in political advertising revenue, retransmission revenue and our growing digital businesses.

Costs and expenses for segments, shared services and corporate were $187 million, up from $173 million, primarily driven by higher network programming fees and costs in our digital businesses.

Fourth-quarter results by segment compared to prior-period amounts were:

In the fourth quarter of 2016, revenue from our television group was $233 million, up $62.7 million or 37 percent. Retransmission revenue increased $24.7 million, and political advertising revenue was $56.2 million in the presidential election year, compared to $2.1 million in 2015.

Advertising revenue broken down by category was:

• Local, down 11.3 percent to $80 million
• National, down 14.5 percent to $32.8 million
• Political, $56.2 million, compared to $2.1 million in 2015

Our core local and national advertising revenue was down 12 percent in the fourth quarter due to displacement from political advertising.

Fourth-quarter segment profit in the television division was $96 million, compared to $41.4 million in the year-ago quarter.

Radio revenue was $18.8 million, down from $19 million in the 2015 quarter. Expenses were $14.6 million compared to $15.2 million in 2015.

Segment profit in the radio division was $4.2 million in the fourth quarter, up from $3.9 million in the 2015 quarter.

Digital revenue was $18.8 million, up $5.6 million or 42 percent from the prior period. Excluding the impact of Cracked, which was acquired in the second quarter of 2016, total revenue increased 30 percent.

Expenses for the digital group were $21.7 million, an increase of $4.5 million from the prior-year period. Excluding the impact of Cracked, expenses increased about 13 percent.

Reported segment loss in the digital division was $2.9 million in the fourth quarter, compared to $3.9 million in the 2015 quarter.

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