For the quarter, the net loss was $26.7 million or 32 cents per share. In the prior-year quarter, net income was $12.5 million or 15 cents per share. The current-year quarter included a non-cash goodwill and intangibles impairment charge for Cracked of $35.7 million as well as $2.4 million of restructuring charges, which increased the net loss by $24 million (net of taxes) or 29 cents per share.
For the quarter, total revenue was $216 million, compared to $233 million in third-quarter 2016, which included $27 million of political revenue.
Business highlights
• On Oct. 2, 2017, the company closed the acquisition of the audience-targeted Katz broadcast networks. The net purchase price was $292 million. The acquisition was financed with a new $300 million floating-rate term loan, due in 2024.
• Retransmission revenue increased 20 percent to $64 million in the third quarter. The increase was driven by the renewal at higher rates of two contracts covering 3 million subscribers during the fourth quarter of 2016.
• Scripps launched a new daytime lifestyle show featuring country music entertainer Kellie Pickler and Emmy Award-winning New York TV personality Ben Aaron. The show began running Sept. 18 on 38 stations across the country as well as cable network CMT.
• Newsy, the national news network focused on millennial audiences, began a major expansion into the cable and satellite marketplace with Scripps’ acquisition of carriage contracts from the Retirement Living Television (RLTV) cable network.
• In the third quarter, Scripps began a comprehensive restructuring of its operations intended to position the company for improved performance and continued growth. On Aug. 23, the company announced a new management team to support the local and national media businesses and a reorganization that merges local operations into a new Local Media division and the national content brands into a National Media division. Those changes are effective Jan. 1. The company also appointed Chief Strategy Officer Lisa Knutson as interim chief financial officer.
Commenting on the third-quarter results, Scripps President and CEO Adam Symson said:
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| Adam Symson |
“In our television business, we saw core advertising move back into positive territory in the third quarter, factoring out incremental Olympics revenue as well as political for 2016. We have now secured shelf space for our local brands with a half-dozen major over-the-top TV disruptors, including YouTubeTV, Hulu and DirectTV Now, with net economics comparable to that of our cable and satellite platforms.
“In our national businesses, we aim to be the disruptor – capitalizing on consumers’ changing media habits by creating compelling content and distributing it across both traditional and emerging platforms. This focus on consumer behavior, combined with national scale, is setting up these brands for continued healthy revenue growth.
“Among these opportunities is our newest acquisition, the Katz networks, whose national reach and targeted audiences give us access to a deep well of national general-market advertisers. The four networks joined us Oct. 2 and are on track to meet their fourth-quarter financial goals.
“We are disappointed by the subpar financial performance at Cracked and the resulting impairment and goodwill write-down. But we are moving quickly to right size the business’s expense structure, curtail investment and bring it to profitability for 2018.
“Newsy and Midroll are both on track to deliver strong revenue growth for the year. Newsy is now nearly fully distributed on the major OTT services and is leveraging that success into gaining carriage on cable and satellite systems in order to participate in that lucrative marketplace. After our recent acquisition of RLTV carriage agreements, we are transitioning the programming to Newsy and expect to further expand its reach to about 40 million cable and satellite subscribers by the end of next year.”
Third-quarter operating results
Revenue decreased 7 percent, to $216 million, compared to the third quarter of 2016.*
Television
In the third quarter of 2017, revenue from our television group was $180 million, down about 9 percent from the prior-year quarter. Political advertising revenue was $1.7 million in the third quarter of 2017, compared to $26.9 million in the third quarter of last year.
Retransmission revenue increased 19.9 percent or $10.6 million.
Core local and national advertising revenue was down 2.8 percent in the third quarter.
Total segment expenses increased 6.4 percent to $148 million, driven by increases in programming fees tied to our network affiliation agreements.
Third-quarter segment profit was $32.1 million, compared to $58.3 million in the year-ago quarter.
Radio
Radio revenue was $17.9 million, down from $19.3 million in the 2016 quarter. Expenses were down 2.5 percent year-over-year.
Segment profit was $1.5 million in the third quarter, down from $2.5 million in the 2016 quarter.
Digital
Digital revenue was $17.8 million, up 13.3 percent from the prior-year period.
Expenses for the digital group were $23.5 million, an increase of $2.1 million from the prior-year period.
Segment loss in the digital division was $5.7 million in the third quarter, compared to $5.6 million in the 2016 quarter.
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