• Political Advertising Revenue: Over $340 million for the full year, nearly 30% above the 2020 Presidential year.
• Third Quarter Company Revenue: Driven by record political ad spending.
• Leverage Ratio: Reduced from 6 times at the end of Q2 to 5.1 times at the end of Q3.
• Local Media Division Revenue: Up 26% from the year-ago period.
• Third Quarter Political Advertising Revenue: $125 million.
• Local Core Advertising Revenue: Down about 9% from the prior year period.
• Local Media Segment Profit: $161 million, more than double the year-ago period.
• Scripps Networks Revenue: $202 million, down 6% from the year-ago quarter.
• Network Segment Profit: $42 million.
• Third Quarter Loss (Other Segment): $7.7 million.
• Shared Services and Corporate Expenses: $21 million for Q3.
• Income Attributable to Shareholders: $33 million or $0.37 per share.
• Debt Payment: Paid down $115 million in debt in the third quarter.
• Net Debt at Quarter End: $2.7 billion.
• Cash and Cash Equivalents: $35 million as of September 30, 2024.
• Expected Debt Pay Down by Year End: Nearly $300 million.
• Connected TV Upfront Revenue Growth: 164% growth over last year's upfront.
• Expected Networks Margin Improvement: 400 to 600 basis points in 2025.

• Warning! GuruFocus has detected 6 Warning Signs with SSP.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The E W Scripps Co (NASDAQ:SSP) reported a record year for political advertising revenue, with over $340 million, marking a 30% increase from the previous Presidential election year.
• The company significantly exceeded expectations for third-quarter EBITA due to record political ad spending and tight expense management.
• The leverage ratio was reduced from 6 times at the end of Q2 to 5.1 times at the end of Q3, with expectations to further reduce it to the high 4 times range by year-end.
• Scripps networks saw a strong performance from WNBA games, doubling revenue for the 2024 season compared to 2023.
• The company is executing a strategy to improve networks margins by 400 to 600 basis points in 2025, focusing on both revenue and expense management.

Negative Points

• Local distribution revenue was down 6% year over year due to no pay TV contract renewals in the quarter.
• Local core advertising revenue decreased by about 9% from the prior year period, with significant displacement in key markets.
• Scripps networks revenue was down 6% from the previous year, impacted by the soft upfront advertising season and pricing pressure from streaming services.
• The company reported a $12.7 million restructuring charge, negatively impacting earnings per share by $0.11.
• The sale of the Bounce network has been delayed to 2025, affecting the timeline for debt reduction plans.

Q & A Highlights

Q: Can you provide more details about the Bounce sale process and its impact on debt reduction? A: Adam Symson, President and CEO, explained that while the Bounce sale process is taking longer than anticipated due to actions by one of the bidders, it remains competitive. The goal is to sell the asset in 2025, with proceeds used to reduce debt and leverage. Despite the delay, significant progress has been made in debt reduction, expecting to reach a high 4 times leverage ratio by year-end.

Q: What are the expectations for local core advertising in 2025, especially post-election? A: Lisa Knutson, COO, noted that while it's too early to provide specific guidance for 2025, there is an expectation of sequential improvement in local core advertising post-election. Key categories like services, automotive, home improvement, and retail are showing signs of recovery.

Q: How are you addressing refinancing given the delay in the Bounce sale? A: Jason Combs, CFO, stated that strong cash flow from political advertising should allow full pay down of the revolving credit facility by year-end. The focus will be on refinancing the term loan and addressing near-term maturities, potentially looking at both loan and bond markets.

Q: What are the cost-saving measures in the Scripps networks division, and how do they impact margins? A: Jason Combs highlighted that the scale-back of Scripps News is expected to generate annualized net savings of $35 million. The company anticipates a 400 to 600 basis points improvement in network margins for 2025, driven by various cost-saving initiatives across programming and personnel.

Q: How is the company positioned to capitalize on sports broadcasting opportunities? A: Adam Symson emphasized the strategy to bring local sports rights to broadcast, citing the recent partnership with the Florida Panthers. He expects more sports to move to broadcast due to the declining reach of RSNs, providing opportunities for growth in both local and national segments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.