Release Date: May 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The E W Scripps Co (SSP, Financial) reported a 13% increase in Local Media division revenue, driven by growth in political and distribution revenue.
- Local distribution revenue saw a significant rise of over 20%, bolstered by 2023 renewals of cable and satellite agreements.
- Political advertising revenue forecast for the full year has been raised to between $240 million and $270 million, surpassing the revenue from the 2020 presidential year.
- Scripps Networks' scatter pricing was up nearly 40% from last year, indicating a strong demand in the advertising market.
- The company has successfully reduced its total debt by about 25% over the past three years, enhancing its financial stability.
Negative Points
- First quarter local core advertising revenue declined by approximately 3% from the previous year.
- Scripps Networks division revenue decreased by about 3% year-over-year in the first quarter.
- The company reported a loss attributable to shareholders of $12.8 million or $0.15 per share for the first quarter.
- For the second quarter, Scripps Networks division revenue is expected to be down in the mid-digit range.
- Local media expenses increased by about 8% from the prior year quarter, impacting overall profitability.
Q & A Highlights
Q: Can you provide some metrics around the potential sale of Bounce TV and the impact on advertising across your other networks?
A: Adam Symson, President and CEO of E W Scripps Co, noted strong inbound interest for Bounce TV, anticipating a significant return for shareholders and a deleveraging event from the sale. He mentioned expecting proceeds in the "hundreds and hundreds of millions of dollars." Regarding advertising impact, Symson highlighted that while Bounce is part of their sales strategy, ION is the primary driver, and they are not overly concerned about losing bundling effects due to their omnichannel approach.
Q: How are you managing costs, and what savings do you expect?
A: Jason Combs, CFO of E W Scripps Co, explained that the company is focusing on managing employee costs, optimizing open positions, and identifying process efficiencies. He highlighted that these measures are part of their strategy to drive savings and support deleveraging by the end of the year.
Q: What is the outlook for core advertising revenue in Q2 and the second half of the year, considering potential political ad crowd-out?
A: Lisa Knutson responded that they are seeing improvements in several advertising categories and expect political ad crowd-out to begin in Q3 and Q4. However, they are working with advertisers to find alternatives and manage the high-margin political ad dollars effectively.
Q: Can you clarify the Networks' revenue guidance for Q2, given the pacing up of direct response and scatter market?
A: Adam Symson addressed the seeming contradiction by explaining that while there is momentum in direct response and scatter markets, they still have to contend with last year's upfront, which secured a significant amount of inventory at lower rates. He anticipates that the strength of this year's upfront will be more reflective of the current rebound by Q4.
Q: What visibility do you have into political advertising bookings for the second half of the year?
A: Lisa Knutson confirmed that they are seeing bookings for Q3 and Q4, which gave them the confidence to increase their political revenue guidance. She highlighted active Senate races and potential high-spend referendums as key drivers for this visibility and optimism.
Q: How is scatter pricing currently compared to last year, and how does it impact your revenue projections?
A: Adam Symson noted that scatter pricing is currently 40% above last year's upfront rates, indicating a stronger market. However, commitments from last year's lower upfront rates are still impacting revenue, which they expect to align more closely with current market conditions by Q4.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
