Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Political advertising revenue reached record levels, up 40% over the same period in 2020.
- Local Media division revenue increased by nearly 4% year-over-year, driven by strong political advertising.
- Virtual pay TV subscriber count rose by low double digits from the previous year.
- Local Media segment profit increased by 9% from Q2 2023.
- Scripps Networks' connected TV revenue grew by 11% in the second quarter.
Negative Points
- Second quarter local core advertising revenue declined by about 7% year-over-year.
- Scripps Networks division revenue fell by 9.7% from the previous year.
- The company faced challenges from Amazon and Netflix unloading discounted inventory into the advertising marketplace.
- Net debt at the end of the quarter was $2.9 billion.
- The loss attributable to shareholders was $13 million, or $0.15 per share.
Q & A Highlights
Highlights of The E W Scripps Co (SSP, Financial) Q2 2024 Earnings Call
Q: Can you talk more about core trends and the impact of displacement on core advertising revenue?
A: (Adam Symson, CEO) Political advertising has been strong, leading to some displacement in core advertising. We expect this trend to continue, especially with the upcoming elections. (Lisa Knutson, COO) Core revenue was down about 7% in Q2, partly due to displacement and category softness, particularly in services and automotive.
Q: How are you thinking about the new political advertising guidance and its potential range of outcomes?
A: (Adam Symson, CEO) We have raised our guidance aggressively due to the entry of Kamala Harris into the presidential race and strong fundraising. We expect record political revenue this year, driven by high spending in key states and ballot issues.
Q: What is the outlook for Scripps Networks and ION, especially in terms of sports programming and cost efficiency?
A: (Adam Symson, CEO) The upfront results validate our sports strategy, with sports and CTV driving growth. We plan to optimize resource allocation and expenses to improve margins. (Jason Combs, CFO) We have already seen flat expenses in Q2 and expect further declines in Q3 and Q4.
Q: How much more sports content can you bring to ION, and is there a plan to move from must-carry to retransmission consent?
A: (Adam Symson, CEO) We are prudently adding sports content but do not plan to turn ION into a sports-only network. The mix of general entertainment and sports is key. We have no plans to move to retransmission consent, as ION's broad reach adds value to our sports partnerships.
Q: Can you provide an update on the Bounce TV network sale and other asset divestitures?
A: (Jason Combs, CFO) The Bounce TV sale process is moving along well and is competitive. We expect to share more details in the next few months. For real estate, we aim to generate between $100 million and $150 million in cash proceeds.
Q: What percentage of your TV station viewers are coming from over-the-air, and how has this changed over the years?
A: (Adam Symson, CEO) Over-the-air viewership is now between 20% and 30%, depending on the market, up from below 20% several years ago. For networks like ION, it's between 30% and 40%. We continue to promote over-the-air viewing through various initiatives.
Q: What caused the Scripps Networks revenue to come in lower than guidance in Q2, and how confident are you in the Q3 outlook?
A: (Lisa Knutson, COO) The shortfall was primarily due to a large amount of discounted inventory from Amazon and Netflix entering the market. We are confident in our Q3 guidance, expecting revenue to be down mid-single digits.
Q: What is the outlook for automotive advertising at your TV stations?
A: (Lisa Knutson, COO) Automotive advertising was down about 2% in Q2, with local dealers down about 8%. We see this as an opportunity for growth in future quarters as dealers need to move inventory.
Q: Is there a risk that political advertising might not be as strong as expected, similar to what happened in 2022?
A: (Adam Symson, CEO) We are confident in our guidance and do not expect a repeat of 2022. The current political environment and early spending trends support our strong outlook.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
