Scripps reports Q2 2023 financial results
- None.
- None.
Notes on results:
- The WNBA Friday Night Spotlight on ION began its run on May 26 and has been steadily growing audience. Ratings for games on ION have grown
42% since the inaugural broadcast and continue to grow. Also, Scripps' new independent stations inLas Vegas andSalt Lake City will begin running the Stanley Cup Champion Vegas Golden Knights National Hockey League games with the preseason in late September. Advertising demand for both Scripps Sports properties has been strong. - In the Local Media segment, Scripps expects to have successfully renegotiated most of the pay TV households up for renewal this year by the end of the third quarter. The 2023 renewals account for
75% of Scripps' total station footprint. - The Scripps Networks segment exceeded second-quarter revenue guidance. Higher ratings and increased demand in the scatter market drove the improvement. The portfolio's second-quarter CTV revenue was up
18% year over year, fueled by audience growth, timing of network launches on streaming platforms and increases in hours of viewing. - Despite a solid second-quarter performance from Scripps Networks, a longer-than-anticipated advertising recession and ongoing macroeconomic headwinds led the company to record a
non-cash charge to reduce the carrying value of goodwill in the networks business.$686 million - In late June, Scripps News began running live news programs on many of Scripps' local television stations as part of their daily lineups. Scripps News programs have replaced very early-morning local newscasts (e.g., 4:30 a.m.) to free up local resources to concentrate on high-quality news production in the higher viewership time periods.
- The company decided to increase the size of its revolver to
and use the revolver to pay down its term loan B-1, which was scheduled to mature in October 2024. The new revolver better aligns with the company's current scale and provides additional financial flexibility.$585 million
From Scripps President and CEO Adam Symson:
"In our Local Media segment, we are pleased to be making good progress on our distribution renewals, netting Scripps significant increases to market rate and leading to mid-teens distribution revenue growth this year as well as significant net distribution margin expansion. In local advertising, the most positive story was the return of automotive spending – our second-largest core advertising category. Automotive has now shown year over year growth for four consecutive quarters.
"At Scripps Networks, scatter market demand and audience ratings were better than we had anticipated for the second quarter, and we look forward to the rebound of our portfolio revenue upon the return of the national advertising marketplace.
"Our Scripps Sports division came to life in the second quarter with the launch of the WNBA on ION. We are very pleased to be attracting a large number of fans to this Friday night franchise, and recent games have surpassed WNBA ratings on other networks, including ESPN. We also are garnering premium advertising rates above our traditional ION programming lineup. Through free, paid and connected TV, we are thrilled to be bringing the excitement of women's professional basketball to a much greater number of Americans each week. Women's sports is at the earliest stages of its rightful recognition in the marketplace, and we're pleased to play an important role in its growth in value.
"We're also looking ahead to the start of our exclusive local distribution partnership with the Vegas Golden Knights, kicking off on Sept. 24. The Stanley Cup champions have an avid fan base and are beloved across the western
"Scripps Sports and Scripps News are both important components to the reorganization we began at the start of the year. The reorganization is positioning the company to capture opportunities in the industry growth areas of news, sports and entertainment; TV distribution platforms including over the air and connected TV; and datacasting and other businesses enabled by our large spectrum footprint. We continue to expect to realize savings of at least
Operating results
Total second-quarter company revenue was
Loss attributable to the shareholders of Scripps was
Second-quarter 2023 results by segment compared to prior-period amounts:
Local Media
Revenue was
- Core advertising revenue decreased
5.2% to .$149 million - Political revenue was
, compared to$3.8 million in the prior-year quarter, an election year.$24 million - Distribution revenue increased
14% to .$195 million
Segment expenses decreased
Segment profit was
Scripps Networks
Revenue was
Segment profit was
Financial condition
On June 30, cash and cash equivalents totaled
During the first six months of 2023, we made mandatory principal payments of
Preferred stock dividends paid in 2023 were
On July 31, the company entered into the Eighth Amendment to the Third Amended Restated Credit Agreement, increasing our revolver borrowing capacity by
Year-to-date operating results
The following comparisons are to the period ending June 30, 2022:
In 2023, revenue was
Costs and expenses for segments, shared services and corporate were
Loss attributable to the shareholders of Scripps was
Looking ahead
Comparisons for our segments are to the same period in 2022.
Third-quarter 2023 | ||||
Local Media revenue | Down mid-single-digit percent range | |||
Local Media expense | Up low-single-digit percent range | |||
Scripps Networks revenue | Down in the 10 percent range | |||
Scripps Networks expense | Up low-single-digit percent range | |||
Shared services and corporate | About | |||
Updated full-year 2023 | ||||
Interest paid | Between | |||
Capital expenditures | Between | |||
Taxes paid | Between | |||
Depreciation and amortization | Between | |||
Conference call
The senior management of The E.W. Scripps Company will discuss the company's quarterly results during a telephone conference call at 9:30 a.m. Eastern today. To access the live webcast, visit http://ir.scripps.com and find the link under "upcoming events."
To access the conference call by telephone, dial (877) 226-8152 (
A replay line will be open from 12:30 p.m. Eastern time Aug. 4 until midnight Sept. 3. The domestic number to access the replay is (866) 207-1041 and the international number is (402) 970-0847. The access code for both numbers is 7872133.
A replay of the conference call will be archived and available online for an extended period of time following the call. To access the audio replay, visit http://ir.scripps.com/ approximately four hours after the call, and the link can be found on that page under "audio/video links."
Forward-looking statements
This document contains certain forward-looking statements related to the company's businesses that are based on management's current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. Such forward-looking statements are made as of the date of this document and should be evaluated with the understanding of their inherent uncertainty. A detailed discussion of principal risks and uncertainties that may cause actual results and events to differ materially from such forward-looking statements is included in the company's Form 10-K, on file with the SEC, in the section titled "Risk Factors." The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date such statements are made.
Media contact: Michael Perry, The E.W. Scripps Company, (513) 259-4718, michael.perry@scripps.com
Investor contact: Carolyn Micheli, The E.W. Scripps Company, (513) 977-3732, carolyn.micheli@scripps.com
About Scripps
The E.W. Scripps Company (NASDAQ: SSP) is a diversified media company focused on creating a better-informed world. As one of the nation's largest local TV broadcasters, Scripps serves communities with quality, objective local journalism and operates a portfolio of 61 stations in 41 markets. The Scripps Networks reach nearly every American through the national news outlets Court TV and Scripps News and popular entertainment brands ION, Bounce, Defy TV, Grit, ION Mystery and Laff. Scripps is the nation's largest holder of broadcast spectrum. Scripps runs an award-winning investigative reporting newsroom in
THE E.W. SCRIPPS COMPANY |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
(in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||
Operating revenues | $ 582,836 | $ 594,467 | $ 1,110,614 | $ 1,160,173 | ||||
Segment, shared services and corporate expenses | (471,086) | (462,892) | (926,432) | (913,453) | ||||
Acquisition and related integration costs | — | — | — | (1,642) | ||||
Restructuring costs | (7,992) | — | (24,503) | — | ||||
Depreciation and amortization of intangible assets | (38,628) | (41,019) | (77,171) | (80,764) | ||||
Impairment of goodwill | (686,000) | — | (686,000) | — | ||||
Gains (losses), net on disposal of property and equipment | (358) | (1,577) | (1,254) | (4,058) | ||||
Operating expenses | (1,204,064) | (505,488) | (1,715,360) | (999,917) | ||||
Operating income (loss) | (621,228) | 88,979 | (604,746) | 160,256 | ||||
Interest expense | (52,275) | (36,011) | (101,113) | (72,510) | ||||
Gain on extinguishment of debt | — | — | — | 1,234 | ||||
Defined benefit pension plan income | 134 | 662 | 268 | 1,325 | ||||
Miscellaneous, net | (675) | 2,170 | (1,178) | 1,763 | ||||
Income (loss) from operations before income taxes | (674,044) | 55,800 | (706,769) | 92,068 | ||||
Benefit (provision) for income taxes | 4,215 | (14,060) | 18,400 | (27,963) | ||||
Net income (loss) | (669,829) | 41,740 | (688,369) | 64,105 | ||||
Preferred stock dividends | (12,577) | (12,577) | (25,153) | (25,153) | ||||
Net income (loss) attributable to the shareholders of The E.W. | $ (682,406) | $ 29,163 | $ (713,522) | $ 38,952 | ||||
Net income (loss) per diluted share of common stock attributable | $ (8.10) | $ 0.32 | $ (8.49) | $ 0.42 | ||||
Weighted average diluted shares outstanding | 84,296 | 87,820 | 84,024 | 90,048 |
See notes to results of operations. |
Notes to Results of Operations
1. SEGMENT INFORMATION
We determine our business segments based upon our management and internal reporting structures, as well as the basis on which our chief operating decision maker makes resource-allocation decisions.
Our Local Media segment includes our 61 local broadcast stations and their related digital operations. It is comprised of 18 ABC affiliates, 11 NBC affiliates, nine CBS affiliates and four FOX affiliates. We also have 12 CW affiliates - four on full power stations and eight on multicast; five independent stations and 10 additional low power stations. Our Local Media segment earns revenue primarily from the sale of advertising to local, national and political advertisers and retransmission fees received from cable operators, telecommunications companies, satellite carriers and over-the-top virtual MVPDs.
Our Scripps Networks segment includes national news outlets Court TV and Scripps News (formerly Newsy), as well as popular entertainment brands ION, Bounce, Defy TV, Grit, ION Mystery and Laff. The Scripps Networks reach nearly every
Our respective business segment results reflect the impact of intercompany carriage agreements between our local broadcast television stations and our national networks. We also allocate a portion of certain corporate costs and expenses, including accounting, human resources, employee benefit and information technology to our business segments. These intercompany agreements and allocations are generally amounts agreed upon by management, which may differ from an arms-length amount.
The other segment caption aggregates our operating segments that are too small to report separately. Costs for centrally provided services and certain corporate costs that are not allocated to the business segments are included in shared services and corporate costs. These unallocated corporate costs would also include the costs associated with being a public company. Corporate assets are primarily cash and cash equivalents, restricted cash, property and equipment primarily used for corporate purposes and deferred income taxes.
Our chief operating decision maker evaluates the operating performance of our business segments and makes decisions about the allocation of resources to our business segments using a measure called segment profit. Segment profit excludes interest, defined benefit pension plan amounts, income taxes, depreciation and amortization, impairment charges, divested operating units, restructuring activities, investment results and certain other items that are included in net income (loss) determined in accordance with accounting principles generally accepted in
Information regarding the operating results of our business segments is as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Segment operating revenues: | ||||||||||||
Local Media | $ 352,219 | $ 355,819 | (1.0) % | $ 664,142 | $ 682,480 | (2.7) % | ||||||
Scripps Networks | 231,229 | 238,929 | (3.2) % | 447,702 | 477,997 | (6.3) % | ||||||
Other | 3,773 | 3,893 | (3.1) % | 7,529 | 8,044 | (6.4) % | ||||||
Intersegment eliminations | (4,385) | (4,174) | 5.1 % | (8,759) | (8,348) | 4.9 % | ||||||
Total operating revenues | $ 582,836 | $ 594,467 | (2.0) % | $ 1,110,614 | $ 1,160,173 | (4.3) % | ||||||
Segment profit (loss): | ||||||||||||
Local Media | $ 81,017 | $ 80,742 | 0.3 % | $ 126,860 | $ 135,135 | (6.1) % | ||||||
Scripps Networks | 60,343 | 73,297 | (17.7) % | 111,869 | 158,373 | (29.4) % | ||||||
Other | (6,279) | (4,349) | 44.4 % | (7,811) | (5,462) | 43.0 % | ||||||
Shared services and corporate | (23,331) | (18,115) | 28.8 % | (46,736) | (41,326) | 13.1 % | ||||||
Acquisition and related integration costs | — | — | — | (1,642) | ||||||||
Restructuring costs | (7,992) | — | (24,503) | — | ||||||||
Depreciation and amortization of intangible assets | (38,628) | (41,019) | (77,171) | (80,764) | ||||||||
Impairment of goodwill | (686,000) | — | (686,000) | — | ||||||||
Gains (losses), net on disposal of property and equipment | (358) | (1,577) | (1,254) | (4,058) | ||||||||
Interest expense | (52,275) | (36,011) | (101,113) | (72,510) | ||||||||
Gain on extinguishment of debt | — | — | — | 1,234 | ||||||||
Defined benefit pension plan income | 134 | 662 | 268 | 1,325 | ||||||||
Miscellaneous, net | (675) | 2,170 | (1,178) | 1,763 | ||||||||
Income (loss) from operations before income taxes | $ (674,044) | $ 55,800 | $ (706,769) | $ 92,068 |
Operating results for our Local Media segment were as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Segment operating revenues: | ||||||||||||
Core advertising | $ 149,449 | $ 157,671 | (5.2) % | $ 290,762 | $ 315,008 | (7.7) % | ||||||
Political | 3,846 | 24,009 | (84.0) % | 7,371 | 29,777 | (75.2) % | ||||||
Distribution | 195,266 | 171,126 | 14.1 % | 358,707 | 330,708 | 8.5 % | ||||||
Other | 3,658 | 3,013 | 21.4 % | 7,302 | 6,987 | 4.5 % | ||||||
Total operating revenues | 352,219 | 355,819 | (1.0) % | 664,142 | 682,480 | (2.7) % | ||||||
Segment costs and expenses: | ||||||||||||
Employee compensation and benefits | 110,468 | 105,254 | 5.0 % | 216,182 | 209,970 | 3.0 % | ||||||
Programming | 119,774 | 118,847 | 0.8 % | 237,826 | 237,450 | 0.2 % | ||||||
Other expenses | 40,960 | 50,976 | (19.6) % | 83,274 | 99,925 | (16.7) % | ||||||
Total costs and expenses | 271,202 | 275,077 | (1.4) % | 537,282 | 547,345 | (1.8) % | ||||||
Segment profit | $ 81,017 | $ 80,742 | 0.3 % | $ 126,860 | $ 135,135 | (6.1) % |
Operating results for our Scripps Networks segment were as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Total operating revenues | $ 231,229 | $ 238,929 | (3.2) % | $ 447,702 | $ 477,997 | (6.3) % | ||||||
Segment costs and expenses: | ||||||||||||
Employee compensation and benefits | 33,580 | 29,827 | 12.6 % | 63,753 | 59,442 | 7.3 % | ||||||
Programming | 90,678 | 87,779 | 3.3 % | 178,084 | 169,778 | 4.9 % | ||||||
Other expenses | 46,628 | 48,026 | (2.9) % | 93,996 | 90,404 | 4.0 % | ||||||
Total costs and expenses | 170,886 | 165,632 | 3.2 % | 335,833 | 319,624 | 5.1 % | ||||||
Segment profit | $ 60,343 | $ 73,297 | (17.7) % | $ 111,869 | $ 158,373 | (29.4) % |
2. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) | As of June 30, 2023 | As of | ||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 39,304 | $ 18,027 | ||
Other current assets | 639,850 | 625,914 | ||
Total current assets | 679,154 | 643,941 | ||
Investments | 23,267 | 23,144 | ||
Property and equipment | 450,861 | 458,600 | ||
Operating lease right-of-use assets | 109,114 | 117,869 | ||
Goodwill | 2,234,574 | 2,920,574 | ||
Other intangible assets | 1,774,272 | 1,821,254 | ||
Programming | 417,584 | 427,962 | ||
Miscellaneous | 13,907 | 17,661 | ||
TOTAL ASSETS | $ 5,702,733 | $ 6,431,005 | ||
LIABILITIES AND EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 83,680 | $ 82,710 | ||
Unearned revenue | 14,272 | 18,183 | ||
Current portion of long-term debt | 18,612 | 18,612 | ||
Accrued expenses and other current liabilities | 332,679 | 365,500 | ||
Total current liabilities | 449,243 | 485,005 | ||
Long-term debt (less current portion) | 2,919,317 | 2,853,793 | ||
Other liabilities (less current portion) | 905,984 | 961,382 | ||
Total equity | 1,428,189 | 2,130,825 | ||
TOTAL LIABILITIES AND EQUITY | $ 5,702,733 | $ 6,431,005 |
3. EARNINGS PER SHARE ("EPS")
Unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our RSUs, are considered participating securities for purposes of calculating EPS. Under the two-class method, we allocate a portion of net income to these participating securities and, therefore, exclude that income from the calculation of EPS for common stock. We do not allocate losses to the participating securities.
The following table presents information about basic and diluted weighted-average shares outstanding:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
Numerator (for basic and diluted earnings per share) | ||||||||
Net income (loss) | $ (669,829) | $ 41,740 | $ (688,369) | $ 64,105 | ||||
Less income allocated to RSUs | — | (872) | — | (1,105) | ||||
Less preferred stock dividends | (12,577) | (12,577) | (25,153) | (25,153) | ||||
Numerator for basic and diluted earnings per share | $ (682,406) | $ 28,291 | $ (713,522) | $ 37,847 | ||||
Denominator | ||||||||
Basic weighted-average shares outstanding | 84,296 | 83,270 | 84,024 | 83,030 | ||||
Effect of dilutive securities | — | 4,550 | — | 7,018 | ||||
Diluted weighted-average shares outstanding | 84,296 | 87,820 | 84,024 | 90,048 |
4. NON-GAAP INFORMATION
In addition to results prepared in accordance with GAAP, this earnings release discusses free cash flow, a non-GAAP performance measure that management and the company's Board of Directors uses to evaluate the performance of the business. We also believe that the non-GAAP measure provides useful information to investors by allowing them to view our business through the eyes of management and is a measure that is frequently used by industry analysts, investors and lenders as a measure of valuation for broadcast companies.
Free cash flow is calculated as non-GAAP Adjusted EBITDA (as defined below), plus reimbursements received from the FCC for repack expenditures, less capital expenditures, preferred stock dividends, interest payments, income taxes paid (refunded) and mandatory contributions to defined retirement plans.
Adjusted EBITDA is calculated as income (loss) from continuing operations, net of tax, plus income tax expense (benefit), interest expense, losses (gains) on extinguishment of debt, defined benefit pension plan expense (income), share-based compensation costs, depreciation, amortization of intangible assets, impairment of goodwill, loss (gain) on business and asset disposals, acquisition and integration costs, restructuring charges and certain other miscellaneous items.
A reconciliation of these non-GAAP measures to the comparable financial measure in accordance with GAAP is as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) | $ (669,829) | $ 41,740 | $ (688,369) | $ 64,105 | ||||
Provision (benefit) for income taxes | (4,215) | 14,060 | (18,400) | 27,963 | ||||
Interest expense | 52,275 | 36,011 | 101,113 | 72,510 | ||||
Gain on extinguishment of debt | — | — | — | (1,234) | ||||
Defined benefit pension plan income | (134) | (662) | (268) | (1,325) | ||||
Share-based compensation costs | 9,174 | 4,557 | 12,649 | 13,883 | ||||
Depreciation | 15,137 | 15,812 | 30,190 | 31,182 | ||||
Amortization of intangible assets | 23,491 | 25,207 | 46,981 | 49,582 | ||||
Impairment of goodwill | 686,000 | — | 686,000 | — | ||||
Losses (gains), net on disposal of property and equipment | 358 | 1,577 | 1,254 | 4,058 | ||||
Acquisition and related integration costs | — | — | — | 1,642 | ||||
Restructuring costs | 7,992 | — | 24,503 | — | ||||
Miscellaneous, net | 675 | (2,170) | 1,178 | (1,763) | ||||
Adjusted EBITDA | 120,924 | 136,132 | 196,831 | 260,603 | ||||
Capital expenditures | (16,814) | (12,368) | (25,110) | (24,955) | ||||
Proceeds from FCC Repack | — | 541 | — | 1,742 | ||||
Preferred stock dividends | (12,000) | (12,000) | (24,000) | (24,000) | ||||
Interest paid | (31,889) | (15,509) | (93,862) | (68,177) | ||||
Income taxes paid, net of tax indemnification reimbursements | (20,569) | (47,209) | (12,890) | (46,778) | ||||
Mandatory contributions to defined retirement plans | (383) | (253) | (630) | (506) | ||||
Free cash flow | $ 39,269 | $ 49,334 | $ 40,339 | $ 97,929 |
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SOURCE The E.W. Scripps Company
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