Scripps reports Q3 2023 financial results
- None.
- None.
Business notes:
- Scripps successfully completed cable and satellite carriage agreements covering about
75% of the company's Local Media subscriber households. The renewals also expand the number of stations on which Scripps is paid a distribution fee, growing revenue and expanding distribution margins. - Scripps Sports signed a new agreement with the National Hockey League's Arizona Coyotes to distribute its games beginning this season with its first broadcast on Oct. 13. Scripps Sports began broadcasting the NHL's Vegas Golden Knights on Sept. 26. Both teams are distributed on independent Scripps stations in their home markets and in surrounding states. Initial game ratings and advertising demand have been strong.
- Scripps Networks' third-quarter revenue was down
8% , exceeding guidance because of better-than-expected connected TV and direct response revenue. - Restructuring charges for the third quarter were nearly
$5 million $40 million - In October, Scripps News won its first-ever National News Emmy Award in the outstanding science, technology or environmental coverage category for "In Real Life: Plastic Time Bomb," a documentary news series that presented a global exploration of the impact of microplastics on the planet and on our health.
From Scripps President and CEO Adam Symson:
"This was a big year for Scripps in testing the strength of the local broadcast distribution revenue ecosystem, and we are exceedingly pleased with the results. In renewing the majority of our legacy cable and satellite households, we not only smoothly and successfully created new agreements but realized new value, including by expanding the number of stations on which we are paid. Credit for this goes in part to our Scripps Sports local strategy, and as we sign additional rights agreements, we expect to partner with distributors and receive payment for delivering live sports to their customers. Clearly, the linear distribution ecosystem continues to support growth in distribution revenue as well as expanded margins.
"We are creating new value with our existing Scripps Networks brands through distribution on connected television services including YouTubeTV, Roku, Fubo, Pluto, Samsung TV Plus and Vizio WatchFree. Scripps has quickly grown to be one of the leading programmers in the ad-supported streaming marketplace. Excluding our low-margin programmatic product we are sunsetting, CTV revenue was up
"As we look ahead to 2024, we anticipate a number of drivers to catalyze free cash flow growth, including further significant growth in our networks' CTV revenue, the annualization of this year's local distribution deals, the continued expansion of our Scripps Sports strategy and the return of a strong advertising marketplace, including a robust political cycle."
Operating results
Total third-quarter company revenue was
Loss attributable to the shareholders of Scripps was
Third-quarter 2023 results by segment compared to prior-period amounts:
Local Media
Revenue was
- Core advertising revenue decreased
3.1% to$142 million - Political revenue was
$9.1 million $63.2 million - Distribution revenue increased
20% to$198 million
Segment expenses decreased slightly from the prior-year quarter at
Segment profit was
Scripps Networks
Revenue was
Segment profit was
Financial condition
On Sept. 30, cash and cash equivalents totaled
During the first nine months of 2023, we made mandatory principal payments of
On July 31, the company entered into the Eighth Amendment to the Third Amended Restated Credit Agreement, increasing our revolver borrowing capacity by
Preferred stock dividends paid to date in 2023 are
Year-to-date operating results
The following comparisons are to the period ending Sept. 30, 2022:
In 2023, revenue was
Costs and expenses for segments, shared services and corporate of
Loss attributable to the shareholders of Scripps was
Looking ahead
Comparisons for our segments are to the same period in 2022.
Fourth-quarter 2023 | ||
Local Media revenue | Down low to mid-double digits | |
Local Media expense | Up mid-single digits | |
Scripps Networks revenue | Down in the | |
Scripps Networks expense | Flat | |
Shared services and corporate | About |
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 (844) 291-6360 (
A replay line will be open from 12:30 p.m. Eastern time Nov. 3 until midnight Dec. 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 8665205.
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 more than 60 stations in 40+ markets. Scripps reaches households across the
THE E.W. SCRIPPS COMPANY RESULTS OF OPERATIONS | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
(in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||
Operating revenues | $ 566,529 | $ 612,101 | $ 1,677,143 | $ 1,772,274 | ||||
Segment, shared services and corporate expenses | (469,076) | (466,912) | (1,395,508) | (1,380,365) | ||||
Acquisition and related integration costs | — | — | — | (1,642) | ||||
Restructuring costs | (4,705) | — | (29,208) | — | ||||
Depreciation and amortization of intangible assets | (38,588) | (39,565) | (115,759) | (120,329) | ||||
Impairment of goodwill | — | — | (686,000) | — | ||||
Gains (losses), net on disposal of property and equipment | (1,066) | (1,593) | (2,320) | (5,651) | ||||
Operating expenses | (513,435) | (508,070) | (2,228,795) | (1,507,987) | ||||
Operating income (loss) | 53,094 | 104,031 | (551,652) | 264,287 | ||||
Interest expense | (56,916) | (41,917) | (158,029) | (114,427) | ||||
Gain on extinguishment of debt | — | — | — | 1,234 | ||||
Defined benefit pension plan income | 251 | 683 | 519 | 2,008 | ||||
Miscellaneous, net | 1,309 | (494) | 131 | 1,269 | ||||
Income (loss) from operations before income taxes | (2,262) | 62,303 | (709,031) | 154,371 | ||||
Benefit (provision) for income taxes | (1,391) | (16,055) | 17,009 | (44,018) | ||||
Net income (loss) | (3,653) | 46,248 | (692,022) | 110,353 | ||||
Preferred stock dividends | (12,576) | (12,576) | (37,729) | (37,729) | ||||
Net income (loss) attributable to the shareholders of The E.W. | $ (16,229) | $ 33,672 | $ (729,751) | $ 72,624 | ||||
Net income (loss) per diluted share of common stock | $ (0.19) | $ 0.38 | $ (8.67) | $ 0.80 | ||||
Weighted average diluted shares outstanding | 84,433 | 85,324 | 84,162 | 88,197 | ||||
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 more than 60 local television 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 seven CW affiliates - four on full power stations and three on multicast; seven 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 September 30, | Nine Months Ended September 30, | |||||||||||
(in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Segment operating revenues: | ||||||||||||
Local Media | $ 353,061 | $ 378,438 | (6.7) % | $ 1,017,203 | $ 1,060,918 | (4.1) % | ||||||
Scripps Networks | 215,393 | 235,401 | (8.5) % | 663,095 | 713,398 | (7.1) % | ||||||
Other | 2,620 | 2,594 | 1.0 % | 10,149 | 10,638 | (4.6) % | ||||||
Intersegment eliminations | (4,545) | (4,332) | 4.9 % | (13,304) | (12,680) | 4.9 % | ||||||
Total operating revenues | $ 566,529 | $ 612,101 | (7.4) % | $ 1,677,143 | $ 1,772,274 | (5.4) % | ||||||
Segment profit (loss): | ||||||||||||
Local Media | $ 74,865 | $ 99,607 | (24.8) % | $ 201,725 | $ 234,742 | (14.1) % | ||||||
Scripps Networks | 49,661 | 71,984 | (31.0) % | 161,530 | 230,357 | (29.9) % | ||||||
Other | (6,263) | (6,791) | (7.8) % | (14,074) | (12,253) | 14.9 % | ||||||
Shared services and corporate | (20,810) | (19,611) | 6.1 % | (67,546) | (60,937) | 10.8 % | ||||||
Acquisition and related integration costs | — | — | — | (1,642) | ||||||||
Restructuring costs | (4,705) | — | (29,208) | — | ||||||||
Depreciation and amortization of | (38,588) | (39,565) | (115,759) | (120,329) | ||||||||
Impairment of goodwill | — | — | (686,000) | — | ||||||||
Gains (losses), net on disposal of property | (1,066) | (1,593) | (2,320) | (5,651) | ||||||||
Interest expense | (56,916) | (41,917) | (158,029) | (114,427) | ||||||||
Gain on extinguishment of debt | — | — | — | 1,234 | ||||||||
Defined benefit pension plan income | 251 | 683 | 519 | 2,008 | ||||||||
Miscellaneous, net | 1,309 | (494) | 131 | 1,269 | ||||||||
Income (loss) from operations before | $ (2,262) | $ 62,303 | $ (709,031) | $ 154,371 | ||||||||
Operating results for our Local Media segment were as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
(in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Segment operating revenues: | ||||||||||||
Core advertising | $ 142,295 | $ 146,899 | (3.1) % | $ 433,057 | $ 461,907 | (6.2) % | ||||||
Political | 9,130 | 63,183 | (85.5) % | 16,501 | 92,960 | (82.2) % | ||||||
Distribution | 197,842 | 164,742 | 20.1 % | 556,549 | 495,450 | 12.3 % | ||||||
Other | 3,794 | 3,614 | 5.0 % | 11,096 | 10,601 | 4.7 % | ||||||
Total operating revenues | 353,061 | 378,438 | (6.7) % | 1,017,203 | 1,060,918 | (4.1) % | ||||||
Segment costs and expenses: | ||||||||||||
Employee compensation and benefits | 109,566 | 106,341 | 3.0 % | 325,748 | 316,311 | 3.0 % | ||||||
Programming | 122,923 | 123,983 | (0.9) % | 360,749 | 361,433 | (0.2) % | ||||||
Other expenses | 45,707 | 48,507 | (5.8) % | 128,981 | 148,432 | (13.1) % | ||||||
Total costs and expenses | 278,196 | 278,831 | (0.2) % | 815,478 | 826,176 | (1.3) % | ||||||
Segment profit | $ 74,865 | $ 99,607 | (24.8) % | $ 201,725 | $ 234,742 | (14.1) % | ||||||
Operating results for our Scripps Networks segment were as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
(in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Total operating revenues | $ 215,393 | $ 235,401 | (8.5) % | $ 663,095 | $ 713,398 | (7.1) % | ||||||
Segment costs and expenses: | ||||||||||||
Employee compensation and benefits | 30,630 | 30,227 | 1.3 % | 94,383 | 89,669 | 5.3 % | ||||||
Programming | 91,459 | 84,562 | 8.2 % | 269,543 | 254,340 | 6.0 % | ||||||
Other expenses | 43,643 | 48,628 | (10.3) % | 137,639 | 139,032 | (1.0) % | ||||||
Total costs and expenses | 165,732 | 163,417 | 1.4 % | 501,565 | 483,041 | 3.8 % | ||||||
Segment profit | $ 49,661 | $ 71,984 | (31.0) % | $ 161,530 | $ 230,357 | (29.9) % | ||||||
2. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) | As of September 30, 2023 | As of | ||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 15,852 | $ 18,027 | ||
Other current assets | 665,479 | 625,914 | ||
Total current assets | 681,331 | 643,941 | ||
Investments | 23,268 | 23,144 | ||
Property and equipment | 450,834 | 458,600 | ||
Operating lease right-of-use assets | 103,428 | 117,869 | ||
Goodwill | 2,234,574 | 2,920,574 | ||
Other intangible assets | 1,751,121 | 1,821,254 | ||
Programming | 431,062 | 427,962 | ||
Miscellaneous | 12,455 | 17,661 | ||
TOTAL ASSETS | $ 5,688,073 | $ 6,431,005 | ||
LIABILITIES AND EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 60,424 | $ 82,710 | ||
Unearned revenue | 18,713 | 18,183 | ||
Current portion of long-term debt | 15,612 | 18,612 | ||
Accrued expenses and other current liabilities | 348,482 | 365,500 | ||
Total current liabilities | 443,231 | 485,005 | ||
Long-term debt (less current portion) | 2,908,390 | 2,853,793 | ||
Other liabilities (less current portion) | 919,777 | 961,382 | ||
Total equity | 1,416,675 | 2,130,825 | ||
TOTAL LIABILITIES AND EQUITY | $ 5,688,073 | $ 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 September 30, | Nine Months Ended September 30, | |||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
Numerator (for basic and diluted earnings per share) | ||||||||
Net income (loss) | $ (3,653) | $ 46,248 | $ (692,022) | $ 110,353 | ||||
Less income allocated to RSUs | — | (885) | — | (1,831) | ||||
Less preferred stock dividends | (12,576) | (12,576) | (37,729) | (37,729) | ||||
Numerator for basic and diluted earnings per share | $ (16,229) | $ 32,787 | $ (729,751) | $ 70,793 | ||||
Denominator | ||||||||
Basic weighted-average shares outstanding | 84,433 | 83,360 | 84,162 | 83,141 | ||||
Effect of dilutive securities | — | 1,964 | — | 5,056 | ||||
Diluted weighted-average shares outstanding | 84,433 | 85,324 | 84,162 | 88,197 | ||||
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 September 30, | Nine Months Ended September 30, | |||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) | $ (3,653) | $ 46,248 | $ (692,022) | $ 110,353 | ||||
Provision (benefit) for income taxes | 1,391 | 16,055 | (17,009) | 44,018 | ||||
Interest expense | 56,916 | 41,917 | 158,029 | 114,427 | ||||
Gain on extinguishment of debt | — | — | — | (1,234) | ||||
Defined benefit pension plan income | (251) | (683) | (519) | (2,008) | ||||
Share-based compensation costs | 3,418 | 3,902 | 16,067 | 17,785 | ||||
Depreciation | 15,100 | 15,340 | 45,290 | 46,522 | ||||
Amortization of intangible assets | 23,488 | 24,225 | 70,469 | 73,807 | ||||
Impairment of goodwill | — | — | 686,000 | — | ||||
Losses (gains), net on disposal of property and equipment | 1,066 | 1,593 | 2,320 | 5,651 | ||||
Acquisition and related integration costs | — | — | — | 1,642 | ||||
Restructuring costs | 4,705 | — | 29,208 | — | ||||
Miscellaneous, net | (1,309) | 494 | (131) | (1,269) | ||||
Adjusted EBITDA | 100,871 | 149,091 | 297,702 | 409,694 | ||||
Capital expenditures | (16,843) | (9,124) | (41,953) | (34,079) | ||||
Proceeds from FCC Repack | — | 908 | — | 2,650 | ||||
Preferred stock dividends | (12,000) | (12,000) | (36,000) | (36,000) | ||||
Interest paid | (67,508) | (55,611) | (161,370) | (123,788) | ||||
Income taxes paid, net of tax indemnification reimbursements | (13,042) | (9,729) | (25,932) | (56,507) | ||||
Mandatory contributions to defined retirement plans | (254) | (247) | (884) | (753) | ||||
Free cash flow | $ (8,776) | $ 63,288 | $ 31,563 | $ 161,217 | ||||
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SOURCE The E.W. Scripps Company
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