Scripps reports fourth-quarter 2017 results
Wed, February 28, 2018 by Carolyn Micheli
CINCINNATI – The E.W. Scripps Company (NYSE: SSP) today reported operating results for the fourth quarter of 2017. At the end of the quarter, Radio operations were classified as held for sale, and its results are included in discontinued operations. All periods have been adjusted to reflect this presentation.
Scripps also is reporting results through its new segments, Local Media and National Media, which are reflected in all periods.
For the quarter, the net income from continuing operations was $11.5 million or 16 cents per share. In the prior-year quarter, net income from continuing operations was $36.3 million or 44 cents per share. The current-year quarter included a gain on the investment in Katz of $5.4 million, offset by $2 million of restructuring charges, which increased income from continuing operations by $2 million (net of taxes) or 2 cents per share.
In spite of a $52.8 million decline in political revenue due to the non-election year, total fourth-quarter 2017 revenue of $257 million stayed relatively equal to the fourth quarter of 2016.
• On Feb. 15, the Scripps board initiated the company’s first quarterly dividend in 10 years. The first-quarter dividend of 5 cents per share will be payable to shareholders of record on March 1 for payout on March 26.
• On Jan. 25, the company said it expects its comprehensive restructuring work to yield more than $30 million in annual savings. The company also announced plans to sell its radio station group, with Kalil & Co. retained to handle the process.
• In the Local Media division, core advertising was up 7 percent in the fourth quarter.
• The company green-lit a second season of the daytime show Pickler & Ben, with 100 markets already committed to airing it compared to 38 in the first season. The show is growing audience in its time periods on Scripps stations.
• In the National Media division, Newsy ended the year with contracts covering carriage into 26 million cable households, broadening its distribution into that lucrative marketplace after already being deployed on all the major over-the-top television platforms.
• Further pursuing a more effective and efficient operating structure, the company reorganized its businesses to better focus on the marketplaces they serve: A Local Media division comprised of local media brands on all platforms and a National Media division made up of the businesses with national scale and reach focused on the national advertising market.
Commenting on the business highlights, Scripps President and CEO Adam Symson said:
“Six months into our systematic work to optimize the company’s performance – and with full confidence in our path ahead – the Scripps board decided the time was right to initiate our first quarterly dividend since 2008. Their decision is a tangible show of confidence in the state of our business and our strategies for the future.
“We’ve begun to see the positive impact of our comprehensive reorganization and restructuring with cost reductions that will drive meaningful margin and cash flow improvement.
“We also continue to move forward with our television station acquisition strategy – an aggressive plan to get deeper and even stronger in the markets where we operate and emerge with a higher-performing portfolio that has more revenue and profit-generating capacity.
“And we’ve made significant progress unlocking strong growth opportunities around the future of television while improving our financial foundation. Our fast-growing Katz networks are capitalizing on the resurgence of over-the-air viewership and their 90 percent national household reach, and Newsy is quickly marching toward 40 million pay TV homes by the end of 2018. Both are creating compelling platforms to attract national advertising revenue.
“This work in recent months demonstrates the company’s commitment to two equally important opportunities: building near-term value through improved operating performance in our strong, stable local business and setting up our company for significant long-term value creation.”
Fourth-quarter operating results
Revenue was $257 million, an increase of 1.6 percent compared to the fourth quarter of 2016.
Costs and expenses for segments, shared services and corporate were $222 million, up from $172 million in the year-ago period, primarily driven by higher network programming fees and a quarter of expense from Katz.
Fourth-quarter results by segment compared to prior-year amounts were:
In the fourth quarter of 2017, revenue from the Local Media group was $203 million, down about 17 percent from the prior-year quarter. Political advertising revenue was $3.4 million in the fourth quarter of 2017, compared to $56.2 million in the fourth quarter of last year.
Retransmission revenue increased 4.9 percent to $63.5 million.
Core advertising was up 6.6 percent in the fourth quarter.
Total segment expenses increased 6.5 percent to $157 million, driven by increases in programming fees tied to network affiliation agreements as well as the cost of producing Pickler & Ben.
Fourth-quarter segment profit was $45.4 million, compared to $95.1 million in the year-ago quarter.
In the fourth quarter of 2017, revenue from the National Media group was $53 million, up from $9 million in the prior-year period. Revenue from Katz, which we acquired on Oct. 2, 2017, was $41 million. Expenses for the National Media group were $50.3 million, up from $11.2 million from the prior-year period. Excluding the impact of Katz, expenses increased 30 percent.
Fourth-quarter segment profit was $2.7 million, compared to a loss of $2.2 million in the 2016 quarter.
As of Dec. 31, cash and cash equivalents totaled $149 million while total debt was $693 million.
From Jan. 1, 2017, through Feb. 23, 2018, the company repurchased 1.3 million shares at an average price of $17.31. In November 2016, the board of directors authorized a $100 million share repurchase program that expires at the end of 2018.
Year-to-date results The following comparisons are for the year ending Dec. 31, 2017:
In 2017, revenue was $865 million compared to $868 million in 2016. Retransmission revenue increased $39 million. In the non-election year, political advertising was $8.7 million in 2017 compared to $101 million in 2016.
Costs and expenses for segments, shared services and corporate were $770 million, an increase of $86 million, primarily driven by higher network programming fees as well as costs in the National Media businesses.
Net loss from continuing operations was $12 million or 13 cents per share. In the prior year, net income from continuing operations was $59.9 million or 71 cents per share. The 2017 period includes a $2.4 million charge to write off deferred loan fees associated with refinanced debt, $11.6 million of other income associated with the gain on Scripps’ 5 percent interest in Katz, the sale of a small business and an adjustment to a purchase-price earnout, $4.4 million of restructuring charges and a $35.7 million non-cash charge to write down goodwill and intangible assets.
The senior management of The E.W. Scripps Company will discuss the company’s fourth-quarter results during a telephone conference call at 8:30 a.m. (Eastern) today. To access the live webcast, visit http://www.scripps.com and click on “investors” and then “investor information.”
To access the conference call by telephone, dial (800) 230-1085 (U.S.) or (612) 234-9959 (international) approximately five minutes before the start of the call and ask for "Scripps earnings call". Callers will be asked to provide their name and company affiliation. The public is granted access to the conference call on a listen-only basis.
A replay line will be open from 10:30 a.m. Eastern time Feb. 28 until 11:59 p.m. on March 14. The domestic number to access the replay is (800) 475-6701 and the international number is (320) 365-3844. The access code for both numbers is 444385.
A replay of the conference call will be archived and available online approximately four hours after the call and then for an extended period of time. To access the audio replay, visit http://www.scripps.com, click on "investors" then "investor information," and scroll down to “audio/video links.”
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 the statement is made.
The E.W. Scripps Company (NYSE: SSP) serves audiences and businesses through a growing portfolio of local and national media brands. With 33 television stations, Scripps is one of the nation’s largest independent TV station owners. Scripps runs an expanding collection of national journalism and content businesses, including Newsy, the next-generation national news network; podcast industry leader Midroll Media; and fast-growing national broadcast networks Bounce, Grit, Escape and Laff. Scripps produces original programming including “Pickler & Ben,” runs an award-winning investigative reporting newsroom in Washington, D.C., and is the longtime steward of the Scripps National Spelling Bee. Founded in 1878, Scripps has held for decades to the motto, “Give light and the people will find their own way.”
Carolyn Micheli, The E.W. Scripps Company, 513-977-3732, [email protected]
Kari Wethington, The E.W. Scripps Company, 513-977-3763, [email protected]