The E.W. Scripps Company (SSP) Q3 2025 Earnings Call Transcript
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Overview
The earnings call reveals mixed sentiments: while CTV growth and margin expansion are positive, revenue declines in key divisions and political ad revenue uncertainty are concerning. The Q&A highlights management's optimism about future growth and margin expansion but also notes challenges in the ad environment and economic uncertainties. Given these mixed signals, the overall sentiment is neutral, suggesting limited stock price movement in the short term.
Key Financial Performance
Local Media division revenue Down 27% year-over-year due to the absence of political advertising revenue compared to the prior year. Core advertising revenue was up nearly 2%, driven by an increase in the largest category, services, and supported by the sports strategy.
Local Media distribution revenue Flat year-over-year.
Local Media division expenses Down more than 4% year-over-year, aided by lower employee-related costs.
Local Media segment profit Nearly $53 million compared to $161 million in Q3 of last year's political cycle, reflecting the absence of political advertising revenue.
Scripps Networks revenue $201 million, about flat compared to the year-ago quarter. Connected TV revenue was up 41% year-over-year, driven by extensive streaming distribution of national networks and strong advertising demand for quality networks programming.
Scripps Networks division expenses Down 7.5% year-over-year due to lower employee-related costs and operational reductions made last fall at Scripps News.
Scripps Networks segment profit $53 million with a segment margin of 27%.
Other segment loss $7.6 million, about the same as Q3 2024.
Shared services and corporate expenses $21.4 million.
Loss per share $0.55 per share, including a $7.6 million loss on extinguishment of debt, $6.5 million of financing transaction costs, a $1.4 million write-off of deferred financing costs, and $2.7 million in restructuring costs, which increased the loss by $0.15 per share. Additionally, the preferred stock dividend reduced EPS by $0.18.
Net leverage 4.6x at the end of Q3, a significant improvement from 6x in Q2 of last year.
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Operating Highlights
Scripps Sports Strategy: The company has expanded partnerships with WNBA, National Women's Soccer League, NHL teams, and other sports leagues. Revenue from WNBA on ION nearly doubled this season, and sports partnerships are driving core advertising revenue growth.
Connected TV Revenue: Revenue from Connected TV increased by 41% year-over-year, with a projected 2025 revenue of over $120 million. Streaming now constitutes 20% of Scripps Networks viewing.
Station Swaps and Sales: The company executed station swaps with Gray and sold stations in Fort Myers and Indianapolis for $123 million. These transactions improve market positioning and provide cash inflow for debt reduction.
Expense Management: Expenses in the Local Media division were down more than 4% year-over-year, and Scripps Networks expenses decreased by 7.5%. Fiscal discipline and efficiency initiatives are improving margins.
AI and Automation: The company is leveraging AI and automation in newsrooms and sales teams to improve efficiency and economics, with early results showing value.
Debt Refinancing and Reduction: The company refinanced 2026 and 2027 maturities, reduced 2028 term loan balance, and achieved a net leverage improvement from 6x to 4.6x year-over-year.
Portfolio Optimization: The company is optimizing its portfolio through station swaps and sales, focusing on enhancing performance and economic durability.
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Risk or Challenges
Local Media Revenue Decline: The Local Media division revenue was down 27% in Q3 due to the absence of political advertising revenue compared to the prior year. For Q4, revenue is expected to decline by about 30%, which could impact financial performance.
Economic Uncertainty: Economic uncertainty has affected the National Networks business, potentially impacting advertising demand and revenue stability.
Debt Levels and Refinancing: The company has refinanced debt and reduced leverage, but it still carries significant debt, with net leverage at 4.6x. High debt levels could pose risks in a rising interest rate environment.
Decline in Political Advertising Revenue: The absence of political advertising revenue in Q3 and lower Medicare open enrollment advertising in Q4 due to the government shutdown are negatively impacting revenue.
Dependence on Sports Strategy: The company’s growth is heavily reliant on its sports strategy, which includes partnerships with sports leagues. Over-reliance on this strategy could pose risks if these partnerships fail to deliver expected returns.
Streaming Revenue Growth Challenges: While Connected TV revenue has grown, the company faces challenges in maintaining double-digit growth in a competitive streaming market.
Operational Risks from AI and Automation: The company is leveraging AI and automation in newsrooms and sales, but these initiatives carry risks related to implementation, cost, and potential disruptions.
M&A Execution Risks: The company is engaged in station swaps and sales to optimize its portfolio. However, these transactions carry execution risks and may not yield the expected financial benefits.
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Guidance & Outlook
Local Media division revenue: For the fourth quarter, we expect Local Media division revenue to be down about 30%. We expect core revenue to be up about 10%, bolstered by our sports strategy, specifically our newest NHL partnership with the Tampa Bay Lightning as well as the comparison to last year's political advertising displacement of core.
Local Media expenses: We expect Local Media expenses to be flat-to-down low single digits, inclusive of the new sports rights expense for the Lightning.
Scripps Networks division revenue: For the fourth quarter, we expect Scripps Networks division revenue to be down in the low-double-digit range. This is being driven by a number of factors, including more than $10 million of networks political revenue in last Q4, a lower percentage of upfront advertising compared to the year ago quarter, and lower Medicare open enrollment advertising due to the government shutdown.
Scripps Networks expenses: We expect Scripps Networks expenses to be down low double digits.
Cash interest paid (full year guidance): We now expect our cash interest paid to be between $165 million and $170 million, reducing the projected cash needed for interest.
Debt reduction: We expect to pay off the remaining reduced 2028 term loan balance through cash flow before it comes due, leaving us with no other bond or term loan financings to address until our 2029 senior notes.
Connected TV revenue: Streaming now constitutes 20% of all Scripps Networks viewing, and we continue to increase our offerings with more streaming content. We have plenty of room for ongoing double-digit growth in Connected TV revenue.
Expense management and transformation: On the Scripps Network side, we expect to deliver a 400 to 600 basis point year-over-year margin improvement through efficiency initiatives and a leaner expense base. Fiscal discipline is a key part of the financial improvement plan, and you can expect it to continue as we balance expense management with strategic growth investments.
Midterm election advertising: The midterm election looks to yield record spending across the advertising ecosystem.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How much more do you think there is to chop in terms of noncore asset sales, and is transformational M&A still an option?
A:Adam Symson stated that there is significant opportunity to identify accretive opportunities for buying, selling, and swapping stations. He emphasized their commitment to unlocking and maximizing shareholder value and mentioned that transformational M&A can be accretive.
Q:Can you parse out the impact of the government shutdown, scatter, DR, and trends in the CTV component?
A:Jason Combs explained that the guidance was down low double digits due to factors like political revenue loss, weakness in DR pricing, tariffs, and volatility in pharma. He noted strong growth in CTV, expecting over 35% growth for the full year, with double-digit growth continuing.
Q:Can you still expand margins in networks despite implied revenue decline next year?
A:Adam Symson expressed confidence in continuing to expand margins for Scripps Networks through sports, programming, distribution, and efficiency improvements. He highlighted their commitment to margin growth.
Q:How does the family trust influence strategic M&A processes?
A:Adam Symson clarified that the process is management-led, with the Board of Directors involved, and the Scripps family brought in later. He emphasized the family's commitment to creating shareholder value.
Q:What are your thoughts on the YouTube TV and Disney dispute and its impact on local affiliates?
A:Adam Symson mentioned that the dispute has caused ABC stations to remain dark, but it hasn't directly impacted revenue performance. He stressed the need for local broadcasters to negotiate directly with virtual MVPDs.
Q:What is coming due on the distribution front in 2026?
A:Jason Combs stated that 3 CBS stations are up for renewal at the end of this year, and ABC, their largest affiliate partner with 18 stations, is up at the end of Q2 2026. Additionally, 70% of retrans traditional MVPD subscribers are renewing mostly in the first half of next year.
Q:Can you provide details on the after-tax proceeds from asset sales and their application?
A:Jason Combs explained that the announced multiples were on a gross basis, with $6 million and $13 million tax payments tied to specific sales. Proceeds will be split 70-30 between B2 and B3 term loans, with a focus on debt paydown and deleveraging.
Q:What are your early indicators for political revenue in 2026 compared to 2022 midterms?
A:Adam Symson expects a compelling year with significant elections in key states. He anticipates broadcasting to take the lion's share of ad revenue, with their portfolio well-positioned for strong performance.
Q:How did the announced asset sales come to be?
A:Jason Combs explained that the process involved both inbounds and proactive approaches. He highlighted the premium multiples achieved in the sales, demonstrating their ability to drive value.
Q:Is there any impact from the Disney-YouTube TV blackout in the Q4 guidance?
A:Adam Symson confirmed that there is no impact from the blackout in the Q4 guidance, and local revenue is performing strongly.
Q:How do you feel about the advertising environment now compared to six months ago?
A:Jason Combs noted momentum in local core advertising, with categories building as the quarter progressed. However, the national ad marketplace faces challenges, including weak DR pricing and regulatory uncertainty in pharma.
Q:What is the breakdown of viewership for local markets and Scripps Networks between over-the-air and streaming?
A:Adam Symson stated that 20% of networks' viewing is through streaming, with growth in OTA-only viewership. Jason Combs added that 25% of prime viewing for networks is OTA, and local revenue is driven by durable news and sports programming.
Q:What is the timing and outlook for resolving the 39% ownership cap?
A:Adam Symson expects the FCC to act on the prohibition against owning two big four stations in one market and to eliminate the national cap, likely by mid-next year.
Q:What is the revenue impact of the government shutdown on Scripps Networks in Q4?
A:Adam Symson mentioned that the government shutdown is a smaller piece of the revenue decline, impacting demand for Medicare Advantage open enrollment advertising.
Q:Are there any changes in advertising categories sensitive to interest rates?
A:Jason Combs noted that automotive has been struggling due to interest rates, inflation, and tariffs. Retail and mortgage-based services are also impacted, but political crowd-out makes it hard to discern trends.
Q:Why isn't the advertising environment more robust despite a decent economy?
A:Jason Combs attributed the weaker ad environment to slower-than-expected rate cuts and secular challenges. Adam Symson added that economic uncertainty makes brands and agencies cautious with spending.
Q:When will AI and cost efficiencies materially benefit operations?
A:Adam Symson indicated that more information on technology-driven transformation and cost efficiencies will be provided next year, with significant progress expected.
Q:Review of Unclear Management Responses
A:Management avoided directly answering the question about the breakdown of over-the-air viewership percentages for both segments, stating that it varies greatly and they do not have the data readily available.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Advertising demand
Bay Lightning
CEO Simpson
CTV distribution
Combs President
Finals cash
Florida week
Fort Myers
Fox affiliate
Indianapolis valuation
Indie Pacer
Investor Relations
League game
Lightning comparison
Lightning highlight
Medicare enrollment
Myers Florida
Myers Indianapolis
NHL Tampa
National Networks
Networks company
Networks division
Networks uncertainty
News Networks
Officer discussion
Pacer Finals
Proceeds
WFTX
WRTV
cash interest
division employee
financing
improvement cash
increase
loss share
note
SSP Transcript
The E.W. Scripps Company (SSP) Q1 2026 Earnings Call Transcript
Unknown5-8
The earnings call summary presents a mixed picture: positive steps in debt reduction and transformation initiatives are offset by a decline in network revenue and macroeconomic challenges impacting advertising. The Q&A highlights concerns about Nielsen's methodology and geopolitical risks, but also notes stable local ad revenue and AI-driven efficiency gains. Overall, the balance of positive and negative factors suggests a neutral impact on the stock price over the next two weeks.
The E.W. Scripps Company (SSP) Q4 2025 Earnings Call Transcript
Unknown2-26
The earnings call summary presents a mixed outlook: positive developments like the NHL partnership and debt reduction are offset by declines in division revenues and unclear management responses. The Q&A section reveals some positive insights, such as political advertising visibility and AI cost savings, but also highlights uncertainties like softer guidance for Scripps Networks and declining affiliate fees. With no strong catalysts for a significant stock price move and the absence of a market cap, the overall sentiment remains neutral, suggesting a stock price change between -2% and 2%.
The E.W. Scripps Company (SSP) Q3 2025 Earnings Call Transcript
Unknown11-7
The earnings call reveals mixed sentiments: while CTV growth and margin expansion are positive, revenue declines in key divisions and political ad revenue uncertainty are concerning. The Q&A highlights management's optimism about future growth and margin expansion but also notes challenges in the ad environment and economic uncertainties. Given these mixed signals, the overall sentiment is neutral, suggesting limited stock price movement in the short term.
The E.W. Scripps Company (SSP) Q2 2025 Earnings Call Transcript
Unknown8-8
The earnings call reveals mixed signals: strong margin improvements and strategic sports partnerships are positive, but EPS loss and cautious advertising outlook are concerns. The Q&A session highlighted uncertainties in the advertising environment and lack of clear strategies for AI impact. While debt reduction efforts are commendable, the overall sentiment remains cautious due to financial losses and macroeconomic uncertainties, leading to a neutral stock price prediction.
SSP Report
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