Nearly three years ago, on April 1, 2015, The E.W. Scripps Co. completed its merger with Journal Communications. With that, a spin-off of each company’s publishing operations created Journal Media Group (acquired by Gannett in October 2015), as Scripps focused on local TV, the roll out of an over-the-top news network, and developed syndicated daytime TV programming.
Then, there were the radio stations Scripps inherited from Journal. Even with TV cross-promotion opportunities in five markets, ownership of AM and FM stations wasn’t meant to be for the Cincinnati-based media company, as Scripps announced Thursday (1/25) that its put its 34 radio stations up for sale.
The possible future for these properties is already the top discussion topic in the media brokerage community. A look at the most recent past could provide a fuller look at these now-available stations for potential buyers.
INK RUNS DRY FOR JOURNAL
It’s been an interesting seven years for the radio stations that Scripps has put up for sale.
These stations are as follows:
- KJOT-FM, KQXR-FM, KRVB-FM & KTHI-FM in Boise, Idaho
- WCYQ-FM, WKHT-FM, WNOX-FM & WWST-FM in Knoxville, Tenn.
- WTMJ-AM & WKTI-FM in Milwaukee
- KEZO-FM, KKCD-FM, KQCH-FM, KSRZ-FM & KXSP-AM in Omaha
- KRVI-FM, KSPW-FM, KTTS-FM and KSGF-AM & FM in Springfield, Mo.
- KFFN-AM, KMXZ-FM, KQTH-FM & KTGV-FM in Tucson
- KFAQ-AM, KBEZ-FM, KHTT-FM, KVOO-FM & KXBL-FM in Tulsa
- KFTI-AM, KFXJ-FM, KYQQ-FM, KFDI-FM & KICT-FM in Wichita
In February 2011, the story from then-Journal Communications CEO Steve Smith was about company growth.
Asked during a Q&A session conducted during its Q4 2010 conference call with Wall Street investment analysts if the company was interested in making acquisitions, Smith said yes. He also noted that Journal, as it had paid down significant debt in 2010, had the flexibility to think about growth initiatives.
“In a market that might not have television where we have a strong radio cluster, we sure would like to add television to that,” Smith said. “And also, we’re certainly not opposed to new markets, but we would have a preference towards beginning in-market for acquisition possibilities.”
Journal had radio stations but no TV properties in Knoxville; Springfield, Mo.; Tulsa; and Wichita. It had TV but no radio in Ft. Myers-Naples, Fla.; Green Bay, Wisc.; Lansing, Mich.; Las Vegas; and Palm Springs, Calif. Today, Tulsa is the lone former Journal market with TV and radio.
Fast-forward to July 30, 2014, and Smith could no longer talk of growth for Journal. That’s the date when a master agreement was struck that put the wheels in motion on Scripps’ acquisition of all Journal assets. With the deal’s closing eight months later, Smith exited as Journal CEO but remained non-executive chairman of Journal Media Group through its Gannett acqusition — pocketing $4.4 million in “golden parachute” payments, the Milwaukee Business Journal reported. Smith also saw $4.7 million in pension payments in retirement out of the Scripps deal.
A NEW BEGINNING FOR BOEHNE
As President/CEO of The E.W. Scripps Co. at the time of the merger, Rich Boehne expressed excitement over the future of a company that no longer had newspapers in its family.
But, from the very start, the “new” Scripps sent a message that it was all about television.
“Beginning today, the platform for our quality journalism and information products is a diverse group of local media brands – television, radio and digital – and we will reach nearly one in five U.S. television households,” Boehne said on the day the Journal merger closed. “We have a big voice that we will continue to use to create and distribute great content and marketing messages that build brand and sales for our advertisers.”
By August 2015, Boehne was talking acquisitions—thanks to the FCC’s incentive auction and the possible financial windfall relinquishing TV spectrum to wireless companies could bring. But, just months into radio ownership, forecasts were glum: Q3 2015 radio revenue was expected to be flat to down in the low-single digits, while radio expenses were to be up in the low single-digits.
As the quarters progressed, so did the laggard-like activity for Scripps’ radio properties. In Q1 2017, the company’s radio stations experienced a 4.2% revenue dip during the quarter. However, Scripps’ digital division, and a dip in syndication income, were bigger red flags for investors.
Those concerns are no longer day-to-day action points for Boehne. In November 2016, Scripps formally announced that Boehne would retire in the “second half of 2017.” The choice of successor? The Chief Digital Officer, Adam Symson. Symson rose to COO on word of Boehne’s retirement plans, and joined the Scripps TV division in 2002. He took over the company’s digital operations in 2011, overseeing Scripps’ local digital businesses in 27 markets as well as national digital content companies Midroll, Newsy and Cracked. He also has led the company’s efforts to develop new businesses in emerging media through investment and acquisition.
Boehne’s transition of power to Symson occurred on Aug. 8, 2017.
Thus, with Symson at the helm, the possibility of a radio industry exit heightened as rumors began with the start of 2018.
FADE OUT LINES
By Oct. 1, 2016, Scripps shares sank to $13.26 — their lowest level since May 2013.
Since then, up and down activity had largely kept “SSP” between $17 and $23.44, seen in March 2017. By Nov. 1, Scripps shares fell toward $15; as of 11:28am Eastern on Thursday (1/25) SSP is trading at $16.42, up 2.7%.
For investors, the sale of Scripps’ radio stations is positive, but not generating blockbuster excitement. Perhaps they’ve seen the signs since November, when Scripps’ Q3 earnings report revealed a startling set of financials: Scripps’ radio revenue was nearly overtaken by its digital segment in Q3.
For Scripps in Q3, radio revenue fell 7.4% to $17.9 million, from $19.3 million as segment profit slid by 40% to $1.5 million, from $2.5 million in Q3 2016. Scripps’ digital revenue surged 13.3%, to $17.8 million from $15.75 million. But the loss in the digital division came in at $5.7 million in Q3, compared to $5.6 million in Q3 2016. A 10% rise in expenses and costs, to $23.5 million, is the likely culprit for the widening gulf between digital revenue and the ability to make a profit.
With a digitally minded CEO now at the helm, the trigger was pulled.
With the Cincinnati Business Courier reporting that “a reduction in local jobs” has already been seen, and job losses are in the works across other Scripps markets, more than $30 million in cost savings will be seen. Some 30 individuals at Scripps’ headquarters were relieved of their duties. The business newspaper says 50 jobs will be trimmed across Scripps’ TV stations during Q1 2018.
The leaner Scripps will be a digitally savvy TV company, with added investment going toward its Newsy operation, which has evolved from Over-the-Top (OTT) delivery to MVPD distribution; and Midroll, its podcast operation.
It also sees itself as a buyer of media properties — of the UHF and VHF variety.
With the imminent departure of Scripps’ 34 radio stations, the end of an area will transpire in Milwaukee, the longtime home of the former Journal Communications. There, News/Talk WTMJ-AM 620 served as the company’s flagship broadcast property, having signed on the air in July 1927, moving to 620 kHz in 1928.
Ninety years later, the torch will be handed off to a new owner, while Journal’s legacy will live on. The same will be said for the other 33 radio stations Scripps is shedding.
With many wondering what will happen, one thing remains clear—someone will be inheriting properties with a rich heritage and potentially vibrant future.
That future just won’t involve a company fully invested in a visual, digital platform.
RBR+TVBR
