With tough comps due to a loss of political dollars and a tightening advertising landscape, perhaps flat is good for a media company in the early months of 2017.
For The E.W. Scripps Co., TV division revenue was statistically flat in Q1. Meanwhile, the company’s radio stations experienced a 4.2% revenue dip during the quarter.
What’s truly hurting Scripps is its digital division, and a dip in syndication income.
Total operating revenue for Scripps came in at $211 million, statistically flat (up 0.7%) from Q1 2016, when the multimedia company saw $209.5 million in revenue.
That led Scripps to swing to a net loss of $1.9 million (-2 cents per share) in Q1, from net income of $4.9 million (+6 cents) in the year-ago period.
The results beat the 4 cents per share average estimate given by a trio of analysts surveyed by Zacks Investment Research.
TV POWERS SCRIPPS AS DIGITAL EXPENSES SURGE
The company’s TV division continues to be the revenue driver, and TV dollars were also statistically flat (they were down 0.1%), finishing at $179.8 million compared to $179.9 million in Q1 2016.
TV segment profit dropped 16.7%, to $34.7 million, in Q1 ’17.
Retransmission revenue, as is the case with several other broadcast TV companies, is a key revenue generator. For Scripps, retransmission revenue increased 24%, to $66 million, in Q1. The increase was driven by the renewal at higher rates of two contracts covering 3 million subscribers during Q4 2016.
Retransmission revenue is expected to become about 35 percent of television division revenue this year.
Local was down 3.3%, to $78 million. National was off 7.3%, to $31 million, while political dollars came in at $1 million, compared to $9.3 million in Q1 2016.
For the radio division, Scripps saw revenue move to $14 million, from $14.6 million, as radio division profit slid 25%, to $1.6 million.
The company did not offer advertising breakouts for radio, as it did for television.
Scripps operates 28 FM stations and six AM stations across eight markets. Its television segment includes 15 ABC affiliates, five NBC affiliates, two FOX affiliates, two CBS affiliates, two MyTV affiliates, one CW affiliate, one independent station and four Azteca América affiliates.
What’s perhaps most vexing to Scripps — and its investors — is its digital division. Revenue climbed 25%, to $15.4 million, but the segment’s quarterly loss widened some 97%, to $6.2 million. The segment includes the digital operations of Scripps’ local television and radio businesses, and also includes the operations of podcast player Midroll, OTT news service Newsy, and multi-platform humor and satire brand Cracked. Revenue is gained primarily through the sale of advertising, marketing services and agency commissions.
Expenses seem to be the killer here. For the digital group, they came in at $21.5 million, reflecting an increase of $6.1 million from Q1 2017. Excluding the impact of Cracked, expenses increased about 25%.
The results come one week after Scripps closed on its offering of $400 million of new 5.125% senior unsecured notes due 2025. The company also closed on the amendment and restatement of its existing $100 million senior secured revolving credit facility, increasing Scripps’ borrowing capacity to $125 million and extending the maturity to 2022.
Meanwhile, Monday will see Scripps’ Newsy unveil new content, advertising opportunities and platform announcements at its second NewFront event, the digital media’s version of the annual Upfronts attended by key brand marketers and agency media buyers.
Newsy’s invitation-only presentation takes place at 6pm Monday (5/8) at Cedar Lake, 547 W 26th Street, New York, NY 10001.
Meanwhile, Scripps’ programming arm is readying the launch of a syndicated daytime talk show featuring country music artist Kellie Pickler and journalist Ben Aaron. It will launch in 20 Scripps markets in fall 2017.
The first quarter following a presidential election is often the lightest in the four-year cycle that drives our broadcast TV business. Nevertheless, we built advertising revenue as the quarter progressed, and now we’re on to partnering with local advertisers as they refine or recast their businesses. — Rich Boehne, Scripps Chairman and President/CEO
As of 1:17pm Eastern, “SSP” shares were down 1.3%, to $20.37, in lighter-than-average trading.