The McGraw-Hill TV group that the E.W. Scripps Company is buying won’t be impacting financial results for Scripps until the transaction actually closes, but CEO Rich Boehne is excited about the addition. He told investors and analysts on his Q3 Wall Street conference call that “we got a great deal” and there is considerable upside for the stations.
Where is that upside? Boehne said Scripps intends to grow news ratings for the McGraw-Hill stations, which will translate into higher revenues, particularly in election years. And he noted that 2012 promises to be a hot election year in California, Colorado and Indiana, where the McGraw-Hill stations are located. Also, he noted, Scripps got into the growing Hispanic media business at a low price point with the Azteca America stations that McGraw-Hill operates, alongside its ABC affiliates, in California and Colorado.
In the CEO’s Q&A session one private investor was obviously miffed that Scripps had decided to make a major acquisition. But noting that the McGraw-Hill is to be paid for with new borrowing, Scripps, which currently has no debt, will still be sitting on a cash hoard of $147 million. So, how about a dividend payment or more stock buybacks? Boehne assured him that the board of directors regularly discusses stock buybacks, but he expressed no interest in paying dividends, preferring to keep “fresh powder” to grow the company’s digital businesses.
RBR-TVBR observation: The TV operations at Scripps already bring in slightly more revenues than the newspapers and that gap will expand once the McGraw-Hill stations are brought into the fold. As Boehne and his team work to “reshape” Scripps it should gradually shake its identification on Wall Street as a “newspaper” chain. Old E.W. wouldn’t recognize the company today, but then he’d have to be 157 years told to check it out.