E.W. Scripps Company announced that its board of directors has suspended payment of its dividend and that a restructuring of its newspaper division will eliminate 400 jobs. The company reported Q3 television revenues up 5%, with the gain all due to political, while newspaper revenues fell 17%. Also, CEO Rich Boehne is taking a pay cut and other top executive salaries have been frozen.
“I’d like to assure you that we here at Scripps understand that our investors have in essence handed us their wallets, trusting that we will at some point hand them back, fatter than when we got them, yielding a reasonable return. We understand that that’s what we’re paid to do and we fully embrace that challenge. That’s why our number one goal short term – and I really do believe it’s short term – is to protect the good health of this enterprise so that we are among the media companies best positioned to take advantage of the opportunities presented by the digital transformation of our businesses. And, as has been the case during similar times in our country’s economic history, the financially strong will have the best opportunity to create real value for shareholders over the next few years,” Boehne said in his opening remarks on the company’s quarterly conference call.
He insisted that “behind all the noise in our third quarter results is a very healthy company, built upon solid media businesses in attractive local markets.” Boehne left the door open to some limited, strategic acquisitions in these troubled times, saying such periods may offer the best opportunities for future growth. And although he said Scripps has a strong balance sheet and little debt, the company decided to take several steps to maintain that financial strength. Those include suspending cash dividend payouts to shareholders, freezing the salaries of senior managers at corporate headquarters and eliminating 400 positions in the newspaper division.
CFO Tim Stautberg disclosed later in the call that Boehne had requested that his own base salary be cut and that the board had agreed to a 10% reduction.
In Q3, revenues for Scripps declined 9% to $230 million. The company reported a loss from continuing operations of $21 million, or 39 cents per share. That included $22 million in costs associated with the separation of what is now Scripps Networks Interactive, a separate publicly traded company, and a $24.9 million non-cash charge to write down its investment in the Denver newspaper partnership.
Newspaper revenues fell 17% in the quarter to $131 million, with all advertising categories down double digits. Local fell 16%, classified 28%, national 31% and even online was down 12%.
The television group did somewhat better, with revenues up 5% to $76.9 million, but that was all due to political advertising. Local declined 6.4% to $42.4 million and national was down 14.6% to $19.5 million, while political jumped to $10.3 million from only $700,000 a year ago. Still, that was less political advertising revenue than the company had expected. Post election, ad pacings are off in Q4 as well.
RBR/TVBR observation: Entercom, in radio, was the first broadcaster to suspend dividend payments to conserve cash. Scripps is second. We doubt they will be the last.