EX-99 2 ssp-2017113ex991.htm EXHIBIT 99 Exhibit


Exhibit 99.1
sspnewsreleaseheadera19.jpg

Scripps reports second-quarter 2017 results
For immediate release
 
 
November 3, 2017
 
 

CINCINNATI - The E.W. Scripps Company (NYSE: SSP) today reported operating results for the third quarter of 2017.


For the quarter, the net loss was $26.7 million or 32 cents per share. In the prior-year quarter, net income was $12.5 million or 15 cents per share. The current-year quarter included a non-cash goodwill and intangibles impairment charge for Cracked of $35.7 million as well as $2.4 million of restructuring charges, which increased the net loss by $24 million (net of taxes) or 29 cents per share.

For the quarter, total revenue was $216 million, compared to $233 million in third-quarter 2016, which included $27 million of political revenue.

Business highlights

•
On Oct. 2, 2017, the company closed the acquisition of the audience-targeted Katz broadcast networks. The net purchase price was $292 million. The acquisition was financed with a new $300 million floating-rate term loan, due in 2024.

•
Retransmission revenue increased 20 percent to $64 million in the third quarter. The increase was driven by the renewal at higher rates of two contracts covering 3 million subscribers during the fourth quarter of 2016.

•
Scripps launched a new daytime lifestyle show featuring country music entertainer Kellie Pickler and Emmy Award-winning New York TV personality Ben Aaron. The show began running Sept. 18 on 38 stations across the country as well as cable network CMT.

•
Newsy, the national news network focused on millennial audiences, began a major expansion into the cable and satellite marketplace with Scripps’ acquisition of carriage contracts from the Retirement Living Television (RLTV) cable network.

•
In the third quarter, Scripps began a comprehensive restructuring of its operations intended to position the company for improved performance and continued growth. On Aug. 23, the company announced a new management team to support the local and national media businesses and a reorganization that merges local operations into a new Local Media division and the national content brands into a National Media division. Those changes are effective Jan. 1. The company also appointed Chief Strategy Officer Lisa Knutson as interim chief financial officer.

Commenting on the third-quarter results, Scripps President and CEO Adam Symson said:

“In the third quarter, we began a deep analysis of our operating division and corporate cost structure, our non-core assets and the opportunities for our national content brands. We are committed to improving



operating performance in our local media businesses, supporting the growth ahead with our national businesses and serving our audiences with news and information across all media platforms.
“In our television business, we saw core advertising move back into positive territory in the third quarter, factoring out incremental Olympics revenue as well as political for 2016. We have now secured shelf space for our local brands with a half-dozen major over-the-top TV disruptors, including YouTubeTV, Hulu and DirectTV Now, with net economics comparable to that of our cable and satellite platforms.

“In our national businesses, we aim to be the disruptor - capitalizing on consumers’ changing media habits by creating compelling content and distributing it across both traditional and emerging platforms. This focus on consumer behavior, combined with national scale, is setting up these brands for continued healthy revenue growth.

“Among these opportunities is our newest acquisition, the Katz networks, whose national reach and targeted audiences give us access to a deep well of national general-market advertisers. The four networks joined us Oct. 2 and are on track to meet their fourth-quarter financial goals.

“We are disappointed by the subpar financial performance at Cracked and the resulting impairment and goodwill write-down. But we are moving quickly to right size the business’s expense structure, curtail investment and bring it to profitability for 2018.

“Newsy and Midroll are both on track to deliver strong revenue growth for the year. Newsy is now nearly fully distributed on the major OTT services and is leveraging that success into gaining carriage on cable and satellite systems in order to participate in that lucrative marketplace. After our recent acquisition of RLTV carriage agreements, we are transitioning the programming to Newsy and expect to further expand its reach to about 40 million cable and satellite subscribers by the end of next year.”

Third-quarter operating results
Revenue decreased 7 percent, to $216 million, compared to the third quarter of 2016.

Costs and expenses for segments, shared services and corporate were $200 million, up from $187 million in the year-ago period, primarily driven by higher network programming fees.

Third-quarter results by segment compared to prior-year amounts were:

Television
In the third quarter of 2017, revenue from our television group was $180 million, down about 9 percent from the prior-year quarter. Political advertising revenue was $1.7 million in the third quarter of 2017, compared to $26.9 million in the third quarter of last year.

Retransmission revenue increased 19.9 percent or $10.6 million.

Core local and national advertising revenue was down 2.8 percent in the third quarter.
 
Total segment expenses increased 6.4 percent to $148 million, driven by increases in programming fees tied to our network affiliation agreements.

Third-quarter segment profit was $32.1 million, compared to $58.3 million in the year-ago quarter.

Radio
Radio revenue was $17.9 million, down from $19.3 million in the 2016 quarter. Expenses were down 2.5 percent year-over-year.

Segment profit was $1.5 million in the third quarter, down from $2.5 million in the 2016 quarter.

Digital



Digital revenue was $17.8 million, up 13.3 percent from the prior-year period.

Expenses for the digital group were $23.5 million, an increase of $2.1 million from the prior-year period.

Segment loss in the digital division was $5.7 million in the third quarter, compared to $5.6 million in the 2016 quarter.

Financial condition
On Sept. 30, cash and cash equivalents totaled $127 million while total debt was $396 million.

From Jan. 1 through Oct. 31, the company repurchased about 725,000 shares at an average price of $18.76. In November 2016, the board of directors authorized a $100 million share repurchase program that expires at the end of 2018.
 
Year-to-date results
The following comparisons are to the year-to-date period ending Sept. 30, 2016:

In 2017, revenue was $659 million compared to revenue of $670 million in 2016. Retransmission revenue increased $36 million. Political advertising was $5.3 million in 2017 compared to $44.6 million in 2016.

Costs and expenses for segments, shared services and corporate were $591 million, an increase of $36 million, primarily driven by higher network programming fees as well as costs in our digital businesses.

Net loss was $20.1 million or 24 cents per share. In the prior year, net income was $28.9 million or 34 cents per share. The 2017 period includes a $2.4 million non-cash charge to write off deferred loan fees associated with our prior debt, $6.3 million of other income associated with the sale of a small business and an adjustment to a purchase-price earnout, $2.4 million of restructuring charges and a $35.7 million non-cash charge to write down goodwill and intangible assets at Cracked.

Looking ahead
Comparisons are to the same periods of 2016.

Fourth-quarter 2017

Television revenue        Down high teens
Television expense        Up high single digits
Radio revenue        Down high single digits
Radio expense        Up low single digits
Digital revenue        About $60 million (includes Katz networks)
Digital expense        Mid- to high $50 million range (includes Katz networks)
Shared services and     $12 million
corporate

Conference call
The senior management of The E.W. Scripps Company will discuss the company’s third-quarter results during a telephone conference call at 9 a.m. (Eastern) today. To access the live webcast, visit http://www.scripps.com and click on “investors” and then “investor information.”

To access the conference call by telephone, dial (800) 230-1074 (U.S.) or (612) 234-9960 (international) approximately five minutes before the start of the call and ask for "Scripps earnings call". Callers will be asked to provide their name and company affiliation. The public is granted access to the conference call on a listen-only basis.




A replay line will be open from 11 a.m. Eastern time Nov. 3 until 11:59 p.m. on Nov. 17. The domestic number to access the replay is (800) 475-6701 and the international number is (320) 365-3844. The access code for both numbers is 431989.

A replay of the conference call will be archived and available online approximately four hours after the call and then for an extended period of time. To access the audio replay, visit http://www.scripps.com, click on "investors" then "investor information," and scroll down to “audio/video links.”

Forward-looking statements
This press release contains certain forward-looking statements related to the company's businesses that are based on management's current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. Such forward-looking statements are made as of the date of this release and should be evaluated with the understanding of their inherent uncertainty. A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from such forward-looking statements is included in the company’s Form 10-K on file with the SEC in the section titled “Risk Factors”. The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

About Scripps
The E.W. Scripps Company (NYSE: SSP) serves audiences and businesses through a growing portfolio of television, radio and digital media brands. With 33 television stations, Scripps is one of the nation’s largest independent TV station owners. Scripps runs an expanding collection of local and national digital journalism and content businesses, including Newsy, the next-generation national news network, and podcast industry leader Midroll Media. Scripps produces original programming including “Pickler & Ben,” runs an award-winning investigative reporting newsroom in Washington, D.C., and is the longtime steward of the Scripps National Spelling Bee. Founded in 1878, Scripps has held for decades to the motto, “Give light and the people will find their own way.”

Investor contact:
Carolyn Micheli, The E.W. Scripps Company, 513-977-3732, Carolyn.micheli@scripps.com

Media contact:
Kari Wethington, The E.W. Scripps Company, 513-977-3763, Kari.wethington@scripps.com





THE E.W. SCRIPPS COMPANY
RESULTS OF OPERATIONS
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in thousands, except per share data)
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Operating revenues
 
$
216,450

 
$
233,040

 
$
659,271

 
$
670,355

Segment, shared services and corporate expenses
 
(200,487
)
 
(187,192
)
 
(591,242
)
 
(555,642
)
Acquisition and related integration costs
 
—

 
—

 
—

 
(578
)
Restructuring costs
 
(2,407
)
 
—

 
(2,407
)
 
—

Depreciation and amortization
 
(14,655
)
 
(14,892
)
 
(44,028
)
 
(44,089
)
Impairment of goodwill and intangibles
 
(35,732
)
 
—

 
(35,732
)
 
—

(Losses) gains, net on disposal of property and equipment
 
(124
)
 
(26
)
 
(435
)
 
(44
)
Operating expenses
 
(253,405
)
 
(202,110
)
 
(673,844
)
 
(600,353
)
Operating income (loss)
 
(36,955
)
 
30,930

 
(14,573
)
 
70,002

Interest expense
 
(5,720
)
 
(4,592
)
 
(18,163
)
 
(13,603
)
Defined benefit pension plan expense
 
(3,551
)
 
(3,605
)
 
(10,485
)
 
(10,504
)
Miscellaneous, net
 
1,187

 
(596
)
 
5,411

 
(1,245
)
Income (loss) from operations before income taxes
 
(45,039
)
 
22,137

 
(37,810
)
 
44,650

(Provision) benefit for income taxes
 
18,355

 
(9,615
)
 
17,732

 
(15,752
)
Net income (loss)
 
$
(26,684
)
 
$
12,522

 
$
(20,078
)
 
$
28,898

 
 
 
 
 
 
 
 
 
Net income (loss) per share of common stock attributable to the shareholders of The E.W. Scripps Company
 
$
(0.32
)
 
$
0.15

 
$
(0.24
)
 
$
0.34

 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
 
82,039

 
83,230

 
82,140

 
83,654

See notes to results of operations.

E - 1


Notes to Results of Operations
1. SEGMENT INFORMATION
We determine our business segments based upon our management and internal reporting structures. Our reportable segments are strategic businesses that offer different products and services.
Our television segment includes fifteen ABC affiliates, five NBC affiliates, two FOX affiliates and two CBS affiliates. We also have three MyTV affiliates, one CW affiliate, one independent station and three Azteca America Spanish-language affiliates. Our television stations reach approximately 18% of the nation’s television households based on audience reach. Television stations earn revenue primarily from the sale of advertising time to local, national and political advertisers and retransmission fees received from cable operators, telecommunications companies and satellite carriers.
Our radio segment consists of thirty-four radio stations in eight markets. We operate twenty-eight FM stations and six AM stations. Our radio stations earn revenue primarily from the sale of advertising to local advertisers.

Our digital segment includes the digital operations of our local television and radio businesses. It also includes the operations of our national digital businesses of Midroll, a podcast industry leader, Newsy, the national news network and Cracked, a multi-platform humor and satire brand. Our digital operations earn revenue primarily through the sale of advertising, marketing services and agency commissions.

We allocate a portion of certain corporate costs and expenses, including information technology, certain employee benefits and shared services, to our business segments. The allocations are generally amounts agreed upon by management, which may differ from an arms-length amount. Corporate assets are primarily cash and cash equivalents, restricted cash, property and equipment primarily used for corporate purposes, and deferred income taxes.

Our chief operating decision maker evaluates the operating performance of our business segments and makes decisions about the allocation of resources to our business segments using a measure called segment profit. Segment profit excludes interest, defined benefit pension plan expense, income taxes, depreciation and amortization, impairment charges, divested operating units, restructuring activities, investment results and certain other items that are included in net income (loss) determined in accordance with accounting principles generally accepted in the United States of America.


E - 2


Information regarding the operating results of our business segments is as follows:
 
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Television
 
$
179,920

 
$
197,283

 
(8.8
)%
 
$
553,022

 
$
568,932

 
(2.8
)%
     Radio
 
17,870

 
19,301

 
(7.4
)%
 
49,112

 
52,087

 
(5.7
)%
Digital
 
17,846

 
15,754

 
13.3
 %
 
52,552

 
43,287

 
21.4
 %
Other
 
814

 
702

 
16.0
 %
 
4,585

 
6,049

 
(24.2
)%
Total operating revenues
 
$
216,450

 
$
233,040

 
(7.1
)%
 
$
659,271

 
$
670,355

 
(1.7
)%
 
 
 
 
 
 


 
 
 
 
 
 
Segment profit (loss):
 
 
 
 
 


 
 
 
 
 
 
Television
 
$
32,083

 
$
58,305

 
(45.0
)%
 
$
116,583

 
$
153,290

 
(23.9
)%
     Radio
 
1,510

 
2,528

 
(40.3
)%
 
6,027

 
8,574

 
(29.7
)%
Digital
 
(5,685
)
 
(5,633
)
 
0.9
 %
 
(16,061
)
 
(13,481
)
 
19.1
 %
Other
 
(897
)
 
(832
)
 
7.8
 %
 
(2,342
)
 
(984
)
 
138.0
 %
Shared services and corporate
 
(11,048
)
 
(8,520
)
 
29.7
 %
 
(36,178
)
 
(32,686
)
 
10.7
 %
Acquisition and related integration costs
 
—

 
—

 
 
 
—

 
(578
)
 
 
Restructuring costs
 
(2,407
)
 
—

 
 
 
(2,407
)
 
—

 
 
Depreciation and amortization
 
(14,655
)
 
(14,892
)
 
 
 
(44,028
)
 
(44,089
)
 
 
Impairment of goodwill and intangibles
 
(35,732
)
 
—

 
 
 
(35,732
)
 
—

 
 
(Losses) gains, net on disposal of property and equipment
 
(124
)
 
(26
)
 
 
 
(435
)
 
(44
)
 
 
Interest expense
 
(5,720
)
 
(4,592
)
 
 
 
(18,163
)
 
(13,603
)
 
 
Defined benefit pension plans
 
(3,551
)
 
(3,605
)
 
 
 
(10,485
)
 
(10,504
)
 
 
Miscellaneous, net
 
1,187

 
(596
)
 
 
 
5,411

 
(1,245
)
 
 
Income (loss) from operations before income taxes
 
$
(45,039
)
 
$
22,137

 
 
 
$
(37,810
)
 
$
44,650

 
 

E - 3


Operating results for our television segment were as follows:
 
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Local
 
$
76,344

 
$
77,882

 
(2.0
)%
 
$
239,347

 
$
246,951

 
(3.1
)%
National
 
33,915

 
35,524

 
(4.5
)%
 
100,639

 
106,873

 
(5.8
)%
Political
 
1,689

 
26,892

 
(93.7
)%
 
5,255

 
44,601

 
(88.2
)%
Retransmission
 
63,733

 
53,134

 
19.9
 %
 
196,003

 
160,181

 
22.4
 %
Other
 
4,239

 
3,851

 
10.1
 %
 
11,778

 
10,326

 
14.1
 %
Total operating revenues
 
179,920

 
197,283

 
(8.8
)%
 
553,022

 
568,932

 
(2.8
)%
Segment costs and expenses:
 
 
 
 
 


 
 
 
 
 


Employee compensation and benefits
 
65,649

 
63,936

 
2.7
 %
 
197,291

 
193,296

 
2.1
 %
Programs and program licenses
 
47,808

 
41,292

 
15.8
 %
 
137,791

 
121,344

 
13.6
 %
Other expenses
 
34,380

 
33,750

 
1.9
 %
 
101,357

 
101,002

 
0.4
 %
Total costs and expenses
 
147,837

 
138,978

 
6.4
 %
 
436,439

 
415,642

 
5.0
 %
Segment profit
 
$
32,083

 
$
58,305

 
(45.0
)%
 
$
116,583

 
$
153,290

 
(23.9
)%
Operating results for our radio segment were as follows:
 
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Advertising
 
$
16,795

 
$
18,320

 
(8.3
)%
 
$
46,806

 
$
50,010

 
(6.4
)%
Other
 
1,075

 
981

 
9.6
 %
 
2,306

 
2,077

 
11.0
 %
Total operating revenues
 
17,870

 
19,301

 
(7.4
)%
 
49,112

 
52,087

 
(5.7
)%
Segment costs and expenses:
 
 
 
 
 


 
 
 
 
 


Employee compensation and benefits
 
7,350

 
7,310

 
0.5
 %
 
21,896

 
21,660

 
1.1
 %
Programs
 
4,736

 
4,539

 
4.3
 %
 
8,965

 
8,558

 
4.8
 %
Other expenses
 
4,274

 
4,924

 
(13.2
)%
 
12,224

 
13,295

 
(8.1
)%
Total costs and expenses
 
16,360

 
16,773

 
(2.5
)%
 
43,085

 
43,513

 
(1.0
)%
Segment profit
 
$
1,510


$
2,528


(40.3
)%

$
6,027


$
8,574


(29.7
)%
Operating results for our digital segment were as follows:
 
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
(in thousands)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating revenues
 
$
17,846

 
$
15,754

 
13.3
 %
 
$
52,552

 
$
43,287

 
21.4
%
Segment costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Employee compensation and benefits
 
12,429

 
12,470

 
(0.3
)%
 
38,784

 
34,104

 
13.7
%
Other expenses
 
11,102

 
8,917

 
24.5
 %
 
29,829

 
22,664

 
31.6
%
Total costs and expenses
 
23,531

 
21,387

 
10.0
 %
 
68,613

 
56,768

 
20.9
%
Segment loss
 
$
(5,685
)
 
$
(5,633
)
 
0.9
 %
 
$
(16,061
)
 
$
(13,481
)
 
19.1
%


E - 4


2. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
As of 
 September 30, 
 2017
 
As of December 31, 2016
 
 
 
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
126,535

 
$
134,352

Other current assets
 
228,397

 
211,543

Total current assets
 
354,932

 
345,895

Investments
 
14,137

 
14,221

Property and equipment
 
247,156

 
260,731

Goodwill
 
587,377

 
616,780

Other intangible assets
 
456,398

 
467,896

Deferred income taxes
 
10,488

 
9,075

Miscellaneous
 
16,122

 
13,775

TOTAL ASSETS
 
$
1,686,610

 
$
1,728,373

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
28,708

 
$
26,670

Customer deposits and unearned revenue
 
7,088

 
7,122

Current portion of long-term debt
 
2,656

 
6,571

Accrued expenses and other current liabilities
 
70,226

 
63,768

Total current liabilities
 
108,678

 
104,131

Long-term debt (less current portion)
 
393,179

 
386,614

Other liabilities (less current portion)
 
255,779

 
291,693

Total equity
 
928,974

 
945,935

TOTAL LIABILITIES AND EQUITY
 
$
1,686,610

 
$
1,728,373




E - 5


3. EARNINGS PER SHARE (“EPS”)

Unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our RSUs, are considered participating securities for purposes of calculating EPS. Under the two-class method, we allocate a portion of net income to these participating securities and, therefore, exclude that income from the calculation of EPS for common stock. We do not allocate losses to the participating securities.

The following table presents information about basic and diluted weighted-average shares outstanding:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in thousands)
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Numerator (for basic and diluted earnings per share)
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(26,684
)
 
$
12,522

 
$
(20,078
)
 
$
28,898

Less income allocated to RSUs
 
—

 
(174
)
 
—

 
(373
)
Numerator for basic and diluted earnings per share
 
$
(26,684
)
 
$
12,348

 
$
(20,078
)
 
$
28,525

Denominator
 
 
 
 
 
 
 
 
Basic weighted-average shares outstanding
 
82,039

 
83,230

 
82,140

 
83,654

Effective of dilutive securities:
 
 
 
 
 
 
 
 
Stock options held by employees and directors
 
—

 
288

 
—

 
306

Diluted weighted-average shares outstanding
 
82,039

 
83,518

 
82,140

 
83,960

Anti-dilutive securities (1)
 
1,373

 
—

 
1,373

 
—

(1) 
Amount outstanding at Balance Sheet date, before application of the treasury stock method and not weighted for period outstanding.



E - 6