E.W. Scripps NASDAQ: SSP reported second-quarter results marked by higher political advertising revenue and progress on cost reductions, but also by weaker networks revenue, carriage-dispute effects and a $1.1 billion non-cash impairment charge tied to its Scripps Networks business.
The company reported a loss of $12.68 per share for the quarter. Results included the impairment charge, $36 million in restructuring costs related to its transformation plan and a $9 million gain from station swaps with Gray Media. Together, those items increased the loss attributable to shareholders by $11.83 per share, according to Chief Financial Officer Jason Combs.
President and CEO Adam Symson said the company’s financial performance “didn't meet my expectations,” citing Nielsen measurement changes, continued linear-TV viewing declines, advertising-market uncertainty and temporary blackouts involving legacy pay-TV distributors.
Local Media Revenue Supported by Political Advertising
On an adjusted combined, or same-station, basis, Scripps’ Local Media division generated $317 million in second-quarter revenue, down 1% from the prior-year quarter. Core advertising revenue declined 4.8%, which Combs attributed to broader economic uncertainty, political advertising crowd-out and the impact of carriage disputes.
Political advertising revenue reached $28 million, a company record for a second quarter. Scripps expects full-year political advertising revenue of $225 million to $250 million, above the $198 million it generated during the 2022 midterm election cycle. Symson said the company is seeing strong election spending across markets including Arizona, California, Colorado, Florida, Michigan, Montana, Nevada, Ohio, Virginia and Wisconsin.
Local Media distribution revenue fell 13% to $161 million, largely reflecting service blackout periods during negotiations with Comcast and DirecTV. The Comcast impasse ran from March 31 through May 5, while the DirecTV dispute lasted from May 31 through July 10.
Combs said Scripps completed the last of three major distribution agreements covering most of the pay-TV subscriber households renewing this year. The company expects full-year gross distribution revenue to decline by a low single-digit percentage, while net distribution revenue is projected to rise by a mid-to-high single-digit percentage.
Local Media expenses declined 3% year over year, helped by lower network affiliation fees and employee costs. Segment profit rose to $56 million from $51 million a year earlier.
For the third quarter, Scripps expects adjusted combined Local Media revenue to increase about 20%. Core advertising is expected to decline by a low-double-digit percentage, in line with the trend seen during the third quarter of the 2022 midterm cycle. The company expects sports-related revenue contributions to become more meaningful in the fourth quarter as NBA and NHL seasons get underway.
Networks Business Faces Measurement and Advertising Pressures
Scripps Networks revenue was $172 million in the second quarter on an adjusted combined basis, down 13% from the year-earlier period. The company said the decline reflected linear-TV viewing trends, changes to Nielsen’s measurement methodology and a softer direct-response advertising market.
Symson said the Nielsen methodology changes accounted for roughly half of the pressure on networks revenue. He said the changes altered the measured audience supply “overnight” and affected broadcast networks, streaming and multicultural audience measurement. Nielsen has indicated that it is developing adjustments expected to begin in the fall, though Symson said no potential benefit is included in Scripps’ guidance.
Connected TV revenue was a relative bright spot, increasing 28% year over year. Still, Scripps Networks expenses rose 3.7% to $146 million, and segment profit declined to $26 million from $57 million in the prior-year quarter.
For the third quarter, Scripps expects Networks revenue to fall by a mid-teens percentage, with expenses rising by a low single-digit percentage. Combs said management continues to believe the business should be capable of margins closer to 30% and intends to pursue a recovery similar to its prior margin-improvement efforts.
Sports, M&A and Transformation Initiatives
Scripps expanded its sports portfolio during the quarter through multiyear, full-season partnerships with the Nashville Predators and Detroit Pistons. The Predators are the company’s fifth NHL team partnership, while the Pistons agreement is its first NBA deal. The company also reached an agreement to air the Women’s Volleyball World Cup on ION in 2027.
Symson said Scripps has converted five ION stations to independent stations carrying local sports, creating local duopolies without acquiring another station. He said the strategy is intended to generate new core advertising and distribution revenue while improving the use of the company’s broadcast spectrum.
The company also highlighted recent portfolio actions, including the acquisition of a second Big Four station in Lexington, Kentucky, a station swap with Gray Media across five markets, and station sales in Fort Myers, Florida, and Indianapolis that generated cash for debt repayment.
Scripps ended the quarter with $13 million of cash, no borrowings on its revolving credit facility and net debt of $2.2 billion under its credit agreement. Net leverage was 4.9 times, compared with 4.4 times at the end of the first quarter. The company extended its revolving credit facility through July 2029, securing total capacity of $200 million.
The company now expects to have executed $100 million in annualized run-rate savings by the end of 2026, up from prior guidance. Its broader transformation plan targets $125 million to $150 million in incremental enterprise EBITDA by 2028.
As part of that effort, Scripps this week notified 268 employees that their jobs would be eliminated. Since the start of the year, the company has eliminated 432 filled positions and 126 open roles, representing 12% of its workforce. Combs said Scripps continues to expect $40 million to $50 million of cash restructuring costs associated with the transformation plan.
Symson said the company is using AI, automation, technology and some centralized roles as it develops 24/7 local news streams and expands geographic reporting. He said the operational changes are intended to improve efficiency while preserving Scripps’ commitment to local journalism.
About E.W. Scripps (NASDAQ:SSP)
The E.W. Scripps Company is a diversified U.S. media organization headquartered in Cincinnati, Ohio. Established in 1878 by Edward Willis Scripps, the company began as a newspaper publisher before expanding into broadcast television, cable networks and digital journalism. Today, Scripps combines a legacy of local news reporting with a growing portfolio of national cable channels and digital platforms.
Scripps operates more than 60 television stations across over 40 markets, delivering local news, weather, sports and entertainment programming to communities in both large and mid-sized U.S.
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