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Scripps Q3 earnings: Presidential race rich in content, light on advertising dollars

Scripps falls short on earnings expectations
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Posted at 8:59 AM, Nov 04, 2016
and last updated 2016-11-04 11:59:32-04

CINCINNATI - Six months ago, the E.W. Scripps Co. was expecting a hotly contested presidential race to produce $150 million in advertising revenue for its TV, radio and digital media properties.

Now, the estimate is $100 million.

That’s a big reason Scripps fell short of Wall Street expectations on revenue and profit in the third quarter. Scripps, which is WCPO's parent company, earned $12.5 million in net income on revenue of $233 million in the three months ending Sept. 30. The revenue figure was $23.5 million shy of analyst expectations, while its $0.15 earnings per share fell 14 cents short.

Scripps shares were up a half percent in pre-market trading, compared to yesterday’s $12.97 closing price.

"This uncommon – if not downright unique – presidential election, combined with key Senate races in Ohio, Florida, Colorado and Wisconsin becoming far less competitive than forecast, leaves us with much less political advertising revenue than we expected,” said CEO Rich Boehne in a press release.

But Boehne stressed that Scripps has benefited from the election in other ways that aren’t as easily measured.

"Our local TV newsrooms served communities across the country with unmatched political news coverage,” he said. “They cut through the noise and helped voters understand issues that could affect their lives for many years to come. We also used the spectacle of this election to boost the brands and audiences of our fast-growing over-the-top video and audio businesses.”

Scripps reported 45 percent revenue growth to $15.8 million in its digital properties, including online video producer, Newsy, podcasting company Midroll and the online humor site Cracked.

Television revenue increased 25 percent to $197.3 million, while radio revenue declined 5.5 percent to $19.3 million.

Scripps was expecting a big revenue boost from the 2016 presidential race because its television stations are concentrated in traditional battleground states of Ohio, Florida, Wisconsin, Nevada and Colorado.

But neither candidate used super PACs to boost ad spending in the way past campaigns have done it. And they stopped spending in states where polls showed Donald Trump or Hillary Clinton with a sizable lead. But that strategy may have backfired, as recent email disclosures allowed Trump to catch Clinton in states that were previously considered safe for the Democratic nominee.

“The last 10 days have been terrific,” said Scripps Senior Vice President Brian Lawlor, in a conference call with analysts. “This is exactly now the environment we expected to be in for the last six to eight weeks. Unfortunately, it happened in the last two.”

But even the increased spending won't match 2012 levels. Scripps now expects $55 million in political spending in the fourth quarter, down from $63 million in 2012.

“This is going to be a fascinating case study” on media spending in politics, said Lawlor. “They really focused on four or five states the entire time, allowed other states to have no messaging, thinking that states would go a certain way. Now, here we are in the last month. Suddenly the polls have tightened up and they’re reacting and throwing money back into other states, trying to pull things out.”