CINCINNATI - E.W. Scripps Co. posted better than expected profits and revenue in the second quarter, driven by a five-fold increase in political advertising and a 21 percent increase in revenue from the Katz broadcast networks that were acquired last October.
“We continue to drive forward with our performance improvement plan,” Scripps CEO Adam Symson said in a press release. “We are moving faster than expected on our corporate cost-cutting initiatives, have announced two radio station deals and are aggressively pursuing television station acquisition opportunities, all on our path to produce meaningful margin and cash-flow improvement.”
Scripps, which is WCPO's parent company, posted a $5.7 million profit on revenue of $283 million in the three months ending June 30. Revenue was up 31 percent from a year ago and it was $7.6 million more than analysts were forecasting. Scripps earned 10 cents per share in profit, 2 cents better than expected. Scripps stock was up more than 7 percent to $13.95 in the first hour of trading Friday, but it's still down about 10 percent year to date.
In a conference call with Wall Street analysts, Symson offered some insight on how big a deal he's willing to make if the right TV properties come available. Benchmark Co. analyst Daniel Kurnos asked if Symson would be "willing to take a stab at a transformative deal" like the 14 local stations that Cox Media Group recently said it was interested in selling. Cox's TV properties include WHIO-TV in Dayton and two stations each in Jacksonville and Orlando, Fla
“I’m not particularly an incrementalist," Symson said. "If there’s an opportunity to significantly add scale to our local stations portfolio, enhance the durability of our group, improve the margins and cash flow, you know we would absolutely take advantage of that in this window of opportunity that we see.”
Among the quarter’s highlights:
- Political advertising of $14.9 million was five times last year's second quarter and more than double the $7 million total from the second quarter of 2014, the last midterm election year. With 20 television stations located in cities with hotly contested Senate and Congressional races, Scripps told analysts Friday that it could see more than $25 million in political revenue in the third quarter, up 20 percent from 2014 levels.
- Scripps is ahead of schedule on a restructuring plan that’s expected to reduce annual expenses by $30 million. The company has incurred $6.1 million in restructuring costs and expects $20 million in annual savings by year end. It previously expected only $10 million in savings to be achieved by the end of 2018.
- Scripps added $5.9 million in non-cash charges to reduce the value of its radio stations on the company’s books. Scripps previously recognized a $20 million reduction after it put 34 stations up for sale. It announced the sale of seven stations in June for a combined $28 million.
- Scripps continues to grow revenue from digital media, with nearly 500,000 subscribers of “over-the-top” local content, meaning it doesn’t come from broadcast or cable outlets. The video news service Newsy has expanded its cable distribution to 38 million households. The podcasting units Midroll and Stitcher grew revenue by 50 percent in the first have of this year.