PART I - Financial Information [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for Q3 2023 show a net loss and decreased assets due to goodwill impairment, and declining operating cash flow [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased significantly by September 2023, primarily due to a goodwill impairment, leading to a substantial reduction in total equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $15,852 | $18,027 | | Goodwill | $2,234,574 | $2,920,574 | | **Total Assets** | **$5,688,073** | **$6,431,005** | | Long-term debt (less current portion) | $2,908,390 | $2,853,793 | | **Total Liabilities** | **$4,271,398** | **$4,300,180** | | Retained earnings (deficit) | ($379,036) | $350,715 | | **Total Equity** | **$1,416,675** | **$2,130,825** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a **$692 million** net loss for the nine months ended September 30, 2023, primarily due to a **$686 million** goodwill impairment charge Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Total operating revenues | $1,677,143 | $1,772,274 | | Operating income (loss) | ($551,652) | $264,287 | | Impairment of goodwill | $686,000 | $0 | | Net income (loss) | ($692,022) | $110,353 | | Net income (loss) per diluted share | ($8.67) | $0.80 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to **$49.1 million** for the nine months ended September 30, 2023, from **$196.3 million** in the prior year Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $49,137 | $196,277 | | Net cash used in investing activities | ($44,731) | ($55,183) | | Net cash used in financing activities | ($6,581) | ($203,351) | | Decrease in cash, cash equivalents and restricted cash | ($2,175) | ($62,257) | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail a **$29.2 million** restructuring charge, a **$686 million** goodwill impairment, and the company's **$2.9 billion** long-term debt structure - In January 2023, the company initiated a strategic restructuring, anticipating at least **$40 million** in annual savings, with costs totaling **$29.2 million** for the first nine months of 2023[65](index=65&type=chunk)[66](index=66&type=chunk) - A **$686 million** non-cash goodwill impairment charge was recognized in Q2 2023 for the Scripps Networks reporting unit, driven by softness in the national advertising market and declining linear TV viewership[79](index=79&type=chunk)[81](index=81&type=chunk) - On July 31, 2023, the company paid off the remaining **$283 million** principal balance of its 2024 term loan using borrowings from its revolving credit facility[85](index=85&type=chunk)[98](index=98&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a challenging operating environment with a **5.4%** revenue decline, a **$686 million** goodwill impairment, and a restructuring plan for **$40 million** in annual savings [Executive Overview](index=28&type=section&id=Executive%20Overview) The company focuses on local TV and national networks, launched Scripps Sports, initiated a restructuring for **$40 million** in annual savings, and recorded a **$686 million** goodwill impairment - A strategic restructuring announced in January 2023 aims to create a leaner operating structure and is anticipated to result in at least **$40 million** in annual savings[125](index=125&type=chunk) - The company launched Scripps Sports to leverage its broadcast reach for partnerships, securing multi-year agreements with the WNBA, Vegas Golden Knights, and Arizona Coyotes[124](index=124&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - Due to softness in the national advertising market and declining linear TV viewership, the company recorded a non-cash goodwill impairment charge of **$686 million** for its Scripps Networks business in Q2 2023[130](index=130&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Consolidated revenue for the first nine months of 2023 fell **5.4%** to **$1.68 billion**, primarily due to lower advertising, resulting in a **$551.7 million** operating loss Consolidated Results of Operations (in thousands) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Operating revenues | $1,677,143 | $1,772,274 | (5.4)% | | Operating income (loss) | ($551,652) | $264,287 | N/A | | Net income (loss) | ($692,022) | $110,353 | N/A | - The revenue decrease was driven by a decline in political revenues of **$80.0 million** and lower core advertising, partially offset by a **$61.1 million** increase in Local Media distribution revenues following contract renewals for **75%** of subscriber households[134](index=134&type=chunk) - Interest expense increased by **$43.6 million** for the nine-month period due to higher year-over-year interest rates on variable debt borrowings[139](index=139&type=chunk) [Business Segment Results](index=32&type=section&id=Business%20Segment%20Results) Local Media segment profit fell **14.1%** due to political advertising decline, while Scripps Networks profit decreased **29.9%** from a **7.1%** revenue drop Segment Profit (Loss) (in thousands) | Segment | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Local Media | $201,725 | $234,742 | (14.1)% | | Scripps Networks | $161,530 | $230,357 | (29.9)% | - Local Media's performance was impacted by an **82.2%** decrease in political advertising revenue year-to-date, partially offset by a **12.3%** increase in distribution revenue from new agreements[149](index=149&type=chunk)[150](index=150&type=chunk) - Scripps Networks revenue decreased **7.1%** year-to-date due to macroeconomic challenges impacting national advertiser budgets and a decline in linear television viewership[154](index=154&type=chunk)[155](index=155&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is sourced from operations and a revolving credit facility, with **$15.9 million** cash and **$238 million** borrowing capacity, despite decreased operating cash flow - As of September 30, 2023, the company had **$15.9 million** of cash on hand and **$238 million** of additional borrowing capacity under its revolving credit facility[159](index=159&type=chunk) - Net cash provided by operating activities decreased by **$147 million** in the first nine months of 2023 compared to 2022, driven by lower segment profit and higher interest payments[161](index=161&type=chunk) - The company amended its credit agreement, increasing the Revolving Credit Facility to **$585 million**, and was in compliance with its maximum first lien net leverage ratio covenant of **5.0 to 1.0** as of September 30, 2023[164](index=164&type=chunk)[166](index=166&type=chunk)[90](index=90&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from variable-rate debt; a **100 basis point** SOFR increase would raise annual interest expense by **$16.2 million** - The company is subject to interest rate risk on its variable-rate debt; a **100 basis point** increase in SOFR would increase annual interest expense by approximately **$16.2 million**[179](index=179&type=chunk) Debt Fair Value vs. Carrying Value (in thousands) | Metric | As of September 30, 2023 | | :--- | :--- | | Long-term debt, including current portion (Cost Basis) | $2,964,822 | | Long-term debt, including current portion (Fair Value) | $2,565,051 | [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures are effective, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[183](index=183&type=chunk) - No material changes were made to the company's internal controls over financial reporting during the quarter[184](index=184&type=chunk) PART II - Other Information [Legal Proceedings](index=3&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation and regulatory proceedings, none of which are expected to result in a material loss - The company is involved in ordinary course litigation and regulatory proceedings, none of which are expected to have a material adverse effect[12](index=12&type=chunk) [Risk Factors](index=3&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K have occurred - No material changes to the risk factors disclosed in the 2022 Form 10-K have occurred[13](index=13&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=3&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not conduct any sales of unregistered equity securities during the quarter ended September 30, 2023 - There were no sales of unregistered equity securities in the third quarter of 2023[14](index=14&type=chunk) [Other Information](index=4&type=section&id=Item%205.%20Other%20Information) Brian Lawlor, President of Scripps Sports, adopted a Rule 10b5-1 trading plan for the potential sale of up to **90,000** Class A common shares - Brian Lawlor, President of Scripps Sports, adopted a Rule 10b5-1 trading plan for the potential sale of up to **90,000** Class A common shares[17](index=17&type=chunk)

The E.W. Scripps Company (NASDAQ:SSP) Q3 2023 Earnings Conference Call November 3, 2023 9:30 AM ET Company Participants Carolyn Micheli - Investor Relations Adam Symson - President & Chief Executive Officer Jason Combs - Chief Financial Officer Lisa Knutson - Chief Operating Officer Conference Call Participants Dan Kurnos - Benchmark Steven Cahall - Wells Fargo Nick Zangler - Stephens Michael Kupinski - NOBLE Capital Markets Craig Huber - Huber Research Partners Operator Ladies and gentlemen, thank you for ...

The E.W. Scripps Company (NASDAQ:SSP) Q2 2023 Earnings Conference Call August 4, 2023 9:30 AM ET Company Participants Carolyn Micheli - EVP, Chief Communications & IR Officer Adam Symson - President, CEO & Director Jason Combs - EVP & CFO Lisa Knutson - COO Conference Call Participants Daniel Kurnos - The Benchmark Company Steven Cahall - Wells Fargo Securities Michael Kupinski - NOBLE Capital Markets Craig Huber - Huber Research Partners Operator Ladies and gentlemen, thank you for standing by, and welcome ...

PART I - Financial Information [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive income (loss), cash flows, and equity, along with detailed notes explaining significant accounting policies, recent events, and financial performance [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets from **$6.43 billion** at December 31, 2022, to **$5.70 billion** at June 30, 2023, primarily due to a significant goodwill impairment, with total equity also decreasing from **$2.13 billion** to **$1.43 billion** Condensed Consolidated Balance Sheets | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $5,702,733 | $6,431,005 | | Goodwill | $2,234,574 | $2,920,574 | | Total Equity | $1,428,189 | $2,130,825 | | Cash and cash equivalents | $39,304 | $18,027 | | Long-term debt (less current portion) | $2,919,317 | $2,853,793 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a significant net loss for both the three and six months ended June 30, 2023, primarily driven by a **$686 million** goodwill impairment charge, with operating revenues decreasing and interest expense increasing substantially Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2023 (in thousands) | Three Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | | :------------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total operating revenues | $582,836 | $594,467 | $1,110,614 | $1,160,173 | | Impairment of goodwill | $686,000 | — | $686,000 | — | | Operating income (loss) | $(621,228) | $88,979 | $(604,746) | $160,256 | | Interest expense | $(52,275) | $(36,011) | $(101,113) | $(72,510) | | Net income (loss) | $(669,829) | $41,740 | $(688,369) | $64,105 | | Net income (loss) per basic share of common stock | $(8.10) | $0.34 | $(8.49) | $0.46 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Total comprehensive loss for the three and six months ended June 30, 2023, significantly widened compared to the prior year, primarily reflecting the reported net loss Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric | Three Months Ended June 30, 2023 (in thousands) | Three Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | | :------------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income (loss) | $(669,829) | $41,740 | $(688,369) | $64,105 | | Total comprehensive income (loss) attributable to preferred and common stockholders | $(669,804) | $42,570 | $(688,319) | $65,765 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased significantly in the first six months of 2023 compared to 2022, mainly due to lower segment profit and higher interest payments, while financing activities turned positive due to net borrowings Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $24,905 | $106,585 | | Net cash used in investing activities | $(26,685) | $(47,243) | | Net cash provided by (used in) financing activities | $23,057 | $(101,585) | | Increase (decrease) in cash, cash equivalents and restricted cash | $21,277 | $(42,243) | [Condensed Consolidated Statements of Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity decreased substantially from **$2.13 billion** at December 31, 2022, to **$1.43 billion** at June 30, 2023, primarily due to the comprehensive loss incurred Condensed Consolidated Statements of Equity | Metric | As of June 30, 2023 (in thousands) | As of December 31, 2022 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Total Equity | $1,428,189 | $2,130,825 | | Retained Earnings (Deficit) | $(362,807) | $350,715 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, recent acquisitions, restructuring costs, income taxes, leases, goodwill, debt, employee benefits, segment information, capital stock, and comprehensive income, highlighting a strategic restructuring, goodwill impairment, and credit agreement amendment - Restructuring costs totaled **$24.5 million** in the first six months of 2023, including a **$13.6 million** charge related to programming asset write-down, aiming for at least **$40 million** in annual savings[67](index=67&type=chunk)[68](index=68&type=chunk)[129](index=129&type=chunk) - A **$686 million** non-cash goodwill impairment charge was recognized for the Scripps Networks reporting unit in Q2 2023, attributed to softness in the national advertising marketplace and declining linear television viewership trends[84](index=84&type=chunk)[133](index=133&type=chunk) - On July 31, 2023, the company amended its Credit Agreement, increasing its revolver borrowing capacity by **$185 million to $585 million**, and borrowed **$283 million** to pay off the remaining principal balance of the term loan maturing in 2024[18](index=18&type=chunk)[167](index=167&type=chunk) - The Board of Directors authorized a new debt repurchase program in February 2023, allowing for a reduction of up to **$500 million** in outstanding principal balance of senior secured and unsecured notes, expiring March 1, 2026[102](index=102&type=chunk)[170](index=170&type=chunk) - Preferred stock dividends paid were **$24.0 million** in both the first six months of 2023 and 2022, with the company prohibited from paying dividends on and repurchasing common shares until all preferred stock shares are redeemed[120](index=120&type=chunk)[134](index=134&type=chunk)[172](index=172&type=chunk) Segment Operating Revenues and Profit (Six Months Ended June 30) | Segment | Operating Revenues 2023 (in thousands) | Operating Revenues 2022 (in thousands) | Change (%) | Segment Profit 2023 (in thousands) | Segment Profit 2022 (in thousands) | Change (%) | | :---------------- | :----------------------------------- | :----------------------------------- | :--------- | :--------------------------------- | :--------------------------------- | :--------- | | Local Media | $664,142 | $682,480 | (2.7)% | $126,860 | $135,135 | (6.1)% | | Scripps Networks | $447,702 | $477,997 | (6.3)% | $111,869 | $158,373 | (29.4)% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting key business developments, consolidated financial performance, segment-specific results, liquidity, capital resources, and critical accounting policies [Executive Overview](index=27&type=section&id=Executive%20Overview) The E.W. Scripps Company, a diverse media enterprise, initiated a strategic restructuring in January 2023 targeting **$40 million** in annual savings, launched Scripps Sports, and secured new broadcasting agreements, despite a **$686 million** goodwill impairment due to national advertising market softness - Strategic restructuring announced in January 2023 aims for at least **$40 million** in annual savings, with **$20 million** expected by the end of 2023[129](index=129&type=chunk) - Scripps Sports launched in December 2022 to pursue partnerships with sports leagues, conferences, and teams, leveraging local market depth and national broadcast reach[128](index=128&type=chunk) - Multi-year agreements secured to televise regular season Friday night WNBA games on ION (April 2023) and Vegas Golden Knights NHL games on KMCC (May 2023)[131](index=131&type=chunk)[132](index=132&type=chunk) - A **$686 million** non-cash goodwill impairment charge was recorded for the Scripps Networks reporting unit in Q2 2023 due to softness in the national advertising marketplace and declining linear television viewership trends[133](index=133&type=chunk) [Consolidated Results of Operations](index=28&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated operating revenues decreased by **2.0%** for Q2 2023 and **4.3%** for the first six months, driven by declines in Local Media and Scripps Networks, while a **$686 million** goodwill impairment and increased interest expense led to a substantial net loss Consolidated Operating Revenues | Period | 2023 (in thousands) | 2022 (in thousands) | Change (%) | | :----- | :------------------ | :------------------ | :--------- | | Q2 | $582,836 | $594,467 | (2.0)% | | YTD | $1,110,614 | $1,160,173 | (4.3)% | - Cost of revenues increased by **2.7% in Q2 2023** and **3.1% for the first six months of 2023**, mainly due to higher network affiliation fees at Scripps Networks[138](index=138&type=chunk) - Selling, general and administrative expenses remained flat in Q2 2023 and decreased **1.9% for the first six months of 2023**, driven by lower ratings costs and advertising/promotion, partially offset by higher payroll and stock compensation[139](index=139&type=chunk) - Interest expense increased **$16.3 million in Q2 2023** and **$28.6 million for the first six months of 2023** due to higher year-over-year interest rates on variable debt borrowings[142](index=142&type=chunk) Consolidated Net Income (Loss) | Period | 2023 (in thousands) | 2022 (in thousands) | | :----- | :------------------ | :------------------ | | Q2 | $(669,829) | $41,740 | | YTD | $(688,369) | $64,105 | [Business Segment Results](index=30&type=section&id=Business%20Segment%20Results) The Local Media segment saw a slight revenue decrease due to lower advertising, partially offset by increased distribution, while Scripps Networks experienced a more significant decline in revenues and profit due to national advertising market softness and declining linear TV viewership [Local Media](index=31&type=section&id=Local%20Media) Local Media revenues decreased slightly by **1.0% in Q2** and **2.7% YTD** due to core and political advertising declines, partially offset by a **14.1% increase in Q2** and **8.5% YTD** in distribution revenues, with segment profit stable in Q2 but down YTD Local Media Operating Revenues | Revenue Type | Three Months Ended June 30, 2023 (in thousands) | Three Months Ended June 30, 2022 (in thousands) | Change (%) | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Change (%) | | :----------------- | :---------------------------------------------- | :---------------------------------------------- | :--------- | :-------------------------------------------- | :-------------------------------------------- | :--------- | | Core advertising | $149,449 | $157,671 | (5.2)% | $290,762 | $315,008 | (7.7)% | | Political | $3,846 | $24,009 | (84.0)% | $7,371 | $29,777 | (75.2)% | | Distribution | $195,266 | $171,126 | 14.1% | $358,707 | $330,708 | 8.5% | | Total operating revenues | $352,219 | $355,819 | (1.0)% | $664,142 | $682,480 | (2.7)% | Local Media Segment Profit | Period | 2023 (in thousands) | 2022 (in thousands) | Change (%) | | :----- | :------------------ | :------------------ | :--------- | | Q2 | $81,017 | $80,742 | 0.3% | | YTD | $126,860 | $135,135 | (6.1)% | [Scripps Networks](index=32&type=section&id=Scripps%20Networks) Scripps Networks revenues, primarily advertising, decreased by **3.2% in Q2** and **6.3% YTD** due to national advertising market softness and declining linear TV viewership, leading to a significant segment profit decrease of **17.7% in Q2** and **29.4% YTD** Scripps Networks Operating Revenues | Period | 2023 (in thousands) | 2022 (in thousands) | Change (%) | | :----- | :------------------ | :------------------ | :--------- | | Q2 | $231,229 | $238,929 | (3.2)% | | YTD | $447,702 | $477,997 | (6.3)% | - Revenue decline driven by softness in the national advertising marketplace, macroeconomic challenges, and declining linear television viewership, partially offset by expanded distribution on Connected TV platforms[158](index=158&type=chunk) Scripps Networks Segment Profit | Period | 2023 (in thousands) | 2022 (in thousands) | Change (%) | | :----- | :------------------ | :------------------ | :--------- | | Q2 | $60,343 | $73,297 | (17.7)% | | YTD | $111,869 | $158,373 | (29.4)% | - Programming expense increased by **3.3% in Q2** and **4.9% YTD** due to higher affiliate fees and increased distribution across the networks[160](index=160&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by **$39.3 million** cash and **$323 million** available under its revolver as of June 30, 2023, with post-period revolver capacity increased to **$585 million** and **$283 million** borrowed to pay off a 2024 term loan, expecting compliance with debt covenants and a new **$500 million** debt repurchase authorization - As of June 30, 2023, the company had **$39.3 million of cash on hand** and **$323 million of additional borrowing capacity** under its revolving credit facility[162](index=162&type=chunk) - On July 31, 2023, the Revolving Credit Facility's borrowing capacity was increased to **$585 million**, and **$283 million** was borrowed to pay off the remaining principal balance of the term loan maturing in October 2024[167](index=167&type=chunk) - The company expects to be in compliance with its maximum first lien net leverage ratio covenant (**5.0x through December 31, 2024**, then stepping down)[169](index=169&type=chunk) - A new debt repurchase authorization permits a reduction of up to **$500 million** in outstanding principal balance of senior secured and unsecured notes, expiring March 1, 2026[170](index=170&type=chunk) - The company is prohibited from paying dividends on and repurchasing common shares until all preferred stock shares are redeemed[172](index=172&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company identifies acquisitions, goodwill and indefinite-lived intangible assets, and pension plans as its most critical accounting policies and estimates, requiring significant judgment and assumptions - The most critical accounting policies and estimates are related to acquisitions, goodwill and indefinite-lived intangible assets, and pension plans[176](index=176&type=chunk) - These policies require significant judgment and assumptions about matters that are highly uncertain, and different estimates could materially change the financial statements[175](index=175&type=chunk)[176](index=176&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk from variable-rate credit agreement borrowings, where a **100 basis point increase in SOFR** would increase annual interest expense by approximately **$15.7 million**, and does not use derivative instruments for speculative trading - The company is subject to interest rate risk associated with its credit agreement, as borrowings bear interest at SOFR plus respective fixed margin spreads or spreads determined relative to the Company's leverage ratio[182](index=182&type=chunk) - A **100 basis point increase in SOFR** would increase annual interest expense on variable rate borrowings by approximately **$15.7 million**[182](index=182&type=chunk) - The company does not use derivative instruments for speculative trading purposes[181](index=181&type=chunk) Fair Value of Long-Term Debt (June 30, 2023) | Debt Type | Cost Basis (in thousands) | Fair Value (in thousands) | | :-------------------------- | :------------------------ | :------------------------ | | Revolving credit facility | $70,000 | $70,000 | | Senior secured notes, 2029 | $523,356 | $423,264 | | Senior unsecured notes, 2027 | $425,667 | $346,919 | | Senior unsecured notes, 2031 | $392,071 | $276,900 | | Term loan, 2024 | $282,750 | $282,220 | | Term loan, 2026 | $732,631 | $721,641 | | Term loan, 2028 | $555,000 | $540,431 | | Total Long-term debt | $2,981,475 | $2,661,375 | [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal controls over financial reporting during the period - The Chief Executive Officer and Chief Financial Officer concluded that the design and operation of disclosure controls and procedures were **effective as of June 30, 2023**[186](index=186&type=chunk) - There were no changes to the company's internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[187](index=187&type=chunk) PART II - Other Information [Item 1. Legal Proceedings](index=3&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation and regulatory proceedings, including defamation actions and broadcast license renewals, none of which is expected to result in material loss - The company is involved in ordinary course litigation and regulatory proceedings, including defamation actions and broadcast license renewals[13](index=13&type=chunk) - None of the legal proceedings are expected to result in material loss[13](index=13&type=chunk) [Item 1A. Risk Factors](index=3&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in the company's 2022 Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the 2022 Annual Report on Form 10-K[14](index=14&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=3&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no sales of unregistered equity securities during the quarter ended June 30, 2023 - No sales of unregistered equity securities occurred during the quarter ended June 30, 2023[15](index=15&type=chunk) [Item 3. Defaults Upon Senior Securities](index=3&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the quarter ended June 30, 2023 - No defaults upon senior securities occurred during the quarter ended June 30, 2023[16](index=16&type=chunk) [Item 4. Mine Safety Disclosures](index=3&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - The company has no mine safety disclosures[17](index=17&type=chunk) [Item 5. Other Information](index=4&type=section&id=Item%205.%20Other%20Information) On July 31, 2023, the company amended its credit agreement, increasing its revolver borrowing capacity by **$185 million to $585 million** and borrowing **$283 million** to pay off a term loan, with no directors or officers adopting, modifying, or terminating Rule 10b5-1 trading arrangements during the quarter - On July 31, 2023, the company entered into the Eighth Amendment to the Third Amended Restated Credit Agreement, increasing its revolver borrowing capacity by **$185 million to $585 million**. The company borrowed **$283 million** on the revolver to pay off the remaining principal balance of its term loan maturing in 2024[18](index=18&type=chunk) - None of the company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2023[19](index=19&type=chunk) [Item 6. Exhibits](index=4&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Section 302 and 906 Certifications, the Eighth Amendment to the Third Amended and Restated Credit Agreement, and the unaudited Condensed Consolidated Financial Statements in iXBRL format - Key exhibits filed include Section 302 Certifications (31(a), 31(b)), Section 906 Certifications (32(a), 32(b)), the Eighth Amendment to the Third Amended and Restated Credit Agreement (10.1), and the company's unaudited Condensed Consolidated Financial Statements in iXBRL format (101)[20](index=20&type=chunk) Signatures [Signatures](index=5&type=section&id=Signatures) The report was duly signed on behalf of The E.W. Scripps Company by Daniel W. Perschke, Vice President, Controller (Principal Accounting Officer), on August 4, 2023 - The report was signed by Daniel W. Perschke, Vice President, Controller (Principal Accounting Officer) of The E.W. Scripps Company[22](index=22&type=chunk) - The report was dated August 4, 2023[22](index=22&type=chunk)

The E.W. Scripps Company (NASDAQ:SSP) Q1 2023 Earnings Conference Call May 5, 2023 9:30 AM ET Company Participants Carolyn Micheli - Head, IR Adam Symson - President & CEO Jason Combs - CFO Lisa Knutson - Chief Operating Officer Conference Call Participants Steven Cahall - Wells Fargo Dan Kurnos - Benchmark Company Michael Kupinski - Noble Capital Markets Craig Huber - Huber Research Partners Operator Ladies and gentlemen, thank you for standing by, and welcome to the Scripps' First Quarter 2023 Earnings Ca ...

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the three months ended March 31, 2023, show a decrease in total assets to **$6.40 billion** from **$6.43 billion** at year-end 2022, with a net loss of **$18.5 million** for the quarter, a significant downturn from **$22.4 million** net income in the same period of 2022, driven by lower operating revenues and higher interest expenses, and a substantial decrease in cash flow from operations [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets were **$6.40 billion**, a slight decrease from **$6.43 billion** at the end of 2022, with total liabilities at approximately **$4.30 billion** and long-term debt at **$2.87 billion**, while total equity decreased to **$2.10 billion** from **$2.13 billion** over the same period Condensed Consolidated Balance Sheet Highlights (As of March 31, 2023) | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$6,402,034** | **$6,431,005** | | Cash and cash equivalents | $16,476 | $18,027 | | Goodwill | $2,920,574 | $2,920,574 | | **Total Liabilities** | **$4,302,226** | **$4,300,180** | | Long-term debt (less current portion) | $2,871,555 | $2,853,793 | | **Total Equity** | **$2,099,808** | **$2,130,825** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2023, the company reported a net loss of **$18.5 million**, compared to a net income of **$22.4 million** in the prior-year period, as total operating revenues decreased by **6.7%** to **$527.8 million**, and operating income fell sharply to **$16.5 million** from **$71.3 million** year-over-year, impacted by lower advertising revenue and **$16.5 million** in restructuring costs Q1 2023 vs. Q1 2022 Statement of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total operating revenues | $527,778 | $565,706 | | Operating income | $16,482 | $71,277 | | Interest expense | ($48,838) | ($36,499) | | Net income (loss) | ($18,540) | $22,365 | | Net income (loss) per diluted share | ($0.37) | $0.10 | - The company incurred restructuring costs of **$16.5 million** in Q1 2023, which were not present in the same period of 2022[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased significantly to **$15.2 million** in Q1 2023 from **$37.4 million** in Q1 2022, while net cash used in investing activities also decreased due to the absence of acquisitions, and financing activities used less cash mainly because of lower debt repayments compared to the prior year Q1 2023 vs. Q1 2022 Cash Flows (in thousands) | Cash Flow Category | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $15,227 | $37,379 | | Net cash used in investing activities | ($7,921) | ($32,854) | | Net cash used in financing activities | ($8,857) | ($69,979) | | **Decrease in cash, cash equivalents and restricted cash** | **($1,551)** | **($65,454)** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on accounting policies, acquisitions, restructuring charges, debt, and segment performance, highlighting **$16.5 million** in restructuring costs related to a strategic reorganization and the shutdown of the TrueReal network, a detailed breakdown of the company's **$2.94 billion** in long-term debt, and performance metrics for the Local Media and Scripps Networks segments - In January 2023, the company initiated a strategic restructuring, incurring **$16.5 million** in costs in Q1 This included a **$13.6 million** write-down of programming assets from the shutdown of the TrueReal network[63](index=63&type=chunk) - Total outstanding principal on long-term debt was **$2.94 billion** as of March 31, 2023, consisting of term loans, senior secured notes, and senior unsecured notes[75](index=75&type=chunk) Segment Performance (Q1 2023 vs Q1 2022, in thousands) | Segment | Revenue Q1 2023 | Revenue Q1 2022 | Segment Profit Q1 2023 | Segment Profit Q1 2022 | | :--- | :--- | :--- | :--- | :--- | | Local Media | $311,923 | $326,661 | $45,843 | $54,393 | | Scripps Networks | $216,473 | $239,068 | $51,526 | $85,076 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic initiatives, including a major restructuring aimed at achieving over **$40 million** in annual savings, the launch of Scripps Sports, and new content agreements, with the analysis of financial results highlighting a **6.7%** decrease in consolidated revenue due to softness in the advertising market, and both Local Media and Scripps Networks segments seeing declines in revenue and profit, while liquidity remains sufficient for the next 12 months [Executive Overview](index=26&type=section&id=Executive%20Overview) The company, a diverse media enterprise with 61 local TV stations and nine national networks, is positioning itself as a leader in free, ad-supported television, with key strategic moves in early 2023 including a corporate restructuring to create a leaner operating model, the launch of Scripps Sports, and the shutdown of the TrueReal network - A strategic restructuring announced in January 2023 aims to create a leaner operating structure and is anticipated to result in at least **$40 million** in annual savings[118](index=118&type=chunk) - The company launched Scripps Sports in December 2022 to pursue partnerships with sports leagues, conferences, and teams, leveraging its local and national broadcast footprint[117](index=117&type=chunk) - On March 27, 2023, the company shut down its TrueReal network, merging some programming with Defy TV and leasing the created spectrum to Jewelry Television[119](index=119&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Consolidated operating revenues for Q1 2023 fell **6.7%** to **$527.8 million**, primarily due to softness in the advertising market affecting both segments, with the Local Media segment's revenue decreasing **4.5%** and a **10.2%** drop in core advertising, and the Scripps Networks segment's revenue declining **9.5%** due to challenges in the national advertising marketplace and lower linear viewership, while operating expenses were impacted by **$16.5 million** in restructuring costs and higher interest expense Consolidated Results of Operations (Q1 2023 vs Q1 2022, in thousands) | Metric | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Operating revenues | $527,778 | $565,706 | (6.7)% | | Operating income | $16,482 | $71,277 | (76.9)% | | Net income (loss) | ($18,540) | $22,365 | N/A | - Local Media core advertising revenue decreased **10.2%** YoY, while distribution revenue grew **2.4%**[139](index=139&type=chunk)[140](index=140&type=chunk) - Scripps Networks revenue fell **9.5%** YoY, reflecting softness in the national advertising market and a decline in linear television viewership[144](index=144&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash from operations and its revolving credit facility, with **$16.5 million** in cash and **$374 million** available under its revolver as of March 31, 2023, which management believes is sufficient to meet operating needs for the next 12 months, despite operating cash flow decreasing to **$15.2 million** from **$37.4 million** year-over-year, and a new debt repurchase program for up to **$500 million** authorized in February 2023 - As of March 31, 2023, the company had **$16.5 million** of cash on hand and **$374 million** of additional borrowing capacity under its revolving credit facility[148](index=148&type=chunk) - Net cash provided by operating activities decreased by **$22.2 million** in Q1 2023 compared to Q1 2022, driven by lower segment profit and higher interest payments[150](index=150&type=chunk) - A new debt repurchase authorization was approved in February 2023, allowing for the reduction of up to **$500 million** in senior notes principal through March 1, 2026[90](index=90&type=chunk)[156](index=156&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk associated with its variable-rate debt under its credit agreement, where a hypothetical **100 basis point (1%)** increase in the SOFR would result in an approximate **$15.8 million** increase in annual interest expense - The company is subject to interest rate risk on its variable rate borrowings A **100 basis point** increase in SOFR would increase annual interest expense by approximately **$15.8 million**[167](index=167&type=chunk) Fair Value of Long-Term Debt (As of March 31, 2023, in thousands) | Debt Instrument | Cost Basis | Fair Value | | :--- | :--- | :--- | | Revolving credit facility | $20,000 | $20,000 | | Senior secured notes, due in 2029 | $523,356 | $411,489 | | Senior unsecured notes, due in 2027 | $425,667 | $315,526 | | Senior unsecured notes, due in 2031 | $392,071 | $270,529 | | Term loans (2024, 2026, 2028) | $1,575,034 | $1,532,169 | | **Total Long-term debt** | **$2,936,128** | **$2,549,713** | [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of the end of the period and concluded that these controls and procedures are effective, with no material changes to the company's internal controls over financial reporting during the quarter - Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective[171](index=171&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[172](index=172&type=chunk) [PART II - Other Information](index=3&type=section&id=PART%20II%20-%20Other%20Information) [Legal Proceedings & Risk Factors](index=3&type=section&id=Item%201.%20Legal%20Proceedings%20%26%20Item%201A.%20Risk%20Factors) The company is involved in ordinary course litigation which is not expected to result in material loss, and there have been no material changes to the risk factors disclosed in the 2022 Annual Report on Form 10-K - The company is not involved in any litigation or regulatory proceedings that are expected to result in a material loss[13](index=13&type=chunk) - There were no material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K[14](index=14&type=chunk) [Unregistered Sales of Equity, Defaults, and Mine Safety](index=3&type=section&id=Item%202,%203,%20%26%204) During the quarter ended March 31, 2023, there were no sales of unregistered equity securities, no defaults upon senior securities, and no mine safety disclosures to report - No sales of unregistered equity securities, defaults upon senior securities, or mine safety disclosures occurred during the first quarter of 2023[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) [Other Information](index=4&type=section&id=Item%205.%20Other%20Information) This section provides the voting results from the Annual Meeting of Shareholders held on May 1, 2023, where all director nominees were elected, and proposals regarding the ratification of the independent accountant, advisory vote on executive compensation, and the 2023 Long-term Incentive Plan were approved - At the May 1, 2023 Annual Meeting, shareholders elected all nominated directors and approved all other management proposals, including the ratification of Deloitte & Touche LLP as the independent auditor and an advisory vote on executive compensation[18](index=18&type=chunk) [Exhibits](index=4&type=section&id=Item%206.%20Exhibits) A list of exhibits filed with this Form 10-Q is provided, including amended articles of incorporation, credit agreements, and officer certifications - The report includes several filed exhibits, such as the Seventh Amendment to the Credit Agreement, Section 302 and 906 Certifications, and the iXBRL formatted financial statements[19](index=19&type=chunk)

PART I [Business](index=4&type=section&id=Item%201%2E%20Business) The company operates Local Media and Scripps Networks divisions, focusing on free ad-supported TV, and recently launched a Scripps Sports division - The company operates through two main divisions: **Local Media** (61 local TV stations) and **Scripps Networks** (nine national networks like ION, Bounce, and Court TV)[15](index=15&type=chunk) - In December 2022, Scripps launched a new **Scripps Sports division** to negotiate sports rights for its Local Media and Scripps Networks businesses[16](index=16&type=chunk) - The company is focusing on the growing free over-the-air (OTA) market, which is expected to surpass **50 million households in 2025**, and has launched a national marketing campaign to promote antenna use[17](index=17&type=chunk) - In January 2023, the company announced a strategic restructuring to create a leaner operating structure, aiming for at least **$40 million in annual savings**[18](index=18&type=chunk)[161](index=161&type=chunk) [Local Media](index=5&type=section&id=1%2E1%20Local%20Media) The Local Media segment's 61 stations derive revenue from advertising and distribution fees, with key expenses in programming and employee costs - The Local Media segment includes 61 TV stations in 41 markets, with affiliations including **18 with ABC, 11 with NBC, and 9 with CBS**[22](index=22&type=chunk) - Approximately **75% of subscribers** under retransmission consent agreements are subject to negotiation in 2023, highlighting a key area for revenue renewal[32](index=32&type=chunk) Local Media 2022 Revenue and Expense Breakdown | Category | Percentage of Segment | | :--- | :--- | | **Revenue Sources** | | | Distribution Revenues | 44% | | Core Advertising | 42% | | Political Advertising | 13% | | **Expense Categories** | | | Programming Costs | 43% | | Employee Costs | 38% | [Scripps Networks](index=11&type=section&id=1%2E2%20Scripps%20Networks) The Scripps Networks segment operates nine national networks, generating revenue primarily from advertising and capitalizing on cord-cutting trends - The segment operates nine national networks: **ION, Bounce, Court TV, Defy TV, Grit, ION Mystery, Laff, Scripps News, and TrueReal**[55](index=55&type=chunk) - Revenue is generated principally from advertising sales, which are subject to seasonality, with the **second and fourth quarters typically being higher**[56](index=56&type=chunk)[57](index=57&type=chunk) - **Programming expenses accounted for 53%** of the segment's costs in 2022, reflecting investments in programming and distribution carriage agreements[58](index=58&type=chunk) - **ION**, the largest network in the segment, reaches around 80 million homes and has the fifth-largest average prime-time audience among all broadcast networks[59](index=59&type=chunk) [Federal Regulation of Broadcasting](index=8&type=section&id=1%2E3%20Federal%20Regulation%20of%20Broadcasting) The company's broadcast operations are extensively regulated by the FCC, including ownership limits, license renewals, and retransmission consent - Broadcast licenses are granted for up to eight years and are renewable; the company has **never had a license revoked or denied renewal**[41](index=41&type=chunk) - The company's national audience reach is **38.0% of television households**, just under the FCC's 39% cap, after applying the 'UHF discount'[43](index=43&type=chunk) - The company negotiates retransmission consent agreements with cable and satellite providers for the majority of its stations, while the acquired ION stations rely on **'must-carry' rules** for carriage[51](index=51&type=chunk) - Scripps stations are participating in the voluntary transition to the new **ATSC 3.0 digital television standard**, which allows for enhanced services but requires simulcasting arrangements[48](index=48&type=chunk) [Employees and Human Capital Resource Management](index=14&type=section&id=1%2E4%20Employees%20and%20Human%20Capital%20Resource%20Management) The company employed approximately 5,700 people at year-end 2022, emphasizing a strong culture, EDI strategy, and competitive compensation - As of year-end 2022, the company had approximately **5,700 full-time equivalent employees**, with about 4,400 in Local Media and 900 in Scripps Networks[71](index=71&type=chunk) - The company's Equity, Diversity, and Inclusion (EDI) strategy is built on four pillars: **Race, Gender, LGBTQ+, and veterans**, and is led by a chief diversity officer[73](index=73&type=chunk)[74](index=74&type=chunk) - Compensation includes a mix of base salary, bonuses, commissions, and **long-term share-based incentives** to align leadership interests with shareholders[78](index=78&type=chunk) - The company enforces a **Code of Conduct** for all employees and has specific ethics codes for its CEO, senior financial officers, and journalists[80](index=80&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A%2E%20Risk%20Factors) The company faces significant business, ownership, and indebtedness risks, including advertising dependency, concentrated control, and substantial debt [Risks Related to Our Businesses](index=16&type=section&id=1A%2E1%20Risks%20Related%20to%20Our%20Businesses) Business risks include reliance on cyclical advertising revenue, audience fragmentation, potential loss of key agreements, and cybersecurity threats - The majority of revenues come from advertising, which is sensitive to economic downturns, **declining linear TV viewing due to cord-cutting**, and the cyclical nature of political advertising[83](index=83&type=chunk)[84](index=84&type=chunk) - Audience fragmentation from direct-to-consumer streaming could negatively impact **advertising rates and retransmission consent revenues**[86](index=86&type=chunk) - The loss or costly renewal of **network affiliation agreements** (e.g., with ABC, NBC, CBS) or carriage agreements for national networks could adversely affect operating results[87](index=87&type=chunk)[89](index=89&type=chunk) - **Cybersecurity risks**, such as data breaches or network disruptions, could lead to financial liability, reputational damage, and loss of clients[101](index=101&type=chunk) - The **$600 million in preferred shares** issued to Berkshire Hathaway include restrictions, such as prohibiting common share dividends and repurchases until the preferred shares are redeemed[103](index=103&type=chunk) [Risks Related to the Ownership of Scripps Class A Common Shares](index=20&type=section&id=1A%2E2%20Risks%20Related%20to%20the%20Ownership%20of%20Scripps%20Class%20A%20Common%20Shares) Ownership risks stem from the Scripps family's concentrated voting control, which can influence corporate actions and affect stock price - Descendants of Edward W. Scripps own approximately **93% of Common Voting shares**, enabling them to elect two-thirds of the Board of Directors and control the outcome of most shareholder votes[104](index=104&type=chunk) - This concentrated control could **discourage potential mergers, takeovers**, or other change-of-control transactions, which may adversely affect the market price of Class A Common shares[104](index=104&type=chunk) [Risks Related to Our Indebtedness](index=22&type=section&id=1A%2E3%20Risks%20Related%20to%20Our%20Indebtedness) The company's substantial debt of approximately $2.9 billion poses risks through restrictive covenants, debt service requirements, and interest rate exposure - As of December 31, 2022, the company had approximately **$2.9 billion in outstanding debt**, which requires a substantial portion of cash flow for payments and may limit flexibility[108](index=108&type=chunk)[110](index=110&type=chunk) - Debt agreements impose **restrictive covenants** on activities such as incurring additional debt, paying dividends, making investments, and merging or selling assets[112](index=112&type=chunk) - Borrowings under the Credit Agreement are at **variable interest rates**, exposing the company to risk from rising interest rates[115](index=115&type=chunk) - The phase-out of LIBOR, scheduled for June 30, 2023, and the transition to SOFR could result in **higher interest rates** on variable rate debt[116](index=116&type=chunk)[117](index=117&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=Item%201B%2E%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments - None[118](index=118&type=chunk) [Properties](index=25&type=section&id=Item%202%2E%20Properties) The company owns or leases all necessary facilities, including offices, studios, and transmission towers, which are in good condition - The company owns or leases facilities and equipment for its television stations and leases its principal executive offices and facilities for its Scripps Networks business[119](index=119&type=chunk) [Legal Proceedings](index=25&type=section&id=Item%203%2E%20Legal%20Proceedings) The company is involved in ordinary course litigation that is not expected to result in a material loss - The company is involved in litigation arising in the ordinary course of business, none of which is expected to result in **material loss**[121](index=121&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) The company reports that it has no mine safety disclosures - None[122](index=122&type=chunk) [Executive Officers of the Company](index=25&type=section&id=Executive%20Officers%20of%20the%20Company) This section lists key executive officers, including the CEO, CFO, and COO, along with their respective ages and positions Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | Adam P. Symson | 48 | President and Chief Executive Officer | | Jason Combs | 46 | Executive Vice President and Chief Financial Officer | | Lisa A. Knutson | 57 | Chief Operating Officer | | Brian G. Lawlor | 56 | President, Scripps Sports | | Laura M. Tomlin | 47 | Executive Vice President, Chief Administrative Officer | | William Appleton | 74 | Executive Vice President, General Counsel | | Daniel W. Perschke | 43 | Vice President, Controller (Principal Accounting Officer) | PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205%2E%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A shares trade on NASDAQ, with approximately 14,500 owners, and share repurchases are currently prohibited - Class A Common shares are traded on NASDAQ under the symbol **'SSP'**[125](index=125&type=chunk) - As of December 31, 2022, there were approximately **14,500 owners of Class A Common shares** and 50 owners of Common Voting shares[125](index=125&type=chunk) - The company is **prohibited from repurchasing its common shares** until the preferred stock issued to Berkshire Hathaway is redeemed[126](index=126&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, revenue grew to $2.45 billion, driven by political and distribution revenue, while the company focused on debt reduction and restructuring [Consolidated Results of Operations](index=36&type=section&id=7%2E1%20Consolidated%20Results%20of%20Operations) Consolidated operating revenues grew 7.4% to $2.45 billion in 2022, with net income increasing significantly to $195.9 million - The **7.4% increase in operating revenues** was mainly due to higher political advertising revenue during the 2022 election year and increased distribution revenues in the Local Media division[165](index=165&type=chunk) - Cost of revenues increased 12% in 2022, driven by **higher network affiliation fees** and increased investment in syndicated and original programming[166](index=166&type=chunk) - The company recorded a **gain on debt extinguishment of $8.6 million** in 2022 from redeeming senior notes below par, compared to a loss of $15.3 million in 2021[172](index=172&type=chunk) Consolidated Results of Operations (in thousands) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Operating revenues | $2,453,215 | $2,283,532 | 7.4% | | Operating income | $428,344 | $400,745 | 6.9% | | Net income | $195,902 | $122,712 | 59.6% | [Business Segment Results](index=39&type=section&id=7%2E2%20Business%20Segment%20Results) In 2022, Local Media segment profit surged 44.1% while Scripps Networks profit declined 20.3% due to a soft national advertising market - **Local Media revenue increased 13.3%** to $1.49 billion, primarily due to a $176 million increase in political advertising revenue and a $38.2 million increase in distribution revenue[183](index=183&type=chunk)[187](index=187&type=chunk) - **Scripps Networks revenue grew slightly by 1.0%** to $961.2 million, as higher CTV and general market advertising pricing were offset by softness in the national ad market[183](index=183&type=chunk)[193](index=193&type=chunk) Segment Profit (Loss) (in thousands) | Segment | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Local Media | $386,369 | $268,140 | 44.1% | | Scripps Networks | $310,336 | $389,278 | (20.3)% | | Shared services and corporate | ($82,280) | ($75,576) | 8.9% | [Liquidity and Capital Resources](index=43&type=section&id=7%2E3%20Liquidity%20and%20Capital%20Resources) The company maintains liquidity through cash and a revolving credit facility, actively managed its debt in 2022, and has total contractual obligations of $6.8 billion - As of December 31, 2022, the company had **$18.0 million in cash** and **$393 million of borrowing capacity** under its revolving credit facility[199](index=199&type=chunk) - In 2022, the company used cash on hand to redeem **$59.0 million of 2027 Senior Notes**, **$26.6 million of 2029 Senior Notes**, **$85.9 million of 2031 Senior Notes**, and made **$100 million in additional payments** on its 2028 term loan[159](index=159&type=chunk)[203](index=203&type=chunk) - In February 2023, the Board authorized a new **debt repurchase program for up to $500 million**, expiring in March 2026[207](index=207&type=chunk)[384](index=384&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $311,423 | $237,000 | | Net cash used in investing activities | ($66,393) | ($2,455,996) | | Net cash (used in) provided by financing activities | ($327,483) | $693,475 | [Critical Accounting Policies and Estimates](index=46&type=section&id=7%2E4%20Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant estimates for goodwill impairment testing, FCC license valuation, and pension plan assumptions - Goodwill impairment testing is critical; the annual test indicated the fair value of the Scripps Networks reporting unit exceeded its carrying value by **only 2.5%**, and a 50 basis point increase in the discount rate could result in an impairment[220](index=220&type=chunk) - The fair value of **FCC licenses ($780 million carrying value)** is tested annually using a 'Greenfield Approach' (a discounted cash flow model), which is sensitive to assumptions about market revenues and growth[221](index=221&type=chunk) - Pension plan accounting relies on key assumptions for the **discount rate (5.47%)** and the expected **long-term rate of return on plan assets (5.50%)**[223](index=223&type=chunk)[224](index=224&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%207A%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure from its variable rate debt, with a 1% rate increase costing an estimated $15.8 million annually - The company is subject to interest rate risk from its variable rate borrowings; a **100 basis point increase in LIBOR** would increase annual interest expense by approximately **$15.8 million**[231](index=231&type=chunk) Fair Value of Long-Term Debt (as of Dec 31, 2022) | Debt Instrument | Cost Basis (in thousands) | Fair Value (in thousands) | | :--- | :--- | :--- | | Senior secured notes, due 2029 | $523,356 | $426,535 | | Senior unsecured notes, due 2027 | $425,667 | $384,697 | | Senior unsecured notes, due 2031 | $392,071 | $316,107 | | Term loans (2024, 2026, 2028) | $1,579,687 | $1,550,506 | | **Total Long-term debt** | **$2,920,781** | **$2,677,845** | [Financial Statements and Supplementary Data](index=50&type=section&id=Item%208%2E%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the audited consolidated financial statements and the unqualified opinion from the independent auditor, Deloitte & Touche LLP [Reports of Independent Registered Public Accounting Firm](index=50&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor, Deloitte & Touche LLP, issued unqualified opinions on the financial statements and internal controls, identifying goodwill valuation as a critical audit matter - The auditor, Deloitte & Touche LLP, issued an **unqualified (clean) opinion** on the financial statements and the company's internal control over financial reporting[239](index=239&type=chunk)[249](index=249&type=chunk) - The valuation of the Scripps Networks reporting unit's **goodwill (approx. $2 billion)** was identified as a **Critical Audit Matter** due to the significant judgments and estimates required for its fair value calculation[244](index=244&type=chunk)[245](index=245&type=chunk) [Consolidated Financial Statements](index=54&type=section&id=Consolidated%20Financial%20Statements) The financial statements show total assets of $6.43 billion, long-term debt of $2.85 billion, and a net income of $195.9 million for 2022 Consolidated Balance Sheet Highlights (as of Dec 31, 2022) | Account | Amount (in thousands) | | :--- | :--- | | Total Assets | $6,431,005 | | Goodwill | $2,920,574 | | Total Liabilities | $4,300,180 | | Long-term debt (net) | $2,853,793 | | Total Equity | $2,130,825 | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2022) | Account | Amount (in thousands) | | :--- | :--- | | Total operating revenues | $2,453,215 | | Operating income | $428,344 | | Net income | $195,902 | | Diluted EPS | $1.62 | [Notes to Consolidated Financial Statements](index=59&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key financial items including the ION acquisition, goodwill allocation, long-term debt structure, and preferred stock terms - The 2021 acquisition of ION Media Networks was completed for **$2.65 billion**, adding **$1.8 billion in goodwill** to the Scripps Networks segment[327](index=327&type=chunk)[333](index=333&type=chunk) - As of Dec 31, 2022, **goodwill was $2.92 billion**, with $2.01 billion allocated to Scripps Networks and $0.91 billion to Local Media[364](index=364&type=chunk) - Total outstanding principal on **long-term debt was $2.92 billion** at year-end 2022[368](index=368&type=chunk) - The company has **$600 million in Series A Preferred Shares** outstanding, held by Berkshire Hathaway, which carry an 8% annual dividend if paid in cash[421](index=421&type=chunk) PART III Part III incorporates information by reference from the company's 2023 proxy statement regarding directors, compensation, and ownership [Directors, Executive Officers and Corporate Governance](index=28&type=section&id=Item%2010%2E%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors and corporate governance is incorporated by reference from the company's Proxy Statement - Information required by this item is **incorporated by reference** to the company's definitive proxy statement[136](index=136&type=chunk)[137](index=137&type=chunk) [Executive Compensation](index=28&type=section&id=Item%2011%2E%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's Proxy Statement - Information required by this item is **incorporated by reference** to the company's definitive proxy statement[139](index=139&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=28&type=section&id=Item%2012%2E%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by management and beneficial owners is incorporated by reference from the company's Proxy Statement - Information required by this item is **incorporated by reference** to the company's definitive proxy statement[140](index=140&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=28&type=section&id=Item%2013%2E%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the company's Proxy Statement - Information required by this item is **incorporated by reference** to the company's definitive proxy statement[141](index=141&type=chunk) [Principal Accounting Fees and Services](index=30&type=section&id=Item%2014%2E%20Principal%20Accounting%20Fees%20and%20Services) Information on accounting fees and services is incorporated by reference from the Audit Committee's report in the company's Proxy Statement - Information required by this item is **incorporated by reference** to the company's definitive proxy statement[142](index=142&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=30&type=section&id=Item%2015%2E%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed with the Form 10-K, including financial statements, auditor reports, and material contracts - This section provides an index of all exhibits filed with the Form 10-K, including financial statements, auditor reports, and material contracts[143](index=143&type=chunk)[146](index=146&type=chunk) [Form 10-K Summary](index=30&type=section&id=Item%2016%2E%20Form%2010-K%20Summary) The company reports that there is no Form 10-K summary - None[144](index=144&type=chunk)

The E.W. Scripps Company (NASDAQ:SSP) Q4 2022 Earnings Conference Call February 24, 2023 9:30 AM ET Company Participants Carolyn Micheli - Head, Investor Relations Adam Symson - President and Chief Executive Officer Jason Combs - Chief Financial Officer Lisa Knutson - Chief Operating Officer Conference Call Participants Michael Kupinski - Noble Capital Markets Craig Huber - Huber Research Partners Steven Cahall - Wells Fargo Nick Zangler - Stephens Dan Kurnos - Benchmark Company Operator Ladies and gentleme ...

The C.W. Scripps Company BANK OF AMERICA LEVERAGED FINANCE CONFERENCE NOV. 29, 2022 GIVE LIGHT AND THE PEOPLE WILL FIND THEIR OWN WAY | --- | --- | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

The E.W. Scripps Company (NASDAQ:SSP) Q3 2022 Earnings Conference Call November 8, 2022 9:00 AM ET Company Participants Carolyn Micheli – Head-Investor Relations Adam Symson – President and Chief Executive Officer Jason Combs – Chief Financial Officer Brian Lawlor – President-Local Media Lisa Knutson – President-Scripps Networks Conference Call Participants Dan Kurnos – Benchmark Company Steven Cahall – Wells Fargo Nick Zangler – Stephens Pat McCann – NOBLE Capital Markets Craig Huber – Huber Research Partn ...