Scripps(SSP) - 2025 Q2 - Quarterly Report

PART I - Financial Information This section provides the company's comprehensive financial data, including statements, notes, and management's analysis Item 1. Financial Statements This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and equity, along with detailed notes explaining significant accounting policies, recent accounting standards, restructuring activities, debt, and segment information for the periods ended June 30, 2025 and 2024 Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Balance Sheet Highlights (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Total Assets | $5,087,737 | $5,198,575 | | Total Liabilities | $3,797,745 | $3,880,561 | | Total Equity | $1,289,990 | $1,318,014 | | Current portion of long-term debt | $78,854 | $15,612 | Condensed Consolidated Statements of Operations This statement details the company's revenues, expenses, and net income or loss over specific reporting periods Net Income (Loss) (in thousands) | Period | 2025 | 2024 | | :------------------------- | :--------- | :------- | | Three Months Ended June 30 | $(35,962) | $1,429 | | Six Months Ended June 30 | $(39,417) | $3,055 | Total Operating Revenues (in thousands) | Period | 2025 | 2024 | | :------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $540,080 | $573,629 | | Six Months Ended June 30 | $1,064,473 | $1,135,093 | Key Expense Items (in thousands) | Item (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------- | :----------- | :------- | | Interest expense | $(102,403) | $(107,040) | | Loss on extinguishment of debt | $(2,972) | — | | Other financing transaction costs | $(38,071) | — | Condensed Consolidated Statements of Comprehensive Income (Loss) This statement presents net income alongside other comprehensive income items not recognized in net income Total Comprehensive Income (Loss) (in thousands) | Period | 2025 | 2024 | | :------------------------- | :--------- | :------- | | Three Months Ended June 30 | $(35,926) | $1,463 | | Six Months Ended June 30 | $(39,345) | $3,123 | Condensed Consolidated Statements of Cash Flows This statement reports cash generated and used by operating, investing, and financing activities Net Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :---------------------------------- | :--------- | :------- | | Operating Activities | $(13,858) | $71,797 | | Investing Activities | $16,533 | $(28,978) | | Financing Activities | $5,133 | $(51,487) | | Increase (decrease) in cash and cash equivalents | $7,808 | $(8,668) | - Proceeds from sale of property and equipment significantly increased to $40,664 thousand in 2025 from $225 thousand in 2024[28] - Payments on long-term debt increased substantially to $1,266,427 thousand in 2025 from $7,806 thousand in 2024, reflecting refinancing activities[28] Condensed Consolidated Statements of Equity This statement details changes in the company's equity accounts over specific periods Total Equity (in thousands) | Date | Amount | | :---------------- | :----------- | | As of June 30, 2025 | $1,289,990 | | As of December 31, 2024 | $1,318,014 | - Accumulated deficit increased from $(476,004) thousand at December 31, 2024, to $(515,421) thousand at June 30, 2025[31] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the financial statements - The company operates as a diverse media enterprise with reportable segments: Local Media, Scripps Networks, and Other[39] - Advertising revenue is recognized over time as ads are aired or impressions delivered, while distribution revenue from retransmission consent contracts is recognized at the point content is transferred[47][48] Share-Based Compensation Costs (in thousands) | Period | 2025 | 2024 | | :------------------------- | :--------- | :------- | | Three Months Ended June 30 | $5,900 | $5,000 | | Six Months Ended June 30 | $11,500 | $9,600 | 2. Recently Adopted and Issued Accounting Standards This note discusses new accounting pronouncements and their impact on the company's financial reporting - New FASB guidance on disaggregation of income statement expenses is effective for annual periods beginning in 2027 and interim periods beginning in Q1 2028[61] - New FASB guidance modifying income tax disclosures is effective for annual periods beginning in 2025[62] - The company adopted new FASB guidance expanding segment disclosure requirements retrospectively, starting with interim periods in Q1 2025[63] 3. Restructuring Costs and Other Transactions This note details expenses related to restructuring activities and significant non-operating transactions Restructuring Costs (in thousands) | Period | 2025 | 2024 | | :------------------------- | :------- | :------- | | Three Months Ended June 30 | $613 | $973 | | Six Months Ended June 30 | $4,757 | $5,988 | - Completed the sale of its West Palm Beach television station building for $40.0 million cash, recognizing a pre-tax gain of $31.4 million on April 30, 2025[68] - Received $18.1 million in pre-tax cash proceeds from the sale of its equity ownership in Broadcast Music, Inc. (BMI) on February 9, 2024[69] - Entered into agreements with Gray Media, Inc. on July 7, 2025, to swap television stations across five markets, expected to close in Q4 2025[70] 4. Income Taxes This note provides information on the company's income tax expense, effective tax rates, and related disclosures - The effective income tax rate for the six months ended June 30, 2025, was 5.2%, significantly lower than 65% in the prior year[73] - H.R. 1, the One Big Beautiful Bill Act (OBBBA), was enacted on July 4, 2025, making permanent key elements of the Tax Cuts and Jobs Act; the company is evaluating its impact[75] 5. Leases This note outlines the company's lease arrangements, including operating and finance leases, and associated costs Operating Lease Costs (in thousands) | Period | 2025 | 2024 | | :------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $6,000 | $5,700 | | Six Months Ended June 30 | $11,500 | $11,800 | Weighted Average Lease Terms and Rates | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Operating leases (term) | 7.27 years | 7.37 years | | Finance leases (term) | 33.00 years | 33.50 years | | Operating leases (discount rate) | 5.10 % | 5.01 % | | Finance leases (discount rate) | 7.10 % | 7.10 % | 6. Goodwill and Other Intangible Assets This note details the carrying values and impairment considerations for goodwill and other intangible assets - Net goodwill remained stable at $1,968,574 thousand as of June 30, 2025[79] Total Other Intangible Assets (in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $1,590,521 | | December 31, 2024 | $1,635,488 | - The Scripps Networks reporting unit's fair value approximates its carrying value, making it sensitive to changes in assumptions; a 50 basis point increase in the discount rate would reduce its fair value by approximately $110 million[82] 7. Long-Term Debt This note provides details on the company's outstanding debt, including refinancing activities and terms Total Outstanding Principal (in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $2,659,750 | | December 31, 2024 | $2,605,307 | - Completed a series of refinancing transactions on April 10, 2025, including new revolving credit facilities, a new accounts receivable securitization facility, and new term loans, while repaying prior term loans[84][85][86][87][88][90] - Incurred $38.1 million in non-capitalized transaction costs and a $3.0 million loss on extinguishment of debt related to the April 2025 refinancing[89][90] - Issued $750 million of 2030 Senior Secured Second Lien Notes on August 6, 2025, to repay $426 million of 2027 Senior Notes, prepay $205 million of the June 2028 term loan, and reduce revolving credit facilities[100][101] 8. Other Liabilities This note presents information on various non-debt liabilities, including programming and other accrued obligations Other Liabilities (less current portion, in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $406,532 | | December 31, 2024 | $464,574 | - Programming liability decreased from $248,634 thousand at December 31, 2024, to $190,914 thousand at June 30, 2025[102] 9. Supplemental Cash Flow Information This note provides additional details on non-cash investing and financing activities and working capital changes Other Changes in Certain Working Capital Accounts, Net (Six Months Ended June 30, in thousands) | Year | Amount | | :--- | :--------- | | 2025 | $(48,935) | | 2024 | $(3,395) | - The increase in cash used by changes in working capital accounts was primarily driven by decreases in accounts payable and accrued employee compensation and benefits[104] 10. Employee Benefit Plans This note describes the company's employee benefit plans, including pension and post-retirement obligations Net Periodic Benefit Cost (in thousands) | Period | 2025 | 2024 | | :------------------------- | :------- | :------- | | Three Months Ended June 30 | $3,574 | $3,261 | | Six Months Ended June 30 | $9,056 | $8,587 | - The company anticipates contributing an additional $1.0 million to fund SERPs' benefit payments during the remainder of 2025[107] 11. Segment Information This note provides financial data disaggregated by the company's operating segments: Local Media and Scripps Networks Segment Operating Revenues (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | | :---------------- | :----------- | :----------- | | Local Media | $660,155 | $717,762 | | Scripps Networks | $403,772 | $417,998 | Segment Profit (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | | :---------------- | :----------- | :----------- | | Local Media | $90,740 | $153,686 | | Scripps Networks | $120,041 | $87,401 | - Local Media segment profit decreased by 41.0% year-over-year for the six months ended June 30, 2025, while Scripps Networks segment profit increased by 37.3%[121][124] 12. Capital Stock This note details the company's capital structure, including preferred and common stock, and related restrictions - As of June 30, 2025, aggregated undeclared and unpaid cumulative dividends on Series A preferred stock totaled $85.7 million, with a redemption value of $718 million[131] - The company is prohibited from paying dividends on and repurchasing common shares until all preferred shares are redeemed[131] - Berkshire Hathaway, Inc. holds a warrant to purchase up to 23.1 million Class A shares at an exercise price of $13 per share[132] 13. Accumulated Other Comprehensive Income (Loss) This note presents the components of accumulated other comprehensive income or loss, net of tax Accumulated Other Comprehensive Loss, Net of Income Taxes (in thousands) | Date | Amount | | :---------------- | :--------- | | June 30, 2025 | $(75,234) | | December 31, 2024 | $(75,306) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The company experienced a decline in consolidated operating revenues and a net loss for the quarter and year-to-date periods ended June 30, 2025, primarily due to lower political and distribution advertising revenues, partially offset by cost reductions and gains from asset sales. Significant debt refinancing activities were completed, incurring substantial transaction costs. The company is focused on free, ad-supported television and expanding into connected TV and over-the-air markets, with new sports media rights agreements and a pending station swap Forward-Looking Statements This section cautions that future statements are subject to risks, uncertainties, and changing circumstances - Forward-looking statements are based on management's current beliefs and assumptions and are subject to inherent risks, uncertainties, and changes in circumstances[136] Executive Overview This overview highlights the company's business model, strategic initiatives, and key financial developments - Scripps is a diverse media enterprise with over 60 local television stations and national news/entertainment networks, focusing on free, ad-supported television and expanding in connected TV and over-the-air markets[137][138] - Formed EdgeBeam Wireless, LLC, a joint venture with Gray Media, Nexstar, and Sinclair, to provide data delivery services leveraging ATSC 3.0, with a $12.8 million cash commitment for a 25% ownership interest[139] - Secured multi-year media rights agreements with the Las Vegas Aces (WNBA) starting May 2025 and the Tampa Bay Lightning (NHL) starting 2025-2026 season, and renewed WNBA Friday Night Spotlight series on ION[140][142][143] - Completed significant debt refinancing transactions on April 10, 2025, and entered into agreements for a television station swap with Gray Media, Inc. on July 7, 2025, expected to close in Q4 2025[141][144] - Undeclared and unpaid cumulative preferred stock dividends totaled $85.7 million as of June 30, 2025, prohibiting common share dividends and repurchases[146] Results of Operations This section analyzes the company's financial performance, including revenues, expenses, and profitability Consolidated Results of Operations This section provides a comprehensive analysis of the company's overall financial performance Consolidated Operating Revenues (YoY Change, in thousands) | Period | 2025 | 2024 | Change | | :------------------------- | :----------- | :----------- | :------- | | Three Months Ended June 30 | $540,080 | $573,629 | (5.8)% | | Six Months Ended June 30 | $1,064,473 | $1,135,093 | (6.2)% | | Core advertising (QTD) | $(4,100) | - | - | | Political (QTD) | $(26,400) | - | - | | Distribution (QTD) | $(4,200) | - | - | - Cost of revenues decreased by 4.1% in Q2 2025 and 3.8% YTD 2025, driven by lower employee compensation, syndicated programming, and network programming costs, partially offset by increased sports rights fees[149] - Selling, general and administrative expenses decreased by 5.4% in Q2 2025 and 5.6% YTD 2025, due to employee compensation savings, reduced advertising/promotions, and lower national sales commissions[150] Non-Operating Expenses (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :-------------------------------- | :----------- | :------- | | Interest expense | $(102,403) | $(107,040) | | Loss on extinguishment of debt | $(2,972) | — | | Other financing transaction costs | $(38,071) | — | Operating Performance This section evaluates the financial performance of the company's individual operating segments Local Media This section details the financial performance and key drivers of the Local Media segment Local Media Segment Operating Revenues (YoY Change, in thousands) | Period | 2025 | 2024 | Change | | :------------------------- | :----------- | :----------- | :------- | | Three Months Ended June 30 | $334,766 | $364,926 | (8.3)% | | Six Months Ended June 30 | $660,155 | $717,762 | (8.0)% | | Political (QTD) | $2,624 | $28,151 | (90.7)% | | Distribution (QTD) | $192,613 | $194,191 | (0.8)% | | Core advertising (QTD) | $136,529 | $139,106 | (1.9)% | Local Media Segment Profit (YoY Change, in thousands) | Period | 2025 | 2024 | Change | | :------------------------- | :------- | :------- | :------- | | Three Months Ended June 30 | $55,821 | $88,130 | (36.7)% | | Six Months Ended June 30 | $90,740 | $153,686 | (41.0)% | - Programming expense increased by 4.9% in Q2 2025 and 5.9% YTD 2025, primarily due to new sports rights contracts (Las Vegas Aces, Florida Panthers) and contractual rate increases for other sports agreements[167][168] Scripps Networks This section details the financial performance and key drivers of the Scripps Networks segment Scripps Networks Operating Revenues (YoY Change, in thousands) | Period | 2025 | 2024 | Change | | :------------------------- | :----------- | :----------- | :------- | | Three Months Ended June 30 | $205,765 | $208,720 | (1.4)% | | Six Months Ended June 30 | $403,772 | $417,998 | (3.4)% | Scripps Networks Segment Profit (YoY Change, in thousands) | Period | 2025 | 2024 | Change | | :------------------------- | :------- | :------- | :------- | | Three Months Ended June 30 | $55,948 | $37,747 | 48.2% | | Six Months Ended June 30 | $120,041 | $87,401 | 37.3% | - Revenue was unfavorably impacted by lower ratings (8.3% QTD, 7.7% YTD), partially offset by increased connected TV (CTV) revenue (5.6% QTD, 4.7% YTD) and advertising spots sold (2.4% QTD, 1.2% YTD)[172] - Employee compensation and benefits decreased by 26% in Q2 2025 and 28% YTD 2025, primarily due to the shutdown of the over-the-air broadcast for Scripps News and other restructuring efforts[173] - Programming expense decreased by 9.8% in Q2 2025 and 12% YTD 2025, driven by lower carriage affiliation fees and syndicated programming costs[174] Liquidity and Capital Resources This section assesses the company's ability to generate and manage cash, and its capital structure Cash Flows This section analyzes the company's cash generation and usage from operating, investing, and financing activities - Cash used in operating activities was $13.9 million in 2025, a significant shift from $71.8 million provided in 2024, reflecting $38.1 million in debt refinancing transaction costs and increased cash used by working capital changes[179] - Cash provided by investing activities was $16.5 million in 2025, compared to $29.0 million used in 2024, primarily due to $40.0 million in cash proceeds from the sale of a television station building[180] - Cash provided by financing activities was $5.1 million in 2025, compared to $51.5 million used in 2024, driven by $885 million from new long-term debt and $423 million from a securitization facility, offset by $1.3 billion in debt repayments[181] Debt This section provides details on the company's outstanding debt, including recent refinancing activities - As of June 30, 2025, total outstanding principal debt was $2.66 billion, including new term loans ($883 million), revolving credit facilities ($278 million aggregate commitments), and an accounts receivable securitization facility ($366 million outstanding)[182][183][184] - On August 6, 2025, the company issued $750 million of 2030 Senior Secured Second Lien Notes to repay $426 million of 2027 Senior Notes, prepay $205 million of the June 2028 term loan, and reduce revolving credit facilities[100][101] Debt Covenants This section discusses the company's compliance with financial covenants related to its debt agreements - The company's term loans and notes do not have maintenance covenants, but the credit agreement requires compliance with maximum first lien net leverage ratios for its revolving credit facilities[185] - As of June 30, 2025, the company was in compliance with its financial covenants[185] Debt Repurchase Program This section outlines the authorized program for repurchasing outstanding senior secured and unsecured notes - The Board of Directors authorized a debt repurchase program in February 2023, allowing for the reduction of up to $500 million in outstanding senior secured and unsecured notes, expiring March 1, 2026[186] Equity This section details the company's equity structure, including preferred stock dividends and common share restrictions - As of June 30, 2025, undeclared and unpaid cumulative dividends on Series A preferred stock totaled $85.7 million, with a redemption value of $718 million[187] - The terms of the preferred shares prohibit the company from paying dividends on and repurchasing common shares until all preferred shares are redeemed[188] Other This section covers additional financial information not categorized elsewhere, such as benefit plan contributions - The company anticipates contributing an additional $1.0 million to fund Supplemental Executive Retirement Plans (SERPs) benefit payments during the remainder of 2025[189] Off-Balance Sheet Arrangements and Contractual Obligations This section discusses the company's off-balance sheet commitments and material contractual obligations - There have been no material changes to the off-balance sheet arrangements disclosed in the company's 2024 Annual Report on Form 10-K[190] Critical Accounting Policies and Estimates This section identifies key accounting policies and estimates requiring significant management judgment - The most critical accounting policies and estimates are identified as accounting for goodwill and indefinite-lived intangible assets, and pension plans[192] Recent Accounting Guidance This section refers to disclosures regarding recently adopted and issued accounting standards - Refer to Note 2 of the Condensed Consolidated Financial Statements for further discussion on recently adopted and issued accounting standards[193] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risk on its variable-rate debt, with a 100 basis point increase in SOFR estimated to increase annual interest expense by approximately $13.2 million. The fair value of long-term debt was $2,378,968 thousand as of June 30, 2025, compared to a cost basis of $2,659,750 thousand - A 100 basis point increase in SOFR (Secured Overnight Financing Rate) would increase annual interest expense on variable rate borrowings by approximately $13.2 million[196] Long-Term Debt Fair Value (in thousands) | Date | Cost Basis | Fair Value | | :---------------- | :----------- | :----------- | | June 30, 2025 | $2,659,750 | $2,378,968 | | December 31, 2024 | $2,605,307 | $2,112,999 | Item 4. Controls and Procedures Management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they are effective. There were no material changes to internal controls over financial reporting during the period Evaluation of Disclosure Controls and Procedures This section details the assessment of the effectiveness of the company's disclosure controls and procedures - The Chief Executive Officer and Chief Financial Officer concluded that the design and operation of the company's disclosure controls and procedures were effective as of June 30, 2025[200] - There were no changes to the company's internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the period[201] PART II - Other Information This section includes disclosures on legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings The company is involved in litigation and regulatory proceedings arising in the ordinary course of business, such as defamation actions and governmental proceedings primarily relating to renewal of broadcast licenses, none of which are 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] - None of the legal proceedings are expected to result in material loss[13] Item 1A. Risk Factors There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K[14] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no sales of unregistered equity securities during the quarter ended June 30, 2025 - No sales of unregistered equity securities occurred during the quarter ended June 30, 2025[15] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the quarter ended June 30, 2025 - No defaults upon senior securities occurred during the quarter ended June 30, 2025[16] Item 4. Mine Safety Disclosures No mine safety disclosures are applicable to the company - Mine safety disclosures are not applicable to the company[17] Item 5. Other Information 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, 2025 - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[18] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including Section 302 and 906 Certifications, and the company's unaudited Condensed Consolidated Financial Statements formatted in iXBRL - Exhibits filed include Section 302 Certifications (31(a), 31(b)), Section 906 Certifications (32(a), 32(b)), the company's unaudited Condensed Consolidated Financial Statements in iXBRL format (101), and the Cover Page Interactive Data File (104)[19] Signatures The report was signed on August 8, 2025, by Daniel W. Perschke, Senior Vice President, Controller, and Principal Accounting Officer of The E.W. Scripps Company - The report was signed by Daniel W. Perschke, Senior Vice President, Controller (Principal Accounting Officer), on August 8, 2025[21]