Core Viewpoint - The local TV industry is leveraging a controversy surrounding Jimmy Kimmel's comments to gain favor with the Republican-controlled FCC, which is crucial for their merger plans and deregulation efforts [1][2][10]. Group 1: Industry Dynamics - Local station owners, including Nexstar Media Group Inc. and Sinclair Inc., are responding to FCC Chairman Brendan Carr's encouragement to drop Kimmel's show due to its controversial comments [2][3]. - The local TV industry is at a critical juncture, facing challenges from declining cable subscriptions and increasing fees demanded by networks [5]. - Executives believe that consolidation through mergers will help them cut costs and enhance negotiating power with cable operators and networks [6]. Group 2: Regulatory Environment - The industry is advocating for the Trump administration to eliminate regulations that currently limit station ownership, which restricts a single company from owning stations that reach more than 39% of U.S. households [7]. - The FCC, under Chairman Carr, is considering changes that would allow for greater consolidation among broadcasters, potentially easing local ownership restrictions [8]. - Nexstar is pursuing a $6.2 billion acquisition of Tegna Inc., which would enable it to reach 80% of U.S. households, significantly above the current limit [9]. Group 3: Strategic Moves - The decision to remove Kimmel's show is seen as a strategic move by Nexstar to align with its goal of regulatory relief, although the company claims it was made independently [10][11]. - Sinclair is also exploring strategic options, including potential sales or restructuring, to adapt to the changing landscape [11]. - The local TV stations may prefer to replace late-night shows with news or other programming, which could be more cost-effective [13].

Financial Data and Key Metrics Changes - The company reported a first quarter loss per share of $0.22, which is an improvement compared to the consensus EPS estimate, despite a preferred stock dividend impact of $0.18 [14] - Total debt at the end of the quarter was $2.6 billion, with a net leverage ratio of 4.9 times, which the company aims to reduce further this year [14][15] - The company completed refinancing transactions that increased the blended cost of debt by less than 1% and extended the maturity of up to $1.5 billion of debt [15] Business Line Data and Key Metrics Changes - Local Media division revenue decreased by 7.8% year-over-year, with core advertising revenue down 3% due to economic uncertainty [9][10] - Scripps Networks revenue was $198 million, down about 5% year-over-year, but Connected TV revenue increased by 42% [11][12] - Local Media segment profit was $35 million, down from $66 million in Q1 2024 [10] Market Data and Key Metrics Changes - Local distribution revenue was down 5% year-over-year, with expectations for high single-digit declines in Q2 [10][11] - The advertising categories of automotive and retail were the worst performers in Q1, while gambling advertising saw growth [46][48] Company Strategy and Development Direction - The company is focused on debt reduction and improving its balance sheet, with a commitment to using free cash flow for debt reduction [15][16] - There is an expectation of local broadcast industry consolidation that could drive growth and enhance shareholder value [20] - The company is leveraging its local news and sports programming to strengthen connections with audiences and advertisers [20][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from economic uncertainty but expressed confidence in the company's performance and strategic direction [7][19] - The company anticipates continued challenges in the advertising market but expects to benefit from strong demand for women's sports programming [54][92] Other Important Information - The company has received multiple prestigious journalism awards for its news programming, highlighting its commitment to quality journalism [21][22] - The company is exploring opportunities for regulatory relief to enhance its competitive position in the market [27] Q&A Session Summary Question: How is Scripps positioned to take advantage of regulatory changes? - Management believes that greater scale and market depth are necessary for performance and plans to leverage opportunities from potential regulatory changes [29][30] Question: What visibility does the company have for performance in the back half of the year? - Management indicated that visibility is strong, particularly due to the demand generated by sports programming [31][38] Question: How did employee compensation and benefits change in Scripps Networks? - Employee compensation was down 31% year-over-year, and management expects this lower cost base to continue [43][45] Question: What is the outlook for advertising categories? - Automotive and retail were the worst performers in Q1, but gambling advertising saw growth, particularly in markets with local sports [46][48] Question: What is the expected impact of political advertising in the upcoming year? - Management expects a typical off-cycle year for political advertising, with potential for earlier spending due to the current environment [91][93]

Financial Data and Key Metrics Changes - The company reported a first-quarter loss per share of $0.22, which is an improvement compared to the consensus EPS estimate, despite a preferred stock dividend impact of $0.18 and a $4 million restructuring charge that increased the loss by $0.04 per share [13][14][24] - Total debt at the end of the quarter was $2.6 billion, with a net leverage ratio of 4.9 times, which the company expects to reduce throughout the year [13][14][24] Business Line Data and Key Metrics Changes - Local Media division revenue decreased by 7.8% year-over-year, with core advertising revenue down 3% due to hesitancy in advertising spending amid economic uncertainty [7][8] - Scripps Networks revenue was $198 million, down about 5% from the previous year, but Connected TV revenue increased by 42% [10][11] - Local Media segment profit was $35 million, down from $66 million in Q1 2024, while Scripps Networks segment profit rose to $64 million from $49.7 million year-over-year [8][12] Market Data and Key Metrics Changes - The company expects Local Media division revenue to decline in the high single-digit range for Q2, with core revenue down in the low single-digit range due to ongoing economic uncertainties [9][12] - Advertising categories such as automotive and retail were the worst performers in Q1, while gambling advertising saw growth tied to local sports deals [42][44][75] Company Strategy and Development Direction - The company is focused on debt reduction and improving its balance sheet, with a commitment to using free cash flow for debt repayment [14][15] - Management anticipates local broadcast industry consolidation, which could enhance growth and efficiency in local markets [17][18] - The company is leveraging its local news and sports programming to strengthen connections with audiences and advertisers, aiming to create shareholder value [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to navigate economic uncertainties and highlighted strong performance in Connected TV and disciplined expense management [6][16] - The company is preparing for potential regulatory changes that could allow for greater consolidation and operational leverage in local markets [24][60] Other Important Information - The company completed refinancing transactions that improved its debt maturity profile and only slightly increased its blended cost of debt [14][15] - The company has received multiple prestigious journalism awards, reinforcing its commitment to quality news reporting [19][20] Q&A Session Summary Question: How is Scripps positioned to take advantage of regulatory changes? - Management believes that greater scale and market depth are necessary for performance and plans to leverage opportunities from potential regulatory changes [26][27] Question: What visibility does the company have on performance in the back half of the year? - Management indicated that while there is excitement around women's sports, concrete details from upfronts will be clearer in the next earnings call [30][31] Question: How did advertising categories perform in Q1? - Automotive and retail were the worst performers, while gambling advertising saw growth due to local sports deals [42][44] Question: What is the outlook for retransmission revenues? - Management confirmed that retransmission subscribers were down mid-single digits year-over-year, consistent with previous trends [52][53] Question: What is the expected impact of deregulation on the ION side of the business? - Management anticipates that changes in ownership rules could allow for more local stations, improving margins for ION [69][70] Question: What is the expected cash balance post-refinancing? - The company had $25 million in cash at the end of the quarter, with expectations to reduce revolver balances by the end of the year [93][96]