Media, broadcasting, and digital services company E.W. Scripps (NASDAQ:SSP) met Wall Streets revenue expectations in Q3 CY2025, but sales fell by 18.6% year on year to $525.9 million. Its GAAP loss of $0.55 per share was 72.1% below analysts’ consensus estimates. Is now the time to buy SSP? Find out in our full research report (it’s free for active Edge members). E.W. Scripps (SSP) Q3 CY2025 Highlights: Revenue: $525.9 million vs analyst estimates of $523.9 million (18.6% year-on-year decline, in line) ...

Financial Data and Key Metrics Changes - The company reported a third consecutive quarter of results that met or exceeded expectations, driven by the Scripps Sports strategy and strong sales execution [4] - Local media division revenue decreased by 27% due to the absence of political advertising revenue compared to the prior year, while core advertising revenue increased by nearly 2% [6] - The company reported a loss of $0.55 per share, which included various costs that increased the loss by a total of $0.15 per share [10] - Net leverage improved to 4.6 times at the end of Q3, down from 6 times in Q2 of the previous year [12] Business Line Data and Key Metrics Changes - Local media segment profit was nearly $53 million compared to $161 million in Q3 of the previous year [6] - Scripps Networks revenue was approximately flat at $201 million year-over-year, with connected TV revenue up 41% [7][8] - Scripps Networks' segment profit was $53 million, with a segment margin of 27% [9] Market Data and Key Metrics Changes - The company expects local media division revenue to decline by about 30% in Q4, while core revenue is anticipated to increase by about 10% [6] - Scripps Networks' revenue is expected to decrease in the low double-digit range for Q4 due to various factors, including a lack of political revenue and lower upfront advertising [9] Company Strategy and Development Direction - The company is focused on optimizing its portfolio through station swaps and sales, with recent transactions yielding strong valuations [4][22] - The Scripps Sports strategy has been a significant driver of revenue growth, particularly in women's sports and partnerships with various leagues [14][16] - The company is pursuing aggressive distribution on streaming services, projecting connected TV revenue to exceed $120 million in 2025 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategies, highlighting strong performance in sports and connected TV revenue streams [13] - The upcoming midterm elections are expected to yield record spending across the advertising ecosystem, positioning the company well for future growth [22] - Management acknowledged challenges in the advertising environment but remains optimistic about the potential for recovery as economic uncertainties are resolved [72] Other Important Information - The company has been actively managing expenses, resulting in improved margins and a focus on fiscal discipline [20] - The Scripps Transformation Office is leveraging technology and AI to enhance operational efficiency and drive growth [20] Q&A Session Summary Question: What is the outlook for further asset sales? - Management indicated there are still significant opportunities for optimizing the portfolio through buying, selling, and swapping stations [26] Question: Can you elaborate on the impact of the government shutdown on revenue? - Management noted that the government shutdown has affected demand and buying from networks, particularly in the Medicare Advantage space [68] Question: How is the advertising environment compared to six months ago? - Management observed some strength in local advertising but noted challenges in the national ad marketplace, particularly in direct response pricing and pharmaceuticals [55][72] Question: What is the company's strategy regarding AI and cost efficiency? - Management expects to provide more information on the impact of technology and AI on operational efficiency in the upcoming year [78]

Financial Data and Key Metrics Changes - The company closed on the placement of $750 million of new senior secured second lien notes, using proceeds to pay off outstanding senior notes and a portion of Term Loan B2, leaving $36 million remaining [6] - The second quarter earnings per share were a loss of $0.59, impacted by $38 million of financing transaction costs and other adjustments [16] - Cash and cash equivalents totaled $31.7 million at June 30, with net leverage at the end of Q2 at 4.4x, a half turn below the end of Q1 [16][17] Business Line Data and Key Metrics Changes - Local Media division revenue declined 8% year-over-year due to lack of political advertising revenue, with local media segment profit nearly $56 million compared to $88 million in 2024 [8][12] - Scripps Networks revenue was $206 million, down 1.4% from the previous year, but CTV revenue increased by 57% [13][14] - The Other segment reported a loss of $7 million, an improvement from a loss of $9.2 million in the prior year [15] Market Data and Key Metrics Changes - Local Media distribution revenue was down 1% year-over-year, with a 5% increase in retail advertising [10][11] - The company expects Local Media division revenue to decline in the mid to high 20% range for Q3, while Scripps Networks division revenue is expected to be down low single digits [12][15] Company Strategy and Development Direction - The company is focused on debt reduction as a top priority, with plans to pay off remaining term loan balances through cash flow [7][20] - Scripps is pursuing opportunities for portfolio optimization and local coverage expansion through station swaps and asset sales [21][31] - The company anticipates industry deregulation will enhance its financial strength and local programming capabilities [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted a soft advertising climate but highlighted strong performance in sports advertising, particularly from the NBA Finals and NHL playoffs [9][19] - There is ongoing uncertainty in the advertising market, particularly in the automotive sector, which has seen significant weakness [46][50] - Management remains optimistic about potential recovery in advertising demand as economic uncertainties resolve [50] Other Important Information - The company has introduced an accounts receivable securitization facility with a capacity of $450 million, contributing to debt management [7] - The management team is executing a plan to improve financial performance and operating profile, with a focus on shareholder value [20][26] Q&A Session Summary Question: Insights on deregulation and future opportunities - Management believes greater depth in market is necessary for asset performance and is actively pursuing swaps and asset sales to improve portfolio durability [30][31] Question: Clarification on Q3 guidance - Core advertising is expected to be flat, with political contributions anticipated to build throughout the year, primarily impacting Q4 [35][36] Question: Current advertising environment and advertiser sentiment - The advertising environment is characterized by hesitancy, particularly in the automotive sector, but there is hope for recovery as uncertainties diminish [44][50] Question: Impact of search traffic decline and AI - The company employs technical solutions to protect its IP and anticipates mixed impacts from AI on direct traffic and brand building [52][55] Question: Thoughts on CBS non-renewal in Atlanta market - Management views the CBS non-renewal as a one-off situation rather than a trend, indicating a changing value perception between networks and affiliates [60] Question: Net retransmission margin expectations - The company expects net retrans margin expansion due to expense savings in programming, despite ongoing subscriber churn [62][65] Question: Contribution of sports strategy to core advertising - The sports strategy is estimated to contribute low single digits to core advertising growth, with specific revenue impacts from recent sports events [68][70]