Scripps(SSP) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a leverage ratio of 4.8 times by the end of 2024, nearly a full turn lower than the end of 2023 [16][28] - The income attributable to shareholders for Q4 was $80 million, or$ 0.92 per share, impacted by preferred stock dividends and restructuring charges [38][39] - Political advertising revenue reached a record $343 million for the full year 2024, with Q4 political advertising revenue at$ 174 million, up 34% year-over-year [31][28] Business Line Data and Key Metrics Changes - Local Media division revenue increased by 34% year-over-year, with a segment profit of nearly $200 million compared to$ 86 million in Q4 2023 [30][33] - Scripps Networks division revenue was $216 million, down 6% year-over-year, but expenses decreased by over 6% due to cost controls [34][35] - Local Media expenses increased by 5.7% year-over-year, while Scripps Networks division is expected to see margin improvements of 400 to 600 basis points in 2025 [32][36] Market Data and Key Metrics Changes - The company achieved record political advertising revenue, with over 80% of this revenue coming from six states [19] - Local distribution revenue decreased by 5% year-over-year, with a total subscriber base decline of about 5% [32] - Connected TV revenue grew by 16% in Q4, indicating a positive trend despite overall challenges in the advertising market [34][85] Company Strategy and Development Direction - The company is focused on transformation, reducing debt, and improving operating performance, with a significant round of debt refinancing announced [15][24] - Management highlighted the potential opportunities arising from changes in FCC regulations that could allow for greater consolidation in the local broadcast market [10][11] - The company aims to leverage its position in local journalism and live sports to enhance community connections and shareholder value [14][20] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for deregulation to enhance operational performance and investment in local content [10][15] - The company is closely monitoring economic conditions, particularly the impact of tariffs and inflation on advertising categories such as automotive and retail [65][66] - Management expects a bounce back in core advertising revenue in the latter half of the year, following a record political advertising year [67] Other Important Information - The company completed$ 20 million in property sales and anticipates closing over $70 million in transactions [39][40] - Cash and cash equivalents totaled$ 24 million at the end of Q4, with total debt at $2.6 billion [41] - The company is executing an aggressive plan for debt paydown and leverage reduction, with significant progress made [42] Q&A Session Summary Question: Comments on FCC and deregulation opportunities - Management believes greater scale is necessary for asset performance and is engaged in discussions to optimize the portfolio [47][50] Question: Distribution trends and subscriber renewals - Approximately mid-20% of the subscriber base is up for renewal this year, with expectations of mid-single-digit declines in core revenue [52][56] Question: Core advertising performance and macroeconomic impacts - Core advertising is expected to be down low to mid-single digits due to economic uncertainty, particularly affecting automotive and retail categories [65][66] Question: Update on EdgeBeam Wireless initiative - The joint venture aims to leverage broadcast spectrum for datacasting, with expectations for future revenue growth [70][72] Question: Local sports contribution to core revenue growth - Local sports is expected to contribute low single-digit growth, with a new franchise potentially adding to this [90][91] Question: Advertising trends in various categories - Automotive is experiencing significant declines, while services remain strong; consumer packaged goods and restaurants are also lagging [122][126] Question: Cost savings from Scripps News operation shutdown - The shutdown is expected to drive$ 35 million in annual savings, contributing to margin improvement [116][118]