Questions Answered by Scripps

Scripps held their town hall meeting and there were a number of questions that they didn’t get to.

So, the company sent out an email to the staff with answers to some of those that did not address.

FTVLive obtained those answers, and we found the answers to the stock price and the news initiative very interesting.

No word if anyone’s pants caught on fire while answering the questions.

Why is our stock price low? 
Scripps’ stock price began a decline in early September, when Disney networks went dark on Charter Cable. Investors started to sell local broadcast stocks (Scripps, Nexstar, Gray, Sinclair, Tegna) because they were worried that more people would cut their cable service, causing retransmission revenue for all of us to decline significantly.  

Even though Disney and Charter came to a quick resolution, investors have continued to worry about cord-cutting and retransmission revenues. In addition, they are worried about the impact of ongoing inflation on consumer spending and advertising revenue. If consumers are not spending, businesses cut their advertising budgets to wait until audiences are more receptive to their messaging.

Inflation also means the government keeps interest rates higher as a way to encourage savings. For companies like Scripps with a heavy debt load, investors worry about the cost of higher interest rates on our loans.

To summarize: Scripps’ stock price is down because of investor concerns about retransmission revenue, the health of advertising, the expense we pay in higher interest rates and our overall amount of debt. Some of this is affecting other local broadcasters, like Gray, which has high debt as well.

Are we looking to sell stations?
We are always evaluating opportunities to strengthen our portfolio – this has been part of our strategy for many years now and it continues to be so. Any exploration of buying or selling is a confidential process. If there is anything impacting our business, we will let you know as soon as we are able to do so.

What is our timeline to pay down debt?
Scripps’ debt was about $4 billion January 2021, after we acquired ION Media in order to create the Scripps Networks division. Since then, we have paid down 22% or about $900 million, and we continue to actively pay down our debt. This year specifically, we will be able to pay down debt using profits from political advertising, connected TV and a few smaller revenue areas. Our CFO constantly says that reducing Scripps’ debt is our highest priority for use of cash.
 

Will we add more stations to our second-station strategy?
We have created second stations in two markets where we won the rights to distribute local sports – Las Vegas and Phoenix. In those cases, we found a new place to distribute ION and used the former ION broadcast tower spectrum to transmit those new local, “second” stations. We will continue to use a second-station strategy in places where, like Las Vegas and Phoenix, economics such as sports rights make it attractive for us.  
 

Are the MVPDs paying to carry ION?
When we bought ION, all of the stations it owned were set up with cable and satellite providers to receive “must carry” distribution. Stations can elect must carry instead of receiving retransmission revenue. They forgo receiving payment in exchange for a guarantee that they will reach all the cable and satellite households in markets across the country. Scripps likes this set-up because, unlike our local stations, ION is dependent on national advertising, and their advertisers want to reach the whole country at once. So we have continued this model, and ION’s only source of revenue is from advertising.
 

Ratings are down for sports. How is that a positive for ION? Are sports deals driving down our stock price?
Ratings are actually up for nearly every major sport, especially women’s sports. You can find many articles about this. Here’s one: https://www.cnbc.com/2024/03/08/womens-sports-could-bring-in-over-1-billion-in-2024-whats-driving-growth.html.

Here is another on sports in general: https://www.nielsen.com/insights/2023/tops-of-2023-sports/.

ION is home to the WNBA on Friday nights and, as of March 16, National Women’s Soccer League on Saturday nights. These games are driving new viewers and visibility to ION, and investors like the strategy. They also like our local strategy of winning sports rights in Las Vegas and Phoenix, where our NHL rights agreements are projected to drive a 3 percentage point lift in local core advertising in 2024. Scripps has been strategic and disciplined in deciding which sports rights to pursue, and this has been a positive on Wall Street. See question 1 for information on what is actually driving down Scripps’ stock price.

Will Scripps continue to rollout the news initiative?
Yes. Creating the best local journalism in each of our markets is our priority. To help our teams achieve that goal, we are focused on completing the news initiative rollout and ensuring we are successful in its adoption and execution in all of our markets. Our commitment to ensuring its success has never been stronger because we believe the news initiative better serves our audiences and communities by getting more reporters out into their regions to report and best understand the markets they cover.
 

Are we spending less on entertainment because of sports and news?
No. First, we are not spending less on entertainment. We are running two original programs on Bounce in 2024. We’re also spending a bit more this year than last on quality syndicated programming for our Scripps entertainment networks. And we have not traded our entertainment programming budget for news and sports content. We see all three categories as complementary and equally important to both traditional linear television and to the networks we are streaming across all the major platforms.
 

Will local sales get a CRM this year?
We’re working on a simple in-house solution for claiming of accounts and revenue tracking against those advertisers for AE use in local media this year – more to come soon. We don’t anticipate moving to a full CRM in local media sales prior to 2025.

You mention a Tablo app will be on LG and Vizio. Will local stations be available on those FAST marketplaces as well, like we are on Samsung TV+?
That's the goal. All 39 of our local media FAST channels are already available on Tablo, Plex, Tubi, Local Now, Fire TV Channels (fka Amazon News), Haystack and NewsON, and 10 of our local media FAST channels are available on Samsung TV Plus. Our distribution team is always working to increase our reach, and they are currently working to send our local media streams to LG Channels, Google TV, and Sling, and possibly more.

How are political sales trending this year?
Scripps has said publicly that we expect between $210-$250 million in political advertising revenue in 2024. That compares to $200 million in the last election year, 2022. The actual amount will be determined by how much the two presidential candidates spend on advertising, the competitiveness of Senate races in seven Scripps states and the number of controversial issues on ballots in a number of states where we have stations.

Will we get location by location results for the OHI survey? How will we communicate specific results?  What are the top areas that were identified as needing improvement in the OHI survey?
The purpose of the OHI survey is to provide an assessment of the company’s overall cultural health, and we are looking at the results at an enterprise level rather than locations. We shared the top-line results at the March all-employee meeting and will continue to share more with all employees at optional sessions April 25 - May 13. If you would like to join us, click here to sign up for a session and receive a calendar invitation.

The top areas identified as needing the most improvement are: clarifying the company strategy and how each team fits into our broader purpose; providing clear goals, role clarity and metrics to hold people accountable; and developing caring and candid leaders who help connect the “what” and “why” of our strategy.

Is there a hiring freeze?
We are not currently under a hiring freeze. We are continuously evaluating and prioritizing hiring that supports serving our communities and maintaining business continuity.

What does it mean for us now that Comscore is accredited by the MRC? How will that help?
Comscore is now the only locally MRC-accredited service in the US.  While the accreditation only covers household ratings and does not apply to demographic targeting, we see this as an important milestone.

The challenge now is agency adoption at the buyer level.  Even as the Comscore methodology has evolved and modernized and now become accredited, we still see the majority of ad buyers using Nielsen as the gold standard for local buys. Scripps was initially one of the few major broadcasters who exclusively signed on for Comscore local measurement.  We recently saw that Tegna joined us, going all in with Comscore as their Nielsen contract ended.  And we hope to see other broadcasters join us.

We continue to work with the planning/buying community to educate them on the benefits of Comscore measurement, including greater stability and now accreditation – and these conversations are continuing.