Q3 2024 The EW Scripps Co Earnings Call

November 4, 2024

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Speaker Change: Good morning, everyone. This is Carolyn Michelle Lee head of Investor Relations at Scripps, we're going to start our call. Thanks, So much for joining us we apologize for this morning's delay we had technical issues with our conference call provider and we're not using an operator assisted line. So please make sure you stay on mute. We appreciate your graciousness and your patience as we navigate this call well.

Speaker Change: Have a Q&A at the end of the prepared remarks again for now please ensure you're on mute I'll come back after Adam's remarks, and open up the call for questions.

Speaker Change: A transcript of the call will be available at scripts Dotcom. This afternoon, and you can visit Scripps Dot com for more information a reminder, that our conference call and webcast include forward looking statements based on management's current outlook and actual results may differ materially factors that may cause them to differ are outlined in our SEC filings, we do not intend to update any.

Speaker Change: Forward looking statements. We make today included on this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and valuation of the company.

Speaker Change: These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies uses or formulations.

Jason Jorge: <unk> in our earnings release are the reconciliations of non-GAAP financial measures to the GAAP measures reported in our financial statements. We'll hear this morning first from Scripps Chief Financial Officer, Jason Comms, and then President and CEO, Adam Simpson Chief Operating Officer, Lisa Knutson also is with US here is Jason Jorge.

Jason Comms: Good morning, everyone and thank you for joining us as.

Jason Comms: As we wind down this year's election cycle, we're very pleased to be reporting another record year of political advertising revenue.

Jason Comms: <unk> full year total local media political AD revenue looks like it will come in at more than $340 million that would be almost 30% above the 2020 presidential year, which was our last record.

Speaker Change: Adam will provide more color on this year's political in just a moment.

Jason Comms: The record level of political AD spending drove record third quarter company revenue as well. This revenue combined with tight expense management helped us to significantly exceed expectations for third quarter company EBITDA.

Jason Comms: And on this note I have another very positive milestone this year.

Jason Comms: The political cache the expense management and a third quarter debt payment have driven down our leverage ratio by nearly a full turn this quarter from six times at the end of Q2 to five one times at the end of Q3 and.

Jason Comms: And with the high level of political advertising revenue and a strong fourth quarter performance. We expect to continue to deleverage to the high four times range by year end. We are pleased with this progress and as we've discussed previously we remain focused on our refinancing opportunities, including with respect to our near term debt maturities. We look forward to updating you on our onboard.

Jason Comms: Refinancing activities when appropriate.

Speaker Change: In a few moments I'll share an update on the execution of our debt reduction plan as well as on the bounce process, but first I'd like to review the quarterly results highlights and fourth quarter guidance for local media and Scripps networks divisions.

Speaker Change: For the third quarter of 2024 local media Division revenue was up 26% from the year ago period that compares very favorably to our guide of up 20% and was driven by a record amount of third quarter political advertising revenue $125 million.

Speaker Change: Local distribution revenue was down 6% year over year as we had no pay TV contract renewals in the quarter.

Speaker Change: Our total subscriber base declined mid single digits in line with our modeling and expectations.

Speaker Change: Third quarter local core advertising revenue was down about 9% from the prior year period.

Speaker Change: We saw significant core advertising displacement in 15 markets across Arizona, Michigan, Montana, Nevada, Ohio, and Wisconsin.

Speaker Change: Those markets account for more than a third of our total footprint.

Speaker Change: Local media expenses were up only 2% from the prior year quarter in line with our guidance.

Speaker Change: Local media segment profit was $161 million more than double the year ago period.

Speaker Change: For the fourth quarter, we expect local media division revenue to be up in the low to mid 30% range.

Speaker Change: We expect local core AD revenue to be down in the low double digit percent range. We expect Q4 local media expenses to be up in the mid single digit percent range.

Speaker Change: Now, let's turn to the Scripps networks Division third quarter results, and then fourth quarter guidance.

Speaker Change: In the third quarter Scripps networks revenue was $202 million down 6% from the year ago quarter, which is in line with our guidance we.

Speaker Change: We continue to cycle through the effects of last year's soft upfront advertising season, we did see a strong performance from WNBA games doubling our revenue for the full 2024 season over 23.

Speaker Change: Connected television revenue was flat in the third quarter after backing out the programmatic advertising product, we shut down again this quarter, we felt the industry impact of streaming services offering discounts on an abundance of inventory we.

Speaker Change: We do expect the pricing pressure to moderate in CTV volume to grow in.

Speaker Change: In Q3, Scripps networks Division expenses decreased by nearly 4%, mainly mainly because of lower programming costs.

Speaker Change: Network segment profit was $42 million.

Speaker Change: For the fourth quarter, we expect Scripps networks division revenue to be down in the mid single digit percent range.

Speaker Change: Our expectation is that networks expenses will be down in the high single digit percent range. In Q4, we have been working diligently to keep down expenses in that division, including reducing operations at our National networks Scripps News.

Speaker Change: And looking ahead, we expect to see a meaningful 400 to 600 basis point improvement in Scripps networks margins in 2025.

Speaker Change: Turning to the segment labeled other in the third quarter, we reported a loss of $7 7 million.

Speaker Change: Shared services and corporate expenses for Q3 were $21 million.

Speaker Change: For the fourth quarter, we expect expenses to be about $25 million.

Speaker Change: For the third quarter, the income attributable to shareholders of Scripps was $33 million or <unk> 37 per share.

Speaker Change: A reminder, that the preferred stock dividends still has a negative impact on earnings per share even when we don't pay it.

Speaker Change: This quarter reduced EPS by <unk> 17.

Speaker Change: In addition, we took a $12 $7 million restructuring charge that decrease the income attributable to shareholders by <unk> <unk> per share.

Speaker Change: Now I'd like to share an update on our plans to divest of the bounce network as we've discussed the process is moving along well then last week, we realized that we would be unable to come to terms with our prospective buyer that reflected the high quality nature of this asset.

Speaker Change: Interest in bounce bounce remains strong and we plan to continue the process with the goal of a 2025 transaction we.

Speaker Change: We are committed to ensuring we received the highest value for our shareholders.

Speaker Change: In the meantime, as you can see we're continuing to significantly reduce both our debt levels and our leverage ratio.

Speaker Change: We also have discussed the sale of real estate assets and right now we have letters of intent for about $60 million in real estate transactions.

Speaker Change: At September 30, cash and cash equivalents totaled $35 million, we paid down $115 million of debt in the third quarter our.

Speaker Change: Our net debt at quarter end was $2 7 billion, including a revolver balance of $175 million.

Speaker Change: By the end of this year due to the influx of cash from political AD revenue, we expect to apply nearly $300 million to debt paydown.

Speaker Change: In August we had said we've reached a year end leverage ratio in the low to mid five times range and again with a strong finish in political in fourth quarter performance. We now expect to continue to deleverage to the high four times range by year end per the terms in our credit agreement.

Speaker Change: We are executing an aggressive plan for both debt Paydown and leverage reduction this year and we are moving even better than expected through the execution of those plans and now here's Adam.

Adam Simpson: Thanks, Jason and good morning, and thanks for being with US today, our nation is on the verge of a presidential election, the polls show as much too close to call. We may know the results late tomorrow or it could take days or weeks, but regardless of the outcome scripts can be proud of the part we play in informing voters across the country of the news.

Adam Simpson: They need to make informed decisions and the trustworthy local programming platform, we provide for candidates and campaigns to reach voters with their messaging.

Speaker Change: Local broadcasters serve a central role in our nation's election spending cycles ad.

Speaker Change: Add impact says we are receiving more than half of all TV AD spending in this election.

Speaker Change: At Scripps superior sales execution, our centralized political sales office and strong demand in many of our markets allowed us to outpace even our past record performance. We saw a nearly 30% increase this year over our 2020 performance.

Speaker Change: Back in May maximizing our political revenue opportunity was just one of the components of the scripts transformation plan that I outlined to improve our financial performance reduce our debt and better position us to grow.

Speaker Change: Every substantial decision we're making at this company is being made through that filter. So I'll use my time. This morning as a check in for you on the progress we've made I think youll see how committed we are to the outcomes.

Speaker Change: I've now told you a few times that our commitment to live sports is an important element of our plan to grow revenue and drive shareholder value.

Speaker Change: I'd like to share now where youre seeing this in both our national and local segments.

Speaker Change: During the third quarter, our Scripps networks sales team worked tirelessly to wrap up the negotiations for the upfront.

Speaker Change: In the end, we surpassed both last year's performance and that of our peers.

Speaker Change: Our live sports programming was the big driver supported by the popularity of ions other programming and demand for connected TV inventory.

Speaker Change: As the broadcaster demonstrating the greatest commitment to professional women's sports scripts capitalized on demand to outpace the market through portfolio and cross platform sales.

Speaker Change: We saw more than a dozen new clients transition from scatter to the upfront concern that our sports inventory would either sell out or command, even more premium prices in the scatter market we.

Speaker Change: We sold over 75% of our sports inventory in the upfront and are now strategically positioned to drive scatter premiums as the demand for women's sports remains robust heading into 2025.

Speaker Change: In fact, we saw such demand in the upfront driven by sports that we have to get creative to fully maximize the available inventory across linear CTV and branded content as well as virtual elements.

Speaker Change: This enthusiasm drove 164% growth in our connected TV upfront revenue over last year's upfront.

Speaker Change: Something that was new for US. This year are live sports strategy was also one of the ways, we maximized our political revenue opportunity in local.

Speaker Change: And this strategy made a big difference in our yield.

Speaker Change: This was most evident in Montana, where our big Sky Conference football games, and adjacent programming opened up significant new premium inventory for our political team.

Speaker Change: We created similar opportunities for ourselves around live sports and other local markets.

Speaker Change: Through the year, we continued to come back to you raising our guidance for political revenue as the competitive nature of the presidential campaign and down ballot races and initiatives in our markets became more clear.

Speaker Change: Ultimately, we blew away even our last guide from just three months ago and advertising is still being placed at this moment.

Speaker Change: Scripps benefited from spending for U S Senate races, in Arizona, Michigan, Montana, Nevada, and Ohio, as well as issue races in Florida.

Speaker Change: As the election season heated up this fall our Michigan stations saw a huge surge in both presidential and U S Senate spending.

Speaker Change: And after Kamala Harris entered the presidential race in July fund, raising accelerated up and down the democratic ticket across our footprint.

Speaker Change: Donald Trump and his pack also began spending more in the two presidential candidates and their packs together contributed tens of millions of dollars to scripts as total election year revenue.

Speaker Change: With so much of this highly profitable political AD revenue, we have been able to direct more cash to debt paydown.

Speaker Change: As Jason mentioned, we will put a total of about $300 million toward our debt. This year and expect to continue to deleverage to the high four times range by the end of the year. That's a remarkable move from six times in just two quarters.

Speaker Change: While we have been pleased to capture this topline opportunity. We also take seriously the headwinds we face and that's why I've been framing up our operational improvement plan.

Speaker Change: You can see that we remain committed to holding down costs in the local media division.

Speaker Change: We are confident in our ability to actually better serve our local audiences and advertisers, while leveraging innovative and more efficient approaches to news production.

Speaker Change: On the Scripps network side, we told you in August that we would be examining our expense structure and resource allocation to improve the business.

Speaker Change: We now expect this strategy, we are executing to bring a 400 to 600 basis point improvement in networks margins for 2025, you are already beginning to see this with expense levels from Q3 and in our guide for Q4.

Speaker Change: Some of the improvement comes from the changes at Scripps News that we announced several months ago, we created scripts news by rebranding newsy and setting up a new organizational structure two years ago.

Speaker Change: Since then it's news teams have won two National Emmy Awards, and a dozen other national Journalism Awards and served Americans with impartial deeply reported news.

Speaker Change: Unfortunately, the hard reality is that the polarized nature of our country has made even quality objective journalism, our hard sell to national advertisers in linear TV.

Speaker Change: And so when it was clear that the network would not meet our revenue growth expectations. It was time to pivot.

Speaker Change: Scripps News will continue to produce the same level of outstanding and important journalism for its fast growing connected TV audience and in service to our local stations with a much lower cost structure.

Speaker Change: I Hope you can see we're doing what we said we would do in pursuit of improving the company's operating performance managing down our debt and positioning the company for the future.

Speaker Change: Obviously, we're not done yet, but bringing leverage down to five one this quarter forecasting further deleveraging and guiding to an improved networks margin by between 400 600 basis points in 2025 should demonstrate just how committed we are to our plan for improvement.

Speaker Change: Carolyn let's take some questions great. Thanks, Adam we'll hear first from the line of decay Hall at Wells Fargo. Steve Go ahead.

decay Hall: Yeah. Thanks can you hear me yes.

decay Hall: Yes.

DK Hall: Thanks, So maybe Jason first on balance it sounds like you were close.

DK Hall: Things didn't quite get over the goal line I am guessing that's overpriced I think you've always said that <unk> had multiple interested parties inbound and thats. How this process got started in the first place so.

DK Hall: I think you said the deal is most likely now and next year can you just talk to us a little bit about what the next steps or any more color about what the level of engagement is around balance I think that was maybe something that folks were.

DK Hall: Acting to maybe crystallize this morning.

decay Hall: Okay.

Speaker Change: Yep.

Speaker Change: No go ahead I'm sorry.

Speaker Change: Okay.

Speaker Change: Squeeze back on and then maybe just on.

Speaker Change: What youre seeing on the advertising market I mean, so thanks for that color Adam clearly political is a record level and the sports strength in scatter.

Speaker Change: Very clear, sometimes it's tough for us to see especially at local kind of what's under the hood in the market more broadly so as you look to local core in 2025 can you help us just with what some of the puts and takes are for the type of growth we can see that.

Speaker Change: Yeah. Thanks, Steven I'll start with balance first of all I think the only reason people have been so focused on <unk>.

Speaker Change: Balance is that they wanted to see us use the proceeds to.

Speaker Change: To pay down debt and deleverage. So I think it's obviously important to point out the significant progress we've made against our debt Paydown and deleveraging plan ahead of our sale by the end of Q4, we expect to be in the high four times range and though its taking a little longer than we anticipated as a result of the actions of one of the bidders as we referenced in the call. This <unk>.

Speaker Change: Really does remain a very competitive process.

Speaker Change: Process in line with the quality of the asset. So our goal is to sell the asset in 2025 with proceeds later used to drive down our debt and leverage ratio.

Speaker Change: You want to talk about core and Steven.

Speaker Change: As we talked about in Q4, we're seeing.

Speaker Change: Sequential improvement over Q3 because.

Speaker Change: Obviously after tomorrow that lack of displacement and beginning to come back.

Speaker Change: And even from October to November we're seeing significant improvement in total dollars in key categories, such as services automotive home improvement and retail it's a little too early to be guiding to 2025.

Speaker Change: Really expecting to end the quarter strong coming out of the political season.

Speaker Change: Thanks, and if I could squeeze one more in.

Speaker Change: Beyond Barbie on me to predict what's going to happen tomorrow, but if we do see a more.

Speaker Change: Deregulatory FCC in the future, what's your appetite to be a seller of certain stations in order to additionally, provide some deleveraging to the EW Scripps.

Speaker Change: Yes, Steve I mean clearly.

Speaker Change: Trump win would usher in greater deregulation, but my answer will be the same either way as I've said, many before we would absolutely transact on other non strategic brands on local stations on real estate assets in pursuit of making our business better performing and more economically durable.

Speaker Change: Again, it depends on the outcome of the election, but we could see new opportunity for the industry for further consolidation in the broadcast industry is something that I frankly think is important for the industry and for local journalism and we could definitely take advantage of that opportunity.

Speaker Change: Thank you.

Speaker Change: Thanks, Steve I believe we now have a question from Mike Kaminski at Noble financial capital Mike are you there.

Mike Kaminski: Thank you and congratulations I mean political is just incredible.

Mike Kaminski: Just on that Brian I know, you mentioned, Arizona, Michigan, and Montana, Ohio, Nevada, and Wisconsin being the key drivers.

Mike Kaminski: What is what are those markets in terms of the percent of political total political what did they account for.

Mike Kaminski: Is there a way of looking at that because certainly it always kind of model. This.

Speaker Change: So I don't think Mike we've broken out how much political how much the political they account for but we did say is in terms of our total core revenue they constitute that quarter well generally close to a third of our total markets are represented in those states you just talked about.

Speaker Change: Gotcha and then my question is regarding the Scripps networks business. Obviously, you took out some layers of management did some streamlining there could you put a dollar amount around the expense savings there and I know.

Mike Kaminski: Particularly as you look at 2025, I know that you've mentioned margin improvement of 400 to 600 basis points.

Mike Kaminski: Does that assume revenue growth in 2025 for the Scripps networks.

Speaker Change: So I don't think we are guiding to anything 2025 right now in terms of revenue what I can say is when you think about that 400 600 basis points that is made up of multiple actions, we're taking some of which we've announced publicly for example, the scripts news.

Mike Kaminski: Announcements, which will net us in annualized net savings of about $35 million a year on a go forward basis, but there are other things. We are also actioning to drive to ultimately drive that 400 to 600 basis point improvement and so capturing both the savings from Scripps news any stranded cost there.

Mike Kaminski: There are other levers we talked in Q4 about.

Mike Kaminski: I'm sorry in Q3 about programming expense being down year over year. So multiple different places we're focused on.

Speaker Change: And then final question in terms of just looking at post election advertising and that sort of thing can you kind of give us some.

Speaker Change: Thoughts about some key advertising categories, particularly auto.

Mike Kaminski: As you kind of look into the balance of December and into January and maybe some of the other key components of.

Mike Kaminski: Services and so forth.

Mike Kaminski: Of your AD categories.

Speaker Change: Yeah, Hey, Mike its lead that so as I said, we are seeing sequential improvement starting in November month over month over month from October to November.

Speaker Change: That displacement.

Speaker Change: <unk> after the election services.

Mike Kaminski: Our top category automotive continues to come back in December and we expect it to come back after.

Mike Kaminski: Q4.

Mike Kaminski: We saw I think as you know between 2000 22022, and 2023 auto was up over 10% and I think there was some.

Mike Kaminski: Some displacement in 'twenty two.

Mike Kaminski: 'twenty two to 'twenty three comparison, so I think automotive.

Mike Kaminski: Automotive will come back I think home improvement is showing good signs of resiliency as well as retail obviously as were in the fourth quarter.

Speaker Change: Okay. That's all I have congratulations.

Speaker Change: Thank you Mike next we'll hear from the line of Craig Huber Huber Research Associates.

Mike Kaminski: Are you there.

Mike Kaminski: Okay.

Mike Kaminski: Chris <unk> to unused.

Mike Kaminski: Okay, we'll move along now come back to Craig.

Mike Kaminski: We have a call from <unk> at Barclays.

Mike Kaminski: And are you there.

Speaker Change: Thanks for taking my question so.

Speaker Change: Now there are news reports that suggested you guys moving at the reporting date to assess the feasibility of a refinancing.

Mike Kaminski: Can you just give a comment on how you guys are thinking about the refinancing now that balance.

Mike Kaminski: Balance is about Seo has been pushed back to 2025.

Speaker Change: Sure Jay.

Speaker Change: So I would say first of all our strong cash flow coming from political is going to allow us or should allow us to fully pay down the revolving credit facility by year end, meaning the.

Mike Kaminski: Secured debt we need to address is just the b two term loan for a little over $700 million, we'll certainly be looking to both alone and the bond market to determine where where there's the most demand to refinance in order to address that our near term maturities as soon as possible and we've said this before we would likely look to address both our 2027 maturities.

Mike Kaminski: And our 2026 maturities at the same time.

Speaker Change: Thank you guys I guess just on the 2027 and 2026 maturities are you guys thinking about it more in terms of you know some kind of exchange or how.

Speaker Change: How should we think about that and then.

Speaker Change: Maybe.

Speaker Change: Another question just on the guidance that you guys gave for local media.

Speaker Change: Obviously, the low to mid 30 is a lot of it's driven by political.

Speaker Change: This year, but it looks like Retrans revenue in third quarter was down 6% year over year.

Speaker Change: Can you just give any color on your fourth quarter guide.

Speaker Change: What are you guys seeing for for Retrans in that in that guidance.

Speaker Change: Yes, so two things I guess first on the refinancing we're not going to provide any additional detail in terms of specific strategies, where obviously continue to work closely with with our bankers and be in communication with our lenders on a pretty regular basis, but not going to be providing any specific strategy on this call.

Speaker Change: Specifically distribution, yes, so we had no pay TV renewals really in the last two quarters, our last pay TV renewal. We had was a small one in Q1 and so.

Speaker Change: The down 6% was largely driven off of no rate increases with mid single digit sub declines I would expect our Q4 number to be roughly in the same line. What we said is.

Speaker Change: For the full year that we expect our both our gross and our net retrans to be up in the low single digit percent range and that.

Mike Kaminski: That implied Q4 number I just gave would get you to that to that range for the full year.

Speaker Change: Okay, great. Thank you.

Mike Kaminski: Yes.

Speaker Change: Next we'll go to Dan <unk>, the benchmark capital Daniel there.

Speaker Change: Yes, hopefully you guys can hear me.

Dan: So first off obviously congrats on the political number it's huge.

Dan: Adam Andrew Jason against Us on sort of the cost efforts.

Mike Kaminski: And apologize if I missed it but how much revenue comes out from the cost efforts on the national side and be in general.

Mike Kaminski: Is there more work to be done around realigning the broader corporate structure local side as well just given the environment. We're in.

Mike Kaminski: And beyond that.

Mike Kaminski: Even we're seeing MLP in kind of a tight spot I don't know, what's going on with the IRS and ultimately.

Mike Kaminski: It feels like there is still a pretty big sports opportunity and so I'm, just trying to kind of frame how.

Mike Kaminski: Broader portfolio local and national should benefit from a growth perspective, as you guys kind of go after sports opportunities once you get the refi done.

Speaker Change: Thanks, Dan.

Speaker Change: So I'll start with the.

Speaker Change: I'll start with the sports question, we continue obviously to execute our strategy to bring local sports rights to broadcast.

Mike Kaminski: With our footprint, where it makes sense economically we just we just launched our partnership with the Stanley Cup, winning Florida Panthers in Florida, and that matches really nicely with our stations in Miami West Palm and Fort Myers.

Mike Kaminski: I do expect there could be more to come but timing is going to depend on the resolution with diamond.

Mike Kaminski: I believe more sports will continue to move to broadcast if not this year, perhaps next year or in the coming years, given the declining reach of the <unk>.

Mike Kaminski: I mean, the RSM cable only model and diamond in particular in a tenuous position, even if the entity emergence from bankruptcy the fundamental problems with the model don't seem likely to be addressed and we at least think that team owners recognize the value of their teams having stronger reach and ultimately.

Mike Kaminski: Folks in their markets to be able to watch the team and so we think that in order for the value of their teams and their franchises to grow and endure theyre going to have to continue to look to broadcast.

Mike Kaminski: As a way to maximize the opportunity so we would expect to.

Mike Kaminski: Continue to be able to benefit in that way and we.

Mike Kaminski: I think I think there will be more to come as.

Mike Kaminski: As time progresses.

Mike Kaminski: The other question. The other question was around any revenue impacts from change on Scripps News, what I'd say is they will be fairly minimal where we're seeing the most revenue growth within Scripps news was in the CTV space.

Mike Kaminski: And that that as we've talked about is a place where Scripps news, we will continue to exist and provide their product out. There. Your last question I think was referencing further opportunity for efficiencies optimization, both at the corporate level networks and local and absolutely I definitely think we're we're continuing to do work as I said in my prepared remark.

Mike Kaminski: We're not done yet the 400 to 600 basis point improvement I think is a beginning there is more work to be done at the networks. There is more work to be done with the corporate office. There is certainly more work to be done in local as we identify ways to improve the operating efficiencies and the performance of the business and I think youll see us continue to.

Mike Kaminski: Execute against that plan.

Speaker Change: Is there any change Adam our thoughts just on.

Speaker Change: At the at the networks Division the portfolio the offering there I mean, I know we've talked about must carry not must carry but I, just mean to leverage better against where the CPM is our highest I know, it's hard to buy there arent a lot of.

Mike Kaminski: Wnba's or ws LS lying around out there.

Mike Kaminski: But.

Speaker Change: There is a pretty big uplift in content cost at the networks right now as they get past the strikes and so there's probably going to be a bunch more stuff coming available, but is there a programming change or any thoughts on how to reinvigorate growth at the networks level.

Speaker Change: I think we're.

Speaker Change: Executing a plan for margin expansion for next year and I expect it to include a focus on revenue as well as expense obviously, we saw the benefit of the upfront.

Mike Kaminski: Benefit of women's sports and live sports in general in our upfront and we will continue to evaluate additional opportunities. There are no shortage of opportunities. The question is what is which of them are right for us I will tell you.

Mike Kaminski: The other big opportunity, we continue to see in front of US is in connected TV.

Mike Kaminski: And we saw the value of having live sports, allowing us to drive greater connected television revenue in the upfront and we would continue to expect connected TV growth ahead.

Mike Kaminski: We'll continue to look at our portfolio.

Mike Kaminski: I referenced it before with respect to.

Mike Kaminski: Divestitures or M&A I would say the same thing with networks will always be looking at our networks portfolio and trying to determine.

Mike Kaminski: The best allocation of our resources from a brand perspective to ensure that we're continuing margin expansion in 'twenty five and beyond.

Speaker Change: Got it that's super helpful. Thanks, guys I appreciate it.

Speaker Change: Thanks, Dan Thanks, Dan next we'll try again with Craig Huber Huber Research Associates, Craig you Couldnt come off mute by pressing star thick.

Speaker Change: Okay. We will go ahead and open up for any <unk>.

Craig Huber: Great can you hear me, Okay now Carolyn Hart.

Mike Kaminski: Hi.

Craig Huber: It's not a we're about we're about the store six okay. Thank you for the time here a few questions guys can you go through again all these costs.

Carolyn Hart: So you've taken a Scripps networks I'm curious can you give us a rough sense of what percentage of the costs are coming out from just the news port in particular.

Speaker Change: So I'm trying to get to GAAP are beginning at the start of 2025 are scaled back scripts news operation is expected to generate annualized net savings of $35 million.

Speaker Change: And so and for the full year next year, we implied an increase in margin of 400 600 basis points. So.

Mike Kaminski: You should be able to then kind of back into what the other the remainder is and as we said, it's Adam kind of alluded to it's really looking across the entire expense structure.

Mike Kaminski: And looking for efficiency in.

Mike Kaminski: The programming spend.

Mike Kaminski: Personnel spend everything to drive that 400 600, and as we also said we were already Actioning a lot of that.

Mike Kaminski: Youre seeing us down 9% in the fourth quarter already in expense year over year in the network segment.

Speaker Change: And then I appreciate that and Jason when you talk about 400 600 basis point improvement next year is that assuming flat.

Speaker Change: Flat revenues next year, what would you what are you assuming there.

Speaker Change: We're not providing revenue guidance at this time for 2025, I think youll hear us talk more about that when we get to the February call.

Speaker Change: So I may ask a different way then.

Speaker Change: Is 100% or more than 100% of that 400 to 600 basis points from expenses.

Speaker Change: Revenue contribution uplift as well thats been to get you that doesn't mean, that's a big increase im just trying to figure out what you're trying to weaker assuming your head on that.

Speaker Change: So we're not giving out anything specific on revenue I will say that a large chunk of that is absolutely going to be on the expense side and Thats. Why we gave the guide of down high single digits. In Q4, we were down mid single digits in Q3, Youre already starting to see that roll through the P&L.

Speaker Change: Okay. Thanks for that and then just step back a second.

Speaker Change: On the macro side of things Adam or Jason.

Speaker Change: How are you feeling about the U S economy right now all the different markets you're in international.

Speaker Change: The exposure for advertising.

Speaker Change: A macro feeling better you guys versus say six months ago worse were about the same just wanted to get a sense of how that headwind is going for you.

Speaker Change: Craig I would say it's about the same.

Mike Kaminski: Obviously, there is some cyclicality in that we're heading into the fourth quarter with health care spending we're heading into the fourth quarter, where we expect to see retail come on strong there was.

Mike Kaminski: I think.

Speaker Change: Our sense that national advertisers sort of sat out a little bit during the last couple of months as a result of the election Theres just been a tremendous amount of noise and you can see that it's not just displacement I actually think it's sitting out and I think we're starting to see that come back because they know that in order to make their cash registers ring they need to place their buys.

Speaker Change: From an economy perspective.

Mike Kaminski: Sure.

Mike Kaminski: I guess there are there.

Mike Kaminski: Those that are way smarter than me that can come up with an answer there I think it's going to depend on.

Mike Kaminski: What happens on Tuesday.

Mike Kaminski: To some extent, but clearly wall Street feels like things are good unemployment is still.

Mike Kaminski: Pretty low inflation is coming down things seem to be heading in the right direction. We are seeing we have seen stabilization and Dr. Which is indicative of the way people feel about spending directly out of their pocketbooks. So that's probably the best answer I can give you.

Speaker Change: Okay. Thank you for that my last question is.

Speaker Change: Yes, Jason core advertising pacings post the election, how are those tracking year over year that'd be helpful to know that.

Mike Kaminski: Hey.

Mike Kaminski: As we said.

Mike Kaminski: Q4, we're seeing improvement over Q3, we are starting to see some of the categories come back in November and certainly.

Mike Kaminski: It's a little too soon to say in November I think the phenomenon that occurred over the last year Craig is that.

Mike Kaminski: They are being written are closer and closer to air date. So we expect to see December and pick up here after the election.

Mike Kaminski: So it's hard to figure out or let us know how things are tracking with Tc basis with TV stations post election like the next three four weeks right now right now the comparisons are pretty challenging given the amount of displacement we've had with our record political advertising.

Speaker Change: But I'm sort of post the election, though I mean, they'll just specify November six forward do you have a sense, how thats looking year over year core advertising.

Speaker Change: In terms of.

Speaker Change: It is improving certainly after the election and we're seeing sequential improvement.

Speaker Change: Five category.

Speaker Change: So I mean, if you think it's up year over year or is there anything you'd share with us on that post the election.

Mike Kaminski: Yes.

Mike Kaminski: That will be up year over year, given the amount of displacement that we're seeing even we're not going to add.

Mike Kaminski: Cut the months so I think we are.

Mike Kaminski: We because of the political displacement, we're not going to wait to see year over year improvement, but certainly we will see sequential improvement.

Mike Kaminski: We get back to business.

Speaker Change: Okay. So you really cant help us with November six forward on a year over year basis, almost pacings are looking for the TV stations versus a year ago put aside displacement. That's obviously November 5th and earlier on November six and afterwards, sorry to keep asking is I'm trying to get a result.

Mike Kaminski: Okay.

Speaker Change: So what I would say is we typically don't break down core revenue on these calls to that level of granularity, we talked about on a quarterly basis and so we certainly are.

Speaker Change: We'll see as the displacement.

Mike Kaminski: Runs off an uptick in core momentum, but I don't think were providing any other color beyond that on this call.

Speaker Change: Okay very good thank you guys.

Speaker Change: Thanks, Craig.

Speaker Change: Any other questions from analysts before we wrap up the call.

Speaker Change: Alright, Adam a couple yes. This is Lisa Knudsen's last earnings call and I just wanted to thank you for your leadership across the company since.

Speaker Change: Practically 2008 and senior leadership.

Speaker Change: Those of us that have had the chance to work alongside Lisa had been privileged to do so and many of you investors.

Speaker Change: Sell side analysts.

Speaker Change: <unk> had that opportunity to get to know Lisa know what a quality person. She is and she will certainly be missed in this room.

Speaker Change: Thank you. Thank you and thanks for joining US we are now going to disconnect the call.

Speaker Change: Your conference is ending now as requested by the host please hang up.

Speaker Change: [music].

Speaker Change: Good morning, everyone. This is Caroline Michele <unk> head of Investor Relations at Scripps, we're going to start our call. Thanks, So much for joining us we apologize for this morning's delay we had technical issues with our conference call provider and we are not using an operator assisted line. So please make sure you stay on mute. We appreciate your graciousness and your patience as we navigate this call.

Speaker Change: We will have a Q&A at the end of the prepared remarks again for now please ensure you're on mute I'll come back after Adam's remarks, and open up the call for questions.

Speaker Change: Transcript of the call will be available at Scripps Dot Com. This afternoon, and you can visit Scripps Dot com for more information a reminder, that our conference call and webcast include forward looking statements based on management's current outlook and actual results may differ materially factors that may cause them to differ are outlined in our SEC filings, we do not intend to update any forward.

Speaker Change: Looking statements we make today.

Speaker Change: On this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and valuation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies uses or formulations included in our earnings release or the.

Speaker Change: <unk> of non-GAAP financial measures to the GAAP measures reported in our financial statements. We'll hear this morning first from Scripps Chief Financial Officer, Jason Comed, and then President and CEO, Adam Simpson Chief Operating Officer, Lisa Knutson also is with US here is Jason good morning.

Jason Comms: Everyone and thank you for joining us.

Speaker Change: As we wind down this year's election cycle, we're very pleased to be reporting another record year of political advertising revenue.

Speaker Change: <unk> full year total local media political AD revenue looks like it will come in at more than $340 million that would be almost 30% above the 2020 presidential year, which was our last record.

Speaker Change: And we'll provide more color on this year's political in just a moment.

Speaker Change: The record level of political AD spending drove record third quarter company revenue as well. This revenue combined with tight expense management helped us to significantly exceed expectations for third quarter company EBITDA.

Speaker Change: And on this note I have another very positive milestone sure.

Speaker Change: The political cache the expense management and a third quarter debt payment have driven down our leverage ratio by nearly a full turn this quarter from six times at the end of Q2 to five one times at the end of Q3 and.

Speaker Change: And with the high level of political advertising revenue and a strong fourth quarter performance. We expect to continue to deleverage to the high four times range by year end. We are pleased with this progress and as we've discussed previously we remain focused on our refinancing opportunities, including with respect to our near term debt maturities. We look forward to updating you on our ongoing.

Speaker Change: Refinancing activities when appropriate.