The E.W. Scripps Q3 2025: Contradictions Emerge in Asset Sales, M&A Strategy, Advertising Outlook, and Political Revenue Forecasts

Date of Call: None provided

Financials Results

• Revenue: Scripps Networks revenue $201M, about flat YOY; Local Media revenue down 27% YOY (absence of political); Local Media distribution revenue flat; company-level total revenue not disclosed
• EPS: Loss of $0.55 per diluted share; one-time items increased loss by $0.15 and preferred stock dividend reduced EPS by $0.18
• Gross Margin: Scripps Networks segment margin 27%

Guidance:

• Local Media Q4 revenue expected down ~30%; core revenue expected up ~10%; Local Media expenses flat to down low-single-digits (inclusive of Tampa Bay Lightning sports rights)
• Scripps Networks Q4 revenue expected down low-double-digits; Networks expenses expected down low-double-digits; Networks expects 400–600 bps YoY margin improvement
• 'Other' corporate/shared services expected ~ $21M in Q4
• Full-year cash interest paid now expected $165M–$170M
• Station sale proceeds ($123M) to be used to pay down debt (12-month reinvestment window, then 70/30 split to B2/B3; limited allocation to M&A optional)

Business Commentary:

• Strong Financial Performance and Strategic Sales:
• E.W. Scripps reported a third consecutive quarter exceeding expectations, with the Scripps Sports strategy and tight expense controls driving results.
• The company announced sales of stations in Fort Myers and Indianapolis, with valuations representing multiples well above current local broadcast station transactions, totaling $123 million.

• The strong financial performance was supported by the successful execution of strategic station sales and the Scripps Sports strategy.

• Distribution Revenue Growth:

• Scripps Networks' connected TV revenue was up 41% year-over-year, contributing to overall revenue of $201 million, which was flat compared to the previous year.

• The significant growth in connected TV revenue was attributed to strategic distribution agreements and strong demand for their national networks programming.

• Networks and Local Media Performance:

• Local Media division revenue was down 27% due to the absence of political advertising revenue.
• Local Media distribution revenue was flat, with expenses down more than 4% year-over-year, resulting in a segment profit of nearly $53 million.

• The performance was influenced by lower employee-related costs and strategic sports partnerships driving core advertising revenue.

• Margin Improvement and Cost Management:

• Scripps Networks posted a segment margin of 27%, with expenses down 7.5%, driven by operational reductions and lower employee-related costs.
• The networks' margin improvement was a result of efficiency initiatives and a leaner expense base, contributing to overall financial improvement.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management: "third consecutive quarter of results that met or exceeded expectations"; CEO: "we are seeing real measurable progress" and "we are heading into 2026 with significant momentum"; CFO: station sales "will total $123 million creating significant cash inflow" and net leverage improved to 4.6x from 6x a year earlier.

Q&A:

• Question from Daniel Kurnos (Benchmark Company): You have done well selling stations at high multiples — how much more can you chop from the portfolio and is transformational M&A on the table?
  Response: Significant opportunity remains to buy/sell/swap stations; management is committed to pursuing accretive portfolio optimizations and transformational M&A remains possible.

• Question from Daniel Kurnos (Benchmark Company): On the network side can you parse the impact of the government shutdown, scatter, DR weakness, and trends in CTV?
  Response: Q4 network weakness driven by >$10M less political revenue plus softer DR/pharma and a weaker upfront; CTV is a strong growth engine (>35% YTD growth, expected double-digit ongoing growth) and sports generates seasonal mid-year uplift.

• Question from Steven Cahall (Wells Fargo): Given upfront softness, can networks still expand margins and how does the family/trust factor into M&A processes?
  Response: Confident networks will deliver the 400–600 bps margin improvement and continue expanding via sports, CTV and efficiencies; M&A is management-led with strong Board involvement and the Scripps family historically acts to maximize shareholder value.

• Question from Avi Steiner (JPMorgan): Thoughts on the YouTube TV/Disney dispute impact on locals; what distribution renewals are coming due in '26; and after-tax proceeds/proceeds application?
  Response: The YouTube TV blackout has shown some ratings softness but not material revenue impact; 70% of retrans MVPD subscribers renew mostly in H1'26 (ABC affiliate renewals mid-2026); station sale taxes ~$6M (Fort Myers) and ~$13M (Indianapolis) and proceeds intended for debt paydown (70/30 split to B2/B3 after 12 months) with optional limited M&A allocation.

• Question from Gengxuan Qiu (Barclays): Early read on 2026 political vs 2022 midterms and were the two station sales competitive or inbound-driven?
  Response: Management expects a compelling 2026 political year (multiple competitive governor, House and Senate races in core footprint) and says the station sales resulted from a mix of inbounds and proactive marketing, achieving ~9x+ multiples.

• Question from Craig Huber (Huber Research Partners): How do you feel about the advertising environment now versus six months ago and how is viewership breaking down between linear/streaming/OTA?
  Response: Local core advertising shows momentum (Q3 core +~2%, Q4 core guide +~10%); national marketplace is mixed with DR and pharma weakness; networks CTV is ~20% of viewing and growing, with OTA and linear still significant (network CTV growth and sports driving monetization).

• Question from Michael Kupinski (Noble Capital Markets): Can you quantify the Q4 revenue decline tied to the government shutdown and which ad categories are most sensitive to rates?
  Response: Q4 softness reflects absence of ~>$10M political, DR weakness and reduced Medicare open-enrollment demand due to the shutdown; auto and mortgage/real-estate-related categories are notably rate-sensitive and have been weaker recently.

Contradiction Point 1

Asset Sales and Portfolio Optimization

It involves changes in the company's strategy for asset sales and portfolio optimization, which are critical for shareholder value and financial performance.

How much more in asset sales remain, and what opportunities exist for accretive M&A? - Daniel Kurnos(Benchmark Company)

20251107-2025 Q3: There is significant opportunity for accretive opportunities to buy, sell, and swap stations. The company is committed to doing the necessary work to unlock and maximize shareholder value. The strategy involves optimizing the portfolio and continuing to pursue transformational M&A opportunities. - Adam Symson(CEO)

How is Scripps positioning its portfolio amid regulatory and deregulatory trends? - Daniel Louis Kurnos(The Benchmark Company)

2025Q2: We're in the middle of discussions with peers to optimize portfolios through swaps and asset sales. The Eighth Circuit's decision on the Big 4 rule isn't effective until October, but based on Chairman Carr's statement, it doesn't seem likely to be challenged. - Adam P. Symson(CEO)

Contradiction Point 2

Advertising Environment and Performance

It involves changes in the company's outlook on the advertising environment and its impact on performance, which are critical for revenue forecasts and financial outlook.

How do you assess the current ad environment and the viewership split between OTA and streaming? - Craig Huber(Huber Research Partners)

20251107-2025 Q3: Local advertising shows momentum; networks face challenges due to softness in DR and pharma ads. Streaming is about 20% of viewing, with 25% OTA only for networks and 50% revenue from news and sports in local. - Jason Combs(CFO)

Could you share insights on the current advertising environment and advertiser sentiment? - Michael A. Kupinski(NOBLE Capital Markets)

2025Q2: Core advertising in Q2 was down 2% due to sports strategy, with positive performance in sports. Automotive is the weakest category, and overall, there's hesitancy among advertisers due to economic uncertainty. - Jason P. Combs(CFO)

Contradiction Point 3

Political Revenue Expectations

It involves the company's expectations for political revenue, which can significantly impact financial performance.

What are your early indicators for political revenue in 2026 and how were asset sales processed? - Gengxuan Qiu (Barclays)

20251107-2025 Q3: Political revenue in 2026 is expected to be strong due to competitive races. - Adam Symson(CEO)

Did you see political benefit from the Wisconsin Supreme Court race? - Craig Huber (Huber Research Partners)

2025Q1: We do have some benefit that rolled through in the political number that we reported in Q1 tied specifically to Wisconsin. And I think that, when you look there wasn't beyond that there wasn't a lot of other political across our footprint. - Jason Combs(CFO)

Contradiction Point 4

Strategic M&A and Portfolio Optimization

It shows a shift in the company's strategy regarding the pursuit of accretive M&A opportunities and the optimization of their station portfolio.

How much potential remains for further asset sales, and what opportunities exist for accretive M&A? - Daniel Kurnos (Benchmark Company)

20251107-2025 Q3: There is significant opportunity for accretive opportunities to buy, sell, and swap stations. The company is committed to doing the necessary work to unlock and maximize shareholder value. The strategy involves optimizing the portfolio and continuing to pursue transformational M&A opportunities. - Adam Symson(CEO)

What are your views on FCC's oversight of local broadcast TV and potential deregulation? How would deregulation affect your strategic positioning? - Dan Kurnos (The Benchmark Company)

2024Q4: We remain open-minded to strategic M&A opportunities that could potentially accelerate our growth and create value for shareholders. - Adam Symson(CEO)

Contradiction Point 5

Advertising Revenue Trends

It highlights differing perspectives on the impact of macroeconomic factors and advertising categories on the company's revenue performance.

How do you assess the current advertising environment and how is viewership distributed between OTA and streaming? - Craig Huber (Huber Research Partners)

20251107-2025 Q3: Local advertising shows momentum; networks face challenges due to softness in DR and pharma ads. - Jason Combs(CFO)

Is core revenue growth being driven by political advertising? - Michael Kupinski (NOBLE Capital Markets)

2024Q4: Economic uncertainty impacting consumer spending particularly in automotive and retail. - Jason Combs(CFO)