SSP Q3 2026 earnings call transcript, November 6, 2026

Good day and thank you for standing by. Welcome to the third quarter 2026 EW Scripps Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Carolyn Michelli, Head of Investor Relations. Please go ahead.

Thanks, Edie. Good morning, everyone, and thank you for joining us for a discussion of the E.W. Scripps Company's financial results and business strategies. You can visit Scripps.com for more information and a replay of this call. 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-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. 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. Reconciliations of these measures are included in our earnings release. We'll hear this morning first from Scripps Chief Financial Officer Jason Combs and then President and CEO Adam Simpson. Here's Jason.

Thanks, Jason, and good morning, everybody. We're very pleased to be reporting another election year where Scripps has set a record for midterm advertising revenue, finishing 44% above our last midterm cycle. And as Jason said, these high margin dollars will go directly to reducing our quantum of debt. Ad impact tells us broadcasters are receiving more than half of all TV political ad spending. And this cycle, that half is even more significant because national political spending levels were a record, not just for midterms, but measured against presidential years as well. We're not surprised. Broadcast television is a trustworthy, reliable platform for candidates and campaigns to reach prospective voters. That's been true for... decades, and it remains true today. And increasingly, it is true on our local and national streaming platforms as well. We expect that relationship with political advertisers to endure and deepen as we grow our streaming reach. Our performance came down to two factors. First, of course, is our footprint, which once again lined up exceptionally well with some of the most hotly contested races. You won't be surprised to hear that we saw strong... ...spending in Ohio and Michigan, both of which were red states in 2024, but came back squarely into the toss-up column for this cycle, driving tremendous national party dollars there. We also saw strong results across Arizona, Florida, Tennessee, Wisconsin, and Virginia. While our footprint ensured the revenue opportunity was in our markets, our sales strategy and execution are what really allowed us to take full...

...advantage of this year's significant demand and outpace our past record performance. And one differentiator that is instructive for how you should model this company going forward is the way our political revenue yield was boosted by the Scripps sports strategy. In many of our most competitive political markets, our sports inventory added meaningful value. For example, in Detroit, we leveraged the opening games of the Pistons... season to create inventory that we monetized at premium political rates. This is the sports strategy working exactly as designed. New, high-value local inventory that serves multiple categories of demand simultaneously. Sports advertisers, political campaigns, and local retail. And as we look ahead to 2028, we intend to build even more of that inventory in more of our markets. Last week was difficult to cross scripts. We notified 431 employees that their roles were being eliminated, bringing the total employees impacted in 2026 to approximately 850, nearly 20% of our employee count from the beginning of the year. I want to speak directly about this, because 2026 has seen one of the most significant structural resets in this company's history. And it hasn't been easy. The people of Scripps who are navigating this transformation while simultaneously managing a frenetic record political cycle, new distribution agreements, new sports rights launches, and measurement disruption at our networks, they deserve enormous credit.

But here's what I want investors to truly understand. This transformation is not just a cost reduction story. It's the story about what we are building. building in place of the old model to drive growth with a setup for greater economic durability. Our local stations are changing along with the American consumer. To do this, we had to upend more than 50 years of legacy newsroom workflow. Now we're putting more journalists in the field to report more stories throughout the day for distribution across the broadcast, streaming, digital and... and social platforms where consumers are spending the most time. We're responsibly taking advantage of new technology, including AI, automation and centralization, to care for some of the traditionally more labor-intensive elements of television news production and put more journalists out in the community, developing relationships, gathering information and reporting the news. Local news is the most important product for this company, both in terms of... ...of our mission and in terms of our financial viability. We're making decisions in service to our intent to thrive and fulfill our commitments to our country and to our shareholders. We are transforming into a faster, more agile and more deeply local company, one that can sustain the public interest work that has defined Scripps since 1878. The early results on streaming platforms are encouraging. Across...

Our new workflows are producing a truly local 24-hour stream, and we're seeing hours of viewing jump an average of 23% before we've even begun to market the product. Four of our first stations to launch are averaging nearly 70% growth in hours of viewing after just eight weeks. And it's not at the expense of our linear TV performance. Traditional time period ratings have remained stable. It's very early and the growth is off of a small base, but I'm encouraged by the consumer demand for local news. I expect that growth to turn into revenue and bottom line value as we mature the initiative. And that's the point. There is opportunity ahead to serve new audiences on new platforms and has taken a bold commitment to change the way we do our work. Our local media streaming strategy draws directly from what has worked. at Scripps Networks. We recognized early the value of streaming rights for our networks content. Shortly after forming the networks division, we gathered the rights to run programming across streaming services, formed agreements with CTV distributors, and built what is now our ubiquitous reach on that platform. That work has taken our networks CTV revenue from zero to a projected $155 million for the full year 2020. That will be 36% above 2025. The scale and revenue potential of what we are building here is real, and it's accelerating because our focus is on the consumer.

Let me now address our Scripps Network's financial performance, brought on by the challenges we saw earlier this year, created by an inaccurate reflection of our viewership. Nielsen's sudden change to methodology last winter altered our measures. audience supply overnight. We worked with Nielsen to address it, and I'm pleased to tell you that work is now bearing out in the numbers. As we wound down the third quarter, we began seeing the results, and the data demonstrates what we always knew. Our audiences didn't go anywhere. The measurement framework introduced September 1st is now a much better reflection of our true ratings. The biggest driver for us in Nielsen's update is its larger antenna house. universe. Antenna homes make up a sizable portion of our core audience, and getting that count right gave our networks a meaningful and deserved ratings lift. At ION, viewership among the key demographic of adults 25 to 54 grew 7% in September over the two months before the change, and all Scripps networks viewing in that demo grew an average of 23%. That performance has been sustained in into October, is now built into our forward-looking statements, and is a tailwind as we head into 2027. During the third quarter, the Scripps networks closed out a successful upfront buoyed by our Scripps sports strategy that's made eye on the home of women's sports. The team sold out more than 75% of our sports inventory, propelling Scripps to buck the industry trends and beat peer performance.

The team sold out more than 75% of our Scripps networks. Our Scripps networks team went into this year's upfront season with one of the most compelling sales stories in the industry, and they delivered. The linchpin of that story is women's sports on eye on and our network's unparalleled reach on every television platform. Eye on the sports inventory is commanding advertising rates that are more than two times its non-sports inventory. And we saw many new clients transition from scatter to the upfront. We saw particularly high demand across the WNBA and the NWSL. We successfully sold key sponsor partnerships across many of our major opportunities. But we also strategically preserved several high-value assets and opportunities for the scatter marketplace. That represents meaningful upside in our pipeline as we move into the future. 2027. One last note before I close out networks. Although we have faced secular challenges throughout 2026, what I will tell you is that Scripps is focused on the levers within our control, particularly as we shift to higher-yield sports and CTV inventory, which provides us meaningful insulation from external factors. Let me close my remarks with the frame I want investors to carry into 2027. Scripps is focused on the levers within our control. Transformation is necessary, as are the hard decisions we made in 2026. Investors will see this work begin to flow through operating results in the fourth quarter and into next year. The EBITDA improvement plan was designed to enhance margins across the enterprise, improve the balance sheet, and support durability. But it's very important for you to understand that cost-cutting was never the destination. While we expect to continue the reposition

of the company, as we move into 2027, the teams at Scripps now turn more of our attention to growth. We're advancing dozens of initiatives to grow revenue with bottom-line benefit, yielding more dollars from businesses we run today, as we do with Scripps Sports, and pursuing adjacent opportunities that double down on our focus of creating connection in our local markets. And doing all of this is in service to building a solid foundation from which we can execute future M&A and transformation at this company. Ultimately, we are guided in this work by our vision of creating connection within our audiences and communities. The journalists we are investing in, the reporters we are adding back to the field, the community relationships we are deepening, those build brand equity that make every other revenue line possible. This will benefit us in 2027 and be the setup. for what I expect will be an outstanding 2028. We're ready for what comes next and I look forward to showing you quarter by quarter exactly what that looks like in our results. Didi, we are now ready for questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the

Q&A roster. And our first question comes from Dan Kerners of StoneX. Your line is open.

Thank you. And our next question comes from Craig Huber of Huber Research Partners. Your line is open.

And our next question comes from Avi Steiner of JPMorgan. Your line is open.

Thank you. And our next question comes from Stephen Cahall of Wells Fargo. Your line is open.

This concludes our question and answer session and also today's conference call.