E.W. Scripps Conference Call Highlights

E.W. Scripps

reported its third quarter earnings on Friday. Shares of the company are fairly neutral. Below are some key highlights from its conference call: Financial Metrics: • We believe a significant early lead established by the incumbent cost our stations in Cleveland and Cincinnati more than $10 million. • With the midterm election behind us, we're already thinking about the 2016 political opportunity. • We'll have 14 senate races in our markets in 2016, and we expect as many as half to be competitive. • As we saw in 2012, we expect the swing states of Florida, Ohio, Colorado, and Michigan to play a significant role in determining our next President. • On top of that, Journal gets us into Wisconsin and Nevada, as well as some Iowa counties in the Omaha DMA. • We look forward to beginning to see early spending on our stations in 2015. • We like our footprint in any political year and we love it during Presidential elections. • In the third quarter, political spending was $17.4 million. • In addition, we saw a nearly 50% increase in our retransmission revenue. • Those two factors were the big contributors to the 22% increase in our television revenue for the quarter. • The two stations we acquired in June from Granite also contributed. • On a same station basis, TV revenue increased 16%. • Total revenues increased 9.5% to $208 million. • Our cost and expenses for segment shared services and corporate were up 3.5% to a $188 million, primarily due to expenses from the two Granite stations • And a couple million dollars of incremental expenses to grow our digital operations. • We recorded a pre-tax income of $400,000 in the quarter, that compares to a loss of nearly $12 million in the 2013 quarter. • The third quarter of 2014 pre-tax income includes $5 million of acquisition and related integration charges. • Our net loss was $1.3 million or $0.2 per share compared to a net loss of nearly $9 million or $0.16 per share last year. • The acquisition and integration costs and the gain on sale of land combined to reduce earnings per share by approximately $0.2 in the current period. • Our tax rate for the quarters a bit odd. • Tax expense of $1.8 million on $400,000 of pre-tax income, that's due to several things, mostly the small amount of pre-tax income relative to normal book tax differences. • And now turning to the broadcast division, total revenues increased 22% to a $121 million. • Our fourth quarter retran should look a lot like the third, bringing us to about $55 million for the year. • Then we see 2015 going gangbusters as several key contracts were new. • We expect our retransmission revenue to be about $100 million in 2015. • That's not including the contribution from Journal Communications or the impact of about 2 million of our cable subscribers going to market rates with charter sometime after the Comcast Time Warner deal closes next year. • Local advertising was up nearly 2%, and national advertising was down 2.8%. • In the second quarter, you remember we saw a 12.5% decline in national. • On that call, we said we expected improvement in the third quarter, but that we did not expect national to get back to flat versus the prior year. • The network and national cable marketplace remains soft, limiting the opportunity for scatter to push to our heavy top 25 foot print, but the third quarter did improve as expected, down 2.8% overall and 9% on a same-station basis. • On the digital revenue front, our dedicated digital sales force once again drove the increase in digital revenue in the TV division, which was about 8.5% to $4.6 million. • Segment expenses were up 14% from the prior-year quarter or less than 7% on a same-station basis. • The increase was driven by salary increases, severance costs related to the consolidation of our master control operations and increases in digital costs. • We expect fourth quarter shared services and corporate expenses to be less than $15 million.