SSP

Business Context and Reporting Period

Company: The E.W. Scripps Company (Scripps)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three months ended March 31, 2026
Business Overview: A diverse media enterprise operating more than 60 local television stations and national news and entertainment networks (Scripps News, ION, Bounce, Grit, etc.). The company serves audiences through broadcast, digital, and streaming platforms.

Key Financial Metrics

Note: Net loss attributable to common shareholders includes preferred stock dividends of $16.2 million.

Material Changes vs. Prior Period

• Revenue: Total operating revenues decreased 1.4% ($7.5 million) year-over-year. Core advertising revenue declined $17.0 million, partially offset by a $6.8 million increase in political advertising (election year) and a $3.4 million increase in distribution revenue.
• Segment Performance:
  • Local Media: Revenues increased 5.0% and segment profit rose 33.7% to $46.7 million, driven by political ad growth and distribution rate increases.
  • Scripps Networks: Revenues decreased 11.1% and segment profit fell 27.8% to $46.3 million, impacted by lower ratings and Nielsen methodology changes.
• Expenses: Selling, general, and administrative (SG&A) expenses increased 6.3% due to higher medical claims and insurance premiums. Restructuring costs decreased significantly to $0.6 million from $4.1 million in the prior year.
• Interest Expense: Increased $13.2 million to $57.0 million due to higher interest rates, despite lower average debt balances.
• Dispositions: Recognized a pre-tax gain of $30.0 million from the sale of Court TV, WFTX (Fort Myers), and WRTV (Indianapolis).

Outlook, Guidance, and Risks

• Transformation Plan: In February 2026, management announced an enterprise-wide transformation plan targeting annualized enterprise EBITDA growth of $125 million to $150 million by 2028. The company anticipates $75 million in annualized EBITDA improvement by the end of 2026.
• Strategic Initiatives: Launched Scripps Sports Network (SSN) streaming channel; signed media rights agreements with the Nashville Predators and PBR; exercised options to acquire 23 stations from INYO Broadcast Holdings (approx. $54 million aggregate price).
• Liquidity: The company holds $83.7 million in unrestricted cash and has approximately $179 million in additional borrowing capacity. Management believes cash flow from operations will meet needs for the next 12 months.
• Preferred Stock: No dividends were declared on Series A Preferred Stock in Q1 2026. Cumulative undeclared dividends totaled $133 million. Common dividends and repurchases are prohibited until preferred shares are redeemed.
• Risks: Exposure to interest rate fluctuations (100 bps increase in SOFR would increase annual interest expense by ~$9.3 million); retransmission consent negotiations (Comcast agreement expired March 31, 2026, and was resolved May 5, 2026); and potential goodwill impairment if fair value estimates decline.

Investor Verification Checklist

• Preferred Stock Dividends: Verify the cumulative $133 million in undeclared preferred dividends and the impact on common shareholder distributions.
• Debt Covenants: Confirm continued compliance with the maximum first lien net leverage ratio (3.50x through Sept 2026, stepping down to 3.25x).
• Disposition Gains: Assess the sustainability of operating income given the $30.0 million one-time gain from asset sales.
• INYO Acquisition: Monitor the status of the $54 million option exercise to acquire 23 stations, which is subject to FCC approval.
• EBITDA Targets: Track progress toward the $75 million annualized EBITDA improvement target for the remainder of 2026.