The E.W. Scripps Company (NASDAQ:SSP) Q3 2023 Earnings Call Transcript

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Jason Combs: Yes. So there are a handful of things going there. And two of my reference in the script one being some of the costs for some of our front-line reporters and some compensation adjustments we did there earlier in the year and seeing that impact year-over-year. We also do have the costs starting to roll in for sport. I would say is my comment earlier where we model these profit positive for the season — season one there is some timing through out there. So when you’re launching a new sports franchise there’s a lot of marketing initially to help viewers in that audience find where the product is and so customer acquisition early on. So we are not looking at sports what is it happening in Q4. We’re looking across season one.

So from Q4 through Q1 of next year these are profitable enterprises. And I would also reference in the case of the Coyote specifically we announced that deal eight days before we launched it. And so from a sales perspective that’s one where the revenue is going to be more back-end loaded as we work to go ahead and really get out in the local marketplace in Arizona and sell that franchise. So there is some timing there. And there are just some other costs too in the fourth quarter outside of sports and the quarter item I mentioned that just are up a bit in Q4 as well. So it’s not just one thing it’s not just sports it’s a variety of things. And so I wouldn’t take that — I wouldn’t take what you’re seeing in Q4 as a trend.

Craig Huber: Okay. I mean, obviously, the extra 4% lift on the core advertising side as you call it another $6 million to $7 million of added revenue. Your costs though up mid-single digits take the midpoint of that 5% sort of $14 million extra cost. You’re saying it’s a lot more than just sports cost that’s bumping that up even though the year ago we did have some political related costs in assuming.

Jason Combs: Right. There really would be — I mean political is high margin almost no cost. And so there wouldn’t really be any material political costs in the fourth quarter last year. So it’s other items I mentioned.

Craig Huber: Okay. Appreciate that. Adam on the ATSC 3.0 side of things, can you maybe just update us on what percent of the households in your markets of that signal? And where do you think it will be at the end of say next year please?

Adam Symson: What percent of the market?

Craig Huber: You’re — sorry of your markets the household, what percent of ATSC 3.0 signal being broadcast to them? And where do you think that percentage will be end of next year? What’s your goal there please?

Adam Symson: Craig, I can get that to you later this afternoon. It’s not necessarily a Scripps goal. It’s ultimately done market by market with the rest industry because the station doesn’t flip to 3.0 on its own, but we can get you an up-to-date version of what the industry’s transition looks like thus far and about where we think it’s going by next year.

Craig Huber: Okay. And then a nitpick question. How much was auto up in the quarter here that we just finished. I know you said 10% up, I think for October, but that’s similar — last quarter.

Lisa Knutson: Yes. Actually auto was up 14% in Q3 which was really strong. And as I said, we’re seeing some continued increases in — certainly in October. So we expect really end the year in upward territory.

Jason Combs: It was 18% of our core in the quarter which is probably the high percent, it’s been in quite some time.

Craig Huber: And I guess my last question on TV stations in the third quarter, can you just break out national core advertising trend there versus the local? I mean how much worse was national? 3Q…

Jason Combs: The local national breakdown in — I would say — I would say in 3Q, there was not a material difference between the year-over-year change in local and national. Certainly, there had been earlier in the year. But in 3Q, I would say, they were roughly in line with each other in terms of the year-over-year decline.

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