E.W. Scripps Company (The)

Ladies and gentlemen, thank you for standing by and welcome to the Scripps first quarter 2022 earnings call. At this time, all participants are in a listen only mode. Later, we will conduct the question and answer session. If you wish to put yourself in line for a question, please press one then zero on your telephone keypad. If you should require assistance during the call, please press star then zero. And as a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Ms. Carolyn Michelli, Head of Investor Relations. Please go ahead.

Thank you, Tawny. 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 link to the replay of this call. A reminder that our conference call and webcast include forward-looking statements and actual results may differ. 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' use or formulation. Included in our earnings release are the reconciliations of non-GAAP financial measures to the GAAP measures reported in our financial statements. We'll hear this morning from Scripps President and CEO Adam Simpson, Chief Financial Officer Jason Combs, Local Media President Brian Lawler, and Scripps Networks President Lisa Knutson. Also on the call is Controller Dan Persky. Now here's Adam.

Thanks, Carolyn. Good morning, everybody. Thanks for joining us. Once again in the first quarter, Scripps delivered a terrific financial performance. outstanding results in local media coming as a result of Scripps' commitment to new business development and better than expected retransmission revenue. And at Scripps Networks, ad revenue that outpaced its marketplace, supported by both growth in ratings share and advertising share. None of this is by chance. It's a reflection of our company's evolution over the past several years. We have crafted and continue to craft a durable and high-performing company that delivers a steady stream of free cash flow, one that comes despite fluctuations in advertising marketplaces and across political spending cycles. Through investments that have grown our top line, ongoing sales execution, and careful expense management, we have built an economic engine that is not just stable, but designed to grow meaningfully every year. To illustrate this point, In first quarter 2022, our free cash flow was three times higher than the comparable quarter in 2020. Our growth strategy is fairly straightforward. It relies on American TV consumers' desire for easy-to-use technology, efficient delivery of the shows they love, and the most cost-effective ways to watch television, whether that be over the air, on a connected TV service, or through cable or satellite. Americans are watching more television than ever before. Of course, how and where they're watching is changing. At Scripps, we have put ourselves in the best position to profit from the evolving TV marketplace. Our brands, local and national, can be found across every linear TV viewing platform, pay TV, over-the-air, and connected TV. So for Scripps, it continues to be an all-of-the-above approach meeting the media consumer wherever they may be. We execute our strategy with the best of both the pure play broadcast business and the lucrative national networks marketplace. As you know, we're delivering strong growth with our nine fully distributed over-the-air networks. We benefit as free over-the-air television is buoyed by the rising cost of the SVOD services, the consumer's plus fatigue, and inflation attacking the American pocketbook. We continue to expand those same networks' distribution into the connected TV ecosystem through free, advertising-supported television services. We told you that we would be launching programming from most of our national networks on major CTV platforms this year, and we continue to do so. We're finding big, new, engaged audiences in this rapidly expanding marketplace. Remember that I said it's an all-of-the-above strategy because paid TV customers account for the majority of the audiences for our local media brands. We believe forecasts of the demise of cable are not just premature but ill-informed. Paid TV, too, appears to be benefiting from plus fatigue and SVOD price increases. A typical household's Internet and subscription services now surpass the cost of the cable bundle. Again, American consumers are, today more than ever, guided by their wallets. Here's recent proof. Our pay TV subscriber households are up from the prior quarter, and we saw significantly lower churn year over year. And then there's spectrum and the opportunities we see ahead with the transition to ATSC 3.0 next gen TV. Scripps is the largest holder of broadcast spectrum. Today, the distribution of our Scripps networks also makes us the most efficient monetizer of that spectrum. We're dedicating significant resources to developing the new avenues for value creation that will come down the road from this valuable asset. While Scripps has a long history of creating value over the long term, we've also proven to be disciplined operators with an excellent track record of near-term operating results. That financial success comes as a result of all of the terrific employees across the EW Scripps Company, including the superb work of our local and national networks sales teams. They have been delivering best-in-class ad revenue growth against macroeconomic headwinds, garnering new business and launching new products, programs, and networks, benefiting the enterprise and investors. Now we're moving into what by all accounts will be another record-breaking national political spending season. As leaders of a connected TV political sales consortium and owners of a prime political station footprint, we anticipate a record year ourselves, leading to free cash flow of $400 to $450 million. At Scripps, our work to evolve and grow this company and create new shareholder value has no end point. Instead, we will continue to strive to meet milestones that build to our next big opportunity. Several years of work have produced greater and more even free cash flow generation and a more economically durable financial engine that is creating new shareholder value. And now here's Jason.