E.W. Scripps Company (The)

Ladies and gentlemen, thanks for standing by and welcome to the Scripps first quarter 2023 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-answer session. The instructions will be provided at that time. If you should require assistance during the call, you can press star and then zero. And as you mind, the call is being recorded. I'd now like to turn the call over to our host, Ms. Carolyn Michelli. Please go ahead.

Thanks, Brad. 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' uses or formulations. 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, and then Scripps Chief Operating Officer Lisa Knutson. Here's Adam.

Thanks, Carolyn. Good morning, everybody. I'll start this morning with some of the news we've broken over the last few weeks in sports. Less than six months ago, we launched Scripps Sports because we saw the opportunity to leverage our unparalleled national reach and local market depth. Free over-the-air broadcast and all that comes with it is the most ubiquitous and fan-friendly of distribution platforms. Since then, we've been exceptionally busy. Two of the deals we've been working on are now public. The announcement we made yesterday with the Vegas Golden Knights, a thriving National Hockey League franchise, and of course, our partnership with the WNBA. We're very pleased to be launching our first Scripps Sports programming this month. The WNBA Friday Night Spotlight on ION begins on May 26th. What the WNBA gets from us is full nationwide reach through free over-the-air, connected TV services, and cable and satellite. Next week, we expect to announce a high-profile title sponsor for our WNBA Friday Night franchise, a blue-chip advertiser that believes, as we do, it's high time women's sports like the WNBA are given the same visibility as men's sports, which these athletes, teams, and fans deserve. the broadest of reach and appointment viewing consistency. We're thrilled to be providing these benefits to the WNBA at a time of burgeoning appreciation for and interest in women's sports. And why wouldn't there be great interest? WNBA games are a display of intense competition, while the players' athleticism and personalities make for the very best television. It's no wonder that last season, WNBA viewership was up 22% and even with limited reach. Now, the vast distribution on ION will give the league maximum visibility, so fans everywhere on any television platform will gather together every Friday night for this franchise TV event. While the WNBA deal takes advantage of our national reach, yesterday's announcement with the Vegas Golden Knights is intensely local. Scripps Sports and our stations KTNV and KNCC in Las Vegas will, starting next season, be the exclusive local media partner for this incredibly popular NHL team, ending the RSN model in Nevada and bringing hockey to every television platform. A big win for NHL fans, the Golden Knights, and Scripps. It's important for investors to hear this. From the beginning, we've pledged to be very financially disciplined in our approach to live sports, even willing to walk away if an opportunity doesn't pencil for us. Every one of our partnerships will enhance the value of our linear television business, be another catalyst for the continued growth of free over-the-air television, and create shareholder value, while representing a new model for the way teams and leagues can grow their fan bases and and continue to create immense value for their stakeholders. There's no argument that live sports is the biggest driver of linear viewing and commands the highest advertising rates in television. We see our expansion into live sports as not only a value creator with the actual games, but another important way to engage audiences with our TV stations and news brands. We launched Scripps Sports as part of a larger strategy to enhance the value of our core asset, our scale and distribution. We're positioning our company to capture opportunities in three principal ways. First, in the industry growth areas of news, sports, and entertainment. Second, with existing and emerging TV distribution platforms. And third, with data casting and other businesses enabled by ATSC 3.0. We are now in the midst of a company-wide reorganization of roles and responsibilities that centralizes management functions so our executives have the broadest possible view of Scripps' opportunity in these three growth areas and are able to move quickly to create value. Scripps Sports is a good example. The WNBA makes use of ION's existing national reach while the Golden Knights Partnership opens up the opportunity for us to launch a new independent station in the growth market of Las Vegas with valuable live sports as an anchor tenant for programming. Both cases are examples of us seeking the best and highest use for our spectrum to increase yield. In Scripps News, you see another good example of our focus on a content genre critical to creating value in linear television. After centralizing operations, we've now deployed our national news resources as the foundation for a company-branded network. Scripps News reaches nearly every U.S. household over the air and on connected TV, and it's designed to fully serve our local station's news consumers with objective, fact-based reporting. Scripps News now becomes an important driver of high-quality journalism across the entire company, while helping us also avoid additional cost. In addition to building value with journalism and live sports, we continue to focus on both existing and emerging TV platforms. Our sports distribution and high quality scripts news content will bolster the use of free over the air television. And we continue to build our connected TV distribution as well. And we're seeing significant gains in advertising revenue there. And as you'll hear in a moment, we continue to leverage our strong partnerships with cable, satellite, and virtual pay TV service providers, who, by the way, capture nearly two-thirds of America's 120 million TV households. Our third strategic focus is the use of our spectrum for alternative business opportunities through ATFC 3.0. We are well into a collaboration with Nexstar, HPE, and Sony. Together, we've built and are deploying a core network that leverages the new television standard to open up new data casting business opportunities. Combined, Nexstar and Scripps represent the single largest broadcast spectrum platform, unduplicated reach of nearly 90% of U.S. population. That includes significant contiguous spectrum along key transportation corridors, a major selling point for data casting services. Now, this is not a case of a hollow press release, but it's also not yet something to put in your financial models. Now that we have a core network, we'll next develop out the marketplace, testing with the auto industry, energy, agriculture, and logistics, among other potential customer bases. In addition, we're encouraged by the FCC's new Future of TV initiative, several task forces created last month to accelerate the 3.0 transition and ensure that every American will continue to have access to free over-the-air television. While there's still much work to be done to create what BIA Kelsey says could be a $10 to $15 billion marketplace for broadcasters, I'm increasingly bullish about this new industry catalyst, and we'll make sure investors know when we have the first customers on board adds a signal of the potential to accelerate the opportunity. Scripps' recent sports distribution announcements, the scale of our national news brand, Scripps News, and the opportunity we see ahead with our spectrum should catch investors' attention. The company is doing what it has done so well time and time again over its 145-year history, creating shareholder value. Economic cycles are short-term hurdles, but our strategic focus is long-term, and we will move into the next economic upturn as we have in the past, as a stronger company with a better operating profile, stronger margins, and greater growth ahead. Now here's Jason.