E.W. Scripps Company (The)

Good day and thank you for standing by. Welcome to the fourth quarter 2024 EW Scripps Company earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today. Carolyn Michelli, please go ahead.

Thank you, Kevin. Good morning, everyone, and thank you for joining us for a discussion of the EW 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 based on management's current outlook, and actual results may differ materially. 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 evaluation 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, and then Chief Financial Officer Jason Combs. Here's Adam.

Good morning, everybody, and thanks for joining us. I'll start this morning by making sure you saw the information we put out yesterday in an 8K detailing the binding commitments we have to refinance our revolving credit facility and our 2026 and 2028 term loans. I wanted to thank you for your patience a few weeks ago when we opted to delay releasing earnings to wrap up this work. Jason will be along shortly to discuss the details. This morning, we're reporting terrific fourth quarter and full year 2024 results, a strong move down in year-end leverage, and really meaningful progress on performance improvement for the Scripps networks that we first told you about last year. All of this progress comes as a result of the company's focus on transformation. But before we discuss Scripps' performance, I want to start high level with an assessment of how the changes in Washington spell opportunity for our industry, for Scripps, and for our investors. The appointment of Brendan Carr to serve as chairman of the Federal Communications Commission signals a significant shift in the federal government's attitude toward local broadcast television. Carr has been a vocal advocate for reducing regulatory constraints, and he has expressed intent to revisit and potentially relax existing ownership limits for local TV stations. This free market policy shift could present new opportunities for us and our peers to strengthen the operating performance of our business through in-market and company consolidation. A change is long overdue. The current FCC ownership rules restricting the number of stations a single company can own, both within a market and nationwide, run counter to the original aim of the rules, to preserve competition and a wide range of viewpoints. In fact, given how much fragmentation has occurred in the journalism and media landscape following the digital revolution, the current ownership restrictions are creating local broadcast group economics that threaten to silence the very voices they were designed to protect. When these rules were created back before World War II, a local broadcast TV station competed with a few other stations, a newspaper or two, and maybe a few radio stations for news audiences and advertisers that wanted to reach them. Today, A plethora of voices comes through digital platforms, social media, streaming services, and a wide range of news outlets that fall across the political spectrum. America does not lack access to information and opinion. And yet the rules that govern our business have not kept up, putting our industry and local journalism itself at an unfair disadvantage. Easing the federal ownership restrictions would finally allow broadcasters to compete in this modern media ecosystem. With economies of scale, we will increase our ability to invest in local content and better serve our communities with objective, locally created news. We'll continue to be there for them during severe weather, natural disasters, and all of the other times of crisis and joy connecting our communities to important local information. and will be the platform Americans can continue to rely on to bring people together around live sports for free, because these are the things that matter most to people. At Scripps, if the government sees fit to modernize the rules, you should expect us to lean into the opportunity in ways that promise to improve our operating profile, deepen our connection to the communities we serve, and most definitely unlock greater value for shareholders. Now we'd like to turn to the plan we're already executing at Scripps to reduce our debt, improve operating performance, and set the stage for company growth. First, we're very pleased this week to be announcing a significant round of debt refinancing. Jason will give you the details in a moment. And I'd like to reinforce that successfully managing our debt structure and pay down is one important aspect of the plan we're executing. We were able to bring down our leverage ratio to 4.8 times by the end of the year. That's nearly a full turn below the end of 2023. In addition, we continue to make strong progress toward improving the company's financial performance. To this end, for example, the company has already taken the necessary steps to improve the Scripps Network's division margin by 400 to 600 basis points this year. Last year, we significantly reduced Scripps News' operating costs, and we reduced headcount and expenses elsewhere in the division. We reported a fourth quarter margin of 28% and it would have been even better if we hadn't had a little noise from a one-time charge. We are on track to continue networks margin improvement in 2025, something you should see implied in our first quarter guide. In the local media division, we achieved a record political advertising revenue, almost 30% higher than our 2020 presidential election year revenue. Remarkably, more than 80% of these dollars came from only six states. To me, this reinforces our value in reaching local voters in a highly partisan political climate. Looking ahead to this year, we are totally focused on continuing the transformation of our business, leaning into the connection we make between audiences and advertisers across platforms, locally and nationally, around our news and programming. And nowhere is that connection more potent than through Scripps Sports. Be it through our own acquired sports rights or the programming we deliver locally with our network partners, linear television dominates with live sports. In the Scripps Networks division, last year we told you that we closed a successful upfront, selling out more than 75% of our sports inventory, allowing Scripps to buck the industry trend and beat peer performance thanks to increases in demand and volume. That laid the foundation for 2025, and now as we head into the beginning of the NWSL and WNBA seasons, ION's sports inventory is commanding advertising rates that are more than two times its non-sports inventory. Scripps is undoubtedly delivering on its promises. We are greatly improving operating performance as well as our balance sheet, decreasing our debt and extending the maturity profile, and positioning ourselves to capitalize on the opportunities of deregulation. Our commitment to this plan we're executing has never been stronger. Now here's Jason.