Media, broadcasting, and digital services company E.W. Scripps (NASDAQ:SSP) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, but sales fell by 6.6% year on year to $524.4 million. Its GAAP loss of $0.22 per share was 15% above analysts’ consensus estimates.
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E.W. Scripps (SSP) Q1 CY2025 Highlights:
- Revenue: $524.4 million vs analyst estimates of $520.8 million (6.6% year-on-year decline, 0.7% beat)
- EPS (GAAP): -$0.22 vs analyst estimates of -$0.26 (15% beat)
- Adjusted EBITDA: $75.61 million vs analyst estimates of $63.28 million (14.4% margin, 19.5% beat)
- Operating Margin: 5.2%, down from 7.7% in the same quarter last year
- Market Capitalization: $219.3 million
StockStory’s Take
E.W. Scripps’ first quarter results were shaped by continued softness in core advertising and distribution revenues, particularly within its Local Media division, as advertisers remained hesitant due to economic uncertainty and sector-specific pressures. Management pointed to declines in automotive and retail advertising as primary contributors to the year-over-year revenue decrease, partially offset by stable services and home improvement categories. CFO Jason Combs emphasized the company’s ongoing expense reductions, especially within Scripps Networks, which achieved its highest division margin in over two years, largely due to cost controls and restructuring efforts. Connected TV revenue growth and strategic focus on live sports programming also provided a partial buffer against broader market headwinds.
Looking ahead, management’s outlook focuses on leveraging its live sports assets and disciplined expense management to navigate ongoing economic headwinds and regulatory uncertainty. CEO Adam Symson highlighted the potential for industry consolidation and regulatory changes that could enable Scripps to deepen its local market presence and improve operating leverage. The company expects further benefits from recent retransmission contract renewals, continued growth in connected TV, and new sports partnerships, particularly in women’s leagues. However, management remains cautious about the timing of regulatory relief and the persistence of macroeconomic challenges impacting advertising demand, stating, “We are navigating a lot of uncertainty right now, but our guide is a little bit better, driven by the positive impact of sports.”
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to expense discipline, connected TV revenue gains, and the strategic expansion of live sports programming, while acknowledging persistent advertising market weakness.
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Expense discipline in networks: Significant expense reductions in Scripps Networks, including lower employee costs and cuts in Scripps News operations, drove margin improvement, reaching a 32% segment margin—its highest since late 2022.
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Connected TV revenue momentum: Continued adoption of Scripps’ national networks on major streaming platforms fueled a 42% year-over-year increase in connected TV revenue, with ION and women’s sports properties such as the National Women’s Soccer League leading performance.
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Live sports programming expansion: The company’s disciplined approach to acquiring sports rights for both local and national platforms generated strong advertiser demand, especially for women’s sports, and provided premium inventory that helped offset declines in other advertising categories.
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Advertising category divergence: Automotive and retail advertising were identified as the weakest segments, while services, home improvement, and gambling advertising—especially in markets with local sports coverage—performed more steadily and, in some cases, grew.
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Balance sheet and refinancing progress: Scripps completed multiple refinancing transactions, reducing near-term debt maturities and improving net leverage, with management reiterating that further debt reduction remains the top capital allocation priority.
Drivers of Future Performance
Scripps’ forward guidance relies on sustained sports-driven revenue, ongoing cost controls, and the potential for regulatory changes to create new growth opportunities.
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Sports partnerships and premium inventory: Management expects continued momentum from recent and upcoming live sports partnerships—including the WNBA, NWSL, and new women’s tournaments—to support advertising revenue and differentiate the company’s offerings in a challenging market.
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Expense management and restructuring: Ongoing cost controls, particularly within Scripps Networks, are expected to support margins even as the company invests in new sports content, though management cautions that some programming expense increases are likely as rights costs rise.
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Regulatory and industry developments: Scripps is monitoring potential changes in FCC ownership rules and virtual MVPD (multichannel video programming distributor) regulations that could allow for market consolidation, improved negotiating leverage, and new revenue streams, but acknowledges the timing and impact of these changes are uncertain.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the extent to which new sports partnerships drive incremental advertising revenue and offset weakness in traditional categories, (2) sustained progress on expense management and margin preservation as sports programming costs rise, and (3) regulatory developments that could enable market consolidation or improved distribution economics. Execution on connected TV growth and further real estate asset sales will also be signposts for strategic progress.
E.W. Scripps currently trades at a forward EV-to-EBITDA ratio of 0.9×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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