http://www.tvnewscheck.com/article/100746/scripps-shines-with-local-news-new-media/page/1
http://www.tvnewscheck.com/article/100746/scripps-shines-with-local-news-new-media/page/2
http://www.tvnewscheck.com/article/100746/scripps-shines-with-local-news-new-media/page/3
http://www.tvnewscheck.com/article/100746/scripps-shines-with-local-news-new-media/page/2
http://www.tvnewscheck.com/article/100746/scripps-shines-with-local-news-new-media/page/3
The 138-year-old company with 33 TV stations in 24 markets is moving boldly into the digital universe. Outgoing CEO Rich Boehne (left) says it’s following its audience, but admits it’s risky and that the journey isn’t for the faint of heart. Incoming CEO Adam Symson (right) shares Boehne's enthusiasm, but doesn't see it as quite so radical. In light of this foreward-looking strategy and the company's continued commitment to producing the best in local news, TVNewsCheck named E.W. Scripps its Station Group of Year for 2017. (Collage by Bill Knight)
By Michael Depp
TVNewsCheck, January 18, 2017 5:21 AM EST
Since joining E.W. Scripps Co. in 1985 as a newspaper reporter, CEO Rich Boehne says the company has undergone three revolutions.
The first was the company’s investment in cable systems (“Broadcasters were shouting it will never work — people will never pay for television,” he says). The second, in the 1990s, was when his friend Ken Lowe launched HGTV and nurtured it into a thriving cable programming enterprise that was spun off as Scripps Interactive Networks (“I was in the rebel camp on that one.”). And the third is happening now.
Story continues after the ad
“I guess I’m Che Guevera on this one, the digital revolution,” he says.
This revolution has taken the form of a substantial investment in national digital media. Over the past two years, Scripps has spent $124 million to buy Newsy, a millennial-targeted news service; Midroll, a podcasting producer and distributor; Stitcher, a podcasting platform; and Cracked, a producer of humorous digital content.
It’s been driven by the need to follow the audience, says Boehne. “We really have to be more consumer-driven than we have been in the past — a radical turn for media. It’s exciting, but not for the faint of heart.”
Chief Operating Officer Adam Symson, who has been a key player in the planning and execution of the digital strategy, shares Boehne’s enthusiasm, but doesn’t see it as quite so radical.
BRAND CONNECTIONS
Ramp Up Your Revenue
CRM, data mining, sales training, coupons, promotions. Drive sales and generate new revenue. Find inspiration in the BrandConnections Directory of Sales and Revenue Development tools. Browse now.
“Our move into podcasting is actually incredibly consistent with the history of this company always looking at where the media consumer is and then either building or buying a stake on that platform,” says Symson, who will become CEO later this year when Boehne relinquishes that title and becomes chairman only (see related story).
Like all revolutions, Scripps’ digital turn carries risk.
Craig Huber, a media analyst at Huber Research, is among the skeptics.
“Historically, when the company has moved away from its core competency, primarily television stations, it has stubbed its toe,” he says. “I’m not going to say they’ve stubbed it here, but they certainly have yet to prove themselves on an economic basis.”
“History is not on their side,” concurs analyst Barry Lucas. He says he understands Scripps needs to pursue audiences and advertisers by diversifying. But, he adds, they have only about two years to start seeing some meaningful profitability before investors start to lose patience.
Boehne hears the criticism firsthand. “It’s tough for investors to understand pieces of a story that are uncommon to the whole,” he says, adding that the long game matters little to Wall Street. “But if you have a long-term vision and you’re committed to it, you’ve gotta hang in there.”
The Broadcasting Backbone
Investors should take comfort that Scripps remains first and foremost a broadcasting company with fairly predictable revenue and high margins. Broadcasting is, Boehne likes to say, the “best business that God ever created.”
It currently operates 33 TV stations in 24 markets along with 37 radio stations. Those numbers include the stations that Scripps acquired in 2015 when it essentially swapped its newspapers for Journal Communications’ broadcast properties.
That deal, part merger and part spinoff, not only expanded its TV coverage to a robust 19% of U.S. TV homes, but eliminated the financial drag of the newspapers.
For the Scripps TV stations, 2016 wasn’t the year it had anticipated, with political advertising coming up far short and depressing overall revenue and earnings.
But Brian Lawlor, VP of television, sees 2016 as an anomalous political year and doesn’t believe that there has been a permanent shift of political dollars to other media. “At the end of the day, it really depends on are you in the places where there are competitive races — so it’s about your footprint.”
Without the political dollars, such as they were, Scripps, like most station groups, will likely see spot revenue shrink in 2017. But until the political business returns in 2018, Lawlor believes he can keep the core spot revenue growing by continuing to focus on local accounts.
“Seventy percent of our spot advertising comes from local,” he says. “That’s our local sales force serving local clients, banging on doors, developing new business. We have a huge focus on developing business.”
The stations have two other sources of revenue — local digital (station websites and apps) and retransmission consent. Both are growing faster than digital, but contribute far less to total company revenue.
The local digital revenue has been growing at a double-digit pace. “I think that’s going to continue for as long as we can see. It’s really important that we as broadcasters recognize that our brands are not just television, our brands are serving our people wherever they are, whatever they’re doing.”
Lawlor says that net retrans (retransmission consent revenue minus reverse comp payments) is growing by at least 7% a year — the growth rate that Wells Fargo securities analysts estimate for the entire industry.