E.W. Scripps Co. (NASDAQ: SSP) reported Q1 EPS of ($0.10), $0.25 worse than the analyst estimate of $0.15. Revenue for the quarter came in at $540.92 million versus the consensus estimate of $536.21 million.

• First-quarter Local Media core advertising outperformed expectations, up 2% on an adjusted-combined basis, driven by a rebound in the advertising market and strong sales execution. The top five core advertising categories were up on a year-over-year basis in March.
• The new Scripps Networks division met expectations on Q1 revenue, flat to Q1 2020 on an adjusted-combined basis, with margins of 43%. The networks are having a strong upfront season, attracting new advertisers, and also have seen strong demand and rate growth in direct response advertising. The division is on track to realize the synergies it identified related to the ION acquisition.
• On Jan. 7, Scripps closed on the acquisition of ION and combined it with Court TV, Newsy, Bounce, Grit, Laff and Court TV Mystery to create the Scripps Networks division. The new national networks portfolio comes together to offer advertisers a large nationwide audience of media consumers who include free over-the-air television in their self-made viewing bundles.
• On March 31, Scripps closed on the sale of Triton. iHeart Media purchased Triton for $230 million, representing 1.6 times cash-on-cash return for Scripps.
• On April 15, Scripps announced its plans to redeem all $400 million in aggregate principal of its outstanding 2025 senior notes on May 15, underscoring Scripps' priority to reduce its debt.
• "During the first quarter, our Local Media and Scripps Networks divisions capitalized on the resurgence of the local and national TV advertising marketplaces with strong sales execution and drove an exceptionally strong start to the year," Scripps President and CEO Adam Symson said.

"In Local Media, service-oriented local business advertising continued its momentum from the end of 2020, and we saw significant growth in advertising tied to the number of states legalizing sports betting as well as meaningful new advertising business developed by our sales teams. The re-opening of economies as Americans receive vaccines for COVID-19 combined with the distribution of federal stimulus dollars is driving activity experts project will fuel ad spending throughout the year.

"Retransmission revenue grew 15% (adjusted combined) as we annualize a big reset in household rates last year and due to stabilization of pay TV household counts in the most recent reporting period.

"In our new Scripps Networks division, we are gaining strong traction in the upfront and scatter markets as well as continued growth in direct response advertising demand and rates. We delivered Q1 margins of more than 40% and expect to maintain margins this year in the 40% range (adjusted combined), other than a dip in the third quarter as we invest in the launch of the new networks Defy TV and True Real and prepare to deploy Newsy over the air.

"The foundation of our acquisition of ION and the creation of our OTA powerhouse networks portfolio is growth in free, over-the-air television viewing that consumers pair with subscription streaming services. Television is a high-free-cash-flow business, and Scripps is creating value today from our two highly profitable operating divisions even as we prepare to capitalize on future industry growth."

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