10-Q: Scripps Navigates Q3 Loss Amid Refinancing, Station Swaps

The E.W. Scripps Company reported a net loss for Q3 and YTD 2025, driven by a significant decline in political advertising and substantial debt refinancing costs, while strategically engaging in station swaps and asset sales.

Summary

• The E.W. Scripps Company reported a net loss attributable to shareholders of $(49.0) million for the third quarter of 2025, a significant decline from a net income of $33.0 million in the same period of 2024.
• For the nine months ended September 30, 2025, the net loss attributable to shareholders widened to $(119.5) million, compared to a loss of $(7.3) million in the prior year.
• Total operating revenues decreased by 18.6% in Q3 2025 to $525.9 million and by 10.7% year-to-date to $1.59 billion, primarily due to a $126 million (Q3) and $165 million (YTD) decline in political advertising revenue in a non-election year.
• Operating income for Q3 2025 was $37.6 million, down from $121.8 million in Q3 2024, and year-to-date operating income was $141.7 million, down from $220.9 million in 2024.
• Net cash provided by operating activities for the nine months ended September 30, 2025, was $7.97 million, a substantial decrease from $212.4 million in the prior year, impacted by $44.5 million in debt refinancing transaction costs.
• The company completed significant debt refinancing transactions in April and August 2025, including issuing $750 million in new senior secured second lien notes and establishing a new $450 million accounts receivable securitization facility.
• Strategic asset movements include an agreement to sell WFTX (Fort Myers, FL) for $40.0 million, the completed sale of a West Palm Beach station building for $40.0 million (resulting in a $31.4 million pre-tax gain), and station swaps with Gray Media, Inc. involving five markets with no cash consideration.
• Restructuring costs decreased to $2.7 million in Q3 2025 (from $12.7 million in Q3 2024) and $7.5 million year-to-date (from $18.7 million in YTD 2024), reflecting efficiency efforts and the shutdown of Scripps News' over-the-air broadcast in late 2024.
• Total long-term debt (net carrying value) increased slightly to $2.64 billion as of September 30, 2025, from $2.56 billion at December 31, 2024.
• Undeclared and unpaid cumulative preferred stock dividends totaled $101 million as of September 30, 2025, with the company prohibited from paying common dividends or repurchasing common shares until preferred shares are redeemed.

Sentiment

Score: 3

Explanation: The company reported significant net losses and a substantial decline in operating cash flow, primarily driven by the absence of political advertising in a non-election year and high debt refinancing costs. While strategic asset sales and cost reductions are positive, the overall financial performance for the period is weak.

Positives

• Cash and cash equivalents increased to $54.7 million as of September 30, 2025, from $23.9 million at December 31, 2024.
• Core advertising revenue for the Local Media segment increased by 1.8% in Q3 2025 to $131.5 million, indicating some underlying business strength outside of political cycles.
• Scripps Networks segment profit increased by 26.7% in Q3 2025 to $53.3 million and by 33.9% year-to-date to $173.3 million, driven by cost reductions and growth in connected TV (CTV) revenue.
• Cost of revenues decreased by 1.9% in Q3 2025 and 3.2% year-to-date, reflecting the impact of restructuring initiatives and reduced programming costs.
• Selling, general and administrative expenses decreased by 11% in Q3 2025 and 7.5% year-to-date, primarily due to savings from restructuring efforts and reduced political sales activities.
• The company recognized a pre-tax gain of $31.4 million from the sale of its West Palm Beach television station building in April 2025.
• Strategic initiatives include a joint venture (EdgeBeam Wireless, LLC) for ATSC 3.0 data delivery services and new multi-year media rights agreements for sports content (Las Vegas Aces, Tampa Bay Lightning, WNBA).
• The company was in compliance with all financial covenants as of September 30, 2025.

Negatives

• Reported a net loss attributable to shareholders of $(49.0) million in Q3 2025 and $(119.5) million year-to-date, a significant deterioration from the prior year.
• Total operating revenues decreased by 18.6% in Q3 2025 and 10.7% year-to-date, largely due to a substantial decline in political advertising revenue in a non-election year ($126 million Q3, $165 million YTD).
• Operating income decreased significantly by $84.2 million in Q3 2025 and $79.2 million year-to-date.
• Net cash provided by operating activities decreased by $204 million year-to-date, primarily due to debt refinancing transaction costs and lower political advertising cash flows.
• Incurred $7.6 million loss on extinguishment of debt in Q3 2025 and $10.6 million year-to-date, along with $44.5 million in other financing transaction costs year-to-date.
• Interest expense increased by $4.8 million in Q3 2025, driven by higher interest rates on borrowings, despite lower average outstanding debt balances year-to-date.
• Local Media segment revenues decreased by 27.0% in Q3 2025 and 15.3% year-to-date, with segment profit down 67.1% and 54.3% respectively, largely due to the political advertising decline.
• Distribution revenues were unfavorably impacted by high-single-digit subscriber declines in the Local Media segment.
• Scripps Networks revenues were unfavorably impacted by lower ratings in key monetized demographics by 6.8% in Q3 2025 and 7.4% year-to-date.
• Undeclared and unpaid cumulative preferred stock dividends reached $101 million, and the company is prohibited from paying common dividends or repurchasing common shares until preferred shares are redeemed.

Risks

• There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in the 2024 Annual Report on Form 10-K.
• The Scripps Networks reporting unit's fair value exceeded its carrying value by only 1.3% in Q4 2024, making it sensitive to changes in assumptions; a 50 basis point increase in the discount rate would reduce its fair value by approximately $110 million, potentially leading to goodwill impairment in future periods.
• Distribution revenues are unfavorably impacted by high-single-digit subscriber declines, reflecting ongoing cord-cutting trends.
• Lower ratings in key monetized demographics continue to unfavorably impact Scripps Networks advertising revenues.
• The company's ability to pay common dividends and repurchase shares is restricted until all preferred shares are redeemed, which currently have $101 million in undeclared and unpaid cumulative dividends.

Future Outlook

The company believes its cash flow from operations and available borrowing capacity under revolving credit facilities and a securitization facility will provide sufficient liquidity to meet operating needs for the next 12 months. The recently enacted One Big Beautiful Bill Act (OBBBA) is expected to have a beneficial cash flow impact in the near term due to accelerated tax deductions, with no material impact on the effective tax rate. The Scripps Networks reporting unit remains sensitive to changes in valuation assumptions, with a 50 basis point increase in the discount rate potentially reducing its fair value by approximately $110 million.

Management Comments

• The company continues efforts to broaden antenna use and is working with key partners in retail, manufacturing, and antenna installation to help television owners understand the quality and quantity of programming available over the air and the ease of antenna use.
• The joint venture, EdgeBeam Wireless, LLC, leverages broadcasters' efficient network architecture and the ATSC 3.0 transmission standard to provide expansive, reliable, and secure data delivery services, unlocking the potential of ATSC 3.0 for nationwide coverage.
• The strategic restructuring and reorganization, substantially completed by the end of Q2 2024, created a leaner and more agile operating structure through centralization of services and consolidation of management layers.

Industry Context

The company operates in a dynamic media landscape characterized by cord-cutting and the rise of streaming services. Its strategy focuses on leveraging its leadership in free, ad-supported television and expanding into the fast-growing connected television marketplace. The joint venture for ATSC 3.0 data delivery positions the company to capitalize on emerging broadcast technology trends, offering new revenue streams beyond traditional content delivery. The acquisition of sports rights for teams like the Las Vegas Aces and Tampa Bay Lightning reflects a broader industry trend of local broadcasters securing exclusive sports content to attract and retain viewers amidst competition.

Corporate Governance

Legal Proceedings

• The company is involved in litigation and regulatory proceedings arising in the ordinary course of business, such as defamation actions and governmental proceedings primarily relating to renewal of broadcast licenses, none of which is expected to result in material loss.

Related Party Transactions

• Berkshire Hathaway, Inc. received a warrant to purchase up to 23.1 million Class A shares at an exercise price of $13 per share in connection with the issuance of preferred shares on January 7, 2021.
• Intercompany carriage agreements exist between local broadcast television stations and national networks, with the intercompany carriage fee revenue earned by local stations equaling the carriage fee expense incurred by national networks; these are eliminated in consolidation.

Stakeholder Impact

• Shareholders: Negative impact due to significant net losses and the inability to receive common dividends or benefit from share repurchases until preferred shares are redeemed.
• Employees: Impacted by restructuring initiatives, including job eliminations (over 200 jobs in 2024 related to Scripps News), though cost savings are being realized.
• Creditors: Debt refinancing activities demonstrate active management of debt obligations, and compliance with financial covenants provides reassurance, but increased interest rates on new debt could affect future debt servicing costs.
• Customers: Potential for enhanced content offerings through new sports rights agreements (Las Vegas Aces, Tampa Bay Lightning, WNBA) and expanded distribution via connected TV and ATSC 3.0 technology.
• Suppliers: Cost reduction efforts through restructuring and programming expense management may impact certain supplier relationships.

Next Steps

• Complete the sale of WFTX (Fort Myers, FL) to Sun Broadcasting for $40.0 million, pending closing conditions and regulatory approval.
• Complete the station swap agreements with Gray Media, Inc., pending closing conditions and necessary regulatory approvals.
• Complete the sale of WRTV (Indianapolis, IN) to Circle City Broadcasting for $83.0 million, pending financing, customary closing conditions, and regulatory approval.
• Contribute the remaining $6.4 million for the 25% ownership interest in the EdgeBeam Wireless, LLC joint venture by the end of 2025.
• Anticipate contributing an additional $0.5 million to fund Supplemental Executive Retirement Plans (SERPs) benefit payments during the remainder of 2025.

Key Dates

Recommendation

The company is undergoing significant strategic restructuring, including asset sales, station swaps, and debt refinancing, which are necessary steps to reposition the business. While current financial results show substantial losses and reduced operating cash flow, largely due to cyclical political advertising and one-time financing costs, the underlying strategic moves in connected TV, ATSC 3.0, and sports rights could offer future growth. Investors should hold to observe the execution and impact of these strategic initiatives, especially as political advertising revenue is expected to rebound in future election cycles. The high preferred stock dividends and restrictions on common dividends remain a concern, but the company's compliance with debt covenants and active management of its financial structure provide some stability.

Keywords

E.W. Scripps, Media, Broadcast Television, Local Media, Scripps Networks, Advertising Revenue, Political Advertising, Distribution Revenue, Debt Refinancing, Station Swap, Asset Sale, Q3 2025 Results, Financial Performance, ATSC 3.0, Connected TV, Corporate Governance