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Media, broadcasting, and digital services company E.W. Scripps (NASDAQ:SSP) missed analysts' expectations in Q2 CY2024, with revenue down 1.6% year on year to $573.6 million. It made a GAAP loss of $0.15 per share, improving from its loss of $8.10 per share in the same quarter last year.
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E.W. Scripps (SSP) Q2 CY2024 Highlights:
- Revenue: $573.6 million vs analyst estimates of $585.4 million (2% miss)
- EPS: -$0.15 vs analyst estimates of -$0.08 (-$0.08 miss)
- Gross Margin (GAAP): 16.6%, down from 45.6% in the same quarter last year
- EBITDA Margin: 17.4%, down from 20.7% in the same quarter last year
- Market Capitalization: $253.6 million
BroadcastingBroadcasting companies have been facing secular headwinds in the form of consumers abandoning traditional television and radio in favor of streaming services. As a result, many broadcasting companies have evolved by forming distribution agreements with major streaming platforms so they can get in on part of the action, but will these subscription revenues be as high quality and high margin as their legacy revenues? Only time will tell which of these broadcasters will survive the sea changes of technological advancement and fragmenting consumer attention.
Sales GrowthA company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones tend to grow for years. Over the last five years, E.W. Scripps grew its sales at a mediocre 12.5% compounded annual growth rate. This shows it couldn't expand in any major way and is a tough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. E.W. Scripps's recent history shows its demand slowed as its revenue was flat over the last two years.
We can dig further into the company's revenue dynamics by analyzing its most important segments, Local Media and Scripps Networks, which are 63.6% and 36.4% of revenue. Over the last two years, E.W. Scripps's Local Media revenue (advertising and re-transmission fees) averaged 3.8% year-on-year growth. On the other hand, its Scripps Networks revenue (advertising) averaged 5.8% declines.
This quarter, E.W. Scripps missed Wall Street's estimates and reported a rather uninspiring 1.6% year-on-year revenue decline, generating $573.6 million of revenue. Looking ahead, Wall Street expects sales to grow 8.4% over the next 12 months, an acceleration from this quarter.
Operating MarginOperating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
E.W. Scripps's operating margin has risen over the last year, but it still averaged negative 8.2%. Its large expense base and inefficient cost structure mean it still sports inadequate profitability for a consumer discretionary business.
In Q2, E.W. Scripps generated an operating profit margin of 9.7%, up 116.3 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was recently more efficient because it scaled down its expenses.
Key Takeaways from E.W. Scripps's Q2 Results We struggled to find many strong positives in these results. Its EPS missed and its Local Media revenue fell short of Wall Street's estimates. Overall, this was a mixed but overall mediocre quarter for E.W. Scripps. The stock traded down 4.7% to $2.83 immediately following the results.
