Thank you, everyone, for standing by and welcome to the Scripps Q1 Earnings Conference Call. I will now turn the call over to your host, Head of Investor Relations, Carolyn Micheli. Please go ahead.

Thank you, Kevin. Good morning, everyone, and thank you for joining us for a discussion of the E.W. Scripps Company's financial results and business strategies. You can visit scripps.com for more information and a link to the replay of this call. A reminder that our conference call and webcast include forward-looking statements and that actual results may differ. Factors that may cause them to differ are outlined in our SEC filings. We do not intend to update any forward-looking statements we make today. Included on this call will be a discussion of certain non-GAAP financial measures that are provided as supplements to assist management and the public in their analysis and valuation of the company. These metrics are not formulated in accordance with GAAP and are not meant to replace GAAP financial measures and may differ from other companies' uses or formulations. Included in our earnings release are the reconciliations of non-GAAP financial measures to the GAAP measures reported in our financial statements. We'll hear first this morning from Scripps' Chief Financial Officer, Jason Combs, who will share financial results as well as color on the Scripps advertising marketplaces; then we'll hear from President and CEO, Adam Symson. Now here's Jason.

Good morning, everyone, and thank you for joining us. We are pleased to be delivering first quarter 2024 operating results that beat profit estimates driven by tight cost controls. I will discuss both our Q1 results and guidance for Local Media first and then the results and guidance for Scripps Networks. Then I'll touch on a few other guidance items. I'll conclude with capital allocation and our debt picture. For the first quarter 2024, Local Media division revenue was up 13% from the year-ago period due to year-over-year growth in political and distribution revenue. The political revenue, which was $15 million, saw strength from early U.S. Senate spending in Montana and Ohio. Local distribution revenue was up more than 20% again this quarter, fueled by 2023 renewals of our cable and satellite agreements. We also saw positive performance in our subscriber numbers. Our total pay TV subscriber count was up nearly 1% in the most recent quarter of data we've received. And on a trailing 12-month basis, our pay TV subscriber count is down mid-single digits, in line with the trend we've experienced for the last several years. First quarter local core advertising revenue was down about 3% from the prior year period. Strong categories included automotive, up 6% and home improvement, up 5%. Services ended the quarter down slightly but ended April up by double digits. Overall, core revenue from local businesses was up slightly for the quarter, while national advertising was down largely due to sports betting declines. Local Media expenses increased about 8% from the prior year quarter, inclusive of our new sports rights agreements. So we came in better than the guidance we gave in February of up 10%. Local Media segment profit was $66 million. For the second quarter, we expect Local Media division revenue to be up in the low to mid-single-digit percent range. We expect local core ad revenue to be down low to mid-single digits. We expect Q2 Local Media expenses to be up in the low to mid-single-digit percent range. Turning to the full year. We now expect our local political advertising revenue to come in between $240 million and $270 million. That is a significant raise from our earlier guidance of $210 million to $250 million, and the high end of that range is above our 2020 presidential year revenue of $265 million. Adam will give more color on political in a moment. Also for the full year, we expect our distribution revenue growth to be up in the low single-digit range despite the fact that we renewed only 5% of our pay TV households this year. Now I'd like to discuss the Scripps Networks division first quarter results and second quarter guidance. In the first quarter, Scripps Networks revenue was $209 million, down about 3% from the year-ago quarter. Excluding the impact of the low-margin programmatic products we began to sunset in the second quarter of 2023, Scripps Networks revenue decreased by less than 1% year-over-year. The direct response marketplace continues to make a comeback in terms of both inventory demand and advertising rates. It was up for the quarter for the first time in 2 years, and it accounted for more than 40% of our network's ad revenue. Scatter pricing was a good story in the first quarter as well, up nearly 40% from the pricing we were getting in last season's upfront. Connected TV was up 22% in the first quarter, if you back out the programmatic advertising product we shut down. For the full year, we expect connected TV revenue to be about 30% above our 2023 revenue, again, backing out revenue from the programmatic product for both periods. First quarter Scripps Networks expenses were $160 million. That's down more than 3% and reflects the end of the programmatic advertising product, which we began to sunset in Q2 of last year as well as close management of expenses. Segment profit was $49.7 million. For the second quarter, we expect Scripps Networks division revenue to be down in the mid-single-digit range from last Q2, and we expect Networks expenses to be up in the low single-digit range. Turning to the segment labeled Other. In the first quarter, we reported a loss of $6.4 million. We now expect the Other segment to run at a $7 million to $8 million loss each of the remaining quarters of 2024, which has improved from our previous guidance. Shared services and corporate expenses for Q1 were $21.6 million. For the second quarter, we expect that expense will again fall in the $22 million range. For the first quarter, the loss attributable to shareholders of Scripps was $12.8 million or $0.15 per share. Pretax cost for the quarter included $5 million in restructuring charges. We also reported an $18 million investment gain. Together, these 2 items decreased the loss attributable to shareholders by $0.12 per share. And a reminder that the preferred stock dividend still has a negative impact on earnings per share even if we don't pay it. At March 31, cash and cash equivalents totaled $30 million. Our net debt at quarter end was $2.9 billion. Scripps total debt at the start of 2021 when we acquired ION Media was about $4 billion. So we brought down our total debt by about 25% over those 3 years. In the first quarter of this year, we made $40 million in discretionary debt paydown. We expect 2024 to be another year of significant debt reduction due to the robust political advertising cycle, incremental cash flow from other top-line revenue, proceeds from potential asset sales and prudent expense management.

Good morning, everybody, and thanks for being with us. As Jason shared, we're off to a pretty good start for the year. We see green shoots in the national advertising marketplace and an improved political revenue outlook. The moves we've made to be a more efficient organization are helping us drive profit. Our top priority this year is reducing debt and optimizing the company's capital structure to move us further down to a level of leverage we're all more accustomed to at Scripps. We are executing a strategy driven by both operating levers and non-operating levers, and that strategy gives me the confidence to know we're on the right track. A key part of that strategy is improving our operating performance. That includes a sharp focus on 4 key areas: local and national advertising revenue, political advertising revenue, careful expense management and realizing a strong return on our investment from assets we've acquired. First, as a result of the actions we're taking and improvement in the marketplace, we expect strong operating performance this year just as we executed in the first quarter. As we move through the second quarter, we are seeing encouraging signs of improvement in national advertising at our networks in both direct response and scatter marketplaces. Our direct response business is higher year-over-year for the first time in 2 years, and we expect that trend to continue in the second quarter. Also, scatter market CPMs are now nearly 40% over last year's upfront. We continue to build value from our leadership position in the women's professional sports movement. We launched the National Women's Soccer League on ION in mid-March, and those games have been drawing a younger and more affluent demographic to the network. More than half of the NWSL viewers are new to ION, so we're pleased that they're finding us and staying week to week. That's opened up the door for new-to-Scripps blue-chip advertisers, including Ally Financial, Gatorade and Meta. In addition, we're capturing average unit rates for NWSL games that are 65% higher than our AURs for non-sports ION prime time programming. Coming up on May 17, we tip off our second season of WNBA basketball, certainly the most highly anticipated season in league history due to the league's rookie class, including, of course, Caitlin Clark, Angel Reese and Kamilla Cardoso. We're pleased State Farm is back as our title sponsor, and sales for the games have been strong. We're also creating new opportunities for advertisers by introducing dedicated studio shows this year. Our commitment to women's sports through the WNBA and NWSL featured prominently in our network's recent upfront presentations in New York, Chicago, and Los Angeles. Our team set a whole new tone this year, punctuated by a more aggressive, chest-forward sales and marketing approach. Now looking ahead on political advertising revenue, our second area of focus, we're pleased to raise our guide for the year after seeing Senate races heat up in Montana and Ohio, and Florida placing abortion on its ballot. Our new guide of $240 million to $270 million now includes the impact of the Florida ballot measure. Arizona is likely also to add a similar high-spend referendum to the ballot. If that issue gets cleared onto the ballots in the Scripps states of Colorado, Missouri, Montana, and Nevada, we could see even more upside in our political revenue performance. The presidential election typically makes up about 20% of our total. And while we're seeing less spending there than we have traditionally, we do expect to benefit in the swing states of Arizona, Michigan, Nevada, and Wisconsin. We are seeing strong political spending in Montana and Ohio, where Republican Senate candidates and their PACs are looking to unseat long-time incumbent Democrats. These are 2 states where Scripps has a big footprint. While most of the political revenue will come in the third and fourth quarters, we now have enough visibility to confidently say that we expect to exit the first half of this year having generated more political revenue than we did during the first half of 2020. Our third area of focus is prudent expense management. While I'm optimistic we are beginning to see some rebound in advertising on the top line, we will also continue to pursue generating higher EBITDA through expense management. This ongoing expense management is above and beyond the $40 million in savings we are realizing from the reorganization of the company we initiated last year. Finally, another important deleveraging and debt-reduction strategy is realizing a strong return on our investment from assets we have acquired. We announced in mid-April that a process was underway to explore the sale of the Bounce TV network prompted by increasingly strong inbound interest from qualified potential buyers. Selling Bounce is entirely consistent with Scripps' long history of buying and creating businesses, growing the asset's value and then divesting at the right time for a strong ROI. In recent years, examples of this include our sale of podcasting businesses, Stitcher and Midroll and digital audio business, Triton. Since acquiring Bounce in 2017 as part of the Katz Networks, we have significantly increased the audience, doubled the revenue, and increased its profit contribution. Under our stewardship, Bounce has become a more important brand in the black communities, an entertainment outlet that tells the complete story of the Black American experience, from original shows like Johnson to beloved movies and syndicated programming. We want to make sure Bounce is in a position for that to grow, and we anticipate that new owners could unlock even more value. We expect to have an update on that process for you later this summer. Adding to the opportunity to generate proceeds to delever, we are also exploring the sale of some smaller, non-strategic real estate assets. Scripps has been here serving American audiences and advertisers for more than 145 years. There are many reasons for the company's longevity and track record of success, creating value in the dynamic media landscape time and time again, from our clarity of mission and our values to our risk tolerance and willingness to focus on the long term. But especially salient today is the long-held view inside Scripps that businesses operate in seasons. Today, during the season we're in right now, our management team is focused on executing against the plan I've shared with you, that will lead us to pay down debt and improve the balance sheet for the benefit of our company, our employees, our mission, and the partnership we have with shareholders that creates value.

And we'll go to the line of Dan Kurnos from Benchmark.

Adam, I know you said you'll update us this summer. Is there any way to get metrics around Bounce? I mean we know kind of directionally from when you bought it, part of Katz a while ago, but just curious if you can help us think about that and/or the real estate just sizing-wise.

Yes. I mean, look, the inbound interest that we've had has been strong. It was strong before the news of the sale process went public, and it's really only gotten more robust. I have a lot of confidence that we'll identify the right next home for the network, and I expect it to be an excellent return for shareholders. Obviously, a deleveraging event with proceeds used to pay down debt and a very good outcome for the company. Relative to metrics, I think there have been some press reports out there that we would expect proceeds to be in the hundreds and hundreds of millions of dollars.

Perfect. And then just maybe to touch on your expense comments. It sounds like you have identified line of sight on more costs. I guess either for you or Jason, probably early to size those. But just kind of curious how you're thinking about how much leverage you still have on the bottom line on the cost side.

Yes. So it probably is early to size those. But what I would say is we think we have the ability to move through the rest of this year to manage things really tightly, whether that is pushing out discretionary spend or identifying continued process efficiencies that drive savings for us. And so I'm optimistic those are things that beyond revenue growth, items we talked about in the script, beyond the asset sale. I think expense management is another lever that we are going to pull that's going to drive deleveraging by the end of this year.

Great. Can you discuss services, which I believe were up double digits in April? We're hearing that the second quarter is performing better than the first, and there are indications that core could be quite strong in the latter half of the year. I understand you have a different footprint, which may make you more vulnerable to crowding out. How should we interpret your expectations regarding core performance in both the second quarter and the latter half of the year?

Dan, it's Lisa Knutson. Sorry, I'll take that question. We are definitely seeing improvement in several categories. Automotive was up in the first quarter and I believe it increased by 10% for the entire year. Regarding other categories, services were slightly down in April, but we continued to see improvement in the first quarter, as well as in home improvement, which also showed gains in the first quarter and is up in April. We expect a reduction in our business in the third and fourth quarters due to political advertising. These are typically high-margin revenues, which we will accept. We collaborate with advertisers to help them find alternatives in light of this situation. Based on the political figures we recently provided guidance on, we anticipate this impact to begin in the third quarter and continue into the early fourth quarter.

Dan, it's Adam. I think the general theme you're seeing is that as part of core, local is hanging in there pretty nicely, doing well. And there's still some softness in core associated with national. For us, it's been really the comps around sports betting that has driven, I think, that performance on the national side.

And we'll go to the next line, Steven Cahall of Wells Fargo.

Lisa, I'm having a bit of difficulty grasping the Networks revenue forecast for Q2. Adam, I believe you mentioned that direct response and scatter are improving compared to last year in the second quarter. However, the guidance indicates that Networks revenue will decline by mid-single digits. I would like to clarify what I might be overlooking. Jason, your initial statement referred to strict cost management. I suspect some of that will be reflected in the shared services or Other category in your segment profit. Could you elaborate on what actions you're taking differently? Also, are there any anticipated cost savings from these initiatives? Lastly, it seems there is currently no guidance on free cash flow. Can you share any estimates regarding the free cash flow you might use to reduce debt this year?

So Steven, thanks for the question. Look, we are seeing some nice, I would say, rebound momentum in direct response and in the scatter market. But we also still have to contend with the upfront from last year, which laid in a fair bit of inventory at lower rates. The good news is scatter rates today are 40% above those rates, and direct response makes up a very big chunk of our inventory, but we still are dealing with the impact. I would expect if the rebound continues on track, that what we would see by the fourth quarter would be indicative of the strength of this year's upfront and, hopefully, consistent with the rebound we're seeing in scatter and direct response.

Yes. I believe we are examining various areas from an expense perspective, similar to what we did in Q1 and are continuing to do in Q2, focusing on employee costs, managing open positions, and identifying opportunities. Additionally, during the call, I updated our guidance for the Other segment, which was previously estimated to incur a loss of $7 million to $10 million. We have now revised that to a loss of $7 million to $8 million. This adjustment is primarily due to a slight slowdown in the rollout of Tablo as we aim to allocate more discretionary cash towards paying down debt in the short term. Regarding our free cash flow guidance, we are not providing a specific figure for the year due to numerous variables, including a broad political landscape and other influencing factors. However, we believe there is potential to generate a significant amount of cash this year through political developments, a recovering advertising market, and the asset sales we mentioned. Our intention is to allocate all of this cash towards debt reduction, as we have successfully done in recent years, thereby achieving a meaningful reduction in leverage by the end of the year.

Just a little bit more color on Tablo. First quarter, Tablo hit our plan on consumer sales. But this is a new business for us. And the change you're seeing in the Other segment reflects essentially expenses moderating because we're able to lower our average customer acquisition cost and spending.

And we'll go to the next line, Michael Kupinski, NOBLE Capital Markets.

I know in the past, you've been hesitant to raise expectations for political. I understand you have someone dedicated to this area who might provide some insights. You've identified some important races and ballot issues, but I'm curious if you're already seeing political revenue booked for the second half. I'm just trying to find out how much visibility you actually have for that period.

Mike, it's Lisa. I think that why we were comfortable with increasing our guide here now is because we're seeing those bookings into the third and fourth quarter. And so that gave us the confidence. As Adam mentioned and I think Jason mentioned in the prepared remarks, the Senate races in Montana and Ohio as well as the abortion issue in Florida. Remember in Florida, we cover 85% of the eyeballs, the households in Florida. So that's another reason we were able to increase guide. And then I think there are a number of things in the back midyear that we're keeping an eye on in terms of other issues, certainly abortion issues in other states where we do business that we are anticipating will also be good money in the back half of the year, so to speak. I think the Senate races, particularly in Ohio and Montana, as well as in other states, will see increased spending starting midyear and continuing into the fourth quarter. We are seeing strong bookings and have solid visibility for the second half of the year. I'm particularly optimistic about connected TV, which I believe will be a significant part of our success in that timeframe.

Just one other point to emphasize, we anticipate that the first half of this year will surpass the first half of 2020, which I believe is quite a notable assertion. We are observing strong bookings for the first and second quarters. Clearly, we have enough confidence to adjust our guidance based on our expectations for the third and fourth quarters. Additionally, I would like to mention that conventional wisdom suggests that having abortion on the ballot is likely to energize voters in a way that, potentially, having Biden on the ballot does not.

That's a good point, Adam. And I hope that you can exceed your expectations or raise it again. Another question I have, typically, advertisers buy across platforms and you may sell some of your weaker networks with some of your stronger ones. And I'm just wondering in terms of the prospect of selling Bounce, do you have a sense of how much of an impact you might have on the sale of Bounce on advertising on your other networks?

Yes, I think you’ve highlighted an important aspect of our sales strategy. That's just one part of it. Another important part has been our omnichannel approach, as we focus on selling across different platforms rather than just networks. Additionally, ION is our primary growth driver. ION performs exceptionally well with multicultural audiences, and our partnership with sports has further diversified ION's viewership. For instance, the WNBA audience from last year was notably more diverse. While ION already attracted a diverse audience, the WNBA has opened up more avenues for us to target younger and more multicultural viewers.

Our next question will be from the line of Craig Huber, Huber Research Partners.

I'll just take them one at a time, if I could. I think you said scatter was up 40% versus the upfront a year ago. Can you maybe talk about how that 40% number compares to, let's say, the year before or something, where it was tracking at before? And then also, what is scatter versus scatter the pricing? And how is that tracking right now?

Yes. To clarify, our scatter pricing has increased by 40% compared to upfront pricing from last year. This does not mean that scatter is up 40% compared to a year ago.

Yes. Understood. What was that a year ago? What was the scatter at that point versus the prior upfront? Is that trend pretty similar? Or was that a better trend?

I would say it's a slightly better trend than last year in terms of improvement, as we've observed that the upfronts over the last two years have been weaker. Therefore, this trend is slightly better than last year.

And then how much is scatter...?

Yes. I don't think that's anything we've given out before. So I don't think we're going to be giving out that number. But I would just reiterate what Lisa said, we are seeing a stronger scatter market now than what we've seen in the last couple of years.

The Networks business is still dealing with last year's upfront. That's why we're experiencing positive momentum while still having commitments from advertisers at last year's rates.

Yes, gross and net distribution are projected to be up in the low single-digit range, correct. And that's despite the fact that we really only have 5% of our sub base renewing this year.

Great. Thank you so much, Kevin. Thanks to everyone for joining us today. Have a good day.

And thank you. Ladies and gentlemen, that does conclude your conference. You may now disconnect.