Good morning, everyone. This is Carolyn Micheli, Head of Investor Relations at Scripps. We're going to start our call. Thanks so much for joining us. We apologize for this morning's delay. We had technical issues with our conference call provider and we're not using an operator assisted line, so please make sure you stay on mute. We appreciate your graciousness and your patience as we navigate this call. We'll have a Q&A at the end of the prepared remarks. Again, for now, please ensure you're on mute. I'll come back after Adam's remark and open up the call for questions. A transcript of the call will be available at scripps.com this afternoon, and you can visit scripps.com for more information. A reminder that our conference call and webcast include forward-looking statements based on management's current outlook, and actual results may differ materially. 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 this morning first from Scripps' Chief Financial Officer, Jason Combs; and then President and CEO, Adam Symson; Chief Operating Officer, Lisa Knutson also is with us. Here's Jason.

Good morning, everyone, and thank you for joining us. As we wind down this year's election cycle, we're very pleased to be reporting another record year of political advertising revenue. Scripps full year total Local Media political ad revenue looks like it will come in at more than $340 million. That will be almost 30% above the 2020 presidential year, which was our last record. Adam will provide more color on this year's political in just a moment. The record level of political ad spending drove record third quarter company revenue as well. This revenue combined with tight expense management helped us to significantly exceed expectations for third quarter company EBITDA. And on this note, I have another very positive milestone to share. The political cash, the expense management and the third quarter debt payment have driven down our leverage ratio by nearly a full turn this quarter from 6x at the end of Q2 to 5.1x at the end of Q3. And with the high level of political advertising revenue and a strong fourth quarter performance, we expect to continue to deleverage to the high 4x range by year end. We are pleased with this progress. And as we've discussed previously, we remain focused on our refinancing opportunities, including with respect to our near-term debt maturities. We look forward to updating you on our ongoing refinancing activities when appropriate. In a few moments, I'll share an update on the execution of our debt reduction plan as well as on the balance process. But first, I'd like to review the quarterly results highlights and fourth quarter guidance for Local Media and Scripps Networks divisions. For the third quarter of 2024, Local Media division revenue was up 26% from the year ago period. That compares very favorably to our guide of…

Thanks, Jason. Good morning and thanks for being with us. Today, our nation is on the verge of a presidential election, the poll show is much too close to call. We may know the results late tomorrow or it could take days or weeks. But regardless of the outcome, Scripps can be proud of the part we play in informing voters across the country of the news they need to make informed decisions and the trustworthy local programming platform we provide for candidates and campaigns to reach voters with their messaging. Local broadcasters serve a central role in our nation's election spending cycles. Ad Impact says we are receiving more than half of all TV ad spending in this election. At Scripps, superior sales execution, our centralized political sales office and strong demand in many of our markets allowed us to outpace even our past record performance. We saw a nearly 30% increase this year over our 2020 performance. Back in May, maximizing our political revenue opportunity was just one of the components of the Scripps transformation plan that I outlined to improve our financial performance, reduce our debt and better position us to grow. Every substantial decision we're making at this company is being made through that filter. So I'll use my time this morning as a check-in for you on the progress we've made. I think you'll see how committed we are to the outcomes. I've now told you a few times that our commitment to live sports is an important element of our plan to grow revenue and drive shareholder value. I'd like to share now where you're seeing this in both our national and local segments. During the third quarter, our Scripps network sales team worked tirelessly to wrap-up the negotiations for the upfront. In the…

Great. Thanks, Adam. We'll hear first from the line of Steven Cahall at Wells Fargo.

Yes. Thanks. So maybe, Jason, first on Bounce. It sounds like you were close and things didn't quite get over the goal line. I'm guessing that's overpriced. I think you've always said that you've had multiple interested parties in Bounce and that's how this process got started in the first place. So I think you said a deal is most likely now next year. Can you just talk to us a little bit about what the next steps are? Any more color about what the level of engagement is around Bounce? I think that was maybe something that folks were expecting to maybe see crystallized this morning.

Hey Steven. Yes. Go ahead. I'm sorry.

Okay. Yes, I'll go ahead and squeeze that one. And then maybe just on what you're seeing on the advertising market. I mean, so thanks for that color, Adam. Clearly, political is a record level and the sports strength in scatter, that's very, very clear. Sometimes it's tough for us to see especially at local kind of what's under the hood in the market more broadly. So as you look to local core in 2025, can you help us just with what some of the puts and takes are for the type of growth we could see there?

Yeah. Thanks, Steven. I'll start with Bounce. First of all, I think the only reason people have been so focused on, Bounce is that they wanted to see us use the proceeds to paydown debt and deleverage. So, I think it's obviously important to point out the significant progress we've made against our debt pay down and deleveraging plan ahead of a Bounce sale. By the end of Q4, we expect to be in the high 4x range and though it's taking a little longer than we anticipated as a result of the actions of one of the bidders as we referenced in the call, this really does remain a very competitive process in line with the quality of the asset. So, our goal is to sell the asset in 2025 with proceeds later used to drive down our debt and leverage ratio. Lisa, you want to talk about core?

Yes. Steven, as we talked about in Q4, we're seeing sequential improvement over Q3 because of obviously after tomorrow, the lack of displacement beginning to come back. And even from October to November, we're seeing significant improvement in total dollars in key categories such as services, automotive, home improvement and retail. It's a little too early to be guiding to 2025, but we're really expecting to end the quarter strong coming out of the political season.

Thanks. And if I could squeeze one more in, be it beyond or beyond me to predict what's going to happen tomorrow. But if we do see a more deregulatory FCC in the future, what's your appetite to be a seller of certain stations in order to additionally provide some deleveraging to E.W. Scripps?

Yes, Steve. I mean, clearly, a Trump win would usher in greater deregulation. But my answer will be the same either way. As I've said many before, we would absolutely transact on other non-strategic brands, on local stations, on real estate assets, in pursuit of making our business better performing and more economically durable. Again, it depends on the outcome of the election, but we could see new opportunity for the industry for further consolidation in the broadcast industry, something that I frankly think is important for the industry and for local journalism, and we could definitely take advantage of that opportunity.

I believe we next have a question from Mike Kupinski at Noble Financial Capital.

Thank you. And congratulations. I mean, political is just incredible. Just on that front, I know that you mentioned Arizona, Michigan, Montana, Ohio, Nevada, and Wisconsin being the key drivers. What did those markets in terms of the percent of political, total political, what did they account for? Is there a way of looking at that? Because certainly as we kind of model this.

Yes. So I don't think, Mike, we've broken out how much political they account for, but we did say is in terms of total core revenue, they constitute or that quarter, well, generally close to it 1/3 of our total markets are represented in those states you just talked about.

Got you. And then my question is regarding the Scripps Network business. Obviously, you took out some layers of management, did some streamlining there. Could you put a dollar amount around the expense savings there? And I know, particularly as you look at 2025, I know that you mentioned margin improvement of 400 to 600 basis points. Does that assume revenue growth in 2025 for the Scripps Networks?

So I don't think we're guiding to anything 2025 right now in terms of revenue. What I can say is when you think about that 400 to 600 basis points, that is made up of multiple actions we're taking, some of which we've announced publicly, for example the Scripps News announcements, which will net us an annualized net savings of about $35 million a year on a go forward basis. But there are other things we are also actioning to drive to ultimately drive that 400 to 600 basis point improvement. And so capturing both the savings from Scripps News, any stranded cost there, but there are other levers. We talked in Q3 about programming expense being down year-over-year. So multiple different places we're focused on.

And then final question. In terms of just looking at post-election advertising and that sort of thing, can you kind of give us thoughts about some key advertising categories, particularly auto, as you kind of look into the balance of December and into January? And maybe some of the other key components of services and so forth of your ad categories?

Hey, Mike, it's Lisa. So as I said, we are seeing sequential improvement starting in November month over month from October to November as that displacement recedes after the election. Services, our top category, automotive continues to come back in December and we expect it to come back after Q4. We saw -- I think as you know between 2022 and 2023, auto was up over 10%. And I think there was some displacement in '22 to '23 comparison. So I think automotive will come back. I think home improvement is showing good signs of resiliency as well as retail, obviously as we're in fourth quarter.

Next, we'll hear from the line of Craig Huber of Huber Research Associates. Craig, are you there? [Operator Instructions] Okay. We'll move along now come back to Craig. We have a call from Shanna Qiu at Barclays. Shanna are you there?

Thanks for taking my question. So, I know there were news reports that suggest that you guys moving up the reporting date to assess the feasibility of a refinancing. Can you just give a comment on how you guys are thinking about the refinancing now that the balance sale has been moved, pushed back to 2025?

Sure, it's Jason. So I would say, first of all, our strong cash flow coming from political is going to allow us or should allow us to fully pay down the revolving credit facility by year end, meaning the secured debt we need to address is just the B2 term loan for a little over $720 million. We'll certainly be looking to both the loan and the bond markets to determine where there's the most demand to refinance in order to address that, our near-term maturities, as soon as possible. And we've said this before, we would likely look to address both our 2027 maturities and our 2026 maturities at the same time.

Thank you, guys. I guess just on the 2027, 2026 maturities, are you guys thinking about it more in terms of you know, some kind of exchange or, how should we think about that? And then maybe, another question just on the guidance that you guys gave for local media. Obviously, the low to mid thirties, a lot of it's driven by political, this year, but it looks like retrans revenue in Q3 was down 6% year-over-year. Can you just give any color on your Q4 guide? What are you guys seeing for retrans in that guidance?

Yes. So two things. I guess, first, on the refinancing. We're not going to provide any additional detail in terms of specific strategies. We're obviously continuing to work closely with our bankers and be in communication with our lenders on a pretty regular basis, but not going to be providing any specific strategy on this call. Specific to distribution, so we had no pay-tv renewals really in the last two quarters. Our last pay-tv renewal we had was a small one in Q1. And so the down 6% was largely driven off of no rate increases with mid-single-digit sub declines. I would expect our Q4 number to be roughly in the same line. What we said is for the full year that we expect our both our gross and our net retrans to be up in the low single digit percent range, and that implied Q4 number I just gave would get you to that range for the full year.

Next, we'll go to Dan Kurnos at Benchmark Capital. Dan, are you there?

Yes. Hopefully, you guys can hear me. So first off, obviously, congrats on the political number. It's huge. Adam and/or Jason, I guess just on sort of the cost efforts. A, I apologize if I missed it, but how much revenue comes out from the cost efforts on the national side? And B, in general, is there more work to be done around realigning the broader corporate structure, local side as well, just given the environment we're in? And beyond that, given we're seeing MLB in kind of a tight spot, I don't know what's going on with the RSNs ultimately, but it feels like there's still a pretty big sports opportunity. And so I'm just trying to kind of frame how the broader portfolio, local and national, should benefit from a growth perspective as you guys kind of go after sports opportunities once you get the refi done?

Yeah. Thanks, Dan. So I'll start with the sports question. We continue obviously to execute a strategy to bring local sports rights to broadcast, with our footprint where it makes sense economically. We just launched our partnership with the Stanley Cup winning Florida Panthers in Florida, and that matches really nicely with our stations in Miami, West Palm and Fort Myers. I do expect there could be more to come, but timing is going to depend on the resolution with Diamond. I believe more sports will continue to move to broadcast. If not this year, perhaps next year or in the coming years, given the declining reach of the RSNs. I mean, the RSN cable-only model and Diamond in particular in a tenuous position, even if the entity emerges from bankruptcy, the fundamental problems with the model don't seem likely to be addressed. And we at least think that team owners recognize the value of their teams having stronger reach and ultimately, want folks in their markets to be able to watch a team. And so, we think that in order for the value of their teams and their franchises to grow and endure, they're going to have to continue to look to broadcast as a way to maximize the opportunity. So, we would expect to continue to be able to benefit in that way. And we've -- I think there will be more to come as time progresses. The other question?

The other question was around any revenue impacts from the change on Scripps News. What I would say is they will be fairly minimal. Where we were seeing the most revenue growth within Scripps News was in the CTV space. And that, as we talked about, is a place where Scripps News will continue to exist and provide their product out there.

Your last question, I think was referencing further opportunity for efficiencies, optimization, both at the corporate level, networks, and local. And absolutely, I definitely think we're continuing to do work. As I said in my prepared remarks, we're not done yet. The 400 to 600 basis point improvement, I think is a beginning. There is more work to be done at the networks. There is more work to be done with the corporate office. There is certainly more work to be done in Local as we identify ways to improve the operating efficiencies and the performance of the business. And I think you'll see us continue to execute against that plan.

Is there any change, Adam, or thoughts just on at the Networks division, the portfolio, the offering there? I mean, I know we've talked about must carry, not must carry. But I just mean to leverage better against where the CPMs are highest. I know it's hard to buy. There aren't a lot of WNBAs or NWSLs lying around out there. But there's a pretty big uplift in content cost at the networks right now as they get past the strikes. And so there's probably going to be a bunch more stuff coming available. But is there a programming change or any thoughts on how to reinvigorate growth at the networks level.

I mean, I think we're executing a plan for margin expansion for next year and I expect it to include a focus on revenue as well as expense. Obviously, we saw the benefit of the upfront benefit of women's sports and live sports in general, in our upfront, and we'll continue to evaluate additional opportunities. There are no shortage of opportunities. The question is, which of them are right for us. I will tell you, the other big opportunity we continue to see in front of us is in connected TV, and we saw the value of having live sports allowing us to drive greater connected TV revenue in the upfront and we would continue to expect connected TV growth ahead. We'll continue to look at our portfolio. I referenced it before with respect to divestitures or M&A. I would say the same thing with networks. We'll always be looking at our networks portfolio and trying to determine the best allocation of our resources from a brand perspective to ensure that we're continuing margin expansion in '25 and beyond.

Next, we'll try again with Craig Huber of Huber Research Associates. [Operator Instructions]

A few questions, guys. Can you go through again all these costs that you're taking out of Scripps Networks? I'm curious, can you give us a rough sense of what percentage of the costs are coming out from just the news part in particular? So how soon is that I'm trying to get to?

Yes. So beginning at the start of 2025, our scaled back Scripps News operation is expected to generate annualized net savings of $35 million. And so and for the full year next year, we implied an increase in margin of 400 to 600 basis points. So you should be able then to kind of back into what the other the remainder is. And as we said, it's and Adam kind of alluded to, it's really looking across the entire expense structure and looking for efficiency in programming spend, personnel spend, everything to drive that $400 million to $600,000 And as we also said, we're already actioning a lot of that. You're seeing us down 9% in the fourth quarter already in expense year over year in the Network segment. And then appreciate that.

And Jason, when you talk about 400 to 600 basis point improvement next year, is that assuming what, flat revenues next year? What are you assuming there?

We're not providing revenue guidance this time for 2025. I think you'll hear us talk more about that when we get to the February call.

Sorry, I may ask it differently than, is 100% or more than 100% of that 400 to 600 basis points from expenses or is there a revenue contribution uplift as well that's benefited to get you that? I mean, that's a big increase. I'm just trying to figure out what you're trying to what you're assuming in your head on this revenue side.

We're not giving out anything specific on revenue. I will say that a large chunk of that is absolutely going to be on the expense side. And that's why we gave the guide of down high single digits in Q4. We were down mid-single digits in Q3. You're already starting to see that roll through the P&L.

Okay. Thanks for that. And then just step back a second. On the macro side, I think, Adam or Jason, how are you feeling about the U.S. economy right now from all the different markets you're in, your national exposure for advertising. How you is the macro feeling better to you guys versus say 6 months ago, worse or about the same? Just want to get a sense of how that headwind is going for you? How are you thinking about that?

Craig, I'd say it's about the same. Obviously, there is some cyclicality in it. We're heading into the Q4 with healthcare spending. We're heading into the Q4 where we expect to see retail come on strong. There was, I think, a sense that national advertisers sort of sat out a little bit during the last couple of months as a result of the election. There's just been a tremendous amount of noise and you can see that. It's not just displacement, I actually think it's sitting out and I think we're starting to see that come back because they know that in order to make their cash registers ring, they need to place their buys. From an economy perspective, I guess there are those that are way smarter than me that can come up with an answer there. I think it's going to depend on, what happens on Tuesday to some extent. But clearly, Wall Street feels like things are good. Unemployment is still pretty low. Inflation is coming down, things seem to be heading in the right direction. We've seen stabilization in VR, which is indicative of the way people feel about spending directly out of their pocketbooks. So, that's probably the best answer I can give you.

Okay. My last question is, I guess, Jason, core advertising pacings post the election? How are those tracking year-over-year? That would be helpful to know that.

It's Lisa. As we said, Q4, we're seeing an improvement over Q3. We are starting to see some of the categories come back in November and certainly it's a little too soon to say in November. I think the phenomenon that occurred over the last year, Craig, is that dollars are being written closer and closer to air dates. So we expect to see December pick up here after the election.

So it's hard to figure out or let us know how things are tracking on a pacing basis for the TV stations post the election in the next 3 weeks?

Right now, the comparisons are pretty challenging given the amount of displacement we've had with our record political advertising.

But -- I'm sorry, post the election, though, I mean, just specifying November 6 forward. Do you have a sense how that's looking year-over-year to core advertising?

In terms of -- it's improving, certainly after the election, and we're seeing sequential improvements in our top 5 categories.

Does that mean -- do you think it's up year-over-year? Or is there anything you could share with us on that post the election?

I don't -- I doubt that will be up year-over-year given the amount of displacement that we're seeing. Even we're not going to cut the months. So I think we -- because of the political displacement, we're not going to see year-over-year improvements. But certainly, we'll see sequential improvements as we get back to business.

Okay. So you really can't help us with November 6 forward on year-over-year base how was pacings are looking for the TV stations versus a year ago. Putting aside the displacement. That's obviously November 5 and earlier, I'm talking about November 6 and afterwards. Sorry to keep asking. I'm just trying to get a very specific point.

So what I would say is we typically don't break down core revenue on these calls to that level of granularity. We talk about it on a quarterly basis. And so we certainly are -- will see as the displacement runs off an uptick in core momentum, but I don't think we're providing any other color beyond that on this call.

Any other questions from analysts before we wrap up the call. All right, Adam, do you have a couple of words.

Yes. This is Lisa Knutson's last earnings call, and I just wanted to thank you for your leadership across the company since practically 2008 in senior leadership. Those of us that have had the chance to work alongside Lisa have been privileged to do so. And many of you, investors and sell-side analysts have had that opportunity to get to know Lisa, know what a quality person she is and she'll certainly be missed in this room.

Thank you, Adam. Thanks for joining us. We're now going to disconnect the call.