The E.W. Scripps Company (NASDAQ:SSP) Q3 2023 Earnings Call Transcript

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We’re pleased to have completed a very successful first season with WNBA on ION. We harness the power of our over-the-air signal, pay TV carriage and connected TV distribution to help the league increase its TV reach by nearly 30%. A third of our viewers this season watch the WNBA Friday night spotlight on ION over the air while 10% watched on FAST, all new reach for the league. Here too, live sports rights drove new value for Scripps with 65% of the revenue we generated from sponsorships and advertising, coming from new-to-script accounts. And as you know, advertising around live sports commands a hefty premium above our average unit rates. We’re already well into the sales cycle for our second season with the WNBA and off to a very good start.

In the near future, we expect to tap into ION’s powerful reach for similar national rights agreements with leagues that recognize the power of partnership with Scripps Sports, setting us up well for growth in 2024 and beyond. As you can see, Scripps is enthusiastic for good reason about the ongoing value of the advertising supported TV marketplace. And our third lever for 2024 will create new opportunity for growth in the over-the-air television market. Given our company’s outside share of over-the-air viewing, we’ve told you that we’d be working to accelerate OTA’s growth. Last year, our marketing campaigns drove up to a 30% increase in digital antenna sales as reported by the antenna makers we work with. But we still recognize the need to solve some of the challenges consumers face with digital antennas.

And we saw an opportunity to revolutionize the free TV experience, especially at this time of rapidly rising streaming costs and relative indifference to the pay TV bundle. That’s why in August we relaunched Tablo and over-the-air TV device that aggregates OTA and connected TV channels with a DVR in a modern user experience that vials to Gen Z as much as baby boomers. It allows you to stream and watch OTA on any TV, phone or tablet in your house through an app. For the new Tablo consumer, it’s a one-time cost can be purchased bundled with or without a digital antenna and today has no subscription fees. Tablo owners get free premium network and fast channel programming every local NFL game and all of the live professional and college sports on broadcast.

In the two months since the soft launch, we are seeing very enthusiastic consumer and media reviews. People have a real passion for this product. Sales have been brisk through our retail partners Amazon, Best Buy and directly at tablotv.com. Just this week, Tablo was live on the home shopping network and sold out minutes. Soon will be sold on walmart.com. We’re launching the marketing campaign in earnest this quarter and expect to share more metrics on future calls. For now, what’s important to know is that, Tableau will grow TV viewing over the year, especially for live sports, so we can turn more eyeballs into ad dollars. Turning to Connected TV, our fourth free cash flow driver our efforts to distribute and monetize our linear network SaaS marketplace, have quickly created a new $100 million business.

We expect double-digit growth on that $100 million next year. And of course, the fifth cash flow driver is the influx of high-margin political advertising in the presidential election year, when we and our broadcast peers are best positioned to capitalize on the $10 billion in projected annual election spending. Beyond these five growth drivers for 2024 is the ongoing benefit of our reorganization work, which Lisa will discuss in a moment. We remain focused on both aggressively tackling the near-term challenges in the media marketplace and creating a more efficient, cost effective, and high-performing business. Scripps is carving out a valuable durable niche in this chaotic media ecosystem. And because of that, I encourage investors not to paint us with the same broad brush as companies that are irrationally expanding into streaming, graveling with constant subscriber churn, and all the while leaving off their valuable businesses with no clear path to profitability.

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