E.w. Scripps Company (the) · NASDAQ:SSP
E.w. Scripps Company (the) — Proxy Contest (April 2018)
50 slides from E.w. Scripps Company (the)'s proxy contest presentation, Apr 12, 2018
Slide 1: The E.W. Scripps Company Investor Presentation Spring 2018
The E.W. SCRIPPS company Investor Presentation Spring 2018
Slide 2: Disclaimer
Disclaimer DISCLAIMER Forward-Looking Statements Certain statements in this communication may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words
Slide 3: Scripps serves audiences through a growing portfolio of local and national media brands
Scripps serves audiences and businesses through a growing portfolio of local and national media brands. We are well-positioned to serve customers through our two key segments: Local Media: With 33 television stations and their digital media outlets, Scripps is one of the nation’s largest independent
Slide 4: Company history and milestones
2016 Acquires Stitcher to fold into Midroll JMG sold to Gannett 1878 Edward W. Scripps borrows $10,000 to start the Penny Press in Cleveland 1935 Enters radio business with purchase of station in Cincinnati; renames it WCPO 1947 Launches first TV station, WEWS in Cleveland 2011 Adds four TV stations
Slide 5: Executive Summary chapters
Chapter 1 Successful Transformation Chapter 2 The Value Creation Ahead Chapter 3 Right Board And Right Management Team Chapter 4 The Missing GAMCO Thesis Chapter 5 Governance Overview Executive Summary
Slide 6: Our Board Is Overseeing A Successful Evolution
Our Board Is Overseeing A Successful Evolution Chapter 1
Slide 7: Strategic direction and transformation from past to present
Present Execute a buy-sell-swap strategy, grow retransmission revenue and reduce costs in order to optimize TV station group performance Scale national businesses, maximizing audience, revenue growth potential and free cash flow contribution Continue to prioritize near-term operating performance whi
Slide 8: Comprehensive Strategy Focused On Delivering Value To Shareholders
In The Near Term Complete reorganization of the Company’s businesses according to the marketplaces they serve: Local and National Pursue in-market consolidation through buy-sell-swap station acquisition strategy, allowing us to assemble the best performing TV portfolio possible Reduce corporate and
Slide 9: Local Media and National Media Brands
Local Media Brands National Media Brands Boise, ID KiVi Idvitc.com Radio: 4 FM Twin Falls, ID KSAW-LD kasawtv.com Denver KMGH, KZCO, KZFC thedenverchannel.com aztecacolorado.com Las Vegas KTNV Ktnv.com Bakersfield, CA KERO, KZKC turnto23.com azteca42.com San Diego KGTV, KZSD 10news.com Phoenix KNXV
Slide 10: Our M&A Priority Is To Strengthen Our TV Portfolio
Our Strategy Our M&A Priority Is To Strengthen Our TV Portfolio Chapter 1 Build on our proven track record as a TV consolidator (McGraw-Hill, Granite Broadcasting, Journal Media Group) Engage in a buy-sell-swap strategy, seizing opportunities in light of TV ownership regulation changes to strengthen
Slide 11: Cost Initiatives Will Create A Stronger, Leaner Company
Cost Initiatives Will Create A Stronger, Leaner, Higher Performing Company Chapter 1 Cost reductions will provide a meaningful boost toward goal of margin and cash flow improvement Rightsizing the cost structure will improve operating performance and enhance broadcast cash flow We expect to realize
Slide 12: Selling The Radio Business
Selling The Radio Business Will Help Us Further Optimize Our Portfolio Chapter 1 4 Selling the radio division allows us to focus on core local TV portfolio and the growth opportunities in National Media Proceeds to be used for buy-sell-swap and to pay down debt
Slide 13: Growth Path For National Media Segment
Our Growth Path For Our National Media Segment: We Expect Continued Margin Expansion As We Scale Our National Brands Chapter 1 1. Create content that draws key target demographic groups 2. Grow nationwide scale and audience reach 3. Convert significant inventory from direct response advertising to m
Slide 14: We Continue to Target Attractive Returns in the Near-Term
We Continue to Target Attractive Returns in the Near-Term Chapter 1 6 We expect cash flow from operations to grow more than 40 percent from 2016 levels to 2020, driven by retransmission revenue increases and restructuring initiatives We expect margin improvement of approximately 400 bps from 2018 to
Slide 15: We Take A Balanced Approach To Allocating Capital
We Take A Balanced Approach To Allocating Capital Chapter 1 Cash And Debt (1) Cash on hand: $149 million Total debt:$693 million Liquidity:$275 million 2012 – 2017 Uses Of Capital The board authorized $100 million in November 2012, $100 million in May 2014 and another $100 million in November 2016 t
Slide 16: Our Payout Ratio Is Attractive Versus Peers
Our Payout Ratio Is Attractive Versus Peers And Sustainable Longer Term Chapter 1 Total Payout Ratio Total Return of Capital as % of 2017A LFCF 1 2 3 4 Median ROC: 57% Median Dividend Payout Ratio 29% Buybacks as % of ROC 65% 35% 100% 21% 30% 100% Source: Capital IQ, Company Filings Total return of
Slide 17: Strong Balance Sheet With A Path To De-Levering
We Maintain A Strong Balance Sheet With A Path To De-Levering Chapter 1 Investors look at our debt levels by calculating the ratio of our net debt ($543 million) to a two-year average of our EBITDA. Right now, our debt is about 3.5 times our EBITDA average – the lowest among our peer group of compan
Slide 18: Restructuring Initiatives Well-Received By Wall Street Research
Restructuring Initiatives Have Been Well-Received By Wall Street Research Chapter 1 Regarding its “Buy” rating: “We now calculate a 2018/2019 PMV of $24 per share for SSP based on 8x BCF, rising to $31 per share in 2019/2020.” “We came away impressed with the strong revenue growth that Katz has alre
Slide 19: Future Of Scripps – Delivering Long-Term Shareholder Value
Future Of Scripps – Delivering Long-Term Shareholder Value Chapter 2
Slide 20: Focused On Long-term Value Creation
In Addition To Our Strategy To Enhance Near-Term Performance, We Are Focused On Long-term Value Creation Our Comprehensive Strategy Centers On Delivering Value To Shareholders Chapter 2 In Local Media, we are focused on creating the strongest portfolio to maximize broadcast cash flow Robust viewersh
Slide 21: Here's Why We Love The Television Business
High barriers to entry Multiple revenue streams Local/national advertising blend Predictable revenue: long-term retransmission contracts Predictable expenses: long-term network contracts Long-term, mutually beneficial partnerships Strong, trusted brands built on serving local communities The adverti
Slide 22: Broadcast TV Commands The Largest Primetime Audiences
Top 10 primetime shows ranked by average weekly viewers, fall 2017 Source: Nielsen NNTV Program Report. All Broadcast and Cable. Jan. 1, 2017 – Nov. 19, 2017. Live+7. Broadcast Prime Rank Show Network Viewers 1 NBC SUNDAY NIGHT FOOTBALL NBC 18,578,000 2 BIG BANG THEORY CBS 18,523,000 3 THE GOOD DOCT
Slide 23: Our Local Brands Have The Greatest Reach
Our Local Brands Have The Greatest Reach Into The Local Markets’ Audiences For Advertisers Chapter 2: Local Media
Slide 24: Scripps' Retransmission Revenue Trajectory
Scripps’ Retransmission Revenue Trajectory 1 $ In millions CAGR: ~35% Our Cable/Satellite Retransmission Revenue Continues Meaningful Growth Next Year And Beyond Chapter 2: Local Media 2013, 2014 and 2015 figures are pro-forma for acquisition of Journal, which do not necessarily reflect historical r
Slide 25: Local Brands Essential To New Over-The-Top Services
Our Local Brands Are Essential To The Launch Of New Over-The-Top Services Chapter 2: Local Media These Over-The-Top (OTT) Services Are Carrying Or Will Soon Carry Scripps’ Local Television Programming
Slide 26: Television Stations Well Positioned In U.S. Elections
Scripps’ Television Stations Remain Well Positioned To Play A Leading Role In U.S. Elections Chapter 2: Local Media SD 3 ND 3 CO 9 IA 6 MN 10 WI 10 NE 5 FL 29 MT 3 WY 3 UT 6 ID 4 NV 6 WA 12 OR 7 PA 20 VA 13 NC 15 GA 16 NM 5 TX 38 OK 7 KS 6 AZ 11 IL 20 MO 10 CA 55 KY 8 NY 29 4 NH WV 5 OH 18 IN 11 TN
Slide 27: Fast-Growing Katz Networks
The Fast-Growing Katz Networks Leverage Target Audiences To Attract A Broad National Ad Base Chapter 2: National Media Multicasting takes advantage of the growth in the over-the-air marketplace. Katz is the multicasting industry leader, with great audience resonance and advertiser relationships. At
Slide 28: Antenna Use Has Been Accelerating
KATZ NETWORKS Antenna Use Has Been Accelerating, With 60 Million People Anticipated To Watch TV Over-The-Air This Year Chapter 2: National Media Consumers Watching TV Over-The-Air Source: MRI GFK 2017 Home Technology Monitor Ownership and Trend Report + ‘18/’19 internal projections. In Thousands
Slide 29: Katz Networks Reach About 90 Percent Of U.S. TV Households
87% of U.S. households 87% of U.S. households All Four Katz Networks Reach About 90 Percent Of U.S. TV Households Chapter 2: National Media 90% of U.S. households 91% of U.S. households
Slide 30: Shifting Inventory To A More Premium Advertiser Mix
LOWER REVENUE HIGHER REVENUE GENERAL MARKET HYBRID DIRECT RESPONSE DIRECT RESPONSE 35% of General Market Rate 80% of General Market Rate Shifting Inventory To A More Premium Advertiser Mix Is One Growth Driver Chapter 2: National Media Example: Network Advertising Inventory
Slide 31: Newsy Is A Fast-Growing News Network
Newsy has journalists across the country reporting for its 24-hour news channel across multiple platforms We are nearly fully deployed on all the major over-the-top and other internet-delivered television services Newsy will be live in 22 million cable households by the end of April Newsy is executi
Slide 32: Expanding Newsy To Cable
Digital Advertising Over-the-Top Advertising Cable Carriage Fees and Advertising + + We Are Expanding Newsy To Cable Because That’s Where The Viewers – And The Money – Are Chapter 2: National Media Traditional pay television provides multiple revenue streams for advertising and subscriber fees Tradi
Slide 33: Podcasting Is A Rapidly Growing Media Marketplace
Podcasting Is A Rapidly Growing Media Marketplace Midroll Is A One-Stop Shop For Advertisers Seeking To Reach Younger Listeners Content Creation MONETIZATION Distribution 25 percent of U.S. listens to podcasts monthly 2009 24 million 2014 40 million 2017 67 million 2020 90 million* MONTHLY LISTENERS
Slide 34: National Media Revenue Growth Diversifies Revenue Streams
The National Media Brands’ Revenue Growth Is Helping Us Diversify Our Revenue Streams Chapter 2: National Media Growing contribution from Retransmission and National Total Revenue $ in millions Revenue Streams:
Slide 35: Right Board And Right Management Team
Right Board And Right Management Team Chapter 3
Slide 36: Distinguished New Leadership Team
Assumed the role of CFO in November 2017 In August 2017, Knutson was promoted to Chief Strategy Officer, adding corporate development to her prior responsibilities as Chief Administrative Officer Prior to joining Scripps in 2005, Knutson led HR finance and operations at Fifth Third Bank and served i
Slide 37: Engaged, Highly Experienced Board
Engaged, Highly Experienced Board… Chapter 3 Lauren Fine will join the Board, if elected by holders of Class A Common shares, at the 2018 Annual Meeting, replacing J. Marvin Quin, who is not standing for re-election Excludes Peter Thompson, who is not standing for re-election at the 2018 Annual Meet
Slide 38: Right Set Of Skills And Experience To Direct Corporate Strategy
…With The Right Set Of Skills And Experience To Direct And Implement Corporate Strategy Chapter 3 NAME 1 AGE TENURE ELECTED BY: OPERATIONAL EXPERIENCE SHAREHOLDER PERSPECTIVE PUBLIC COMPANY CEO EXPERIENCE TELECOM / MEDIA SECTOR EXPERTISE OUTSIDE PUBLIC BOARD EXPERIENCE FINANCIAL EXPERTISE TECHNOLOGY
Slide 39: We Continually Refresh Our Board To Support Strategy
Chapter 4 We Continually Refresh Our Board To Support Strategy Chapter 3 Add Pete and Kelly here Pete: Tivo, Amazon, deep emerging-industry experience Kelly: Operating experience for media companies; deep understanding of digital media dynamics Lauren Fine will join the Board, if elected by holders
Slide 40: Board Composition And Diversity Best The S&P 1500
Chapter 4 The Scripps Board Composition And Diversity Best The S&P 1500 Company Performance Chapter 3 Source: IRRC Institute & ISS Board Refreshment Trends, Jan 2017 SSP figures are pro-forma for the addition of Lauren Fine, who will join the Board if elected by holders of Class A Common shares at t
Slide 41: Scripps Engages Frequently With Shareholders And Seeks Input
Chapter 4 Scripps Engages Frequently With Shareholders And Seeks Input Chapter 3 Regular outreach to our shareholders (including GAMCO) to discuss governance and compensation matters Attendance at 10+ industry investor conferences per year Over 200 in-person investor meetings a year Annual investor
Slide 42: GAMCO's Thesis Is Misguided
GAMCO’s Thesis Is Misguided Chapter 4
Slide 43: Mr. Gabelli Never Articulated A Coherent Thesis For Company Change
As it does with all investors, Scripps has sought to foster an open dialogue with GAMCO about company operations and strategy as well as board composition. Despite Scripps' attempts at dialogue, GAMCO escalated to a proxy contest, with little explanation. To avoid any risk, executing on our strategy
Slide 44: GAMCO Margin Argument Unclear
Chapter 6 GAMCO Margin Argument Unclear; Our Strategy Provides Runway To Near-Term Margin Expansion Chapter 4 Local Media margin expansion will be driven by retransmission growth and restructuring initiatives Margin improvement driven by our buy-sell-swap strategy and efforts to go deeper in existin
Slide 45: Governance Overview
Governance Overview Chapter 5
Slide 46: Governance Overview
Annually elected Board of Directors Separate Chairman, Separate Chief Executive Officer Lead Independent Director Independent Directors meet without management at every Board meeting Annual review of executive compensation to ensure alignment with shareholder interests Chapter 6 Governance Overview
Slide 47: Aligning Executive Pay With Our Shareholder Interests
Aligning Executive Pay With Our Shareholder Interests Pay-Performance Alignment With Strong Common Share Support Target Pay That Is Majority At-Risk Shareholder-Friendly Provisions That Minimize Pay-Related Risk Balanced Design Weighted Heavily On Performance Annual review of compensation program to
Slide 48: Focus On Journalism That Makes A Difference
Focus On Journalism That Makes A Difference Chapter 5 The company motto since 1923 has been Give Light and the People Will Find Their Own Way, which inspires its employees to provide news and other information of the highest quality in order to help improve the lives of those in their communities. A
Slide 49: Conclusion: Scripps Is Well-Positioned To Create Value
Chapter 6 Conclusion: Scripps Is Well-Positioned To Create Meaningful Short-Term And Long-Term Value For Shareholders Conclusion Reorganized Business and Right-Sized Cost Structure to Capture Value in the Short Term Diversified Revenue Streams and Business Models to Strengthen Our Foundation for Lon
Slide 50: Board Recommends You Vote The WHITE Proxy Card
Chapter 6 The Board Of Directors Recommends That You Vote The WHITE Proxy Card Conclusion GAMCO Seeks to Disrupt Scripps’ Momentum to Pursue an Undisclosed Agenda GAMCO has not indicated any particular failing by Scripps, its Board, or its management team Failed to provide any credible arguments as