E.w. Scripps Company (the) · NASDAQ:SSP
E.w. Scripps Company (the) — Debt Investor Presentation (March 2019)
35 slides from E.w. Scripps Company (the)'s debt investor presentation, Mar 26, 2019
Slide 1: Lender Presentation: Cordillera Acquisition
THE E.W. SCRIPPS COMPANY LENDER PRESENTATION CORDILLERA ACQUISITION MARCH 2019 CONFIDENTIAL
Slide 2: Disclaimer: Forward-Looking Statements
THE E.W. SCRIPPS COMPANY 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
Slide 3: Agenda
THE E.W. SCRIPPS COMPANY AGENDA I. Introduction Wells Fargo Securities II. The E.W. Scripps Company Overview Adam Symson, President / CEO, Scripps III. Acquisition Overviews Lisa Knutson, EVP / CFO, Scripps IV. Key Credit Highlights Doug Lyons, SVP, Controller & Treasurer, Scripps V. Financial Overv
Slide 4: Introduction
INTRODUCTION INTRODUCTION o On October 29, 2018, The E.W. Scripps Company ("Scripps" or the "Company") announced that it will be acquiring 15 television stations in 10 markets from Cordillera Communications ("Cordillera") for $521 million o Scripps intends to finance the acquisition through today’s
Slide 5: Sources & Uses and Pro Forma Capitalization
INTRODUCTION Sources & Uses and Pro Forma Capitalization ($ in Millions) Sources of Funds Uses of Funds Step 1: Incremental Cordillera Term Loan B $525 Cordillera Purchase Price $521 Cordillera Existing Cash 11 Transaction Costs 15 Total Sources $536 Total Uses $536 ($ in Millions) Sources of Funds
Slide 6: The E.W. Scripps Company Overview
THE E.W. SCRIPPS COMPANY OVERVIEW
Slide 7: Scripps Is One Of The Nation's Largest Local Broadcasters
THE E.W. SCRIPPS COMPANY Scripps Is One Of The Nation’s Largest Local Broadcasters And Owns Content Brands With National Reach 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 segment
Slide 8: Laying The Groundwork For The Next Evolution Of The Company
THE E.W. SCRIPPS COMPANY We’ve Been Laying The Groundwork For The Next Evolution Of The Company COMPLETED WORK WORK IN PROGRESS o Re-organized the company into National Media and o Acquire more TV stations to increase depth, Local Media divisions to capitalize on consumer durability and national rea
Slide 9: Continued Margin Expansion As We Grow Our National Brands
THE E.W. SCRIPPS COMPANY We Expect Continued Margin Expansion As We Grow Our National Brands OUR NATIONAL MEDIA GROWTH PLAN THE PROGRESS ON OUR PLAN For Newsy, Katz and Stitcher: 40 million Newsy subscribers this year 1. Create content that draws key target demographic groups 2. Grow nationwide dept
Slide 10: Recent Acquisition Of Triton Furthers National Division Goals
THE E.W. SCRIPPS COMPANY Our Recent Acquisition Of Triton Furthers Our National Division Goals of Margin Expansion and Consumer Focus Terms of the deal: o Purchase price: $150 million o Financing: Cash on hand Financial projections: o Immediately accretive to company margins o 2019 revenue growth in
Slide 11: Acquisition Overviews
ACQUISITION OVERVIEWS
Slide 12: Traits We Seek As We Rebalance The Local Media Portfolio
ACQUISITION OVERVIEWS These Are The Traits We Seek As We Rebalance The Scripps Local Media Portfolio Network Affiliation Duopolies Political Footprint In-Market Rank Reach Diversify and balance Enhance in-market Add stations to Increase the number Expand our national our network affiliation depth an
Slide 13: Cordillera Enhances Our Depth, Durability And Reach
CORDILLERA COMMUNICATIONS Cordillera Enhances Our Depth, Durability And Reach Highlights Acquired Stations Overview % of U.S. Primary Secondary Ad Revenue Cordillera operates high quality stations (all 10 acquired 1 o DMA TV HH Market Affiliate Affiliates Rank # markets are #1 ranked) 63 0.4% Lexing
Slide 14: Nexstar-Tribune Stations Increase Reach To 30% Of U.S. TV Households
NEXSTAR-TRIBUNE STATIONS The Nexstar-Tribune Stations Increase Our Local Media Reach To 30% Of U.S. TV Households Highlights Station Overview % of U.S. Current Ad Revenue 1 o Diversifies Scripps’ network affiliations, adding 2 DMA TV HH Market Affiliate Owner Rank # CBS stations, 2 Fox stations and
Slide 15: Acquisitions Enhance Strength Of Our Local Media Platform
ACQUISITION OVERVIEWS The Acquisitions Enhance The Strength And Operating Performance Of Our Local Media Platform o The acquisitions of Cordillera and the seven Nexstar-Tribune markets will expand our reach to 30% of U.S. TV households with 59 stations serving 42 markets o Scripps will have the No.
Slide 16: Fourth-Largest Independent Broadcaster Upon Closing
ACQUISITION OVERVIEWS Upon Closing Of These Transactions, Scripps Will Be The Fourth-Largest Independent Broadcaster PERCENTAGE OF U.S. TELEVISION HOUSEHOLDS REACHED 61% 40% 37% 30% 24% 19% 11% 11% 7% 5% 3% 16 Note: Pro forma for all announced transactions as of Wednesday, March 20, including Nexsta
Slide 17: Expands Our Local Media Reach To 30% Of U.S. TV Households
ACQUISITION OVERVIEWS Expands Our Local Media Reach To 30% Of U.S. TV Households E.W. Scripps GRAND RAPIDS-KALAMAZOO- MILWAUKEE, WI Cordillera COLORADO SPRINGS, CO BATTLE CREEK, MI WTMJ Nexstar-Tribune KOAA, KZCS WXMI MISSOULA, BILLINGS, BUTTE- DETROIT, MI BOZEMAN, GREAT FALLS, HELENA, MT BOISE, ID
Slide 18: Key Credit Highlights
KEY CREDIT HIGHLIGHTS
Slide 19: Scripps Credit Highlights
KEY CREDIT HIGHLIGHTS Scripps Credit Highlights 1 Portfolio of local and national television / digital media brands provides diversified revenue streams 2 Strong television stations in large, NFL markets 3 Growth of retransmission revenue provides additional opportunities to improve margins 4 One of
Slide 20: Diversified Across Revenue Streams and Affiliations
KEY CREDIT HIGHLIGHTS 1 Scripps Is Diversified Across Revenue Streams and Affiliations 2018 Revenue by Segment 2018 Revenue by Activity 2018 Revenue by Affiliate Total Revenue: $1,764 million1 Other 1% Other 7% Other Political 4% National <1% 12% 9% 18% Advertising 2 47% 57% 15% Retransmission 27% L
Slide 21: Strong TV Stations In Large, NFL Markets
KEY CREDIT HIGHLIGHTS 2 Strong TV Stations In Large, NFL Markets Green Bay-Appleton, WI E.W. Scripps Buffalo, NY Cordillera DMA No. 67 DMA No. 52 Nexstar-Tribune % Household Reach: 0.4% % Household Reach: 0.5% Milwaukee, WI New York, NY DMA No. 36 DMA No. 1 % Household Reach: 0.8% % Household Reach:
Slide 22: Significant Retransmission Revenue Growth Expected To Continue
KEY CREDIT HIGHLIGHTS 3 We Have Experienced Significant Retransmission Revenue Growth That Is Expected To Continue Gross Retransmission Revenue Trajectory1 Network and MVPD Renewals2 $ IN MILLIONS $304 1 station 1 station $260 2 stations 15 stations 8 stations $221 5 stations $148 1 station 11 stati
Slide 23: Stations Continue To Play A Leading Role In U.S. Elections
KEY CREDIT HIGHLIGHTS 4 Scripps’ Television Stations Will Continue To Play A Leading Role In The U.S. Elections Pro Forma Scripps Markets with at Least One 2020 Election Governor 24% 2018 Resulted in $140M of Political Revenue US Senate 55% (39% Increase Over 2016) 2020 Poised to Present House 100%
Slide 24: National Media Brands Rapidly Growing And Attracting Large Audiences
KEY CREDIT HIGHLIGHTS 5 National Media Brands Are Rapidly Growing And Attracting Large Audiences The opportunity to convert Nationwide depth, durability and Content strategies significant inventory from direct audience reach that provide that draw key target response advertising to the Scripps acces
Slide 25: Strong Balance Sheet and Cash Flow Generation
KEY CREDIT HIGHLIGHTS 6 Strong Balance Sheet and Cash Flow Generation Gross Leverage in Line with Peers1 5.3x 5.1x 2 5.0x Peer Average: 4.9x 4.5x 4.4x Market Cap ($mm) $5,113 $1,771 $2,177 $3,497 $2,997 Industry Leading FCF Conversion (2017A / 2018A)3 62% 60% 55% 53% 47% Note: Market capitalization
Slide 26: Experienced Management Team
KEY CREDIT HIGHLIGHTS 7 Experienced Management Team Name Scripps Tenure Media Experience Biographies . Served as Scripps’ COO, Chief Digital Officer and Director of Content & Marketing Adam Symson 15+ years 25+ years . Prior roles include Executive Producer for KNXV TV and Investigative Producer for
Slide 27: Financial Overview
FINANCIAL OVERVIEW
Slide 28: Scripps Stand-Alone Reported Historical Financial Metrics
FINANCIAL OVERVIEW Scripps Stand-Alone Reported Historical Financial Metrics Revenue Adjusted EBITDA & Margin $ IN MILLIONS Local Media National Media Other $ IN MILLIONS Adjusted EBITDA Margin $1,208 $1,043 $233 $196 $874 $877 $170 $654 $92 $107 22% 19% 14% 12% 16% 2015A 2016A 2017A 2018A '17 / '18
Slide 29: Bridge to Pro Forma 2018 L8QA Adj. EBITDA
FINANCIAL OVERVIEW Bridge to Pro Forma 2018 L8QA Adj. EBITDA 2018 L8QA Adj. EBITDA Bridge $ IN MILLIONS $320 $10 $57 (Excluding $8 NXST-TRCO Stations) $57 $7 ($9) $3 $16 $180 $170 Standalone 2018 L8QA Radio Katz Acquisition Triton Acquisition 2018 L8QA Gray Stations Cordillera Acquisition Cordillera
Slide 30: Questions?
QUESTIONS?
Slide 31: Appendix
APPENDIX
Slide 32: Scripps Stand-Alone Historical Financial Summary
APPENDIX Scripps Stand-Alone Historical Financial Summary ($ in Millions) Fiscal Year Ending December 31, L8QA 2016 2017 2018 2017 / 2018 Segment Operating Revenues Local Media $835 $778 $917 $848 National Media 34 93 286 190 Other 5 5 5 5 Total Segment Operating Revenues $874 $877 $1,208 $1,043 Seg
Slide 33: Cordillera Historical Financials
APPENDIX Cordillera Historical Financials ($ in Millions) Fiscal Year Ending September 30, L8QA 9/30 L8QA 12/31 2016 2017 2018 2016 / 2017 2017 / 2018 2017 / 2018 Operating Revenues Core Revenues $125 $119 $115 $122 $117 Political 13 23 26 18 25 Retransmission Revenues 34 39 47 37 43 Digital 11 12 1
Slide 34: Scripps Stand-Alone Historical Statement of Operations
APPENDIX Scripps Stand-Alone Historical Statement of Operations ($ in Millions) Fiscal Year Ending December 31, L8QA 2016 2017 2018 2017 / 2018 Operating Revenues Advertising $609 $564 $836 $700 Retransmission and Carriage 221 260 304 282 Other 45 53 68 61 Total Operating Revenues $874 $877 $1,208 $
Slide 35: Pro Forma Adjusted EBITDA Reconciliation
APPENDIX Pro Forma Adjusted EBITDA Reconciliation ($ in Millions) Fiscal Year Ending December 31, L8QA 2016 2017 2018 2017 / 2018 Net Income $67 ($15) $20 $3 Amortization of Pension Losses 4 4 17 11 Gain (Loss) Due to Write-Ups/Downs of Assets - (5) 19 7 Gain (Loss) Due to Dispositions - (4) - (2) G
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