The E.W. Scripps Company (SSP)

Executive Summary / Key Takeaways

• Strategic transformation is delivering measurable results: Scripps has reduced net leverage from 6.0x to 4.6x in just over a year while simultaneously expanding Scripps Networks margins by 400-600 basis points, demonstrating that aggressive debt paydown and operational improvement can coexist with growth investments.

• Asset sales validate significant intrinsic value: Recent station sales at 8.5-9.2x EBITDA multiples—well above industry norms—combined with a $123 million cash infusion from divestitures, prove the market significantly undervalues SSP's assets at its current 0.16x sales and 1.30x free cash flow multiples.

• Sports strategy creates a durable competitive moat: Multi-year partnerships with four NHL teams, the WNBA Champion Las Vegas Aces, and NWSL franchises are driving core advertising revenue growth of nearly 2% in Q3 2025 while commanding premium ad rates, differentiating SSP from peers struggling with cyclical ad declines.

• Regulatory tailwinds could unlock consolidation premium: FCC Chairman Carr's push to relax ownership limits, combined with the Eighth Circuit striking down the Big 4 rule, positions SSP to benefit from in-market consolidation that management explicitly states will "deepen our presence in local markets" and "unlock greater value for shareholders."

• The critical variable is execution on CTV scaling: While Connected TV revenue surged 41-57% across recent quarters and is projected to exceed $120 million in 2025, this represents just 20% of Networks viewing—success in scaling this channel while maintaining premium pricing will determine whether SSP achieves sustainable revenue growth in a fragmenting media landscape.

Setting the Scene: A 147-Year-Old Media Company at the Inflection Point

The E.W. Scripps Company, founded in 1878 and headquartered in Cincinnati, Ohio, has evolved from a newspaper empire into a diversified broadcaster operating over 60 local television stations and national networks reaching nearly all U.S. television homes. This transformation reflects a broader industry shift from print to broadcast to digital, but SSP's current position is uniquely defined by a deliberate strategic reset that began in earnest in 2023. The company is simultaneously shrinking its debt burden, expanding its content moat through sports rights, and positioning for regulatory changes that could reshape local broadcasting.

The broadcasting industry faces existential headwinds. Cord-cutting continues to erode traditional pay-TV subscribers, streaming platforms are capturing advertising dollars, and economic uncertainty has made brands hesitant to commit spending. Yet SSP is outperforming peers on core advertising metrics while improving margins. How? The answer lies in a three-pronged strategy that treats balance sheet repair not as a defensive crouch but as an enabler of offensive growth. Management has made debt reduction the "highest capital allocation priority," using free cash flow to retire $1.7 billion in near-term maturities while investing in sports content and connected TV distribution that drive measurable revenue growth.

This approach contrasts sharply with competitors. While Nexstar pursues scale through the TEGNA merger and Sinclair grapples with political content risks, SSP is optimizing its portfolio for profitability rather than sheer size. The recent station swap with Gray Media —exchanging two SSP stations for five Gray stations—creates immediate efficiency opportunities without cash consideration, demonstrating a creative approach to consolidation that larger players cannot easily replicate. The question for investors is whether this disciplined, capital-efficient strategy can generate sufficient growth to justify a re-rating from current depressed valuation levels.

Technology, Products, and Strategic Differentiation: The Sports and CTV Moats

SSP's competitive advantage stems from two distinct but complementary strategies: an early-mover position in women's and overlooked professional sports, and an aggressive push into connected TV distribution that leverages its unique over-the-air footprint.

The Scripps Sports strategy represents a fundamental rethinking of local broadcasting economics. While competitors focus on expensive NFL or NBA rights, SSP has carved out a leadership position in women's sports—WNBA and NWSL games—and affordable NHL partnerships that reach full geographic markets. This matters because these leagues provide authentic connections with passionate fan bases while commanding premium advertising rates that are "more than 2 times its non-sports inventory," according to management. In Q3 2025, total sports volume in the upfront market was up over 30%, with WNBA revenue nearly doubling. These aren't marginal improvements; they represent a structural shift in how SSP monetizes its airtime.

The strategy extends beyond national networks to local stations, where full-season agreements with four NHL teams, the Las Vegas Aces, an NWSL team, and the Big Sky College Conference are "driving up core advertising revenue by several percentage points a quarter." This is real, measurable growth in a market where peers are reporting flat or declining core advertising. The Tampa Bay Lightning partnership launching in Q4 2025 is projected to bolster core revenue growth of about 10% despite the absence of political advertising. While competitors struggle with automotive category weakness—SSP's weakest segment in Q2 and Q3—the sports inventory provides a differentiated, recession-resilient revenue stream that attracts new advertisers and commands higher CPMs.

Connected TV distribution forms the second moat. SSP's networks—including ION, Bounce, Grit, and Court TV—reach nearly all U.S. television homes through free over-the-air broadcast, cable, satellite, and streaming platforms. This ubiquity is unique in the marketplace. Cable peers face preclusions from streaming due to operator contracts, and networks can't bypass affiliates. SSP's over-the-air networks face no such restrictions, allowing them to capture the 20% of viewing now occurring on streaming platforms. CTV revenue surged 57% in Q2 2025 and 41% in Q3, with management projecting full-year 2025 CTV revenue exceeding $120 million and "plenty of room for ongoing double-digit growth."

The strategic value of this distribution advantage becomes clear when considering the broader industry context. As cord-cutting accelerates and streaming service prices increase, over-the-air channels become more important to viewer choice. One in five non-pay-TV homes already watches television over-the-air alongside streaming subscriptions. SSP is uniquely positioned to capture this shift because its networks are "uniquely distributed in the FAST marketplace " and represent "the far right side of the premium bell curve." This isn't just about reaching cord-cutters; it's about commanding premium rates in a fragmented advertising landscape where advertisers crave reach and measurability.

Financial Performance & Segment Dynamics: Evidence of Strategic Success

The financial results provide compelling evidence that SSP's strategy is working, even in a challenging advertising environment. The Local Media division's core advertising revenue increased 1.8% in Q3 2025 despite a 27% total revenue decline due to the absence of political advertising. This outperformance relative to peers—who reported core declines in the low single digits—directly reflects the sports strategy's impact. The NBA Finals alone generated over $7 million in Q2, while retail advertising grew 5% and services categories showed strength.

Distribution revenue, representing retransmission fees , remained remarkably stable at $185.77 million in Q3 2025 (down just 0.4% year-over-year) and $565.57 million year-to-date (down 2.2%). This stability is crucial because it provides a recurring revenue base that partially insulates SSP from advertising cyclicality. Management notes that 70% of the retrans traditional MVPD subscriber base renews mostly in the first half of 2026, and while cord-cutting is real, the company sees "headroom on household rates based on the deals we've closed this year." More importantly, network affiliate fees are flat and expected to trend downward, creating potential for net retrans margin expansion as programming expense savings materialize.

The Scripps Networks division demonstrates the most dramatic improvement. While revenue was essentially flat in Q3 2025 at $201 million, segment profit surged 26.7% to $53.3 million, driving margins to 27%. This 400-600 basis point margin improvement for the full year—promised by management and delivered ahead of schedule—stems from aggressive expense management and the $35 million annual savings from shutting down Scripps News over-the-air operations. Expenses decreased 7.5% in Q3 and over 12% in Q2, showing that cost discipline is structural, not temporary.

The "Other" segment, which includes Tablo and the Scripps National Spelling Bee, remains a small drag with losses of $7.6 million in Q3, but this is consistent with expectations and represents minimal capital allocation. Shared services and corporate expenses of $21.4 million in Q3 are well-controlled, up only 2% year-over-year despite inflationary pressures.

Balance sheet transformation is the most compelling financial story. Net leverage fell from 6.0x in Q2 2024 to 4.6x in Q3 2025, driven by $1.7 billion in debt refinancing that extended maturities to 2028-2029 while increasing the cost of capital by only 1%. The company retired $719 million of 2026 term loans and $541 million of 2028 term loans, replacing them with longer-dated facilities. Two station sales—WFTX for $40 million and WRTV for $83 million—will generate $123 million in cash for further deleveraging. These sales occurred at multiples of 8.5-9.2x EBITDA, well above current transaction norms and validating the intrinsic value of SSP's assets.

Cash generation remains robust despite refinancing costs. Operating cash flow was $365.68 million over the trailing twelve months, with free cash flow of $300.42 million. The company used $44.5 million in transaction costs for refinancing and experienced a $93.1 million working capital headwind from reduced political advertising, yet still generated sufficient cash to reduce revolver borrowings to zero a full quarter ahead of guidance. As of September 30, 2025, SSP held $54.7 million in cash with $269 million in additional borrowing capacity.

Outlook, Management Guidance, and Execution Risk

Management's guidance for Q4 2025 and beyond reveals confidence in the strategic direction despite macro uncertainty. Local Media core revenue is projected to grow approximately 10% in Q4, a remarkable acceleration from the 1.8% growth in Q3, driven by the new Tampa Bay Lightning partnership and easier comparisons against prior-year political displacement. This guidance is not based on rosy economic assumptions but on measurable contributions from sports rights that are "driving up core advertising revenue by several percentage points a quarter."

Scripps Networks revenue is expected to decline in the low double-digit range in Q4, reflecting over $10 million in prior-year political revenue and reduced Medicare open enrollment advertising due to the government shutdown. However, expenses are also guided down low double digits, preserving margins. The underlying CTV growth engine remains intact, with management reiterating that "there's plenty of room for ongoing double-digit growth" and that streaming now accounts for 20% of all Networks viewing.

Full-year guidance improvements signal better cash generation than originally anticipated. Cash interest paid is now expected to be $165-170 million (down from earlier guidance), capital expenditures $45-50 million, and cash taxes $5-10 million. These reductions, combined with the $35 million Scripps News savings, will drive "significantly better cash flow in 2025 than originally anticipated."

The regulatory environment represents a potential catalyst that could accelerate the strategy. Chairman Carr's FCC is "revisiting and potentially relaxing existing ownership limits," which management views as "absolutely critical to our ability to continue to invest in localism and objective journalism." The Eighth Circuit's July 2025 ruling striking down the Big 4 ownership rule, effective October 21, 2025, removes a key barrier to in-market consolidation. SSP is already "seizing upon anticipated industry deregulation" through its Gray Media station swap, which creates three new duopolies in Mountain West markets and "immediate efficiency opportunities."

Management explicitly states that "the greatest opportunities for us will be with swaps and select asset sales" rather than large acquisitions, given the deleveraging priority. This disciplined approach contrasts with peers pursuing debt-funded M&A and positions SSP to benefit from consolidation without taking on additional risk. The company expects to pay off the remaining 2028 term loan balance through cash flow before maturity, leaving no other bond or term loan financings until 2029.

Risks and Asymmetries: What Could Break the Thesis

The most material risk is advertising market cyclicality beyond management's control. While sports strategy provides a buffer, SSP remains exposed to economic uncertainty that makes brands "hold on to their dollars for longer because they're unsure of what's next." Automotive advertising, the company's weakest category, faces additional pressure from tariffs and consumer hesitancy. If the economic environment deteriorates further, even premium sports inventory may not command expected rates, compressing the 2x+ ad rate premium that underpins the growth thesis.

Execution risk on the sports strategy is significant. The company has committed to multi-year agreements with leagues and teams, requiring consistent audience delivery and advertiser demand. While early results are strong—WNBA revenue nearly doubling, NHL partnerships driving local growth—these are still nascent programs. If viewer engagement disappoints or advertisers shift budgets to other platforms, the promised revenue contributions may not materialize. The Tampa Bay Lightning partnership launching in Q4 2025 represents a new market and sport for SSP, adding execution uncertainty.

Regulatory changes, while positioned as a tailwind, could face political or legal challenges. The FCC's ownership rule relaxation is not guaranteed, and any reversal would limit SSP's ability to consolidate markets and capture synergies. The Gray Media (GTN) swap, while announced, still requires regulatory approval and could face delays or conditions that reduce its efficiency benefits.

The Sinclair (SBGI) hostile bid represents a potential catalyst or risk. If Sinclair acquires SSP, the strategic direction could shift toward Sinclair's political content strategy, potentially alienating advertisers and viewers who value SSP's neutral, investigative approach. Conversely, if SSP remains independent but faces a protracted takeover battle, management distraction could impair execution.

Goodwill impairment risk exists in the Scripps Networks reporting unit, where fair value approximates carrying value. A 50 basis point increase in the discount rate would reduce fair value by approximately $110 million, potentially triggering non-cash charges that could spook investors despite having no operational impact.

Valuation Context: Significant Discount to Asset Value

At $4.39 per share, SSP trades at a market capitalization of $389.84 million, representing just 0.16x trailing twelve-month revenue of $2.51 billion and 1.30x free cash flow of $300.42 million. These multiples are strikingly low for a company generating positive free cash flow and reducing leverage. The enterprise value of $3.12 billion implies an EV/EBITDA multiple of 6.85x, below the 7-8x range typical for broadcasting assets.

The recent asset sales provide the most compelling valuation anchor. WFTX in Fort Myers sold for $40 million at 9.2x blended EBITDA, and WRTV in Indianapolis sold for $83 million at 8.5x EBITDA (9.2x adjusted for Pacers Finals impact). These multiples are "well above current local broadcast station transactions" and demonstrate that strategic buyers will pay premium prices for SSP's assets. If the entire company traded at even 8.0x EBITDA—below these individual asset sales—the implied equity value would be substantially higher than the current market price.

The balance sheet strength further supports valuation. With $54.7 million in cash, $269 million in available credit, and net leverage of 4.6x (down from 6.0x), SSP has financial flexibility to weather downturns and invest in growth. The debt refinancing extended maturities to 2028-2029 while increasing borrowing costs by only 1%, limiting financial risk. The company's return on assets of 3.67% and return on equity of 1.86% appear low but reflect the heavy investment in sports rights and CTV infrastructure that should generate returns over multi-year cycles.

Peer comparisons highlight the valuation disconnect. Nexstar (NXST) trades at 1.20x sales and 8.11x EV/EBITDA despite facing similar cyclical pressures. TEGNA (TGNA) commands 1.10x sales and 7.92x EV/EBITDA. SSP's 0.16x sales multiple implies either a dramatic discount for smaller scale or a market failure to recognize the value of its transformation. The key difference is that SSP is actively shrinking its asset base to optimize returns, while peers are pursuing growth through acquisition.

The company's capital allocation priorities reinforce the value proposition. Management has stated clearly that "the highest and best use of cash is to go towards traditional debt paydown right now," intending to pick the preferred stock dividend through 2025 rather than repurchase shares. This discipline, while perhaps frustrating for investors seeking immediate returns, strengthens the balance sheet and positions SSP to either pursue accretive consolidation or return capital more aggressively once leverage targets are met.

Conclusion: A Transformation in Progress, Valued Like a Distressed Asset

Scripps is executing a strategic transformation that addresses the core challenges facing local broadcasters while building new revenue streams for the digital era. The combination of aggressive debt reduction, premium asset monetization, sports-driven advertising growth, and connected TV expansion is creating a more resilient, profitable business. Net leverage has fallen from 6.0x to 4.6x in just over a year, Scripps Networks margins have expanded by 400-600 basis points, and core advertising is outperforming peers thanks to strategic sports investments.

The market, however, values SSP as if this transformation will fail. At 0.16x sales and 1.30x free cash flow, the stock trades at a fraction of the multiples commanded by peers and below the 8.5-9.2x EBITDA valuations demonstrated in recent asset sales. This disconnect creates a compelling risk-reward asymmetry: if management executes on its sports strategy and CTV growth initiatives while continuing to deleverage, the valuation gap should close. If regulatory deregulation enables further portfolio optimization, the upside could be substantial.

The critical variables to monitor are execution on the sports strategy's revenue contributions and the pace of CTV scaling. The Q4 2025 guidance for 10% core advertising growth will be a key test of whether sports rights can deliver consistent, material contributions. CTV revenue must maintain its 40%+ growth trajectory to offset linear TV declines. And the balance sheet must continue improving, with net leverage falling below 4.0x to provide strategic optionality.

For investors willing to look past near-term advertising cyclicality and appreciate the strategic value of SSP's assets and transformation, the current valuation offers a rare combination of downside protection from asset value and upside optionality from operational improvement and regulatory tailwinds. The company is not navigating decline—it is engineering a deliberate, disciplined revival.