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DATE

Friday, Aug. 7, 2026 at 9:30 a.m. ET

CALL PARTICIPANTS

• Head of Investor Relations - Carolyn Pione Micheli
• President and CEO - Adam Symson
• Chief Financial Officer - Jason Combs

TAKEAWAYS

• Total Revenue -- $490.4 million, representing a 9.2% decrease driven by advertising market challenges and distribution blackouts.
• Net Loss Per Share -- $12.68, reflecting a $1.1 billion non-cash impairment charge and $35.8 million in restructuring costs.
• Networks Division Impairment -- $1.1 billion, resulting from pressure in the national linear advertising market and broader macroeconomic uncertainty.
• Adjusted EBITDA -- $55.2 million, down from $88.9 million in the prior-year period.
• Annual Run-Rate Savings Target -- $100 million by the end of 2026, which is a 33% increase from previous guidance.
• Enterprise EBITDA Growth Goal -- $125 million to $150 million by 2028, reflecting the company transformation plan objectives.
• Full-Year Political Advertising Revenue -- $225 million to $250 million, compared to $198 million in the 2022 midterm cycle.
• Local Media Revenue -- $316.5 million, a 5.4% decrease primarily due to temporary service blackouts with Comcast and DIRECTV.
• Local Media Distribution Revenue -- $161 million, down 17% following impasse periods with major pay TV providers.
• Blackout Revenue Impact -- $26.7 million in lost revenue, attributed to carriage disputes with Comcast and DIRECTV during the quarter.
• Scripps Networks Revenue -- $171.9 million, a 16.5% decline impacted by Nielsen measurement changes and soft direct response advertising.
• Connected TV Revenue -- Increasing 28%, serving as a growth driver within the Networks division.
• Total Workforce Reductions -- 432 positions eliminated since the beginning of the year, including 268 jobs cut during the second quarter.
• Local Media Core Advertising -- $125 million, an 8.7% decrease reflecting political crowd out and economic uncertainty.
• Full-Year Capital Expenditures Guidance -- $50 million to $60 million, representing a revised downward forecast from management.
• Net Debt -- $2.2 billion, with the company finalizing an extension of its corporate revolving line of credit through July 2029.
• Third-Quarter Local Media Revenue Guidance -- Expected to increase approximately 20%, driven by heavy political advertising spending.
• Scripps Networks Margin Target -- 30%, which management intends to reclaim following recent headwinds from measurement changes.
• Cumulative Preferred Dividends -- $150 million in aggregated undeclared dividends as of June 30.
• Annual Tax Refund Forecast -- $5 million, expected to be received as a net refund for the full year.
• Second-Quarter Political Revenue -- $28.1 million, setting a record for a second quarter in a midterm election cycle.
• Net Distribution Revenue Guidance -- Projected to increase in the mid to high single digits for the full year.

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RISKS

• CEO Symson stated, "We faced challenges on a number of fronts, including sudden changes to Nielsen's measurement methodology that impacted our networks, continued declines in linear viewing, uncertainty in the economy and the advertising market, and blackouts with legacy pay TV sub providers," when explaining why financial results did not meet expectations.
• CFO Combs warned that Local Media core advertising decreased 4.8% on an adjusted basis due to factors including broader economic uncertainty and political crowd out.

SUMMARY

The E.W. Scripps Company (SSP -1.18%) reported a second-quarter loss primarily due to a non-cash impairment of its Networks division and revenue impacts from distribution blackouts with major providers. Management announced an acceleration of the company transformation plan, increasing run-rate savings targets while implementing a series of workforce reductions. The company finalized several professional sports rights agreements and distribution renewals intended to stabilize the Local Media segment. Management cited a positive outlook for the third quarter driven by political advertising and the deployment of AI technology to modernize news production. The strategic focus remains on utilizing broadcast spectrum for local sports duopolies to address declines in linear television viewing.

• CEO Symson stated, "The second quarter's results do not reflect the hard work performed by hundreds of our colleagues across the company," while citing external factors for the current performance.
• Management reported that approximately 50% of the softness in Networks division performance is attributed to sudden changes in Nielsen's measurement methodology.
• The company is leaning into AI automation and technology to centralize roles and produce local news more efficiently across 27 news streams.
• CEO Symson noted that the Nashville Predators and Detroit Pistons agreements provide "meaningful organic growth in core revenue year after year" starting in the fourth quarter.
• Management renewed 70% of its subscriber base through new distribution agreements that are expected to contribute to margin expansion.
• The company converted five ION stations into local duopolies to optimize spectrum productivity without deploying capital for station acquisitions.
• The FCC broadcast ownership cap lift is expected to support management's ability to pursue business models that allow for further M&A and transformation.

INDUSTRY GLOSSARY

• Duopoly: The ownership or control of two television stations in the same media market.
• FAST: Free Ad-supported Streaming Television, a service providing linear channels without a subscription.
• MVPD: Multichannel Video Programming Distributor, a service provider that delivers multiple television channels, such as cable or satellite.
• RSN: Regional Sports Network, a cable television channel that presents local or regional sports programming.
• Retransmission Fees: Payments made by cable, satellite, and streaming providers to local broadcast stations for the right to carry their signals.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the second quarter 26 EW Scripps Company Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Carolyn Pione Micheli, Head of Investor Relations. Please go ahead.

Carolyn Pione Micheli: Thanks, Didi. Good morning, everyone, and thank you for joining us for a discussion of the EW Scripps Company's financial results and business strategies. You can visit scripps.com for more information and a link to the replay of this call. 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 met to replace GAAP financial measures and may differ from other companies' uses or formulations. Reconciliations of these measures are included in our earnings release. We will hear this morning from Scripps' President and CEO, Adam Symson, and Chief Financial Officer, Jason Combs. With that, here's Adam.

Adam Symson: Thanks, Carolyn. Good morning, everybody. Before Jason reviews our financial results, I would like to make a few brief comments on yesterday's vote at the FCC to lift the broadcast ownership cap. We are very pleased that the commission has made the decision in the direction of further leveling the playing field in the media business. By finally addressing some of the arcane rules that have significantly impaired the broadcast industry. These regulations once served an important purpose. But they were put in place well before the digital revolution, well before consumers had the kind of choices they do today.

Over the last 20 years, these regulations have put us at an unfair disadvantage to the nationally scaled big tech companies and streaming platforms that vie for audience and advertiser attention. I am pleased that yesterday's actions should support our ability to pursue business models that will allow scripts and broadcasters like us to maintain our commitment to the communities we serve. Both as a result of M&A and through Scripps' transformation, which I will discuss further in a few moments. First, here's Jason.

Jason Combs: Good morning, everyone, and thank you for joining us. This morning, we are looking forward to discussing highlights from the second quarter that demonstrate our commitment to transforming Scripps operations. And creating new value in our current businesses through sports, through TV station M&A, through our network and distributor relationships. I will discuss the financial details of these business highlights, and then Adam will provide more color on our strategic progress. This morning, we also plan to share some new third quarter and full year guidance that will help you quantify where we will soon realize these benefits. We continue to move forward on our company transformation plan. Which includes both expense reduction and revenue growth components.

As we have said previously, we are targeting 125 to $150 million in incremental enterprise EBITDA by 2028. And we now expect to have executed on $100 million in annual run rate savings by the end of this year, that is up 33% from the guidance we gave you on our first quarter earnings call. During the second quarter, we made further gains in our script sports strategy signing our first NBA agreement with the Detroit Pistons our local media division. And another marquee national women's sports agreement with the Women's Volleyball World Cup tournament in 2027 on ION.

These agreements join a robust portfolio of local and national sports that are adding material value to our core advertising revenue, our Scripps networks revenue, and our traction in the national advertising upfront this summer. On the M&A front, we have executed a number of accretive localization transactions including acquiring a second Big 4 station, to create a duopoly in Lexington, Kentucky. We completed a station swap with gray media across 5 midsized and small markets that expand our presence in the Mountain West, And just a reminder that we completed the sales of stations in Fort Myers, Florida, and Indianapolis in the spring, putting that cash towards debt pay down.

1 more highlight I want to mention from the second quarter: We completed the last of 3 major distribution agreements. Covering the majority of our pay TV subscriber households renewing this year. As you know, both Comcast and DIRECTV temporarily dropped script stations, which affected our distribution and core advertising revenue for the second quarter, but we held firm with them in order to attain our fair share of the value our programming provides to them. We are pleased with the outcome of those negotiations. With those highlights in mind, let's now turn to a review of our financial results for second quarter 26. And guidance for the back half of this year.

I will present our second quarter Local Media division results on the same station or adjusted combined basis removing the Q2 25 results of the 2 CD stations that we have now sold, and reflecting our addition of the Lexington ABC affiliate. During the second quarter, our local media division revenue was $317 million down 1% from the second quarter 25. Core advertising decreased 4.8% tied to factors including broader economic uncertainty, political crowd out, and the impact of our carriage disputes. Local media political advertising revenue was $28 million, a record for second-record second quarter for us in what is expected to be a record spending cycle for the midterm election.

Local media distribution revenue declined 13% to $161 million The service blackout periods during the contract negotiations with Comcast and DIRECTV accounted for the decline. Expenses for the division were down 3% year over year, driven by lower network affiliation fees and lower employee cost. Local Media segment profit was $56 million. Compared to $51 million in the year ago quarter. For the third quarter, on an adjusted combined or same station basis, we expect Local Media division revenue to be up about 20%. We expect core advertising to be down low double digits. In line with the core revenue decline in the third quarter of the 22 midterms.

We expect our political advertising revenue for the full year to reach a range of $225 million to $250 million We are carefully watching spending for a number of federal races that will determine where we land, and Adam will give more color on that in a moment. For comparison, in the 22 midterm, we took in $198 million. As I mentioned, local media distribution revenue has been impacted by our impasse with Comcast. Which ran from March 31 to May 5 and with DIRECTV, which lasted from May 31 to July 10.

Based on those events, we now expect full year gross distribution revenue to be down in the low single digit percent range but net distribution revenue to be up in the mid to high single digits. We expect third quarter local media expenses to be down low single digits in comparison to Q3 of 25. Now let's review the Scripps Networks division second quarter results and third quarter guidance. Once again, I will be presenting the results on an adjusted combined basis. In this case, adjusting for the impact of the Court TV sale. In the second quarter, Scripps Network revenue was $172 million down 13% from Q2 of 25.

The decline was driven by linear TV viewing trends and changes in Nielsen's measurement methodology. Nielsen has told us they are developing some forthcoming adjustments to their methodology that will better reflect our true audience size. As you know, this is a bit of a black box for those of us in the industry, Nevertheless, we are aggressively pursuing strategies to improve the network's revenue, and overall operating results. Our network's results also were impacted by a softer direct advertising market. Which is susceptible to consumer spending trends. Connected TV revenue continues to be a strong growth driver for us, up 28% over the same quarter last year. The division's second quarter expenses were $146 million, up 3.7%.

Scripps Networks' Q2 segment profit was $26 million compared to $57 million in the year ago quarter. For the third quarter, we expect Scripps Networks division revenue to be down in the mid teens percent range as we work through the impact of the Nielsen measurement changes and continuing soft response advertising market conditions driven by the macroeconomic environment. We expect Scripps Networks expenses to be up in the low single digits. For the segment labeled other, in the second quarter, we reported a loss of $4.5 million Shared services and corporate expenses were $27.5 million, due to higher medical claims and increased insurance premiums. For the third quarter, we expect that line to be about $25 million.

2 updates to our full year guidance. We now expect to receive a net tax refund of approximately $5 million and we have brought down our forecast for CapEx to a range of $50 million to $60 million As I mentioned the beginning of my remarks, we now expect our company transformation plan activities to produce an annualized run rate of $100 million by year end. You can see the benefits of this work begin to roll through in into our third quarter guidance and that benefit will grow as we move into the fourth quarter. Let me size that up for you with a comparison for each division of third quarter and fourth quarter expense guides.

In the Local Media division, backing out the impact of new sports related costs, we expect expenses to move from a low single digit decline in Q3 to mid to high single digit decline in Q4. In the Networks division, we expect expenses to move from up low single digits In Q3 to down low to mid single digits in Q4. For the second quarter, the company is reporting a loss of $12.68 per share. Due to the current outlook for national linear advertising revenue driven by economic and secular pressures, we reported a $1.1 billion noncash goodwill and other intangibles asset impairment charge for the Scripps Networks business.

The quarter also included $36 million in restructuring costs coming out of our company transformation plan. And a $9 million gain from our swaps with Gray Media. These 3 items together increased the loss attributable to shareholders by $11.83 per share. In addition, the preferred stock dividend has a negative impact on earnings per share even when we do not pay it. This quarter, it reduced EPS by $0.18. We ended the quarter with $13 million in cash and nothing drawn on our revolving credit facility. Net debt was $2.2 million as defined in our credit agreement.

Following the successful refinancing of our 2026, 2027, and 2028 debt last year, we achieved another major milestone in the second quarter by extending our corporate revolving line of credit through July 2029. We secured commitments for a total credit capacity of $200 million. With this extension finalized, the company has no near term debt deadlines. Net leverage at the end of the quarter was 4.9x as compared to 4.4x at the end of Q1 when calculated on the same basis according to the terms of our credit agreement, which includes certain pro form a adjustments related to our transformation efforts and now here's Adam.

Adam Symson: You, Jason. Good morning, everybody. We are reporting a second quarter during which we significantly advanced Scripps' strategic priorities on every front. Live sports, distribution value, top line and net, political advertising, M&A, and operational efficiency through transformation. Our financial performance for the quarter did not meet my expectations. We faced challenges on a number of fronts, including sudden changes to Nielsen's measurement methodology that impacted our networks, continued declines in linear viewing, uncertainty in the economy and the advertising market, and blackouts with legacy pay TV sub providers. The second quarter's results do not reflect the hard work performed by hundreds of our colleagues across the company.

They have been creating more efficient ways of working to drive profitable top line growth that you will begin to see as permanent benefits to our results starting in third quarter and into next year. I am pleased to share that through this work, on our company transformation plan, we have lifted our guidance for the year end run rate savings twice. Now to a $100 million. In a moment, I will discuss more details about our transformation plan including how we are leveraging AI automation and technology to remake the business and better serve our consumers. But first, let me discuss some operational and financial highlights that are setting up the company for growth.

Nearly 4 years ago, we created Scripps Sports to seize the opportunity caused by the implosion of the RSN model and capitalize on the power of our broadcast reach. During the second quarter, we expanded upon our leadership, signing 2 new teams to multiyear full season partnerships. Our 5th NHL team, the Nashville Predators, and our 1st NBA team, the Detroit Pistons. As you saw in our financial results last season, these partnerships add material gains to our core advertising revenue and meaningful organic growth in core revenue year after year. You will see that reflected again this year starting in the fourth quarter on top of the benefit of political.

When we flip an ION station to an independent carrying local sports, we create a platform for new core revenue and new distribution revenue. Creating a local duopoly without having to deploy capital to buy a station. it is a clear example of how we are optimizing our spectrum for its best and most profitable use. We have now converted 5 ION stations to build local duopolies, and we will continue to look for opportunities to maximize the productivity of our assets. On the national side, we have seized upon the importance of live sports and linear broadcast. Scripps Sports has established ION as the home of women's sports.

That leadership is why the women's volleyball World Cup announced in July that it would make ION its US home for year's tournament leading up to LA 28. The women's volleyball World Cup joins the WNBA the National Women's Soccer League, professional women's hockey, and women's college basketball, track, pro cheer, and rodeo on ION. In this toughest television marketplace, live sports is 1 of the most valuable ways to advertiser demand and premium rates. During our national advertising upfront negotiations this summer, sports has helped differentiate Scripps' program offerings and created opportunities to capture advertiser investment across our network's broadcast, connected TV, and broader portfolio.

I expect we will continue to see more growth in our sports revenue performance as we turn even more focus to this growing part of our business. With respect to distribution revenue, we are leveraging the power of our network affiliations, news, and premium live sports to maximize our opportunity with the MVPDs. The blackouts are now behind us. I am very pleased with the results of our new distribution agreements. We successfully renewed 70% of our subs with agreements that will contribute to margin expansion. And our ability to serve local audiences for years to come. And you can see from our local media programming expense line, we also are bringing down network compensation costs across the board.

We are realizing these savings on the expense side while driving new value on the revenue side, allowing us to capture and keep much more of what we deserve for our programming. Second quarter also set a new record for our company political revenue, foreshadowing what we expect in the back half of the year. No other medium delivers a political message as powerfully and reliably as broadcast television. And our multiplatform approach allows candidates and campaigns to reach voters anywhere they watch TV. AdImpact recently raised its estimate for this year's spending to a record $11.6 billion. And they are projecting local television to once again capture nearly half of that. As it has in recent election cycles.

As Jason mentioned, Scripps expects a record midterm cycle between $225 and $250 million. We are seeing strong election spending in our markets across Arizona, California, Colorado, Florida, Michigan, Montana, Nevada, Ohio, Virginia, and Wisconsin. The recent Supreme Court decision on coordinated candidate and party spending has raised some investor questions. We see this ruling creating significant upside for political volume. Encouraging more investment into the political ad ecosystem. The ruling has clearly not dampened our political revenue outlook. We are committed to capitalizing on changes in the federal regulatory environment to create value through our recent M&A activity. We have sold stations for cash, swapped others strategically, and acquired some to create high margin duopolies.

Station M&A will continue to be a meaningful tool to optimize our portfolio, enabling our public service mission. And while I am bullish on the future of M&A for our industry and recognize the opportunity for financial engineering it will not be the only arrow in our quiver. that is why scripts through our company transformation plan is proactively making fundamental changes to the way we produce our most important and costliest product. Local news. Our strategy will address a few simple truths. First, our audiences expect us to deliver the news when and where they want it. And to meet that expectation, we are rolling out 27 local news streams to distribute stories as they happen.

To social, digital, and streaming platforms. Second, consumers expect us to report on the full text of life in their communities. Down to the neighborhood, So we are doubling down on our commitment to having more reporters covering geographic beats. And third, making these changes requires an entirely different approach to resource allocation. So we are leaning into AI automation technology, and the centralization of some roles. This revolution and that is really what it is, a revolution in the way local news is created and distributed, has been developed and built by members of Scripps' news and technology teams.

Who have been working together for the last year because they believe our mission is too important, the role we play in our community is too critical for us not to evolve to meet the moment. This work makes Scripps' local media a technology forward AI powered broadcast journalism company dedicated to serving our communities with the same high quality fact based reporting for which they relied on us for nearly 150 years. Let me be clear. We are making use of technology to improve our operating model and better serve our audiences. We are not wavering from our commitment to quality journalism.

Because we are adopting more efficient ways of working across the entire enterprise, our transformation work has resulted in a reduction in our work workforce. This week, we notified 268 employees that their jobs would be eliminated. Since the beginning of the year, we have eliminated 432 employee positions. And 126 open positions. 12% of our total. The coming quarters will see additional savings. Parting ways with colleagues is a painful process. Full of difficult decisions. But we make them knowing they are financially necessary to fulfill our commitments to our communities, our nation, and our shareholders.

Just as we have been making significant changes in our local media business, so are we applying our transformation lens to the Scripps Networks business. We realize the headwinds there require us to rethink our strategies. And that is 1 of the reasons why I have asked Dean Littleton to oversee the network's business as well as local media. In his new role as president of media. We believe the networks business can benefit from his holistic view of our opportunity. His industry expertise and his growth mindset.

I am energized knowing that hundreds of scripts colleagues are invested in our transformation plan, so invested in the company's future that they have been willing to set aside conventions about how things have always been done in order to invent what is next. At a time when many in our industry were will respond to economic pressure with cuts alone, Scripps is differentiating itself with a goal to build a better product under a more sustainable model for serving our audiences and advertisers. Our work is what separates cost reduction from transformation. 1 protects an ineffective status quo The other builds something new and powerful with tremendous value to the enterprise.

This is the word positioning scripts for durable growth, and creating meaningful shareholder value. I am gonna close where I started. And quote chairman Carr's remarks yesterday because between the regulatory changes and our own transformation, this is exactly how I feel. He said, quote, we should learn from our mistakes with the local newspaper industry. And we should not let the same thing happen to the local broadcast TV industry. Trusted sources of local reporting broadcast over the public airwaves are worth protecting and worth fighting for. Operator, we are now ready for questions.

Operator: Thank you. As a reminder to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. And our first question comes from Daniel Louis Kurnos of StoneX Your line is open.

Dan Kurnos: Great. Thanks. Good morning. Appreciate all the additional color, guys. And sort of the progress on the transformation plan. I have 2 housekeeping ish questions and then 2 kind of larger questions. The first housekeeping question is, Jason, I just wanna double-click on did you say Core was pacing down low doubles in Q3?

Jason Combs: Yeah. Low doubles in Q3. You know, driven by, you know, the political crowd that you would expect. it is pretty--it is right in line with what we saw in core in, Q3 of 22.

Dan Kurnos: But I would also point Daniel surprising, I guess, But well, go ahead, Adam, if you are gonna say something.

Adam Symson: No. I would also point even that ahead, though, to that because the onset of the NBA and NHL seasons will just start in third quarter and then really come into their own in fourth quarter when we will expect to see significant outperformance above political.

Dan Kurnos: Yeah. No. That makes sense. I mean, we have Q4 a little bit better, I think, than Q3 on that. And that is something I do want to get into in a second, but just I just wanna make sure I get this right, Jason, because the I am just trying to sort of back into the up 20% and your retrans guide seems pretty clear now given, the noise is behind you, so it kind of implies political in the mid seventies in Q3. Is that the right figure?

Jason Combs: Based on the full year guide we gave and the core guide we gave in Q3, I can see where you would end up in that range.

Dan Kurnos: Okay. And then, just the other piece of that is I appreciate the color in the in the release on the impact of, Comcast and Direct. Is there a way directionally I do not expect that specific number, but is there a way to directionally to think about net retrans in 2027 now? Because, obviously, we started it, I think, mid-teens net retrans growth this year. And obviously, the blackouts clearly impact but you will get the full benefit of that next year. And I do not think you have any major network renewals and your programming costs are coming down anyway. So just any way to think about into next year, the trajectory for net?

Jason Combs: Certainly, we are gonna get a year over year benefit from the impact of the blackout. We are not going to give any guidance now. We do have about 20% of our subs resetting next year. And then obviously, we will have the full year impact of the step ups we have this year. And so I do think both gross and net will be a good story for us next year, but I do not think we are gonna get any more specific than that right now.

Adam Symson: And, Daniel, just to reiterate what you said, we what you said, we have locked in all of our, affiliation agreements, and so that we have that expense visibility here into the foreseeable future.

Dan Kurnos: Okay. Perfect. And then the 2 big things that I wanted to hit first, just on Nielsen. You know, if you can just talk about any progress that you have made on sort of the big panel stuff, which seems--I mean, you can see the numbers. They are ridiculous. Do not know why they would be burying their heads in the sand. So any progress on that front? And then subsequently, it sounds like there may be some benefit on the local side from Nielsen. So, I mean, how are you guys thinking about sort of the broader impact from any Nielsen changes, you know, in the coming quarters?

Adam Symson: Yeah. So it is the same changes that you are talking about that are meant to rebalance things and more accurately measure our networks business and that we are told will improve or benefit local broadcast. The same round of changes, so to speak. Right now, just for investors reference, I would say our performance softness, I attribute about 50% of that to the sudden change in Nielsen. We have been in conversations with the very highest levels at Nielsen on the process that they are working on to correct this for this fall. But as you know, I am leery to sort of take anything to the bank.

None of the upside of a fix is baked into our guide. And so, I am just a little gun-shy of assuming anything until things go into production. We just as a reminder, we were on track in the first quarter and really, sort of seeing everything as it should have been until Nielsen made that sudden. And sort of inexplicable update to its measurement methodology. That punished the broadcast networks and benefited cable. It by the way, it is also underrepresenting multicultural audiences. Something else they say they are going to address. And all of this has been negatively impacting both streaming and broadcast. Which is not at all a reflection of what we know is actually happening.

In the video ecosystem as a as a as a as it relates to the consumer habits and cord cutting. So I expect changes to begin sometime in September. But I am unclear on what the benefit will be. And so we are just taking a more I think, sober approach and would hope to recognize upside. Okay.

Dan Kurnos: No. that is very helpful, Adam, and I think that is probably prudent given that it is Nielsen. And then the last thing I wanna ask you is just big picture, Adam, on the transformation plan. So, appreciate the color on the 27 news streams. Clearly, we have got the momentum on the local side. You have got indies. You have got ION switching to Indies. The growth on local actually kind of puts now, and local is obviously twice as big as networks. The color that you just gave on Nielsen was super helpful.

Is there anything else that we can think about outside of maybe CTV on the network side that can help just kind of get the rest of the balance of the equation even though I think local growing something could probably offset even modest declines in network and produce a plus.

Adam Symson: Yeah. I think, first of all, you should recall that we have been very proactive in managing the P and L and managing the networks for growth. As a result, last year we beat our expectation on improving the margin for networks. And we are very, very dedicated to getting back to that place. We are focused on continuing to expand and sports and to drive revenue growth and profit. We want to address some of the opportunities with our programming and distribution strategies. Continue to expand and fast. And this is also 1 of the reasons I recently made a leadership change at the networks. We now have brought the operation together under Dean Littleton's leadership.

We are sort of looking at the portfolio as the largest portfolio of broadcast stations and how we use that spectrum for its best and highest use through both network television and local Dean will, I think, be optimizing the business from that perspective. he is done he is done a great job leading and transforming the local business, and it is cost structure, and I think he is gonna bring the same opportunity to the network side and get it quickly back on track.

Know, there is no there is no question in my mind that the story of the networks and our I guess, cumulative collection of the largest nationwide broadcast platform is not complete yet, and we will continue to look at ways to use this platform to drive greater shareholder value.

Dan Kurnos: Got it. Really appreciate all the color, guys. Thanks so much.

Adam Symson: And it seems like you got a little bit of something cooking Thanks, Daniel.

Operator: Thank you. And our next question comes from Craig Huber of Huber Research Partners. Your line is open.

Craig Huber: Great. Thank you. I guess sorry for the directness of this question. But, I mean, given all the changes you guys are making here and given what is happened outside of your control here, does this any of this make you and the family any more likely or less likely to sell the company? I mean, obviously, you had a bid here, not too long ago for the whole for the company and so forth. You guys turned it down. I understand why. But does any of the changes you guys have put in place here make you feel like you really do not need to go down that road or you can just--you will get through all this successfully?

Adam Symson: Well, first of all, it is important to note, Craig, that I do not speak for our controlling shareholder, but I can reiterate what I have said many times before and what you have seen over the long history of the company, the family has always acted in the best interest of all shareholders. And is committed to doing what is best for the company to create the greatest shareholder value. Now I will speak for myself and maybe management's perspective. You know, we believe greater scale nationally and greater depth in market are helpful.

For our assets to perform their very best for shareholders and continue in service to the communities where we operate from a journalism, local programming, and local sports perspective. So I will I expect we will continue to do everything in our power to take advantage of this moment. I mean, I expect the greatest opportunities will be ahead for us, whether that is continuing to transform the business or identifying opportunities for us to engage in swaps select divestitures, or acquisitions to improve our portfolio.

Craig Huber: Okay. Appreciate that. My second question. The Nielsen change here, did I hear you right saying you thought roughly 50% of the pressure on revenue on the Scripps networks came from that. I mean, just about that a little bit more, please.

Adam Symson: Yeah. that is correct. I mean, there has been no softness in the demand for our product. But overnight at the end of February, the inventory, the supply actually changed as a result of a methodology change. Especially when we think about the demand for our premium sports products. So our sales team is doing a terrific job of monetizing what we have. But Nielsen changed the picture on what we have or what we are the amount of audience we serve overnight negatively impacting about 50% of the revenue. it is been significant--it is been a significant blow. They tell us they are fixing that. This fall.

But like I said, I have been reticent to adjust up our forecast, and I am sharing this in the interest transparency. that is upside to our plan. And so, you know, the Nielsen challenges have impacted the general market side of the business. The other sort of piece of the equation is the direct response piece, which, you know, direct response, we say, is often is heavily driven off of consumer sentiment. And right now, with the current state of inflation and interest rates, that is negatively impacting that sentiment and, therefore, Doctor demand. We also talk about direct response being a leading indicator and 1 that can turn quickly.

So, I will point you back to government shutdown in Q4 of last year. We saw a material drop in our direct response revenue during that shutdown. And when the shutdown ended, we saw a quick snapback or rebound, as consumer sentiment improved.

Craig Huber: I appreciate that. And then further on the Nielsen side, just talk a little bit further about changes there on the local TV side of the business and stuff.

Adam Symson: What would you expect? Yeah. On the local side, sure.

Jason Combs: On the local side, first of all, a lot of the changes they make that impact the makeup of the audience will benefit. The changes they made back in February began to underrepresent the multicultural audience. Beginning to reintegrate multicultural audiences back into the sample or to better statistically measure them should theoretically improve both network and local television. At the same time, we understand they are gonna be moving to a different way of measuring local broadcast after all these years. The measurement will give credit to local broadcasters for a cumulative minute of viewing rather than what historically was a longer period. And that required a longer period.

And that too should better reflect the way people's viewing habits have actually evolved and improve what you see on the local front.

Craig Huber: Real quick.

Jason Combs: I also wanna just correct something I said earlier. When I was asked about distribution. I said we had 20% renewing next year. I was getting my years mixed up. that is actually in 2028. Next year is only 5%. So for the, the transcript, I wanted that updated.

Craig Huber: Great. Appreciate that. Sorry. If I could ask a little bit further on this, and you will Nielsen thing. Are you is it possible that you could share with us quantify for us the impact to the viewership as they as they count it, as they calculate it.

Adam Symson: As they have shared--Craig,, if they have shared with yeah, I mean, they have shared with me those estimates I do not feel comfortable sharing them with the market or the street because today, they are measuring, I would say, a non-production environment, And when they move to production, it will become live, and that is when we will see it. So, again, we have given a guide based on what we believe we see using today's methodology. When the methodology changes again, there is a good chance that there could be upside to it. But we do not control Nielsen's currency or the methodology.

And so I am reticent to share anything that I do not have any influence over.

Craig Huber: Yeah. I can certainly sense the frustration there. it is been a nightmare for your industry for decades here with this Nielsen company. I will say this sympathetically. I just Correct. Shake my head. Just to say the least. 1 last question, please. I appreciate your time here. The cash cost, to get to this new $100 million annual run rate of cost savings, I think you said, by the end of this year. Are you willing to talk about that publicly?

Jason Combs: How much--I will--yeah. So we have talked about that, previously. We had guided to $40 million to $50 million in cash restructuring costs. Tied to the transformation plan. This quarter, you saw a very large restructuring number come through. A good portion of that was noncash. And so just so we are talking kind of apples to apples, there are--of the $36 million in restructuring that flowed through this quarter, about $12 million of that is actually cash restructuring this quarter. About $9 million is accrued and will be paid in subsequent quarters. And the balance of it, roughly $15 million would be noncash items.

And so we are still we still believe the $40 to $50 million in cash restructuring is the estimate for the transformation.

Craig Huber: that is still good even though you moved up the cost savings number.

Jason Combs: We well, we--well, we did not move up our cost our total number. We just pulled forward the number, to achieve it sooner. We still the net number is still $120 to $150 million. We just think we will have executed on more of that by the end of this year than we originally anticipated.

Craig Huber: Okay. Understood. Thank you a lot, guys.

Adam Symson: Yep.

Operator: Thanks, Craig. Thank you. And as a reminder, if you have a question, please press *11. And our next question comes from Steven Cahall of Wells Fargo. Your line is open.

Steven Cahall: Thank you. Jason, just wanted to talk through a little bit how we think about $100 million run rate for 27. Is it kind of as simple as just thinking about consolidated costs being down about that much year on year in 2027 versus 2026. I know there is probably a little bit of underlying cost growth like sports rights, So I just wanted to kind of start to think about 2027 And then, you know, you have done a lot of work on margin improvement at Networks. You have got this new headwind from Nielsen measurement. I think you are given some of the good margin that you expanded last year back.

I was just wondering if you could specifically talk about your expectations for network margins for this year and next year through the transformation.

Jason Combs: Yeah. So first on your question, about the 100 million and how it applies to 2027. It would not be, you know, a full $100 million, adjustment to your current view of 2027? Because some of that is being realized in year, and was 1 of reasons why we gave not just a Q3 expense guide, but also a Q4 expense guide. You were certainly in the local media starting to see some of that transformation benefit flow through in the third quarter. Adam talked about some of the headcount reductions that have happened recently. And then the guidance we gave for fourth quarter, expense trends, would indicate we are starting to realize even more of the benefit this year.

So your year-over-year view of 2026 to 2027, you would have some of that built in your 2026 run rate, but there would be a large incremental piece from the Q4 activities in getting the full year benefit of that. In terms of network margins, you I think, as Adam alluded to it before. You know, we continue to believe that this business should be closer to a 30% margin. We saw some significant headwinds in 2024, and we set a very aggressive plan to grow margins by 400 to 600 basis points. And we actually ended up north of 600 basis points last year.

We now have some new challenges, and we intend to chart the path forward, to see a similar rebound to what we saw previously.

Steven Cahall: Great. And then, I wanted to ask you about Spectrum a little bit. So I think Scripps significantly over-indexed on spectrum due to ION. I think that was part of the original thinking. When you purchased it. it is a topic I have written a lot about recently. And if I have learned 1 thing, it is that the broad industry has no consensus on how it should be used, how to create value, whether lease it or another auction or the next gen business model.

I am wondering how you think about the best way to monetize your spectrum, whether it is more station conversion with local sports or something that is a little more kind of wholesale since you do have so much spectrum?

Adam Symson: Yeah. Thanks for the question, Steven. there is no question in my mind that we are sitting on a gold mine of spectrum. 1 that actually has proven to be increasing in value over time. And there is also no question that none of that value is reflected in our stock price. As you described, Scripps is 1 of the largest holders of broadcast spectrum. It was it was 1 of the reasons why we found the ION acquisition so interesting. We are always looking at what the best and highest uses of our spectrum and we will continue to do so. As you described, 1 of the reasons why we have turned ION stations into sports duopolies.

Steven Cahall: I am sorry. If I if I hear a noise on the call, Steven, I do not know if you are you maybe need to mute.

Operator: Yeah.

Steven Cahall: I am on mute.

Operator: Okay. I am sorry. I am sorry, Adam.

Adam Symson: that is okay. that is okay. Yeah. I mean, we are like I said, we are always looking for the best and highest use of our spectrum. And I think whether that is turning stations that are ION stations into local stations in order to create high margin duopolies. We will continue to look for the greatest opportunity When there is an opportunity to monetize our spectrum, either through an incentive auction, as chairman Carr referenced yesterday, which he I think he referenced maybe as early as 2028 or otherwise, you know, I am absolutely sure we will take full advantage to benefit our shareholders, our employees, and the company's ability to continue to serve its mission.

Steven Cahall: Great. And then lastly, do you feel like there is an M&A shot clock with this administration? Or do you think after the changes, that the SEC enacted yesterday, that there is gonna be a lot of opportunity that runs even past 2028?

Adam Symson: Well, I mean, I do not think there is a shot clock per se, but I do think there is potentially a balance that has to be struck right now between the opportunity to take advantage of the changes in the regulatory environment and some uncertainty that we see obviously being held up in courts. You know, it is important to note that have already been active in the M&A marketplace from the outset to improve the performance of the portfolio and the balance sheet. Every deal we have announced has either put cash in our pockets or increased segment profit to benefit the company and investors. And some are doing both.

And I am referencing the divestitures of the stations in Fort Myers, Indianapolis, which went for premium sellers multiples. The gray swap, the sale of Court TV, the acquisition we announced of more than 12 stations from INYO that will be accretive and that will fold into our networks portfolio and add to segment profit margins and add to our spectrum holdings. I definitely do not think we are finished with this work. I do think there is continued opportunities for swaps ahead. With opportunity for us to get deeper in the markets where we operate.

Opportunity for us to improve our operating performance and margin expansion, As I said earlier, I am also a believer that national scale is beneficial. it is helpful. I do not think it is the only thing necessary for this industry, and that is why we are also equally aggressively pursuing a transformation plan. At the end of the day, consolidation is gonna be helpful. But for us to continue to be able to serve out our mission, we have to do things that address our consumer. Buying more TV stations in a market does not get anybody more to watch the 5 and 11:00 and 11:00 news.

Transforming so that we serve audiences across multiple platforms and deliver our journalism so that we remain relevant in the local markets where we operate that is gonna require more than just consolidation. While we will take advantage of consolidation in order to improve our economics, we have to take it a step further and transform the business, and that is what you see Scripps do. Thank you.

Operator: This concludes our question and answer session and today's conference call. Thank you for participating, and you may now disconnect.