U.S. broadcaster Scripps surges on refinancing agreement and fourth-quarter earnings

Quotes on U.S. broadcaster the E.W. Scripps Company soared more than 40% yesterday, March 12. The rally was driven by two positive news items: The company secured refinancing for its term loans and reported strong financial results for the fourth quarter.

Yesterday, Scripps soared to close at $2.00 per share, 43% above the previous closing price.

The day before, the company released its financial results for the fourth quarter. The top line grew 18% year over year to $728 million, the bulk of which came from the local media segment, which saw a 34% jump in revenue to $511 million. Political advertising contributed an additional $174 million, buoyed by the U.S. presidential election in November. For context, in the fourth quarter of 2023, political advertising stood at only $16.4 million.

Scripps also announced that it had secured refinancing for up to $1.3 billion of term loans. The company extended the maturity dates of its loans from May 2026 and June 2028 to June 2028 and November 2029, respectively.

Additionally, Scripps signed commitment letters with new lenders for a $450 million accounts receivable securitization facility, part of which will be used to repay the term loans. To bolster liquidity, the company has raised a new $208 million revolving credit facility due in July 2027.

The E.W. Scripps Company is one of the oldest media companies in the U.S. It started out in the newspaper business in the late 19th century before expanding into radio and television broadcasting. Today, Scripps owns 60 television stations across the U.S., which generate about 60% of its revenue. It also operates Scripps Networks, which includes national broadcasters such as Ion Media, Bounce, and Court TV.

In 2020, Berkshire Hathaway invested $600 million in Scripps, acquiring an 8% stake through preferred shares. This helped finance the company’s $2.7 billion acquisition of Ion Media. However, Scripps took a gamble by purchasing the company through debt and preferred shares, which resulted in high leverage that, amid the crisis in the television industry, led to deteriorating financial performance over the last few years. In early 2024, the company even suspended cash dividend payments on the preferred shares owned by Berkshire Hathaway, instead prioritizing the repayment of almost $3 billion in debt.

Scripps stock has struggled in recent years. It is down 50% in the last 12 months and is 90% off its 2021 peak of $24 per share.

However, the company’s latest revenue numbers exceeded Noble Capital Market’s expectations. In a report published yesterday, Noble highlighted further asset monetization and debt reduction as key drivers for a higher valuation of the stock. It rates Scripps an “outperform” with a target price of $10 per share.

According to MarketWatch, the three analysts covering the name have an average target price of $4.60 per share.