A strategy based on more campaign ads, less industry competition

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E.W. Scripps Co. is in the process of shedding its newspapers as part of a combination with Milwaukee-based Journal Communications.  The newspaper-free E.W. Scripps will focus primarily on broadcast and digital. Its future, outlined by CEO Rich Boehne (excerpts below), anticipates a windfall of heavy campaign spending in a post-Citizens United political marketplace. It also looks to a future with fewer competing media voices in local markets.

Boehne & Co. have been singing the same tune for more than four years. In a 2010 presentation to analysts, E.W. Scripps gloated about the windfall it garnered from midterm elections. “We took more than our fair share — by design” read one slide in the presentation that was headlined: “2010 political winners: GOP and SSP.” (SSP is the ticker symbol for Scripps.)

Some idealists may think such a strategy — one that depends fewer competing news organizations and on 30-second, often vitriolic and misleading, TV spots — is cynical, and even inconsistent with a corporate mission statement that reads, in part: “We do well by doing good.” But a $60 million special dividend, payable when the deal is consummated, is probably enough to quiet any shareholder concerns and stanch any civic-minded impulses.

It’s unclear what the former Scripps newspapers get, other than the prospect of additional reductions. But Scripps never was sentimental about newspapers.

Here are some relevant comments gleaned from the Scripps presentation at the UBS Global Media and Communications Conference, held Dec. 10, 2014):

Rich Boehne (chairman, president, CEO of the E.W. Scripps Co.):  “Even after the Journal deal, we will remain acquisitive. We like to — we would like more duopolies. We would like to drill down deeper in the markets where we are. I really do believe that in-market consolidation of broadcasting is just essential, important, and should begin as soon as possible. We have some friends in Washington  who don’t have quite the same view I do. But there’s a lot of opportunity there, and that will definitely come. …”

“There’s going to need to be consolidation in local markets. If anything — I just can’t see how you can have three or four TV stations and a newspaper all chasing the same digital opportunity. Most of that value is going to accrue to one or two, and it’s time to be in the strong position. …”

“Across our TV group, as you probably know, we really focus on political-advertising revenue. We have a fantastic footprint. That footprint is going to improve when we bring the Journal stations in. We broker and handle all of our own political advertising. We have a 365-day-a-year, small office in Washington, D.C. that works with the agencies and the campaigns. And when we get into election season, we can place that money, the same thing 24 hours a day; and we get definitely more than our share across our footprint. … ” [Brian Lawlor, senior vice president, television: “When you have the right footprint, you can do very well. In 2012, we had $107 million. The Presidential got played out, really, in Florida and Ohio, and we had two big television stations in each. … And we’re really optimistic. We have a great footprint for 2016. And as Rich talked about, we already have a footprint that serves us well in Presidential cycles. And our ability to now add Wisconsin, more Florida, and Nevada I think will set us up very well.”]

“If you look at our digital new business investments, they fall into three, for us, very clear buckets. The first one is the local. That’s the building out around the local brands we have. That has been in TV and newspaper markets. Going forward, it’ll be in TV and some radio markets. That’s your dot-coms, your mobiles, that’s focused on organic, local growth. The second bucket is building and testing new local models that are less dependent on advertising, more dependent on the value of data and loyalty and subscription. … Finally, we build and buy national brands that provide access to new marketplaces, while leveraging our core expertise and our current audiences. And we’re going to show you Newsy and some others that fall right in. …”

(Disclaimer: I watch E.W. Scripps occasionally because I worked for them in Memphis for 12 years, during two very different periods. I left there on good terms twice, in 1998 and 2013, but have always wondered about the way they manage their properties. I’ve never owned Scripps shares.)

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