Scripps Co. Bets Big on Broadcast Bandwidth as Key to TV’s Future

how people consume news, information and entertainment. Simpson wants to make sure the company that is still controlled by Scripts Airs is competitive no matter how the market takes shape. Simpson is the rare media CEO who has a background

as an investigative journalist. He explains in our wide ranging conversation why he is aggressively bought TV stations since he took over as CEO into when he's seventeen, and he also details how Warren Buffett's Berkshire Hathaway came on board as a partner in Scripts as few point six five billion dollar acquisition of I On Media TV stations earlier this year. That's all coming up on today's episode of

Strictly Business. Welcome back to strictly business. Adam Simpson, President CEO of E W Scripts, K, thank you so much for joining us today. Yeah, it's my pleasure, glad to be here. There has been a lot going on at Scripts. I have been writing about deals and transactions and movement in the company. UM some m and a on both

sides of the equations, some buying, some selling. Tell me kind of in the big picture, is this the result of kind of a concerted effort to grow and make some of these moves or are you responding to organic market opportunities? Well, I would say both. I mean, really for the long history of Scripts and about a hundred and forty two years, the company has UH prided itself on always evolving to meet the changing needs of the media consumer. And you know, the company started in newspapers.

It was one of the first companies to own radio licenses, one of the first companies to launch with television when that was brand new and nobody quite understood the impact it would have on on America. Was a cable mso an operator got out of the operating business and actually you know, launched among the first cable UH networks um h G TV, and then acquired the controlling interest of

the Food Network. We spun off the Scripts Networks back in two thousand eight, ultimately exited the newspaper business, double the size of our local television portfolio, and then, you know, under my leadership, I would say over the last three years, we've really been focused on re making the company again to be prepared for the next iteration of what the media landscape looks like. The opportunities have come to us UM first to add scale to our local media portfolio.

We can recognize the opportunity in consolidation, and we participated in that. We double the size of our our local media portfolio. UM. We also invested you're talking about the purchase of I on Media. No, actually this was even

before that. We we we double the size of our local stations when we acquired stations from cordill Era and also stations from the Next Star Tribune to vestitures, and then last year, during amidst the pandemic, we really sought to seek the opportunity in the chaos, and that's when we acquired I on Media and really transformed the company.

That was what I would consider a significant transformation UH an investment in what we see as the future uh, the over the air ecosystem, and and we've also created value and been in other business as well. I mean, we we certainly were early to the game and podcasting, acquiring mid Role Media and Stitcher and Trite and digital and then last year, uh, and this year we actually sold our podcasting business and our exiting digital audio as

well for really good returns for our shareholders. And what made it? With podcasting growing, you know, really, it's got so much sizzle. Why did you feel like it was the right time for you to exit? Well, I look, I think we believe that scale is necessary in the media space, and it became very clear to us that our brands, we had done a wonderful job growing those brands, and they had they had been great companies to operate. Frankly, I think podcasting will be one of the most important

platforms for the future of journalism. But I also recognize that we were not going to be in a position to help foster those companies growth. And putting them in the hands of audio only companies that had the capital necessary for them to really continue to foster their growth would benefit both the brands are employees, and doing so at a time when the valuations were high would benefit our shareholders, and that's why we sold Stitcher to Syria

s x M last year. And that's why we recently announced the sale of Triton Digital to Higheart, because those two companies truly have scale in the audio ecosystem, the scale, the kind of scale that we didn't have. Is it hard when you're evaluating your assets like that? Is it hard?

Do you have to kind of force yourself sometimes to be objective because for something that people may be very passionate about, or even something like podcasting, which is, you know, all the arrows are going up, it seems like it's a growth business. But you know, what you explain makes a lot of sense. But is it hard to get there? Sometimes if you're in a business that you're passionate about, Oh absolutely. Um. You know, while I see my role as a bit of an asset manager, the truth is,

you know, podcasting. We got into podcasting under my leadership when I was the chief digital officer. I love podcasting. I've always loved audio. I actually started in radio um and so, uh, it was a bit of an emotional decision. I think anytime you're divesting of businesses, it can be emotional, but at the same time, I think you have to think about what's best for those businesses. I think you have to think about what's best for the employees and

those businesses. And you know, our responsibility is always to create value, and uh, podcasting is a growth business. That's what's fueling a lot of the valuations. And it was a great opportunity for us to do right by our employees, those businesses, and our own company and shareholders divesting of those assets, even despite my personal love and affection for

the medium and the business. MM. Well with the with the acquisitions that you've made and with Ion Media coming into the fold um earlier this year, you have you know you are you said you're looking to position the company for the future, and a lot of those those acquisitions have been broadcast TV stations, which on the surface, don't you know, they don't screen the future. Why are

you invested in continuing to invest in broadcast TV? Well, yeah, I mean I think people have this impression that over the air broadcasting is a relic of the past. And if you're thinking about over the air broadcasting, um the way you know, I grew up where I remember my dad having to adjust the antenna in order to get the signal before we had cable in our in our house when I was a kid. That's not what over your broadcasting is anymore. Today, over the air broadcasting is

a robust marketplace. It's a growth marketplace in media, and it all has to do with the changes to the television ecosystem because while most people have followed closely the growth of over the top television, of streaming of of s BOD or subscription video on demand right alongside that, over the air has been growing. And today, you know, there's recent research that talks about the total number of households now at of US homes that are antenna homes

digital antenna homes. That's about fifty million households that are using digital antennas. And I think what's happened is consumers have recognized that there is a universe of free over the air television that pairs very efficiently with s BOD. And we talked about this phenomenon as self bundling, you know, Cynthia, I mean, consumers have completely taken control of their entertainment options and for US investing further in free ads reported

television through over the air broadcasting. In fact, being the dominant company in this marketplace is a really terrific opportunity because we see continued growth ahead and it is interesting we're seeing, you know, we've we've seen we've done stories about the rise of things like Pluto TV and people that are assembling a lot of a lot of big content companies are slicing and dicing and assembling new channels. And when you get right down to it, it's like, oh,

it's free over the air television. What a concept. It's been around for you know, upwards of upwards of seventy years. Um do you um? How so do you see I mean, for for the moves that you're making, it sounds like you see E W Scripts as kind of still rooted in the broadcast distance. That is that that is kind of the core foundation of the company that you see in the for the foresueable future. Well, look, we've always been a journalism and entertainment company and we will continue

to be a journalism company. Are our roots are in journalism, going all the way back to you know, ews first newspaper, the Penny Press in Cleveland. We expect that will continue to serve consumers both locally through our local television stations as well as nationally. When I think about the platforms that we serve people on, will certainly make use of broadcasting. I mean there is no more ubiquitous platform up which

you can reach more Americans than broadcast television. But our brands are also in the over the top space where obviously aggressive in digital uh, and I expect will continue to make, you know, additional moves to distribute our our programming streams wherever the consumer gets them. So it's not a it's not a you know, a world. We don't think the world is going to be either pay TV

or O T T or over the year. We really think that the world is going to be a combination, That TV landscape is going to be a combination of all three. And I I, you know, I sort of think my charges to make sure we're well positioned to navigate the future of television no matter how the the consumer watches. How are you feeling in the local in the local trenches, how are you feeling it various times

in the pandemic. You know, we've heard that local local spot has really really taken taken hard hits obviously, and you know, for for obvious reasons. But what what, how's it been and what do you see? For well, it's

sort of interesting. Local television itself has proven itself more valuable as a source of news and information for consumers during this pandemic than for you know, for for I would say, you know, a long while before it comes at the moment when newspapers are most um wounded, and local TV remains the dominant form of news information for most Americans, and in fact it's it's also the most

trusted source of news and information. So during the height of the pandemic, during the social and rest of the summer, we saw higher ratings to our newscasts than we had seen in a long time. Now some of that is retained, been retained, and some of that has settled down. But at the same time, you know, we also were significantly

suffering from the impact of the business disruption. When you watch the government shut down local economies, it's you know, undoubtedly going to impact the local advertising environment, and dealership is going to feel it, right absolutely. I mean the auto you know, the manufacturing plants shut down, that stops

the auto dealers from getting inventory. The auto dealers are closed, I mean don't forget that, you know, some of our TV stations, service advertisers that can be as large as you know, the supermarket chain down to as small as UM you know, the mufflers, the mufflers shop on the corner and all of those business is. We're definitely negatively impacted during the pandemic, since I would tell you that we have been very encouraged by the pace of the rebound.

UM first quarter has been very good, I expect us. I absolutely could have never guessed that we would have seen a rebound as strong as we saw following the election and following the pandemic that we experienced last year. You know, most of the categories are really coming back. The one exception I would say that we haven't seen come back yet has been travel and leisure. Travel and leisure is starting to come back as governors allow more

in person events. But I would tell you, UM, you know, travel and leisure as a category has also been positively impacted by the continued growth of the sports betting industry. Sports betting has become a very important category for US. So core what we referred to as core advertising is actually UM twenty with respect one doing very very well. Hopefully, you know, hopefully those are positive signs on many levels for the broadcasting business and for the country at large.

We'll be back with more from Script CEO Adam Simpson right after this break, and we're back with Scripts CEO Adam Simpson. Scripts that you have invested a lot in multicast networks, networks that run on the as sub channels on the bandwidth of of what we call the mother the mothership station in each market. It's amazing, you know, the technology is is amazing. What what can be done?

And um, you just recently launched announced plans to launch a couple of new networks along the lines of programming, along the lines of certain niches. How are how is the multicast business? It's been around, you know, in various stages for some time. Now is it becoming you know, this gives you, this gives Scripts a chance to be a national player because of the nature of how these how these channels can be accessed in streaming by streaming platforms.

How has that been Is that has that changed your profile at all in terms of talking to Madison Avenue because you have a lot of services that now can reach nationally. Yeah, So let me impact that we don't

even think about them as multicast anymore. At this point, the over the air universe is exploding um and whether the whether the signal is on a D one or main channel or on one of the sub channels is sort of irrelevant at this point because to the consumer they all appear to be full fledged over the air

broadcast television programming streams. And so rather than sort of think about them as you know, sort of the dominant station and the sub channels, at this point, we programmed them as networks, and we bring them to Madison Avenue. We bring them to the national advertising marketplace as a bundle of networks. We reach more than seventy million Americans monthly. Our networks are highly rated. They take significant ratings out of the broadcast and cable marketplace and therefore revenue out

of the marketplace. The real interesting opportunity is that as more consumers, particularly younger consumers, forgo pay TV or cut the chord, our free over the air television networks become the best way for Madison Avenue to reach those consumers because they're spending time with spot services which are commercial free, and they're spending time with free ad supported television over broadcast, and we will in on a grid on your smart TV, and it just looks like TV. That's right, it just

looks like TV. The consumer doesn't care whether they're watching it off of what transmitter. You know. That's that's sort of like parsing. You know, whether you are watching a video on YouTube from WiFi or five G or four G. None of that really matters anymore at this point. The

bottom line is I'm enjoying the content. And so we've really spent the last several years putting together networks that are programs specifically to attract niche demographics, and we'll continue to launch uh those networks in the over the air marketplace.

At this point, you know, we have a really dominant position. Uh. If you if you were to be in one of our local markets, for example, and I'll just use uh Detroit as an example, there might be twenty five to thirty over the year channels that the consumer has access to. Now ours are already the biggest. They're they're they're they're all Nielsen rated, or they're you know, they're they're the

most dominant in audience size. And you look at that twenty five or thirty channels Scripts has between our local stations and our national networks. You know, we will buy July have uh eight channels in Detroit, for example. So you're really talking about a fairly dominant share of Mart. It's a lot of share of the of the marketplace and a and a really terrific opportunity for us to serve advertisers with the demographics they're seeking. And do you have do you get broad m v p D distribution

of those channels or does that not matter? So some of our channels have MVPD distribution and some of them don't. It doesn't you know, obviously, the more distribution you have matter, it's gonna matter. So Ion, for example, UM is carried on virtually all of the m v p ds as a result of must carry right, but some of the some of the other stations are in different different situations. In some cases we have MVB the carriage, in some

cases we don't. It just really depends. Our goal, though, is to continue to drive greater distribution so that we can be wherever the consumer wants to watch Spot subscription video on demand services UM. That's UM. That's a really expensive, high risk knife fight going on among content creators. And it's going to benefit us because we have continued to see what happens when the consumer loads up incremental cost.

As they add more cost, they become aware that free over the year television is an efficient pairing for it. The other the other thing I always think of. I mean, I think about, you know, the evenings my wife and I spend on the couch. You know, I love the subscription video on demand services. Um that I have to admit, um that it's starting to feel a little bit like

a content blood. And every once in a while I find myself sitting on the couch and staring at the Netflix screen or flipping over to lipping over to Prime or Hulu, and I'm almost paralyzed, like what do I want to start next? And sometimes I just want to lean back, flip around and enjoy something that comes to me. And that's the opportunity in the free ad supported television space.

And that's why consumers are flocking to plugging in digital antennas and recognizing that, you know, sometimes you want to watch something comfortable, and you know, that's that's the that's what's behind really what we expect to be a continued growth opportunity on our network side, and I on media. Of course, buying those sixties some stations brought you also a lot of bandwidth to carry and distribute your your subchannels or multicast networks or whatever you want to call them.

And I know that that they brought you some technical capabilities that you didn't have before. So there was precisely I mean, we're distributing our programming streams over broadcast spectrum, and now our company is the largest holder of broadcast spectrum in the company in the country, and I would say we're the most efficient at monetizing that broadcast spectrum because you know will be uh, you know, eight nine

networks deep soon. When you think about uh that ecosystem where that electronic program guide from the consumer's perspective, you know, you've got a lot of programming coming off of all of our transmitters that um that is that has delivered ubiquitously into the homes of you know that that fifty million Americans and growing. M No, it's interesting, and you also have a very interesting partner in the ion track

transaction in Berkshire half away. Can you at all characterized sort of what the what the appeal of this transaction was from the Berkshire perspective. Well, I think Berkshire recognized the opportunity around the economics of this transaction, and I think they like to see company is that have near term operating discipline but long term value creation aspirations and goals,

and that's exactly we have Scripts operates. I also know Berkshire UM does like doing business with family controlled companies, you know, Scripts as public but family controlled. And the Script's family has been at this for a hundred and forty two years, incredibly committed to this company, and they are and Berkshire are long holders. They like to be invested with people who themselves are invested in the business,

and I think all of that comes together. The other thing I would say my sense of things is UM they understand the television ecosystem and they also understand the wireless and spectrum ecosystem, having made investments in both of these. You know, they own w p l G in Miami, which means they have an intimate understanding of the value

of local television and what's at play there. They are also the nations, if not the nation's the nation, one of the nation's largest television advertisers in their ownership of Geico, right, so they also recognized exactly where television shines. I mean, there is no other medium that does an effective job of um, you know, selling cars, of converting people from one wireless carrier to the next, of of getting the

cash registered to ring and television. I think they understood the value of journalism and and our company's commitment to the fourth of State, the defense of the First Amendment, and the service to the communities where we operate. And I think they appreciated all of that, along of course with the the economics that this transaction UH provided for transformation for the scripts for the U Scripts Company. Adam tell us a little bit about what about your background

and what brought you to script. So I'm a journalist by trade. I was born and raised in Los Angeles. I attended U C L A UM and UH started working at a at a radio station when I was in high school, a radio station called k g I L UH out in the out in the valley. UM and then went right into television after UM. Frankly, you know, losing my job at kg I L when when they when they did a format change, which is not uncommon, I guess in the radio business, and I worked in

Los Angeles television news rooms, mostly doing investigative journalism. For the first several years of my career. I worked also for the CBS O and O in Chicago w BBM, and I found myself working for Scripts as a a sort of a consultant um to help them start up an investigative team in Phoenix. And at Scripts, I found a company incredibly committed to journalism, committed to the highest

form of ethics, objective quality journalism. It was exactly, you know, the kind of storytelling that I that I enjoyed, long form,

long form investigative journalism. And when my wife was graduating from business school, we knew that we should be in the same city because I was sort of commuting back and forth from from Phoenix to UM Chicago and she was in Chicago at at Kellogg and UH and so UH Procter and Gamble offered her a job here in Cincinnati, and the Scripts corporate office offered me a job overseeing investigations for what at the time was our nine station

television station group. Right from from there, I I, you know, I had the opportunity to broaden my responsibility to all of News UH and then UM spend some time outside of our television business overseeing content and marketing for our interactive media division, and then in UM in two thousand and eight, when we were spending away the Script's networks, you know, I was sort of given the option, do you want to continue with the interactive businesses or do

you want to go back to work on the journalism side. For me, it was a very obvious choice. I'm a journalist by nature and really love them. We have to the mission, and so I came back to the broadcast division and oversaw interactive ultimately became the chief Digital Officer for the company, overseeing the digital assets for our newspapers and our television stations and UM back in two thousand uh sixteen, I was named the successor CEO and took

over in two thousand seventeen. And it's been a really it's been a wild ride. Scripts as an incredible company, and it's been a humbling experience to be able to lead our six thousand employees dedicated to you know, informing, engaging and entertaining people across the nation. Thanks for listening. Be sure to give us a review at Apple podcasts we love to hear from listeners, and be sure to tune in next week for another episode of Strictly Business. They can be the thing did him