Item 1. Business
Item 1. Business
Founded in 1878, The E.W. Scripps Company motto is "Give light and the people will find their own way." Our mission is to do well by doing good — creating value for customers, employees and owners by informing, engaging and empowering those we serve. We serve audiences and businesses through a portfolio of more than 60 local television stations in more than 40 markets and national news and entertainment networks. Our local stations have programming agreements with ABC, NBC, CBS, FOX and the CW. The Scripps Networks reach nearly every American through national news outlets Scripps News and Court TV and popular entertainment brands ION, Bounce, Defy TV, Grit, ION Mystery and Laff. Effective in January 2023, we merged our nationally focused news resources into a national outlet called Scripps News. Scripps News combines the development and distribution of Newsy programming, the Local Media national desk and our award-winning investigative reporting newsroom in Washington, D.C. into one coordinated organization. The combined operation more efficiently serves national audiences and our local television stations. We also serve as the longtime steward of one of the nation's largest, most successful and longest-running educational programs, the Scripps National Spelling Bee. Additionally, we produce a television viewing device called Tablo that allows households to watch and record dozens of free, over-the-air and streaming channels anywhere in their home without a subscription. For a full listing of our brands, visit http://www.scripps.com.
Scripps is a leader in free, ad-supported television. All of our local stations and national networks reach consumers over the air, and all of our television brands can also be found on free streaming platforms. We have continued to expand in the fast-growing connected television marketplace, and we are leveraging our leadership position in the growing over-the-air marketplace. Currently, one in three non pay-TV homes is watching television over the air alongside their streaming subscription services, and as cord-cutting and streaming service price increases continue, over-the-air channels will be an important part of television viewers' choices. To that end, Scripps continues efforts to broaden antenna use even more, and is working with key partners in retail, manufacturing and antenna installation to help television owners understand the quality and quantity of programming available over the air and the ease of antenna use. During 2023, we continued our efforts to build awareness, grow the broadcast marketplace and improve consumers over-the-air television experiences by relaunching a new version of our Tablo product.
In December 2022, we launched Scripps Sports to further leverage our local market depth and national broadcast reach for partnerships with sports leagues, conferences and teams. In addition to the market depth of our local broadcast television stations, ION boasts the fifth-largest national broadcast viewership and its network of owned and operated and affiliate stations reaches nearly 100% of U.S. television households through broadcast, cable/satellite and connected TV platforms, providing it the opportunity to run localized, regionalized and national programming. Scripps Sports is comprised of a limited number of employees who seek and negotiate sports rights for the benefit of our Local Media and Scripps Networks businesses. The revenues earned and any sports rights fees or other direct expenses incurred reside within those respective businesses.
In January 2023, we announced a strategic restructuring and reorganization of the Company to further leverage our strong position in the U.S. television ecosystem and propel our growth across new distribution platforms and emerging media marketplaces. Lisa Knutson was named chief operating officer, assuming responsibility for the Local Media and Scripps Networks operating divisions, and was tasked with leading the Company’s restructuring efforts. The restructuring aims to create a leaner and more agile operating structure through the centralization of certain services and the consolidation of layers of management across our operating businesses and corporate office. We currently anticipate this effort will result in more than $40 million in annual savings, of which $20 million of the annualized savings was achieved by the end of 2023.
On March 27, 2023, we shut down the multicast network TrueReal, merging certain of its programming with that of Defy TV, and began leasing the additional spectrum it created on our owned and operated stations to Jewelry Television. In connection with the TrueReal restructuring, we relinquished rights to portions of their programming library.
On April 20, 2023, we announced a multi-year agreement to televise regular season Friday night WNBA games on ION. The WNBA Friday Night Spotlight on ION included games available nationally as well as games made available on a regional basis.
On May 4, 2023, we announced a multi-year agreement with the Vegas Golden Knights to televise the National Hockey League's team's games in Las Vegas and surrounding markets. The games aired on our local station KMCC, and our Las Vegas ABC affiliate KTNV provided marketing and promotion.
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On October 5, 2023, we announced a multi-year agreement with the Arizona Coyotes to televise their locally broadcast games to residents of Arizona and surrounding states within the team's broadcast territory. Games will air on our television stations within the Phoenix, Tucson and Salt Lake City markets.
On November 9, 2023, we announced a multi-year agreement with the National Women's Soccer League to nationally televise Saturday night games on ION. These regular season matches will be distributed over 25 exclusive Saturday night double-headers beginning with their 2024 season.
Financial information for each of our business segments can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Notes to Consolidated Financial Statements of this Form 10-K.
LOCAL MEDIA
Our Local Media segment includes more than 60 local television stations and their related digital operations. We have operated broadcast television stations since 1947, when we launched Ohio’s first television station, WEWS, in Cleveland. Our television station group reaches approximately 25% of the nation’s television households and includes 18 ABC affiliates, 11 NBC affiliates, nine CBS affiliates and four FOX affiliates. We also have seven CW affiliates - four on full power stations and three on multicast; seven independent stations and 10 additional low power stations.
We provide free over-the-air news, information, sports and entertainment content that informs and engages our local communities. We distribute our content on multiple platforms, including broadcast, digital, mobile, social and over-the-top ("OTT"). It is our objective to develop content and applications designed to enhance the user experience on each of those platforms. Our ability to cover our communities across various digital platforms allows us to expand our audiences beyond traditional broadcast television.
We believe the most critical component of our product mix is compelling news content, which is an important link to the community and aids our stations' efforts to retain and expand viewership. We have trained employees in our news departments to be multi-media journalists, allowing us to pursue a “hyper-local” strategy by having more reporters covering local news for our over-the-air and digital platforms.
In addition to news programming, our television stations run network programming, local sporting events, syndicated programming and original programming. Our strategy is to balance syndicated programming with original programming that we control. We believe this strategy improves our Local Media division's financial performance. We also provide live, local sporting events on many of our stations by acquiring local television broadcast rights for these events.
Revenue cycles and sources
Core Advertising
Our core advertising is comprised of sales to local and national businesses. The advertising includes a combination of broadcast spots as well as digital and connected TV advertising. Our core advertising revenues accounted for 43% of our Local Media segment’s revenues in 2023. Pricing of broadcast spot advertising is based on audience size and share, the demographics of our audiences and the demand for our limited inventory of commercial time. Our stations compete for advertising revenues with other sources of local media, including competitors’ television stations in the same markets, radio stations, cable television systems, newspapers, digital platforms and direct mail.
Local advertising time is sold by each station’s local sales staff calling upon advertising agencies and local businesses, which typically include advertisers such as car dealerships, health-care facilities, home improvement companies and other service providers. We seek to attract new advertisers to our television stations and to increase the amount of advertising sold to existing local advertisers by relying on experienced local sales forces with strong community ties, producing news and other programming with local advertising appeal and sponsoring or promoting local events and activities.
National advertising time is generally sold by calling upon advertising agencies, whose clients typically include businesses such as automobile manufacturers and dealer groups, telecommunications companies and insurance providers.
Digital revenues are primarily generated from the sale of advertising to local and national customers on our local television websites, smartphone apps, tablet apps and other platforms.
Cyclical factors influence revenues from our core advertising categories. Some of the cycles are periodic and known well in advance, such as election campaign seasons and special programming events (e.g. the Olympics or the Super Bowl). For
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example, our NBC affiliates currently benefit from incremental advertising demand from the coverage of the Olympics. Economic cycles are less predictable and beyond our control.
Due to increased demand in the spring and holiday seasons, the second and fourth quarters normally have higher advertising revenues than the first and third quarters.
Political Advertising
Political advertising is generally sold through our Washington, D.C. sales office. Advertising is sold to presidential, gubernatorial, U.S. Senate and House of Representative candidates, as well as for state races and local issues. It is also sold to political action groups (PACs) and other advocacy groups. Political advertising revenues were 2.4% of our Local Media segment's revenues in 2023, an off-cycle election year.
Political advertising revenues increase significantly during even-numbered years when local, state and federal elections occur. In addition, every four years, political spending is typically elevated further due to the advertising for the presidential election. Because of the cyclical nature of each political election cycle, there has been a significant difference in our operating results when comparing the performance in even-numbered years to that in odd-numbered years. Additionally, our operating results are impacted by the number, importance and competitiveness of individual political races and issues discussed in our local markets.
Distribution Revenues
We earn revenues from cable operators, satellite carriers, other multi-channel video programming distributors (collectively "MVPDs"), other online video distributors and subscribers for access rights to our local broadcast signals. Distribution revenues were 54% of our Local Media segment's revenues in 2023. These arrangements are generally governed by multi-year contracts and the fees we receive are typically based on the number of subscribers the respective distributor has in our markets and the contracted rate per subscriber. During 2023, we completed renewal negotiations on distribution agreements covering approximately 75% of our subscriber households.
Expenses
Employee costs accounted for 39% of our Local Media segment's costs and expenses in 2023.
We centralize certain functions, such as master control, traffic, graphics, research and political advertising, at company-owned hubs that do not require a presence in the local markets. This approach enables each of our stations to focus local resources on the creation of content and revenue-producing activities. We expect to continue to look for opportunities to centralize functions that do not require a local market presence.
Programming costs, which include network affiliation fees, local sports rights fees, syndicated programming and shows produced for us or in partnership with others, were 44% of our Local Media segment's costs and expenses in 2023.
Our network-affiliated stations broadcast programming is supplied to us by the Big 4 broadcast networks in various dayparts. Under each affiliation agreement, the station broadcasts all of the programs transmitted by the network. In exchange, we pay affiliation fees to the network, and the network sells a substantial majority of the advertising time during these broadcasts. We expect our network affiliation agreements to be renewed upon expiration.
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Information concerning our full-power television stations, their network affiliations and the markets in which they operate is as follows:
Station Market Network Affiliation/
DTV Channel Affiliation Agreement
Expires in FCC License
Expires in Market Rank (1)
WFTS-TV Tampa-St. Petersburg, FL - Ch. 28 ABC/17 2026 2029 11
WMYD-TV Detroit, MI - Ch. 20 CW/31 2024 2029 12
WXYZ-TV Detroit, MI - Ch. 7 ABC/25 2026 2029 12
KNXV-TV Phoenix, AZ - Ch. 15 ABC/15 2026 (2) 13
KASW -TV Phoenix, AZ - Ch. 61 Ind/27 N/A 2030 13
KMGH-TV Denver-Aurora, CO - Ch. 7 ABC/7 2026 2030 16
KCDO-TV Denver-Aurora, CO - Ch. 3 Ind/23 N/A 2030 16
WSFL-TV Miami, FL - Ch. 39 CW/27 2024 2029 17
WEWS-TV Cleveland, OH - Ch. 5 ABC/15 2026 2029 19
WMAR-TV Baltimore, MD - Ch. 2 ABC/27 2026 2028 26
WRTV-TV Indianapolis, IN - Ch. 6 ABC/25 2026 2029 27
WTVF-TV Nashville, TN - Ch. 5 CBS/36 2024 2029 28
KMCI-TV Kansas City, MO - Ch. 38 Ind/25 N/A 2030 30
KSHB-TV Kansas City, MO - Ch. 41 NBC/36 2024 2030 30
WTMJ-TV Milwaukee, WI - Ch. 4 NBC/32 2024 2029 31
KGTV-TV San Diego, CA - Ch. 10 ABC/10 2026 2030 32
KSTU-TV Salt Lake City, UT - Ch. 13 FOX/28 2026 2030 33
KUPX-TV Salt Lake City, UT - Ch. 16 Ind/29 N/A 2030 33
WPTV-TV West Palm Beach-Port St. Lucie, FL - Ch. 5 NBC/12 2024 2029 35
WHDT-TV West Palm Beach-Port St. Lucie, FL - Ch. 9 Ind/34 N/A 2029 35
WCPO-TV Cincinnati, OH - Ch. 9 ABC/26 2026 2029 36
KTNV-TV Las Vegas, NV - Ch. 13 ABC/13 2026 2030 41
KMCC-TV Las Vegas, NV - Ch. 34 Ind/32 N/A 2030 41
WXMI-TV Grand Rapids-Kalamazoo, MI - Ch. 17 FOX/19 2026 2029 42
WGNT-TV Norfolk-Virginia Beach, VA - Ch. 27 CW/20 2024 2028 43
WTKR-TV Norfolk-Virginia Beach, VA - Ch. 3 CBS/16 2026 2028 43
WKBW-TV Buffalo, NY - Ch. 7 ABC/34 2026 2031 49
WFTX-TV Ft. Myers-Cape Coral, FL - Ch. 4 FOX/34 2026 2029 50
WTVR-TV Richmond, VA - Ch. 6 CBS/23 2026 2028 55
KJRH-TV Tulsa, OK - Ch. 2 NBC/8 2024 2030 62
WGBA-TV Green Bay-Appleton, WI - Ch. 26 NBC/14 2024 2029 63
WACY-TV Green Bay-Appleton, WI - Ch. 32 Ind/36 N/A 2029 63
WLEX-TV Lexington, KY - Ch. 18 NBC/28 2024 2029 65
KMTV-TV Omaha, NE - Ch. 3 CBS/31 2026 2030 69
KWBA-TV Tucson, AZ - Ch. 58 CW/21 2024 2030 70
KGUN-TV Tucson, AZ - Ch. 9 ABC/9 2026 2030 70
KOAA-TV Colorado Springs, CO - Ch. 5 NBC/25 2024 2030 86
KXXV-TV Waco-Killeen, TX - Ch. 25 ABC/26 2026 2030 93
KIVI-TV Boise, ID - Ch. 6 ABC/24 2026 2030 103
WSYM-TV Lansing, MI - Ch. 47 FOX/28 2026 2029 114
WTXL-TV Tallahassee-Thomasville, FL-GA - Ch. 27 ABC/27 2026 2029 116
KERO-TV Bakersfield, CA - Ch. 23 ABC/10 2026 (2) 120
KATC-TV Lafayette, LA - Ch. 3 ABC/28 2026 2029 124
KSBY-TV Santa Barbara-Santa Maria, CA - Ch. 6 NBC/15 2024 2030 130
KRIS-TV Corpus Christi, TX - Ch. 6 NBC/26 2024 2030 132
KPAX-TV Missoula, MT - Ch. 8 CBS/7 2024 2030 164
KTVQ-TV Billings, MT - Ch. 2 CBS/10 2024 2030 167
KXLF-TV Butte-Bozeman-Silver Bow, MT - Ch. 4 CBS/5 2024 2030 186
KRTV-TV Great Falls, MT - Ch. 3 CBS/7 2024 2030 194
KTVH-TV Helena, MT - Ch. 12 NBC/12 2024 2030 204
(1) Market rank is based on the 2023 Comscore HH Universe estimates.
(2) Application for renewal of the license was submitted timely to the FCC. Under FCC rules, the license expiration date is automatically extended pending FCC review of and action on the renewal application. Historically, we have been successful in renewing our FCC licenses.
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SCRIPPS NETWORKS
Our Scripps Networks segment includes national news outlets Scripps News and Court TV as well as popular entertainment brands ION, Bounce, Defy TV, Grit, ION Mystery and Laff. The networks reach nearly every U.S. television home through free over-the-air broadcast, cable/satellite, connected TV and digital distribution.
The segment generates revenue principally from the sale of advertising time on the national television networks. Advertising revenue generated by our networks depends on viewership ratings and advertising rates paid by advertisers for delivery of advertisements to certain viewer demographics. Advertising revenue is sold in the upfront, scatter (together called general market), direct response and connected TV markets. In the upfront market, advertisers buy advertising time for upcoming seasons and, by committing to purchase in advance, lock in the advertising rates they will pay for the upcoming year. In the scatter market, advertisers buy their spots closer to the time when the spots will run. The mix of upfront and scatter market advertising time sold is based upon the economic conditions at the time the sales take place, impacting the sell-out levels management is willing or able to obtain. The demand in the scatter market then impacts the pricing achieved for our remaining general market advertising inventory. Scatter market pricing can vary from upfront pricing and can be volatile. In most cases, advertising sales in the upfront and scatter markets are subject to ratings guarantees that require us to provide additional advertising time if the guaranteed audience levels are not achieved. Similar to the scatter market, direct response advertisers buy their spots closer to the time when the spots will run, and pricing can vary based on demand. Direct response advertisers buy spots based on expected performance, giving advertisers an efficient and measured way to reach their customers. Direct response advertising is not subject to ratings guarantees.
Revenue from advertising is subject to seasonality, market-based variations and general economic conditions. Due to increased demand in the spring and holiday seasons, the second and fourth quarters normally have higher advertising revenues than the first and third quarters.
Programming expenses, employee costs and sales and marketing expenses are the primary operating costs of our Scripps Networks segment. Programming expenses accounted for 54% of our Scripps Networks segment's costs and expenses in 2023, reflecting the costs of investing in quality programming, costs of distribution from carriage agreements with local television broadcasters and cable and satellite providers and costs of programming acquired under multi-year sports rights agreements. The national networks are carried on both our owned and operated television stations and from carriage agreements with other broadcast stations. Our over-the-air ("OTA") television networks are well-positioned to capitalize on cord-cutting trends and provide a platform for delivering mass audiences to national advertisers.
ION
Our ION national television network is available in nearly 100% of U.S. television broadcast homes. It is available through its owned and operated OTA broadcast TV stations, on pay TV platforms and independent broadcast affiliates that carry the ION programming. ION broadcasts popular scripted crime and justice procedural programming and has the fifth-largest average prime-time audience among all broadcast networks on television. ION generally elects government-mandated must-carry provisions, thereby ensuring its programming is available on cable and satellite systems. ION is available as a free advertising-supported streaming television ("FAST") channel with distribution across multiple streaming services.
Bounce
Bounce is available in approximately 98% of U.S. television broadcast homes. Bounce is an African American broadcast network dedicated to inspiring, empowering and entertaining viewers. Bounce programming represents a rich mosaic of the African American community, featuring both licensed and original dramas, sitcoms, movies and specials. Original programming includes the hit series Johnson. Bounce XL is available as either an app or FAST channel with distribution on multiple streaming services.
Court TV
Court TV is available in approximately 96% of U.S. television broadcast homes. Court TV is devoted to live, gavel-to-gavel coverage, in-depth legal reporting and expert analysis of the nation's most important and compelling trials. Court TV is available as either an app or FAST channel with distribution on multiple streaming services.
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Defy TV
Defy TV reaches approximately 95% of U.S. television broadcast homes and is a network that immerses viewers in the originality and eccentricity of those who cut against the grain. Programming includes reality-based series such as Pawn Stars , Forged in Fire , American Pickers and Storage Wars.
Grit
Grit is available in approximately 99% of U.S. television broadcast homes and appeals more strongly to male viewers. Grit’s programming line-up is primarily iconic Western series and movies. Grit Xtra is available as a FAST channel with distribution across multiple streaming services.
ION Mystery
ION Mystery is available in approximately 98% of U.S. television broadcast homes, and its programming is anchored in popular true-crime and justice procedural programming. Programming on ION Mystery includes NCIS and CSI franchises. ION Mystery is available as a FAST channel with distribution across multiple streaming services.
Laff
Laff is available in approximately 95% of U.S. television broadcast homes and targets comedy-lovers in the 18 to 49 age range. Programming on Laff includes popular sitcoms such as Home Improvement , Last Man Standing, Man with a Plan and According to Jim . Laff More is available as a FAST channel with distribution across multiple streaming services.
Scripps News
Scripps News is our national news network focused on bringing objective, fact-based reporting and analysis on world and national news, including politics, entertainment, science and technology. Scripps News remains the nation's only free 24/7 broadcast news network, available in approximately 91% of U.S. television broadcast homes. Scripps News is also available on multiple streaming services as either an app or FAST channel. The network’s programming lineup includes Morning Rush , In the Loop with Christian Bryant , Scripps News Reports with Chance Seales and Scripps News Showcase .
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Information concerning our Scripps Networks FCC licensed television stations and the markets in which they operate is as follows:
Station Market
DTV
Channel FCC License Expires in Market Rank (1)
WPXN New York, NY 34 2031 1
KILM Los Angeles, CA 24 2030 2
KPXN Los Angeles, CA 24 2030 2
WCPX Chicago, IL 34 2029 3
WPPX Philadelphia, PA 34 2031 4
KPXD Dallas-Ft. Worth, TX 25 2030 5
WBPX Boston, MA 22 2031 6
WDPX Boston, MA 22 2031 6
WPXG Boston, MA 23 2031 6
WPXW Washington, DC 35 2028 7
WWPX Washington, DC 13 2028 7
WPXA Atlanta, GA 16 2029 8
KKPX San Francisco-San Jose, CA 33 2030 9
KPXB Houston, TX 32 2030 10
WXPX Tampa-St. Petersburg, FL 29 2029 11
KPXM Minneapolis-St. Paul, MN 16 2030 14
KWPX Seattle, WA 33 2031 15
WPXM Miami, FL 21 2029 17
WOPX Orlando, FL 14 2029 18
KSPX Sacramento, CA 21 2030 20
WRBU St. Louis, MO 28 2029 22
WFPX Raleigh-Durham, NC 32 2028 23
WRPX Raleigh-Durham, NC 32 2028 23
WINP Pittsburgh, PA 16 2031 24
KPXG Portland, OR 22 2031 25
WNPX Nashville, TN 32 2029 28
WPXE Milwaukee, WI 30 2029 31
WSFJ Columbus, OH 19 2029 34
KPXL San Antonio, TX 26 2030 38
WPXC Jacksonville, FL 24 2029 44
WPXQ Providence, RI 17 2031 52
WPXL New Orleans, LA 33 2029 53
WQPX Wilkes Barre-Scranton, PA 33 2031 57
WPXK Knoxville, TN 18 2029 58
WKOI Dayton, OH 31 2029 61
KTPX Tulsa, OK 28 2030 62
KFPX Des Moines, IA 36 2030 71
WPXR Roanoke-Lynchburg, VA 27 2028 72
WIPL Portland, ME 24 2031 76
WLPX Charleston-Huntington, WV 18 2028 79
WZRB Columbia, SC 25 2028 81
WSPX Syracuse, NY 36 2031 82
KPXR Cedar Rapids, IA 22 2030 90
WEPX Greenville-Jacksonville, NC 36 2028 98
WPXU Greenville-Jacksonville, NC 16 2028 98
WTPX Wausau-Stevens Point, WI 19 2029 131
(1) Market rank is based on the 2023 Comscore HH Universe estimates.
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Federal Regulation of Broadcasting — Broadcast television is subject to the jurisdiction of the FCC pursuant to the Communications Act of 1934, as amended (“Communications Act”). The Communications Act prohibits the operation of broadcast stations except in accordance with a license issued by the FCC and empowers the FCC to revoke, modify and renew broadcast licenses, approve the transfer of control of any entity holding such a license, determine the location of stations, regulate the equipment used by stations and adopt and enforce necessary regulations. As part of its obligation to ensure that broadcast licensees serve the public interest, the FCC exercises limited authority over broadcast programming by, among other things, requiring certain children's television programming and limiting commercial content therein, requiring the identification of program sponsors, including specific rules related to identifying programming sponsored or provided by foreign governments, regulating the sale of political advertising and the distribution of emergency information, and restricting indecent programming. The FCC also requires television broadcasters to close caption their programming for the benefit of persons with hearing impairment and to ensure that any of their programming that is later transmitted via the Internet is captioned. Network-affiliated television broadcasters in larger markets must also offer audio narration of certain programming for the benefit of persons with visual impairments. Reference should be made to the Communications Act, the FCC’s rules and regulations, and the FCC’s public notices and published decisions for a fuller description of the FCC’s extensive regulation of broadcasting.
Broadcast licenses are granted for a term of up to eight years and are renewable upon request, subject to FCC review of the licensee's performance. While there can be no assurance regarding the renewal of our broadcast licenses, we have never had a license revoked, have never been denied a renewal, and all previous renewals have been for the maximum term.
FCC regulations govern the ownership of television stations, and the agency is required by statute to review these rules every four years to determine if they continue to serve the public interest. The FCC recently concluded the review that commenced in 2018, adopting an Order that largely retained the existing multiple ownership rules and added a prohibition on television broadcasters using multicast channels or low power television stations to acquire two “top-four” affiliations in a single market. Existing combinations of two or more “top-four” affiliations are allowed to continue but cannot be sold together to a single buyer. Court challenges to the Commission’s Order are expected. The 2022 quadrennial review of the ownership rules remains open.
With respect to national television ownership, the FCC voted in December 2017 to consider whether and how it might revisit its rule preventing applicants from obtaining an ownership interest in television stations whose total national audience reach would exceed 39% of all television households. Earlier in that year, the FCC also reinstated the 50% discount applied to the number of households deemed covered by UHF television stations. Scripps' current national audience reach is 38.0% of television households after application of the “UHF discount.”
We cannot predict the outcome of these open proceedings, the expected court reviews of the FCC's most recent changes to its television ownership rules, or the effect of further FCC rule revisions on our stations' operations or our business.
The restrictions imposed by the FCC’s ownership rules may apply to a corporate licensee due to the ownership interests of its officers, directors or significant shareholders. If such parties meet the FCC’s criteria for holding an attributable interest in the licensee, they are likewise expected to comply with the ownership limits, as well as other licensee requirements such as compliance with certain criminal, antitrust and antidiscrimination laws.
In order to provide additional spectrum for mobile broadband and other services, the FCC in 2017 conducted an incentive spectrum auction in which some television broadcasters agreed to voluntarily give up spectrum in return for a share of the auction proceeds. No Scripps station went off-air or relinquished a UHF-band allocation for a VHF-band allocation as a result of the auction, but many of Scripps' full-power, Class A, and low-power and translator stations relocated to new channels in the reduced broadcast spectrum band. All Scripps stations completed this transition timely.
Broadcasters are continuing to deploy a new voluntary digital television standard, ATSC 3.0. This Internet-protocol based transmission method permits television stations to offer enhanced and innovative services coupled with much improved broadcast signal reception, particularly by mobile devices. The new standard, however, is incompatible with both existing television receivers and with a station’s ability to continue offering its service via the current ATSC 1.0 digital standard. To avoid loss of service to those viewers who lack a new receiver, stations switching to ATSC 3.0 transmission are required to arrange for a local station that continues to use the current 1.0 standard to air (on a subchannel) programming “substantially similar” to that offered by the switching station on its 3.0 channel. In return, the 3.0 station could host the 3.0 signal of its 1.0 “host” station. This “simulcasting” requirement was originally due to “sunset” in 2023 but has been extended by the FCC and is now due to expire in July 2027, unless further extended. Scripps stations in several markets are operating with the new transmission protocol.
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The FCC remains committed to permitting non-broadcast spectrum use in the “white spaces” between television stations' protected service areas despite broadcasters’ concerns about the possibility of harmful interference to their existing service and to the potential for innovative uses of their broadcast spectrum in the future. In 2015, the FCC proposed to reserve a 6 MHz “vacant channel” in each market for non-broadcast, unlicensed services (including wireless microphones) which, if adopted, would have further reduced the spectrum available for television broadcasting. The reservation of spectrum in the “broadcast” band for interference-protected non-broadcast services could have had a particularly adverse effect on the ability of low-power and translator television stations to offer service since these stations enjoy only “secondary” status that offers no protection from interference caused by a full-power station. In late 2020, the FCC declined to adopt its own vacant channel proposal, although it continues to explore other ways to allow use of “white spaces” by unlicensed operators. We cannot predict the outcome of these proceedings or their possible impact on the Company.
In 2022, Congress passed the Low Power Protection Act, which directed the FCC to adopt rules that will allow certain low-power television stations in smaller markets to apply for “Class A” regulatory status, which will provide those stations with increased protection from interference. The FCC has adopted rules implementing the Low Power Protection Act, although those rules have not yet gone into effect. When those rules become effective, eligible stations will have one year in which to apply for “Class A” status. While certain low power television stations owned by the Company may be eligible to apply for this status, we cannot predict the outcome of any such applications or their possible impact on the Company.
Full-power broadcast television stations generally enjoy “must-carry” rights on any cable television system defined as “local” with respect to the station. Stations may waive their must-carry rights and instead negotiate retransmission consent agreements with local cable companies. Similarly, satellite video providers are required to carry the signal of those television stations that request carriage and that are located in markets in which the satellite carrier chooses to retransmit at least one local station. Satellite video providers may not carry a broadcast station without its consent. For stations that do not elect mandatory carriage, FCC rules most recently revised in 2020 require parties to negotiate in “good faith” for retransmission consent agreements, and the FCC has imposed significant fines on parties who have been found to have violated these requirements. The Company has elected to negotiate retransmission consent agreements with cable operators and satellite video providers for the majority of both our network-affiliated stations and our independent stations. Prior to the Company’s 2021 acquisition of ION, only two Scripps stations had elected “must-carry” status, but all acquired ION stations rely on “must carry” to ensure carriage.
Other proceedings before the FCC and the courts have reexamined the policies that protect television stations' rights to control the distribution of their programming within their local service areas. For example, the FCC in 2014 initiated a rulemaking proceeding on the degree to which an entity relying upon the Internet to deliver video programming should be subject to the regulations that apply to multi-channel video programming distributors (“MVPDs”), such as cable operators and satellite systems. While the major broadcast networks secured a victory in their lawsuit against the streaming service Locast, with the court finding that its retransmission of local television stations’ signals without their consent violated copyright law, the application of copyright law to other potential streaming services remains uncertain. We cannot predict the outcome of any FCC initiatives to address the use of new technologies to challenge traditional means of redistributing television broadcast programming or their possible impact on the Company.
The FCC may impose substantial penalties for violations of its rules and policies. While uncertainty continues regarding the scope of the FCC's authority to regulate indecent programming, the agency has increased its enforcement efforts regarding other programming issues such as sponsorship identification, broadcasting improper emergency alerts and extending service to persons with disabilities. We cannot predict the effect of the FCC’s expanded enforcement efforts on the Company.
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Employees and Human Capital Resource Management
Scripps operates under the fundamental philosophy that people are our most valuable asset. Identifying quality talent is at the heart of everything we do and our business success is dependent upon our ability to attract, develop and retain highly qualified employees. Our core values of courage, compassion, curiosity and community establish the foundation on which the culture is built and represent the key expectations we have of our employees. Our goal is to hire the best, to spark their passion for the job and then to nourish their career with tools that will help them learn and excel. We believe our culture and commitment to our employees help us attract and retain our qualified talent, while simultaneously providing significant value to Scripps and its shareholders.
In January 2023, we announced a strategic reorganization of the Company to further leverage our strong position in the U.S. television ecosystem and propel our growth across new distribution platforms and emerging media marketplaces. We created the role of chief operating officer to oversee both the Scripps Networks and Local Media businesses. The chief operating officer is leading the reorganization process to create a nimbler organizational structure, including the centralization of certain services as well as the consolidation of layers in management. Underlying our intent to restructure and reorganize is a sincere commitment to the Scripps mission. Our company has a long history of evolving to meet the changing needs of the media consumer.
Employees
As of December 31, 2023, we had approximately 5,200 employees, including full-time and part-time employees. Various labor unions represent approximately 400 employees, all of which are in Local Media. We have not experienced any work stoppages at our current operations since 1985. We consider our relationships with our employees to be good.
Equity, Diversity and Inclusion
Scripps is committed to an equitable, diverse and inclusive workplace that reflects the communities where we live, work and play. Our goal is to support all employees with the resources and development opportunities they need to write their own stories. Our overarching Equity, Diversity and Inclusion ("EDI") strategy focuses on building awareness of the importance of EDI in our workplaces and communities, empowering leaders to employ EDI practices in their business units or reporting structures, and tracking its equity, diversity and inclusion efforts, which culminates in required regulatory reporting (Equal Employment Opportunity-1 reports), divisional analysis and regular reports to the Company’s Board of Directors.
Leading Scripps' diversity, equity and inclusion strategies across the enterprise is the chief diversity & inclusion officer ("CDO"). This past year, we designated the CDO as a standalone role with a singular focus on EDI that directs our EDI strategy based on our guiding principles:
• Culture - To foster a culture that embraces each person's diversity and empowers employees to reach their full potential,
• People - To attract and retain diverse talent through strategic recruiting practices and professional development to reflect the communities we serve, and
• Business - to create additional value for Scripps and drive stronger business results by leveraging new ideas and innovation that stem from a culture of inclusion.
The CDO's team partners with business, senior leadership and human resources leaders to develop and implement the EDI strategy as well as action plans that continually evolve Scripps’ EDI commitment. The components of these plans include:
• Enterprise HR Objective: Foster diverse, inclusive, respectful workplaces focused on recruiting and developing talent that drives a high-performance, mission-oriented culture to support business objectives.
• EDI Mission: Cultivate a culture of inclusion where everyone is valued, informed and empowered to fully realize their Scripps story.
• EDI Vision: Transforming our business and the communities where we live, work and play by acknowledging, incorporating and uplifting our increasingly diverse world.
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Our four diversity pillars are: Race, Gender, LGBTQ+ and veterans, and we hope to add a fifth, disability, before year end 2024. As a foundation of our EDI journey, we work to help both employees and external stakeholders understand how and why Scripps is focused on a more equitable, diverse and inclusive workplace. The awareness and educational part of our strategy is foundational to improving representation in our workforce. We now celebrate our history and heritage months throughout the year and ensure ongoing learning opportunities through The Welcome Table, which highlights educational awareness; Courageous Conversations, showcasing robust, candid discourse among employees and speakers; EDI Academy, which promotes intimate topical exchanges; EDI Journey, which pairs two employees from diverse backgrounds on a six-week getting-to-know you program filled with meaningful conversations, and our annual Diversity Symposium. To engage employees deeper in our organization, we’ve also introduced our EDI Advisory Council, which will leverage employee perspectives on our EDI strategy and supporting tactics. Our Employee Resource Groups have increased across the organization, with each diversity pillar represented.
In 2023, we held our third annual EDI Symposium, which is our annual, weeklong event featuring internal and external speakers talking to our employees about multiple dimensions of difference including, but not limited to, visible and invisible disabilities, behavioral health and wellness and EDI and appearance bias related to size, tattoos and hair texture. More than 3,800 employees joined 14 inspiring sessions. Of those, 39% were in manager and executive roles.
At its core, our EDI work is about engaging every employee and helping them to participate at work at their fullest level, to achieve a truly inclusive workplace culture where they experience the satisfaction of belonging and performing well.
Compensation and Benefits
Critical to our success is identifying, recruiting, retaining and incentivizing our existing and future employees. We strive to attract and retain the most talented employees in the industry by offering competitive compensation and benefits. Our compensation philosophy is based on rewarding each employee’s individual contributions and striving to achieve equal pay for equal work regardless of gender, race or ethnicity. We use a combination of fixed and variable pay, including base salary, bonus, commissions and merit increases, which vary across the business and by role. In addition, as part of our long-term incentive plan for executives and certain employees, we provide share-based compensation to foster our merit-based culture, align our business leaders’ interests with those of our shareholders, and attract, retain and motivate our key leaders.
As the success of our business is fundamentally connected to the well-being of our people, we offer benefits that support their physical, financial and emotional well-being. We provide our employees with access to flexible and convenient medical programs intended to meet their needs and the needs of their families. In addition to standard medical coverage, we offer eligible employees dental and vision coverage, health savings and flexible spending accounts, paid time off, employee assistance programs, voluntary identity theft protection, access to student loan assistance programs, voluntary short-term and long-term disability insurance and term life insurance. We also offer a voluntary Employee Stock Purchase Plan ("ESPP") whereby employees can elect to participate through payroll deductions to purchase company stock at a discounted price. Additionally, we offer a 401(k) defined contribution plan to employees and an executive deferred compensation plan to certain senior-level employees. Through the Scripps Howard Fund, our employees have opportunities to apply for grants to support their volunteer efforts in local communities as well as charitable contribution matching gifts. Our benefits vary by location and are designed to meet or exceed local laws and to be competitive in the marketplace.
Commitment to Values and Ethics
Along with our core values, we demonstrate a commitment to operate at the highest ethical standards by enforcing the principles in Scripps’ Code of Conduct, which is applicable to all employees and sets forth expectations and guidance for employees to make appropriate decisions. Our Code of Conduct covers topics related to accounting and auditing matters, antitrust activity, confidentiality and privacy, conflict of interest, discrimination or harassment, diverting of product or business activity, embezzlement, employee relations, falsification of contracts, reports or records, gifts or entertainment, improper supplier or contractor activity, leadership or management issues, securities law violations, sexual harassment, substance abuse, theft, and unsafe working conditions, among other things. The Code of Conduct reflects our commitment to operating in a fair, honest, responsible and ethical manner and also establishes a means for employees to submit confidential and anonymous reports of suspected or alleged violations of our policies (including through an anonymous hotline). Our executive officers and supervisors maintain “open door” policies and any form of retaliation is strictly prohibited. Our chief ethics officer is responsible for the implementation and oversight of the Code of Conduct, monitors the ethics hotline, investigates ethics concerns and reports to the Board's Nominating & Governance Committee on related quarterly activity. Additionally, the Company has in place a Code of Business Conduct and Ethics for the chief executive officer and the senior financial and accounting officers. We also require our journalists to read and sign our Journalism Code of Ethics, and we provide Social
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Media Guidelines that help our employees understand how to protect the reputations of themselves and the Company on social media platforms.
Professional Development and Training
We believe a key factor in employee retention is training and professional development for our people. We have designed training programs to meet the needs of various roles, specialized skill sets and departments across the Company. In addition, we have dedicated time, resources and focus to developing people leaders across all levels of the organization, from the first-time frontline manager to aspiring executive. We use certain workforce metrics to inform the structure and effectiveness of our programs. These metrics include performance and productivity, employee internal movement and voluntary turnover. To assist employees with career growth and exploration, we invite them to update their interests, experience and skills in our human capital management system. This provides visibility into the capabilities and career aspirations of our people, allowing us to map employees to new opportunities and employees to self-explore ways in growing their careers. Additionally, we use a performance evaluation program that adopts a modern approach to valuing and strengthening individual performance through on-going interactive progress assessments related to established goals and objectives.
Communication and Engagement
We strongly believe Scripps’ success depends on employees understanding how their work contributes to the Company’s overall strategy. To that end, we communicate with our workforce through a variety of channels and encourage open and direct communication, including frequent emails and videos from corporate leaders to all employees; daily company social media postings; annual all-employee awards program; and regular town hall meetings with the CEO and other executives. We also welcome communication from our employees through focus groups, employee experience councils and town hall meeting surveys. In addition, Scripps employees across the country are giving back in their local communities through reporting on critical issues, entertaining audiences with quality content, fundraising to help those in need and volunteering for important causes.