Scripps’ cost-cutting and AI integration are the latest effort to boost profits

E. W. Scripps It is enacting what it calls the broadcast station company’s turnaround plan — one that aims to deliver growth for both profits and its local TV stations.

The company announced Wednesday that it is targeting growth of $125 million to $150 million in annual enterprise earnings before interest, taxes, depreciation and amortization by 2028. In order to get there, Scripps will undergo a number of cost-savings and revenue growth measures that rely on technology, specifically artificial intelligence, CNBC can exclusively report.

“This will essentially be a reorientation of the entire company… with a more flexible and efficient cost structure,” Adam Simpson, the company’s CEO, said in an interview with CNBC. “We have to act like a startup media company. We have to act like the company EW founded, because the market can’t handle the old pace or the old thinking.”

The company plans to explain more details about its efforts during its upcoming earnings call with investors on February 26, but Simpson described making changes to the newsroom to move journalists away from administrative tasks and focus more on gathering and reporting news.

The company declined to comment on specific employment impacts as a result of cost cuts, saying that potential impacts on jobs will be determined over the next few months.

“Everything is on the table, but our goal is to always maintain press and sales, which are the two things that make up our relationship with customers,” Simpson said.

Scripps has more than 60 local broadcast stations in 40 markets, including Ion, which has become a broadcaster of the WNBA and other professional sports.

The company’s stock has fallen 70% in the past five years, a decline not unlike many of its media peers.

The revitalization of the nearly 150-year-old Scripps comes at a time when the company — as well as the broadcast industry in general — finds itself at a historically difficult moment.

The broadcasting station industry – which also includes publicly traded companies e.g Nexstar Media Group, Tegna, Sinclair and Gray media – It faces the same challenges as its cable and content studio peers, namely the defection of pay-TV package subscribers to streaming alternatives.

As a result, the industry has been seeking consolidation while awaiting major regulatory changes. Scripps itself has been a target of mergers and acquisitions, with Sinclair recently taking a hostile approach to merging with the company. Scripps rejected such overtures.

Meanwhile, print, digital and television media were in the midst of widespread layoffs last year. Paramount Skydance The company has cut thousands of jobs, including at CBS News, and recently the Washington Post told employees it would cut a third of its newsroom jobs.

The rise of artificial intelligence has also heightened concerns about mass layoffs, especially in newsrooms.

In 2024, Scripps announced the creation of an AI team that will report to Laura Tomlin, Scripps’ chief transformation officer. Simpson said her first order of business was to “unify technology from across the company.”

Simpson said Scripps’ move to implement the new technology is not intended to replace journalism jobs with artificial intelligence, but rather to help newsrooms operate more efficiently and ensure a long runway for local news.

“This cannot be an exercise in cutting service costs in order to incrementally try to improve profit margins from cutting product. This has proven to be the beginning of the end,” Simpson said. “It has to be about starting to understand our customers, and what they need from us, both from our news product and from our sales product.”

This week, Simpson gathered 200 leaders from across the company at Scripps’ headquarters in Cincinnati to outline the latest plan, which will be announced more broadly Wednesday to Scripps employees and investors.

The company will also reaffirm its latest earnings guidance, noting that it expects its 2026 financial performance to rise through the midterm elections — local broadcast stations rely heavily on political advertising — as well as the upcoming Winter Olympics and World Cup broadcast on its affiliates this year.

This transformation, with the vision tagline “We Create Connection,” is the latest move in recent years for Scripps to find new avenues for revenue growth.

“Scripps’ turnaround efforts are not unique in and of themselves,” Benchmark analyst Dan Cornus said in a recent interview. “Everyone in this space is cutting costs.” “Last time we checked, streaming TV wasn’t the fastest-growing sector of the media ecosystem. It’s not as bad as cable.”

During a November earnings call with investors, Symson teased more initiatives the team was working on, calling out its focus on “expense management.”

For its local media division, Scripps said third-quarter expenses fell more than 4% year over year, and its networking business saw expenses decline 7.5%, due in part to “reduced employee-related costs.”

However, Cornus said Scripps has deviated from its peers through other moves, such as growing Scripps Sports with local media rights. The Scripps Networks now have the rights to broadcast WNBA games, and the company has also acquired the rights for NHL teams to exit its regional sports networks.

“I think Scripps has had to reinvent itself a few times,” Cornus told CNBC.

While Scripps has declined to merge with Sinclair, the company has been making smaller deals itself, such as offloading stations and swapping stations with Gray Media, which are still awaiting approval. The company also agreed this week to sell its Court TV network for less than $125 million, according to a person familiar with the matter who declined to be identified speaking on internal matters.

Simpson acknowledged the need for consolidation as the industry moves into a new era. But he stopped short of saying that was necessary, at least for Scripps, as some of his peers have said in recent public calls.

“Responsible consolidation is undoubtedly important for the industry,” Simpson said. “But make no mistake, it is financial engineering.” “It will create tailwinds for our business that investors should appreciate, and we will pursue them, but it will not create the organic growth that we are talking about here.”

Simpson’s history at Scripps runs deep and began in the newsroom. He started at the company as executive producer of investigations and special projects at a Scripps-owned subsidiary in Phoenix before joining the parent company in 2003 and assuming the CEO role in 2017.

The latest turnaround efforts follow similar shifts in 2023, when Scripps eliminated some core roles, added reporters in smaller markets and increased reporter pay, among other changes.

“It’s very personal to me. I think at this point I’m the only CEO of a broadcast company that comes from a journalism background and from a newsroom background,” Simpson said. “What we do is so important to us that we continue to attack and we are aggressively transforming the company in order to ensure that we are a company that continues to thrive.”

Disclosure: Versant, parent company of CNBC, carries Olympic coverage produced by NBC Sports on its networks, including USA Network and CNBC.