US broadcasting company E.W. Scripps reported $283 million in total revenues during the second quarter of 2018, up 31 percent year-over-year. Its earnings come as the company executes its comprehensive plan to improve its short-term operating performance, which includes mergers and acquisitions and organizational restructuring as it sells its radio assets. However, a major driver came in form of boosts in political ad revenues and retransmission on its over-the-top (OTT) subscription platforms.

“In local media, we blew away the expectations for our political advertising revenue as we saw competitive elections emerge in markets across our footprint,” announced E.W. Scripps CEO Adam Symson on the earnings call.

Scripps reported that its local media division’s revenue was up nearly 6 percent year-over-year, which includes 3.4 percent growth in broadcast time sales driven by higher political advertising dollars. To put things into perspective, political advertising revenue in Q2 was $14.9 million, more than double the revenue brought in during the second quarter of 2014, the last midterm election year.

Specifically, the company saw strong political spending in its three Florida markets due to the US Senate race there. Other areas include San Diego, with two highly competitive Congressional races, and Nashville’s trio: a local special mayoral election, the US Senate race and a governor’s race.

Based on its second-quarter results, Scripps may have the opportunity to exceed its 2014 political ad revenue dollars of $21 million by over 20 percent in the third quarter.

Growth was also generated through the Katz Networks, which Scripps acquired for $302 million in 2017. It brought in $47 million in revenue, an increase of 21 percent year-over-year. Symson said that each of its multicast channels is serving more than 90 percent of households at a time when more consumers turning to over-the-air broadcasting than ever. In fact, he stated that Katz is “attracting network sized audiences for its cadre of brand and direct response advertisers.”

Scripps president of local media Brian Lawlor added, “The strategies for their (Katz) success are straightforward: growing the audiences they’re delivering to advertisers, increasing advertising rates as they attract more general advertising brands, and expanding their national distribution and reach.”

Excluding Katz, revenues from the national media division grew by over 60 percent.

But at the same time, the company’s core advertising saw reduced revenue compared to 2017, mainly due to declines in the automotive sector and because there were fewer NBA Finals games featuring the Cleveland Cavaliers. Scripps has lost millions in core revenue over the past two years because of the NBA Finals reduction, and the loss is expected to continue with the departure of Lebron James from the team. To compensate, the company is betting that the Pistons, Nuggets, Pacers or Suns will rise up fill the space.

The good news for Scripps is that subscriptions for its OTT platforms are making a major impact, showing strong retransmission revenues, which increased by 12 percent. The company reported that its OTT subscriber base grew from zero to almost 500,000 by March, led by brands such as Newsy, which fits well with the OTT platform because of its appeal to younger audiences. Even so, Newsy is expanding to include distribution on cable and satellite networks.

“Just like scale adds value in local television businesses, we’re focused on building scale in these fast-growing national brands,” said Symson, discussing how revenue growth was directly tied to the investments made in Katz and Midroll Media. Stand out OTT subscription platforms include DirecTV Now, YouTube TV, Hulu and Sony’s PlayStation Vue service.

Scripps is also seeing significant growth from podcasting networks Stitcher and Midroll Media, with combined revenues that have grown by 50 percent to date. The company explained that consumer engagement with podcasts is accelerating and advertisers are following that trend. Blue Chip advertisers including Proctor & Gamble and Coca-Cola placed new podcast ad buys during the second quarter, showing strong renewal activity in addition to more brands coming on board.

Freakonomics is one of its leading podcasts, and it gets more than 12 million downloads per month. The show also offers extra content to premium subscribers, driving more users to Stitcher Premium alongside dozens of other programs such as Wolverine: The Long Night.

The company said that it will continue to invest in these networks in the long-term while tracking multiple KPIs including the number of listeners on Stitcher and how general market advertising is growing. According to Scripps, the podcasting industry is expected to grow to somewhere between $1-2 billion, with revenue growth on track for meeting that goal.

“As we move into the back half of the year, we see significant opportunity in the local broadcast industry,” Symson said in closing, “[with] a dynamic political landscape, continued growth in over-the-top households, the promise of automated advertising to drive greater national dollars into our local stations and the potential for [mergers and acquisitions]. Today, because of the foundation we’re building with our transformation plan, Scripps is poised to capitalize on all of these opportunities.”