What Happened?

Shares of media, broadcasting, and digital services company E.W. Scripps (NASDAQ: SSP) jumped 33.8% in the morning session after rival broadcaster Sinclair Inc. acquired an 8.2% stake in the company's class A non-voting shares, fueling discussions about a potential merger. 

According to a filing, Sinclair's board and management had engaged in "constructive discussions" with E.W. Scripps for several months regarding a potential combination of the two companies. The acquisition involved approximately 6.28 million shares. In response, Scripps' board stated it remained focused on its strategic plan but would evaluate alternatives to enhance shareholder value. The board also noted it would take steps to protect the company and its shareholders from what it termed "opportunistic actions" by Sinclair or others.

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What Is The Market Telling Us

E.W. Scripps’s shares are extremely volatile and have had 80 moves greater than 5% over the last year. But moves this big are rare even for E.W. Scripps and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 7.6% as the stock continued to rally following its third-quarter earnings report, which investors viewed favorably despite a wider-than-expected loss. 

This move extended a significant gain from the previous trading session, where the stock also surged after the results were released. While the company reported a loss of $0.55 per share, missing forecasts, investors focused on positive underlying trends. The company highlighted strong execution, including a 41% increase in Connected TV revenue and successful sales of broadcast stations. Furthermore, management pointed to progress in its sports strategy, with partnerships involving the WNBA and NHL driving advertising growth. E.W. Scripps also made strides in improving its financial position by cutting expenses and reducing its net leverage. A broader market rally may have also provided a tailwind for the shares.

E.W. Scripps is up 67.3% since the beginning of the year, and at $4.22 per share, has set a new 52-week high. Investors who bought $1,000 worth of E.W. Scripps’s shares 5 years ago would now be looking at an investment worth $327.25.

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