Includes business segments now operating as Scripps Networks Interactive CINCINNATI, July 24
CINCINNATI, July 24 /PRNewswire-FirstCall/ -- The E. W. Scripps Company
(NYSE: SSP), which on July 1 spun off its national lifestyle television
networks and global interactive services businesses into a separate publicly
traded company, today reported consolidated operating results for the second
quarter of 2008.
The earnings report for the three-month and year-to-date periods ending
June 30 includes results from the company's Scripps Networks and Interactive
Media operating divisions, the two business segments that now comprise the
Lifestyle Media and Interactive Services business segments of the newly
created Scripps Networks Interactive Inc. (NYSE: SNI).
Scripps Networks Interactive will report operating results separately
beginning with the third quarter of 2008. Its businesses will be classified by
The E. W. Scripps Company as discontinued operations, also beginning with the
third quarter.
Consolidated second-quarter results for The E. W. Scripps Company reflect
strong growth at Scripps Networks, which includes HGTV and Food Network, and
solid operating performance at Shopzilla, the company's online comparison
shopping business. Consolidated growth, however, was held back by weak
advertising sales at the company's newspapers and broadcast television
stations.
On a consolidated basis, The E. W. Scripps Company's second-quarter
revenue increased 3.8 percent to $664 million compared with the same period a
year ago.
The company's second-quarter net income was $51.2 million, or 94 cents a
share, compared with $97.5 million, or $1.78 a share, for the same period in
2007. Reported earnings per share reflect the one-for-three reverse stock
split that became effective on July 16 for The E. W. Scripps Company. Shares
of Scripps Networks Interactive were not affected by the reverse stock split.
For The E. W. Scripps Company, on a pre-spin-off basis, consolidated
second-quarter net income was affected by about $18.0 million in costs related
to the spin-off.
Net income also was affected by a $26.4 million loss that resulted from
the repurchase of previously issued long-term debt from bondholders ahead of
scheduled maturity dates. The company restructured its debt prior to the
spin-off.
Consolidated net income was favorably affected during the second quarter
by solid operating performance at Scripps Networks, which in addition to HGTV
and Food Network, also includes DIY Network, Fine Living Network, the Great
American Country television network and SN Digital, a growing portfolio of
food- and shelter-related interactive businesses.
Second-quarter revenue at Scripps Networks grew 13 percent year over year
to $349 million. Segment profit for the division increased 9.8 percent to
$180 million.
(Segment profit, as defined by the company, excludes interest, income
taxes, depreciation and amortization, divested operations, restructuring
activities, investment results and certain other items that are included in
net income.)
Financial performance at Scripps Networks was favorably affected during
the second quarter by increased advertising sales that resulted from improved
viewership at HGTV and Food Network and strong pricing in the scatter
advertising market.
At the company's online comparison shopping services, Shopzilla and
uSwitch, combined second-quarter revenue grew 13 percent to $66.9 million.
Segment profit for the Interactive Media division was $15.1 million compared
with $6.8 million during the same period a year earlier.
The Interactive Media division's second-quarter growth is attributable to
Shopzilla's effectiveness in increasing and monetizing domestic user traffic
to its Web sites and strong growth in its emerging European markets. Increased
energy switching activity combined with significantly lower expenses at
uSwitch in the United Kingdom also contributed to the positive results.
At the company's newspapers and television stations, second-quarter
operating performance was affected by industry-wide weakness in local
advertising sales.
Total second-quarter revenue at Scripps newspapers was down 13 percent,
year over year, to $144 million. The company has been adjusting fixed costs at
its newspapers to align with changing business conditions. Newspaper expenses
were down 9.7 percent in the quarter, and employee costs were down 12 percent.
The company incurred employee severance costs of $8.9 million during the
second quarter 2007. Newspaper segment profit for the period was $16.3 million
vs. $30.1 million last year.
Lower local and classified advertising sales, including particularly weak
real estate, employment and automotive classified advertising, contributed to
the decline in total newspaper revenue and segment profit.
Second-quarter revenue at the Scripps television station group was
$80.5 million compared with $84.5 million during the same period a year
earlier. Second-quarter segment profit at the TV station group was
$18.3 million vs. $23.5 million, year-over-year.
The decline in revenue and segment profit at the television station group
was attributable to generally weak local and national advertising sales,
particularly in the automotive and retail categories. Political advertising
revenue during the quarter was $1.6 million compared with $400,000 during the
same period in 2007. Political advertising revenue was weaker than expected
due to the lack of primary campaign spending in Florida and Michigan.
Year-to-date, political advertising revenue at the company's TV stations is
about $4.7 million vs. $700,000 in the prior-year period.
Here are second-quarter results by segment:
Scripps Networks
Scripps Networks advertising revenue increased 11 percent to $271 million.
Affiliate fee revenue was $69.7 million, up 19 percent.
Programming, marketing and other expenses increased 18 percent to
$133 million. Employee costs were up 14 percent to $41.5 million.
Scripps Networks segment profit was $180 million, up 9.8 percent from
$164 million in the prior-year period.
Revenue at HGTV was up 13 percent to $172 million. HGTV now reaches about
95 million domestic subscribers compared with 93 million at the end of the
second quarter 2007.
Food Network revenue also increased 13 percent to $136 million. Food
Network reaches about 96 million domestic subscribers, up from 93 million at
the end of the second quarter 2007.
Revenue at DIY Network was $19.3 million, up 28 percent. DIY can be seen
in about 48 million households, up from about 45 million households a year
ago.
Fine Living revenue increased 17 percent to $14.7 million. Fine Living
reaches about 50 million households vs. 47 million households last year.
Revenue at Great American Country was $6.8 million vs. $7.1 million,
year-over-year. Great American Country can be seen in about 54 million homes
compared with 48 million homes a year ago.
Newspapers
Total newspaper revenue declined 13 percent to $144 million. Advertising
revenue at newspapers managed solely by Scripps was $112 million, down 15
percent from the prior-year period.
Advertising revenue broken down by category was:
-- Local, down 13 percent to $30.8 million.
-- Classified, down 21 percent to $38.5 million.
-- National, down 20 percent to $6.7 million.
-- Preprint and other, down 7.9 percent to $35.9 million. Online revenue,
which is included in the preprint and other category, was $9.9 million, down
8.0 percent relative to the prior-year period due mostly to the weakness in
classified advertising categories. Revenue from Internet-only advertising
sales was up 26 percent.
Circulation revenue was $28.0 million, down 5.4 percent.
Segment profit at newspapers managed solely by the company was
$19.1 million compared with $29.3 million in the year-ago quarter. The segment
loss from the company's joint operating agreement newspaper and partnerships
was $2.7 million vs. a $900,000 contribution to segment profit in the second
quarter 2007.
Newsprint expense declined 3.9 percent due primarily to lower paper usage.
Newsprint pricing was up about 15 percent over the prior-year period.
Total cash expenses for Scripps newspapers managed solely by the company
were down 8.1 percent from the prior year. Year-over-year newspaper expense
reductions reflect $8.9 million in employee severance costs the company
incurred during the second quarter of 2007.
Total newspaper segment profit was $16.3 million vs. $30.1 million in the
same prior-year period.
Scripps Television Station Group
Television station group revenue was $80.5 million compared with
$84.5 million a year earlier.
Revenue broken down by category was:
-- Local, down 7.0 percent to $50.4 million.
-- National, down 7.6 percent to $23.8 million.
-- Political, $1.6 million compared with $400,000 in 2007.
Cash expenses for the television station group were $62.2 million, up
1.9 percent from the prior year.
Television Station Group segment profit was $18.3 million compared with
$23.5 million in the prior year period.
Interactive Media
Interactive Media revenue was $66.9 million for the second quarter
compared with $59.0 million in the second quarter 2007.
Segment profit was $15.1 million compared with $6.8 million in the second
quarter of 2007.
Licensing and Other Media
Revenue was $23.4 million compared with $22.4 million in the prior-year
period.
Segment profit was $1.8 million compared with $2.6 million in the second
quarter 2007.
Guidance
(The following guidance is for The E. W. Scripps Company. Guidance for
Scripps Networks Interactive Inc. was provided today in a separate press
release.)
Total newspaper revenue is expected to be down 13 to 15 percent from the
prior year in the third quarter due to continued weakness in classified and
local advertising. Total newspaper expenses are expected to be flat compared
with the prior year. The company anticipates a segment loss of $3 million
during the quarter from its joint operating agreement newspapers and
partnerships.
At the company's broadcast television stations, total revenue, including
political advertising, is expected to be up 15 to 17 percent compared with the
prior-year period. TV station group expenses are expected to be up in the
mid-single digits. Political advertising revenue at the company's TV stations
is expected to be between $40 million and $44 million for the full-year.
Corporate expenses, excluding costs incurred as a result of the Scripps
Networks Interactive spin-off, are expected to be about $11 million in the
third quarter.
Third-quarter earnings per share from continuing operations, excluding
separation costs, are expected to be between 10 and 15 cents.
Based on the stock price of the company subsequent to the July 1, 2008,
spin-off of Scripps Networks Interactive and the continued effects of a
weakening economy on our newspaper advertising revenue, the company will test
goodwill, long-lived assets and equity investments for impairment as of July
1, 2008. If it is determined that the fair values of those assets are less
than their carrying values, a non-cash charge for impairment will be recorded
in the third quarter. Such a charge is not included in the earnings per share
forecast provided above.
Conference call
The senior management teams at The E. W. Scripps Company and Scripps
Networks Interactive Inc. will discuss the company's second quarter results
during a telephone conference call at 10 a.m. EDT today. Scripps will offer a
live audio webcast of the conference call. To access the webcast, visit
www.scripps.com, choose "Shareholders" then follow the link in the "Upcoming
Events" section.
To access the conference call by telephone, dial 1-800-230-1766 (U.S.) or
1-612-332-0418 (International), approximately 10 minutes before the start of
the call. Callers will need the name of the call (second quarter earnings
report) to be granted access. Callers also will be asked to provide their name
and company affiliation. The media and general public are provided access to
the conference call on a listen-only basis.
A replay line will be open from 12:00 p.m. EDT July 24 until 11:59 p.m.
EDT July 31. The domestic number to access the replay is 1-800-475-6701 and
the international number is 1-320-365-3844. The access code for both numbers
is 953825.
A replay of the conference call will be archived and available online for
an extended period of time following the call. To access the audio replay,
visit www.scripps.com approximately four hours after the call, choose
"Shareholders" then follow the "audio archives" link on the left navigation
bar.
Forward-looking statements
This press release contains certain forward-looking statements related to
the company's businesses that are based on management's current expectations.
Forward-looking statements are subject to certain risks, trends and
uncertainties, including changes in advertising demand and other economic
conditions that could cause actual results to differ materially from the
expectations expressed in forward-looking statements. All forward-looking
statements should be evaluated with the understanding of their inherent
uncertainty. The company's written policy on forward-looking statements can be
found on page F-5 of its 2007 SEC Form 10K.
We undertake no obligation to publicly update any forward-looking
statements to reflect events or circumstances after the date the statement is
made.
About The E. W. Scripps Company
The E. W. Scripps Company (www.scripps.com) is a diverse, 130-year-old
media enterprise with interests in broadcast television stations, newspaper
publishing and licensing and syndication. The company's portfolio of locally
focused media properties includes: 10 broadcast TV stations, with six
ABC-affiliated stations, three NBC affiliates and one independent; daily and
community newspapers in 15 markets and the Washington D.C.-based Scripps Media
Center, home of the Scripps Howard News Service; and United Media, the
licensor and syndicator of Peanuts, Dilbert and approximately 150 other
features and comics.
About Scripps Networks Interactive Inc.
Scripps Networks Interactive Inc. is the leading developer of
lifestyle-oriented content for television and the Internet, where on-air
programming is complemented with online video, social media areas and e-
commerce components on companion Web sites and broadband vertical channels.
The company's media portfolio includes: Lifestyle Media, with popular
lifestyle television and Internet brands HGTV, Food Network, DIY Network, Fine
Living Network and country music network Great American Country; and
Interactive Services, with leading online comparison shopping services,
Shopzilla and uSwitch.
THE E. W. SCRIPPS COMPANY
RESULTS OF OPERATIONS
(in thousands, except per share data)
Three months endedSix months ended
June 30, June 30,
2008 2007Change2008 2007Change
Operating
revenues$664,141 $640,0743.8% $1,306,615 $1,241,4985.2%
Costs and
expenses(473,208) (441,906) 7.1% (936,170) (890,307) 5.2%
Depreciation and
amortization of
intangibles (29,703) (32,207) (7.8)% (58,465) (66,645) (12.3)%
Gains (losses) on
disposal of PP&E 2,364 (243) 1,497 (332)
Operating income 163,594 165,718 (1.3)% 313,477284,214 10.3%
Interest expense (5,431) (10,729) (49.4)% (11,263) (20,930) (46.2)%
Equity in earnings
of JOAs and other
joint ventures 7,54313,628 (44.7)%19,732 17,249 14.4%
Gains (losses) on
repurchases
of debt (26,380) 317(26,380) 317
Miscellaneous,
net7,431 2,601 8,192 3,449
Income from
continuing
operations
before income
taxes and
minority
interests146,757 171,535 (14.4)% 303,758284,2996.8%
Provision for
income taxes (71,136) (54,781) 29.9% (122,010) (86,316) 41.4%
Income from
continuing
operations
before minority
interests 75,621 116,754 (35.2)% 181,748197,983 (8.2)%
Minority
interests(24,441) (20,988) 16.5%(46,734) (38,968) 19.9%
Income from
continuing
operations51,18095,766 (46.6)% 135,014159,015 (15.1)%
Income from
discontinued
operations,
net of tax 1,695234 6,930 (96.6)%
Net income$51,180 $97,461 (47.5)% $135,248 $165,945 (18.5)%
Net income per
diluted share
of common stock:
Income from
continuing
operations $0.94 $1.75 $2.47 $2.90
Income from
discontinued
operations0.00 0.03 0.00 0.13
Net income per
diluted share of
common stock $0.94 $1.78 $2.48 $3.02
Weighted average
diluted shares
outstanding 54,70654,797 54,629 54,886
As a result of the one-for-three reverse stock split that became effective
on July 16, 2008, all share and per share amounts in our consolidated
financial statements and related notes have been retroactively adjusted to
reflect the reverse stock split for all periods presented.
Net income per share amounts may not foot since each is calculated
independently.
See notes to results of operations.
Notes to Results of Operations
1. DISCONTINUED OPERATIONS
Our Cincinnati joint operating agreement ("JOA") with Gannett Co. Inc.,
was not renewed when the agreement terminated on December 31, 2007. In
connection with the termination of the JOA, we ceased publication of our
Cincinnati Post and Kentucky Post newspapers that participated in the
Cincinnati JOA.
In 2006, we sold our Shop At Home television network to Jewelry
Television. We also reached agreement in the third quarter of 2006 to sell
the five Shop At Home-affiliated broadcast television stations. On December
22, 2006, we closed the sale of the three stations located in San Francisco,
CA, Canton, OH and Wilson, NC. The sale of the two remaining stations located
in Lawrence, MA, and Bridgeport, CT closed on April 24, 2007.
In accordance with the provisions of FAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", the results of businesses held
for sale or that have ceased operations are presented as discontinued
operations within our results of operations. Accordingly, these businesses
have been excluded from segment results for all periods presented.
Operating results of our discontinued operations were as follows:
(in thousands)
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
Operating revenues $- $213 $5 $1,320
Equity in earnings of JOA $- $4,511 $331 $8,439
Income from discontinued
operations:
Income from discontinued
operations, before tax $- $2,664 $371 $5,597
Income taxes (benefit) - 969 137 (1,333)
Income from
discontinued operations $- $1,695 $234 $6,930
A tax benefit of $3.4 million was recognized in the first quarter of 2007
related to differences that were identified between our prior year provision
and tax returns for our Shop At Home businesses.
2. OTHER CHARGES AND CREDITS
Net income was affected by the following:
2008 - In the second quarter of 2008, we redeemed the remaining balances
of our outstanding notes and recorded a $26.4 million loss on the
extinguishment of debt. Transaction costs and other activities related to the
spin-off of our national lifestyle media brands (HGTV, Food Network, DIY, Fine
Living and GAC and their category-leading Internet businesses) and online
comparison shopping services (Shopzilla and uSwitch and their associated Web
sites) increased our costs and expenses by $23.4 million in 2008. The costs
associated with these transactions, some of which are not expected to be
deductible for income tax purposes, reduced year-to-date net income by
$48.8 million, $.89 per share.
Investment results, reported in the caption "Miscellaneous, net" in our
Condensed Consolidated Statements of Income, include realized gains from the
sale of certain investments in the second quarter of 2008. Net income was
increased by $4.3 million, $.08 per share.
2007 - A majority of our newspapers offered voluntary separation plans to
eligible employees during 2007. In connection with the acceptance of the
offer by 137 employees, we accrued severance related costs of $8.9 million in
the second quarter of 2007. These costs reduced net income $5.4 million, $.10
per share.
Due to changes in a distribution agreement at our Shopzilla business, we
wrote down intangible assets during the first quarter of 2007 to reflect that
certain components of the contract were not continued. This resulted in a
charge to amortization of $5.2 million that reduced year-to-date net income
$3.3 million, $.06 per share.
In connection with the adoption of Financial Accounting Standards Board
Interpretation No. 48 and the corresponding detailed review that was completed
for our deferred tax balances, we identified adjustments necessary to properly
record certain tax balances. These adjustments reduced the tax provision in
the first quarter of 2007 increasing year-to-date net income $4.0 million,
$.07 per share.
3. SEGMENT INFORMATION
Our reportable segments are strategic businesses that offer different
products and services. Scripps Networks includes national television
networks, Newspapers includes daily and community newspapers, Broadcast
television includes nine network affiliated stations and one independent
station, Interactive media includes our online search and comparison shopping
services, and Licensing and other media primarily includes syndication and
licensing of news features and comics.
Our chief operating decision maker (as defined by FAS 131, "Segment
Reporting") evaluates the operating performance of our business segments using
a measure we call segment profit. Segment profit excludes interest, income
taxes, depreciation and amortization, divested operating units, restructuring
activities, investment results and certain other items that are included in
net income determined in accordance with accounting principles generally
accepted in the United States of America.
Items excluded from segment profit generally result from decisions made in
prior periods or from decisions made by corporate executives rather than the
managers of the business segments. Depreciation and amortization charges are
the result of decisions made in prior periods regarding the allocation of
resources and are therefore excluded from the measure. Financing, tax
structure and divestiture decisions are generally made by corporate
executives. Excluding these items from our business segment performance
measure enables us to evaluate business segment operating performance for the
current period based upon current economic conditions and decisions made by
the managers of those business segments in the current period.
We account for our share of the earnings of our JOA and newspaper
partnerships using the equity method of accounting. Our equity in earnings of
our JOA and newspaper partnerships is included in "Equity in earnings of JOAs
and other joint ventures" in our results of operations. Newspaper segment
profit includes equity in earnings of JOAs and newspaper partnerships.
Scripps Networks segment profit includes equity in earnings of joint ventures.
Information regarding the operating performance of our business segments
determined in accordance with FAS 131 and reconciliation to our results of
operations is as follows:
(in thousands) Three months ended Six months ended
June 30, June 30,
2008 2007 Change2008 2007 Change
Segment operating
revenues:
Scripps
Networks $349,223 $308,148 13.3%$660,059 $577,627 14.3%
Newspapers:
Newspapers
managed
solely
by us 144,433 165,723 (12.8)%300,032335,474 (10.6)%
JOAs and
newspaper
partnerships 5348 10.4% 1141067.5%
Total
newspapers144,486 165,771 (12.8)%300,146335,580 (10.6)%
Broadcast
television 80,52084,539 (4.8)%156,539161,047 (2.8)%
Interactive
media 66,85159,022 13.3% 144,347121,956 18.4%
Licensing and
other media23,37522,3814.4% 45,818 45,5810.5%
Corporate 200 799 (75.0)%909 1,226 (25.9)%
Intersegment
eliminations (514) (586) (12.3)% (1,203)(1,519) (20.8)%
Total operating
revenues $664,141 $640,0743.8% $1,306,615 $1,241,4985.2%
Segment profit
(loss):
Scripps
Networks $180,236 $164,1369.8%$326,856 $291,636 12.1%
Newspapers:
Newspapers
managed
solely by us 19,07429,256 (34.8)% 44,624 65,947 (32.3)%
JOAs and
newspaper
partnerships (2,732) 886(717)(6,488) (88.9)%
Total
newspapers 16,34230,142 (45.8)% 43,907 59,459 (26.2)%
Broadcast
television 18,30523,496 (22.1)% 32,475 39,875 (18.6)%
Interactive
media 15,064 6,757 36,031 6,376
Licensing and
other media 1,850 2,578 (28.2)% 4,022 5,556 (27.6)%
Corporate (33,341) (15,319)(53,151) (34,273) 55.1%
Intersegment
eliminations 20 6 37 (189)
Depreciation and
amortization of
intangibles (29,703) (32,207) (7.8)%(58,465) (66,645) (12.3)%
Gains (losses)
on disposal
of PP&E 2,364 (243) 1,497 (332)
Interest expense (5,431) (10,729) (49.4)%(11,263) (20,930) (46.2)%
Gains (losses)
on repurchases
of debt (26,380) 317 (26,380) 317
Miscellaneous,
net 7,431 2,601 8,192 3,449
Income from
continuing
operations
before income
taxes and
minority
interests $146,757 $171,535 (14.4)% $303,758 $284,2996.8%
Certain items required to reconcile segment profitability to consolidated
results of operations determined in accordance with accounting principles
generally accepted in the United States of America are attributed to
particular business segments. Significant reconciling items attributable to
each business segment are as follows:
(in thousands) Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
Depreciation:
Scripps Networks$6,038 $4,876 $12,014 $9,480
Newspapers:
Newspapers managed
solely by us 5,4375,623 10,810 10,960
JOAs and newspaper
partnerships321 330 646 659
Total newspapers 5,7585,953 11,456 11,619
Broadcast television 4,7244,1199,1378,442
Interactive media6,6625,359 12,8628,820
Licensing and
other media 119 121 236 235
Corporate 116 436 175 815
Total depreciation $23,417 $20,864 $45,880 $39,411
Amortization of
intangibles:
Scripps Networks $815 $815 $1,630 $1,621
Newspapers:
Newspapers managed
solely by us519 4611,038 916
JOAs and newspaper
partnerships
Total newspapers 519 4611,038 916
Broadcast television 282 282 563 560
Interactive media4,6709,7859,354 24,137
Total amortization
of intangibles $6,286 $11,343 $12,585 $27,234
Gains (losses) on
disposal of PP&E:
Scripps Networks $(764)$(68)
Newspapers:
Newspapers managed
solely by us$(6)$(33) (6) (41)
JOAs and newspaper
partnerships(53) (2) (33) (1)
Total newspapers (59) (35) (39) (42)
Broadcast television 2,538 (12) 2,415 (26)
Interactive Media (196) (196)
Corporate (115) (115)
Gains (losses) on
disposal of PP&E $2,364$(243) $1,497$(332)
4. JOINT OPERATING AGREEMENT AND NEWSPAPER PARTNERSHIPS
Our Denver newspaper is operated pursuant to the terms of a joint
operating agreement ("JOA"). The Newspaper Preservation Act of 1970 provides
a limited exemption from anti-trust laws, permitting competing newspapers in a
market to combine their sales, production and business operations in order to
reduce aggregate expenses and take advantage of economies of scale, thereby
allowing the continuing operation of both newspapers in that market. Each
newspaper in a JOA maintains a separate and independent editorial operation.
The sales, production and business operations of the Denver newspapers
that participate in the JOA are operated by the Denver Newspaper Agency, a
limited liability partnership (the "Denver JOA"). Each newspaper owns 50% of
the Denver JOA and shares management of the combined newspaper operations. We
receive a 50% share of the Denver JOA profits.
In the first quarter of 2008, we ceased publication of our Albuquerque
Tribune newspaper. We also reached an agreement with the Journal Publishing
Company, the publisher of the Albuquerque Journal ("Journal"), to terminate
the Albuquerque joint operating agreement between the Journal and our
Albuquerque Tribune newspaper following the closure of our newspaper. Under
an amended agreement with the Journal Publishing Company, we will continue to
own an approximate 40% residual interest in the Albuquerque Publishing
Company, G.P. (the "Partnership"). The Partnership will direct and manage the
operations of the continuing Journal newspaper and we will receive a share of
the Partnership's profits commensurate with our residual interest.
We participate in a newspaper partnership with MediaNews Group, Inc.
("MediaNews") that operates certain of both companies' newspapers in Colorado,
including their editorial operations. We have a 50% interest in the
partnership.
Our share of the earnings of our JOA and newspaper partnerships is
reported as "Equity in earnings of JOAs and other joint ventures" in our
Results of Operations.
Financial information related to our JOA and newspaper partnerships is as
follows:
(in thousands) Three months ended Six months ended
June 30, June 30,
2008 2007 Change 2008 2007 Change
Equity in earnings of JOAs
and newspaper partnerships:
Denver $1,318$6,011 (78.1)% $8,223$4,154 98.0%
Albuquerque 1,074 2,559 (58.0)%2,854 4,497 (36.5)%
Colorado68 506 (86.6)% (104) 399
Other newspaper
partnerships and
joint ventures(323)
Total equity in
earnings of JOAs 2,460 9,076 (72.9)% 10,973 8,727 25.7%
Operating revenues
of JOAs and
newspaper
partnerships 5348 10.4% 114 1067.5%
Total $2,513$9,124 (72.5)% $11,087$8,833 25.5%
In the third quarter of 2005, the management committee of the Denver
Newspaper Agency ("DNA") approved plans to consolidate DNA's newspaper
production facilities resulting in certain assets of the existing facilities
being retired earlier than previously estimated. The reduction in these
assets' estimated useful lives increased DNA's depreciation expense through
April 2007. The increased depreciation resulted in a $4.0 million decrease in
our equity in earnings of JOAs in the year-to-date period of 2007.
The consolidation of DNA's newspaper production facilities was completed
in 2007. In the first quarter of 2008, DNA sold the production facility that
was no longer being utilized in DNA's operations. The gain from this
transaction increased our 2008 equity in earnings from JOA's $4.4 million.
5. SCRIPPS NETWORKS
Scripps Networks includes five national television networks and their
affiliated Websites, Home & Garden Television ("HGTV"), Food Network, DIY
Network ("DIY"), Fine Living and Great American Country ("GAC"); and our 7.25%
interest in Fox-BRV Southern Sports Holdings, which comprises the Sports South
and Fox Sports Net South regional television networks. Our networks also
operate internationally through licensing agreements and joint ventures with
foreign entities.
Revenue information for Scripps Networks is as follows:
(in thousands) Three months ended Six months ended
June 30, June 30,
2008 2007 Change2008 2007Change
Operating revenues:
HGTV$171,818 $152,198 12.9% $320,295 $286,051 12.0%
Food Network 136,191 120,874 12.7% 264,446 228,663 15.6%
DIY 19,31915,117 27.8% 34,66726,665 30.0%
Fine Living 14,66612,574 16.6% 27,42122,889 19.8%
GAC6,768 7,089 (4.5)% 12,68312,678
THE E.W. SCRIPPS COMPANY
Unaudited Revenue and Statistical Summary
Period: June
Report date: July 24, 2008
REVENUE AND STATISTICAL SUMMARY FOR SELECTED OPERATING SEGMENTS
(amounts in millions, unless otherwise noted)
Quarter Year-to-date
2008 2007 % 2008 2007 %
SCRIPPS NETWORKS
Operating
Revenues
Advertising $271.3$244.5 10.9% $506.7$450.3 12.5%
Affiliate
fees, net69.7 58.7 18.8%137.1 116.5 17.7%
Other 8.3 4.9 67.5% 16.2 10.8 49.6%
Scripps
Networks $349.2$308.1 13.3% $660.1$577.6 14.3%
Subscribers (1)
Food Network 95.6 93.22.6%
HGTV 95.3 93.32.1%
DIY 47.6 45.25.3%
Fine Living 50.0 47.25.9%
Great American
Country 54.1 48.4 11.8%
NEWSPAPERS (2)
Operating
Revenues
Local$30.8 $35.3 (12.7)% $64.7 $72.3 (10.5)%
Classified38.5 48.8 (21.1)%80.3 100.5 (20.1)%
National 6.7 8.3 (19.9)%14.7 17.3 (14.9)%
Preprints, online
and other35.9 38.9 (7.9)%72.3 75.5 (4.2)%
Newspaper
advertising 111.9 131.4 (14.9)% 232.1 265.6 (12.6)%
Circulation 28.0 29.6 58.5 60.5 (3.2)%
Other 4.5 4.7 (3.5)% 9.5 9.50.2%
Newspapers
managed solely
by us $144.4$165.7 (12.8)% $300.0$335.5 (10.6)%
BROADCAST TELEVISION
Operating
Revenues
Local$50.4 $54.2 (7.0)% $96.2$102.7 (6.4)%
National 23.8 25.8 (7.6)%46.0 49.7 (7.6)%
Political 1.6 0.4 4.7 0.7
Other 4.6 4.1 13.5% 9.7 7.923.4%
Broadcast
Television $80.5 $84.5 (4.8)% $156.5$161.0 (2.8)%
(1) Subscriber counts are according to the Nielsen Homevideo Index of
homes that receive cable networks, with the exception of Fine Living
which is not yet rated by Nielsen and represent comparable amounts
estimated by us.
(2) First half 2008 had 26 Sundays, versus 25 Sundays in 2007.
SOURCE The E. W. Scripps Company
