Costs related to the early termination of a contract pushed Scripps Networks' earnings lower in the second quarter despite higher ad and affiliate revenues.
Net income fell 4% to $154 million, or $1.07 per share, from $160 million, or $1.09, a year ago. Excluding a $9.7 million charge for the early termination of a contract covering third-party back-offices and sales related services internationally, earnings were $1.14 a share.
Revenues rose 7% to $708 million. Ad revenues rose 7.6% to $497 million. Affiliate revenues were up 4.5% to $198 million.
Without the special charge, earnings were slightly above Wall Street expectations, while revenue was a bit lower.
Costs increased 13% to $389 million, driven by higher programming amortization and marketing and promotion expenses.
“The company delivered another solid quarter validating the strength of our lifestyle brands and the quality of viewers they attract both domestically and internationally,” CEO Ken Lowe said in a statement. “Our popular lifestyle networks delivered on our expectations for the quarter. Our confidence in the company enabled us to continue investing in our brands by developing compelling content, while returning cash to shareholders through our share repurchase program.”
Profits were up 4.7% at Scripps’ lifestyle media unit to $362.5 million. Ad revenue grew 6.5% to $486 million. Affiliate fees rose 4.1% to $188 million because of higher rates an expanded distribution of Cooking Channel and DIY Network.
Operating revenue rose 8.6% to $247 million at HGTV, 6.4% at Food Network to $238 million and, 1.6% at Travel Channel to $85 million. At Scripps’ smaller networks, DIY showed a 12% increase to $43 million, Cooking Channel jumped 13% to $32.2 million and Great American Country rose 12% to $8 million.
Operating revenues were down 5% to $4.5 million at Scripps’ digital businesses