Scripps Networks 3Q Earnings Higher - Broadcasting & Cable

Scripps Networks 3Q Earnings Higher

U.S. ad sales up but distribution revenue drops
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Scripps Networks Interactive reported higher earnings in the third quarter despite high programming costs and lower distribution revenue at its domestic networks.

Net income rose to $146 million, or $1.12 per share, compared to $124.6 million, or 96 cents a share a year ago.

Revenue rose 3.5% to $803.1 million, with U.S. ad revenues up 6.6% to $477.5 million.

The results were better than Wall Street forecasts.

"Scripps Networks Interactive delivered solid revenue growth at both our U.S. and international business segments, helping drive a double-digit improvement in net income,” said CEO Ken Lowe.  “Our successful strategy to focus on our differentiated lifestyle brands in the home, food and travel genres continues to pay off. Our popular networks are available on more platforms and reaching more new audiences than before, positioning the company for continued growth.”

Scripps Networks' U.S. networks' operating income fell 2.6% to $298.8 million because of an increase in programming expenses.

Revenues were up 3.8% at the U.S. networks. The ad revenue increase was partially offset by distribution revenue, which fell 2.5% to $194.3 million. Distribution revenue was hurt by the consolidation of distributors. Scripps hasn’t said whether it was AT&T, which acquired DirecTV, or Charter, which bought Time Warner, that is causing the issue. In the second quarter, the drop in distribution revenues caught Wall Street by surprise and sent Scripps Networks stock tumbling.

Operating revenue was up at Scripps Networks’ three biggest channels. HGTV was up 7% to $265 million, Food Network was up 1.5% to $217 million, Travel Channel was up $3.2 million to $76 million. Cooking Channel was also up 2.8% to $34 million, but DIY was down 2.4% to $40 million and Great American Country was down 5.4% to $7 million

Scripps Networks’ international operations reported an operating loss of $14.9 million, compared with a loss of $6 million a year ago. Revenues were up 3.8% to $123.2 million.

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