[opendtv] News: Cable Continues Revenue Growth, But Pace May Slow

A bit of education here for John W.
E.W. Scripps is a relatively large media company with diverse holdings, that is NOT one of the big media conglomerates. The company has a large newspaper group that is in decline; a fairly large broadcast station group that is a consistent performer (but is not a growth business); a small on-line media group (it does not include Web operations for the cable networks group), and the crown jewel, the Networks group that includes HGTV, Food, Fine Living, DIY et al.
Whild John is not impressed by the cable network business, Scripps has managed to grow a new business segment that is carrying the company forward, even as its legacy businesses decline. One of the most important aspects of the Networks business is the way that it is driving not only ad revenues, but growth of the web portals for these networks. This is a sustainable and growing business opportunity. Even more important, the company has developed the ability to create content, something that the the stations group may need to learn in order to survive. 

Regards
Craig


Scripps Cable Continues Revenue Growth, But Pace May Slow
by David Goetzl, Wednesday, Jul 25, 2007 8:45 AM ET
EVEN AS SCRIPPS' CABLE PROPERTIES continue to show growth, company CEO Ken Lowe said Tuesday that maintaining a double-digit pace would be a challenge going forward. Still, the network portfolio led by HGTV and Food Network is expected to continue the trend--albeit barely--with a 10% increase this year, executives said.
Growth at the two networks had been propelled in part by distribution expansion and the resulting ratings boost, but now both are just about fully distributed.
Lowe said it is becoming "increasingly difficult to maintain" the double-digit annual revenue growth, and HGTV and Food are "are in some ways burdened by their tremendous success." He made his comments in a conference call to discuss second-quarter results, where the network group posted ad revenues up 4.8% to $245 million. A year ago, the growth rate was higher (15%) but volume lower ($233 million).
CFO Joe NeCastro described the second quarter as "mixed." He said the growth rate ebbed at the cable networks--which also include DIY, Fine Living and GAC--due to softness in daytime ratings at HGTV and Food Network. But "we reacted quickly" with programming alterations.
To look for new revenue streams, the company is bulking up its interactive operations affiliated with each network's Web operations, and online revenue jumped 26% to $19.4 million in the quarter.
Going forward, Scripps is still wrapping its upfront business, but executives expressed optimism that its haul would yield a volume gain over a year ago, even with the new so-called "C3" commercial ratings covering three days of DVR use. Under the new currency, Scripps loses about 5% to 6% of impressions, but CPM increases should allow for unit prices to stabilize and perhaps increase, the executives indicated.
Regardless of the upfront results, executives said they expected to do well in the scatter market over the next 12 months, partly because in the most recent quarter at HGTV and Food, pricing was 25% higher than the 2006 upfront market.
Overall at Scripps, a 130-year company that has been transformed largely by the two leading cable networks, the newspaper business is its "most challenging" operation, Lowe said. Revenues fell from $182 million a year ago to $166 million, and profit dropped considerably, in line with industry trends.
Also, Lowe said e-commerce businesses are experiencing some "growing pains." Revenue at Shopzilla and uSwitch came in at $59 million, down from $65 million last year.
But Lowe said the cable-propelled spirit that helped reinvent the company will continue, saying it "can't evolve as a media enterprise if we're timid or weak at heart."
Note - This article did not include results for the Scripps Broadcast Station Group. The following is from the Scripps release on second quarter earnings:
Second-quarter revenue at the Scripps Television Station Group was $84.5 million compared with $86.4 million during the same period a year earlier. Second quarter segment profit at the TV station group was $23.5 million vs. $26.4 million last year.
The decline in revenue and segment profit at the TV station group is attributable to the relative absence of political advertising during the quarter compared with the previous year. Political advertising during the second quarter of 2007 was $400,000 compared with $2.7 million during the prior-year period. Local advertising sales at Scripps TV stations were up slightly, while national advertising sales were down 4.0 percent. 


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