[opendtv] Scripps Spins Off TV Sector

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Wed, 2 Jul 2008 09:34:22 -0400

This short story says volumes...

Seems like everyday we are hearing about the declining fortunes of the newspaper business. This month there have been major layoffs at newspapers around the country - the culprit is declining display ad revenues, triggered in large part by declining readership, with much of what is left in the >50 year old demographics.

We hear far less about the declining fortunes of local TV broadcasters, however, the story is similar. Declining ratings and older demographics for what remains.

The headline of this story is a tiny bit misleading. One might assume that Scripps, one of the few operators of cable networks not owned by the big five media conglomerates, has spun off both the cable networks and their TV stations. But that assumption would be wrong.

The new Scripps Networks Interactive is made up of the company's cable networks and related Internet-based businesses. The older E.W. Scripps Company will retain control of their newspaper assets and local broadcast stations, and Internet businesses related to these assets.

The last sentence of the first paragraph says volumes - "to unlock growth likely hindered by old-line newspaper and local TV station businesses..."



Scripps Spins Off TV Sector
by David Goetzl, Wednesday, Jul 2, 2008 8:31 AM ET

The new entity, with HGTV and Food Network leading the way, became a separate, publicly traded company Tuesday and saw its shares rise 3%, even as media stocks have struggled lately. Scripps Networks Interactive was split off from the E.W. Scripps Co. in a bid to unlock growth likely hindered by old-line newspaper and local TV station businesses.

In that vein, reflecting investors' lack of enthusiasm for the new E.W. Scripps, that company's share price on its first day was flat at $3.07. It operates newspapers in 15 markets and 10 local stations.

The new Scripps Networks Interactive (SNI) is led by Ken Lowe, who previously headed the combined E.W. Scripps. While Scripps' cable networks--which also include Fine Living, DIY and Great American Country--are based in Knoxville, Tenn., Lowe will continue to operate out of SNI's corporate offices in Scripps' long-time Cincinnati home base.

SNI shares increased $1.20 each to close at $39.75 Tuesday. The 3% rise outpaced the Dow's .28% gain. It's possible that the company was initially priced too low, and it could now suffer the fate of media stocks that have tumbled of late.

Scripps' cable networks have grown consistently--prompting the split and yielding a 15% increase in first-quarter revenue this year to $311 million. Ad revenue jumped 15% to $236 million with a strong scatter market.

In 2007, HGTV contributed 38% of the would-be SNI's revenue, Food Network accounted for 31%. Interactive assets such as uSwitch and ShopZilla accounted for 18%.

The prospects for the new E.W. Scripps remain murky. In the first quarter, newspaper revenue was down 8.3% to $156 million (ad dollars dropped 10%). Another trouble spot: Even as newspaper chains are experiencing falling ad dollars, revenues at online operations--although small--are generally increasing, but Scripps' were flat in Q1 at $10 million.

Local TV revenue was down slightly ($500,000) versus Q1 in 2007.

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