Scripps third-quarter income rose 36 percent

Wed, August 27, 1997 by Rich Boehne

CINCINNATI, Ohio – The E.W. Scripps Company’s third-quarter income from continuing operations moved up 36 percent to $23.7 million (29 cents per share) from $17.4 million (22 cents per share) last year.Consolidated operating cash flow (operating income plus depreciation and amortization) from continuing operations increased 23 percent to $62.5 million, and operating income grew 34 percent to $45.2 million."Our good results so far this year demonstrate the strength and momentum that will propel Scripps as we become a more content-focused information and entertainment company," said William R. Burleigh, president and chief executive officer. Since the fourth quarter of 1995 the company’s cable division has been presented as a discontinued operation in the company’s financial statements.Scripps announced – on Oct. 29, 1995 – an agreement to merge its cable systems with Comcast Corporation in exchange for approximately $1.575 billion in Comcast stock, to be distributed tax-free to Scripps shareholders.Scripps will have a shareholder meeting on Nov. 5 with respect to the cable transaction.THIRD-QUARTER OPERATING RESULTS (excluding cable television)Newspapers (includes Vero Beach Press Journal in 1996): Operating cash flow from newspapers increased 25 percent to $42.1 million, due in large part to continued strength in classified advertising and declining newsprint prices. Operating income was up 32 percent to $31.9 million. Newsprint costs were $29.4 million, down $2.6 million or 8.1 percent fromlast year, compared to increases of 27 percent in the first quarter and 13 percent in the second quarter. Newsprint usage in the third quarter declined 1 percent. Total newspaper revenues were $164 million, up 5 percent.Advertising revenue increased 5.7 percent to $119 million. About half of the increase was due to the addition of the Vero Beach newspaper this year. Broken down by category:· Local retail increased 5.0 percent to $48.1 million;· Classified increased 7.5 percent to $51.0 million;· National increased 26 percent to $4.6 million;· Preprint decreased 2.3 percent to $15.4 million.Circulation revenues moved up 3.4 percent to $31.8 million.Broadcast television:Operating cash flow jumped 15 percent to $26.4 million on a 10 percent rise in revenues to $74.3 million.Good ratings for local news programming and a strong flow of political advertising in advance of the presidential election boosted revenues in the third quarter. Political advertising alone totaled $4 million compared to $400,000 in the year-ago period.Entertainment:Revenues for the division moved up 30 percent to $27.5 million and cash operating losses were $1.7 million, compared to $1.8 million in the year-ago quarter.At Home & Garden Television, revenues doubled year-over-year and cash operating losses were $4.9 million, up from $3.5 million last year.HGTV now has more than 18 million subscribers under contract, up 80 percent from the beginning of the year. The network is carried by more than 814 cable systems in all 50 states and also is available to subscribers of DIRECTV, EchoStar, and C-Band satellite packages. HGTV recently received permission to launch in Canada through a partnership with LifeNetwork of Toronto. At United Media, licensing revenues grew 19 percent in the quarter to $13.2 million, despite the unfavorable trend in exchange rates between the US dollar and the Japanese yen. More than 40 percent of the company’s licensing revenue is generated through Japan. Domestic licensing continues to benefit from the growing popularity of the DILBERT characters.YEAR-TO-DATE RESULTS (excluding cable television)Net income improved 17 percent to $75.1 million (93 cents per share) from $64.2 million (80 cents per share) in the first nine months of 1995, excluding a pre-tax charge of approximately $4 million for the company’s share of certain costs to restructure portions of the newspaper distribution system at Cincinnati’s joint operating agency.Through a joint operating agreement, all business functions of the Scripps-owned Cincinnati Post are handled by Gannett’s Cincinnati Enquirer.After the charge, which was recorded in the second quarter, net income increased 13 percent to $72.5 million (90 cents per share).Consolidated operating cash flow rose 9.4 percent to $193 million. Operating income increased 11 percent to $142 million.CABLE TELEVISION RESULTSOperating cash flow in the third quarter increased 11 percent to $33.3 million. Revenues moved up 10 percent to $78 million. For the first three quarters of the year, operating cash flow was up 14 percent to $98.4 million, and revenues were up 11 percent to $231 million.The E.W. Scripps Company operates nine large-market television stations; daily newspapers in 16 markets; two television production companies – Los Angeles-based Scripps Howard Productions and Knoxville’s Cinetel Productions; United Media, a licensor and syndicator of news features and comics; and Home & Garden Television, a 24-hour cable television network.THE E.W. SCRIPPS COMPANY(in thousands, except per share data)Three months ended Sept. 30,Nine months ended Sept. 30,19961995%19961995%Operating Revenues:Newspapers$163,703 $155,913 5.0 %$489,528 $468,338 4.5 %Broadcast television74,325 67,663 9.8 %230,250 211,711 8.8 %Entertainment27,455 21,155 29.8 %77,274 68,964 12.0 %Total265,483 244,731 8.5 %797,052 749,013 6.4 %Divested operations(a)294 Total operating revenues$265,483 $244,731 8.5 %$797,052 $749,307 6.4 %Operating Cash Flow:Newspapers$42,140 $33,662 25.2 %$122,119 $116,009 5.3 %Broadcast television26,374 22,888 15.2 %87,470 76,710 14.0 %Entertainment(b)(1,670)(1,822)(3,651)(3,868)Corporate(4,343)(3,734)(12,650)(12,152)Total62,501 50,994 22.6 %193,288 176,699 9.4 %Unusual item(c)(4,000)Divested operations(a)(512)(418)(1,938)Total operating cash flow62,501 50,482 23.8 %188,870 174,761 8.1 %Depreciation and amortization17,256 17,140 0.7 %51,726 49,632 4.2 %Total operating income(d)45,245 33,342 35.7 %137,144 125,129 9.6 %Interest expense(2,713)(2,441)(6,350)(8,623)Miscellaneous, net291 1,427 614 2,603 Provision for income taxes(18,331)(14,187)(56,603)(52,285)Minority interests(841)(784)(2,326)(2,587)Income from continuing operations23,651 17,357 36.3 %72,479 64,237 12.8 %Income from discontinued operations (Cable TV)(e)12,268 10,277 34,645 28,650 Net income$35,919 $27,634 $107,124 $92,887 Per Share of Common Stock:Income from continuing operations$ .29 $ .22 $ .90 $ .80 Net income$ .45 $ .35 $ 1.33 $ 1.16 Summary of the Per Share Effect of Unusual Items on Continuing Operations:Income from continuing operations$ .29 $ .22 $ .90 $ .80 Garfield sale(.23)TV programs/property write-downs .09 Special charitable contribution .06 Lawsuits re: divested newspapers .05 Change in tax liability .07 Adjusted income from continuing operations$ .29 $ 1.25 $ .90 $ 1.25 Weighted average commonshares outstanding80,473 80,010 80,328 79,930 Excluding the effect of unusual items:Income from continuing operations$23,651 $17,357 36.3 %$75,079 $64,237 16.9 %Income from continuing operationsper share of common stock$ .29 $ .22 31.8 %$ .93 $ .80 16.3 %