Scripps fourth-quarter earnings increase 31 percent

Wed, August 27, 1997 by Rich Boehne

CINCINNATI, Ohio – The E.W. Scripps Company’s fourth-quarter income from continuing operations moved up --31 percent to $38.6 million (48 cents per share) from $29.4 million (37 cents per share) last year, excluding unusual gains and charges (see page 5).For the full year 1996, income from continuing operations increased 21 percent to $114 million, $1.41 per share, from $93.6 million, $1.17 per share, in 1995, also excluding unusual items.Results for both 1996 and 1995 were adversely affected by Home & Garden Television, a wholly owned cable network which now has commitments for 28 million subscribers. Costs for HGTV reduced net income by about $4 million, 5 cents per share, in the fourth quarter of each year.Consolidated operating cash flow (operating income plus depreciation and amortization) from continuing operations increased 17 percent in the fourth quarter to $86.4 million, and operating income grew 21 percent to $68.7 million."The past year was one of the most satisfying in the history of this company. Our newspapers and television stations performed well, enabling us to make prudent investments in new markets and businesses that we believe will result in desirable returns for our shareholders," said William R. Burleigh, president and chief executive officer. "Through the successful spinoff of our cable television systems, we delivered substantial value directly to our shareholders and refocused the company on its core mission – providing information and entertainment that’s interesting, relevant and unique in its marketplace."On Nov. 13, 1996, the company completed the merger of its cable television systems with Comcast Corporation. In exchange for the cable systems, Scripps shareholders received 93.048 million shares of Comcast stock, which were distributed directly to Scripps shareholders on a tax-free basis. The cable division has been presented as a discontinued operation in the company’s financial statements since the fourth quarter of 1995.Fourth-quarter operating results (excluding cable television)Newspapers (includes Vero Beach Press Journal in 1996): Operating cash flow from newspapers increased 19 percent to $54.7 million, due to continued growth in advertising and declining newsprint prices. Operating income was up 21 percent to $44.8 million. Newsprint costs were $26.7 million, down $8.7 million or 25 percent from last year, compared to a decrease of 8 percent in the third quarter and increases of 13 percent in the second quarter and 27 percent in the first quarter. Newsprint usage in the fourth quarter increased 2 percent. Total newspaper revenues were $181 million, up 5.6 percent.Advertising revenue increased 6.1 percent to $133 million. About half of the increase was due to the addition of the Vero Beach newspaper. Broken down by category:· Local retail increased 9.3 percent to $61.2 million;· Classified increased 5.3 percent to $45.9 million;· National increased 25 percent to $5.4 million;· Preprint decreased 4.7 percent to $20.1 million.Circulation revenues moved up 1.6 percent to $32.6 million.Broadcast television:Operating cash flow rose 6.9 percent to $38.8 million on a 12 percent rise in revenues to $93.2 million.Good ratings for local news programming and a strong flow of political advertising in advance of the Nov. 5 elections boosted revenues in the fourth quarter. Political advertising alone totaled $12.4 million compared to $2.5 million in the year-ago period.In the fourth quarter the company took a $1.5 million charge for the unrecoverable cost of syndicated programming rights held by several stations. Entertainment:Revenues for the division moved up 95 percent to $50.3 million and cash operating losses were $2.4 million, compared to $4.8 million in the year-ago quarter.At Home & Garden Television, revenues grew 51 percent year-over-year and cash operating losses were $6.5 million, unchanged from last year.HGTV now has more than 28 million subscribers committed, up from 13.5 million at the beginning of last year. The network is carried by more than 820 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 47 percent in the quarter to $15.8 million, primarily due to the success of the DILBERT characters. Full-year resultsConsolidated operating cash flow rose 12 percent to $280 million, excluding the company’s $4 million share of costs to restructure 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. Operating income increased 14 percent to $210 million.By division, operating cash flow was:· Newspapers, up 9.1 percent to $177 million;· Broadcast television, up 12 percent to $126 million;· The entertainment division had cash operating losses of $6.1 million, due to a loss of $17.6 million at HGTV.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.(a) In the second quarter of 1996 the Company sold its equity interest in The Television Food Network, a cable programmingnetwork. In the first quarter of 1995 the Company sold its Watsonville, California, daily newspaper. (b) In the second quarter of 1996 the Company incurred an unusual charge of approximately $4 million, $2.6 million after-tax($.03 per share), the Company’s share of certain costs associated with restructuring portions of the distribution system of theCincinnati joint operating agency. (c) In the fourth quarter of 1996 the Company recognized net gains that increased net income $24.3 million ($.30 per share). Apre-tax gain of $40.0 million was recognized on the Company’s investment in Turner Broadcasting Systems when Turner wasmerged into Time Warner, and a $3.0 million investment in Patient Education Media, Inc., a producer of patient educationunder the Time Life Medical brand, was written off. (d) Also in the fourth quarter of 1996 the Company made a special gift of $15.5 million in Time Warner stock to ScrippsHoward Foundation, a private foundation, reducing net income $5.2 million ($.06 per share for the quarter; $.07 per shareyear-to-date). At year end the Company held 672,000 shares of Time Warner stock with a market value of $25.2 million. (e) Operating income by segment is as follows: (f) Operating results for HGTV are as follows: (g) Summarized operating results for the discontinued cable television operations are as follows: