Scripps' second-quarter net income rose 22 percent

Wed, September 03, 1997 by Rich Boehne

CINCINNATI, Ohio – The E. W. Scripps Company’s second-quarter income from continuing operations increased 22 percent to $38.6 million, 48 cents per share, from $31.7 million, 39 cents per share, in the year-ago quarter, excluding an unusual charge from 1996.Prior-year results exclude a $2.6 million, 3 cent per share, after-tax charge against earnings related to the Cincinnati newspaper operation. (See newspaper section for more detail.) Consolidated operating cash flow (operating income before depreciation and amortization) from continuing operations increased 16 percent to $87.7 million, and operating income moved up 20 percent to $70.4 million, excluding the prior-year charge. Results for both years were affected by Home & Garden Television, a wholly owned cable network which reached 28.4 million homes as of June 30 and has commitments for an additional 3 million homes. Costs for the 30-month-old network reduced net income by $1.3 million, 2 cents per share, in the quarter just ended, compared to $1.9 million, 2 cents per share, in the second quarter of 1996."We have been pleasantly surprised by the revenue and profit growth at our newspapers and TV stations in the first half of the year," said William R. Burleigh, president and chief executive officer. "However, we're taking a cautious approach to the upcoming months. Higher year-over-year newsprint prices will dampen profit growth at the newspapers in the second half of the year, and the absence of political advertising this fall will leave the TV stations scrambling to replace that revenue. Also, while Home & Garden Television is developing at a faster rate than expected, we still project higher losses in the third and fourth quarters than in the first half of the year." NEWSPAPER RESULTS(includes the Vero Beach Press Journal since May 1996)Operating cash flow increased 18 percent to $52.3 million. Newsprint costs decreased 8 percent, or $2.7 million. Newsprint prices fell 20 percent but were partially offset by a 14 percent increase in usage. If newsprint remains at its current price, year-over-year costs will be about flat in the third quarter, and increase 15 percent in the fourth quarter.Prior-year results exclude a charge of approximately $4 million for the Company’s share of costs to restructure portions of the distribution system at Cincinnati’s joint operating agency.Total newspaper revenues moved up 8.9 percent to $182 million.Advertising revenues increased 9.8 percent to $132 million. Broken down by category:· Local retail increased 10 percent to $53.6 million;· Classified increased 9.8 percent to $55.7 million;· National increased 22 percent to $6.1 million;· Preprint increased 3.9 percent to $16.8 million.Excluding the Vero Beach Press Journal, which was acquired in May 1996, advertising revenues increased 8 percent.Circulation revenues increased 0.2 percent to $32.2 million.TELEVISION RESULTSRevenues, at $87.1 million, were up 2.3 percent over the year-ago quarter. Local advertising grew 2.4 percent, national grew 5.3 percent, and political, which totaled $1.7 million in the second quarter last year, was only $200,000 in the quarter just ended. Operating cash flow increased 3.6 percent to $38.1 million.ENTERTAINMENT RESULTSRevenues for the division moved up 45 percent to $36.5 million and operating cash flow was $1.5 million, compared to a loss of $1.3 million in the year-ago quarter.At Home & Garden Television, revenues more than doubled year-over-year to $13 million and cash operating losses were $1.4 million, compared to $2.7 million last year.The network is seen on cable television systems in all 50 states, and also is available to subscribers of DIRECTV, EchoStar and C-Band satellite packages. Internationally, HGTV’s programming can be seen in Canada, Australia, Japan, and in Europe on NBC’s Superchannel.At United Media, licensing revenues grew 19 percent in the quarter to $14.5 million, due to the continued popularity of the PEANUTS and DILBERT characters. YEAR-TO-DATE RESULTSNet income improved 33 percent to $68.6 million, 85 cents per share, from $51.4 million, 64 cents per share, in the first half of 1996, excluding the newspaper charge.Consolidated operating cash flow rose 24 percent to $162 million. Operating income increased 31 percent to $126 million.The E. W. Scripps Company operates nine television stations; newspapers in 16 markets; a licensor and syndicator of news features and comics; two television production companies; and a 24-hour cable network. On May 19, 1997, the company announced it had reached an agreement to acquire the newspaper and broadcast properties of Harte-Hanks Communications, Inc.(a) 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 the Cincinnati joint operating agency.(b) In the second quarter of 1996 the Company sold its equity interest in The Television Food Network, a cable programming network. (c) Operating income by segment is as follows:(d) Operating results for HGTV, included in the Entertainment segment, are as follows: