September Revenues Rise 16 Percent

Thu, October 09, 1997 by Rich Boehne

CINCINNATI, Ohio – The E. W. Scripps Company’s third-quarter income from continuing operations moved up 16 percent to $27.4 million, 34 cents per share, from $23.7 million, 29 cents per share, in the year-ago quarter, excluding an unusual gain from 1997’s results.On August 24, Scripps traded its newspapers in Monterey and San Luis Obispo, Calif., for Knight-Ridder’s paper in Boulder, Colo. The disposition of the two California papers resulted in an after-tax gain to Scripps of $11.1 million, or 14 cents per share.Consolidated operating cash flow (operating income before depreciation and amortization), excluding divested operations, increased 10 percent to $67 million in the third quarter, and operating income moved up 12 percent to $49.4 million. Home & Garden Television, the company’s wholly owned cable network, had a modest effect on third-quarter results, reducing net income by $1 million, or 1 cent per share, compared to $3.3 million, 4 cents per share, in the year-ago quarter. Now in its 34th month since launch, HGTV reaches 31 million U.S. homes and has commitments for carriage to an additional 4 million homes."Home & Garden Television’s advertising growth continues to exceed our expectations, which translates into lower than expected hits to our bottom line," said William R. Burleigh, president and chief executive officer. "In the newspaper and television markets, the demand for advertising space and time continues to be strong."In the coming weeks, we expect to complete the purchase of six local newspapers, as well as the expansion of our cable network operations through acquisition of the controlling interest in The Food Network. These are key steps in our long-term plan for building shareholder value," Burleigh said.As previously announced, Scripps will spend a total of approximately $700 million to acquire six newspapers in Texas and South Carolina from Harte-Hanks Communications and 58 percent interest in The Food Network from Belo Communications.NEWSPAPER RESULTS (Excluding divested operations in Monterey, San Luis Obispo and El Paso; including the Boulder Daily Camera since Aug. 24, 1997.) Operating cash flow increased 9.7 percent to $44.4 million. Newsprint costs increased 4.2 percent to $29.5 million. Newsprint prices were 7 percent lower, but the difference was more than offset by an 11 percent increase in usage. Year-over-year newsprint costs are expected to increase approximately 15 percent in the fourth quarter.Total newspaper revenues moved up 9.8 percent to $169 million. Assuming the Boulder newspaper had been owned for the full quarter in both years, revenues would have increased 8.1 percent. On that same pro forma basis, advertising revenues increased 8.1 percent to $128 million. Broken down by category: · Local retail increased 4.6 percent to $49 million; · Classified increased 11 percent to $56.9 million; · National increased 12 percent to $5.3 million; · Preprint increased 5.9 percent to $16 million. Circulation revenues were unchanged at $30.6 million. TELEVISION RESULTS Revenues, at $76.9 million, were up 3.5 percent over the year-ago quarter. Local advertising grew 6.2 percent and national grew 12.9 percent, together more than offsetting the sharp decline in political advertising, which totaled only $400,000 compared to $4 million in the third quarter last year. Cash operating costs rose 6.9 percent and operating cash flow decreased 2.7 percent to $25.7 million. ENTERTAINMENT RESULTS Revenues for the division moved up 22 percent to $33.5 million and operating cash flow was $900,000, compared to a loss of $1.7 million in the year-ago quarter. At Home & Garden Television, revenues jumped from $5.4 million last year to $13.5 million and cash operating losses were $900,000, compared to $4.9 million last year. The network can be seen on cable television systems in all 50 states and is available to subscribers of DIRECTV, EchoStar and C-Band satellite packages. Internationally, HGTV/Canada will launch Oct. 17 through a partnership with Atlantis Communications of Toronto. Additionally, HGTV’s programming can be seen on host networks in Australia and Japan, and in Europe on NBC’s Superchannel.At United Media, licensing revenues decreased 4.7 percent in the quarter to $12.5 million.YEAR-TO-DATE RESULTS (Excluding unusual items.)Net income improved 28 percent to $96 million, $1.19 per share, from $75.1 million, 93 cents per share, in the first nine months of 1996.Consolidated operating cash flow rose 20 percent to $226 million, excluding divested operations. The E. W. Scripps Company operates nine television stations; newspapers in 14 markets; a licensor and syndicator of news features and comics; two television production companies; and a 24-hour cable network. The company has also announced agreements to acquire the newspaper properties of Harte-Hanks Communications, Inc. and Belo Communication’s interest in The Food Network.(a) In the third quarter the Company traded its newspapers in Monterey and San Luis Obispo, California, for the newspaper in Boulder, Colorado. The trade resulted in a gain of $21.0 million, $11.1 million after-tax ($.14 per share). The Company's newspaper in El Paso will cease operations after October 11, 1997. Operating results for the Monterey, San Luis Obispo and El Paso newspapers are included in "divested operations." (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 the Cincinnati joint operating agency. (c) Operating income by segment is as follows:(d) Operating results for HGTV, included in the Entertainment segment, are as follows: