CINCINNATI, Ohio – The E.W. Scripps Company’s operating cash flow increased15 percent to $99.1 million in the fourth quarter and 19 percent to $328 million for the full year 1997. Operating cash flow, excluding acquired and divested operations and unusual items, moved up 4.5 percent in the quarter and 15 percent in the year.In mid-October the company acquired six newspapers and controlling interest in the Food Network. The effects of those transactions reduced earnings by 4 cents per share.Basic earnings (income from continuing operations) per share for the fourth quarter, excluding unusual items (see page 6), were 46 cents vs. 48 cents in the year ago quarter. For the full year, on the same basis, basic earnings per share were $1.66 vs. $1.42. Diluted earnings per share were 46 cents vs. 48 cents for the fourth quarter and for the full year, $1.63 vs. $1.41.”Following a series of strategic acquisitions and divestitures over the past year, Scripps has a tighter focus and greater opportunity to build long-term value for shareholders,” said William R. Burleigh, president and chief executive officer. “In the year ahead, we anticipate continued growth at the newspapers, despite higher newsprint costs in the early months. The television station business remains strong and political advertising should boost demand for commercial time this year.”At Home & Garden Television, network operations will turn profitable in 1998 after only three full years on the air and we intend to continue the aggressive development of this franchise and its related businesses,” Burleigh said. “Although we have only controlled the Food Network since late last year, we’re encouraged by the growing viewer demand for this service and we expect this enterprise to make substantial progress in the months ahead.”Scripps is now reporting its results in four groups to more accurately reflect its operating structure and conform with new accounting requirements. The groups are:· “Category Television,” which includes Home & Garden Television; the company’s 56 percent interest in the Food Network; and the company’s 12 percent interest in SportSouth, a regional cable network. · “Licensing and Other Media,” which includes United Media (licensing and news feature syndication); the company’s 60 percent share of an independent producer of Yellow Pages telephone directories; Scripps Ventures, a venture fund; and Cinetel Productions, a Knoxville-based creator of non-fiction television programming. The company decided in December to focus its efforts on non-fiction programming and, as a result, is seeking a buyer for the fiction operations of Scripps Howard Productions. Cinetel Productions will assume the Scripps Howard Productions name when a transaction is completed. · “Newspapers,” which no longer includes the independent Yellow Pages telephone directory business.· “Broadcast Television,” which is unchanged.Fourth-quarter operating results Newspapers: (excluding acquired and divested newspapers, unless otherwise noted)Operating cash flow increased 7.6 percent primarily due to continued strength in classified advertising. Including the acquired and divested newspapers, operating cash flow increased 25 percent to $69.3 million.Newsprint costs moved up 20 percent over the prior year as the price of newsprint increased 10 percent. The company anticipates that, with the acquisitions, year-over-year newsprint costs will rise about 40 percent in the first quarter of 1998 on an increase in newsprint prices of about 15 percent.Employee costs increased 4.3 percent and other cash expenses edged up only 0.6 percent.Advertising revenue increased 6.7 percent to $166 million on a pro forma basis for newspapers owned at the end of 1997. Broken down by category:· Local retail increased 2.4 percent to $72.8 million.· Classified increased 13 percent to $60.3 million.· National increased 7.2 percent to $6.5 million.· Preprint increased 6 percent to $26.6 million.Pro forma circulation revenues moved up 1.2 percent to $39.5 million.Pro forma total revenues were $224 million, up 6.4 percent.Broadcast Television:Operating cash flow rose 1.6 percent to $39.4 million on a 1.4 percent rise in revenues to $94.5 million.Good ratings for local news programming and strong demand by local advertisers helped the station group overcome the absence of heavy political advertising in the fourth quarter of 1997. Political advertising for the quarter was only $1.5 million compared to $12.4 million in 1996.Category Television:At Home & Garden Television, revenues grew 131 percent to $15.4 million and cash operating losses were $5.4 million compared to $6.5 million for the year ago period. Home & Garden Television now reaches 35.4 million subscribers, up 10.2 million from the beginning of 1997 and up 4.3 million in the past three months.The Food Network had revenues of $6.9 million and cash operating losses of $900,000 during the two and a half months it was controlled by the company. The network reaches 29.8 million subscribers, up 10.7 million since the beginning of 1997. Licensing and Other Media:Revenues decreased 44 percent to $24.3 million, primarily due to the uneven booking of fiction programming by the company’s Scripps Howard Productions unit. The unit reported no revenues for the quarter vs. $19.3 million during the same period in 1996. At United Media, licensing revenues declined 11 percent during the quarter to $14 million. While business related to DILBERT and PEANUTS characters remained strong for the quarter, comparisons were difficult because much of the revenue from the popular DILBERT books was recognized in the fourth quarter of 1996. Operating cash flow for the group decreased —$2.5 million, to $400,000. Full-year results· Newspapers: Excluding acquired and divested newspapers; operating cash flow grew 19 percent. Pro forma revenues were up 7 percent to $840 million.· Broadcast Television: Revenues were up 2.4 percent to $331 million; operating cash flow increased 1.4 percent to $128 million.· Category Television: Home & Garden Television revenues increased 133 percent to $51.5 million; cash operating losses decreased $7.8 million, to $9.7 million. · Licensing and Other Media: Total revenues were down 3.9 percent to $101 million; operating cash flow decreased $3.5 million, to $5.3 million. The E.W. Scripps Company operates 20 daily newspapers; nine network-affiliated television stations; two TV networks, Home & Garden Television and the Food Network; two TV programmers, Cinetel Productions and Scripps Howard Productions; and United Media, a worldwide syndicator and licensor of news features and comics.In the fourth quarter the Company adopted Statement of Financial Accounting Standard No. 128 – Earnings per Share. The standard requires the Company to present two measures of earnings per share. Basic earnings per share is based upon the weighted average common shares outstanding for the period, while diluted earnings per share includes the effects of additional shares resulting primarily from stock-based compensation. All per share amounts presented in the disclosures below assume dilution.(a) Includes the Company’s newspapers in Monterey, San Luis Obispo and El Paso. In the third quarter of 1997 the Company traded its newspapers in Monterey and San Luis Obispo, California, for the newspaper in Boulder, Colorado. The Company terminated the Joint Operating Agency (JOA) and ceased operations of its El Paso newspaper on October 11, 1997.(b) The JOA termination and the trade resulted in gains totaling $47.6 million, $26.2 million after-tax ($.32 per share), in 1997, of which $26.6 million, $15.0 million after-tax ($.18 per share), occurred in the fourth quarter. Also in the fourth quarter of 1997 certain investments were adjusted to estimated realizable value, resulting in a loss of $2.7 million, $1.7 million after-tax ($.02 per share). (c) In the second quarter of 1996 the Company incurred an unusual charge of approximately $4 million, $2.6 million after-tax ($.03 per share), which was the Company’s share of certain costs associated with restructuring portions of the distribution system of the Cincinnati JOA.(d) In the fourth quarter of 1996 the Company recognized net gains that increased net income $24.3 million ($.30 per share). A pre-tax gain of $40.0 million was recognized on the Company’s investment in Turner Broadcasting Systems when Turner was merged into Time Warner, and a $3.0 million investment in Patient Education Media, Inc., a producer of patient education under the Time Life Medical brand, was written off.(e) In the fourth quarter of 1996 the Company made a special gift of $15.5 million in Time Warner stock to Scripps Howard Foundation, a private foundation, reducing net income $5.2 million ($.07 per share). (f) Operating income by segment is as follows: (g) Operating results for HGTV, included in the Category Television segment, are as follows: