Scripps first quarter operating cash flow up 12 percent

Thu, April 09, 1998 by Rich Boehne

CINCINNATI, Ohio – The E. W. Scripps Company’s operating cash flow moved up 12 percent to $83.2 million in the first quarter of 1998. Excluding acquired and divested operations, operating cash flow increased 3.9 percent.In October 1997 the company acquired six newspapers and controlling interest in the Food Network. The effects of those transactions reduced first quarter net income by 8 cents per share. Earnings per share were 31 cents in the first quarter vs. 37 cents in the year ago quarter."The first full quarter for the newly configured Scripps played out about as expected," said William R. Burleigh, president and chief executive officer. "As anticipated, higher newsprint prices hurt profit growth at the newspapers and television programming costs, which have risen only modestly in recent years, jumped up due to price increases for relatively new syndicated shows. "Newspaper advertising revenue continues to expand with classified leading the way, but television revenue has been soft, largely the result of weak ratings for network programming in our largest markets."The biggest surprise was the sooner than anticipated profitability at Home & Garden Television," Burleigh said. "HGTV is off to a good start, which puts us on track to achieve our goal of profitability for the total year. We also intend to continue investing to build HGTV’s valuable brand. The Food Network also performed better than expected and both networks are showing continued growth in subscribers."Scripps is now reporting its results in four groups to more accurately reflect its operating structure and conform with new accounting requirements:· "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.· "Newspapers," which no longer includes the independent Yellow Pages telephone directory business. · "Broadcast Television," which is unchanged.Newspapers Operating cash flow increased 21 percent to $62.7 million. Excluding the acquired and divested newspapers, operating cash flow increased 3.5 percent. Newsprint costs moved up 33 percent over the prior year, reflecting a 10 percent year-over-year increase in the price paid for paper, a little better than expected. The company anticipates that year-over-year newsprint costs will increase about 25 percent in the second quarter.Advertising revenue increased 7.9 percent to $158 million on a pro forma basis for newspapers owned at the end of 1997. Broken down by category: · Local retail increased 3.4 percent to $65 million. · Classified increased 12 percent to $65.1 million. · National increased 8.2 percent to $6.4 million. · Preprint increased 9.9 percent to $21.7 million. Pro forma circulation revenues moved up 1.1 percent to $40.5 million. Pro forma total revenues were $215 million, up 7 percent.Broadcast TelevisionOperating cash flow declined 9.5 percent to $22.6 million. As anticipated, costs for syndicated programming rose 21 percent to $13.4 million. Several popular programs, including The Rosie O’Donnell Show, were renewed for the first time in late 1997 at dramatically higher prices. Revenues moved up 2.9 percent to $74.8 million. Revenue growth was dampened by weak ratings for ABC network programming in the company’s six largest TV markets. Category TelevisionHome & Garden Television produced positive operating cash flow of $2.3 million in the first quarter (excluding development costs of $500,000 for brand extensions), compared to losses of $2.1 million in the year-ago period.Revenues grew 112 percent to $20.3 million due to strong increases in advertising and subscriber fees. Home & Garden Television now reaches 40.2 million domestic subscribers, up 15.1 million in the past 12 months and up 4.8 million since the beginning of 1998. The Food Network had revenues of $8.8 million and cash operating losses of $2.4 million during its first full quarter of control by Scripps. The network reaches 31.7 million domestic subscribers, up 9.7 million in the past 12 months and up 1.9 million since the beginning of this year.Licensing and Other MediaExcluding the divestiture of the Los Angeles-based fiction television programming unit, revenues increased 21 percent to $29.1 million. The company published its first revenue-producing independent Yellow Pages directory.Operating cash flow decreased ---$100,000 to $3.9 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;; a TV programmer, Cinetel Productions; United Media, a worldwide syndicator and licensor of news features and comics; and independent Yellow Pages directories in Florida and Tennessee