Scripps operating cash flow up 15 percent
Mon, July 13, 1998 by Rich Boehne
CINCINNATI, Ohio – The E. W. Scripps Company’s operating cash flow moved up 15 percent to $101 million in the second quarter of 1998. Excluding acquired and divested operations, operating cash flow increased 3 percent.In October 1997 the company acquired six newspapers and controlling interest in the Food Network. The effects of those transactions reduced second quarter net income by 6 cents per share. Earnings per share were 45 cents in the second quarter vs. 47 cents in the year ago quarter."The second quarter wasn’t as strong as we had anticipated, due in part to less robust revenue growth at our newspapers," said William R. Burleigh, president and chief executive officer."Scripps broadcast television stations continue to suffer from weak ABC network ratings and the high cost of renewing syndicated programming. Indications are that the revenue softness at our stations will continue through the third quarter," Burleigh said."Our category television networks – Home & Garden Television and the Food Network – are experiencing terrific growth. HGTV is performing well beyond our expectations, making it a certainty that we’ll reach our goal of profitability at the network this year. At the Food Network, losses have been more modest than expected. Subscriber growth at both networks has continued at a healthy pace."Following are results by operating group:Newspapers Operating cash flow increased 23 percent to $65.6 million. Excluding the acquired and divested newspapers, operating cash flow increased 1 percent. Excluding divested newspapers, newsprint costs moved up 27 percent over the prior year, reflecting a 7 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 third quarter, including the effects of the acquired newspapers.Advertising revenue on a pro forma basis increased 6.2 percent to $165 million for newspapers owned at the end of 1997. Broken down by category: · Local retail increased 3.0 percent to $64.9 million. · Classified increased 9.1 percent to $70.3 million. · National decreased 4.2 percent to $6.1 million. · Preprint increased 10.3 percent to $23.5 million. On a pro forma basis, circulation revenues decreased 1.7 percent to $37.7 million and total revenues increased 4.6 percent to $220 million.Broadcast TelevisionOperating cash flow decreased 7 percent to $35.4 million. As anticipated, costs for syndicated programming rose 20 percent to $13.3 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 1.8 percent to $88.7 million. Revenue growth was dampened by weak ratings for ABC network programming in the company’s six largest TV markets. Political advertising revenues for the quarter were $3.2 million, compared to $200,000 for the same period in 1997.Category TelevisionThe category television group produced positive second quarter cash flow of $2.2 million. Revenues for the period were $34 million.Home & Garden Television produced positive operating cash flow of $4.6 million in the second quarter (excluding development costs of $1.2 million for brand extensions), compared to losses of $1.4 million in the year-ago period. Revenues grew 85 percent to $24.2 million. Home & Garden Television now reaches 42.2 million domestic subscribers, up 12.5 million in the past 12 months and up 2 million in the second quarter. The Food Network had revenues of $9.9 million and cash operating losses of $1.8 million. The network reaches 33.1 million domestic subscribers, up 7.5 million in the past 12 months and up 1.4 million in the second quarter.Category television also includes Scripps’ 12 percent ownership of SportSouth, a regional sports network.Licensing and Other MediaExcluding the divestiture of the Los Angeles-based fiction television programming unit, revenues increased 11 percent to $26.1 million. Operating cash flow increased $400,000, to $2 million.Year-to-date resultsConsolidated operating cash flow rose 14 percent to $184 million. Excluding acquired and divested operations, operating cash flow increased 3.4 percent.Net income declined 10 percent to $61.5 million, 75 cents per share, from $68.6 million, 84 cents per share, in the first half of 1997. The effects of the October 1997 acquisitions reduced net income by 14 cents per share.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.