Scripps operating cash flow increased 13 percent in fourth quarter
Mon, April 12, 1999 by Rich Boehne
CINCINNATI, Ohio - The E.W. Scripps Company’s operating cash flow increased 13 percent to $113 million in the fourth quarter and 16 percent to $380 million for the full year 1998, excluding divested operations.Excluding acquired and divested operations, the operating cash flow increase was11 percent for the quarter and 6.3 percent for the year.Excluding unusual items from the prior year, earnings per share were 55 cents vs. 46 cents for the fourth quarter and for the full year, $1.62 vs. $1.63.In mid-October 1997 the company acquired six newspapers and controlling interest in the Food Network. In December 1998 the company sold a daily newspaper and group of associated community newspapers in suburban Dallas.“Our newspapers continue to show solid growth and benefit from healthy local economies,” said William R. Burleigh, president and CEO. “Results for the entire division, however, are affected by the intensified effort to gain market share in the growing but highly competitive Denver market.“As for our television station group, political advertising provided a boost, but overall, softness in broadcast advertising sales continues. Based on advance broadcast advertising sales, it appears that trend will continue into the first quarter of 1999. We’re addressing the problem forthrightly through cost controls and programming initiatives that should result in long-term savings and some new advertisers.”“Meanwhile, our category television networks – Home & Garden Television and Food – continue to grow. HGTV has 48 million subscribers and will produce positive cash flow while also investing to expand the franchise. We’ll continue to move toward consistent profitability at Food, which has surpassed 37 million subscribers,” Burleigh said.“We’ll also be building on these respected franchises with the launch this year of the Do-It-Yourself network, which will be available to cable operators for their new digital tier of channels.” Fourth-quarter operating results Newspapers: (excluding the acquired and divested newspapers, unless otherwise noted)Operating cash flow decreased 1.6 percent. Newspaper group results reflect the intensified effort to gain market share in the competitive Denver market. Excluding Denver, newspaper operating cash flow increased 8.6 percent for the period.Newsprint costs moved up 7.3 percent over the prior year as the price of newsprint increased 3 percent. The company anticipates newsprint prices in the first quarter of 1999 will be flat with the fourth quarter of 1998.Employee costs increased 2 percent and other cash expenses increased 7.3 percent. Excluding Denver, other cash expenses decreased 1.3 percent.Advertising revenue increased 5.4 percent to $172 million on a pro forma basis for newspapers owned at the end of 1998. Broken down by category: Local retail increased 6.6 percent to $76.5 million. Classified increased 2.3 percent to $59.9 million. National increased 12.9 percent to $7.3 million. Preprint increased 6.9 percent to $28.3 million. Circulation revenues, also pro forma for newspapers owned at the end of 1998, decreased 4.5 percent to $37.5 million. Total revenues, on the same basis, were $226 million, up 2.6 percent. Broadcast Television: Operating cash flow increased 1.1 percent to $39.8 million on flat revenues of $94.6 million. In response to continuing softness in broadcast advertising sales, employee costs and other cash expenses were reduced 6.6 percent and 2.9 percent, respectively. Program costs were up 12.8 percent, but are expected to increase about 2 percent in 1999. Advance advertising sales are pacing down for the month of January, but are expected to be flat for the first quarter of the year. Political advertising for the quarter was $12.8 million compared to $1.5 million in 1997. Category Television: At Home & Garden Television, revenues grew 83 percent to $28.2 million and operating cash flow was $2.5 million compared to operating cash losses of $5.4 million for the year-ago period. Home & Garden Television now reaches 48.4 million subscribers, up 12.3 million from the beginning of 1998 and up 3.3 million in the past three months. The Food Network had revenues of $13.1 million and operating cash flow of $1 million. Food’s trends are positive and the network is moving toward profitability, but the company does not expect the network to be profitable over the next 12 months. The Food Network reaches 37.1 million subscribers, up 8 million since the beginning of 1998, and up 2.6 million in the past three months. Licensing and Other Media: Revenues increased 25 percent to $26.8 million, primarily on the strength of Peanuts licensing. Operating cash flow for the group increased ---$1.2 million, to $2.4 million. Full-year results Newspapers: Excluding acquired and divested newspapers, operating cash flow grew 3.5 percent. Pro forma revenues were up 4.6 percent to $865 million. Broadcast Television: Revenues were flat at $331 million; operating cash flow decreased 7.8 percent to $118 million. Category Television: Home & Garden Television revenues increased 86 percent to $95.9 million; operating cash flow was $8.6 million, compared to a cash operating loss of $9.7 million last year. Pro forma revenues for the Food Network for the year increased 72 percent to $41.7 million. Licensing and Other Media: Total revenues were up 18 percent to $96.2 million; operating cash flow increased $4 million, to $11.6 million. The E.W. Scripps Company operates 19 daily newspapers; nine network-affiliated television stations; two TV networks, Home & Garden Television and the Food Network; a TV programmer, Scripps Productions; United Media, a worldwide syndicator and licensor of news features and comics; the Scripps Howard News Service; and publishes independent Yellow Pages directories.