Scripps operating cash flow up 9.3 percent
Mon, October 11, 1999 by Tim Stautberg
CINCINNATI, Ohio – The E. W. Scripps Company’s operating cash flow moved up 9.3 percent to $110 million in the second quarter of 1999.Earnings per share were 56 cents for the second quarter. Earnings per share for the same period in 1998 were 45 cents.“Despite disappointing results from our broadcast television group, Scripps had a good quarter led by the exceptional growth of our cable television networks and strong advertising sales at our newspapers,” said William R. Burleigh, chairman, president and chief executive officer. “Home & Garden Television’s profits continue to expand at an impressive rate, as does the network’s subscriber base,” Burleigh said.“The Food Network was cash-flow positive in the second quarter, but, remember, we’re launching 1,000 hours of new programming that will increase costs substantially in the second half of the year.” “Also in our Category Television division, we’re looking forward to the Sept. 30 launch of our new, fully-interactive network, ‘do-it-yourself,’ or DIY,” Burleigh added. “DIY was designed specifically with interactive technology in mind and is an integral piece of our strategy to build networks that are deep in content and high in utility. We’re also developing local portals on the Internet that leverage the trusted brands and marketing power of our newspapers and television stations.“Our newspapers, meanwhile, reported solid increases in revenue and cash flow. Strong classified and national advertising in many of our markets contributed to the growth.“At our broadcast television stations, second quarter advertising revenue was weak,” Burleigh said. “However, advance broadcast advertising sales going into the third quarter have been showing some improvement.”Newspapers (excluding divested newspapers, unless otherwise noted)Operating cash flow increased 7.5 percent to $70 million. Newsprint costs decreased 6 percent over the prior year on a 16 percent decrease in newsprint prices. The company anticipates that year-over-year newsprint costs will be down about 10 percent in the third quarter.Newspaper advertising revenue during the quarter increased 6.5 percent to $172 million. Broken down by category: Local retail increased 2.5 percent to $65.9 million. Classified increased 5.9 percent to $72.3 million. National increased 45 percent to $8.9 million. Preprint increased 9.3 percent to $25.2 million. Circulation revenues decreased 6.7 percent to $35 million, due in part to the continuing initiatives to increase share in the Denver market. Total newspaper revenues were $225 million, up 3.9 percent.Broadcast TelevisionBroadcast television operating cash flow decreased 22 percent to $27.7 million.Revenues declined 8 percent to $81.6 million. Advance broadcast television advertising sales for the third quarter are stronger than in the second quarter, but comparisons will be difficult because of the $3.8 million in political advertising in the 1998 period.Operating costs increased 1.1 percent during the quarter, including a 4.5 percent increase in costs for syndicated programming. Employee costs were up just 0.4 percent during the quarter, reflecting an ongoing hiring freeze.Category TelevisionHome & Garden Television produced positive operating cash flow of $10.6 million vs. $3.4 million in the year-ago period.Revenues grew 69 percent to $40.9 million.Home & Garden Television now reaches 55.2 million domestic subscribers, an increase of 13 million in the past 12 months and up 3.3 million in the second quarter. The Food Network had revenues of $15.8 million, up 60 percent. Operating cash flow was $3.3 million compared to a loss of $1.8 million in the second quarter of last year. The network reaches 40.7 million domestic subscribers, up 7.6 million in the past 12 months and up 1.6 million in the second quarter.Licensing and Other Media Revenues increased 8.2 percent to $24.2 million. Operating cash flow was $2.5 million vs. $3.3 million in the second quarter of last year. Licensing and other media operating cash flow was held back by increased investments in the company’s Internet services and independent Yellow Pages directory business.At United Media, the company’s licensing and syndication subsidiary, marketing and promotion initiatives related to the 50th anniversary of the Peanuts comic strip will begin later this year. Also, the half-hour, animated television series based on the comic strip, Dilbert, has been picked up for another season by the UPN network.Year-to-date resultsConsolidated operating cash flow rose 9.7 percent to $202 million.Net income increased 24 percent to $76.2 million, 96 cents per share, from $61.5 million, 75 cents per share in the first half of 1998. 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. Scripps also operates 31 revenue-producing Web sites, including hgtv.com, foodtv.com and comics.com.