Scripps provides financial outlook for 2002
Wed, December 12, 2001 by Tim Stautberg
NEW YORK – Senior managers of The E. W. Scripps Company today provided a general financial outlook for 2002 during a presentation at the Credit Suisse First Boston Media Week Conference in New York.Scripps management also discussed the company’s long-term growth strategy, which includes continued expansion of its growing portfolio of cable television networks – Home & Garden Television, Food Network, the Do It Yourself network, and its newest brand, Fine Living, which is scheduled to debut in March 2002.Participating in the Scripps presentation were Kenneth W. Lowe, president and chief executive officer; Daniel J. Castellini, senior vice president and chief financial officer; and Richard A. Boehne, executive vice president.“Our goal at all of our businesses is to position the company to take full advantage of the economic recovery when it comes,” Lowe said. “As managers of this enterprise, we fully understand the importance of maximizing cash flow in the present economy, but we think it’s equally important to look beyond the cycle.” Castellini provided a general financial outlook for revenues and expenses in 2002 for each of the company’s business segments. Castellini qualified the outlook, however, saying the company is still in the process of establishing 2002 budgets and because of uncertain economic conditions.“We are beginning to get a feel for what the year might look like,” Castellini said. “But, bear in mind there’s still plenty of uncertainty. So, what we’re saying today is based on our best thinking and doesn’t take into account any more unexpected jolts to the economy.”Here’s the outlook for revenues and expenses by segment:NewspapersExcluding Denver, revenues are expected to be flat to 2001. The weak newspaper advertising environment is expected to continue through the first half of the year, with improvement anticipated in the second half of the year. Newspaper employee costs are expected to be up slightly because of increases in health care and pension expenses. Other cash expenses are expected to be flat. Newsprint prices are expected to be lower.In Denver, the company expects to generate positive operating income in 2002 as a result of the joint operating agreement between its newspaper, the Rocky Mountain News, and The Denver Post, owned by MediaNews Group. The company believes the Denver newspapers are positioned to take full advantage of an economic recovery when it occurs because of substantial cost reductions resulting from the implementation of the joint operating agreement. Since the JOA was approved in January, the number of full-time equivalent employees has decreased 22 percent. Also, newsprint consumption in Denver has been reduced by 105,000 tons, due in part to the publication of combined weekend editions. Scripps operating losses in Denver are expected to narrow from $24 million last year to $14 million in 2001 as a result of the decline in expenses. Scripps NetworksRevenues are expected to be up, but an uncertain outlook for the strength of the scatter advertising market next year makes it difficult to estimate the percentage increase. Scripps Networks will be more reliant on scatter market advertising sales during the first three quarters of the year because of very weak cable up front sales for the 2001-2002 season. The company booked about 50 percent of its 2002 inventory during the recent up front, down from about 60 percent in 2001.Expenses at Scripps Networks will increase as the company moves forward with its deliberate strategy to build its cable television network brands. Programming and distribution expenses will be up, but tight discipline will be maintained on all other expenses. Operating losses related to the launch and development of Fine Living and DIY will be about $35 million, up $15 million from 2001.Broadcast televisionBroadcast television revenues are expected to increase because of political advertising during the 2002 elections and the Olympics in February, which will be carried by the company’s three NBC affiliates. Based on results during the off-year elections in 1998, the company anticipates 2002 political advertising revenues will be between $15 million and $20 million. Softness in other broadcast television advertising categories is expected to persist at least through the first half of the year.Broadcast television employee expenses are expected to increase slightly because of higher health and pension costs. Programming costs will be down about 3 percent.Capital spendingThe company has budgeted $78 million in capital spending for 2002, with the largest share earmarked for the newspaper division, which is building a new production plant for its newspaper in Knoxville, Tenn.Safe Harbor statementThis press release contains certain forward-looking statements related to the company’s newspaper publishing, Scripps Networks and broadcast television businesses that are based on management’s current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions, that could cause actual results to differ materially from the expectations expressed in forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The company’s written policy on forward-looking statements can be found on page F-5 of its 2000 SEC Form 10K and page F-15 of its Form 10Q for the period ended Sept. 30, 2001.About Scripps The E.W. Scripps Company is a diverse media concern with interests in newspaper publishing, broadcast television, national television networks and interactive media. Scripps operates 21 daily newspapers, 10 broadcast TV stations and three cable television networks, with plans to launch a fourth.Scripps national television network brands include Home & Garden Television, Food Network, Do It Yourself and Fine Living, due to launch in March 2002.The company also operates Scripps Howard News Service, United Media, the worldwide licensing and syndication home of PEANUTS and DILBERT, and 31 Web sites, including hgtv.com, foodtv.com, diynet.com and comics.com.