Scripps provides 2003 financial outlook at CSFB, UBS Warburg conferences
Mon, December 09, 2002 by Tim Stautberg
NEW YORK – Senior managers of The E. W. Scripps Company will provide a general financial outlook for 2003 during the Credit Suisse First Boston Media Conference today and at the UBS Warburg Media Conference on Wednesday. The annual media conferences are being held in New York.Scripps management also will discuss the company’s long-term growth strategy, which includes continued expansion of its growing portfolio of cable television networks – Home & Garden Television, Food Network, DIY -- Do It Yourself network and Fine Living.Participating in the Scripps presentation will be Kenneth W. Lowe, president and chief executive officer; Joseph G. NeCastro, senior vice president and chief financial officer; and Richard A. Boehne, executive vice president.The company will provide a general financial outlook for revenues and expenses in 2003 for each of the company’s business segments. The financial outlook, by segment, will include: Scripps Networks Advertising and affiliate fee revenues are each expected to be up about 15 percent. The company said it anticipated continued revenue growth at its national programming services based on the strength of advanced advertising sales through the first three quarters of 2003. The level of growth for the full year, however, will depend on the strength or weakness of the quarter-to-quarter sale of unreserved advertising time.The company said it expects programming expenses for Food Network and Home & Garden Television to be up 10 to 15 percent, as it continues to build the popular cable and satellite television brands. Other expenses for HGTV and Food will be up 10 to 12 percent. Operating losses related to the launch and development of Fine Living, DIY and other developing programming services will be $40 million to $45 million, compared to about $37 million in 2002.NewspapersExcluding Denver, advertising revenues are expected to be up 3 to 5 percent. The company said it is encouraged by improving advertising sales in its mid-sized newspaper markets.Employee costs are expected to increase 4 to 6 percent because of rising health care and pension costs and modest wage increases. The company also is factoring in a 5 to 10 percent increase in newsprint costs in anticipation of a price adjustment by producers later in the year. Other expenses are expected to be up slightly.The company is projecting at least a $6 million improvement in 2003 operating cash flow from its newspaper in Denver, the Rocky Mountain News. The company shares 50 percent of the profits generated by a joint operating agreement between the News and The Denver Post, which is owned MediaNews Group.Scripps also projected that for the full-year 2002, its operating cash flow in Denver would be $4 million compared to a $16 million operating cash flow loss in 2001.Broadcast television The company said current broadcast television advertising sales for 2003 look promising, however comparisons with 2002 will reflect the strength of political advertising sales during this year’s mid-term elections. The company projected that total political advertising for 2002 will be about $24 million. The company said it hopes to increase local and national ad revenues in 2003 by 8 percent, which would result in total revenues for 2003 being flat to 2002. Employee costs at the company’s television stations are expected to increase 4 to 6 percent because of the higher health care and pension costs. Programming and other expenses are expected to be up 2 to 3 percent.Shop At HomeThe company did not provide operating result projections for Shop At Home Network, which was acquired on Oct. 31, but reiterated previously issued guidance that the acquisition would reduce consolidated income from core operations in 2003 by 10 to 15 cents per share.PensionsThe company said that effective in 2003, it will be adjusting return assumptions for its pension plans to better reflect recent market conditions. On a consolidated basis, pension expenses will increase from $13 million in 2002 to $22 million. By the end of 2003, the company expects to fund $75 million into its pension plans, which will be the first contributions since 1996.Capital spending The company expects to spend $90 million to $100 million on capital projects during the year, with the largest allocation for a new production facility that will be built for its newspaper operations along Florida’s Treasure Coast. The company also will build a new production facility for its Cincinnati television station, which is being relocated to make way for a new downtown convention center.Safe Harbor statement This 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 in its most recent forms 10K and 10Q. About Scripps The E.W. Scripps Company is a diverse media concern with interests in newspaper publishing, broadcast television, national television networks, interactive media and television retailing. Scripps operates 21 daily newspapers, 10 broadcast TV stations, four cable and satellite television programming services and a home shopping network. Scripps national television network brands include Home & Garden Television, Food Network, DIY -- Do It Yourself Network, Fine Living and Shop At Home Network. Scripps Networks programming can be seen in 25 countries. Scripps 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, fineliving.com and comics.com.