Scripps provides financial outlook at Mid-Year Media Review conference
Fri, June 27, 2003 by Mark Kroeger
CINCINNATI – The E. W. Scripps Company today will provide financial projections for the second half of 2003 during its presentation at the annual Mid-Year Media Review investor conference in New York City.The following projections, by operating division, will be made by Joseph G. NeCastro, senior vice president and chief financial officer:Scripps Networks Advertising revenue from the company’s four national cable television networks is expected to be up 20 to 30 percent. The company attributed the expected increase to the strength of the national television advertising market and the targeted nature of its lifestyle networks. Scripps Networks includes Home & Garden Television, Food Network, the DIY – Do It Yourself Network and Fine Living.Net revenues from affiliate fees paid by cable and satellite television operators to carry the company’s networks are expected to be up 15 to 20 percent.Programming expenses for HGTV and Food Network will be up about 25 percent as investment in quality programming to attract more viewers continues. Increased spending on consumer marketing, including a national advertising campaign to promote HGTV, will cause other cash expenses to increase 15 to 20 percent. For the full year, segment losses from developing programming services are expected to be $40 million to $45 million. Developing programming services include DIY, Fine Living, the development of video on demand content for cable operators and the company’s early development of a lifestyle programming service for Hispanic audiences.“At Scripps Networks, the news continues to get better,” NeCastro said. “The strength of the national television advertising market and the targeted nature of our networks puts us in good position to show strong results the second half of the year.”NewspapersAdvertising revenue from the company’s daily newspapers, excluding Denver, is expected to be up 2 to 4 percent as a result of solid growth in the national and preprint categories. Strength in real estate and automotive classified advertising will help offset continued weakness in the help wanted category.On the expense side, newspaper employee costs are expected to be up 3 to 5 percent, newsprint costs are expected to be up 8 to 10 percent and other cash expenses will be down about 3 percent. “Our newspapers have been bumping along the bottom for the past 18 months and we expect more of the same for the second half of the year,” NeCastro said. “Help wanted advertising, which is still down double digits, shows no signs of turning in the near term. We do expect that continued strength in real estate and automotive advertising will offset the weakness in help wanted.”The company also projected that its share of the profits from the Denver Newspaper Agency for the full year 2003 will increase by about $3 million compared to the$6 million profit growth projected earlier in the year.The Denver Newspaper Agency is a joint partnership that publishes the Scripps newspaper in Denver – the Rocky Mountain News – and The Denver Post, which is owned by Media NewsGroup. Scripps receives 50 percent of the total profits from both newspapers.The company attributed the lower projected profits in Denver to a continuing downturn in the local economy. Help wanted advertising at the Denver newspapers is down about 20 percent through the first five months of the year, offsetting strong results in other advertising categories.The projected profits in Denver include the expectation of higher newsprint prices. The company said other expenses in Denver are under good control.“The Denver Newspaper Agency has been operating in a difficult environment that has hindered top-line growth,” NeCastro said. “The management team at the Denver Newspaper Agency is working hard to get to the original target, but it will require some positive developments in the local economy that we don’t see quite yet.”Broadcast TelevisionLocal and national advertising sales are expected to up 8 to 10 percent, but total revenues will be down mid-single digits. Total expenses will be up low single digits.“Our TV stations, like the rest of the industry, have difficult comparisons in the second half of the year owing to the $23 million in political dollars we generated last fall,” NeCastro said. Shop At HomeThe cost of integrating the Shop At Home Network into the company’s mix of media businesses will dilute earnings per share for the year by about 15 cents per share, which is consistent with the company’s earlier guidance. The company acquired Shop At Home in November 2002.Second quarter guidanceEarnings per share for the second quarter are expected to be near the upper end of the company’s previously reported guidance of 73 to 83 cents, excluding unusual items. The company reported it will have an unusual item in the quarter related to a $3 million write down in value for certain investments. The write-down will reduce reported earnings by about 3 cents per share. WebcastThe Scripps presentation at the Mid-Year Media Review is scheduled for 2 p.m. EDT and will be Webcast live via the company’s Web site at www.scripps.com. The conference is being held at The McGraw Hill Building in New York. An audio archive will be available via the Scripps Web site within 24 hours after the presentation. Forward looking statementsThis press release contains certain forward-looking statements related to the company’s 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 2002 SEC Form 10K and page F-18 of its most recent Form 10Q. About ScrippsCelebrating its 125th anniversary, Scripps 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. All of the company’s media businesses provide content and advertising services via the Internet. Scripps Networks brands include Home & Garden Television, Food Network, DIY -- Do It Yourself Network and Fine Living. Home & Garden and Food Network each can be seen in about 80 million U.S. television households. Scripps Networks Web sites include FoodNetwork.com, hgtv.com, DIYnetwork.com and FineLiving.com. Scripps Networks programming can be seen in 33 countries. The company’s home shopping subsidiary, Shop At Home Network, markets a growing range of consumer goods directly to television viewers and visitors to the Shop At Home Web site, shopathometv.com. Shop At Home reaches about 49 million full-time equivalent U.S. households. Scripps also operates Scripps Howard News Service and United Media, which is the worldwide licensing and syndication home of PEANUTS and DILBERT.