Scripps Networks Interactive reports third quarter financial results

Scripps Networks Interactive reports third quarter financial results

  • Revenues of $566 million, up 12 percent

  • Segment profit of $251 million, up 15 percent

  • Income from continuing operations of $0.78 per share, up 20 percent

KNOXVILLE, Tenn.--(BUSINESS WIRE)-- Scripps Networks Interactive, Inc. (NYS: SNI) today reported operating results for the third quarter 2012.

Consolidated revenues for the quarter increased 12 percent to $566 million from the prior-year period. Results for the three-month period ended Sept. 30 reflect strong advertising revenue of $377 million, up 10 percent, and affiliate fee revenue of $175 million, up 18 percent year-over-year.


Expenses for the quarter increased 11 percent from the prior-year period to $315 million. The increase was driven primarily by higher employee costs and investments in planned domestic and international growth initiatives. Also contributing to the increase was higher marketing and promotional expenses to drive viewership at all of the company's lifestyle television networks.

Total segment profit increased 15 percent to $251 million. (See note 2 for a definition of segment profit).

Third quarter income from continuing operations attributable to Scripps Networks Interactive was $118 million, or $0.78 per diluted share, compared with $105 million, or $0.65 per diluted share, in the third quarter 2011.

"Our positive third quarter results demonstrate in a powerful way the ubiquitous nature of our popular lifestyle brands," said Kenneth W. Lowe, chairman, president and chief executive officer of Scripps Networks Interactive. "Our networks and related businesses engage millions of media consumers every day, not just on television, but on smart phones, tablets, newsstands and in thousands of retail outlets across America. We've established ourselves as clear leaders in our ability to influence consumer purchasing decisions in the home, food and travel categories. And in the process, we've created tremendous value for our shareholders," Lowe said.

Revenues by network were as follows:

  • Food Network was $199 million, up 11 percent.

  • HGTV was $195 million, up 8.1 percent.

  • Travel Channel was $68.9 million, up 10 percent.

  • DIY Network was $29.9 million, up 26 percent.

  • Cooking Channel was $21.6 million, up 31 percent.

  • Great American Country (GAC) was $6.9 million, up 15 percent.

Revenue from the company's digital businesses, which include its network-branded websites, was $27.7 million, up 12 percent.

Conference call

The senior management team of Scripps Networks Interactive will discuss the company's third quarter results during a telephone conference call at 10 a.m. ET today. Scripps Networks Interactive will offer a live webcast of the conference call. To access the webcast, visit www.scrippsnetworksinteractive.comand follow the Investors link at the top of the page. The webcast link can be found next to the microphone icon on the investor relations landing page.

To access the conference call by telephone, dial 800-230-1085 (U.S.) or 612-288-0337 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, "SNI Third Quarter Earnings Call," to be granted access. Callers also will be asked to provide their name and company affiliation. The media and general public are granted access to the conference call on a listen-only basis.

A replay line will be open from 12:30 p.m. ET Nov. 1 until 11:59 p.m. ET Nov. 15. The domestic number to access the replay is 800-475-6701 and the international number is 320-365-3844. The access code for both numbers is 266000. A replay of the conference call also will be available online. To access the audio replay, visit www.scrippsnetworksinteractive.com approximately four hours after the call, choose Investors then follow the Audio Archives link on the top right side of the investor relations landing page.

Forward-looking statements

This 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-3 of its 2011 Form 10-K filed with the Securities and Exchange Commission.

The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

About Scripps Networks Interactive

Scripps Networks Interactive is one of the leading developers of lifestyle-oriented content for television and the Internet, where on-air programming is complemented with online video, social media areas and e-commerce components on companion websites and broadband vertical channels. The company's media portfolio includes popular lifestyle television and Internet brands Food Network, HGTV, Travel Channel, DIY Network, Cooking Channel and country music network Great American Country.

SCRIPPS NETWORKS INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

Three months ended

Nine months ended

September 30,

September 30,

(in thousands, except per share data)

2012

2011

Change

2012

2011

Change

Operating revenues

$

566,186

$

503,744

12.4

%

$

1,702,517

$

1,518,559

12.1

%

Cost of services, excluding depreciation and amortization of intangible assets

(156,297

)

(147,563

)

5.9

%

(444,981

)

(383,271

)

16.1

%

Selling, general and administrative

(158,823

)

(137,710

)

15.3

%

(482,554

)

(415,466

)

16.1

%

Depreciation and amortization of intangible assets

(28,978

)

(22,736

)

27.5

%

(79,432

)

(66,471

)

19.5

%

Gains (losses) on disposal of property and equipment

(16

)

82

(102

)

63

Operating income

222,072

195,817

13.4

%

695,448

653,414

6.4

%

Interest expense

(12,518

)

(9,157

)

36.7

%

(37,945

)

(26,348

)

44.0

%

Equity in earnings of affiliates

11,240

7,035

59.8

%

46,267

29,717

55.7

%

Miscellaneous, net

1,667

(23,972

)

12,689

(23,504

)

Income from continuing operations before income taxes

222,461

169,723

31.1

%

716,459

633,279

13.1

%

Provision for income taxes

(65,653

)

(33,183

)

97.9

%

(211,277

)

(174,866

)

20.8

%

Income from continuing operations, net of tax

156,808

136,540

14.8

%

505,182

458,413

10.2

%

Income (loss) from discontinued operations, net of tax

(6,552

)

(61,252

)

Net income

156,808

129,988

20.6

%

505,182

397,161

27.2

%

Net income attributable to noncontrolling interests

(38,398

)

(31,385

)

22.3

%

(129,505

)

(120,604

)

7.4

%

Net income attributable to SNI

$

118,410

$

98,603

20.1

%

$

375,677

$

276,557

35.8

%

Income from continuing operations attributable to SNI common shareholders per basic share of common stock

$

0.79

$

0.65

$

2.46

$

2.03

Income from continuing operations attributable to SNI common shareholders per diluted share of common stock

$

0.78

$

0.65

$

2.44

$

2.02

Weighted average basic shares outstanding

149,985

161,789

152,731

166,318

Weighted average diluted shares outstanding

151,201

162,276

153,905

167,314

Net income per share amounts may not foot since each is calculated independently.

SCRIPPS NETWORKS INTERACTIVE, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

As of

September 30,

December 31,

2012

2011

(in thousands, except per share data)

ASSETS

Current assets:

Cash and cash equivalents

$

439,238

$

760,092

Accounts receivable (less allowances: 2012- $5,344; 2011- $5,000)

530,178

553,022

Programs and program licenses

392,141

336,305

Other current assets

71,203

66,549

Total current assets

1,432,760

1,715,968

Investments

477,551

455,267

Property and equipment, net

223,205

219,845

Goodwill

573,482

510,484

Other intangible assets, net

648,243

556,095

Programs and program licenses (less current portion)

367,642

299,089

Unamortized network distribution incentives

27,842

46,239

Other non-current assets

149,248

158,683

Total Assets

$

3,899,973

$

3,961,670

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

9,422

$

12,482

Program rights payable

42,422

50,402

Customer deposits and unearned revenue

38,276

52,814

Employee compensation and benefits

47,694

49,920

Accrued marketing and advertising costs

7,662

6,838

Other accrued liabilities

64,440

60,443

Total current liabilities

209,916

232,899

Deferred income taxes

65,935

100,002

Long-term debt

1,384,148

1,383,945

Other liabilities (less current portion)

209,964

148,429

Total liabilities

1,869,963

1,865,275

Redeemable noncontrolling interest

115,722

162,750

Equity:

SNI shareholders' equity:

Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding

Common stock, $.01 par:

Class A - authorized: 240,000,000 shares; issued and outstanding: 2012 - 115,461,988 shares; 2011 - 122,828,359 shares

1,155

1,228

Voting - authorized: 60,000,000 shares; issued and outstanding: 2012 - 34,317,173 shares; 2011 - 34,317,173 shares

343

343

Total

1,498

1,571

Additional paid-in capital

1,381,362

1,346,429

Retained earnings

272,750

364,073

Accumulated other comprehensive income (loss)

(24,701

)

(33,347

)

Total SNI shareholders' equity

1,630,909

1,678,726

Noncontrolling interest

283,379

254,919

Total equity

1,914,288

1,933,645

Total Liabilities and Equity

$

3,899,973

$

3,961,670

SCRIPPS NETWORKS INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Nine months ended

September 30,

(in thousands)

2012