The company behind HGTV, Food Network and other lifestyle channels has a great topline story to tell for Q1. The bottom line? Not so much. Net income came in at $151.2M, -3.7% vs the period last year, on revenues of $594.4M, +11%. The revenue figure was well above the $582.5M that analysts expected. But earnings attributable to Scripps Networks investors, at 72 cents a share, were 2 cents shy of the consensus forecast. The company says that ad sales and affiliate fees were both up 11% in early 2013, respectively to $395M and $187M. Food Network revenues came in at $208.3M (+4.8%), with HGTV at $206.0M (+10.9%), Travel Channel at $76.4M (+15.1%), DIY Network at $$31.9M (+15.4%), Cooking Channel at $26.3M (+32.7%), and GAC — Great American Country — at $6.4M (+28.2%). But expenses for the quarter, at $347M, were +17%. Scripps Networks says that the increased outlays were “driven by programming amortization expenses as the company invests to drive viewership” as well as “higher employee costs and investments in planned domestic and international growth initiatives.” The company has been struggling to boost its audiences in the U.S., where the pay TV market has plateaued, and to expand overseas. READ MORE »
Travel Channel is embarking on its post-Anthony Bourdain life by adding four new series to its 2013 programming slate, which was unveiled today as part of Scripps Networks Interactive‘s upfront presentation today in NY. The lineup includes a new show from host Adam Richman, Adam Richman’s Fandemonium, which will premiere July 14. The other three greenlighted shows are the wilderness survival series Get Lost, the take-out food series Best Daym Takeout starring YouTube food critic Daymon Patterson, and the antique car restoration show Backroad Gold. Travel Channel also set premiere dates for Season 3 of Hotel Impossible (August 12) and Season 5 of Mysteries At The Museum (August 15).
Here’s a look at the networks’ new and returning shows:
The company CEO, chairman and president benefited from new contract terms including special retention stock grants recognizing “the critical nature of [his] talent” in a year when Scripps Networks shares appreciated 33.5%. Ken Lowe‘s package included $1.3M salary, $7.4M in stock awards, $1.4M in option awards, $1.7M in non-equity incentives, $2M change in pension value, and $441,155 in other compensation according to the proxy filed at the SEC this morning. The “other” category includes $16,080 for dining, business, and country clubs. Lowe’s package is 3.1 times higher than the median for the four other highest-paid execs. That’s better than last year, when he made 3.5 times the median. But it’s still high enough to worry corporate governance watchdogs who say that a CEO’s pay can be considered out of whack when it’s at least 3 times higher than the average for his or her top colleagues.
The analysis today from Nomura Equity Research’s Michael Nathanson could dampen the mood at TV networks as we head into the big upfront ad sales season. The most startling discovery: total ad revenues didn’t grow at all in 2012 at the Big Media companies he tracks. Declines at Viacom and News Corp outweighed gains at Discovery and Scripps Networks while sales were “essentially flat” at CBS, Disney, and Time Warner. “Given the surge in media stocks, the aggregate 0% growth was somewhat surprising,” Nathanson says. Factoring out political and Olympics-related ads in 2012, he sees ad sales at the companies growing 3.6% in 2013. But the analyst is “cautious” about his forecast. The pickup in the U.S. economy has been “weak” and the ongoing budget stalemates portend “an uncertain economic future.” Meanwhile Internet-based media are taking market share, and driving ad rates down. “In effect, online advertising — specifically online display advertising — is enabling advertisers to reach their ‘eye-ball targets’ with less (and sometimes even no) ad dollar budget growth.” For example, last year media and entertainment companies cut their ad spending 4.2% — even as box office sales hit a record high.
The cable networks company’s year-end results missed analysts’ targets, although revenues increased at all of its major networks. Operating income fell, but with income tax adjustments folded in Scripps Networks generated a net profit of $344.5M, +93.3% vs the last three months of 2011, on revenues of $604.7M, +9.2%. Analysts expected revenues to come in higher at $613.9M. Excluding one-time items, earnings came in at 84 cents a share, below forecasts for 92 cents. The company’s ad sales increased 4.3% to $409.4M while payments from pay TV distributions were up 14.8% to $166.9M. Scripps notes, though, that its Q4 expenses were up 14% to $339M largely due to “higher employee costs and investments in planned domestic and international growth initiatives” as well as programming and marketing expenses “to drive viewership at all of the company’s lifestyle television networks.”
PHILADELPHIA, PA and KNOXVILLE, TN – July 16, 2012 – Comcast (NASDAQ: CMCSA, CMCSK) and Scripps Networks Interactive (NYSE: SNI) announced today they have reached a long-term agreement to expand their relationship in bringing Scripps’ popular television networks and their award-winning shows to Comcast’s Xfinity TV customers throughout the U.S. on more devices than ever before. The multi-year arrangement covers distribution via Comcast’s linear and on-demand platforms and makes Scripps’ content available to Xfinity TV customers through online, mobile, and other devices, as well as via Scripps’ sites and services.
It’s not a leading economic indicator. But Scripps Networks CEO Kenneth Lowe says that programming on his cable channel HGTV “had to be turned on its head” when the housing bubble burst a few years ago. Viewers suddenly wanted to know how to flip their house, not just how to make it beautiful. But things are changing, he hopes: “As we slowly build the housing market back, it will have a positive effect on HGTV.” So will improvements at the network’s popular show House Hunters, where ratings have softened. “Stabilization is the key word” for that show, Lowe says. That concept is important for all of Scripps’ lifestyle-focused services. When it comes to advertising, “we’re not seeing a lot of things to be concerned about, but we’re watching along with the rest of the industry,” says Lori Hickok, EVP Finance. Lowe’s upbeat, though, because he says Scripps’ channels are “the female equivalent of ESPN. They’re must-have. … The passion and connection that female viewers have for these networks is second to none.” Even among those viewers, Scripps saw a shift last year to sports programming, which Lowe says “was a little unusual.” He attributes that to the growing appeal of live shows.
Add two more influential cable programmers to the Coalition for Innovative Media Measurement — an initiative by Big Media and advertisers that hopes to update TV ratings system to account for viewing on new platforms including smartphones. The group is supported by heavyweights including AT&T, CBS, Comcast, Discovery, Disney, News Corp, Procter & Gamble, Starcom MediaVest, Time Warner, and Viacom.
NEW YORK, NY – September 7, 2011 – The Coalition for Innovative Media Measurement (CIMM / cimm-us.org), today announced that A+E Networks and Scripps Networks LLC are the newest members of the industry alliance focused on finding the best ways to measure changing media audiences.
“The combination of rapid technology advancements and shifting consumer behavior is quickly changing the media landscape in how we consume media and how we measure that consumption,” said Mike Greco, EVP Research, A+E Networks. “It’s critical that the industry comes together to map our best practice and leverage new insights and innovations. We are extremely excited to be partnering with media companies and advertisers through CIMM to activate new tools and insights into our businesses.”
The cable industry is livid today over a new FCC order that makes it harder for pay TV distributors to mess around with independently owned channels. Regulators clarified the rules of engagement called for by the 1992 Cable Act to resolve contract disputes that channels have with cable and satellite companies. One provision particularly infuriates cable: The FCC says channels can’t be interrupted during a fight; for example, Cablevision customers lost Food Network and HGTV in early 2010 when Scripps wanted to raise the price for its services. A standstill order would keep existing contract terms in place while the FCC resolves the matter. The agency particularly wants to prevent cable operators from using their near-monopoly power in TV distribution to favor channels that they own — or extort channel owners to sell equity in order to guarantee carriage. Public interest advocates welcome the change. “This will promote diversity in cable TV offerings by insuring that independent cable channels have a shot at getting carriage on large cable systems” says Media Access Project policy director Andrew Jay Schwartzman. But former FCC Chairman Michael Powell — now CEO of the National Cable & Telecommunications Association — says the order shows “little regard for the limits of agency authority or constitutional rights, and a disturbing lack of appreciation of the potential impact of government intervention on consumers or the marketplace.”
Here’s why: Media stocks are up 24.4% over the last six months, outperforming the benchmark Standard & Poor’s 500, which rose 15.1% over the period. So they already reflect a lot of optimism. But investors may be disappointed by upcoming news about ad sales, ratings, and ticket sales, Nomura Securities analyst Michael Nathanson says in a report out this morning. His warning comes as media executives prepare to release their quarterly earnings and talk to Wall Street about the state of the business. They conduct hour-long infomercials designed to persuade the world that everything is fine — or, if it manifestly isn’t, that it’s someone else’s fault.
But Nathanson says the companies’ go-go projections about over-the-top ad sales miss how much Japanese auto makers are cutting production as they grapple with parts shortages following the country’s earthquake and tsunami. For example, Toyota will crank out 35,000 fewer cars than planned in North America in March and April. That’s a big deal: Auto companies typically spend about $1,200 on ads for each car they sell. Meanwhile, overall broadcast and cable network ratings stank in the first quarter. The Big Four networks’ live ratings were down 15.9% vs. the same period last year. As for movies, if you don’t know about this year’s miserable ticket sales, then you aren’t paying attention — although Nathanson says that box office would have been up 11% if last year didn’t include Fox’s Avatar and Disney’s Alice In Wonderland.
After a three-day blackout of Scripps Networks’ cable networks, including HGTV and Food Network, on AT&T U-Verse, the two sides tonight reached a new distribution agreement. The five Scripps channels affected, HGTV, Food Network, DIY, Cooking Channel and Great American Country have been restored in 2.7 million AT&T U-verse …