Friday, May 10, 2002

Scripps profits propelled by success of its cable TV division




By John Eckberg, jeckberg@enquirer.com
The Cincinnati Enquirer

        During a recessionary year when most media companies ran for cover from falling profits, the Cincinnati-based E.W. Scripps Co. in 2001 found safe shelter in its how-to cable division, Scripps Networks, the company said Thursday.

        Advertising and affiliate fees at Scripps Networks — Home & Garden Television, Food Network, DIY-Do It Yourself Network and Fine Living — brought the division $59.4 million in operating income in 2001.

        That was a 9 percent increase from the $54.4 million posted in 2000.

        The revenue increase in the division came in the worst year for advertising in a generation, a year in which advertising expenditures contracted nationally by about 4 percent.

        At the company's annual shareholders meeting Thursday, Kenneth W. Lowe, Scripps president and chief executive, said he expected North American viewership and revenues to continue to grow as the cable division matures in 2002.

        “Expanding these powerful national television network brands is our company's top priority,” Mr. Lowe said.

        “We believe that investing in these successful enterprises continues to be the very best use of this company's free cash.”

        Eight years after Scripps Networks launched, the division generated $337 million, or about 24 percent of the company's $1.4 billion in operating revenues in 2001.

        Another turning point in 2001 for Scripps developed in Denver, where a joint operating agreement between Scripps' Rocky Mountain News and The Denver Post allowed the newspapers to merge business and production operations while maintaining competing news departments.

        The pact ended a brutal circulation war that cost Scripps $123 million during the past decade.

        In the first quarter of 2002, the partnership erased a $7.3 million year-to-year operating loss, Mr. Lowe told shareholders. “We are on track to be profitable” in Denver, he said.

        He credited the results to cost reductions and not an improvement in the advertising market.

        The Denver payroll was slashed by about 25 percent, and newsprint consumption in Denver fell by 100,000 tons.

        “Denver newspapers are now in excellent position to fully capitalize on the economic recovery,” he said.

        He said first-quarter results were solid, with operating cash flow from core operations increasing by about 12 percent and revenues about even from last year.

        Earnings per share in the second quarter are projected to be in the 65 to 75 cent range, compared with 64 cents last year.

        “We are cautiously optimistic that the worst of the economic downturn may be behind us — at least for Scripps,” he said.

        “Generally, the stabilization we saw in the first quarter is continuing.”

       



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