Table of Contents
| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |
||||
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported) |
October 14, 2004 |
| THE E.W. SCRIPPS COMPANY |
| (Exact name of registrant as specified in its charter) |
| Ohio | 0-16914 | 31-1223339 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 312 Walnut Street Cincinnati, Ohio |
45202 | |
| (Address of principal executive offices) | (Zip Code) |
| Registrant’s telephone number, including area code | (513) 977-3000 |
| Not Applicable |
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Table of Contents
INDEX TO CURRENT REPORT ON FORM 8-K
| Item No. |
Page | |||
| 2.02. | Results of Operations and Financial Condition | 3 | ||
| 9.01. | Financial Statements and Exhibits | 3 | ||
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Table of Contents
Item 2.02. Results of Operations and Financial Condition
On October 14, 2004, we released information regarding results of operations for the quarter ended September 30, 2004. A copy of the press release is filed as Exhibit 99.
The discussion and the information contained in the press release contain certain forward-looking statements that are based on our current expectations. Forward-looking statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially from the expectations expressed in the forward-looking statements. Such risks, trends and uncertainties, which in most instances are beyond our control, include changes in advertising demand and other economic conditions; consumers’ taste; newsprint prices; program costs; labor relations; technological developments; competitive pressures; interest rates; regulatory rulings; and reliance on third-party vendors for various products and services. The words “believe,” “expect,” anticipate,” “estimate,” “intend,” and similar expressions identify forward-looking statements. All forward-looking statements, which are as of the date of this filing, should be evaluated with the understanding of their inherent uncertainty. We undertake no obligation to publicly update any forward-looking statement to reflect events or circumstances after the date the statement is made.
Item 9.01. Financial Statements and Exhibits
| (c) | Exhibits |
| 99 | Press release dated October 14, 2004. |
3
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE E.W. SCRIPPS COMPANY | ||
| BY: |
/s/ Joseph G. NeCastro | |
| Joseph G. NeCastro | ||
| Senior Vice President and Chief Financial Officer | ||
Dated: October 14, 2004
4
| PRESS RELEASE | Exhibit 99 |
Scripps reports third quarter results
| For immediate release |
(NYSE: SSP) | |
| Oct. 14, 2004 |
CINCINNATI – The E. W. Scripps Company today reported a 7.2 percent year-over-year increase in net income during the third quarter, reflecting rapid growth at the company’s national television networks, strong political advertising revenue at the Scripps broadcast television stations and including the adverse effects of the hurricanes on the company’s newspapers and TV stations in Florida.
Net income for the three-month period ended Sept. 30 was $55.6 million vs. $51.9 million during the same period a year ago. On a post-split basis, third quarter earnings per share were 34 cents compared to 32 cents in the third quarter of 2003. The company completed a 2 for 1 stock split in September of 2004.
The company estimates that the financial impact of the hurricanes on third quarter net income was approximately $3.7 million, or 2 cents per share. The hurricanes adversely affected business operations at the company’s Treasure Coast Newspapers (The Stuart News, The Tribune in Fort Pierce and the Vero Beach Press Journal), Naples Daily News, WPTV-TV, Channel 5 in West Palm Beach and WFTS-TV, Channel 28 in Tampa.
Total revenue for the company was up 14 percent to $500 million during the third quarter.
The improved third quarter results reflect the continued rapid growth of the company’s Scripps Networks division, which includes Home & Garden Television, Food Network, DIY – Do It Yourself Network and Fine Living. On Tuesday the company announced plans to expand Scripps Networks by acquiring the Great American Country network.
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Segment profit at Scripps Networks increased 58 percent to $63.6 million during the three-month period. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, restructuring activities, investment results and certain other items that are included in net income. Scripps Networks advertising revenue was up 33 percent year-over-year to $128 million and affiliate fee revenue increased 58 percent to $37.1 million. Affiliate fee revenue was favorably affected in September by the completion of several renewal agreements with cable television operators to carry the company’s national lifestyle networks. Total revenue at Scripps Networks was up 38 percent to $168 million.
Strong political advertising at the company’s local broadcast television stations also contributed to improved consolidated results. Total broadcast television revenue was up 12 percent to $80.7 million for the three-month period. Broadcast television segment profit was up 23 percent in the third quarter to $23.0 million. Excluding the impact of the hurricanes on the company’s TV stations in Florida, the company estimates that total broadcast television revenues would have been up 13 percent in the quarter.
Political advertising revenue at Scripps stations reached $10.2 million during the third quarter, which, for comparison purposes, is about even with the third quarter of the 2000 presidential election year. Scripps television stations had about $1.0 million in political advertising revenue during the third quarter of 2003.
Total revenue at the company’s newspapers was $166 million during the third quarter, up 1.2 percent over the same period in 2003. Newspaper advertising revenue was up 2.5 percent to $131 million. Excluding the impact of the hurricanes on the company’s Florida newspapers, the company estimates that total newspaper revenue would have been up 2.6 percent and newspaper advertising revenue would have been up 4.1 percent in the quarter.
Newspaper division segment profit declined 9.3 percent to $55.2 million. Newspaper segment profits were held back by the adverse revenue and expense effects of the hurricanes, higher employee benefit costs and higher newsprint prices.
At the Shop At Home Network, third quarter revenue rose 8.6 percent to $63.4 million as the company continued to implement its television commerce strategy. Segment losses were $7.6 million. Scripps is integrating management of Shop At Home with its Scripps Networks division and shifting the mix of retail products offered for sale on the network to align more closely with the consumer categories targeted by the company’s national lifestyle programming networks.
“Scripps just completed another solid quarter thanks to exceptional performance at our cable television networks and the great job our television stations have done capturing political advertising revenue during this year’s presidential election campaign,” said Kenneth W. Lowe, president and chief executive officer for Scripps. “At Scripps Networks, and especially at HGTV and Food Network, the high double-digit growth in advertising revenue is the direct result of the steadily growing number of viewers and higher primetime and total-day ratings. Our investment in original programming coupled with consumer marketing to build these valuable brands continues to bear fruit.”
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“At our television stations, we’ve created attractive forums for political discourse through our Democracy 2004 project, which grants free broadcast time to responsible candidates,” Lowe said. “Our free air-time policy – which dates back to the 2000 elections - has created a win-win situation for candidates and our stations. We believe it’s the right thing to do and it establishes local Scripps TV stations as authoritative sources for news and information on candidates and issues. That’s especially important in the key political battleground states of Ohio and Florida, where Scripps operates top-rated stations in four key markets.”
“Third quarter results for our newspapers and television stations were adversely affected by the September hurricanes. Fortunately, all of our people in Florida escaped serious harm, but our Treasure Coast Newspapers and West Palm TV station did suffer some property damage in addition to an interruption in business. Businesses are slowly beginning to return to normal in the affected areas. On an encouraging note, excluding the impact of the hurricanes on our Florida newspapers, we saw some improvement in local retail and classified newspaper advertising during the third quarter.”
“At our developing businesses, the look and feel at Shop at Home is beginning to reflect the creative efforts of our talented management team,” Lowe said. “We’re taking a more creative approach to sales and programming, on-air talent from our lifestyle networks is getting onboard and we’ve firmed up distribution of Shop at Home to 51 million television households.”
“At DIY and Fine Living, advertising revenue growth continued at a healthy pace as distribution of both networks has widened,” Lowe said. “DIY reached an important distribution milestone during the quarter, topping 30 million U.S. television households. Fine Living, at 24 million homes, also continues to gain traction. We’ve succeeded in a relatively short period of time, we believe, in establishing both as valuable cable and satellite television programming brands.”
Here are detailed third-quarter results by segment:
Scripps Networks
Scripps Networks segment profit was $63.6 million, up 58 percent from $40.3 million in the prior year period.
Scripps Networks advertising revenue increased 33 percent to $128 million. Affiliate fee revenue was $37.1 million, up 58 percent.
Programming expense increased 31 percent to $45.0 million.
Home & Garden Television contributed $42.2 million to segment profit, up 29 percent from the year-ago period. HGTV revenue grew 27 percent to $88.7 million. Home & Garden Television now reaches about 87 million domestic subscribers, compared to 83 million at the end of the third quarter 2003.
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Food Network had revenue of $66.6 million, up 50 percent. The network contributed $29.9 million to segment profit vs. $15.4 million in the third quarter last year. Food Network reaches 85 million domestic subscribers, up from 82 million in the third quarter 2003.
Revenue at DIY was $7.8 million compared to $5.0 million in 2003. Operating losses at DIY reduced segment profit by $2.6 million compared to a $2.5 million reduction in segment profit in 2003. DIY can be seen in about 30 million households, up from about 22 million a year ago.
Fine Living revenues increased to $4.3 million from about $2.0 million the previous year. Operating losses at Fine Living reduced segment profit by $5.7 million vs. a $6.3 million reduction in segment profit in 2003. Fine Living reaches about 24 million households vs. 19 million at this time a year ago.
Newspapers
Total newspaper segment profit was $55.2 million, down 9.3 percent.
Advertising revenue at newspapers managed solely by Scripps was $131 million, up 2.5 percent. Advertising revenue broken down by category was:
| • | Local, up 0.8 percent to $37.8 million. |
| • | Classified, up 1.4 percent to $52.6 million. |
| • | National, up 3.0 percent to $9.7 million. |
| • | Preprint and other, up 6.3 percent to $31.2 million. |
Circulation revenues were $30.8 million, down 4.8 percent.
Newsprint expenses increased 6.5 percent on a 7.4 percent increase in newsprint prices. Newsprint consumption declined slightly as a result of the hurricanes.
The company’s newspapers that are managed under joint operating agreements contributed $10.2 million to segment profit vs. $8.8 million last year. The increase was primarily attributable to improvements in Denver and Cincinnati.
Broadcast Television
Broadcast television segment profit increased 23 percent to $23.0 million.
Broadcast television revenue increased 12 percent to $80.7 million.
Advertising revenue broken down by category were:
| • | Political, $10.2 million vs. $1.0 million in 2003. |
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| • | Local, down 2.7 percent to $42.4 million. |
| • | National, up 1.3 percent to $24.0 million. |
| • | Other, up 2.9 percent to $4.1 million. |
Shop at Home Network
Shop at Home Network revenue was $63.4 million, up 8.6 percent from the same year-ago period.
Shop at Home reported a segment loss of $7.6 million vs. a segment loss of $3.8 million in the same period a year ago.
The network reached an average 51 million full-time equivalent homes during the quarter compared to 46 million last year.
Licensing and Other Media
Revenue was $22.3 million vs. $24.4 million in the prior year period.
Segment profit was $3.1 million compared to $4.5 million in 2003.
Guidance
Based on advance advertising sales, the company currently anticipates fourth quarter 2004 advertising revenue for Scripps Networks will be up about 25 percent year over year. Affiliate fee revenue for Scripps Networks is expected to increase about 45 percent during the quarter, net of distribution fee amortization. Programming and marketing expenses are expected to increase about 30 percent in the fourth quarter as the company continues to invest in building viewership across all four networks. Investments in the development of DIY, Fine Living and video-on-demand and broadband programming services are expected to reduce segment profits by about $10 million and earnings per share by about 4 cents during the quarter.
Newspaper advertising revenues are expected to be up low single digits over the prior year in the fourth quarter. Fourth quarter newspaper results will continue to be adversely affected by the lingering effects of the hurricanes on the company’s Florida operations.
At the company’s broadcast television stations, advertising revenues, including political, are expected to be up about 13 percent in the fourth quarter. Political advertising in the fourth quarter is expected to reach about $15 million, similar to the amount the company generated in the last presidential election year.
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The company’s continuing investment in the Shop at Home Network is expected to reduce fourth quarter segment profits by about $7 million and earnings per share by about 4 cents.
Due primarily to increased profitability of the Food Network and the company’s allocation of operating income to Tribune Company, which owns 31 percent of the network, minority interest is expected to be between $11 and $12 million in the fourth quarter.
Fourth quarter earnings per share are expected to be between 50 cents and 55 cents. Earnings per share during the fourth quarter of 2003 were 62 cents, including unusual items that increased net income by 16 cents per share.
Conference call
The senior management team at Scripps will discuss the company’s third quarter results during a telephone conference call at 11 a.m. EDT today. Scripps will offer a live audio Web cast of the conference call. To access the Web cast, visit www.scripps.com, choose “Investor Relations,” then follow the “Live Web Cast” link at the top of the page. Listeners need Windows Media Player to access the call online.
To access the conference call by telephone, dial 1-888-496-6261 (U.S.) or 1-303-262-0067 (International), approximately 10 minutes before the start of the call. Callers will need the name of the call (third quarter earnings report) to be granted access. Callers also will be asked to provide their name and company affiliation. The media and general public are provided access to the conference call on a listen-only basis.
A replay line will be open from 2:30 p.m. EDT Oct. 14 until 11:59 p.m. EDT Monday, Oct. 18. The domestic number to access the replay is 1-800-475-6701 and the international number is 1-320-365-3844. The access code for both numbers is 746663.
A replay of the conference call will be archived and available online for an extended period of time following the call. To access the audio replay, visit www.scripps.com approximately four hours after the call, choose “Investor Relations” then follow the “Audio Archives” link at the top of the 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-5 of its 2004 SEC Form 10K and F-27 of its most recent Form 10Q.
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We undertake no obligation to publicly update any forward-looking statements to reflect events for circumstances after the date the statement is made.
About Scripps
The E.W. Scripps Company is a diverse media concern with interests in national lifestyle television networks, newspaper publishing, broadcast television, television retailing, interactive media and licensing and syndication. All of the company’s media businesses provide content and advertising services via the Internet.
Scripps is organized into the following operating divisions.
Scripps Networks, which includes the company’s growing portfolio of popular lifestyle television networks. Scripps Networks brands include Home & Garden Television, Food Network, DIY — Do It Yourself Network and Fine Living. Scripps Networks Web sites include FoodNetwork.com, HGTV.com, DIYnetwork.com and fineliving.com. Scripps Networks programming can be seen in 86 countries.
Scripps Newspapers, including daily and community newspapers in 18 markets and the Washington-based Scripps Media Center, home to the Scripps Howard News Service. Scripps newspapers include the Rocky Mountain News in Denver, the Commercial Appeal in Memphis, the Knoxville (Tenn.) News-Sentinel and the Ventura County (Calif.) Star.
Scripps Television Station Group, including six ABC-affiliated stations, three NBC affiliates and one independent. Scripps operates broadcast television stations in Detroit, Cleveland, Cincinnati, Phoenix, Tampa, Baltimore, Kansas City, Mo., West Palm Beach, Fla., Tulsa, Okla., and Lawrence, Kan.
Shop At Home Network, the company’s television retailing subsidiary, which 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 51 million full-time equivalent U.S. households, including 5 million households via five Scripps-owned Shop At Home affiliated television stations.
United Media, a leading licensing and syndication company. United Media is the worldwide licensing and syndication home of Peanuts, Dilbert, For Better or For Worse and about 150 other features and characters.
###
Contact: Tim Stautberg, The E. W. Scripps Company, 513.977.3826
Email: stautberg@scripps.com
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THE E. W. SCRIPPS COMPANY
RESULTS OF OPERATIONS
| (in thousands, except per share data) |
Three months ended Sept. 30, |
Nine months ended Sept. 30, |
||||||||||||||||||||
| 2004 |
2003 |
Fav(Unf) |
2004 |
2003 |
Fav(Unf) |
|||||||||||||||||
| Operating revenues |
$ | 499,792 | $ | 440,481 | 13.5 | % | $ | 1,560,764 | $ | 1,360,521 | 14.7 | % | ||||||||||
| Costs and expenses |
(394,955 | ) | (349,068 | ) | (13.1 | )% | (1,196,254 | ) | (1,058,941 | ) | (13.0 | )% | ||||||||||
| Depreciation and amortization of intangibles |
(17,779 | ) | (17,156 | ) | (3.6 | )% | (49,810 | ) | (50,248 | ) | 0.9 | % | ||||||||||
| Gain on sale of production facility |
11,148 | |||||||||||||||||||||
| Operating income |
87,058 | 74,257 | 17.2 | % | 325,848 | 251,332 | 29.6 | % | ||||||||||||||
| Interest expense |
(7,149 | ) | (7,944 | ) | 10.0 | % | (22,816 | ) | (23,779 | ) | 4.0 | % | ||||||||||
| Equity in earnings of JOAs and other joint ventures |
22,341 | 20,830 | 7.3 | % | 59,216 | 60,894 | (2.8 | )% | ||||||||||||||
| Interest and dividend income |
118 | 1,201 | (90.2 | )% | 1,648 | 3,845 | (57.1 | )% | ||||||||||||||
| Other investment results, net of expenses |
14,674 | (3,200 | ) | |||||||||||||||||||
| Miscellaneous, net |
121 | (340 | ) | 124 | (299 | ) | ||||||||||||||||
| Income before income taxes and minority interests |
102,489 | 88,004 | 16.5 | % | 378,694 | 288,793 | 31.1 | % | ||||||||||||||
| Provision for income taxes |
37,623 | 33,841 | (11.2 | )% | 136,982 | 113,021 | (21.2 | )% | ||||||||||||||
| Income before minority interests |
64,866 | 54,163 | 19.8 | % | 241,712 | 175,772 | 37.5 | % | ||||||||||||||
| Minority interests |
9,272 | 2,304 | 29,175 | 6,491 | ||||||||||||||||||
| Net income |
$ | 55,594 | $ | 51,859 | 7.2 | % | $ | 212,537 | $ | 169,281 | 25.6 | % | ||||||||||
| Net income per diluted share of common stock |
$ | .34 | $ | .32 | 6.3 | % | $ | 1.29 | $ | 1.04 | 24.0 | % | ||||||||||
| Weighted average diluted shares outstanding |
165,187 | 163,210 | 164,906 | 162,623 | ||||||||||||||||||
As a result of the two-for-one stock split authorized and distributed in the third quarter 2004, all share and per share amounts in our consolidated financial statements and related notes have been retroactively adjusted to reflect the stock split for all periods presented.
See notes to results of operations.
1. INVESTMENT RESULTS AND OTHER ITEMS
Net income was affected by the following:
2004 - Third quarter and year-to-date operating results were affected by the impact of hurricanes at our Florida operations. Our Florida operations sustained wind and water damage and the hurricanes interrupted operations at our affected businesses and at certain of their customers, resulting in lost revenues. Estimated asset impairment losses and restoration costs incurred through September 30, 2004, totaled $2.4 million, of which approximately $1.1 million relates to the newspaper segment and $1.3 million to the broadcast television segment. Net income was reduced by $1.5 million, $.01 per share. Additional restoration costs, which are not expected to be significant, will be expensed as incurred.
Our insurance program provides coverage for damage to property and interruption of business operations, including profit recovery and costs incurred to minimize the period and total cost of interruption. Business interruption losses through September 30, 2004, are estimated to be approximately $3.7 million. Insurance recoveries are subject to an approximate $1.0 million per occurrence, per location deductible. Insurance recoveries are recognized when they are probable of collection. We are currently in discussions with our insurance providers to assess the amount of the claim and the amount of the covered losses and accordingly, have not recorded any recovery of property or business interruption losses resulting from the hurricanes in our third quarter results of operations.
Year-to-date operating results include an $11.1 million pre-tax gain on the sale of our Cincinnati television station’s production facility to the City of Cincinnati. The gain on sale had previously been deferred while the station continued to use the facility until construction of a new production facility was complete. Net income was increased by $7.0 million, $.04 per share
Year-to-date other investment results represent realized gains from the sale of certain investments, including Digital Theater Systems. Net income was increased by $9.5 million, $.06 per share.
2003 - Year-to-date other investment results were a pre-tax charge of $3.2 million for write-downs associated with declines in value of certain investments in development-stage businesses. Net income was reduced by $2.1 million, $.01 per share.
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2. SEGMENT INFORMATION
Our reportable segments are strategic businesses that offer different products and services. Our chief operating decision maker (as defined by Financial Accounting Standard (“FAS”) 131 – Segment Reporting) evaluates the operating performance of our business segments using a measure we call segment profits. Segment profits excludes interest, income taxes, depreciation and amortization, divested operating units, restructuring activities, investment results and certain other items that are included in net income determined in accordance with accounting principles generally accepted in the United States of America.
Items excluded from segment profits generally result from decisions made in prior periods or from decisions made by corporate executives rather than the managers of the business segments. Depreciation and amortization charges are the result of decisions made in prior periods regarding the allocation of resources and are therefore excluded from the measure. Financing, tax structure and divestiture decisions are generally made by corporate executives. Excluding these items from our business segment performance measure enables us to evaluate business segment operating performance for the current period based upon current economic conditions and decisions made by the managers of those business segments in the current period.
We account for our share of the earnings of joint operating agreements (“JOAs”) using the equity method of accounting. Our equity in earnings of JOAs is included in “Equity in earnings of JOAs and other joint ventures” in our Results of Operations. Newspaper segment profits include equity in earnings of JOAs and other joint ventures. Scripps Networks segment profits include equity in earnings of FOX Sports Net South and certain other joint ventures.
Information regarding the operating performance of our business segments determined in accordance with FAS 131 and reconciliation to our Results of Operations is as follows:
| (in thousands) |
Three months ended Sept. 30, |
Nine months ended Sept. 30, |
||||||||||||||||||||
| 2004 |
2003 |
Fav(Unf) |
2004 |
2003 |
Fav(Unf) |
|||||||||||||||||
| Segment operating revenues: |
||||||||||||||||||||||
| Newspapers managed solely by us |
$ | 165,744 | $ | 163,828 | 1.2 | % | $ | 518,940 | $ | 509,202 | 1.9 | % | ||||||||||
| Newspapers operated pursuant to JOAs |
54 | 56 | (3.6 | )% | 171 | 174 | (1.7 | )% | ||||||||||||||
| Total newspapers |
165,798 | 163,884 | 1.2 | % | 519,111 | 509,376 | 1.9 | % | ||||||||||||||
| Scripps Networks |
167,546 | 121,549 | 37.8 | % | 519,135 | 380,042 | 36.6 | % | ||||||||||||||
| Broadcast television |
80,693 | 72,257 | 11.7 | % | 243,730 | 221,300 | 10.1 | % | ||||||||||||||
| Shop At Home |
63,439 | 58,425 | 8.6 | % | 203,725 | 173,380 | 17.5 | % | ||||||||||||||
| Licensing and other media |
22,316 | 24,366 | (8.4 | )% | 75,063 | 76,423 | (1.8 | )% | ||||||||||||||
| Total operating revenues |
$ | 499,792 | $ | 440,481 | 13.5 | % | $ | 1,560,764 | $ | 1,360,521 | 14.7 | % | ||||||||||
| Segment profit (loss): |
||||||||||||||||||||||
| Newspapers managed solely by us |
$ | 45,040 | $ | 52,069 | (13.5 | )% | $ | 149,206 | $ | 165,363 | (9.8 | )% | ||||||||||
| Newspapers operated pursuant to JOAs |
10,185 | 8,811 | 15.6 | % | 23,673 | 26,390 | (10.3 | )% | ||||||||||||||
| Total newspapers |
55,225 | 60,880 | (9.3 | )% | 172,879 | 191,753 | (9.8 | )% | ||||||||||||||
| Scripps Networks |
63,552 | 40,277 | 57.8 | % | 213,392 | 137,821 | 54.8 | % | ||||||||||||||
| Broadcast television |
23,040 | 18,713 | 23.1 | % | 68,482 | 58,841 | 16.4 | % | ||||||||||||||
| Shop At Home |
(7,576 | ) | (3,753 | ) | (13,937 | ) | (15,293 | ) | 8.9 | % | ||||||||||||
| Licensing and other media |
3,085 | 4,489 | (31.3 | )% | 11,716 | 12,977 | (9.7 | )% | ||||||||||||||
| Corporate |
(10,148 | ) | (8,363 | ) | (21.3 | )% | (28,806 | ) | (23,625 | ) | (21.9 | )% | ||||||||||
| Total segment profit |
127,178 | 112,243 | 13.3 | % | 423,726 | 362,474 | 16.9 | % | ||||||||||||||
| Depreciation and amortization of intangibles |
(17,779 | ) | (17,156 | ) | (3.6 | )% | (49,810 | ) | (50,248 | ) | 0.9 | % | ||||||||||
| Gain on sale of production facility |
11,148 | |||||||||||||||||||||
| Interest expense |
(7,149 | ) | (7,944 | ) | 10.0 | % | (22,816 | ) | (23,779 | ) | 4.0 | % | ||||||||||
| Interest and dividend income |
118 | 1,201 | (90.2 | )% | 1,648 | 3,845 | (57.1 | )% | ||||||||||||||
| Other investment results, net of expenses |
14,674 | (3,200 | ) | |||||||||||||||||||
| Miscellaneous, net |
121 | (340 | ) | 124 | (299 | ) | ||||||||||||||||
| Income before income taxes and minority interests |
$ | 102,489 | $ | 88,004 | 16.5 | % | $ | 378,694 | $ | 288,793 | 31.1 | % | ||||||||||
| (in thousands) |
Three months ended Sept. 30, |
Nine months ended Sept. 30, |
||||||||||||||||
| 2004 |
2003 |
Fav(Unf) |
2004 |
2003 |
Fav(Unf) |
|||||||||||||
| Depreciation: |
||||||||||||||||||
| Newspapers managed solely by us |
$ | 5,703 | $ | 5,692 | (0.2 | )% | $ | 16,025 | $ | 17,122 | 6.4 | % | ||||||
| Newspapers operated pursuant to JOAs |
303 | 324 | 6.5 | % | 897 | 966 | 7.1 | % | ||||||||||
| Total newspapers |
6,006 | 6,016 | 0.2 | % | 16,922 | 18,088 | 6.4 | % | ||||||||||
| Scripps Networks |
3,080 | 2,815 | (9.4 | )% | 8,224 | 7,759 | (6.0 | )% | ||||||||||
| Broadcast television |
4,981 | 4,889 | (1.9 | )% | 14,480 | 14,568 | 0.6 | % | ||||||||||
| Shop At Home |
1,959 | 1,581 | (23.9 | )% | 5,550 | 4,226 | (31.3 | )% | ||||||||||
| Licensing and other media |
175 | 153 | (14.4 | )% | 495 | 476 | (4.0 | )% | ||||||||||
| Corporate |
543 | 567 | 4.2 | % | 1,629 | 1,668 | 2.3 | % | ||||||||||
| Total depreciation |
$ | 16,744 | $ | 16,021 | (4.5 | )% | $ | 47,300 | $ | 46,785 | (1.1 | )% | ||||||
| Amortization of intangibles: |
||||||||||||||||||
| Newspapers managed solely by us |
$ | 107 | $ | 107 | 0.0 | % | $ | 319 | $ | 318 | (0.3 | )% | ||||||
| Newspapers operated pursuant to JOAs |
66 | 67 | 1.5 | % | 200 | 200 | 0.0 | % | ||||||||||
| Total newspapers |
173 | 174 | 0.6 | % | 519 | 518 | (0.2 | )% | ||||||||||
| Scripps Networks |
148 | 548 | 73.0 | % | 445 | 1,721 | 74.1 | % | ||||||||||
| Broadcast television |
21 | 32 | 34.4 | % | 58 | 95 | 38.9 | % | ||||||||||
| Shop At Home |
693 | 381 | (81.9 | )% | 1,488 | 1,129 | (31.8 | )% | ||||||||||
| Total amortization of intangibles |
$ | 1,035 | $ | 1,135 | 8.8 | % | $ | 2,510 | $ | 3,463 | 27.5 | % | ||||||
3. JOINT OPERATING AGREEMENTS
Four of our newspapers are operated pursuant to the terms of JOAs. The Newspaper Preservation Act of 1970 provides a limited exemption from anti-trust laws, permitting competing newspapers in a market to combine their sales, production and business operations in order to reduce aggregate expenses and take advantage of economies of scale, thereby allowing the continuing operation of both newspapers in that market. Each newspaper in a JOA partnership maintains a separate and independent editorial operation.
Information related to the operating results of our JOAs is as follows:
| (in thousands) |
Three months ended Sept. 30, |
Nine months ended Sept. 30, |
||||||||||||||||
| 2004 |
2003 |
Fav(Unf) |
2004 |
2003 |
Fav(Unf) |
|||||||||||||
| Equity in earnings of JOAs: |
||||||||||||||||||
| Denver |
$ | 8,706 | $ | 8,051 | 8.1 | % | $ | 23,901 | $ | 24,345 | (1.8 | )% | ||||||
| Cincinnati |
6,011 | 5,367 | 12.0 | % | 16,540 | 16,167 | 2.3 | % | ||||||||||
| Other |
4,391 | 4,590 | (4.3 | )% | 11,389 | 13,338 | (14.6 | )% | ||||||||||
| Total equity in earnings of JOAs |
19,108 | 18,008 | 6.1 | % | 51,830 | 53,850 | (3.8 | )% | ||||||||||
| Operating revenues |
54 | 56 | (3.6 | )% | 171 | 174 | (1.7 | )% | ||||||||||
| Total |
$ | 19,162 | $ | 18,064 | 6.1 | % | $ | 52,001 | $ | 54,024 | (3.7 | )% | ||||||
| Contribution to segment profit: |
||||||||||||||||||
| Denver |
$ | 3,242 | $ | 2,375 | 36.5 | % | $ | 6,698 | $ | 7,671 | (12.7 | )% | ||||||
| Cincinnati |
4,132 | 3,511 | 17.7 | % | 10,611 | 10,415 | 1.9 | % | ||||||||||
| Other |
2,811 | 2,925 | (3.9 | )% | 6,364 | 8,304 | (23.4 | )% | ||||||||||
| Total contribution to segment profit |
$ | 10,185 | $ | 8,811 | 15.6 | % | $ | 23,673 | $ | 26,390 | (10.3 | )% | ||||||
Gannett Newspapers has notified us of its intent to terminate the Cincinnati JOA upon its expiration in 2007.
4. SCRIPPS NETWORKS
Financial information for each of our four national networks is as follows:
| (in thousands, except per share data) |
Three months ended Sept. 30, |
Nine months ended Sept. 30, |
||||||||||||||||||||
| 2004 |
2003 |
Fav(Unf) |
2004 |
2003 |
Fav(Unf) |
|||||||||||||||||
| HGTV: |
||||||||||||||||||||||
| Operating revenues |
$ | 88,694 | $ | 70,074 | 26.6 | % | $ | 275,182 | $ | 216,124 | 27.3 | % | ||||||||||
| Contribution to segment profit |
42,203 | 32,828 | 28.6 | % | 142,764 | 108,208 | 31.9 | % | ||||||||||||||
| Net income effect |
25,051 | 18,784 | 33.4 | % | 85,312 | 62,251 | 37.0 | % | ||||||||||||||
| Net income effect per share of diluted common stock |
$ | .15 | $ | .12 | 25.0 | % | $ | .52 | $ | .38 | 36.8 | % | ||||||||||
| Food Network: |
||||||||||||||||||||||
| Operating revenues |
$ | 66,614 | $ | 44,464 | 49.8 | % | $ | 208,067 | $ | 145,446 | 43.1 | % | ||||||||||
| Contribution to segment profit |
29,896 | 15,440 | 93.6 | % | 94,980 | 57,194 | 66.1 | % | ||||||||||||||
| Net income effect: |
||||||||||||||||||||||
| Food Network net income |
28,085 | 13,508 | 89,836 | 51,520 | 74.4 | % | ||||||||||||||||
| Minority owner share of Food Network |
8,593 | 1,637 | 27,198 | 6,294 | ||||||||||||||||||
| Scripps share of Food Network before income tax |
19,492 | 11,871 | 64.2 | % | 62,638 | 45,226 | 38.5 | % | ||||||||||||||
| Net income effect to Scripps |
11,937 | 7,026 | 69.9 | % | 38,420 | 26,766 | 43.5 | % | ||||||||||||||
| Net income effect per share of diluted common stock |
$ | .07 | $ | .04 | 75.0 | % | $ | .23 | $ | .16 | 43.8 | % | ||||||||||
| DIY: |
||||||||||||||||||||||
| Operating revenues |
$ | 7,775 | $ | 4,997 | 55.6 | % | $ | 22,749 | $ | 13,426 | 69.4 | % | ||||||||||
| Contribution to segment profit (loss) |
(2,607 | ) | (2,510 | ) | (3.9 | )% | (6,831 | ) | (8,769 | ) | 22.1 | % | ||||||||||
| Net income (loss) effect |
(1,857 | ) | (1,796 | ) | (3.4 | )% | (4,898 | ) | (6,031 | ) | 18.8 | % | ||||||||||
| Net income (loss) effect per share of diluted common stock |
$ | (.01 | ) | $ | (.01 | ) | $ | (.03 | ) | $ | (.04 | ) | 25.0 | % | ||||||||
| Fine Living: |
||||||||||||||||||||||
| Operating revenues |
$ | 4,286 | $ | 1,973 | $ | 12,811 | $ | 4,794 | ||||||||||||||
| Contribution to segment profit (loss) |
(5,710 | ) | (6,309 | ) | 9.5 | % | (15,944 | ) | (19,992 | ) | 20.2 | % | ||||||||||
| Net income (loss) effect |
(3,729 | ) | (3,868 | ) | 3.6 | % | (10,785 | ) | (12,418 | ) | 13.2 | % | ||||||||||
| Net income (loss) effect per share of diluted common stock |
$ | (.02 | ) | $ | (.02 | ) | $ | (.07 | ) | $ | (.08 | ) | 12.5 | % | ||||||||
| THE E.W. SCRIPPS COMPANY | For more information: | |
| Unaudited Revenue and Statistical Summary |
Tim Stautberg | |
| Period: September |
The E.W. Scripps Company | |
| Report date: October 14, 2004 |
513-977-3826 |
| ( amounts in millions, unless otherwise noted ) |
September |
Year-to-date |
||||||||||||||||
| 2004 |
2003 |
% |
2004 |
2003 |
% |
|||||||||||||
| SEGMENT OPERATING REVENUES |
||||||||||||||||||
| Newspapers |
$ | 53.5 | $ | 53.2 | 0.5 | % | $ | 519.1 | $ | 509.4 | 1.9 | % | ||||||
| Scripps Networks |
61.8 | 42.6 | 45.0 | % | 519.1 | 380.0 | 36.6 | % | ||||||||||
| Broadcast Television |
29.6 | 27.2 | 8.7 | % | 243.7 | 221.3 | 10.1 | % | ||||||||||
| Shop At Home |
24.5 | 21.1 | 16.1 | % | 203.7 | 173.4 | 17.5 | % | ||||||||||
| Licensing and Other Media |
7.2 | 7.3 | (1.1 | )% | 75.1 | 76.4 | (1.8 | )% | ||||||||||
| TOTAL |
$ | 176.6 | $ | 151.4 | 16.6 | % | $ | 1,560.8 | $ | 1,360.5 | 14.7 | % | ||||||
| NEWSPAPERS |
||||||||||||||||||
| Operating Revenues |
||||||||||||||||||
| Local |
$ | 12.6 | $ | 12.5 | 1.4 | % | $ | 121.0 | $ | 120.9 | 0.1 | % | ||||||
| Classified |
16.0 | 16.7 | (4.4 | )% | 163.6 | 159.3 | 2.7 | % | ||||||||||
| National |
3.6 | 3.0 | 20.3 | % | 29.0 | 28.3 | 2.7 | % | ||||||||||
| Preprints and other |
10.3 | 9.3 | 9.7 | % | 95.4 | 89.3 | 6.8 | % | ||||||||||
| Newspaper advertising |
42.5 | 41.6 | 2.3 | % | 409.0 | 397.8 | 2.8 | % | ||||||||||
| Circulation |
9.6 | 10.4 | (7.5 | )% | 98.1 | 101.6 | (3.4 | )% | ||||||||||
| Other |
1.3 | 1.2 | 8.4 | % | 12.0 | 10.0 | 19.7 | % | ||||||||||
| Newspapers |
$ | 53.5 | $ | 53.2 | 0.5 | % | $ | 519.1 | $ | 509.4 | 1.9 | % | ||||||
| Ad inches (excluding JOAs) (in thousands) |
||||||||||||||||||
| Local |
544 | 532 | 2.1 | % | 5,237 | 5,254 | (0.3 | )% | ||||||||||
| Classified |
766 | 833 | (8.0 | )% | 7,881 | 7,914 | (0.4 | )% | ||||||||||
| National |
112 | 107 | 5.1 | % | 953 | 966 | (1.4 | )% | ||||||||||
| Full run ROP |
1,422 | 1,472 | (3.4 | )% | 14,071 | 14,133 | (0.4 | )% | ||||||||||
| Share of JOA operating profits (1) |
$ | 7.4 | $ | 5.7 | 30.6 | % | $ | 51.8 | $ | 53.9 | (3.8 | )% | ||||||
| SCRIPPS NETWORKS |
||||||||||||||||||
| Operating Revenues |
||||||||||||||||||
| Advertising |
$ | 46.2 | $ | 34.3 | 34.6 | % | $ | 408.0 | $ | 306.6 | 33.1 | % | ||||||
| Affiliate fees, net |
14.5 | 7.8 | 85.0 | % | 104.5 | 69.0 | 51.4 | % | ||||||||||
| Other |
1.1 | 0.4 | 145.7 | % | 6.6 | 4.4 | 48.6 | % | ||||||||||
| Scripps Networks |
$ | 61.8 | $ | 42.6 | 45.0 | % | $ | 519.1 | $ | 380.0 | 36.6 | % | ||||||
| Subscribers (2) |
||||||||||||||||||
| HGTV |
87.2 | 82.7 | 5.4 | % | ||||||||||||||
| Food Network |
85.5 | 81.6 | 4.8 | % | ||||||||||||||
| BROADCAST TELEVISION |
||||||||||||||||||
| Operating Revenues |
||||||||||||||||||
| Local |
$ | 14.8 | $ | 16.0 | (7.5 | )% | $ | 136.9 | $ | 135.1 | 1.4 | % | ||||||
| National |
8.7 | 9.0 | (4.3 | )% | 73.5 | 72.2 | 1.8 | % | ||||||||||
| Political |
4.2 | 0.5 | 20.5 | 2.0 | ||||||||||||||
| Other |
1.9 | 1.7 | 11.7 | % | 12.8 | 12.0 | 6.6 | % | ||||||||||
| Broadcast Television |
$ | 29.6 | $ | 27.2 | 8.7 | % | $ | 243.7 | $ | 221.3 | 10.1 | % | ||||||
| SHOP AT HOME |
||||||||||||||||||
| Operating Revenues |
||||||||||||||||||
| Shop At Home |
$ | 24.5 | $ | 21.1 | 16.1 | % | $ | 203.7 | $ | 173.4 | 17.5 | % | ||||||
| Avg. full-time equivalent homes |
52.3 | 44.3 | 18.1 | % | 49.3 | 46.7 | 5.6 | % | ||||||||||
| (1) | Excludes editorial costs. |
| (2) | Subscriber counts are according to the Nielsen Homevideo Index of homes that receive cable networks. |
| THE E.W. SCRIPPS COMPANY | For more information: | |
| Unaudited Revenue and Statistical Summary |
Tim Stautberg | |
| Period: September |
The E.W. Scripps Company | |
| Report date: October 14, 2004 |
513-977-3826 |
| ( amounts in millions, unless otherwise noted ) |
Third Quarter |
||||||||
| 2004 |
2003 |
% |
|||||||
| SEGMENT OPERATING REVENUES |
|||||||||
| Newspapers |
$ | 165.8 | $ | 163.9 | 1.2 | % | |||
| Scripps Networks |
167.5 | 121.5 | 37.8 | % | |||||
| Broadcast Television |
80.7 | 72.3 | 11.7 | % | |||||
| Shop At Home |
63.4 | 58.4 | 8.6 | % | |||||
| Licensing and Other Media |
22.3 | 24.4 | (8.3 | )% | |||||
| TOTAL |
$ | 499.8 | $ | 440.5 | 13.5 | % | |||
| NEWSPAPERS |
|||||||||
| Operating Revenues |
|||||||||
| Local |
$ | 37.8 | $ | 37.5 | 0.8 | % | |||
| Classified |
52.6 | 51.9 | 1.4 | % | |||||
| National |
9.7 | 9.5 | 3.0 | % | |||||
| Preprints and other |
31.2 | 29.3 | 6.3 | % | |||||
| Newspaper advertising |
131.3 | 128.2 | 2.5 | % | |||||
| Circulation |
30.8 | 32.3 | (4.8 | )% | |||||
| Other |
3.7 | 3.4 | 8.8 | % | |||||
| Newspapers |
$ | 165.8 | $ | 163.9 | 1.2 | % | |||
| Ad inches (excluding JOAs) (in thousands) |
|||||||||
| Local |
1,647 | 1,622 | 1.6 | % | |||||
| Classified |
2,564 | 2,638 | (2.8 | )% | |||||
| National |
305 | 309 | (1.3 | )% | |||||
| Full run ROP |
4,516 | 4,568 | (1.1 | )% | |||||
| Share of JOA operating profits (1) |
$ | 19.1 | $ | 18.0 | 6.1 | % | |||
| SCRIPPS NETWORKS |
|||||||||
| Operating Revenues |
|||||||||
| Advertising |
$ | 128.2 | $ | 96.6 | 32.6 | % | |||
| Affiliate fees, net |
37.1 | 23.5 | 57.8 | % | |||||
| Other |
2.3 | 1.4 | 62.3 | % | |||||
| Scripps Networks |
$ | 167.5 | $ | 121.5 | 37.8 | % | |||
| Subscribers (2) |
|||||||||
| HGTV |
87.2 | 82.7 | 5.4 | % | |||||
| Food Network |
85.5 | 81.6 | 4.8 | % | |||||
| BROADCAST TELEVISION |
|||||||||
| Operating Revenues |
|||||||||
| Local |
$ | 42.4 | $ | 43.6 | (2.7 | )% | |||
| National |
24.0 | 23.7 | 1.3 | % | |||||
| Political |
10.2 | 1.0 | |||||||
| Other |
4.1 | 4.0 | 2.9 | % | |||||
| Broadcast Television |
$ | 80.7 | $ | 72.3 | 11.7 | % | |||
| SHOP AT HOME |
|||||||||
| Operating Revenues |
|||||||||
| Shop At Home |
$ | 63.4 | $ | 58.4 | 8.6 | % | |||
| Avg. full-time equivalent homes |
51.2 | 45.6 | 12.3 | % | |||||
| (1) | Excludes editorial costs and proportionate share of JOA activities. |
| (2) | Subscriber counts are according to the Nielsen Homevideo Index of homes that receive cable networks. |