• by David Goetzl  @dgoetzl, July 25, 2007

Even as Scripps' cable properties continue to show growth, company CEO Ken Lowe said Tuesday that maintaining a double-digit pace would be a challenge going forward. Still, the network portfolio led by HGTV and Food Network is expected to continue the trend--albeit barely--with a 10% increase this year, executives said.

Growth at the two networks had been propelled in part by distribution expansion and the resulting ratings boost, but now both are just about fully distributed.

Lowe said it is becoming "increasingly difficult to maintain" the double-digit annual revenue growth, and HGTV and Food are "are in some ways burdened by their tremendous success."

He made his comments in a conference call to discuss second-quarter results, where the network group posted ad revenues up 4.8% to $245 million. A year ago, the growth rate was higher (15%) but volume lower ($233 million).

CFO Joe NeCastro described the second quarter as "mixed." He said the growth rate ebbed at the cable networks--which also include DIY, Fine Living and GAC--due to softness in daytime ratings at HGTV and Food Network. But "we reacted quickly" with programming alterations.

To look for new revenue streams, the company is bulking up its interactive operations affiliated with each network's Web operations, and online revenue jumped 26% to $19.4 million in the quarter.

Going forward, Scripps is still wrapping its upfront business, but executives expressed optimism that its haul would yield a volume gain over a year ago, even with the new so-called "C3" commercial ratings covering three days of DVR use. Under the new currency, Scripps loses about 5% to 6% of impressions, but CPM increases should allow for unit prices to stabilize and perhaps increase, the executives indicated.

Regardless of the upfront results, executives said they expected to do well in the scatter market over the next 12 months, partly because in the most recent quarter at HGTV and Food, pricing was 25% higher than the 2006 upfront market.

Overall at Scripps, a 130-year company that has been transformed largely by the two leading cable networks, the newspaper business is its "most challenging" operation, Lowe said. Revenues fell from $182 million a year ago to $166 million, and profit dropped considerably, in line with industry trends.

Also, Lowe said e-commerce businesses are experiencing some "growing pains." Revenue at Shopzilla and uSwitch came in at $59 million, down from $65 million last year.

But Lowe said the cable-propelled spirit that helped reinvent the company will continue, saying it "can't evolve as a media enterprise if we're timid or weak at heart."