Shopzilla Till You Drop: Scripps Reports Earnings Down
- by Gavin O'Malley @mp_gavin, August 6, 2009
The company attributed the decline to weak demand and an unfavorable sponsored-link revenue-sharing agreement with Google as profit fell 43% on continued moves to scale back the business to match market conditions. The company is just now beginning to see the continuing effects of a repositioning of Shopzilla, the company's online comparison shopping business.
"We're beginning to see positive results from the strategic repositioning of the business that we initiated to make it more competitive and sustainable," said Kenneth Lowe, chairman, president and CEO of Scripps Networks Interactive.
Revenue from the company's Interactive Services business segment, which includes online comparison shopping services Shopzilla and BizRate, was $40.8 million during the second quarter compared with $57.2 million during the same period in 2008.
Demonstrating the positive effects of Shopzilla's repositioning, leads to the site's merchant partners in the quarter grew 14% year-over-year. This qualified lead volume metric is notable because it measures the value Shopzilla is delivering to its direct merchant partners, as well as the level of engagement that consumers are having with the core content on its branded comparison shopping Web sites at BizRate.com and Shopzilla.com.
uSwitch results were reported as discontinued operations as the company announced during the quarter that it is seeking a buyer for the energy-switching subsidiary.
Interactive Services expenses declined 24% during the second quarter as the company continued to scale the business to match market conditions.
The Interactive Services segment profit was $7.3 million in the second quarter compared with $12.9 million during the same period a year earlier. The company expects Shopzilla segment profit to be above $30 million for the full year.
Consolidated revenue for the quarter decreased 3.7% year-over-year to $391 million, with total revenue from the company's Lifestyle Media business segment up slightly for the period compared with last year. Consolidated second-quarter expenses decreased 1.1% year-over-year.
Consolidated second-quarter net income attributable to Scripps Networks Interactive was $79.5 million, or 48 cents per share, compared with $53.3 million, or 33 cents, in second-quarter 2008. Net income reported for the second quarter 2008 included a charge of $26.4 million, or 16 cents per share, that was related to the company's spin-off from the E. W. Scripps Company in July of last year.
Because the company was not operated independently from its former parent before July 1, 2008, prior-year net income for the period included an estimate of corporate expenses.
Overall, consolidated segment profit for the company during the second quarter was $166 million compared with $179 million in the prior-year period. The company generated $82.4 million in cash from continuing operating activities and $42.3 million in free cash flow during the three-month period.
From the company's Lifestyle Media business segment, which includes HGTV and Food Network, total revenue for the period was $351 million, up slightly from $349 million in the prior-year quarter.
