• by Dana Blankenhorn , April 13, 2003

Positive results from E.W. Scripps highlight a down quarter for the industry as a whole, and point the way to a greater use of newspaper assets as cash cows.

Scripps earned $52.7 million for the quarter, up 32% from a year ago. But in a news release announcing the results, President and CEO Kenneth W. Lowe emphasized profits from its cable networks, like Food Network.

Other newspaper companies did worse. Pulitzer missed its earnings target, as did Belo, Gannett, and The New York Times. All blamed the war with Iraq for slower ad sales.

This is a long-term industry problem, however, said Scripps spokesman Tim Stautberg. In 2002 its newspapers "were down 3% in the first quarter, down a little in the second, up a little in the third, up maybe 3% in the fourth. Here in the first we're up 2-3%"

Cable programming, on the other hand, has delivered solid returns. "We've nearly doubled in terms of market cap since 1997," said Stautberg. "We bought a controlling interest in Food Network in 1997, then invested in it. It was in 28 million homes and today it's 78 million."

That success has been repeated with HGTV, and the company has equally high hopes for DIY, launched in 1999 and Fine Living, launched last year, Stautberg said.

The Scripps example is especially important right now given the coming FCC decision on media ownership rules, expected in June. FCC chairman Michael Powell has predicted those rules will be liberalized, allowing newspapers to buy TV stations in their home markets, and vice versa.

"I'm concerned that some of the good intentions of the rule might have contributed to making it more difficult for newspapers," said Commissioner Kenneth Martin, considered a swing vote on the FCC, at the NAB convention in Las Vegas. Robert Pepper, chief of plans and policy for the FCC, told the AAAA in New Orleans last month the agency must now justify any ownership rules in order to keep them. At its last review of the rules, the burden fell on opponents. Pepper said evidence shows some rise in local ad rates from media consolidation, but no impact on national rates, so that those limits might have to be eased.