MoffettNathanson Downgrades Scripps Networks' Ad Projections

With the backdrop of its announced merger with Discovery Communications, Scripps Networks' U.S. advertising growth has been downgraded -- largely due to softening viewership -- by one analyst.

Michael Nathanson, senior research analyst at MoffettNathanson Research, now projects flat U.S. ad revenue results for Scripps in the third quarter (down from an earlier 4% projection), versus the same period a year ago, and a 2% rise for the full year (down from a 4% estimate).

Nathanson's concerns are twofold -- he cites softening viewership and reliance on a small handful of shows for each of its two big networks: Food Network and HGTV.

Some 26% of its total Nielsen C3 25-54 ratings -- year-to-date -- comes from “Diners, Drive Ins & Dives” and 21% comes from “Chopped.” For HGTV, 22% of its total rating points comes from “House Hunters,” 19% from “Fixer Upper” and 16% from “Property Brothers.”



Year-to-date, Food Network ratings are down 3% year among Nielsen's 25-54 viewers in the C3 metric. HGTV is off 10%.

Nathanson writes: “After many years of outrunning trends of the broader cable network sector, Scripps Network's ratings declined in January. Ratings bottomed out in July, right around when the merger was announced.”

Discovery Communications announced a proposed $11.9 billion merger for Scripps on July 31.

Looking forward, Nathanson estimates a 3% rise in advertising domestic revenue growth for Scripps Networks, to $2.13 billion in 2018.

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