Scripps Outlook: Newspapers Flat, Cable, Broadband Soar

Only weeks after indicating it could benefit from divesting its slow-growth newspaper business, E.W. Scripps seemingly reversed course. On Tuesday, via a read-my-lips-style declaration, it announced its print business is here to stay. While newspapers--per fourth-quarter earnings--were flat, cable saw gains.

"Let me be as clear as I can be: There is no plan to spin off, separate or sell the Scripps newspaper division," said CEO Ken Lowe.

Lowe said management has conducted a thorough evaluation of options for the business, described as standard operating procedure for all its units, and concluded no reshuffling of the newspaper division is imminent. He said the company will monitor the results of the Tribune auction process as an industry barometer, but will continue to take a "long-term view to creating value for company shareholders" and focus on grabbing more ad dollars in its print markets.

Lowe's Tuesday denial on a conference call to discuss fourth-quarter results appeared to contrast with comments made at an investor conference earlier this month, where an executive insinuated the company would look to shed its 18 newspapers in markets such as Denver and Memphis.



"Clearly, the most advantageous route would be separating the newspaper business from the rest of the business," said Joe NeCastro, executive vice president-finance and administration, at the event.

In the just-completed fourth-quarter, ad revenue at newspapers managed solely by Scripps was flat, versus the same period in 2005.

As usual, that contrasted sharply with results for the company's cable networks, which include HGTV and Food Network. There, double-digit gains continued, with ad revenue up 11% to $224 million in the quarter versus a year ago.

Overall, revenue for the networks for the full-year 2006 surpassed $1 billion for the first time in the cable group's 12-year history, Lowe said.

Scripps executives were bullish on the networks' related broadband channels propelling growth in the coming year. In the fourth quarter, network Web sites brought in $21 million in revenue, a 90% jump over a year ago.

Executives said advertisers are attracted to targeted Internet video focusing on categories affiliated with HGTV and DIY network, such as kitchen design and woodworking. And the costs for operating the channels is low, since the video is already produced for the linear channels.

CPMs for the broadband outlets are in the $30-$35 range, versus $15-$18 for a more traditional Internet banner or other presence. In total, fourth-quarter revenue for EW Scripps grew 11% to $683 million. (A slightly lower percentage if recently acquired online shopping site uSwitch were included.)

For the company's local TV stations, a strong political ad climate sent revenue up 25% to $112 million in the quarter versus a year ago. Political ad dollars were $28.9 million versus $2.5 million in 2005.

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