"We believe strongly in the long-term viability of our local markets, the current economic environment notwithstanding," said Ken Lowe--who will soon relinquish duties overseeing those two areas--on a conference call to announce third-quarter results. "We believe there is great potential in the communities where we operate local media businesses, particularly in Florida and in California."
Scripps has a strong presence on Florida's West Coast, with the ABC affiliate in the growing Tampa DMA and the newspaper in nearby Naples. It also has the NBC station in West Palm Beach and newspapers nearby.
But a depressed housing market is hurting those properties, the company said, as it reported its third-quarter earnings.
Newspapers and the company's collection of TV stations will become part of a separate publicly traded company as soon as next April--while the cable networks such as HGTV, now in some 96 million homes, will form the core of a spun-off entity to be headed by Lowe. With plans in place for the split, the company is assembling transition teams.
In the third quarter, the cable networks accounted for 70% of segment profits.
Overall, third-quarter income rose 12% to $88 million. Revenue was less impressive, up only 2% to $596 million.
Revenue for the Scripps networks, which accounted for 48% of the company's total, increased 16% to $289 million. The company said it is benefiting from a scatter market that's 25% higher than a year ago at this time--and up 10% compared to the recent upfront, helped by a tightening in the broadcast market due to makegoods there.
Between 30% and 40% of ad dollars for the five networks--which also include Food Network and the smaller Fine Living, DIY and GAC--come from prime time.
Scripps is counting on online revenues to provide a boost over time to its soon-to-be Scripps Networks Interactive split-off company. Online ad dollars in the third quarter jumped 31% to $17 million.
The company said it reached a deal with Food Network personality Rachael Ray, allowing it to sell ad space on her Web site and share in the revenues. Food Network is also planning a marketing campaign touting its "In the Kitchen" programming block.