Scripps Networks Profit Rises 38% on Ad, Fee Gains
NEW YORK - Scripps Networks Interactive, the company behind HGTV and Food Network, on Thursday reported a higher fourth-quarter profit as revenue rose amid increased advertising and affiliate fees.
But the company's stock declined in early trading as some analysts had projected higher ad sales. Scripps shares were down 4.7 percent early in the day before recovering and closing down 1 percent at $49.87.
Ratings at HGTV and Food Network have been challenged as of late after growth in the past, which has led to some downgrades from Wall Street analysts.
Executives on a conference call with analysts on Thursday acknowledged that strong NFL ratings have affected Food Network viewership more than in the past, saying they will continue to track that situation.
But chairman, president and CEO Ken Lowe vowed: "We'll be unveiling a wealth of exciting new programming ideas and concepts across all of our networks that we believe will further define and secure our competitive advantage as a leader in lifestyle programming."
Management mentioned that HGTV will add more than a dozen new personalities in 2011 and mentioned such new shows as an LA version of Selling New York and makeover show HGTV'd, while House Hunters On Vacation will be a limited-run spin-off of the hit franchise.
Executives also mentioned that the Food Network will this year feature such shows as Restaurant: Impossible, Tough Cookies and Chocolate Nuts.
Management also said that ratings for HGTV and Food early in 2011 are down over the year-ago period, but up from late in 2010 and predicted further upwards momentum. Scatter ad prices are up in the mid to high teens percentages over 2010 or up in the mid-20s percentage range over last year's upfront.
Lowe said that despite competition from cooking shows on other networks, his team doesn't see a reason to doubt further growth upside for his company.
Scripps predicted its lifestyle networks will grow revenue by 10 percent-12 percent this year, ahead of Swinburne's estimate.
Scripps posted a quarterly profit of $130.6 million, up 38 percent compared with $94.4 million in the same period a year earlier. Both periods included some one-time items.
Revenue rose 33 percent to $573 million. Excluding Travel Channel, which Scripps acquired in Dec. 2009, revenue rose 20 percent.
Advertising revenue increased 23 percent, or 11 percent when excluding Travel Channel. The firm's lifestyle networks grew ad revenue 10 percent on that basis. Affiliate fee revenue jumped 61 percent, or 39 percent when excluding Travel Channel.
Morgan Stanley analyst Benjamin Swinburne said that he had been looking for ad growh of 13.4 percent excluding Travel Channel, arguing that "rating declines limited monetization of a robust scatter market."