Scripps Networks Third-Quarter Earnings Beat Estimates

Kenneth Lowe - H 2015
AP Images

Kenneth Lowe - H 2015

U.S. advertising revenue for the owner of HGTV and Food Network rises 5.2 percent as CEO Ken Lowe and his team discuss ad trends and their approach to OTT services.

Lifestyle channels operator Scripps Networks Interactive on Monday reported better-than-expected third-quarter earnings.

The company, led by chairman, president and CEO Kenneth Lowe, posted earnings of $124.6 million, compared with $131.3 million in the year-ago period, but earnings per share rose from 93 cents to 96 cents. The latest earnings figure exceeded Wall Street estimates. Excluding the impact of currency fluctuations, transaction expenses and restructuring charges, earnings would have amounted to $137.6 million, or $1.06 per share.

The company, which operates such cable networks as HGTV, Food Network and Travel Channel, said its quarterly revenue rose 20.4 percent to $776.1 million, driven by an advertising revenue gain of 22.2 percent and affiliate fee growth of 13.5 percent. U.S. networks revenue increased 6.2 percent on a 5.2 percent ad gain and a 6.3 percent affiliate fee improvement.

After the end of the second quarter, Scripps closed its acquisition of a 52.7 percent stake in Polish network operator TVN and made a public tender offer to purchase the remaining outstanding shares, which it closed during the latest quarter. The deal contributed to its latest results.

"This has been a transformative quarter for Scripps Networks Interactive," said Lowe. "Our international business has been bolstered by the successful acquisition of Poland's leading multi-platform media company, TVN. Our networks continue to thrive in the United States, and their success is reflected in strong growth in both advertising and affiliate revenues."

He added: "With a strategy that enables us to create deeper connections with consumers across the world, we are focused on delivering long-term growth and enhanced shareholder value."

On the company's earnings conference call, management touted strong ad pricing and demand, saying third-quarter strength was carrying over into the fourth quarter. 

Asked about direct-to-consumers OTT services, Lowe said Scripps managers were "big believers" in the current ecosystem in the U.S., calling it the "best possible platform for us." But he acknowledged that there was more experimentation outside the U.S. market.

Management highlighted that its Polish unit TVN has been operating the TVN Player as a direct-to-consumer OTT product, which allows the company to learn about the space. The company also said it was exploring similar offers in some other international markets.