New CEO Rich Boehne sees long-term opportunities to increase the value of the old media assets at the E.W. Scripps Company. The company yesterday reported its Q2 results, combined for the last time with the Scripps Network Interactive (SNI) businesses spun-off as Q3 began. Revenues were up for the recently departed units, but down for both newspapers and television.
Q3 is looking better, with TV revenues expected to increase 15-17% over a year ago, but only because of political advertising. Otherwise, the quarter is expected to be a lot like Q2, when local was down 7% and national 7.6%. Newspaper revenues were down 13% in Q2 and Q3 is said to look much the same. Meanwhile, the spun-off SNI is projecting that its cable networks will enjoy 5-7% growth, down from double digits in Q2.
Boehne said he didn’t foresee the severity of challenges facing his local media businesses, but that the current environment proved the wisdom of decoupling the national and local media businesses. With its concentration on growth markets (once the real estate crisis passes) and low debt, Boehne said Scripps is in a good position to play offense in its newspaper and TV markets while other companies are retrenching. “Don’t get me wrong, the next few years are going to be bumpy and uncomfortable as these markets adjust and as we shift resources and carefully allocate our capital for the best long-term return,” he said.
For Q2, Scripps saw TV revenues decline 4% to $80.5 million. Local was down 7% and national 7.6%, while political jumped to $1.6 million from $400K. The company is projecting that Q3 revenues will shoot up 15-17%, but all due to political. Local and national results are expected to be in line with Q2.
Newspaper results in Q3 are also expected to look a lot like Q2, but with no political boost to change the overall total. Q3 newspaper revenues declined 13% to $144 million. Ad revenues at newspapers managed solely by Scripps fell 15% to $112 million. Local fell 13%, national 20% and classified 21%.
Former E.W. Scripps CEO Ken Lowe was also on the call in his new role as CEO of Scripps Interactive Networks – the last time the two companies will report results jointly. He insisted that the spin-off was not done so that the red-hot cable networks could then be bought out by a media giant. “They’re not for sale,” he said, but noted that there was nothing he could do to stop rumors from circulating.
Citing the “glut” of competing inventory in Q3 from NBC Universal’s multi-platform Olympics telecasts, SNI is projecting that total revenues from its cable nets will be up only 5-7%, although the company is sticking with its projection that full-year revenues will grow 8-10%.
Q3 ad revenues for Scripps Networks increased 11% to $271 million while affiliate fees grew 19% to $69.7 million. Interactive Media revenues increased 13.4% to $66.9 million.