Scripps Networks scores healthy Q4


Scripps Networks InteractiveRevenues for the quarter increased 8.2% to $654 million from Q4 2012 on strong ad revenue of $450 million, up 8.8%, and affiliate fee revenue of $190 million, up 9.7% YOY. A decrease in international licensing fees offset the growth.

Costs of services and selling, general and administrative expenses for the quarter increased 13% from the prior-year period to $381 million. The increase was driven primarily by higher programming amortization and marketing expenses to drive viewership at all of the company’s lifestyle television networks, which include HGTV, Food Network, DIY Network, Cooking Channel, Travel Channel and Great American Country (GAC).

Total segment profit increased 2.8% to $273 million. Q4 net income was $109 million or $0.73 per diluted share, including a $0.17 per share write-down related to the company’s Travel Channel International business. Q4 2012 net income was $306 million, or $2.02, which was increased by net adjustments of $1.11 per diluted share.

For the full-year 2013, revenue was $2.5 billion, up 9.7% from the prior year. YOY ad revenue was up 9.8%, to $1.7 billion, and affiliate fee revenue was up 10%, to $758 million. Segment profit increased to $1.1 billion, up 5.9% from the prior year.

Full-year 2013 net income was $505 million, or $3.40 per diluted share, including the write-down noted in the fourth quarter. Full-year 2012 net income was $681 million, or $4.44 per diluted share, which included the fourth quarter net adjustments of $1.11 per diluted share.

“Our strong fourth-quarter and full-year operating results validate our success in attracting an engaged, upscale audience with our unique lifestyle content,” said Ken Lowe, Scripps Networks Interactive CEO. “We create long-term value for our shareholders by building iconic lifestyle brands, a fact that’s borne out in the company’s long and successful track record.”

Lifestyle media revenues Q4 increased 7.6% to $629 million driven by advertising and affiliate fee revenue growth. Total advertising revenue for the lifestyle media segment grew 7.1% to $439 million. Affiliate fee revenue grew 9.0% to $182 million due to higher rates, a reduction of launch fee amortization and the benefit of online video distribution deals.

Lifestyle media segment profit increased 5.2% to $302 million reflecting the revenue growth, partially offset by higher program amortization and marketing expense.

On 2/14, Scripps Networks Interactive’s board has authorized an additional $1 billion for its share repurchase program. The prior share repurchase authorization had $647 million remaining as of 12/31/13. The board also has increased its quarterly dividend rate and declared a quarterly dividend of 20 cents per share up from 15 cents. This dividend will be payable on 3/10/14, to shareholders of record at the close of business on 2/28/14.

Here’s their 2014 outlook:

–Total revenue is expected to increase between 6% and 8%.

–Cost of services are expected to increase between 11% and 13%.

–Selling, general and administrative expenses are expected to be between flat and up 2%.

–Depreciation and amortization, between $120 million and $130 million.