The improved Lifestyle Media results, however, were offset by lower revenues at Shopzilla and uSwitch, the online comparison shopping brands that comprise the company's Interactive Services business segment.
The Lifestyle Media segment includes HGTV, Food Network, DIY Network, Fine Living Network, Great American Country and SN Digital, the segment's growing portfolio of online lifestyle content businesses.
Total company revenue for Scripps Networks Interactive for the three-month
period ending
The company recorded a net loss during the fourth quarter of
Excluding these non-cash impairment charges, the company's consolidated
net income for the fourth quarter 2008 was
Consolidated net income for the fourth quarter includes the effect of a
In 2007, the company recorded a non-cash charge of
For comparison purposes, prior-year results include an estimated
allocation of Scripps Networks Interactive's corporate expenses paid by
The
During the fourth quarter 2008, financial performance at the company's
Lifestyle Media segment was favorably affected by growth in advertising sales,
strong viewership trends, particularly at Food Network and DIY Network, and
growth in affiliate fee revenue. Lifestyle Media revenue grew 7.0 percent
during the fourth quarter to
Revenue from the Lifestyle Media segment's SN Digital interactive
businesses grew 12 percent during the fourth quarter to
Revenue from the company's Interactive Services business segment was
"Led by HGTV and Food Network, the company had a very good fourth quarter,
especially when considering the strong macro-economic headwinds we were
facing," said
"All of our television networks grew during the three-month period, as we were able to leverage the unique, engaged and growing audiences each brand aggregates," Lowe said. "Strong double-digit revenue growth at our newer networks demonstrates the success we're having establishing these valuable brands. And at SN Digital, we finished the year on a definite high note with double-digit revenue growth. Our resolve to be the leading provider of food and shelter lifestyle content on any and all media platforms clearly is gaining momentum.
"At our Interactive Services businesses, fourth quarter results reflect the weakening economy, particularly as it relates to the exposure Shopzilla has to the challenging retail spending environment and changing competitive forces within the online comparison shopping marketplace." Lowe said. "Interactive Services results also were affected by lower energy switching activity at uSwitch during the fourth quarter, which followed an extended period of robust switching during the first three quarters of the year. Going forward, we expect operating results at our Interactive Services segment to remain under pressure as we execute our competitive repositioning of Shopzilla."
Here are fourth-quarter results by operating segment:
Lifestyle Media
Lifestyle Media advertising revenue increased 3.3 percent to
Programming expenses increased 9.7 percent to
Lifestyle Media segment profit was
Operating revenue at HGTV was up 4.2 percent to
Food Network operating revenue increased 5.1 percent to
Revenue at DIY Network was
Fine Living Network revenue increased 16 percent to
Revenue at Great American Country was
Revenue from the Lifestyle Media segment's interactive businesses
(SN Digital) grew 12 percent to
Interactive Services
Interactive Services revenue was
Segment profit was
Full-year results
Consolidated operating revenue in 2008 grew 10 percent to
Excluding non-cash charges, the company's consolidated net income for the
full-year 2008 was
Including the effects of non-cash charges, 2008 consolidated net income
was
Following are full-year results by operating segment:
Total Lifestyle Media revenue increased 11 percent to
Total Interactive Services revenue increased 8.6 percent to
Total company capital expenditures were
Conference call
The senior management team of Scripps Networks Interactive will discuss
the company's fourth quarter results during a telephone conference call at
To access the conference call by telephone, dial 1-800-230-1951 (U.S.) or 612-332-0530 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, "fourth quarter earnings report," to be granted access. Callers also will be asked to provide their name and company affiliation. The media and general public are granted access to the conference call on a listen-only basis.
A replay line will be open from
Forward-looking statements
This press release contains certain forward-looking statements related to
the company's businesses that are based on management's current expectations.
Forward-looking statements are subject to certain risks, trends and
uncertainties, including changes in advertising demand and other economic
conditions that could cause actual results to differ materially from the
expectations expressed in forward-looking statements. All forward-looking
statements should be evaluated with the understanding of their inherent
uncertainty. The company's written policy on forward-looking statements can be
found on page 23 of its Form 10 information statement that was filed
The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.
About Scripps Networks Interactive
SCRIPPS NETWORKS INTERACTIVE, INC.
CONSOLIDATED AND COMBINED BALANCE SHEETS
(unaudited)
(in thousands, except per share data)
As of December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $9,970 $12,532
Short-term investments 2,703
Accounts and notes receivable
(less allowances - 2008, $5,480 ;
2007, $3,945) 372,736 364,824
Programs and program licenses 238,319 212,868
Other current assets 14,296 12,533
Total current assets 638,024 602,757
Investments 40,279 38,444
Property, plant and equipment, net 201,512 173,255
Goodwill and other intangible assets:
Goodwill 424,213 665,154
Other intangible assets, net 110,810 129,385
Total goodwill and other intangible assets, net 535,023 794,539
Other assets:
Programs and program licenses
(less current portion) 235,967 261,607
Unamortized network distribution incentives 107,796 135,367
Other non-current assets 14,607 11,858
Total other assets 358,370 408,832
Total Assets $1,773,208 $2,017,827
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,960 $8,010
Program rights payable 15,240 16,555
Customer deposits and unearned revenue 11,045 15,018
Accrued liabilities:
Employee compensation and benefits 35,451 28,780
Accrued marketing and advertising costs 18,671 17,587
Other accrued liabilities 70,927 58,630
Total current liabilities 166,294 144,580
Deferred income taxes 140,735 115,474
Long-term debt (less current portion) 80,000 503,361
Other liabilities (less current portion) 104,239 102,626
Total liabilities 491,268 866,041
Minority interests 146,733 138,498
Shareholders' equity:
Preferred stock, $.01 par - authorized:
25,000,000 shares; none outstanding
Common stock, $.01 par:
Class A - authorized: 240,000,000 shares;
issued and outstanding: 127,184,107 shares
for 2008; 1,272
Voting - authorized: 60,000,000 shares;
issued and outstanding: 36,568,226
shares for 2008 366
Total 1,638
Additional paid-in capital 1,222,856
Retained earnings (deficit) (120,774)
Parent company's net investment 971,889
Accumulated other comprehensive income 31,487 41,399
Total shareholders' equity 1,135,207 1,013,288
Total Liabilities and Shareholders' Equity $1,773,208 $2,017,827
SCRIPPS NETWORKS INTERACTIVE, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Three months ended
December 31,
2008 2007 Change
Operating revenues $411,520 $397,717 3.5 %
Costs and expenses (230,638) (210,785) 9.4 %
Depreciation and amortization of
intangible assets (19,335) (21,950) (11.9)%
Write-down of goodwill and intangible
assets (243,700) (411,006)
Gains (losses) on disposal of PP&E 47 (55)
Operating income (loss) (82,106) (246,079) (66.6)%
Interest expense (898) (7,662) (88.3)%
Equity in earnings of affiliates 1,321 5,468 (75.8)%
Gains (losses) on repurchases of debt
Miscellaneous, net 1,636 520
Income (loss) from continuing operations
before income taxes and minority interest (80,047) (247,753) (67.7)%
Provision for income taxes (47,130) (25,059) 88.1 %
Income (loss) from continuing operations
before minority interest (127,177) (272,812) (53.4)%
Minority interest (26,370) (25,725) 2.5 %
Income (loss) from continuing operations (153,547) (298,537) (48.6)%
Income (loss) from discontinued operations
net of tax (262)
Net income (loss) $(153,547) $(298,799) (48.6)%
Net income (loss) per diluted share of
common stock (1):
Income (loss) from continuing operations $(0.94) $(1.83)
Income (loss) from discontinued
operations 0.00 (0.00)
Net income (loss) per diluted share of
common stock $(0.94) $(1.83)
Weighted average basic shares
outstanding (1) 163,338 163,466
Weighted average diluted shares
outstanding (1) 163,338 163,466
Twelve months ended
December 31,
2008 2007 Change
Operating revenues $1,590,637 $1,441,265 10.4 %
Costs and expenses (940,070) (849,109) 10.7 %
Depreciation and amortization of
intangible assets (73,937) (86,694) (14.7)%
Write-down of goodwill and intangible
assets (243,700) (411,006)
Gains (losses) on disposal of PP&E (788) (687) 14.7 %
Operating income (loss) 332,142 93,769
Interest expense (14,207) (36,770) (61.4)%
Equity in earnings of affiliates 15,498 17,603 (12.0)%
Gains (losses) on repurchases of debt (26,380) 1,245
Miscellaneous, net 2,266 2,706 (16.3)%
Income (loss) from continuing operations
before income taxes and minority interest 309,319 78,553
Provision for income taxes (193,371) (126,387) 53.0 %
Income (loss) from continuing operations
before minority interest 115,948 (47,834)
Minority interest (92,391) (82,534) 11.9 %
Income (loss) from continuing operations 23,557 (130,368)
Income (loss) from discontinued
operations, net of tax 3,961
Net income (loss) $23,557 $(126,407)
Net income (loss) per diluted share of
common stock (1):
Income (loss) from continuing
operations $0.14 $(0.80)
Income (loss) from discontinued
operations 0.00 0.02
Net income (loss) per diluted share of
common stock $0.14 $(0.77)
Weighted average basic shares
outstanding (1) 163,245 163,466
Weighted average diluted shares
outstanding (1) 164,131 163,466
For comparison purposes, first half 2008 and year-to-date and fourth
quarter 2007 results include estimates of Scripps Networks Interactive's
portion of The E. W. Scripps Company's corporate expenses for those
periods. Such estimates are not representative of our costs as a
stand-alone company.
(1) For the quarter and year-to-date periods of 2007, diluted EPS was
computed using the number of common shares outstanding on the
spin-off-date.
Net income per share amounts may not foot since each is calculated
independently.
See notes to results of operations.
Notes to Results of Operations
1. OTHER CHARGES AND CREDITS
Net income was affected by the following:
Write-down of goodwill and other intangible assets
In accordance with Financial Accounting Standards ("FAS") 142 and FAS 144, we perform annual impairment tests on Goodwill and also perform impairment tests on other long-lived assets whenever events or circumstances indicate the carrying amounts of the assets may not be recoverable. An impairment charge is recorded when the fair value of an asset is below its carrying value.
Our fourth quarter 2008 operating results include a write-down of
Shopzilla goodwill that reduced net income
During 2007, falling energy prices in the
Separation costs
As a result of the distribution of
In the second quarter of 2008,
Other costs incurred in connection with the separation of the Company from
Income tax adjustments
In the fourth quarter of 2007, we changed our estimate of the realizable
value of certain uSwitch tax benefits recorded in prior periods. Net income
was reduced by
2. SEGMENT INFORMATION
We determine our business segments based upon our management and internal reporting structure. Our reportable segments are strategic businesses that offer different products and services.
Lifestyle Media includes five national television networks, Internet
businesses and other electronic content services primarily in the
Interactive Services includes our online comparison shopping services,
Shopzilla, BizRate and uSwitch. Shopzilla and BizRate are product comparison
shopping services that help consumers find products offered for sale on the
Web by online retailers. Shopzilla and BizRate also operate a Web-based
consumer feedback network which collects millions of consumer reviews of
stores and products each year. uSwitch operates an online comparison service
that helps consumers compare prices and arrange for the purchase of a range of
essential home services including gas, electricity, home phone, broadband
providers and personal finance products, primarily in the
Our chief operating decision maker (as defined by FAS 131, "Segment
Reporting") evaluates the operating performance of our business segments using
a measure we call segment profit. Segment profit excludes interest, income
taxes, depreciation and amortization, divested operating units, restructuring
activities, investment results and certain other items that are included in
net income determined in accordance with accounting principles generally
accepted in the
Items excluded from segment profit generally result from decisions made in prior periods or from decisions made by corporate executives rather than the managers of the business segments. Depreciation and amortization charges are the result of decisions made in prior periods regarding the allocation of resources and are therefore excluded from the measure. Financing, tax structure and divestiture decisions are generally made by corporate executives. Excluding these items from our business segment performance measure enables us to evaluate business segment operating performance for the current period based upon current economic conditions and decisions made by the managers of those business segments in the current period.
Information regarding the operating performance of our business segments
determined in accordance with FAS 131 and reconciliation to our results of
operations is as follows:
(in thousands)
Three months ended
December 31,
2008 2007 Change
Segment operating revenues:
Lifestyle Media $340,254 $317,898 7.0 %
Interactive Services 71,435 79,819 (10.5)%
Corporate
Intersegment eliminations (169)
Total operating revenues $411,520 $397,717 3.5 %
Segment profit (loss):
Lifestyle Media $176,271 $175,000 0.7 %
Interactive Services 18,871 24,680 (23.5)%
Corporate (12,939) (7,280) 77.7 %
Depreciation and amortization of
intangibles (19,335) (21,950) (11.9)%
Write-down of goodwill and intangible
assets (243,700) (411,006)
Gains (losses) on disposal of PP&E 47 (55)
Interest expense (898) (7,662) (88.3)%
Gains (losses) on repurchases of debt
Miscellaneous, net 1,636 520
Income (loss) from continuing
operations before income taxes and
minority interests $(80,047) $(247,753) (67.7)%
Twelve months ended
December 31,
2008 2007 Change
Segment operating revenues:
Lifestyle Media $1,312,313 $1,184,901 10.8 %
Interactive Services 278,407 256,364 8.6 %
Corporate 86
Intersegment eliminations (169)
Total operating revenues $1,590,637 $1,441,265 10.4 %
Segment profit (loss):
Lifestyle Media $647,557 $605,014 7.0 %
Interactive Services 67,686 39,751 70.3 %
Corporate (49,178) (35,006) 40.5 %
Depreciation and amortization of
intangibles (73,937) (86,694) (14.7)%
Write-down of goodwill and intangible
assets (243,700) (411,006)
Gains (losses) on disposal of PP&E (788) (687) 14.7 %
Interest expense (14,207) (36,770) (61.4)%
Gains (losses) on repurchases of debt (26,380) 1,245
Miscellaneous, net 2,266 2,706 (16.3)%
Income (loss) from continuing
operations before
income taxes and minority interests $309,319 $78,553
Certain items required to reconcile segment profitability to consolidated
results of operations determined in accordance with accounting principles
generally accepted in the
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
(in thousands)
Depreciation:
Lifestyle Media $6,399 $5,399 $24,330 $19,923
Interactive Services 6,972 6,104 26,738 20,323
Corporate 90 320 259 1,002
Total depreciation $13,461 $11,823 $51,327 $41,248
Amortization of intangibles:
Lifestyle Media $1,270 $824 $3,979 $3,269
Interactive Services 4,604 9,303 18,631 42,177
Total amortization of
intangibles $5,874 $10,127 $22,610 $45,446
Losses (gains) on disposal of
PP&E:
Lifestyle Media $(43) $103 $721 $172
Interactive Services (3) (36) (3) 516
Corporate (1) (12) 70 (1)
Losses (gains) on disposal of
PP&E $(47) $55 $788 $687
Write-down of goodwill and
intangible assets $243,700 $411,006 $243,700 $411,006
3. SUPPLEMENTAL FINANCIAL INFORMATION
Our Lifestyle Media division earns revenue primarily from the sale of advertising time in our national television networks' programming, affiliate fees paid by cable and satellite television operators that carry our network programming, the licensing of its content to third parties, the licensing of its brands for consumer products such as books and kitchenware, and from the sale of advertising on our Lifestyle Media affiliated Web sites (SN Digital).
Supplemental information for Lifestyle Media is as follows:
(in thousands)
Three months ended
December 31,
2008 2007 Change
Operating revenues by brand:
HGTV $148,846 $142,866 4.2 %
Food Network 127,555 121,382 5.1 %
DIY 16,667 12,991 28.3 %
Fine Living 12,827 11,085 15.7 %
GAC 7,087 6,133 15.6 %
SN Digital 25,048 22,312 12.3 %
Other/intersegment eliminations 2,224 1,129 97.0 %
Operating revenues by type:
Advertising $263,060 $254,543 3.3 %
Affiliate fees, net 70,379 58,297 20.7 %
Other 6,815 5,058 34.7 %
Subscribers (1):
HGTV
Food Network
DIY
Fine Living
GAC
Twelve months ended
December 31,
2008 2007 Change
Operating revenues by brand:
HGTV $596,584 $549,641 8.5 %
Food Network 485,914 436,354 11.4 %
DIY 64,005 48,879 30.9 %
Fine Living 52,464 43,061 21.8 %
GAC 25,175 24,496 2.8 %
SN Digital 81,894 75,410 8.6 %
Other/intersegment eliminations 6,277 7,060 (11.1)%
Operating revenues by type:
Advertising $1,005,330 $928,221 8.3 %
Affiliate fees, net 277,370 235,248 17.9 %
Other 29,613 21,432 38.2 %
Subscribers (1):
HGTV 97,700 95,800 2.0 %
Food Network 97,900 95,800 2.2 %
DIY 49,400 46,900 5.3 %
Fine Living 53,900 49,900 8.0 %
GAC 55,100 53,100 3.8 %
(1) Subscriber counts are according to the Nielsen Homevideo Index of
homes that receive cable networks, with the exception of Fine Living
which is not yet rated by Nielsen and represent comparable amounts
estimated by us.
SOURCE
CONTACT: