CINCINNATI - Scripps Networks Interactive Inc. (NYSE: SNI) today reported operating results for the first quarter 2010.

Results for the three-month period ended March 31 reflect strong, double-digit growth in advertising and affiliate fee revenue at the company's Lifestyle Media business segment, which includes HGTV, Food Network and Travel Channel.

Consolidated revenue for the quarter increased 32 percent to $469 million from the prior-year period. Excluding Travel Channel, which was acquired Dec. 15, 2009, the company's consolidated revenue increased 16 percent to $411 million year-over-year.

Total revenue from the company's Lifestyle Media business segment was $429 million, up 38 percent from the first-quarter 2009. Excluding Travel Channel, Lifestyle Media total revenue was $371 million, up 20 percent year-over-year.

Consolidated expenses for the quarter increased 36 percent from the prior-year period to $294 million. The increase in expenses included:

• $15.5 million in transition costs related to the Travel Channel acquisition and integration.
• $11.0 million in marketing and legal expenses to support the company's affiliate renewal negotiations for Food Network and HGTV.

Excluding these items and a one-time, spin-off related item in the prior-year period, consolidated expenses were up 26 percent year-over-year. The increase in expenses is attributable to the addition of the Travel Channel and the restoration of marketing budgets to support brand-building initiatives at all of the company's television networks. The company had significantly held back marketing expenses in 2009 in response to the economic recession and its anticipated negative effect on advertising sales.

First-quarter net income attributable to Scripps Networks Interactive was $72.5 million, or 43 cents per share, compared with $60.1 million, or 37 cents per share, in the first-quarter 2009. Excluding one-time expense items, first-quarter 2010 earnings per share would have been 50 cents.

Total segment profit for the company was up 26 percent to $175 million in the first quarter compared with $139 million in the prior-year period. (See Note 2 for a definition of segment profit). Excluding one-time expense items, total segment profit was $202 million compared with $143 million in the prior-year quarter.

"Scripps Networks Interactive had an exceptionally good first quarter thanks to the healthier advertising marketplace, solid audience growth at our three flagship television networks and a strong, double-digit increase in affiliate revenues," said Kenneth W. Lowe, chairman, president and chief executive officer of Scripps Networks Interactive. "The ever-rising popularity of HGTV, Food Network and Travel Channel contributed significantly to our solid financial results for the first three months of the year."

"We're also making good progress executing our strategic plan for 2010, which includes fully integrating Travel Channel, the debut of the new Cooking Channel during Memorial Day weekend and exporting our powerful brands across the globe," Lowe said. "Based on what we're experiencing in the early going, 2010 is shaping up very positively for the company and its shareholders."

Here are first-quarter results by operating segment:

Lifestyle Media

Lifestyle Media revenue was $429 million, up 38 percent. Affiliate fee revenue grew 72 percent to $136 million. Advertising revenue was $287 million, up 28 percent. Excluding Travel Channel, affiliate revenue increased 40 percent and advertising revenue was up 14 percent.

Total expenses increased 47 percent to $242 million.

Non-programming costs increased 64 percent to $153 million, due to:

• The addition of Travel Channel operating results.
• Non-recurring Travel transition costs.
• Marketing and legal expenditures to support the company's affiliate renewal process
• And the restoration of marketing budgets to support brand-building initiatives at all of the company's television networks.

Excluding one-time expense items, non programming costs increased 37 percent.

Programming expenses increased 26 percent to $89.5 million. The increase in programming expenses during the period was due in part to the introduction of the new Worst Cooks of America event at Food Network. Programming expenses excluding Travel Channel were up about 12 percent.

Lifestyle Media segment profit was up 28 percent to $186 million compared with $146 million in the prior-year period. Excluding one-time expenses, segment profit was up 45 percent.

Operating revenue at HGTV was $162 million, up 12 percent. HGTV now reaches 99 million U.S. subscribers compared with about 98 million at the end of the first quarter 2009.

Food Network operating revenue was $152 million, up 31 percent. Food Network reaches about 100 million U.S. subscribers, up from about 98 million at the end of the first quarter 2009.

Operating revenue at Travel Channel increased 7.8 percent to $56.9 million. Travel Channel reaches 96 million U.S. subscribers, up from about 94 million at the end of the first quarter 2009.

Revenue at DIY Network was up 22 percent to $18.6 million. DIY can be seen in about 53 million U.S. households, up from about 51 million households a year ago.

Fine Living Network (FLN) revenue was $13.8 million, up 18 percent. Fine Living reaches 57 million U.S. households vs. 55 million last year. The company expects to complete its rebranding of the Fine Living Network to the Cooking Channel by May 31.

Revenue at Great American Country (GAC) increased 5.3 percent to $6.4 million. Great American Country can be seen in about 59 million U.S. homes compared with about 56 million homes a year ago.

Revenue from the Lifestyle Media segment's digital businesses, which includes its network-branded Web sites, was $18.0 million, up 15 percent.

Interactive Services

Interactive Services revenue was $37.6 million compared with $45.1 million in the year-ago quarter.

Segment expenses decreased 14 percent to $32.7 million.

Segment profit was $4.9 million compared with $7.0 million.

Direct leads to Shopzilla merchant partners grew 11 percent year over year during the quarter. The lead volume metric measures the value Shopzilla delivers to its merchant partners, as well as the level of engagement consumers have with its branded comparison shopping Web sites, BizRate.com and Shopzilla.com.

2010, Full-year Guidance

The company provided the following outlook for 2010.

Lifestyle Media

• Affiliate revenue is expected to be $530 million to $540 million, with about $100 million attributable to Travel Channel. Affiliate revenue guidance is unchanged from the prior forecast.
• Programming expenses are expected to be $380 million to $400 million as previously forecast. Travel Channel programming expenses are expected to account for about $50 million of the total.
• Non-programming expenses are expected to be $545 million to $560 million. The revised forecast includes non-recurring expenses related to the integration of the Travel Channel. The company now expects Travel Channel transition costs for the year to be nearer the lower end of its previously forecasted range of $30 million to $40 million. Also included in non-programming expenses for the year are $11 million in marketing and legal expenses incurred during the first quarter to support the company's affiliate renewal negotiations.

Interactive Services

The full-year segment profit forecast for the company's Shopzilla comparison shopping business also is unchanged. Shopzilla segment profit is expected to be $33 million to $35 million for the year.

International

As a result of the company's decision this week to end discussions with a potential partner in India, international operating losses for the full-year are now expected to be $11 million to $16 million. International operating losses for the first quarter were $1.8 million.

Other items

Capital expenditures, $95 million to $100 million. Includes $35 million in non-recurring spending for the company's facility expansion in Knoxville, Tenn., and $8 million to facilitate the integration of Travel Channel.

• Effective tax rate, 31 to 33 percent.
• Depreciation and amortization, $135 million to $145 million.
• Interest expense, $33 million to $35 million.
• Non-controlling interests share of net income, $110 million to $115 million.

Conference call

The senior management team of Scripps Networks Interactive will discuss the company's first quarter results during a telephone conference call at 10 a.m. EDT today. Scripps Networks Interactive will offer a live webcast of the conference call. To access the webcast, visit http://www.scrippsnetworksinteractive.com/ and follow the Investor Relations link at the top of the page. The webcast link can be found next to the microphone icon.

To access the conference call by telephone, dial 1-800-230-1085 (U.S.) or 1-612-288-0337 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, "First Quarter Earnings Call," 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 12 p.m. EDT May 6 until 11:59 p.m. EDT May 20. The domestic number to access the replay is 1-800-475-6701 and the international number is 1-320-365-3844. The access code for both numbers is 154180. A replay of the conference call will also be available online. To access the audio replay, visit http://www.scrippsnetworksinteractive.com/ approximately four hours after the call, choose Investor Relations then follow the Audio Archives link on the left side of the page.

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 F-3 of its 2009 Form 10-K filed with the Securities and Exchange Commission.

The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.