Scripps Networks reports earnings up in third quarter

Scripps Networks Interactive on Monday reported that its consolidated revenues were up 3.5 percent for the third quarter of 2016, despite a quarter in which viewers had plenty of other options to distract them.

Kenneth Lowe, Scripps president, chairman and CEO, said during a conference call with investors that the Knoxville-based company had a strong quarter despite having to compete with such TV fare as the Summer Olympics and U.S. presidential election coverage.

“So, what is encouraging is how well we are doing with all this sports programming going on, and how we have held our own during all this election coverage, which is really remarkable,” he said.

Scripps Networks' consolidated operating revenues for the third quarter were $803.1 million. Consolidated advertising revenues were $556.4 million, an increase of 5.4 percent from the previous year, and consolidated revenues were $221.7 million, which was a decrease of 1.4 percent compared to last year.

The company also reported that its consolidated operating income declined 4.8 percent and consolidated adjusted segment profit fell 2.1 percent, as the company had anticipated. Lori Hickock, Scripps' chief financial officer, said these declines were related to programming premieres that resulted in extra expenses for the company's U.S. Networks.

Lowe said Scripps Networks is expanding its programming internationally. It will debut HGTV in Poland next year, in what will be the company’s biggest launch outside the U.S, and will also launch its Cooking Channel in Canada on Dec. 12, he said.

The company's U.S. networks increased their advertising revenues by 6.6 percent for a total of $477.5 million.However, the U.S. networks' distribution revenues decreased 2.5 percent to $194.3 million because of rate changes in distributor agreements caused by industry consolidation and because of subscriber declines.

Scripps' international networks posted $123.2 million in operating revenues for the third quarter, which was a 3.8 percent increase over the same quarter last year.

Third-quarter consolidated net income was $146.0 million, or $1.12 per diluted share, compared to $124.6 million, or $0.96 per diluted share during third quarter 2015. Third-quarter consolidated adjusted net income increased 13.8 percent to $163.9 million and consolidated adjusted diluted earnings per share increased 13.5 percent to $1.26. According to the company, this improvement in earnings per share was largely due to growth in operating revenues along with gains from foreign currency transactions and lower interest expense. The company said this was partially offset by lower equity in earnings of affiliates, mainly a result of the company selling off its investment in Fox Sports South in the first quarter of 2016.

Lowe told investors that some of the company’s strengths are that it produces high-quality content which it also owns and has programming that entices viewers to buy a large number of the products advertised.

“We are seeing significant traction in 2016,” he said. “We have grown our brands, and they are real powerhouse content brands.”

Scripps Networks Interactive develops lifestyle programming in the food, home and travel categories for TV, the internet and other platforms. It's TV and internet brand portfolio includes HGTV, DIY Network, Food Network, Cooking Channel, Travel Channel and Great American Country.