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Scripps Networks Interactive Reports Third Quarter Financial Results

Scripps Networks Interactive, Inc. (NYSE: SNI) today reported operating results for the third quarter 2013.

“Scripps Networks Interactive delivered another strong quarter of growth during the third quarter, driven by the tremendous popularity of our lifestyle television networks,” said Kenneth W. Lowe, chairman, president and chief executive officer. “We’ve created a valuable portfolio of lifestyle networks — as well as industry-leading websites and apps — that attract a highly engaged and upscale audience of food, home and travel enthusiasts.”

Consolidated revenues for the quarter increased 9.0 percent to $617 million from the prior-year period. Results for the three-month period ended Sept. 30 reflect advertising revenue of $410 million, up 8.7 percent, and affiliate fee revenue of $191 million, up 9.0 percent year over year.

Expenses for the quarter increased 13 percent from the prior-year period to $355 million. The increase was driven by higher program amortization expense reflecting the company’s investments to drive viewership at all of its lifestyle television networks. Also contributing to the expense growth were increased investments in international and digital growth initiatives.

Total segment profit increased 4.4 percent to $262 million. (See reconciliation of non-GAAP financial measures for a definition of segment profit.)

Equity in earnings of affiliates increased 35 percent to $15.2 million, due to increased contributions from our investments in HGTV Canada and Food Network Canada, and improved performance from HGTV and Food Network magazines.

Third quarter net income attributable to Scripps Networks Interactive was $129 million, or $0.87 per diluted share, compared with $118 million, or $0.78 per diluted share, in the third quarter 2012.

Segment results
(in thousands)   Three months ended     Nine months ended  
September 30, September 30,
    2013   2012   Change   2013   2012   Change
Segment operating revenues:
Lifestyle Media $ 594,941 $ 551,917 7.8 % $ 1,823,103 $ 1,671,516 9.1 %
Corporate and other 23,184 14,269 62.5 % 54,535 31,011 75.9 %

Intersegment eliminations
    (1,224 )               (1,224 )     (10 )    
Total operating revenues   $ 616,901     $ 566,186     9.0 %   $ 1,876,414     $ 1,702,517     10.2 %
Segment profit (loss):
Lifestyle Media $ 291,340 $ 273,033 6.7 % $ 921,370 $ 848,089 8.6 %
Corporate and other     (29,304 )     (21,967 )   33.4 %     (92,179 )     (73,107 )   26.1 %
Total segment profit   $ 262,036     $ 251,066     4.4 %   $ 829,191     $ 774,982     7.0 %

Lifestyle media revenues in the third quarter of 2013 increased 7.8 percent to $595 million driven by advertising and affiliate fee revenue growth. On-air television advertising revenue increased 9.2 percent, partially offset by a decrease in digital advertising. Total advertising revenue for the lifestyle media segment grew 7.5 percent to $403 million. The decrease in digital advertising was due in part to a planned organizational restructuring to better align digital sales with technology platforms and lifestyle categories. Affiliate fee revenue grew 8.9 percent to $183 million due to higher rates, a reduction of launch fee amortization and the benefit of online video distribution arrangements.

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