NEW YORK (TheStreet) -- A sign of the times, The E.W. Scripps Company (SSP) is shuttering its print newswire to focus on digital-media platforms of online and movile television. The Scripps-Howard News Service, in operation for 96 years, will close its wire news and newspaper article syndication services by the end of the year, the Cincinnati-based company said on Wednesday.
In response, shares gained 3.5% to $18.57 by mid-afternoon.
The nonagenarian news service, founded in 1917, rose to prominence during World War II, applauded for its Pulitzer Prize-winning columns from war correspondent Ernie Pyle.
In a deal announced Tuesday, McClatchy-Tribune Information Services (MNI) will absorb the wire service's clients and contributors.As part of its push into new media, the Cincinnati-based company said it had acquired grassroots political Web site and podcasting brand DecodeDC and will restructure its Scripps DC Bureau. "The Scripps DC bureau, which for many years served newspapers exclusively, will be reconfigured to be a leading investigative storyteller on all the Scripps-owned media platforms -- television, digital and print," the company said in a statement. For its third quarter ended September, the company reported newspaper subscriptions for its 13 local dailies nationwide had increased 1.4% on the year-ago quarter. This marked the first print subscription increase since the fourth quarter 2010 and was most likely a result of special-offer digital and print bundled subscriptions. Total revenue from newspapers fell 4.4% compared to the year-ago quarter. E.W. Scripps' newspaper division hasn't seen positive revenue growth since the third quarter 2006. The numbers paint a clear picture: evolve or perish. Scripps CEO Rich Boehne reassured diversification efforts have proven fruitful. "Nearly 25% of our total subscribers had already established their digital accounts by the end of the quarter and some markets have seen 40% activation rates," he said in a statement. "Also strong in the early months have been digital-only subscriptions which establish our relationship with an all-new group of consumers." The tides are turning on the print industry with none safe from choppy waters. Industry heavyweight News Corp (NWSA) reported a first-quarter revenue decline of 3% on Tuesday, as a 12% fall in advertising revenue across its newspaper properties dragged on profitability. TheStreet Ratings team rates E.W. Scripps as a Hold with a ratings score of C. The team has this to say about their recommendation: "We rate E.W. Scripps (SSP) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.74, which clearly demonstrates the ability to cover short-term cash needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Media industry and the overall market on the basis of return on equity, E.W. Scripps has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.1%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for E.W. Scripps is currently extremely low, coming in at 10.27%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.53% trails that of the industry average.
- Net operating cash flow has significantly decreased to $15.81 million or 66.59% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: SSP Ratings Report
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