Scripps Networks Interactive Q1 2010 Earnings Call Transcript

Scripps Networks Interactive Q1 2010 Earnings Call Transcript
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Scripps Networks Interactive (SNI)

Q1 2010 Earnings Call

May 06, 2010 10:00 am ET


Joseph NeCastro - Chief Administrative Officer and Chief Financial Officer

Mark Kroeger - Vice President of Corporate Communications & Investor Relations

John Lansing - President of Scripps Networks LLc

Kenneth Lowe - Chairman, Chief Executive Officer, President and Chairman of Executive Committee


Micah Nance

Douglas Mitchelson - Deutsche Bank AG

Brian Karimzad

John Janedis - Wells Fargo Securities, LLC

Anthony DiClemente - Barclays Capital

Alexia Quadrani - JP Morgan Chase & Co

Jason Helfstein - Oppenheimer & Co. Inc.

Matthew Harrigan - Wunderlich Securities Inc.

Eric Handler - Lehman Brothers



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Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter Earnings Report Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Senior Vice President of Investor Relations, Mr. Mark Kroeger. Please go ahead, sir.

Mark Kroeger

Thank you, Abraham, and good morning, all, and thanks for joining us. We'll start the conference call today with comments from Ken Lowe, our Chairman, President and CEO; and Joe NeCastro, our Chief Financial Officer. Our prepared remarks should take about 15 minutes then we'll open it up for questions. Also on the call are John Lansing, President of the Scripps Networks Operating Division; and Lori Hickok, Executive Vice President of Finance.

Let me remind you, if you prefer to listen in via the Internet, go to our website, click on Investor Relations and find the microphone icon on the landing page. An audio archive will be available on the site later today, and we'll leave it there for a week or so, so you can access it at your convenience.

Let me remind you that our discussion this morning will contain certain forward-looking statements. Actual results may differ from those projected and some of the factors that may cause results to differ are set forth in our publicly filed documents, including our Form 10-K.

With that, I'll turn it over to Ken.

Kenneth Lowe

Okay. Thank you, Mark. Good morning, everyone, and as always, thank you for your interest in Scripps Networks Interactive. Our first quarter was an exceptionally good one for the company and the shareholders. Allow me to share a few headlines with you.

Industry-leading growth in advertising sales, dramatically higher affiliate fee revenue, audience growth at all our flagship networks, the successful integration of the Travel Channel and lots of progress towards the upcoming debut of our brand-new Cooking Channel. Put it all together, and you have one of America's top-performing media companies and the clear leader in lifestyle television programming.

The resounding popularity of our networks is evident in our exceptionally strong financial results. On a consolidated basis, total revenue for the company was up 32% during the quarter, driven by the addition of Travel, the steadily improving marketplace for advertising and substantially higher affiliate fees for our core brands, particularly Food Network and HGTV.

On an apples-to-apples basis, back in our Travel Channel results, total revenue for the quarter was up 20%. Now we're effectively monetizing the audience gains that we've achieved at Food Network and HGTV, benefiting from both the healthy rebound in advertising and the success we have last year negotiating new and improved affiliate fee agreements with our distribution partners.

Viewership growth continued at all three of our fully distributed networks, despite some serious competition from the Olympics, the NCAA basketball tournament and seasonally strong network programming. At Food Network, entertaining series and new specials like Worst Cooks in America help drive total household viewership, up 10% during primetime and 9% total day. And that was on top of strong total double-digit audience growth in the prior-year period. At HGTV, Holmes on Homes has been our breakout hit of the year as a growing number of viewers identify what home improvement perfectionist Mike Holmes with his very gritty disdain for shoddy workmanship. The result, the primetime audience at HGTV grew 9% during the quarter, and total day viewership jumped 11%. And many of these new viewers, by the way -- these are new viewers, by the way, thanks to some creative and effective marketing that we've done to promote the Holmes on Homes franchise.

Audience trends at Travel Channel are all moving in the right direction as well. Travel marked its sixth consecutive quarter of viewership growth, both in primetime and total day. In fact, the first quarter of 2010 was the best three month of ratings period in the network's history. Hit shows like Adam Richman's Man v. Food are gaining new and younger fans every day. Our integration of Travel, by the way, is nearly complete. We named the industry veteran, Laureen Ong, as the network's new President. And Laureen's probably best known for guiding the launch and development of Nat Geo. She is a true pro. And she'll be helping us build on Travel's strength as the go-to lifestyle brand.

We also assumed the advertising sales responsibilities March 29, and we're fully marketing the brand in the broadcast upfront, which is doing very well. And there's more to come.

We're also on track for the Memorial Day debut of the brand-new Cooking Channel. We'll be launching the network with a good mix of new and familiar personalities who will take food enthusiasts deeper into the genre. Rachael Ray, Emeril Lagasse and Bobby Flay, all with original new series produced just for the Cooking Channel, will be joined by promising new personalities hosting shows like Chinese Food Made Easy, Everyday Exotic and French Food at Home.

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