Scripps Networks Interactive's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Scripps Networks Interactive (SNI)

Q4 2011 Earnings Call

February 09, 2012 10:00 am ET

Executives

Mark W. Kroeger - Senior Vice President of Corporate Communications and Investor Relations

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

Joseph G. NeCastro - Chief Administrative Officer, Chief Financial Officer and Principal Accounting Officer

John Lansing - President of Scripps Networks LLC

Lori A. Hickok - Executive Vice President of Finance

Bobby Flay -

Analysts

John Janedis - UBS Investment Bank, Research Division

Chris Marlowe

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

Michael C. Morris - Davenport & Company, LLC, Research Division

David Bank - RBC Capital Markets, LLC, Research Division

Jason B. Bazinet - Citigroup Inc, Research Division

Michael Nathanson - Nomura Securities Co. Ltd., Research Division

Eric O. Handler - MKM Partners LLC, Research Division

Tuna N. Amobi - S&P Equity Research

Thomas W. Eagan - Collins Stewart LLC, Research Division

David Carl Joyce - Miller Tabak + Co., LLC, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the fourth quarter earnings report. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mr. Mark Kroeger, Senior Vice President, Investor Relations. Please go ahead.

Mark W. Kroeger

Thank you, Collin, and good morning, all. Thanks for joining us. We'll start the conference call today with comments from Ken Lowe, our Chairman, President and CEO; and Joe NeCastro, Chief Financial and Administrative Officer. Our prepared remarks should take about 20 minutes, then we'll open it up for questions. Also on the call this morning is 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. Additionally on the page, under the microphone icon, you'll find our fourth quarter earnings presentation materials that we'll be referring to during the prepared remarks portion of our call. An audio archive will be available on the site later today and we'll leave it there for 2 weeks so you can access it at your convenience.

Our discussion this morning will contain certain forward-looking statements. Actual results may differ from those predicted, 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 W. Lowe

All right, Mark, thank you, and good morning, everyone. As always, we appreciate your interest in Scripps Networks Interactive. You know, 2011 was a truly outstanding year for the company and we ended up with very strong fourth quarter results due to double-digit increases in revenues, segment profit and earnings growth, which you're going to hear more about on the call a little later. I have to say I was extremely proud of our business leaders across all our brands and various businesses. Our focus on building world-class brands in the categories of home, food and travel is just one reason for Scripps Networks Interactive's solid performance in 2011. Our strong growth is also a direct result of our expertise in engaging audiences, particularly upscale female viewers that our advertisers value. Fans incorporate our brands into their everyday lives. We influence the foods they eat, the homes they live in and the places they want to travel. Now, this level of engagement is rare for television networks and advertisers know it. That's why our networks are must buys for advertisers and also must carry's with our distributors. There's no doubt that Scripps Networks Interactive is a rapidly growing, multi-platform media company and we're doing all we can to perpetuate and sustain the company's success in 2012 and for years to come.

At the Food Network, we're building on the excellent momentum generated in the fourth quarter, which was its highest-rated quarter ever, solidifying its status as a Top 10 network. The success of programs like Next Iron Chef America, Restaurant: Impossible and Rachel versus Guy contributed to the network's outstanding results. Rachel versus Guy debuted as the number one show on the 9:00 p.m. time slot and number two on cable for the night overall. In fact, Food Network was the highest-rated, most-watched cable network that evening. With results like these, it's no surprise that the Daily Meal, which is a popular website about all things food, recently named Brooke Johnson, President of the Food Network, as the most powerful personality in all of food. So congratulations to Brooke and the talented team at Food Network for this recognition and for their many achievements this past year. They have truly defined the food genre for television and they're on their way to claiming a unique competitive advantage in publishing and digital worlds as well.

Food Network Magazine maintained its rank as the number one culinary magazine on newsstands. It's also the sixth-ranked magazine overall based on newsstand sales. Online, foodnetwork.com generated more than 120 million page views during Thanksgiving week alone. And on Facebook, Food Network can claim more than 2.3 million friends, more than double that at the end of 2010. We're also seeing consumer engagement in the mobile app space. To date, we have more than 450,000 paid downloads of Food Network's In The Kitchen app, making it the number one paid culinary app in the iTunes Store. The terrific brand equity extends to our branded products as well. We now have more than 1,000 Food Network licensed products at Kohl's Department Stores. And our branded wine collection, called Entwine, by the way, continued to exceed all expectations, ranking 34th in the premium wine category, out of almost 400 labels.

For 2012, not only do we want to maintain our top 10 network ranking, but we hope to push this power brand even higher to a Top 5 status within the next few years. Now, to support this goal, we're investing in more special events, more premieres and more new series. We're also exploring new programming formats and new ways to enhance the viewer experience. And we're also evolving existing successful franchises, like Food Network Star, Extreme Chef and Chopped, and finding new roles for existing talent and increasing convergence across platforms.

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