Scripps Networks Interactive Management Discusses Q2 2012 Results - Earnings Call Transcript

Scripps Networks Interactive (SNI)

Q2 2012 Earnings Call

August 02, 2012 10:00 am ET


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 F. Lansing - President of Scripps Networks Llc

Lori A. Hickok - Executive Vice President of Finance


John Janedis - UBS Investment Bank, Research Division

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

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

Anthony J. DiClemente - Barclays Capital, Research Division

Alexia S. Quadrani - JP Morgan Chase & Co, 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

Eric O. Handler - MKM Partners LLC, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

Thomas W. Eagan - Canaccord Genuity, Research Division

Alan S. Gould - Evercore Partners Inc., Research Division

Vasily Karasyov - Susquehanna Financial Group, LLLP, Research Division

Amy Yong - Macquarie Research

Tuna N. Amobi - S&P Equity Research

Matthew J. Harrigan - Wunderlich Securities Inc., Research Division



Ladies and gentlemen, thank you for standing by and welcome to the Scripps Networks Interactive Second Quarter 2012 Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. I'll now turn the conference over to Mark Kroeger, SVP, Investor Relations. Please go ahead, sir.

Mark W. Kroeger

Thank you, Cathy. 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, Chief Financial and Administrative Officer. Our prepared remarks should take about 20 minutes, then we'll open it up for your questions. Also on the call is John Lansing, President of the Scripps Networks' Operating Division; and Lori Hickock, 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 second 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.

During the Q&A this morning, it would be helpful if you would please limit yourselves to 1 question and 1 follow-up. Let me remind you, that 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 the 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, thank you, Mark, and good morning, everyone. As always, we appreciate your interest in Scripps Networks Interactive. We just completed another terrific quarter. Let me just quickly run through some highlights. We saw audience growth at all of our Home and Food category networks. We debuted new travel programming, that is clearly resonating with viewers. We had double-digit growth in advertising and affiliate fee revenue. We just completed our $1 billion dollar share buyback authorization and just announced another $1 billion buyback this week as you probably saw. We also reached an agreement with the country's biggest distribution partner that will make Scripps branded content accessible to millions of our fans on their tablets, smartphones and other new electronic platforms.

And the big news, and I am happy to report, is the successful completion of our best ever performance in the upfront ad sales marketplace. In fact, in total business booked, we booked through the $1 billion threshold for the first time in our company's history. That gives us a whopping 10% of the marketplace and it puts us in the same league with a very short list of other programming groups. Clearly, we've created a distinct competitive advantage by uniquely defining and staying true to the lifestyle content categories that we own and it's paying off.

Our superior performance is driven by the remarkable power of our programming and our brands. We've establish ourselves as leaders in influencing consumer purchasing decisions in the Home, Food and Travel categories. And that's why our networks and related interactive businesses are must buys for advertisers and must carries for content, distributors. Our investment in trendsetting original programming and our commitment to stay focused on our lifestyle categories is delivering industry-leading returns and creating uncommon value for our shareholders. So let's take a look at how we're performing in each of these lucrative content categories and we'll start out with food.

At Food Network, we had our highest rated second quarter ever and ended the period ranked eighth among ad supported cable networks in the 25-54 demo. That is just outstanding. Promising new shows like Mystery Diners, and the eighth season of Food Network Star drove our improved viewership numbers. Also contributing were stalwarts like Diners, Drive-Ins & Dives, Chopped All Stars and Restaurant: Impossible, all of which are proving their enduring popularity.

The third quarter has gotten off to a strong start with premiere of Chef Wanted, with Anne Burrell, it's a great new show. I hope you'll have a chance to catch it. And coming up, we're looking forward to another season of the breakout hit Restaurant Stakeout and the ever popular Great Food Truck Race Competition.

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