Tags: Scripps | cable | economy | SNI

Scripps Cable Growth Hinges on Economy

By    |   Monday, 24 Oct 2011 11:48 AM

Scripps Networks Interactive (SNI) says viewers are tuning into its cable television channels and other media outlets and that advertisers are lining up. Ratings agencies, though, warn that growth hinges on a continuing recovery in the economy.

Consolidated revenues for the second quarter of 2011 rose 12 percent to $534 million from the prior-year period. Strong advertising revenue of $374 million, up 13 percent, and affiliate fee revenue of $148 million, up 6.3 percent year-over-year, drove the increase in business.

Net income fell 27 percent to $77.4 million, mainly from business lost from the sale of online shopping platform Shopzilla. Company executives nevertheless are pleased with the performance of their brands.

"HGTV, Food Network and Travel Channel — our fully distributed networks — consistently lead their respective content categories and genres on both TV and the Web, aggregating large and targeted audiences that are highly valued by media consumers, our advertising customers and distribution partners," says Kenneth W. Lowe, chairman, president and chief executive officer of Scripps.

"Likewise our premium-tier channels in the home and food categories, DIY Network and Cooking Channel, generated strong revenue growth as an increasing number of viewers discovered the exceptional vitality and utility of the creative original programming that's defining these unique and exciting brands. Put it all together, and the company succeeded in delivering solid double-digit growth in revenue and segment profit during the second quarter and is on track for another outstanding year."

New competitors

Still, keep an eye on advertising revenue, as any downturn in the economy or the arrival of newer, alternative media companies could affect the SNI's revenue streams, says rating agency Standard and Poor’s.

"Standard & Poor's views the cable network business as vulnerable to further fragmentation as a result of incumbents' new network launches, migration of viewing and advertising to new media, and resistance from cable system operators with respect to increases in the subscriber fees that they pay to the content providers," its analysts write in a report on the company.

Fitch Ratings analysts feels likewise.

"Cable continues to take an increasing share of ad dollars from broadcast, and for the first time, total cable dollars surpassed broadcast in the 2011/2012 upfront. However, the growth has decelerated in recent years, due to increases in industry ad inventory and the shift in dollars toward alternative mediums," Fitch analysts write in a study on the sector.

Barclays Capital downgraded its recommendation on the stock to equal weight from overweight in September.

The company should unveil third quarter earnings around Nov. 8.

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Scripps Networks Interactive (SNI) says viewers are tuning into its cable television channels and other media outlets and that advertisers are lining up. Ratings agencies, though, warn that growth hinges on a continuing recovery in the economy. Consolidated revenues for...
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Monday, 24 Oct 2011 11:48 AM
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