Scripps Networks Interactive Reports Fourth Quarter Financial Results
- Revenues of $605 million, up 9.2 percent
- Segment profit of $266 million, up 3.3 percent
- Income from continuing operations of $2.02 per share, including adjustments
Consolidated revenues for the quarter increased 9.2 percent to $605 million from the prior-year period. Results for the three-month period ended Dec. 31 reflect solid advertising revenue of $414 million, up 5.1 percent, and affiliate fee revenue of $174 million, up 18 percent year-over-year.
Expenses for the quarter increased 14 percent from the prior-year period to $339 million. The increase was driven primarily by higher employee costs and investments in planned domestic and international growth initiatives. Also contributing to the increase was higher programming amortization and marketing expenses to drive viewership at all of the company's lifestyle television networks.
Total segment profit increased 3.3 percent to $266 million. (See note 2 for a definition of segment profit.)
Fourth quarter income from continuing operations attributable to Scripps Networks Interactive was $306 million, or $2.02 per diluted share, compared with $135 million, or $0.84 in the fourth quarter of 2011. Included in the fourth quarter 2012 figure are:
- Favorable tax adjustments of $202 million, or $1.33 per diluted share; and
- Asset impairment charges of $22 million, net of tax, or $0.15 per diluted share.
In the prior-year period, net income from continuing operations included favorable tax adjustments of $10.5 million, or $0.07 per diluted share.
Excluding these items in both the current and prior-year periods, fourth quarter 2012 income from continuing operations attributable to Scripps Networks Interactive was $0.84, compared with $0.77 in the fourth quarter of 2011. (See note 1.)
"Our solid fourth-quarter and full-year operating results demonstrate the popularity and superior marketing power of our lifestyle television networks and related interactive businesses," said Kenneth W. Lowe, chairman, president and chief executive officer of Scripps Networks Interactive. "Since the launch of HGTV in 1994, our lifestyle media businesses have generated 18 consecutive years of growth, creating tremendous value for our shareholders, delivering uncommon value to our advertisers and distributors and engaging media consumers at the highest levels. Underpinning the company's success is our commitment to remain focused on lifestyle content categories that touch and inspire the everyday lives of media consumers."
Revenues by network were as follows:
- Food Network, $215 million, up 5.2 percent.
- HGTV, $200 million, up 5.1 percent.
- Travel Channel, $71.1 million, up 5.9 percent.
- DIY Network, $30.4 million, up 13 percent.
- Cooking Channel, $24.7 million, up 38 percent.
- Great American Country (GAC), $7.6 million, up 16 percent.
Revenue from the company's digital businesses, which include its network-branded websites, was $33.2 million, up 9.1 percent.
Consolidated operating revenue in 2012 was $2.3 billion, up 11 percent from the prior year. Advertising revenue was $1.6 billion, up 9.0 percent from the prior year. Affiliate fee revenue was $688 million, up 17 percent from the prior year.
Segment profit increased to $1.0 billion, up 6.5 percent from the prior year.
Consolidated income from continuing operations attributable to Scripps Networks Interactive was $681 million, or $4.44 per share, compared with $473 million, or $2.86 per share in 2011. Consolidated income from continuing operations and per share amounts reflect the items disclosed in note 1 to the results of operations.
2013 Full-year Guidance
The company provided the following outlook for 2013.
Total revenue is expected to increase 7 percent to 9 percent.
Cost of services are expected to increase 12 percent to 14 percent.
Selling, general and administrative expenses are expected to increase 7 percent to 9 percent.
- Depreciation and amortization, $115 million to $125 million.
- Interest expense, $50 million to $55 million.
- Effective tax rate, 28 percent to 30 percent.
- Noncontrolling share of net income, $175 million to $185 million.
- Capital expenditures, $65 million to $70 million.
The senior management team of Scripps Networks Interactive will discuss the company's fourth quarter results during a telephone conference call at 10 a.m. ET today. Scripps Networks Interactive will offer a live webcast of the conference call. To access the webcast, visit www.scrippsnetworksinteractive.com and follow the Investors link at the top of the page. The webcast link can be found next to the microphone icon on the investor relations landing page.
To access the conference call by telephone, dial 800-230-1092 (U.S.) or 612-288-0337 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, "SNI Fourth Quarter Earnings Call," to be granted access. Callers also will be asked to provide their name and company affiliation. The media and general public are granted access to the conference call on a listen-only basis.
A replay line will be open from 12:30 p.m. ET Feb. 7 until 11:59 p.m. ET Feb. 21. The domestic number to access the replay is 800-475-6701 and the international number is 320-365-3844. The access code for both numbers is 279208. A replay of the conference call also will be available online. To access the audio replay, visit www.scrippsnetworksinteractive.com approximately four hours after the call, choose Investors then follow the Audio Archives link on the top right side of the investor relations landing page.
This press release contains certain forward-looking statements related to the company's businesses that are based on management's current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The company's written policy on forward-looking statements can be found on page F-3 of its 2011 Form 10-K filed with the Securities and Exchange Commission.
The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.
About Scripps Networks Interactive
Scripps Networks Interactive is one of the leading developers of lifestyle-oriented content for television and the Internet, where on-air programming is complemented with online video, social media areas and e-commerce components on companion websites and broadband vertical channels. The company's media portfolio includes popular lifestyle television and Internet brands Food Network, HGTV, Travel Channel, DIY Network, Cooking Channel and country music network Great American Country.
|SCRIPPS NETWORKS INTERACTIVE, INC.|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(unaudited)||Three months ended||Twelve months ended|
|December 31,||December 31,|
|(in thousands, except per share data)||2012||2011||Change||2012||2011||Change|
|Operating revenues||$||604,665||$||553,489||9.2 %||$||
Cost of services, excluding depreciation and amortization of intangible assets
|(165,855)||(143,594)||15.5 %||(610,836)||(526,865)||15.9 %|
|Selling, general and administrative||(172,919)||(152,436)||13.4 %||(655,473)||(567,902)||15.4 %|
Depreciation and amortization of intangible assets
|(28,159)||(23,609)||19.3 %||(107,591)||(90,080)||19.4 %|
|Write-down of goodwill||(19,663)||(19,663)|
|Gains (losses) on disposal of property and equipment||856||(666)||754||(603)|
|Operating income||218,925||233,184||(6.1)%||914,373||886,598||3.1 %|
|Interest expense||(12,869)||(9,773)||31.7 %||(50,814)||(36,121)||40.7 %|
|Equity in earnings of affiliates||14,597||20,094||(27.4)%||60,864||49,811||22.2 %|
|Income from continuing operations before income taxes||221,304||249,821||(11.4)%||937,763||883,100||6.2 %|
|Income tax benefit (provision)||123,170||(71,586)||(88,107)||(246,452)||(64.2)%|
|Income from continuing operations, net of tax||344,474||178,235||93.3 %||849,656||636,648||33.5 %|
Income (loss) from discontinued operations, net of tax
|Net income||344,474||178,235||93.3 %||849,656||575,396||47.7 %|
|Net income attributable to noncontrolling interests||(38,673)||(43,234)||(10.5)%||(168,178)||(163,838)||2.6 %|
|Net income attributable to SNI||$||305,801||$||135,001||$||681,478||$||411,558||65.6 %|
Income from continuing operations attributable to SNI common shareholders per basic share of common stock
Income from continuing operations attributable to SNI common shareholders per diluted share of common stock
|Weighted average basic shares outstanding||150,546||159,727||152,180||164,657|
|Weighted average diluted shares outstanding||151,711||160,399||153,327||165,572|
|Net income per share amounts may not foot since each is calculated independently.|
|SCRIPPS NETWORKS INTERACTIVE, INC.|
|CONSOLIDATED BALANCE SHEETS|
|December 31,||December 31,|
|(in thousands, except per share data)|
|Cash and cash equivalents||$||437,525||$||760,092|
|Accounts receivable (less allowances: 2012- $5,514; 2011- $5,000)||565,298||553,022|
|Programs and program licenses||395,017||336,305|
|Deferred income taxes||26,338||1,799|
|Other current assets||60,098||64,750|
|Total current assets||1,484,276||1,715,968|
|Property and equipment, net||237,308||219,845|
|Other intangible assets, net||678,500||556,095|
|Programs and program licenses (less current portion)||371,856||299,089|
|Deferred income taxes||148,501|
|Other non-current assets||176,833||204,922|
|LIABILITIES AND EQUITY|
|Program rights payable||36,274||50,402|
|Customer deposits and unearned revenue||44,903||52,814|
|Employee compensation and benefits||56,553||49,920|
|Accrued marketing and advertising costs||10,689||6,838|
|Other accrued liabilities||91,577||60,443|
|Total current liabilities||252,629||232,899|
|Deferred income taxes||100,002|
|Other liabilities (less current portion)||237,402||148,429|
|Redeemable noncontrolling interest||136,500||162,750|
|SNI shareholders' equity:|
Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding Common stock, $.01 par:
Class A - authorized: 240,000,000 shares; issued and outstanding: 2012 - 114,570,332 shares; 2011 - 122,828,359 shares
Voting - authorized: 60,000,000 shares; issued and outstanding: 2012 - 34,317,173 shares; 2011 - 34,317,173 shares
|Additional paid-in capital||1,405,699||1,346,429|
|Accumulated other comprehensive income (loss)||(38,862)||(33,347)|
|Total SNI shareholders' equity||1,820,924||1,678,726|
|Total Liabilities and Equity||$||4,138,798||$||3,961,670|