SCRIPPS E W CO /DE - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-16914

THE E. W. SCRIPPS COMPANY

(Exact name of registrant as specified in its charter)

Ohio

31-1223339

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

312 Walnut Street

Cincinnati, Ohio

45202

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (513) 977-3000

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of July 31, 2004 there were of the Registrant’s Class A Common Shares outstanding and 18,369,113 of the Registrant’s Common Voting Shares outstanding.

INDEX TO THE E. W. SCRIPPS COMPANY

REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2004


Item No.		Page
	PART I - FINANCIAL INFORMATION

1	Financial Statements	3

2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

3	Quantitative and Qualitative Disclosures About Market Risk	3

4	Controls and Procedures	3

	PART II - OTHER INFORMATION

1	Legal Proceedings	3

2	Changes in Securities and Use of Proceeds	3

3	Defaults Upon Senior Securities	4

4	Submission of Matters to a Vote of Security Holders	4

5	Other Information	4

6	Exhibits and Reports on Form 8-K	5

	Signatures	5

PART I

As used in this Quarterly Report on Form 10-Q, the terms “we,” “our,” “us” or “Scripps” may, depending on the context, refer to The E.W. Scripps Company, to one or more of its consolidated subsidiary companies or to all of them taken as a whole.

ITEM 1. FINANCIAL STATEMENTS

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10-Q.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information at page F-1 of this Form 10-Q.

PART II

ITEM 1. LEGAL PROCEEDINGS

We are involved in litigation arising in the ordinary course of business, such as defamation actions and various governmental and administrative proceedings, none of which is expected to result in material loss.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

There were no changes in the rights of security holders during the quarter for which this report is filed.

There were no sales of unregistered equity securities during the quarter for which this report is filed.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

There were no defaults upon senior securities during the quarter for which this report is filed.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The following table presents information on matters submitted to a vote of security holders at the April 15, 2004 Annual Meeting of Shareholders.


Description of Matters Submitted	In Favor	Against	Abstain	Broker Non-Votes
1. Election of Directors:
Class A Common Shares:
David A. Galloway	54,637,370	1,185,417
Nicholas B. Paumgarten	45,988,033	9,834,754
Ronald W. Tysoe	53,164,678	2,658,109
Julie A. Wrigley	53,164,133	2,658,654

Common Voting Shares:
William R. Burleigh	16,493,340	170,000
John H. Burlingame	16,493,340	170,000
Kenneth W. Lowe	16,663,340
Jarl Mohn	16,663,340
Jeffrey Sagansky	16,493,340	170,000
Nackey E. Scagliotti	16,493,340	170,000
Edward W. Scripps	16,493,340	170,000
Paul K. Scripps	16,493,340	170,000

2. Amend and restate the 1997 Long-Term
Incentive Plan:
Common Voting Shares:	16,663,340

The following table presents information on matters submitted to a vote of security holders on July 15, 2004.


Description of Matters Submitted	In Favor	Against	Abstain	Broker Non-Votes
1. Amend Articles of Incorporation to increase the number of authorized shares of the Company’s two classes of common stock: Common Voting Shares:	18,215,773	17,320

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

The information required by this item is filed as part of this Form 10-Q. See Index to Exhibits at page E-1 of this Form 10-Q.

Reports on Form 8-K

A Current Report on Form 8-K reporting the release of information regarding the results of operations for the quarter ended March 31, 2004, was filed on April 14, 2004.

A Current Report on Form 8-K reporting that we completed our acquisition of Summit America Television was filed on April 15, 2004.

A Current Report on Form 8-K reporting the release of information regarding the results of operations for the quarter ended June 30, 2004, was filed on July 15, 2004.

A Current Report on Form 8-K reporting the Common Voting shareholders approved an amendment to the Articles of Incorporation increasing the number of authorized shares was filed on July 21, 2004.

A Current Report on Form 8-K reporting that our existing Competitive Advance and Revolving Credit Facilities had been replaced with a $450 million facility expiring in July 2009 was filed on August 2, 2004.

A Current Report on Form 8-K reporting the Board of Directors authorized a 2-for-1 stock split and declared a quarterly dividend was filed on August 2, 2004.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	THE E. W. SCRIPPS COMPANY

Dated: August 6, 2004	BY:	/s/ Joseph G. NeCastro
		Joseph G. NeCastro
		Senior Vice President and Chief Financial Officer

THE E. W. SCRIPPS COMPANY

Index to Financial Information


Item		Page
Consolidated Balance Sheets		F-2
Consolidated Statements of Income		F-4
Consolidated Statements of Cash Flows		F-5
Consolidated Statements of Comprehensive Income and Shareholders’ Equity		F-6
Condensed Notes to Consolidated Financial Statements		F-7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements		F-27
Executive Overview		F-27
Critical Accounting Policies and Estimates		F-28
Results of Operations
Consolidated Results of Operations		F-28
Business Segment Results		F-30
Newspapers		F-32
Scripps Networks		F-35
Broadcast Television		F-37
Shop At Home		F-39
Liquidity and Capital Resources		F-40
Quantitative and Qualitative Disclosures About Market Risk		F-41
Controls and Procedures		F-42

F-1

CONSOLIDATED BALANCE SHEETS


*( in thousands )*	June 30, 2004		As of December 31, 2003		June 30, 2003
	( Unaudited )				( Unaudited )
ASSETS
Current assets:
Cash and cash equivalents	$	25,498	$	18,227	$	23,975
Short-term investments		4,000
Accounts and notes receivable (less allowances - $16,297, $14,852, $18,666)		358,357		336,681		292,102
Programs and program licenses		141,211		120,721		109,602
Inventories		31,450		29,946		31,243
Deferred income taxes		24,178		25,264		27,568
Miscellaneous		20,467		31,598		27,290

Total current assets		605,161		562,437		511,780

Investments		239,416		261,655		248,598

Property, plant and equipment		498,932		478,462		467,261

Goodwill and other intangible assets:
Goodwill		1,230,152		1,174,431		1,173,994
Other intangible assets		244,190		63,289		66,514

Total goodwill and other intangible assets		1,474,342		1,237,720		1,240,508

Other assets:
Programs and program licenses (less current portion)		169,226		166,673		175,045
Unamortized network distribution incentives		210,560		221,622		195,228
Note receivable from Summit America				44,750		44,000
Miscellaneous		33,657		34,483		17,944

Total other assets		413,443		467,528		432,217

TOTAL ASSETS	$	3,231,294	$	3,007,802	$	2,900,364

See notes to consolidated financial statements.

F-2

CONSOLIDATED BALANCE SHEETS


*( in thousands, except share data )*	June 30, 2004	As of December 31, 2003			June 30, 2003
	(Unaudited)				(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$ 112,829	$	98,639		$	104,102
Customer deposits and unearned revenue	43,646		53,596			46,626
Accrued liabilities:
Employee compensation and benefits	56,986		62,674			57,987
Network distribution incentives	46,292		53,275			47,990
Miscellaneous	75,459		63,975			69,898

Total current liabilities	335,212		332,159			326,603

Deferred income taxes	204,760		192,418			160,157

Long-term debt (less current portion)	575,432		509,117			629,007

Other liabilities and minority interests (less current portion)	141,960		151,577			133,030

Shareholders’ equity:
Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding
Common stock, $.01 par:
Class A - authorized: 120,000,000 shares; issued and outstanding: 63,123,988, 62,598,947; and 62,329,923 shares	631		626			623
Voting - authorized: 30,000,000 shares; issued and outstanding: 18,369,113 shares	184		184			184

Total	815		810			807
Additional paid-in capital	315,925		278,378			259,965
Retained earnings	1,672,972		1,546,522			1,417,372
Accumulated other comprehensive income (loss), net of income taxes:
Unrealized gains (losses) on securities available for sale	6,272		15,439			4,609
Pension liability adjustments	(14,713)		(14,713	)		(22,650	)
Foreign currency translation adjustment	647		989			460
Unvested restricted stock awards	(7,988)		(4,894	)		(8,996	)

Total shareholders’ equity	1,973,930		1,822,531			1,651,567

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$3,231,294	$	3,007,802		$	2,900,364

See notes to consolidated financial statements.

F-3

CONSOLIDATED STATEMENTS OF

INCOME ( UNAUDITED )


	Three months ended June 30,						Six months ended June 30,
*( in thousands, except per share data )*	2004			2003			2004			2003
Operating Revenues:
Advertising	$	382,221		$	329,950		$	717,552		$	625,670
Merchandise		63,381			54,361			134,116			109,926
Circulation		32,126			33,694			67,352			69,256
Network affiliate fees, net		33,554			23,336			67,431			45,557
Licensing		21,085			18,816			42,596			40,549
Other		14,949			14,689			31,925			29,082

Total operating revenues		547,316			474,846			1,060,972			920,040

Costs and Expenses:
Employee compensation and benefits (exclusive of JOA editorial compensation costs)		137,938			128,058			275,882			255,433
Programs and program licenses		51,480			43,091			101,343			83,317
Costs of merchandise sold		41,617			37,238			89,911			76,264
Newsprint and ink		19,779			17,860			39,861			35,874
JOA editorial costs and expenses		9,700			9,296			19,351			18,381
Other costs and expenses		141,125			121,964			274,951			240,604

Total costs and expenses		401,639			357,507			801,299			709,873

Depreciation, Amortization, and Gains (Losses):
Depreciation		(15,482	)		(15,945	)		(30,556	)		(30,764	)
Amortization of intangible assets		(812	)		(1,171	)		(1,475	)		(2,328	)
Gain on sale of production facility		11,148						11,148

Net depreciation, amortization and gains (losses)		(5,146	)		(17,116	)		(20,883	)		(33,092	)

Operating income		140,531			100,223			238,790			177,075
Interest expense		(8,272	)		(7,832	)		(15,667	)		(15,835	)
Equity in earnings of JOAs and other joint ventures		20,212			22,511			36,875			40,064
Interest and dividend income		303			1,266			1,530			2,644
Other investment results, net of expenses					(3,200	)		14,674			(3,200	)
Miscellaneous, net		(200	)		(222	)		3			41

Income before income taxes and minority interests		152,574			112,746			276,205			200,789
Provision for income taxes		54,489			44,672			99,359			79,180

Income before minority interests		98,085			68,074			176,846			121,609
Minority interests		11,661			3,341			19,903			4,187

Net income	$	86,424		$	64,733		$	156,943		$	117,422

Net income per share of common stock:
Basic	$	1.07		$	.81		$	1.94		$	1.47
Diluted		1.05			.80			1.91			1.45

See notes to consolidated financial statements.

F-4

CONSOLIDATED STATEMENTS OF CASH

FLOWS ( UNAUDITED )


	Six months ended June 30,
*( in thousands )*	2004			2003
Cash Flows from Operating Activities:
Net income	$	156,943		$	117,422
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization		32,031			33,092
Gain on sale of production facility, net of deferred income tax		(7,773	)
Investment gains, net of deferred income tax		(9,595	)		2,080
Other effects of deferred income taxes		(6,936	)		18,151
Tax benefits of stock compensation plans		9,623			8,929
Dividends received greater than equity in earnings of JOAs and other joint ventures		5,907			12,307
Stock and deferred compensation plans		5,089			4,870
Minority interests in income of subsidiary companies		19,903			4,187
Affiliate fees billed greater than amounts recognized as revenue		11,376			5,625
Network launch incentive payments		(29,394	)		(19,938	)
Payments for programming less (greater) than program cost amortization		(19,136	)		(13,799	)
Other changes in certain working capital accounts, net		(10,171	)		(18,757	)
Miscellaneous, net		2,670			2,571

Net operating activities		160,537			156,740

Cash Flows from Investing Activities:
Purchase of subsidiary companies and long-term investments		(180,930	)		(4,118	)
Additions to property, plant and equipment		(42,288	)		(39,548	)
Decrease (increase) in short-term investments		(4,000	)
Sale of long-term investments		14,019
Proceeds from sale of production facility		3,000
Miscellaneous, net		(34	)		(362	)

Net investing activities		(210,233	)		(44,028	)

Cash Flows from Financing Activities:
Increase in long-term debt		69,904			50,000
Payments on long-term debt		(2,733	)		(147,770	)
Dividends paid		(30,493	)		(24,077	)
Dividends paid to minority interests		(728	)		(722	)
Miscellaneous, net (primarily employee stock options)		21,017			18,324

Net financing activities		56,967			(104,245	)

Increase in cash and cash equivalents		7,271			8,467

Cash and cash equivalents:
Beginning of year		18,227			15,508

End of period	$	25,498		$	23,975

Supplemental Cash Flow Disclosures:
Interest paid, excluding amounts capitalized	$	15,153		$	15,519
Income taxes paid		85,363			37,690
Non-Cash Transactions:
Assumption of Summit America note and preferred stock obligations		48,424

See notes to consolidated financial statements.

F-5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

AND SHAREHOLDERS’ EQUITY ( UNAUDITED )


*( in thousands, except share data )*	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Unvested Restricted Stock Awards			Total Shareholders’ Equity			Comprehensive Income for the Three Months Ended June 30
As of December 31, 2002	$	801	$	218,623	$	1,324,027		$	(23,396	)	$	(4,590	)	$	1,515,465
Comprehensive income:
Net income						117,422									117,422		$	64,733

Unrealized gains (losses), net of tax of $2,977 and $4,433									5,530						5,530			8,235
Adjustment for losses (gains) in income, net of tax of $13 and $43									24						24			79

Change in unrealized gains (losses)									5,554						5,554			8,314
Currency translation, net of tax of $300 and $196									261						261			155

Total						117,422			5,815						123,237		$	73,202

Dividends: declared and paid - $.30 per share						(24,077	)								(24,077	)
Compensation plans, net: 706,706 shares issued; 43,304 shares repurchased; 1,700 shares forfeited		6		32,413								(4,406	)		28,013
Tax benefits of compensation plans				8,929											8,929

As of June 30, 2003	$	807	$	259,965	$	1,417,372		$	(17,581	)	$	(8,996	)	$	1,651,567

As of December 31, 2003	$	810	$	278,378	$	1,546,522		$	1,715		$	(4,894	)	$	1,822,531
Comprehensive income:
Net income						156,943									156,943		$	86,424

Unrealized gains (losses), net of tax of ($362) and $508									(675	)					(675	)		941
Adjustment for losses (gains) in income, net of tax of ($4,573) and ($40)									(8,492	)					(8,492	)		(74	)

Change in unrealized gains (losses)									(9,167	)					(9,167	)		867
Currency translation, net of tax of ($106) and ($67)									(342	)					(342	)		(321	)

Total						156,943			(9,509	)					147,434		$	86,970

Dividends: declared and paid - $.375 per share						(30,493	)								(30,493	)
Compensation plans, net: 556,607 shares issued; 31,566 shares repurchased		5		27,924								(3,094	)		24,835
Tax benefits of compensation plans				9,623											9,623

As of June 30, 2004	$	815	$	315,925	$	1,672,972		$	(7,794	)	$	(7,988	)	$	1,973,930

See notes to consolidated financial statements.

F-6

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The information disclosed in the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2003, has not changed materially. Financial information as of December 31, 2003, included in these financial statements has been derived from the audited consolidated financial statements included in that report. In management’s opinion all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the interim periods have been made.

Results of operations are not necessarily indicative of the results that may be expected for future interim periods or for the full year.

Nature of Operations - We are a diverse media concern with interests in newspapers, national television networks (“Scripps Networks”), broadcast television stations and television-retailing (“Shop At Home”). Under the trade name United Media, we distribute news columns, comics and other features to newspapers and license copyrights and trademarks for use on numerous products.

We operate 21 daily newspapers in the U.S. Newspapers earn revenue primarily from the sale of advertising space to local and national advertisers and from the sale of newspapers to readers. Four of our newspapers are operated pursuant to the terms of joint operating agreements. See Note 6. Each of those newspapers maintains an independent editorial operation and receives a share of the operating profits of the combined newspaper operations.

Scripps Networks includes four national television networks distributed by cable and satellite television systems: Home & Garden Television (“HGTV”), Food Network, DIY - Do It Yourself Network (“DIY”) and Fine Living. Scripps Networks also includes our 12% interest in FOX Sports Net South, a regional television network. We own approximately 70% of Food Network and approximately 90% of Fine Living. Scripps Networks earns revenue primarily from the sale of advertising time and from affiliate fees from cable and satellite television systems.

We operate 10 broadcast television stations. Each station is located in one of the 60 largest television markets in the U.S. Nine of our television stations are affiliated with national broadcast television networks. Six are ABC affiliates and three are NBC affiliates. Broadcast television stations earn revenue primarily from the sale of advertising time to local and national advertisers.

Shop At Home markets a range of consumer goods to television viewers and through its Internet site. In 2004, we acquired Summit America Television (“Summit America”) which owns and operates five television stations that exclusively broadcast Shop At Home programming. Shop At Home programming is distributed under the terms of affiliation agreements with broadcast television stations and cable and satellite television systems. Substantially all of Shop At Home’s revenues are earned from the sale of merchandise.

Financial information for each of our business segments is presented in Note 16. Licensing and other media aggregates our operating segments that are too small to report separately, and primarily includes syndication and licensing of news features and comics.

Our operations are geographically dispersed and we have a diverse customer base. We believe bad debt losses resulting from default by a single customer, or defaults by customers in any depressed region or business sector, would not have a material effect on our financial position. Approximately 70% of our operating revenues are derived from advertising. Operating results can be affected by changes in the demand for advertising both nationally and in individual markets.

The six largest cable television systems and the two largest satellite television systems provide service to more than 90% of homes receiving HGTV and Food Network. The loss of distribution by any of these cable and satellite television systems could adversely affect our business. While no assurance can be given regarding renewal of our distribution contracts, we have not lost carriage upon the expiration of our distribution contracts with any of these cable and satellite television systems.

F-7

Use of Estimates - The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make a variety of decisions that affect the reported amounts and the related disclosures. Such decisions include the selection of accounting principles that reflect the economic substance of the underlying transactions and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience, actuarial studies and other assumptions.

Our financial statements include estimates and assumptions used in accounting for our defined benefit pension plans; the recognition of certain revenues; product returns and rebates due to customers; the periods over which long-lived assets are depreciated or amortized; the fair value of securities that do not trade in a public market; income taxes payable; estimates for uncollectible accounts receivable; the fair value of our inventories and self-insured risks.

While we re-evaluate our estimates and assumptions on an ongoing basis, actual results could differ from those estimated at the time of preparation of the financial statements.

Newspaper Joint Operating Agreements (“JOA”) - We include our share of JOA earnings in “Equity in earnings of JOAs and other joint ventures” in our Consolidated Statements of Income. The related editorial costs and expenses are included in “JOA editorial costs and expenses.” Our residual interest in the net assets of the Denver and Albuquerque JOAs is classified as an investment in the Consolidated Balance Sheets. We do not have a residual interest in the net assets of the other JOAs.

Stock-Based Compensation - We have a stock-based compensation plan, which is described more fully in our Annual Report on Form 10-K for the year ended December 31, 2003. Options to purchase Class A Common shares (“stock options”) are granted under the plan with exercise prices not less than 100% of the fair market value on the date of the award. Awards of Class A Common shares (“restricted stock”) generally require no payment by the employee. Stock options and restricted stock generally vest over a three-year incentive period conditioned upon the individual’s continued employment through that period.

We measure compensation expense using the intrinsic-value based method of Accounting Principles Board Opinion 25 - Accounting for Stock Issued to Employees, and its related interpretations (collectively “APB 25”).

The grant-date fair value of time-vested restricted stock is amortized to expense over the vesting period. Cliff vested restricted stock is amortized on a straight-line basis over the vesting period and pro-rata vested restricted stock is amortized as each vesting period expires. Certain performance-vested restricted stock vests when the market price of our Class A Common shares reaches certain targets. Compensation expense for those awards is based upon the fair value of the shares on that date and is recognized in full when the awards vest.

The fair value of options granted, using the Black-Scholes model and the following assumptions, were as follows:


	Three months ended June 30,						Six months ended June 30,
	2004			2003			2004			2003
Weighted-average fair value of options granted	$	26.43		$	22.24		$	23.72		$	21.97
Assumptions used to determine fair value:
Dividend yield		0.8	%		0.8	%		0.8	%		0.8	%
Expected volatility		19.0	%		22.0	%		19.5	%		22.0	%
Risk-free rate of return		3.9	%		3.8	%		3.5	%		3.8	%
Expected life of options		6.5 years			7 years			6.5 years			7 years

F-8

The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of Financial Accounting Standard No. (“FAS”) 123—Accounting for Stock-Based Compensation, as amended by FAS 148 - Accounting for Stock-Based Compensation - Transition and Disclosure, to all stock-based employee compensation for the periods covered in this report:


	Three months ended June 30,						Six months ended June 30,
*( in thousands, except per share data )*	2004			2003			2004			2003
Net income as reported	$	86,424		$	64,733		$	156,943		$	117,422
Add stock-based compensation included in reported income, net of related income tax effects:
Restricted stock		1,022			798			1,719			1,275
Deduct stock-based compensation determined under fair value based method, net of related income tax effects:
Restricted stock		(1,022	)		(798	)		(1,719	)		(1,275	)
Stock option grants		(4,118	)		(3,985	)		(7,727	)		(7,428	)
Stock option modifications		(1,051	)					(1,051	)

Pro forma net income	$	81,255		$	60,748		$	148,165		$	109,994

Net income per share of common stock
Basic earnings per share:
As reported	$	1.07		$	0.81		$	1.94		$	1.47
Additional stock-based compensation, net of income tax effects		(0.06	)		(0.05	)		(0.11	)		(0.09	)

Pro forma basic earnings per share	$	1.00		$	0.76		$	1.83		$	1.37

Diluted earnings per share:
As reported	$	1.05		$	0.80		$	1.91		$	1.45
Additional stock-based compensation, net of income tax effects		(0.06	)		(0.05	)		(0.11	)		(0.09	)

Pro forma diluted earnings per share	$	0.98		$	0.75		$	1.80		$	1.35

Net income per share amounts may not foot since each is calculated independently.

On April 14, 2004, shareholders approved amendments to the 1997 Long-Term Incentive Plan (the “Plan”) that, among other things: (a) extended the term of the Plan to June 1, 2014 and (b) modified provisions with respect to vesting and the term of outstanding stock options when employment is terminated due to death, disability or “change in control.” Under the prior Plan provisions, stock options held by an employee whose employment was terminated due to death or disability were immediately vested with the exception of stock options granted less than one year prior to the termination of employment. The employee forfeited any stock options granted less than one year prior to termination of employment due to death or disability. Vested stock options granted prior to 1999 were exercisable for the lesser of one year or the remaining terms of the stock options, while vested stock options granted after 1998 were exercisable for the remaining terms of the stock options. The amended and restated Plan provides that all stock options held by an employee will immediately vest upon termination of employment due to death or disability and those stock options will remain exercisable for the remaining terms of the options.

The terms of approximately 1.7 million stock options, representing substantially all outstanding stock options granted after 1994 but before 1999, and from April 15, 2003, through April 14, 2004, were modified by the Plan amendments with respect to termination of employment due to death or disability. Because we are unable to estimate which employees, if any, will benefit from these modifications, the intrinsic-value based method of APB 25 requires us to record compensation expense for any such options that are held by an employee at the time their employment is terminated due to death or disability. Such compensation expense would be measured by the difference between the market price of our Class A Common Shares on the date of the modification and the exercise prices of the modified stock options held by the employee. No compensation expense would be recognized if such stock options were exercised or forfeited prior to termination of employment due to death or disability.

F-9

Under the terms of the prior Plan, a change in control of The E.W. Scripps Company resulted in immediate vesting of all stock options held by employees, while a change in control of a subsidiary or division thereof (“subsidiary”) alone did not trigger vesting of stock options held by employees of that subsidiary. Vested stock options held by employees of a subsidiary whose employment was terminated due to a change in control of that subsidiary were exercisable for a period of 90 days. The amended and restated plan provides that all stock options held by an employee of a subsidiary will vest and remain exercisable for the remaining terms of the stock options upon termination of employment due to a change in control of that subsidiary.

The Plan amendments with respect to termination of employment due to change in control modified the terms of approximately 2.3 million stock options held by employees of subsidiary companies. Approximately 0.7 million of those stock options were also modified by the plan amendments with respect to termination of employment due to death or disability. Because we are unable to estimate which employees may benefit from the Plan modifications, the intrinsic-value based method of APB 25 requires us to record compensation expense for any such stock options that are held by an employee of a subsidiary company at the time their employment is terminated due to a change in control of that subsidiary. Such compensation expense would be measured by the difference between the market price of our Class A Common Shares on the date of the modification and the exercise prices of the modified stock options held by the employee. No compensation expense would be recognized if such options were exercised or forfeited prior to termination of employment due to a change in control.

While we measure compensation expense in our financial statements using the intrinsic-value based method of APB 25, we must also report pro forma net income and earnings per share assuming we had used the fair-value based methods of FAS 123. Both the amount of compensation expense and the timing of recognition of compensation expense resulting from the Plan modifications is different if fair-value based methods are used instead of intrinsic-value based methods. Under the fair-value based method, Plan modifications are accounted for as the retirement of the outstanding stock options and the issuance of new stock options at the modification date. The fair value of the modified stock options exceeds the fair value of the stock options held as of the date of the modifications by approximately $2.8 million. That compensation expense is recognized over the remaining vesting period of the stock options, or immediately for vested stock options. Included in the pro forma effects of stock option modifications in the preceding table is a $0.9 million after-tax charge for modified vested options.

Under current Financial Accounting Standard Board proposals, we will be required to account for options using the fair value provisions of FAS 123, as amended, beginning in 2005. Compensation expense recognized in 2005 and later related to the Plan modifications will be based upon the fair-value based methods of FAS 123, as amended, rather than the intrinsic-value based methods of APB 25.

Net Income Per Share - - The following table presents information about basic and diluted weighted-average shares outstanding:


	Three months ended June 30,		Six months ended June 30,
*( in thousands )*	2004	2003	2004	2003
Basic weighted-average shares outstanding	81,136	80,156	80,986	80,027
Effect of dilutive securities:
Unvested restricted stock held by employees	170	163	177	157
Stock options held by employees and directors	1,275	1,014	1,220	981

Diluted weighted-average shares outstanding	82,581	81,333	82,383	81,165

Reclassifications - For comparative purposes, certain prior year amounts have been reclassified to conform to current classifications.

F-10

2. ACCOUNTING CHANGES

In 2003 we adopted FAS 132 (Revised) (“FAS 132-R”) - Employer’s Disclosure about Pensions and Other Postretirement Benefits. FAS 132-R retains disclosure requirements of the original FAS 132 and requires new disclosures in annual financial statements relating to plan assets, investment strategy, plan obligations, cash flows, and the components of net periodic benefit costs and requires certain disclosures to be included in interim financial statements. FAS 132-R also requires interim disclosure of the elements of net periodic benefit cost and the total amount of contributions paid or expected to be paid during the current fiscal year if significantly different from amounts previously disclosed. Additional disclosures regarding expected future benefit payments will become effective for fiscal years ending after June 15, 2004.

Effective June 30, 2004, we adopted Emerging Issues Task Force Issue (“EITF”) No. 03-01 - The Meaning of Other-Than-Temporary Impairments and its Application to Certain Investments. An impairment is considered other than temporary unless positive evidence indicating that the carrying value of the investment is recoverable in a reasonable time outweighs negative evidence to the contrary. The EITF also requires cost-basis investments to be tested for impairment whenever an indication of impairment is present. Adoption of the EITF had no effect on our financial statements.

3. ACQUISITIONS


2004	-	On April 14, 2004, we acquired Summit America. Summit America owns a 30% minority interest in Shop At Home and owns and operates five Shop At Home-affiliated broadcast television stations. The acquisition provided us with complete ownership of Shop At Home and secured distribution of the network in Summit America’s television markets.

		We paid $4.05 in cash per fully-diluted outstanding share of Summit America common stock, or approximately $180 million, which we financed through cash and short-term investments on hand and additional borrowings on our existing credit facilities. We also assumed Summit America’s obligations to us under the $47.5 million secured loans and the $3 million in redeemable preferred stock extended to Summit America as part of the 2002 acquisition of the controlling interest in Shop At Home.

2003	-	In the first quarter of 2003, we acquired an additional interest of less than one percent in our Memphis newspaper for $3.5 million in cash.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of the dates of acquisition. The allocation of the purchase price to the Summit America assets and liabilities is based upon preliminary appraisals and estimates of the tax basis of the assets acquired, and is therefore subject to change.


	Six months ended June 30,
*( in thousands )*	2004			2003
Current assets	$	388
Property, plant and equipment		8,360
Indefinite-lived intangible assets		180,450
Amortizable intangible assets		1,790
Goodwill		55,721		$	2,885
Other assets		25
Net operating loss carryforwards		31,008

Total assets acquired		277,742			2,885
Current liabilities		(904	)
Deferred income taxes		(48,152	)
Obligations under notes receivable and redeemable preferred stock		(48,424	)
Minority interest retired					619

Cash paid	$	180,262		$	3,504

Results of operations of Summit America are included in our Consolidated Statements of Income from the date of acquisition. Pro forma results of operations, assuming the acquisition had been completed as of the beginning of each period are not presented because the combined results of operations would not be significantly different than the reported amounts.

F-11

4. INVESTMENT RESULTS AND OTHER ITEMS

Reported results of operations include the following items which affect the comparability of year-over-year results.

2004 - Second quarter and year-to-date operating results include an $11.1 million pre-tax gain on the sale of our Cincinnati television station’s production facility to the City of Cincinnati. The gain on sale had previously been deferred while the station continued to use the facility until construction of a new production facility was complete. Net income was increased by $7.0 million, $.08 per share.

Year-to-date other investment results represent realized gains from the sale of certain investments, including Digital Theater Systems. Net income was increased by $9.5 million, $.12 per share.

2003 - Second quarter and year-to-date other investment results in 2003 were a pre-tax charge of $3.2 million for write-downs associated with declines in value of certain investments in development-stage businesses. Other investment results reduced net income by $2.1 million, $.03 per share.

5. INCOME TAXES

Food Network is operated under the terms of a general partnership agreement. Fine Living and Shop At Home are limited liability companies (“LLC”) and are treated as partnerships for tax purposes. As a result, federal and state income taxes for these “pass-through” entities accrue to the individual partners. Accordingly, our federal and state income tax returns include only our proportionate share of the taxable income or loss of pass-through entities. Our financial statements do not include any provision (benefit) for income taxes on the income (loss) of pass-through entities attributed to the non-controlling interests.

Consolidated income before income tax consisted of the following:


	Three months ended June 30,				Six months ended June 30,
*( in thousands )*	2004		2003		2004		2003
Income allocated to Scripps	$	141,586	$	110,024	$	257,600	$	196,730
Income of pass-through entities allocated to non-controlling interests		10,988		2,722		18,605		4,059

Income before income taxes	$	152,574	$	112,746	$	276,205	$	200,789

The income tax provision for interim periods is determined based upon the expected effective income tax rate for the full year and the tax rate applicable to certain discreet transactions in the interim period. To determine the annual effective income tax rate for the full year period we must estimate both the total income before income tax for the full year and the jurisdictions in which that income is subject to tax. The actual effective income tax rate for the full year may differ from these estimates if income before income tax is greater or less than what was estimated or if the allocation of income to jurisdictions in which it is taxed is different from the estimated allocations. We review and adjust our estimated effective income tax rate for the full year each quarter based upon our most recent estimates of income before income tax for the full year and the jurisdictions in which we expect that income will be taxed.

Information regarding our expected effective income tax rate for the full year of 2004 and the actual effective income tax rate for the full year of 2003 is as follows:


	2004		2003
Statutory rate	35.0	%	35.0	%
Effect of:
State and local income taxes, net of federal income tax benefit	3.5		3.8
Income of pass-through entities allocated to non-controlling interests	(2.4	)	(1.1	)
Changes in estimates for prior year income taxes			(5.0	)
Adjustment of state net operating loss carryforward valuation allowance			(1.4	)
Miscellaneous	0.2		1.3

Effective income tax rate	36.3	%	32.6	%

F-12

The provision for income taxes consisted of the following:


	Three months ended June 30,						Six months ended June 30,
*( in thousands )*	2004			2003			2004			2003
Current:
Federal	$	40,887		$	24,706		$	71,026		$	37,630
State and local		7,904			6,853			14,429			12,646
Foreign		1,527			1,658			2,964			2,944

Total		50,318			33,217			88,419			53,220
Tax benefits of compensation plans allocated to additional paid-in-capital		6,394			6,279			9,623			8,929

Total current income tax provision		56,712			39,496			98,042			62,149

Deferred:
Federal		(1,732	)		8,421			(4,103	)		18,109
Other		(90	)		1,427			379			2,212

Total		(1,822	)		9,848			(3,724	)		20,321
Deferred tax allocated to other comprehensive income		(401	)		(4,672	)		5,041			(3,290	)

Total deferred income tax provision		(2,223	)		5,176			1,317			17,031

Provision for income taxes	$	54,489		$	44,672		$	99,359		$	79,180

The approximate effects of the temporary differences giving rise to deferred income tax liabilities (assets) were as follows:


*( in thousands )*	June 30, 2004			As of December 31, 2003			June 30, 2003
Property, plant and equipment	$	45,963		$	37,340		$	53,658
Goodwill and other intangible assets		194,421			161,348			134,316
Network distribution incentives		5,698			11,553			9,200
Investments, primarily gains and losses not yet recognized for tax purposes		18,808			8,750			451
Accrued expenses not deductible until paid		(12,443	)		(10,035	)		(12,338	)
Deferred compensation and retiree benefits not deductible until paid		(27,911	)		(23,919	)		(33,637	)
Other temporary differences, net		(6,933	)		(7,680	)		(15,196	)

Total		217,603			177,357			136,454
Federal net operating loss carryforwards		(27,503	)
State net operating loss carryforwards		(14,061	)		(14,406	)		(13,074	)
Valuation allowance for state deferred tax assets		4,543			4,203			9,209

Net deferred tax liability	$	180,582		$	167,154		$	132,589

At the date of acquisition Summit America had federal net operating loss carryforwards totaling $86.6 million which expire between 2020 and 2024. We expect to be able to fully utilize the carryforwards on our federal income tax returns.

At the date of acquisition Summit America had state tax loss carryforwards totaling $45.3 million. State net operating loss carryforwards totaled $438 million at June 30, 2004. Our state tax loss carryforwards expire between 2004 and 2022.

Federal and state tax loss carryforwards are recognized as deferred tax assets, subject to valuation allowances. We generally file separate state income tax returns for each subsidiary company. Because separate state income tax returns are filed, we are not able to use state tax losses of a subsidiary company to offset state taxable income of another subsidiary company. At each balance sheet date we estimate the amount of state net operating loss carryforwards that are not expected to be used prior to expiration of the carryforward period. The tax effect of these unused state net operating loss carryforwards is included in the valuation allowance.

F-13

6. JOINT OPERATING AGREEMENTS

Four of our newspapers are operated pursuant to the terms of joint operating agreements (“JOAs”). The Newspaper Preservation Act of 1970 provides a limited exemption from anti-trust laws, permitting competing newspapers in a market to combine their sales, production and business operations in order to reduce aggregate expenses and take advantage of economies of scale, thereby allowing the continuing operation of both newspapers in that market. Each newspaper in a JOA partnership maintains a separate and independent editorial operation.

The table below provides certain information about our JOAs.


Newspaper	Publisher of Other Newspaper	Year JOA Entered Into	Year of JOA Expiration
The Albuquerque Tribune	Journal Publishing Company	1933	2022
Birmingham Post-Herald	Newhouse Newspapers	1950	2015
The Cincinnati Post	Gannett Newspapers	1977	2007
Denver Rocky Mountain News	MediaNews Group, Inc.	2001	2051

The JOAs generally provide for renewals unless an advance termination notice ranging from two to five years is given to either party. Gannett Newspapers has notified us of its intent to terminate the Cincinnati JOA upon its expiration in 2007.

The combined sales, production and business operations of the newspapers are either jointly managed or are solely managed by one of the newspapers. The sales, production and business operations of the two Denver newspapers are operated by the Denver Newspaper Agency, a limited liability partnership (the “Denver JOA”). Each newspaper owns 50% of the Denver JOA and shares management of the combined newspaper operations. We have no management responsibilities for the combined operations of the other three JOAs.

The operating profits earned from the combined operations of the two newspapers are distributed to the partners in accordance with the terms of the joint operating agreement. We receive a 50% share of the Denver JOA profits and between 20% and 40% of the profits from the other three JOAs.

F-14

7. INVESTMENTS

Investments consisted of the following:


*( in thousands, except share data )*	June 30, 2004		As of December 31, 2003		June 30, 2003
Securities available for sale (at market value):
Time Warner (2,017,000 common shares)	$	35,456	$	36,283	$	32,451
Digital Theater Systems (554,000 common shares)				13,690
Other available-for-sale securities		6,015		3,932		6,470

Total available-for-sale securities		41,471		53,905		38,921
Denver JOA		175,029		181,968		182,007
FOX Sports Net South and other joint ventures		14,009		13,302		9,267
Summit America preferred stock, at cost plus accrued dividends				3,240		3,150
Other equity securities		8,907		9,240		15,253

Total investments	$	239,416	$	261,655	$	248,598

Unrealized gains (losses) on securities available for sale	$	9,646	$	23,749	$	7,087

Note receivable from Summit America, at initial fair value plus accreted discount			$	44,750	$	44,000

Investments available for sale represent securities in publicly-traded companies. Investments available for sale are recorded at fair value. Fair value is based upon the closing price of the security on the reporting date. As of June 30, 2004, there were no unrealized losses on our available-for-sale securities. In the third quarter of 2003, Digital Theater Systems (“DTS”) completed an initial public offering of its common stock. This investment had previously been included in the other equity securities category. We sold our investment in DTS during the first quarter of 2004. See Note 4.

Other equity securities include securities that do not trade in public markets, so they do not have readily determinable fair values. We estimate the fair values of the other securities approximate their carrying values at June 30, 2004, however, many of the investees have had no rounds of equity financing in recent years. There can be no assurance we would realize the carrying values of these securities upon their sale.

In connection with the October 2002 acquisition of the controlling interest in Shop At Home, we purchased $3.0 million of Summit America 6.0% redeemable preferred stock. At Summit America’s option, dividends were deferred until the mandatory redemption of the preferred stock in 2005. We also loaned Summit America $47.5 million, to be repaid in 2005, at 6% interest. The note was recorded at fair value as of the date of acquisition of Shop At Home. The difference between the face value of the note and the fair value at the date of acquisition was accreted to income over the term of the note. In connection with our acquisition of Summit America, we agreed to assume Summit America’s obligations to us under the note and redeemable preferred stock.

8. PROPERTY, PLANT AND EQUIPMENT

Property,

plant and equipment consisted of the following:


*( in thousands )*	June 30, 2004		As of December 31, 2003		June 30, 2003
Land and improvements	$	53,561	$	52,904	$	52,573
Buildings and improvements		272,824		249,116		268,851
Equipment		639,674		630,712		613,607

Total		966,059		932,732		935,031
Accumulated depreciation		467,127		454,270		467,770

Net property, plant and equipment	$	498,932	$	478,462	$	467,261

F-15

9. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consisted of the following:


*( in thousands )*	June 30, 2004			As of December 31, 2003			June 30, 2003
Goodwill	$	1,230,152		$	1,174,431		$	1,173,994

Other intangible assets:
Amortizable intangible assets:
Carrying amount:
Acquired network distribution		5,887			4,757			23,308
Customer lists		6,410			5,753			5,753
Other		7,527			7,525			7,525

Total carrying amount		19,824			18,035			36,586

Accumulated amortization:
Acquired network distribution		(3,484	)		(2,822	)		(20,026	)
Customer lists		(3,140	)		(2,651	)		(2,148	)
Other		(5,121	)		(4,934	)		(4,703	)

Total accumulated amortization		(11,745	)		(10,407	)		(26,877	)

Total amortizable intangible assets		8,079			7,628			9,709

Other indefinite-lived intangible assets:
Network affiliation		26,748			26,748			26,748
FCC licenses		205,622			25,622			25,622
Other		3,572			3,122			2,872

Total other indefinite-lived intangible assets		235,942			55,492			55,242

Pension liability adjustments		169			169			1,563

Total other intangible assets		244,190			63,289			66,514

Total goodwill and other intangible assets	$	1,474,342		$	1,237,720		$	1,240,508

F-16

Activity related to goodwill and other intangible assets by business segment was as follows:


*( in thousands )*	Newspapers			Scripps Networks			Broadcast Television			Shop At Home			Licensing and Other		Total
Goodwill:
Balance as of December 31, 2002	$	780,825		$	141,201		$	219,367		$	29,698		$	18	$	1,171,109
Memphis minority interest		2,885														2,885

Balance as of June 30, 2003	$	783,710		$	141,201		$	219,367		$	29,698		$	18	$	1,173,994

Balance as of December 31, 2003	$	783,710		$	141,201		$	219,367		$	30,135		$	18	$	1,174,431
Summit America acquisition											55,721					55,721

Balance as of June 30, 2004	$	783,710		$	141,201		$	219,367		$	85,856		$	18	$	1,230,152

Amortizable intangible assets:
Balance as of December 31, 2002	$	3,772		$	3,337		$	223		$	3,668				$	11,000
Additions		119						918								1,037
Amortization		(344	)		(1,173	)		(63	)		(748	)				(2,328	)

Balance as of June 30, 2003	$	3,547		$	2,164		$	1,078		$	2,920				$	9,709

Balance as of December 31, 2003	$	3,333		$	1,110		$	999		$	2,186				$	7,628
Summit America acquisition											1,790					1,790
Other additions		136														136
Amortization		(346	)		(297	)		(37	)		(795	)				(1,475	)

Balance as of June 30, 2004	$	3,123		$	813		$	962		$	3,181				$	8,079

Other indefinite-lived intangible assets:
Balance as of December 31, 2002	$	1,153		$	659		$	52,370		$	1,050				$	55,232
Additions					10											10

Balance as of June 30, 2003	$	1,153		$	669		$	52,370		$	1,050				$	55,242

Balance as of December 31, 2003	$	1,153		$	919		$	52,370		$	1,050				$	55,492
Summit America acquisition											180,450					180,450

Balance as of June 30, 2004	$	1,153		$	919		$	52,370		$	181,500				$	235,942

Amortizable intangible assets acquired in the Summit America acquisition include customer lists and network distribution relationships which are amortized over three years. Indefinite-lived assets acquired primarily consist of FCC licenses and trade and domain names. The allocation of the Summit America purchase price is based upon preliminary appraisals and estimates of the tax basis of the assets acquired and are subject to change.

Goodwill acquired in the Summit America acquisition was assigned to the Shop At Home business segment. Goodwill assigned in 2003 relates to the acquisition of minority interest in our Memphis newspaper. Goodwill acquired in these acquisitions is not expected to be deductible for income tax purposes.

Estimated amortization expense of intangible assets for each of the next five years, excluding the effects of any acquisition subsequent to June 30, 2004, is expected to be $1.4 million for the remainder of 2004, $2.1 million in 2005, $1.1 million in 2006, $0.6 million in 2007, $0.5 million in 2008 and $2.4 million in later years.

F-17

10. PROGRAMS AND PROGRAM LICENSES

Programs and program licenses consisted of the following:


*( in thousands )*	June 30, 2004		As of December 31, 2003		June 30, 2003
Cost of programs available for broadcast	$	753,721	$	681,079	$	631,706
Accumulated amortization		504,453		443,310		414,407

Total		249,268		237,769		217,299
Progress payments on programs not yet available for broadcast		61,169		49,625		67,348

Total programs and program licenses	$	310,437	$	287,394	$	284,647

In addition to the programs owned or licensed by us included in the table above, we have commitments to license certain programming that is not yet available for broadcast, including first-run syndicated programming. Such program licenses are recorded as assets when the programming is delivered to us and is available for broadcast. First-run syndicated programming is generally produced and delivered at or near its broadcast date. Such contracts may require progress payments or deposits prior to the program becoming available for broadcast. Remaining obligations under contacts to purchase or license programs not yet available for broadcast totaled approximately $235 million at June 30, 2004. If the programs are not produced, our obligations would generally expire without obligation.

Progress payments on programs not yet available for broadcast and the cost of programs and program licenses capitalized totaled $56.8 million in the second quarter of 2004 and $44.2 million in the second quarter of 2003. Year to date progress payments and capitalized programs totaled $102 million in 2004 and $82.5 million in 2003.

Estimated amortization of recorded program assets and program commitments for each of the next five years is as follows:


*( in thousands )*	Programs Available for Broadcast		Programs Not Yet Available for Broadcast		Total
Remainder of 2004	$	70,535	$	34,478	$	105,013
2005		92,390		89,287		181,677
2006		51,453		68,159		119,612
2007		24,436		53,552		77,988
2008		9,321		40,256		49,577
Later years		1,133		10,727		11,860

Total	$	249,268	$	296,459	$	545,727

Actual amortization in each of the next five years will exceed the amounts presented above as our broadcast television stations and our national networks will continue to produce and license additional programs.

F-18

11. UNAMORTIZED NETWORK DISTRIBUTION INCENTIVES

Unamortized network distribution incentives consisted of the following:


*( in thousands )*	June 30, 2004		As of December 31, 2003		June 30, 2003
Network launch incentives	$	332,278	$	332,876	$	299,642
Accumulated amortization		147,479		135,540		122,082

Net book value		184,799		197,336		177,560
Unbilled affiliate fees		25,761		24,286		17,668

Total unamortized network distribution incentives	$	210,560	$	221,622	$	195,228

We capitalized launch incentive payments in the second quarter totaling $1.6 million in 2004 and $0.2 million in 2003. Capitalized launch incentives were $2.0 million year to date in 2004 and $3.5 million year to date in 2003.

Amortization recorded as a reduction to affiliate fee revenue in the consolidated financial statements, and estimated amortization of recorded network launch incentives for each of the next five years, is presented below.


	Three months ended June 30,				Six months ended June 30,
*( in thousands )*	2004		2003		2004		2003
Amortization of network launch incentives	$	6,507	$	6,137	$	12,882	$	12,215


Estimated amortization for the next five years is as follows:
Remainder of 2004							$	14,017
2005								31,581
2006								28,935
2007								20,448
2008								22,359
Later years								67,459

Total							$	184,799

Actual amortization will be greater than the above amounts as additional incentive payments will be capitalized as we expand distribution of Scripps Networks.

F-19

12. LONG-TERM DEBT

Long-term debt consisted of the following:


*( in thousands )*	June 30, 2004			As of December 31, 2003		June 30, 2003
Variable-rate credit facilities	$	119,882		$	50,187	$	166,337
$100 million, 6.625% notes, due in 2007		99,953			99,946		99,938
$50 million, 3.75% notes, due in 2008		50,000			50,000		50,000
$100 million, 4.25% notes, due in 2009		99,478			99,430		99,382
$200 million, 5.75% notes, due in 2012		198,997			198,934		198,871
Other notes		7,794			10,318		12,793

Total face value of long-term debt less discounts		576,104			508,815		627,321
Fair market value of interest rate swap		(672	)		302		1,686

Total long-term debt	$	575,432		$	509,117	$	629,007

As of June 30, 2004, we had Competitive Advance and Revolving Credit Facilities (the “Revolver”) and a commercial paper program that collectively permitted aggregate borrowings up to $575 million (the “Variable-Rate Credit Facilities”). The Revolver consisted of two facilities, one permitting $375 million in aggregate borrowings expiring in August 2004 and the second a $200 million facility expiring in 2007. Borrowings under the Revolver were available on a committed revolving credit basis at our choice of three short-term rates or through an auction procedure at the time of each borrowing. The Revolver was primarily used as credit support for our commercial paper program in lieu of direct borrowings under the Revolver. The weighted-average interest rate on borrowings under the Variable-Rate Credit Facilities was 1.3% at June 30, 2004, 1.1% at December 31, 2003, and 1.2% at June 30, 2003.

On July 30, 2004, the Revolver was replaced with a single credit facility that permits $450 million in aggregate borrowings and expires in July 2009. There were no other material changes in the terms and conditions of the facility.

We have a U.S. shelf registration statement which allows us to borrow up to an additional $350 million as of June 30, 2004.

We entered into a receive-fixed, pay-floating interest rate swap to achieve a desired proportion of fixed-rate versus variable-rate debt. The interest rate swap expires upon the maturity of the $50 million, 3.75% notes in 2008, and effectively converts those fixed-rate notes into variable-rate borrowings. The variable interest rate was 1.9% at June 30, 2004, which was based on six-month LIBOR minus a rate spread. The swap agreement was designated as a fair-value hedge of the underlying fixed-rate notes. Accordingly, changes in the fair value of the interest rate swap agreement (due to movements in the benchmark interest rate) are recorded as adjustments to the carrying value of long-term debt with an offsetting adjustment to other non-current assets. The changes in the fair value of the interest rate swap agreements and the underlying fixed-rate obligation are recorded as equal and offsetting unrealized gains and losses in the Consolidated Statements of Income. We have structured the interest rate swap to be 100% effective. As a result, there is no current impact to earnings resulting from hedge ineffectiveness.

Certain long-term debt agreements contain maintenance requirements for net worth and coverage of interest expense and restrictions on incurrence of additional indebtedness. We were in compliance with all debt covenants.

Current maturities of long-term debt are classified as long-term to the extent they can be refinanced under existing long-term credit commitments.

F-20

13. OTHER LIABILITIES AND MINORITY INTERESTS

Other liabilities and minority interests consisted of the following:


*( in thousands )*	June 30, 2004		As of December 31, 2003		June 30, 2003
Program rights payable	$	34,822	$	30,758	$	47,474
Employee compensation and benefits		77,257		75,310		87,891
Network distribution incentives		49,854		76,668		50,551
Minority interests		51,629		32,460		23,794
Deferred gain on sale of WCPO production facility				7,649		7,649
Other		14,758		15,238		17,859

Total other liabilities and minority interests		228,320		238,083		235,218
Current portion of other liabilities		86,360		86,506		102,188

Other liabilities and minority interests (less current portion)	$	141,960	$	151,577	$	133,030

Minority interests include non-controlling interests of approximately 8% in the capital stock of the subsidiary companies that publish our Memphis and Evansville newspapers. The capital stock of these companies does not provide for or require the redemption of the non-controlling interests by us.

Non-controlling interests hold an approximate 10% residual interest in Fine Living. The minority owners of Fine Living have the right to require us to repurchase their interests. We have an option to acquire their interests. The minority owners will receive the fair market value for their interests at the time their option is exercised. The put and call options become exercisable at various dates through 2016. Put options on an approximate 6% non-controlling interest in Fine Living are currently exercisable. The remaining put options become exercisable in 2006.

Non-controlling interests hold an approximate 30% residual interest in Food Network. The Food Network general partnership agreement terminates on December 31, 2012, unless amended or extended prior to that date. Upon termination, the assets of the partnership are to be liquidated and distributed to the partners in proportion to their partnership interests.

In 2002, we sold our Cincinnati television station production facility to the City of Cincinnati for $7.8 million in cash. The gain on the sale of the facility of $7.6 million was deferred until our station relocated to its new production facility. Our station relocated to its new production facility in May 2004. A pre-tax gain of $11.1 million, including incentive payments for relocating prior to June 1, 2004, was recognized in the second quarter of 2004. See Note 4.

F-21

14. SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents additional information about the change in certain working capital accounts:


	Six months ended June 30,
*( in thousands )*	2004			2003
Other changes in certain working capital accounts, net:
Accounts receivable	$	(21,676	)	$	(11,750	)
Prepaid and accrued pension expense		10,662			(9,406	)
Inventories		(1,504	)		(7,009	)
Accounts payable		1,122			5,365
Accrued income taxes		2,756			12,830
Accrued employee compensation and benefits		(7,756	)		(9,274	)
Accrued interest		34			(272	)
Other accrued liabilities		5,541			3,184
Other, net		650			(2,425	)

Total	$	(10,171	)	$	(18,757	)

15. EMPLOYEE BENEFIT PLANS

We sponsor defined benefit pension plans that cover substantially all non-union and certain union-represented employees. Benefits are generally based upon the employee’s compensation and years of service. We also sponsor a defined contribution plan that covers substantially all non-union and certain union employees. We match a portion of employee’s voluntary contributions to this plan.

Other union-represented employees are covered by defined benefit pension plans jointly sponsored by us and the union, or by union-sponsored multi-employer plans.

Retirement plans expense is based on valuations performed by plan actuaries as of the beginning of each fiscal year. The components of the expense consisted of the following:


*( in thousands)*	Three months ended June 30,						Six months ended June 30,
*( in thousands)*	2004			2003			2004			2003
Service cost	$	4,931		$	4,262		$	9,862		$	8,524
Interest cost		5,879			5,403			11,746			10,806
Expected return on plan assets, net of expenses		(5,536	)		(5,077	)		(11,072	)		(10,154	)
Net amortization and deferral		1,622			1,406			3,243			2,812

Total for defined benefit plans		6,896			5,994			13,779			11,988
Multi-employer plans		116			133			239			243
Defined contribution plans		1,803			1,603			3,559			3,212

Total	$	8,815		$	7,730		$	17,577		$	15,443

We made contributions of $2.0 million to our defined benefit plans in the first half of 2004. We anticipate contributing $3.0 million to meet minimum funding requirements of the defined benefit plans during the remainder of fiscal 2004. We may also elect to make additional contributions to our defined benefit pension plans.

F-22

16. SEGMENT INFORMATION

We determine our business segments based upon our management and internal reporting structure. Our reportable segments are strategic businesses that offer different products and services. See Note 1.

The accounting policies of each of our business segments are those described in Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2003.

Each of our segments may provide advertising, programming or other services to our other business segments. In addition, certain corporate costs and expenses, including information technology, pensions and other employee benefits, and other shared services, are allocated to our business segments. The allocations are generally amounts agreed upon by management, which may differ from amounts that would be incurred if such services were purchased separately by the business segment. Corporate assets are primarily cash, cash equivalent and other short-term investments, property and equipment primarily used for corporate purposes, and deferred income taxes.

Our chief operating decision maker (as defined by FAS 131 – Segment Reporting) evaluates the operating performance of our business segments and makes decisions about the allocation of resources to our business segments using a measure we call segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, restructuring activities, investment results and certain other items that are included in net income determined in accordance with accounting principles generally accepted in the United States of America.

As discussed in Note 1, we account for our share of the earnings of JOAs using the equity method of accounting. Our equity in earnings of JOAs is included in “Equity in earnings of JOAs and other joint ventures” in our Consolidated Statements of Income. Newspaper segment profits include equity in earnings of JOAs. Scripps Networks segment profits include equity in earnings of FOX Sports Net South and certain other joint ventures.

F-23

Information regarding our business segments follows:


*( in thousands)*	Three months ended June 30,						Six months ended June 30,
*( in thousands)*	2004			2003			2004			2003
Segment operating revenues:
Newspapers managed solely by us	$	174,723		$	172,828		$	353,196		$	345,374
Newspapers operated pursuant to JOAs		59			67			117			118

Total newspapers		174,782			172,895			353,313			345,492
Scripps Networks		192,820			141,923			351,589			258,493
Broadcast television		87,379			78,870			163,037			149,043
Shop At Home		66,307			56,638			140,286			114,955
Licensing and other media		26,028			24,520			52,747			52,057

Total operating revenues	$	547,316		$	474,846		$	1,060,972		$	920,040

Segment profit (loss):
Newspapers managed solely by us	$	50,922		$	56,518		$	104,166		$	113,294
Newspapers operated pursuant to JOAs		7,636			10,972			13,488			17,579

Total newspapers		58,558			67,490			117,654			130,873
Scripps Networks		87,535			55,944			149,840			97,544
Broadcast television		28,215			24,522			45,442			40,128
Shop At Home		(2,740	)		(5,607	)		(6,361	)		(11,540	)
Licensing and other media		4,361			4,617			8,631			8,488
Corporate		(10,040	)		(7,116	)		(18,658	)		(15,262	)

Total segment profit		165,889			139,850			296,548			250,231
Depreciation and amortization of intangibles		(16,294	)		(17,116	)		(32,031	)		(33,092	)
Gain on sale of production facility		11,148						11,148
Interest expense		(8,272	)		(7,832	)		(15,667	)		(15,835	)
Interest and dividend income		303			1,266			1,530			2,644
Other investment results, net of expenses					(3,200	)		14,674			(3,200	)
Miscellaneous, net		(200	)		(222	)		3			41

Income before income taxes and minority interests	$	152,574		$	112,746		$	276,205		$	200,789

Depreciation:
Newspapers managed solely by us	$	5,101		$	5,859		$	10,322		$	11,430
Newspapers operated pursuant to JOAs		298			321			594			642

Total newspapers		5,399			6,180			10,916			12,072
Scripps Networks		2,569			2,482			5,144			4,944
Broadcast television		4,883			5,029			9,499			9,679
Shop At Home		1,926			1,536			3,591			2,645
Licensing and other media		162			165			320			323
Corporate		543			553			1,086			1,101

Total depreciation	$	15,482		$	15,945		$	30,556		$	30,764

Amortization of intangibles:
Newspapers managed solely by us	$	106		$	107		$	212		$	211
Newspapers operated pursuant to JOAs		67			66			134			133

Total newspapers		173			173			346			344
Scripps Networks		150			588			297			1,173
Broadcast television		18			32			37			63
Shop At Home		471			378			795			748

Total amortization of intangibles	$	812		$	1,171		$	1,475		$	2,328

F-24


*( in thousands )*	Three months ended June 30,				Six months ended June 30,
*( in thousands )*	2004		2003		2004		2003
Additions to property, plant and equipment:
Newspapers managed solely by us	$	5,374	$	6,862	$	14,216	$	21,939
Newspapers operated pursuant to JOAs		228		91		338		198

Total newspapers		5,602		6,953		14,554		22,137
Scripps Networks		10,695		2,011		14,602		2,400
Broadcast television		4,397		7,815		9,320		11,941
Shop At Home		1,213		392		3,039		1,713
Licensing and other media		128		74		205		161
Corporate		477		628		568		1,196

Total additions to property, plant and equipment	$	22,512	$	17,873	$	42,288	$	39,548

Business acquisitions and other additions to long-lived assets:
Newspapers managed solely by us							$	3,504
Newspapers operated pursuant to JOAs			$	40				80

Total newspapers				40				3,584
Scripps Networks	$	58,441		44,392	$	104,064		85,407
Broadcast television				918				918
Shop At Home		228,686				228,686
Investments		588		23		588		534

Total	$	287,715	$	45,373	$	333,338	$	90,443

Assets:
Newspapers managed solely by us					$	1,089,164	$	1,080,033
Newspapers operated pursuant to JOAs						191,471		196,714

Total newspapers						1,280,635		1,276,747
Scripps Networks						937,188		822,009
Broadcast television						495,088		487,334
Shop At Home						354,710		154,919
Licensing and other media						23,165		27,200
Investments						50,674		54,173
Corporate						89,834		77,982

Total assets					$	3,231,294	$	2,900,364

No single customer provides more than 10% of our revenue. International revenues are primarily derived from licensing comic characters and HGTV and Food Network programming in international markets. Licensing of comic characters in Japan provides approximately 50% of our international revenues, which are less than $60 million annually.

Other additions to long-lived assets include investments, capitalized intangible assets and Scripps Networks capitalized programs and network launch incentives.

F-25

17. STOCK COMPENSATION PLANS

The following table presents information about stock options:


	Number of Shares		Weighted Average Exercise Price		Range of Exercise Prices
Options outstanding at December 31, 2002	4,840,034		$	54.39	$	16 - 78

Options granted during the period	1,099,100			80.05		80 - 85
Options exercised during the period	(524,794	)		40.06		16 - 76

Options outstanding at June 30, 2003	5,414,340		$	60.99	$	16 - 85

Options outstanding at December 31, 2003	5,173,895		$	61.97	$	18 - 93

Options granted during the period	1,051,750			98.58		97 - 108
Options exercised during the period	(478,902	)		48.37		19 - 85
Options forfeited during the period	(60,983	)		68.80		35 - 93

Options outstanding at June 30, 2004	5,685,760		$	69.82	$	18 - 108

Substantially all options granted prior to 2002 are exercisable. Options generally become exercisable over a one-to-three-year period. Information about options outstanding and options exercisable by year of grant is as follows:


Year of Grant	Options Outstanding					Options Exercisable
Year of Grant	Options on Shares Outstanding	Range of Exercise Prices		Weighted Average Exercise Price		Options on Shares Exercisable	Range of Exercise Prices		Weighted Average Exercise Price
1994 - expire in 2004	38,700	$	18 - 19	$	18.94	38,700	$	18 - 19	$	18.94
1996 - expire in 2006	13,000		26 - 27		26.27	13,000		26 - 27		26.27
1997 - expire in 2007	251,100		34 - 42		34.86	251,100		34 - 42		34.86
1998 - expire in 2008	329,950		39 - 54		47.28	329,950		39 - 54		47.28
1999 - expire in 2009	426,763		42 - 50		47.11	426,763		42 - 50		47.11
2000 - expire in 2010	685,733		43 - 60		49.44	685,733		43 - 60		49.44
2001 - expire in 2011	812,942		58 - 70		64.24	808,042		58 - 70		64.23
2002 - expire in 2012	995,221		73 - 78		75.32	780,725		73 - 78		75.33
2003 - expire in 2013	1,080,601		80 - 93		80.21	416,707		80 - 86		80.00
2004 - expire in 2014	1,051,750		97 - 108		98.58	55,000		106		106.00

Total options on number of shares	5,685,760	$	18 - 108	$	69.82	3,805,720	$	18 - 106	$	60.25

Information related to awards of Class A Common Shares is presented below:


	Number of Shares		Price at Award Dates
	Number of Shares		Weighted Average		Range of Prices
Unvested shares at December 31, 2002	328,376		$	55.77	$	43 - 77

Shares awarded during the period	161,819			78.92		79 - 81
Shares vested during the period	(135,664	)		49.84		43 - 77
Shares forfeited during the period	(1,700	)		50.67		50 - 57

Unvested shares at June 30, 2003	352,831		$	69.12	$	44 - 81

Unvested shares at December 31, 2003	302,968		$	70.07	$	45 - 93

Shares awarded during the period	59,290			96.79		95 - 107
Shares vested during the period	(103,027	)		65.31		45 - 106
Shares forfeited during the period	(2	)		52.08		52

Unvested shares at June 30, 2004	259,229		$	78.27	$	45 - 107

F-26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis of financial condition and results of operations is based upon the consolidated financial statements and the condensed notes to the consolidated financial statements. You should read this discussion in conjunction with those financial statements.

FORWARD-LOOKING STATEMENTS

This discussion and the information contained in the condensed notes to the consolidated financial statements contain certain forward-looking statements that are based on our current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from the expectations expressed in the forward-looking statements. Such risks, trends and uncertainties, which in most instances are beyond our control, include changes in advertising demand and other economic conditions; consumers’ taste; newsprint prices; program costs; labor relations; technological developments; competitive pressures; interest rates; regulatory rulings; and reliance on third-party vendors for various products and services. The words “believe,” “expect,” “anticipate,” “estimate,” “intend” and similar expressions identify forward-looking statements. All forward-looking statements, which are as of the date of this filing, should be evaluated with the understanding of their inherent uncertainty. We undertake no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

EXECUTIVE OVERVIEW

We are a diverse media concern with interests in newspapers, national television networks (“Scripps Networks”), broadcast television stations and television-retailing (“Shop At Home”). Scripps Networks includes four cable and satellite television programming services, Home & Garden Television (“HGTV”), Food Network, DIY – Do It Yourself Network (“DIY”) and Fine Living. Our media businesses provide high quality news, information and entertainment content to readers and viewers.

We place the highest priority on allocating capital generated by our operations in order to create the most value for our shareholders. In order to create new businesses or acquire businesses that are expected to significantly increase shareholder value, we operate our core media businesses to maximize cash flow. We have used a portion of the cash produced by our newspapers and broadcast television stations to develop HGTV, DIY and Fine Living and to acquire Food Network and Shop At Home.

In our most recent Annual Report on Form 10-K, we outlined several of our current value-creation objectives including the continued development of our national network brands, integrating Shop At Home’s management with that of Scripps Networks, strengthening the competitive positions of our strong local media franchises, and capitalizing on the growth opportunity of our joint operating agreement in the Denver market.

At Scripps Networks, we continue to invest in high quality, original programming, to undertake marketing campaigns designed to increase awareness of our national networks, and to expand distribution of DIY and Fine Living. In June 2004, HGTV achieved a 1.0 viewership rating and averaged 830,000 viewers each night during primetime while primetime viewership at Food Network was up 19% with a nightly average of 600,000 households according to A.C. Nielsen Company (“Nielsen”) ratings. DIY and Fine Living are not yet rated by Nielsen, however we estimate DIY could be seen in about 29 million homes in June 2004. DIY is on track to reach 30 million homes by the end of the year. Fine Living is available in 23 million households and can be seen in all of the country’s top 50 markets.

At Shop At Home, we continue to create a commerce platform that complements our portfolio of lifestyle networks. Sales of home and cookware products were approximately 9% of Shop At Home total revenue in the year-to-date period of 2004 compared to 6% in the year-to-date period of 2003.

At our newspapers, a number of industry related economic factors have continued to hold back profits, including higher newsprint and employee benefit costs. To maintain competitive positions in our newspapers markets, we have introduced a number of new product initiatives. Examples include new zoned sections in Memphis and a popular Spanish-language publication in Ventura County. We are continuing to achieve significant increases in advertising revenues for these types of publications in hopes of offsetting some of the declines in traditional advertising revenues.

F-27

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make a variety of decisions which affect reported amounts and related disclosures, including the selection of appropriate accounting principles and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience, actuarial studies and other assumptions. We are committed to preparing financial statements incorporating accounting principles, assumptions and estimates that promote the representational faithfulness, verifiability, neutrality and transparency of the accounting information included in the financial statements.

Note 1 to the Consolidated Financial Statements included in our Annual Report on Form 10-K describes the significant accounting policies we have selected for use in the preparation of our financial statements and related disclosures. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in estimates that our likely to occur could materially change the financial statements. We believe the accounting for Network Affiliate Fees, Investments, Income Taxes and Pension Plans to be our most critical accounting policies and estimates. A detailed description of these accounting policies is included in the Critical Accounting Policies Section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2003. There have been no significant changes in those accounting policies.

RESULTS OF OPERATIONS

The trends and underlying economic conditions affecting the operating performance and future prospects differ for each of our four business segments. Accordingly, we believe the following discussion of our consolidated results of operations should be read in conjunction with the discussion of the operating performance of our business segments that follows on pages F-30 through F-39.

Consolidated Results of Operations - Consolidated results of operations were as follows:


*( in thousands )*	2004			Quarter Period Change		2003			2004			Year-to- Date Change		2003
Operating revenues	$	547,316		15.3	%	$	474,846		$	1,060,972		15.3	%	$	920,040
Costs and expenses		(401,639	)	(12.3	)%		(357,507	)		(801,299	)	(12.9	)%		(709,873	)
Depreciation and amortization of intangibles		(16,294	)	4.8	%		(17,116	)		(32,031	)	3.2	%		(33,092	)
Gain on sale of production facility		11,148								11,148

Operating income		140,531		40.2	%		100,223			238,790		34.9	%		177,075
Interest expense		(8,272	)	(5.6	)%		(7,832	)		(15,667	)	1.1	%		(15,835	)
Equity in earnings of JOAs and other joint ventures		20,212		(10.2	)%		22,511			36,875		(8.0	)%		40,064
Interest and dividend income		303		(76.1	)%		1,266			1,530		(42.1	)%		2,644
Other investment results, net of expenses							(3,200	)		14,674					(3,200	)
Miscellaneous, net		(200	)	9.9	%		(222	)		3		(92.7	)%		41

Income before income taxes and minority interests		152,574		35.3	%		112,746			276,205		37.6	%		200,789
Provision for income taxes		54,489		22.0	%		44,672			99,359		25.5	%		79,180

Income before minority interests		98,085		44.1	%		68,074			176,846		45.4	%		121,609
Minority interests		11,661					3,341			19,903					4,187

Net income	$	86,424		33.5	%	$	64,733		$	156,943		33.7	%	$	117,422

Net income per diluted share of common stock	$	1.05		31.3	%	$	.80		$	1.91		31.7	%	$	1.45

F-28

The increase in operating revenues was primarily attributed to the continued growth in advertising and network affiliate fee revenues at our national television networks, increases in merchandise sales at Shop At Home and the return of political advertising at our broadcast television stations. The growth in advertising revenues at Scripps Networks was primarily driven by increased viewership of our national networks. The growth in affiliate fee revenues at Scripps Networks is attributed to scheduled rate increases and wider distribution of our networks.

Increases in cost and expenses were impacted by the expanded hours of original programming and costs to promote our national networks, increases in costs of merchandise sold at Shop At Home, increases in newsprint prices and increases in disability, pension and health costs provided to our employees.

Second quarter and year-to-date operating results include an $11.1 million pre-tax gain on the sale of our Cincinnati television station’s production facility to the City of Cincinnati. Net income was increased by $7.0 million, $.08 per share.

Interest expense in the second quarter increased due to additional borrowings for the Summit America acquisition and higher interest costs on deferred compensation and other employee benefits.

Second quarter and year-to-date equity in earnings of JOAs includes a $2.5 million accrual the company recorded as a result of a court judgment involving The Birmingham News Co. Our newspaper, the Birmingham Post-Herald, is the minority, non-managing partner under a JOA with the Birmingham News Co.

Year-to-date other investment results represent realized gains from the sale of certain investments, including Digital Theater Systems. Net income was increased by $9.5 million, $.12 per share.

Information regarding our effective tax rate is a follows:


*( in thousands )*	Quarter Period								Year-to-Date
*( in thousands )*	2004			Change		2003			2004			Change		2003
Income before income taxes and minority interests as reported	$	152,574		35.3	%	$	112,746		$	276,205		37.6	%	$	200,789
Income allocated to non-controlling interests		10,988					2,722			18,605					4,059

Income allocated to Scripps	$	141,586				$	110,024		$	257,600				$	196,730

Provision for income taxes	$	54,489		22.0	%	$	44,672		$	99,359		25.5	%	$	79,180

Effective income tax rate as reported		35.7	%				39.6	%		36.0	%				39.4	%
Effective income tax rate on income allocated to Scripps		38.5	%				40.6	%		38.6	%				40.3	%

Our effective income tax rate is affected by the growing profitability of Food Network. Food Network is operated pursuant to the terms of a general partnership, in which we own an approximate 70% residual interest. Income taxes on partnership income accrue to the individual partners. While the income before income tax reported in our financial statements includes all of the income before tax of the partnership, our income tax provision does not include income taxes on the portion of Food Network income that is attributable to the non-controlling interest.

The effective tax rate also decreased in 2004 due to lower effective state tax rates. We expect the effective tax rate will be between 36.0% and 36.5% for the full year of 2004.

Minority interest increased in the second quarter and year-to-date periods primarily due to the operating performance of Food Network and profits being allocated based upon residual interests. Prior to the fourth quarter of 2003, Food Network profits were allocated solely to Class A partnership interests, of which we own approximately 87%. During the fourth quarter of 2003, Food Network profits began to be allocated in proportion to each partner’s residual interests in the partnership, of which we own approximately 70%. In the third quarter of 2004, we expect minority interest will be between $8 and $9 million.

F-29

Business Segment Results - As discussed in Note 16 to the Consolidated Financial Statements our chief operating decision maker (as defined by FAS 131 - Segment Reporting) evaluates the operating performance of our business segments using a performance measure we call segment profits. Segment profits excludes interest, income taxes, depreciation and amortization, divested operating units, restructuring activities, investment results and certain other items that are included in net income determined in accordance with accounting principles generally accepted in the United States of America.

Items excluded from segment profits generally result from decisions made in prior periods or from decisions made by corporate executives rather than the managers of the business segments. Depreciation and amortization charges are the result of decisions made in prior periods regarding the allocation of resources and are therefore excluded from the measure. Financing, tax structure and divestiture decisions are generally made by corporate executives. Excluding these items from our business segment performance measure enables us to evaluate business segment operating performance for the current period based upon current economic conditions and decisions made by the managers of those business segments in the current period.

Information regarding the operating performance of our business segments determined in accordance with FAS 131 and a reconciliation of such information to the consolidated financial statements is as follows:


*( in thousands )*	2004			Quarter Period Change		2003			2004			Year-to-Date Change		2003
Segment operating revenues:
Newspapers managed solely by us	$	174,723		1.1	%	$	172,828		$	353,196		2.3	%	$	345,374
Newspapers operated pursuant to JOAs		59		(11.9	)%		67			117		(0.8	)%		118

Total newspapers		174,782		1.1	%		172,895			353,313		2.3	%		345,492
Scripps Networks		192,820		35.9	%		141,923			351,589		36.0	%		258,493
Broadcast television		87,379		10.8	%		78,870			163,037		9.4	%		149,043
Shop At Home		66,307		17.1	%		56,638			140,286		22.0	%		114,955
Licensing and other media		26,028		6.2	%		24,520			52,747		1.3	%		52,057

Total operating revenues	$	547,316		15.3	%	$	474,846		$	1,060,972		15.3	%	$	920,040

Segment profit (loss):
Newspapers managed solely by us	$	50,922		(9.9	)%	$	56,518		$	104,166		(8.1	)%	$	113,294
Newspapers operated pursuant to JOAs		7,636		(30.4	)%		10,972			13,488		(23.3	)%		17,579

Total newspapers		58,558		(13.2	)%		67,490			117,654		(10.1	)%		130,873
Scripps Networks		87,535		56.5	%		55,944			149,840		53.6	%		97,544
Broadcast television		28,215		15.1	%		24,522			45,442		13.2	%		40,128
Shop At Home		(2,740	)	51.1	%		(5,607	)		(6,361	)	44.9	%		(11,540	)
Licensing and other media		4,361		(5.5	)%		4,617			8,631		1.7	%		8,488
Corporate		(10,040	)	(41.1	)%		(7,116	)		(18,658	)	(22.3	)%		(15,262	)

Total segment profit		165,889		18.6	%		139,850			296,548		18.5	%		250,231
Depreciation and amortization of intangibles		(16,294	)	4.8	%		(17,116	)		(32,031	)	3.2	%		(33,092	)
Gain on sale of production facility		11,148								11,148
Interest expense		(8,272	)				(7,832	)		(15,667	)				(15,835	)
Interest and dividend income		303					1,266			1,530					2,644
Other investment results, net of expenses							(3,200	)		14,674					(3,200	)
Miscellaneous, net		(200	)				(222	)		3					41

Income before income taxes and minority interests	$	152,574		35.3	%	$	112,746		$	276,205		37.6	%	$	200,789

Discussions of the operating performance of each of our reportable business segments begin on page F-32.

Compliance with the Sarbanes-Oxley Act led to the increase in corporate expenses in 2004. Partly as a result of the continued cost of compliance with the Act, corporate expenses are expected to increase approximately $1 million year-over-year in the third quarter of 2004 and $4 million to $5 million for the full year of 2004.

F-30

Segment profits include our share of the earnings of JOAs and certain other investments included in our consolidated operating results using the equity method of accounting. Newspaper segment profits include equity in earnings of JOAs and other joint ventures. Scripps Networks segment profits include equity in earnings of FOX Sports Net South and other joint ventures.

A reconciliation of our equity in earnings of JOAs and other joint ventures included in segment profits to the amounts reported in our Consolidated Statements of Income is as follows:



*( in thousands )*	2004			Quarter Period Change		2003		2004			Year-to-Date Change		2003
Newspapers:
Equity in earnings of JOAs	$	17,277		(14.5	)%	$	20,201	$	32,722		(8.7	)%	$	35,842
Equity in earnings (loss) of joint ventures		(35	)						(75	)
Scripps Networks:
Equity in earnings of joint ventures		2,970		28.6	%		2,310		4,228		0.1	%		4,222

Total equity in earnings of JOAs and other joint ventures	$	20,212		(10.2	)%	$	22,511	$	36,875		(8.0	)%	$	40,064

Certain items required to reconcile segment profitability to consolidated results of operations determined in accordance with accounting principles generally accepted in the United States of America are attributed to particular business segments. Significant reconciling items attributable to each business segment are as follows:



*( in thousands )*	2004		Quarter Period Change		2003		2004		Year-to-Date Change		2003
Depreciation and amortization:
Newspapers managed solely by us	$	5,207	(12.7	)%	$	5,966	$	10,534	(9.5	)%	$	11,641
Newspapers operated pursuant to JOAs		365	(5.7	)%		387		728	(6.1	)%		775

Total newspapers		5,572	(12.3	)%		6,353		11,262	(9.3	)%		12,416
Scripps Networks		2,719	(11.4	)%		3,070		5,441	(11.1	)%		6,117
Broadcast television		4,901	(3.2	)%		5,061		9,536	(2.1	)%		9,742
Shop At Home		2,397	25.2	%		1,914		4,386	29.3	%		3,393
Licensing and other media		162	(1.8	)%		165		320	(0.9	)%		323
Corporate		543	(1.8	)%		553		1,086	(1.4	)%		1,101

Total depreciation and amortization	$	16,294	(4.8	)%	$	17,116	$	32,031	(3.2	)%	$	33,092

Gain on sale of broadcast television producton facility	$	11,148					$	11,148

Interest and dividend income:
Newspapers managed solely by us	$	66			$	86	$	127			$	233
Newspapers operated pursuant to JOAs		5				4		11				10

Total newspapers		71				90		138				243
Summit America note		173				1,131		1,306				2,325
Other		59				45		86				76

Total interest and dividend income	$	303			$	1,266	$	1,530			$	2,644

F-31

Newspapers - We operate 21 daily newspapers in 19 markets in the U.S. Our newspapers earn revenue primarily from the sale of advertising space to local and national advertisers and from the sale of newspapers to readers. Four of our newspapers are operated pursuant to the terms of joint operating agreements. Each of those newspapers maintains an independent editorial operation and receives a share of the operating profits of the combined newspaper operations.

Newspapers managed solely by us: The newspapers managed solely by us operate in mid-size markets, focusing on news coverage within their local markets. Advertising and circulation revenues provide substantially all of each newspaper’s operating revenues and employee and newsprint costs are the primary expenses at each newspaper. Declines in circulation and readership of daily newspapers have resulted in a loss of advertising market share throughout the newspaper industry. Further declines in circulation and readership in our newspaper markets could adversely affect our newspapers.

The trends and underlying economic conditions affecting the operating performance of any of our newspapers are substantially the same as those affecting all of our newspapers. Our newspaper operating performance is most affected by newsprint prices and economic conditions, particularly within the retail, labor, housing and auto markets. From time-to-time, individual newspapers may perform better or worse than our newspaper group as a whole due to specific conditions at that newspaper or within its local economy. The operating performance of our Memphis newspaper was more adversely affected by the most recent recession, and its recovery has been more sluggish than our other newspapers. However, such variances between markets do not significantly affect the overall long-term operating performance of the newspaper segment.

Operating results for newspapers managed solely by us were as follows:



*( in thousands)*	2004			Quarter Period Change		2003		2004			Year-to-Date Change		2003
Segment operating revenues:
Local	$	40,602		(0.8	)%	$	40,948	$	83,260		(0.2	)%	$	83,439
Classified		55,237		1.9	%		54,196		110,940		3.3	%		107,431
National		9,720		(2.8	)%		10,003		19,268		2.5	%		18,798
Preprint and other		32,956		7.1	%		30,783		64,191		7.1	%		59,939

Newspaper advertising		138,515		1.9	%		135,930		277,659		3.0	%		269,607
Circulation		32,126		(4.7	)%		33,694		67,352		(2.7	)%		69,256
Other		4,082		27.4	%		3,204		8,185		25.7	%		6,511

Total operating revenues		174,723		1.1	%		172,828		353,196		2.3	%		345,374

Segment costs and expenses:
Employee compensation and benefits		65,768		3.9	%		63,322		131,839		4.7	%		125,894
Newsprint and ink		19,779		10.7	%		17,860		39,861		11.1	%		35,874
Other segment costs and expenses		38,219		8.8	%		35,128		77,255		9.9	%		70,312

Total costs and expenses		123,766		6.4	%		116,310		248,955		7.3	%		232,080

Contribution to segment profit before joint ventures		50,957		(9.8	)%		56,518		104,241		(8.0	)%		113,294
Equity in earnings (loss) of joint ventures		(35	)						(75	)

Contribution to segment profit	$	50,922		(9.9	)%	$	56,518	$	104,166		(8.1	)%	$	113,294

Supplemental Information:

Depreciation and amortization	$	5,207				$	5,966	$	10,534				$	11,641

Capital expenditures		5,374					6,862		14,216					21,939

Business acquisitions and other additions to long-lived assets														3,504

Newspaper advertising revenues increased in 2004 as increased help wanted classified advertising and preprint and other advertising offset declines in real estate and automotive advertising. We expect newspaper advertising revenue to increase between 2% and 4% year-over-year in the third quarter of 2004.

F-32

Increases in preprint and other advertising reflect the development of new print and electronic products and services. These products include niche publications such as community newspapers, lifestyle magazines, publications focused upon the classified advertising categories of real estate, employment and auto, and other publications aimed at younger readers. Additionally, our Internet sites had advertising revenues of $4.0 million in the second quarter of 2004 compared with $2.9 million in the second quarter of 2003. Year-to-date Internet advertising revenues were $7.5 million in 2004 compared with $5.6 million in 2003. We expect continued growth in advertising on our Internet sites as we continue to leverage our local franchises in help wanted, automotive and real estate advertising.

Employee compensation and benefit expenses increased due primarily to higher employee benefit costs, including a $1.4 million year-to-date increase in health care costs and a $1.0 million year-to-date increase in long-term disability costs.

Newsprint and ink costs increased in the second quarter and year-to-date periods due to newsprint prices increasing 11% during the current year. We expect newsprint costs to increase approximately 15% year-over-year in the third quarter of 2004.

Year-to-date other costs and expenses in 2004 include a $0.9 million charge for bad debts related to the Kmart bankruptcy. In February the U.S. Court of Appeals for the 7th Circuit affirmed a U.S. District Court ruling that Kmart incorrectly paid certain companies, including many of our newspapers, which had been identified by Kmart as “critical vendors.” As a result of the ruling, Kmart has been ordered to seek recovery of those payments, which were made in 2002 after bankruptcy proceedings were initiated. The payments made to our newspapers were for advertising that was purchased and published in the company’s newspapers prior to Kmart’s bankruptcy filing.

F-33

Newspapers operated under Joint Operating Agreements (“JOAs”): Four of our newspapers are operated pursuant to the terms of joint operating agreements (“JOAs”). The table below provides certain information about our JOAs.


Newspaper	Publisher of Other Newspaper	Year JOA Entered Into	Year of JOA Expiration
The Albuquerque Tribune	Journal Publishing Company	1933	2022
Birmingham Post-Herald	Newhouse Newspapers	1950	2015
The Cincinnati Post	Gannett Newspapers	1977	2007
Denver Rocky Mountain News	MediaNews Group, Inc.	2001	2051

Operating results for our newspapers operated under JOAs were as follows:


*( in thousands )*	2004		Quarter Period Change		2003		2004		Year-to-Date Change		2003
Equity in earnings of JOAs included in segment profit:
Denver	$	9,232	(10.5	)%	$	10,310	$	15,195	(6.7	)%	$	16,294
Cincinnati		5,551	6.2	%		5,226		10,529	(2.5	)%		10,800
Other		2,494	(46.5	)%		4,665		6,998	(20.0	)%		8,748

Total equity in earnings of JOAs included in segment profit		17,277	(14.5	)%		20,201		32,722	(8.7	)%		35,842
Operating revenues		59	(11.9	)%		67		117	(0.8	)%		118

Total		17,336	(14.5	)%		20,268		32,839	(8.7	)%		35,960

JOA editorial costs and expenses:
Denver		5,933	5.3	%		5,634		11,815	6.6	%		11,079
Cincinnati		2,029	3.7	%		1,956		4,051	4.0	%		3,896
Other		1,738	1.9	%		1,706		3,485	2.3	%		3,406

Total JOA editorial costs and expenses		9,700	4.3	%		9,296		19,351	5.3	%		18,381

JOAs contribution to segment profit:
Denver		3,336	(29.4	)%		4,727		3,456	(34.7	)%		5,296
Cincinnati		3,524	7.8	%		3,270		6,479	(6.2	)%		6,904
Other		776	(73.9	)%		2,975		3,553	(33.9	)%		5,379

Total JOA contribution to segment profit	$	7,636	(30.4	)%	$	10,972	$	13,488	(23.3	)%	$	17,579

Supplemental Information:

Depreciation and amortization	$	365			$	387	$	728			$	775

Capital expenditures		228				91		338				198

Second quarter and year-to-date JOA equity in earnings was reduced by a $2.5 million accrual recorded as a result of a court judgment involving The Birmingham News Co. Our newspaper, the Birmingham Post-Herald, is the minority, non-managing partner under a joint operating agreement with The Birmingham News Co. In June, the Alabama Supreme Court upheld an arbitration panel’s decision in favor of former contract newspaper carriers who challenged actions by The Birmingham News Co. that resulted in agreements with The Birmingham News Co. either not being renewed or being terminated before normal expiration.

Gannett Newspapers has notified us of its intent to terminate the Cincinnati JOA upon its expiration in 2007.

F-34

Scripps Networks- Scripps Networks includes four national television networks distributed by cable and satellite television systems: Home & Garden Television (“HGTV”), Food Network, DIY– Do It Yourself Network (“DIY”), and Fine Living. Programming from our networks can be viewed on demand (“VOD”) on cable television systems in about 84 markets across the United States. Scripps Networks also includes our 12% interest in FOX Sports Net South, a regional television network.

We launched HGTV in 1994. Food Network launched in 1993, and we acquired our controlling interest in 1997. We launched DIY in the fourth quarter of 1999 and Fine Living in the first quarter of 2002. We have used a similar strategy in developing each of our networks. Our initial focus is to gain distribution on cable and satellite television systems. We may offer incentives in the form of cash payments or an initial period in which payment of affiliate fees by the systems is waived in exchange for long-term distribution contracts. We create new and original programming and undertake promotion and marketing campaigns designed to increase viewer awareness. We expect to incur operating losses until network distribution and audience size are sufficient to attract national advertisers. As distribution of the network increases, we make additional investments in the quality and variety of programming and increase the number of hours of original programming offered on the network. Such investments are expected to result in increases in viewership, yielding higher advertising revenues.

While we have employed similar development strategies with each of our networks, there can be no assurance DIY and Fine Living will achieve operating performances similar to HGTV and Food Network. There has been considerable consolidation among cable and satellite television operators, with the eight largest providing services to approximately 90% of the homes that receive cable and satellite television programming. At the same time, there has been an expansion in the number of programming services seeking distribution on those systems, with the number of networks more than doubling since 1996. DIY, Fine Living and our VOD and broadband initiatives are expected to reduce segment profits by approximately $18 million in the second half of 2004 and approximately $34 million for the full year of 2004.

Operating results for each of our four national networks were as follows:



*( in thousands )*	2004			Quarter Period Change		2003			2004			Year-to-Date Change		2003
Operating revenues:
HGTV	$	101,390		28.1	%	$	79,135		$	186,488		27.7	%	$	146,050
Food Network		78,311		40.4	%		55,781			141,453		40.1	%		100,982
DIY		8,182		65.6	%		4,942			14,974		77.6	%		8,429
Fine Living		4,837		146.2	%		1,965			8,525		202.2	%		2,821
Other		100					100			149		(29.4	)%		211

Total segment operating revenues		192,820		35.9	%		141,923		$	351,589		36.0	%	$	258,493

Contribution to segment profit (loss):
HGTV		56,560		39.3	%		40,592		$	100,561		33.4	%	$	75,380
Food Network		38,001		59.5	%		23,828			65,084		55.9	%		41,754
DIY		(1,813	)	29.4	%		(2,568	)		(4,224	)	32.5	%		(6,259	)
Fine Living		(5,082	)	23.1	%		(6,611	)		(10,234	)	25.2	%		(13,683	)
Other		(131	)				703			(1,347	)				352

Total segment profit	$	87,535		56.5	%	$	55,944		$	149,840		53.6	%	$	97,544

Homes reached in June (1):
HGTV										85,600		5.7	%		81,000
Food Network										84,100		6.3	%		79,100
DIY										29,000		52.6	%		19,000
Fine Living										23,000		35.3	%		17,000

(1)	Approximately 87 million homes in the United States receive cable or satellite television. Homes reached are according to the Nielsen Homevideo Index (“Nielsen”), with the exception of DIY and Fine Living which are not yet rated by Nielsen and represent comparable amounts calculated by us.

Each of our four national television networks is a targeted lifestyle-oriented network. Advertising and network affiliate fees provide substantially all of each network’s operating revenues and employee costs and programming costs are the primary expenses. The trends and underlying economic conditions affecting each of our networks are substantially the same as those affecting all of our networks, primarily the demand for national advertising.

F-35

Operating results for Scripps Networks were as follows:



*( in thousands )*	2004			Quarter Period Change		2003			2004			Year-to-Date Change		2003
Segment operating revenues:
Advertising	$	157,472		34.9	%	$	116,771		$	279,886		33.3	%	$	209,929
Network affiliate fees, net		33,554		43.8	%		23,336			67,431		48.0	%		45,557
Other		1,794		(1.2	)%		1,816			4,272		42.1	%		3,007

Total segment operating revenues		192,820		35.9	%		141,923			351,589		36.0	%		258,493

Segment costs and expenses:
Employee compensation and benefits		23,759		10.6	%		21,476			45,975		11.9	%		41,095
Programs and program licenses		39,742		24.4	%		31,936			77,821		26.7	%		61,430
Other segment costs and expenses		44,754		28.3	%		34,877			82,181		31.2	%		62,646

Total segment costs and expenses		108,255		22.6	%		88,289			205,977		24.7	%		165,171

Segment profit before joint ventures		84,565		57.7	%		53,634			145,612		56.0	%		93,322
Equity in income of joint ventures		2,970		28.6	%		2,310			4,228		0.1	%		4,222

Segment profit	$	87,535		56.5	%	$	55,944		$	149,840		53.6	%	$	97,544

Supplemental Information:

Billed network affiliate fees	$	39,495		51.2	%	$	26,127		$	78,807		54.0	%	$	51,182

Network launch incentive payments		23,722					4,203			29,394					19,938

Payments for programming less (greater) than program cost amortization		(11,972	)				(5,758	)		(18,555	)				(14,688	)

Depreciation and amortization		2,719					3,070			5,441					6,117

Capital expenditures		10,695					2,011			14,602					2,400

Business acquisitions and other additions to long-lived assets		58,441					44,392			104,064					85,407

Increased viewership of our networks led to increased demand for advertising time and higher advertising rates. Increased viewership has been driven by wider distribution of the networks and higher ratings resulting from our investments in the quality and hours of original programming and marketing campaigns to promote consumer awareness of the networks. Advertising revenues are expected to increase approximately 35% year-over-year in the third quarter of 2004.

The increase in network affiliate fees reflects both scheduled rate increases and wider distribution of the networks. In addition, the charter distribution agreements for Food Network provided the programming to cable television systems without charge for the initial 10-year term of the agreement. Charter distribution agreements with cable television systems distributing our programming to approximately 25 million homes expired at the end of 2003. Distribution agreements with cable and satellite television systems currently in force require the payment of affiliate fees over the terms of the agreements. Network affiliate fees are expected to increase approximately 40% year-over-year in the third quarter of 2004.

Employee compensation and benefit expenses increased due to the hiring of additional employees to support the growth of Fine Living and DIY.

Programs and program licenses and other costs and expenses increased due to the improved quality and variety of programming, expanded hours of original programming and continued efforts to promote the programming in order to attract a larger audience. Our continued investment in building viewership across all four networks is expected to increase programming and marketing expenses approximately 30% year-over-year in the third quarter of 2004.

F-36

Broadcast Television - We operate 10 broadcast television stations. Each station is located in one of the 60 largest television markets in the U.S. Nine of our television stations are affiliated with national broadcast television networks. Six are ABC affiliates and three are NBC affiliates. Our broadcast television stations earn revenue primarily from the sale of advertising time to local and national advertisers.

National broadcast television networks offer affiliates a variety of programs and sell the majority of advertising within those programs. We may receive compensation from the network for carrying its programming. In addition to network programs, we broadcast locally produced programs, syndicated programs, sporting events, and other programs of interest in each station’s market. News is the primary focus of our locally-produced programming.

Advertising provides substantially all of each station’s operating revenues. Employee and programming costs are the primary expenses. Increased viewing choices on cable and satellite television systems and the growth of alternative electronic entertainment devices has resulted in fragmentation of the viewing audience. Further audience fragmentation could adversely affect our broadcast television stations.

The trends and underlying economic conditions affecting the operating performance of any of our broadcast television stations are substantially the same as those affecting all of our stations. The operating performance of our broadcast television group is most affected by the health of the economy, particularly conditions within the retail and auto markets, and by the volume of advertising time purchased by campaigns for elective office and for political issues. The demand for political advertising is significantly higher in even-numbered years, when congressional and presidential elections occur, than in odd-numbered years. From time-to-time, individual television stations may perform better or worse than our television station group as a whole due to specific conditions at that station or within its local economy. However, such variances do not significantly affect the overall operating performance of the broadcast television segment.

Operating results for broadcast television were as follows:



*( in thousands )*	2004		Quarter Period Change		2003		2004			Year-to-Date Change		2003
Segment operating revenues:
Local	$	50,095	4.4	%	$	47,997	$	94,464		3.3	%	$	91,446
National		26,850	3.4	%		25,976		49,481		2.0	%		48,497
Political		6,172				847		10,324					1,008
Network compensation		2,207	2.3	%		2,158		4,545		0.1	%		4,540
Other		2,055	8.6	%		1,892		4,223		18.9	%		3,552

Total segment operating revenues		87,379	10.8	%		78,870		163,037		9.4	%		149,043

Segment costs and expenses:
Employee compensation and benefits		30,798	6.3	%		28,960		61,428		5.7	%		58,134
Programs and program licenses		11,738	5.2	%		11,155		23,522		7.5	%		21,887
Other segment costs and expenses		16,628	16.8	%		14,233		32,645		13.0	%		28,894

Total segment costs and expenses		59,164	8.9	%		54,348		117,595		8.0	%		108,915

Segment profit	$	28,215	15.1	%	$	24,522	$	45,442		13.2	%	$	40,128

Supplemental Information:

Payments for programming less (greater) than program cost amortization	$	126			$	1,522	$	(581	)			$	889

Depreciation and amortization		4,901				5,061		9,536					9,742

Capital expenditures		4,397				7,815		9,320					11,941

Business acquisitions and other additions to long-lived assets						918							918

F-37

Broadcast television operating results are significantly affected by the political cycle. Our stations, while reaching approximately 10% of U.S. television households, are located in states with 22% of the electoral vote. We operate five television stations in the key electoral states of Michigan, Ohio and Florida. We expect political advertising in the third quarter of 2004 to be between $11 and $12 million.

Local and national advertising revenue increased in 2004 over 2003 due to a stronger television advertising market and the successful development of new business in our station’s local markets. Advertising revenues, including political advertising, are expected to increase approximately 20% year-over-year in the third quarter of 2004.

Our six ABC affiliation agreements expire in 2004 through 2006. Our ABC affiliates recognized $2.1 million of network compensation revenue in the second quarter of 2004 and 2003. Year-to-date network compensation revenue was $4.4 million in 2004 and 2003. We are currently negotiating renewal of our affiliation agreements with ABC. While we expect network compensation will be reduced under the new agreements, we are unable to predict the amount of network compensation we may receive upon renewal of these agreements.

F-38

Shop At Home - On April 14, 2004, we completed our acquisition of Summit America Television Inc. (“Summit America”). Summit America owns a 30% minority interest in Shop At Home and owns and operates five Shop At Home-affiliated broadcast television stations.

Shop At Home markets a range of consumer goods directly to television viewers and visitors to its Web site. Programming is distributed on a full or part-time basis under the terms of affiliation agreements with broadcast television stations and cable and satellite television systems. Affiliates are paid a fee (“network distribution fee”) based upon the number of cable and direct broadcast satellite households reached by the affiliate.

Retail merchandise sales provide substantially all of Shop At Home’s operating revenues and cost of merchandise sold and network distribution costs are the primary expenses. Shop At Home’s operating results are influenced by the distribution of the network, our ability to attract an audience, our selection and mix of product, and by consumers’ discretionary spending.

Operating results for Shop At Home were as follows:


	2004			Quarter Period Change		2003			2004			Year-to-Date Change		2003
*( in thousands )*	2004			Quarter Period Change		2003			2004			Year-to-Date Change		2003
Segment operating revenues:
Retail merchandise	$	62,304		16.3	%	$	53,572		$	131,646		21.3	%	$	108,534
Shipping and handling		3,247		18.9	%		2,731			7,235		25.8	%		5,753
Other		756		125.7	%		335			1,405		110.3	%		668

Total segment operating revenues		66,307		17.1	%		56,638			140,286		22.0	%		114,955

Segment costs and expenses:
Cost of merchandise sold		41,235		11.6	%		36,947			88,999		17.4	%		75,803
Network distribution fees		13,360		(15.8	)%		15,862			28,655		(8.6	)%		31,343
Employee compensation and benefits		7,343		35.2	%		5,433			15,473		41.9	%		10,904
Other segment costs and expenses		7,109		77.6	%		4,003			13,520		60.1	%		8,445

Total segment costs and expenses		69,047		10.9	%		62,245			146,647		15.9	%		126,495

Segment profit (loss)	$	(2,740	)	51.1	%	$	(5,607	)	$	(6,361	)	44.9	%	$	(11,540	)

Supplemental Information:

Interest and dividend income from Summit America	$	173				$	1,131		$	1,306				$	2,325

Depreciation and amortization		2,397					1,914			4,386					3,393

Capital expenditures		1,213					392			3,039					1,713

Business acquisitions and other additions to long-lived assets		228,686								228,686

We continue to integrate management of Shop At Home with that of Scripps Networks and to shift the mix of retail products offered for sale by Shop At Home to parallel the consumer categories targeted by our lifestyle programming networks. Sales of products for the home and cookware were approximately 8% of total revenue in the second quarter of 2004 compared to 6% in the second quarter of 2003. Year-to-date sales of products for the home and cookware were approximately 9% of total revenue in 2004 compared to 6% in 2003. The improvement in 2004 operating results is partially attributed to the fact that operating results were negatively affected in 2003 after the beginning of the war in Iraq.

In connection with the acquisition of Summit America, we assumed Summit America’s obligations to us under the $47.5 million secured loan and $3 million redeemable preferred stock extended to Summit America as part of the 2002 acquisition of the controlling interest in Shop At Home. We also assumed Summit America’s rights under the Shop At Home affiliation agreements with the Summit America broadcast television stations. Accordingly, interest and dividend income from Summit America and network distribution fees paid to the Summit America broadcast television stations ceased upon the acquisition of Summit America.

Our continuing investment in Shop At Home is expected to reduce segment profits by about $6 million and net income by about $.07 per share in the third quarter of 2004.

F-39

LIQUIDITY AND CAPITAL RESOURCES

Our primary source of liquidity is our cash flow from operating activities. Advertising has historically provided 70% of total operating revenues, so cash flow from operating activities is adversely affected during recessionary periods. Information about our use of cash flow from operating activities is presented in the following table:


	Six months ended June 30,
*( in thousands )*	2004			2003
Net cash provided by operating activities	$	160,537		$	156,740
Capital expenditures		(42,288	)		(39,548	)
Dividends paid, including to minority interests		(31,221	)		(24,799	)
Other - primarily stock option proceeds		21,017			18,324

Cash flow available for acquisitions and debt repayment	$	108,045		$	110,717

Use of available cash flow:
Business acquisitions and net investment activity	$	(170,911	)	$	(4,118	)
Other investing activity		2,966			(362	)
Increase (decrease) in long-term debt		67,171			(97,770	)

Our cash flow has been used primarily to fund acquisitions and investments and to develop new businesses. There are no significant legal or other restrictions on the transfer of funds among our business segments.

Net cash provided by operating activities increased year-over-year due to improved operating performance of our business segments. Cash required for the development of our emerging brands ( DIY, Fine Living, VOD and Shop At Home) was approximately $35 million in the first half of 2004. We expect cash flow from operating activities in 2004 will provide sufficient liquidity to continue the development of our emerging brands and to fund the capital expenditures necessary to support our businesses.

On April 14, 2004, we completed the acquisition of Summit America Television Inc. for approximately $180 million in cash. The acquisition of Summit America was financed through cash and short-term investments on hand and additional borrowings on our existing credit facilities.

In the second quarter of 2004, the Denver JOA entered into an $88 million financing arrangement with a group of banks to construct a new office building for the non-production related employees of the Denver JOA and the editorial departments of both the Rocky Mountain News and Media News Group’s (“MNG”) Denver Post. Upon completion of construction, which is expected to take approximately 24 months, the Denver JOA will lease the building for an initial term of five years. Scripps and MNG are not parties to the arrangement and have not guaranteed any of the Denver JOA’s obligations under the arrangement. At the end of the initial lease term the Denver JOA will either renegotiate an additional lease term, relocate to an alternative building or acquire the building. Relocation or acquisition of the building may require capital contributions by the JOA partners.

At June 30, 2004, we had two credit facilities, one permitting $375 million in aggregate borrowings expiring in August 2004 and the second a $200 million facility expiring in 2007. Total borrowings under the facilities were $120 million at June 30, 2004. Effective July 30th, both facilities were replaced with a single facility that permits $450 million in aggregate borrowings and expires in July 2009. There were no other material changes in the terms and conditions of the facility.

Our access to commercial paper markets can be affected by macroeconomic factors outside of our control. In addition to macroeconomic factors, our access to commercial paper markets and our borrowing costs are affected by short and long-term debt ratings assigned by independent rating agencies.

We have a U.S. shelf registration statement which allows us to borrow up to an additional $350 million as of June 30, 2004.

F-40

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Earnings and cash flow can be affected by, among other things, economic conditions, interest rate changes, foreign currency fluctuations (primarily in the exchange rate for the Japanese yen) and changes in the price of newsprint. We are also exposed to changes in the market value of our investments.

We may use foreign currency forward and option contracts to hedge our cash flow exposures that are denominated in Japanese yen and forward contracts to reduce the risk of changes in the price of newsprint on anticipated newsprint purchases. We held no foreign currency or newsprint derivative financial instruments at June 30, 2004.

The following table presents additional information about market-risk-sensitive financial instruments:


	As of June 30, 2004						As of December 31, 2003
*( in thousands, except share data )*	Cost Basis			Fair Value			Cost Basis		Fair Value
Financial instruments subject to interest rate risk:
Variable-rate credit facilities, including commercial paper	$	119,882		$	119,882		$	50,187	$	50,187
$100 million, 6.625% notes, due in 2007		99,953			112,625			99,946		113,146
$50 million, 3.75% notes, due in 2008		50,000			49,328			50,000		50,302
$100 million, 4.25% notes, due in 2009		99,478			98,410			99,430		102,160
$200 million, 5.75% notes, due in 2012		198,997			208,159			198,934		214,863
Other notes		7,794			8,096			10,318		9,604

Total long-term debt including current portion	$	576,104		$	596,500		$	508,815	$	540,262

Interest rate swap	$	(672	)	$	(672	)	$	302	$	302

Note from Summit America, including accreted discount (c)							$	44,750	$	46,000

Financial instruments subject to market value risk:
Time Warner (2,017,000 common shares)	$	29,667		$	35,456		$	29,667	$	36,283
Digital Theater Systems (“DTS”) (554,000 common shares) (b)								11		13,690
Other available-for-sale securities		2,158			6,015			478		3,932

Total investments in publicly-traded companies		31,825			41,471			30,156		53,905
Summit America preferred stock (c)								3,240			^(a)
Other equity securities		8,907				^(a)		9,240			^(a)

(a)

Includes securities that do not trade in public markets, so the securities do not have readily determinable fair values. We estimate the fair value of these securities approximates their carrying value. However, many of the investees have not issued new equity within the past three years. There can be no assurance that we would realize the carrying value upon sale of the securities.

(b)	Our shares in DTS were sold during the first quarter of 2004.

(c)	On April 14, 2004, we completed the acquisition of Summit America Television Inc. As part of the transaction, we assumed Summit America’s obligations to us under the note and redeemable preferred stock.

Our objectives in managing interest rate risk are to limit the impact of interest rate changes on our earnings and cash flows and to reduce our overall borrowing costs. We manage interest rate risk primarily by maintaining a mix of fixed-rate and variable-rate debt. In February 2003, we issued $50 million of 3.75% notes due in 2008. Concurrently, we entered into a receive-fixed, pay-floating interest rate swap, effectively converting the notes to a variable-rate obligation indexed to LIBOR. We account for the interest rate swap as a fair value hedge of the underlying fixed-rate notes. As a result, changes in the fair value of the interest rate swap are offset by changes in the fair value of the swapped notes and no net gain or loss is recognized in earnings.

F-41

CONTROLS AND PROCEDURES

Scripps’ management is responsible for the preparation, integrity and objectivity of the consolidated financial statements and other information presented in this report. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and reflect certain estimates and adjustments by management. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, we must make a variety of decisions that affect the reported amounts and the related disclosures. Such decisions include the selection of accounting principles that reflect the economic substance of the underlying transactions and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience, actuarial studies and other assumptions. We re-evaluate our estimates and assumptions on an ongoing basis. While actual results could differ from those estimated at the time of preparation of the financial statements, we are committed to preparing financial statements incorporating accounting principles, assumptions and estimates that promote the representational faithfulness, verifiability, neutrality and transparency of the accounting information included in the financial statements.

We maintain a system of internal accounting controls and procedures, which management believes provide reasonable assurance that transactions are properly recorded and that assets are protected from loss or unauthorized use.

We maintain a system of disclosure controls and procedures to ensure timely collection and evaluation of information subject to disclosure, to ensure the selection of appropriate accounting polices, and to ensure compliance with our accounting policies and procedures. Our disclosure control systems and procedures include the certification of financial information provided from each of our businesses by the management of those businesses.

The integrity of the internal accounting and disclosure control systems is based on written policies and procedures, the careful selection and training of qualified financial personnel, a program of internal audits and direct management review. Our disclosure control committee meets periodically to review our systems and procedures and to review our financial statements and related disclosures.

Both the internal and independent auditors have direct and private access to the Audit Committee.

The effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) was evaluated as of the date of the financial statements. This evaluation was carried out under the supervision of and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures are effective. There were no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of the most recent evaluation.

F-42

THE E. W. SCRIPPS COMPANY

Index to Exhibits


Exhibit No.	Item	Page
3-01	Amended Articles of Incorporation	(1	)
12	Ratio of Earnings to Fixed Charges	E-2
31(a)	Rule 13a-14(a)/15d-14(a) Certifications	E-3
31(b)	Rule 13a-14(a)/15d-14(a) Certifications	E-4
32(a)	Section 1350 Certifications	E-5
32(b)	Section 1350 Certifications	E-6

(1)	Incorporated by reference to The E. W. Scripps Company Current Report on Form 8-K dated July 21, 2004.

E - 1