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| 8-K - FORM 8-K - E.W. SCRIPPS Co | c24393e8vk.htm |
EXHIBIT 99.1
Scripps reports third-quarter results
| For immediate release November 8, 2011 |
(NYSE: SSP) |
CINCINNATI — The E.W. Scripps Company reported operating results for the third quarter of 2011
that reflect slightly better expense discipline than management estimated in August, and a revenue
decline caused principally by lower political spending in this non-election year.
Consolidated revenues from continuing operations were $168 million, a decrease of 8.6 percent from
$184 million in the third quarter of 2010.
Operating expenses totaled $165 million, down 4.9 percent from the second quarter, and down 2.3
percent compared with the year-ago quarter. Restructuring costs, largely for the ongoing efforts to
standardize and centralize certain functions that should benefit the newspaper division starting in
2012, were $2.6 million.
The third quarter results include a non-cash charge for the impairment of long-lived assets at four
of the company’s newspapers. The company concluded that the fair value of certain of its newspapers
was less than the carrying value of its net assets. Scripps recorded in the third quarter a $9
million, pre-tax, non-cash charge to reduce the carrying value of property and equipment.
Largely due to the impairment charge, the company reported an $18.2 million loss from continuing
operations before income taxes, compared with what was essentially a breakeven quarter a year ago.
The loss from continuing operations, net of tax, was $10.7 million, or 19 cents per share in the
2011 quarter, compared with income from continuing operations, net of tax, of $5.4 million, or 8
cents per share, in the year-ago quarter. Excluding the effect of the impairment charge, the loss
from continuing operations, net of tax, would have been 9 cents per share in the most-recent
quarter.
The tax provisions in the third quarter of both 2011 and 2010 include the impact of favorable
settlements of the examinations of prior-year tax returns.
“We continue to reshape Scripps, improving the company’s short-term and long-term opportunities for
growth,” said Rich Boehne, Scripps president and CEO. “We believe local TV stations are both good
businesses today and attractive launching pads for the future, which is why during the quarter we
agreed to purchase the nine stations now owned by McGraw-Hill Broadcasting. At a purchase price of
$212 million, we should show a strong return on investment and gain access to TV and digital media
consumers and advertisers in Indianapolis, Denver and San Diego. Plus we picked up a great
small-market station in Bakersfield, Calif., and access to the developing Spanish-language market
through five Azteca stations in Colorado and California. We’re eager to close the deal and bring
these businesses into the Scripps fold.
“In our current television markets, we’re seeing improved ratings through investments in the
quality of on-air news programming. Higher local news ratings are driving underlying revenue growth
that will provide a strong base on which we’ll stack political advertising in 2012. Local TV
advertising grew at a double-digit pace in the third quarter and was up substantially from the
amounts we booked in the previous non-political year 2009.
“We also moved during the quarter to launch a new digital media group, combining resources across
the company into a single organization focused on delivering market-leading digital products across
our markets. This demonstrates that products and services for digital audiences are now core to
what we do today at Scripps. This reorganization also will make us more efficient, improve speed to
market for new services, heighten accountability and enable us to better build or buy additional
digital brands.
“In our newspaper markets we continue to simplify the business, focusing resources on those
products and services that are most beneficial to local readers and advertisers. Total revenue
declines slowed, but we’re still racing to create common advertising and circulation platforms and
systems to lower expenses and improve our opportunity to capitalize on local advertising revenues.
Despite the weakness in ad revenues, we continue to enjoy strong audiences, in both print and on
digital platforms, for high-quality enterprise journalism.”
Third-quarter results by segment are as follows:
Television
Total revenue from the company’s television stations was $69.9 million in the third quarter of 2011
— an 11 percent decrease compared with $78.5 million in the year-ago period, but a 17 percent
increase from the same period in 2009, the previous third quarter in a non-election year.
Excluding political advertising from the 2011 and 2010 totals, revenue increased 6.5 percent.
Advertising revenue broken down by category was:
| • | Local, up 11 percent to $41.7 million |
| • | National, down 6.6 percent to $18.8 million |
| • | Political was $2.1 million, compared with $14.8 million in the 2010 quarter |
Revenue from retransmission consent agreements increased 32 percent year over year to $4.0 million.
Digital revenue was $2.2 million, an increase of 11 percent compared with the third quarter of
2010.
Expenses for the TV station group rose by 2.7 percent year over year to $62.5 million in the third
quarter. Slightly lower programming expenses were offset by higher employee costs as a consequence
of the decision earlier this year to restore certain retirement plan benefits. Programming costs
are expected to drop further since Oprah no longer airs.
The television division’s segment profit in the third quarter was $7.5 million, compared with
segment profit in the year-ago quarter of $17.7 million. (See Note 1 in the attached financial
information for a definition of segment profit.)
Newspapers
Total revenue from Scripps newspapers fell 4.4 percent year over year to $96.0 million in the third
quarter of 2011, reflecting an improvement in the rate of decline from the second quarter, when the
year-over-year decline in revenues was 5.6 percent.
Circulation revenue in the third quarter was essentially unchanged at $28.6 million.
Print advertising revenue was down 7.9 percent to $56.5 million.
Advertising revenue broken down by category was:
| • | Local, down 3.4 percent to $18.6 million |
| • | Classified, down 10 percent to $18.7 million |
| • | National, down 31 percent to $3.1 million |
| • | Preprint and other, down 4.1 percent to $16.1 million |
Within the classified advertising category, help wanted advertising was essentially flat compared
with the year-ago period, while automotive advertising was down 8.7 percent, and real estate
advertising, which has been weak due to the prolonged nationwide housing slump, was down 17
percent.
In 2011, we began reporting revenue from certain of our digital offerings net of the amounts paid
to our digital partners. As a result of this change, reported digital revenues decreased 8.2
percent to $6.4 million and reported pure-play digital advertising was down 3.2 percent. If 2010
revenues had been reported on this net basis, total digital revenues in the third quarter of 2011
would have been unchanged and pure-play digital revenues would have increased 6.4 percent.
Management’s August guidance included a low-single-digit percentage increase in third-quarter
newspaper expenses. Due to lower employee costs, the newspaper division’s actual expenses were
essentially flat at $94.4 million.
The expense for newsprint and press supplies increased 6.5 percent in the quarter, largely driven
by a 5.5 percent increase in the price of newsprint.
Third-quarter segment profit in the newspaper division was $1.6 million, compared with segment
profit of $6.6 million in the third quarter of 2010.
Syndication and other
The “syndication and other” category of the company’s financial statements includes the performance
of United Media’s remaining syndication business and a number of smaller entities. The September
period is the first full fiscal quarter to reflect the previously announced arrangement with
Universal Uclick, which began providing syndicate services for United Media on June 1.
In the third quarter, revenues were $2.0 million, and the segment operated essentially at a
breakeven level, compared with a segment loss of $1.1 million in the third quarter of 2010.
Financial condition
Scripps had cash and cash equivalents of $147 million at the end of the quarter, and no long-term
debt. At June 30, 2011, and Sept. 30, 2010, cash and cash equivalents were $157 million and $169
million, respectively.
The company repurchased 2.0 million shares during the quarter at a weighted average price of $8.04,
bringing the year-to-date total to 4.6 million shares. The remaining repurchase authorization,
which expires at the end of 2012, stands at $36 million as of September 30, 2011.
Year-to-date results
Revenue from continuing operations through the first three quarters of the year was $531 million,
compared with $557 million in the prior-year period.
Scripps reported a net loss from continuing operations of $21.8 million, or 38 cents per share, in
the first nine months of the year, compared with net income from continuing operations of $5.2
million, or 8 cents per share, in the first nine months of 2010.
Excluding the newspaper impairment charge mentioned above, Scripps reported a net loss from
continuing operations of $16.2 million, or 28 cents per share, in the first nine months of 2011
Looking ahead
For year-over-year performance of key metrics in the fourth quarter, management expects:
| • | Television revenues to be down in the high teens; excluding political advertising in both periods, television revenues are expected to be up in the high-single digits to low-double digits |
| • | Television expenses to be down in the mid-single digits |
| • | Newspaper revenues to be down at approximately the same rate as in the third quarter |
| • | Newspaper expenses to be down slightly |
Management expects corporate and shared services to be about $8 million.
Conference call
The senior management of The E.W. Scripps Company will discuss the company’s third-quarter results
during a telephone conference call at 9 a.m. (Eastern) today. Scripps will offer a live audio
webcast of the conference call. To access the webcast, visit www.scripps.com, choose “Investor
Relations” then follow the link in the “Upcoming Events” section.
To access the conference call by telephone, dial 1-800-230-1085 (U.S.) or 1-612-288-0340
(international), approximately 10 minutes before the start of the call. Callers will need the name
of the call (“third quarter earnings report”) to be granted access. Callers also will be asked to
provide their name and company affiliation. The media and general public are provided access to the
conference call on a listen-only basis.
A replay line will be open from 11 a.m. (Eastern) Nov. 8 until 11:59 p.m. (Eastern) Nov. 15. The
domestic number to access the replay is 1-800-475-6701 and the international number is
1-320-365-3844. The access code for both numbers is 220282.
A replay of the conference call will be archived and available online for an extended period of
time following the call. To access the audio replay, visit
www.scripps.com approximately
four hours after the call, choose “investor relations” then follow the “audio archives” link on the
left navigation bar.
Forward-looking statements
This press release contains certain forward-looking statements related to the company’s businesses
that are based on management’s current expectations. Forward-looking statements are subject to
certain risks, trends and uncertainties, including changes in advertising demand and other economic
conditions that could cause actual results to differ materially from the expectations expressed in
forward-looking statements. All forward-looking statements should be evaluated with the
understanding of their inherent uncertainty. The company’s written policy on forward-looking
statements can be found in its 2010 SEC Form 10K. The company undertakes no obligation to publicly
update any forward-looking statements to reflect events or circumstances after the date the
statement is made.
About Scripps
The E.W. Scripps Company is a diverse media enterprise with interests in television stations,
newspapers, local news and information Web sites, and syndication of news features and comics. For
a full listing of Scripps media companies and their associated Web sites, visit
http://www.scripps.com/.
###
Contact Tim King, The E.W. Scripps Company, 513-977-3732
tim.king@scripps.com
tim.king@scripps.com
THE E. W. SCRIPPS COMPANY
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (in thousands, except per share data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Operating revenues |
$ | 167,871 | $ | 183,587 | $ | 531,263 | $ | 556,652 | ||||||||
Costs and expenses, excluding restructuring costs |
(164,624 | ) | (168,464 | ) | (516,128 | ) | (508,532 | ) | ||||||||
Restructuring costs |
(2,614 | ) | (3,206 | ) | (6,529 | ) | (10,269 | ) | ||||||||
Depreciation and amortization |
(10,052 | ) | (10,724 | ) | (30,501 | ) | (33,920 | ) | ||||||||
Impairment of long-lived assets |
(9,000 | ) | — | (9,000 | ) | — | ||||||||||
Gains (losses), net on disposal of property, plant
and equipment |
476 | (525 | ) | 234 | (1,260 | ) | ||||||||||
Operating income (loss) |
(17,943 | ) | 668 | (30,661 | ) | 2,671 | ||||||||||
Interest expense |
(362 | ) | (741 | ) | (1,167 | ) | (2,434 | ) | ||||||||
Miscellaneous, net |
110 | 39 | (622 | ) | 950 | |||||||||||
Income (loss) from continuing operations before
income taxes |
(18,195 | ) | (34 | ) | (32,450 | ) | 1,187 | |||||||||
Benefit for income taxes |
7,473 | 5,459 | 10,621 | 4,021 | ||||||||||||
Income (loss) from continuing operations, net of tax |
(10,722 | ) | 5,425 | (21,829 | ) | 5,208 | ||||||||||
Income from discontinued operations, net of tax |
— | 820 | — | 99,664 | ||||||||||||
Net income (loss) attributable to the shareholders of
The E.W. Scripps Company |
$ | (10,722 | ) | $ | 6,245 | $ | (21,829 | ) | $ | 104,872 | ||||||
Net income (loss) per basic share of common stock attributable
to the shareholders of The E.W. Scripps Company: |
||||||||||||||||
Income (loss) from continuing operations |
$ | (0.19 | ) | $ | 0.08 | $ | (0.38 | ) | $ | 0.08 | ||||||
Income from discontinued operations |
0.00 | 0.01 | 0.00 | 1.56 | ||||||||||||
Net income (loss) per basic share of common stock |
$ | (0.19 | ) | $ | 0.10 | $ | (0.38 | ) | $ | 1.64 | ||||||
Weighted average basic shares outstanding |
56,834 | 57,435 | 58,071 | 56,512 | ||||||||||||
Net income (loss) per share amounts may not foot since each is calculated independently.
See notes to results of operations.
Notes to Results of Operations
1. 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.
Television includes six ABC-affiliated stations, three NBC-affiliated stations and one independent
station. Our television stations reach approximately 10% of the nation’s television households.
Television stations earn revenue primarily from the sale of advertising to local and national
advertisers.
Our newspaper business segment includes daily and community newspapers in 13 markets in the U.S.
Newspapers earn revenue primarily from the sale of advertising to local and national advertisers
and from the sale of newspapers to readers.
Syndication and other media primarily include syndication of news features and comics and other
features for the newspaper industry.
We allocate a portion of certain corporate costs and expenses, including information technology,
pensions and other employee benefits, and other shared services, to our business segments. The
allocations are generally amounts agreed upon by management, which may differ from an arms-length
amount. Corporate assets are primarily cash, cash equivalents and other short-term investments,
property and equipment primarily used for corporate purposes, and deferred income taxes.
Our chief operating decision maker evaluates the operating performance of our business segments and
makes decisions about the allocation of resources to our business segments using a measure called
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 (loss) determined in accordance with accounting principles generally
accepted in the United States of America.
Information regarding our business segments is as follows:
| Three months ended | Nine months ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| (in thousands) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
Segment operating revenues: |
||||||||||||||||||||||||
Television |
$ | 69,939 | $ | 78,515 | (10.9 | )% | $ | 215,933 | $ | 220,164 | (1.9 | )% | ||||||||||||
Newspapers |
95,948 | 100,416 | (4.4 | )% | 304,080 | 321,016 | (5.3 | )% | ||||||||||||||||
Syndication and other |
1,984 | 4,656 | (57.4 | )% | 11,250 | 15,472 | (27.3 | )% | ||||||||||||||||
Total operating revenues |
$ | 167,871 | $ | 183,587 | (8.6 | )% | $ | 531,263 | $ | 556,652 | (4.6 | )% | ||||||||||||
Segment profit (loss): |
||||||||||||||||||||||||
Television |
$ | 7,461 | $ | 17,658 | $ | 27,315 | $ | 37,611 | ||||||||||||||||
Newspapers |
1,595 | 6,645 | 11,872 | 37,775 | ||||||||||||||||||||
Syndication and other |
156 | (1,072 | ) | (1,727 | ) | (2,371 | ) | |||||||||||||||||
Corporate and shared services |
(5,965 | ) | (8,108 | ) | (22,325 | ) | (24,895 | ) | ||||||||||||||||
Depreciation and amortization |
(10,052 | ) | (10,724 | ) | (30,501 | ) | (33,920 | ) | ||||||||||||||||
Impairment of long-lived assets |
(9,000 | ) | — | (9,000 | ) | — | ||||||||||||||||||
Gains (losses), net on disposal
of property, plant and equipment |
476 | (525 | ) | 234 | (1,260 | ) | ||||||||||||||||||
Interest expense |
(362 | ) | (741 | ) | (1,167 | ) | (2,434 | ) | ||||||||||||||||
Restructuring costs |
(2,614 | ) | (3,206 | ) | (6,529 | ) | (10,269 | ) | ||||||||||||||||
Miscellaneous, net |
110 | 39 | (622 | ) | 950 | |||||||||||||||||||
Income (loss) from continuing
operations before income taxes |
$ | (18,195 | ) | $ | (34 | ) | $ | (32,450 | ) | $ | 1,187 | |||||||||||||
The following is segment operating revenue for television:
| Three months ended | Nine months ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| (in thousands) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
Segment operating revenues: |
||||||||||||||||||||||||
Local |
$ | 41,725 | $ | 37,638 | 10.9 | % | $ | 128,553 | $ | 119,672 | 7.4 | % | ||||||||||||
National |
18,767 | 20,099 | (6.6 | )% | 61,257 | 62,524 | (2.0 | )% | ||||||||||||||||
Political |
2,053 | 14,775 | 3,435 | 20,001 | ||||||||||||||||||||
Retransmission |
3,994 | 3,016 | 32.4 | % | 11,807 | 8,669 | 36.2 | % | ||||||||||||||||
Network compensation |
— | 68 | — | 1,061 | ||||||||||||||||||||
Other |
3,400 | 2,919 | 16.5 | % | 10,881 | 8,237 | 32.1 | % | ||||||||||||||||
Total operating revenues |
$ | 69,939 | $ | 78,515 | (10.9 | )% | $ | 215,933 | $ | 220,164 | (1.9 | )% | ||||||||||||
The following is segment operating revenue for newspapers:
| Three months ended | Nine months ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| (in thousands) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
Segment operating revenues: |
||||||||||||||||||||||||
Local |
$ | 18,595 | $ | 19,254 | (3.4 | )% | $ | 60,601 | $ | 64,718 | (6.4 | )% | ||||||||||||
Classified |
18,683 | 20,836 | (10.3 | )% | 59,660 | 64,743 | (7.9 | )% | ||||||||||||||||
National |
3,069 | 4,414 | (30.5 | )% | 9,808 | 13,976 | (29.8 | )% | ||||||||||||||||
Preprint and other |
16,106 | 16,799 | (4.1 | )% | 50,770 | 52,688 | (3.6 | )% | ||||||||||||||||
Print advertising |
56,453 | 61,303 | (7.9 | )% | 180,839 | 196,125 | (7.8 | )% | ||||||||||||||||
Circulation |
28,604 | 28,780 | (0.6 | )% | 89,896 | 90,622 | (0.8 | )% | ||||||||||||||||
Digital |
6,400 | 6,970 | (8.2 | )% | 19,397 | 20,623 | (5.9 | )% | ||||||||||||||||
Other |
4,491 | 3,363 | 33.5 | % | 13,948 | 13,646 | 2.2 | % | ||||||||||||||||
Total operating revenues |
$ | 95,948 | $ | 100,416 | (4.4 | )% | $ | 304,080 | $ | 321,016 | (5.3 | )% | ||||||||||||
2. CONDENSED CONSOLIDATED BALANCE SHEETS
The following are our Condensed Consolidated Balance Sheets:
| As of | As of | |||||||
| September 30, | December 31, | |||||||
| (in thousands) | 2011 | 2010 | ||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 147,474 | $ | 204,924 | ||||
Other current assets |
169,022 | 157,655 | ||||||
Total current assets |
316,496 | 362,579 | ||||||
Investments |
17,411 | 10,652 | ||||||
Property, plant and equipment |
354,889 | 389,650 | ||||||
Intangible assets |
22,154 | 23,107 | ||||||
Deferred income taxes |
25,311 | 30,844 | ||||||
Other long-term assets |
12,455 | 10,710 | ||||||
TOTAL ASSETS |
$ | 748,716 | $ | 827,542 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 19,075 | $ | 34,091 | ||||
Customer deposits and unearned revenue |
27,020 | 26,072 | ||||||
Accrued expenses and other current liabilities |
64,504 | 78,321 | ||||||
Total current liabilities |
110,599 | 138,484 | ||||||
Other liabilities (less current portion) |
99,418 | 97,526 | ||||||
Total equity |
538,699 | 591,532 | ||||||
TOTAL LIABILITIES AND EQUITY |
$ | 748,716 | $ | 827,542 | ||||
3. EARNINGS PER SHARE (“EPS”)
Unvested awards of share-based payments with rights to receive dividends or dividend equivalents,
such as our restricted stock and restricted stock units (RSUs), are considered participating
securities for purposes of calculating EPS. Under the two-class method, we allocate a portion of
net income to these participating securities and therefore exclude that income from the calculation
of EPS allocated to common stock. We do not allocate losses to the participating securities.
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Numerator (for basic earnings per share) |
||||||||||||||||
Net income (loss) attributable to the shareholders of
The E.W. Scripps Company |
$ | (10,722 | ) | $ | 6,245 | $ | (21,829 | ) | $ | 104,872 | ||||||
Less income allocated to unvested restricted stock
and RSUs |
— | (649 | ) | — | (12,261 | ) | ||||||||||
Numerator for basic earnings per share |
$ | (10,722 | ) | $ | 5,596 | $ | (21,829 | ) | $ | 92,611 | ||||||
Denominator |
||||||||||||||||
Basic weighted-average shares outstanding |
56,834 | 57,435 | 58,071 | 56,512 | ||||||||||||
Effective of dilutive securities: |
||||||||||||||||
Stock options held by employees and directors |
— | 67 | — | 129 | ||||||||||||
Diluted weighted-average shares outstanding |
56,834 | 57,502 | 58,071 | 56,641 | ||||||||||||