Scripps Networks Interactive reports second quarter financial results

For immediate release

Aug 8, 2013

KNOXVILLE, Tenn. – Scripps Networks Interactive, Inc. (NYSE: SNI) today reported operating results for the second quarter 2013.

“The growth story at Scripps Networks Interactive continued during the second quarter, driven by the tremendous popularity of our lifestyle television networks with media consumers, advertisers and content distributors,” said Kenneth W. Lowe, chairman, president and chief executive officer. “We’ve succeeded in creating a valuable portfolio of networks – as well as industry-leading websites and apps – that attract a highly engaged audience of food, home and travel enthusiasts. Those distinctly unique attributes drive our company’s consistently solid operating results.”

Consolidated revenues for the quarter increased 11 percent to $665 million from the prior-year period. Results for the three-month period ended June 30 reflect strong advertising revenue of $462 million, up 11 percent, and affiliate fee revenue of $189 million, up 11 percent year over year.

Expenses for the quarter increased 9.2 percent from the prior-year period to $345 million. The increase was driven by program amortization expenses as the company invests to drive viewership at all of its lifestyle television networks. Also contributing to the increase were increased investments in international growth initiatives.

Total segment profit increased 12 percent to $320 million. (See reconciliation of non-GAAP financial measures for a definition of segment profit.)

Second quarter net income attributable to Scripps Networks Interactive was $160 million, or $1.08 per diluted share, compared with $142 million, or $0.93 per diluted share, in the second quarter 2012.

Segment results

Lifestyle media revenues in the second quarter of 2013 increased 9.5 percent to $647 million driven by advertising and affiliate fee revenue growth. Advertising revenue increased 10 percent to $456 million primarily as a result of the strong advertising market. Affiliate fee revenue grew 9.5 percent to $182 million due to higher rates, a reduction of launch fee amortization and the benefit of digital distribution arrangements.

Lifestyle media segment profit increased 12 percent to $348 million reflecting 9.5 percent revenue growth, partially offset by higher program amortization expense.

Corporate and other revenues, which are primarily international operations, increased 81 percent to $18.0 million. This increase was largely due to the April 30, 2012, acquisition of Travel Channel International and the April 12, 2013, acquisition of Asian Food Channel.

Corporate and other segment loss increased 9.6 percent to $28.2 million. This increase was driven primarily by continued investments in international operations and digital business initiatives.

2013 Full-year Guidance

The company also updated full year 2013 guidance for the following items:

The company reiterated all other guidance:

| 2 |

Share repurchase program

For the quarter ended June 30, the company repurchased 1.5 million shares under its stock repurchase program, for an aggregate purchase price of $100 million. As of June 30, the company had $650 million remaining in the $1 billion stock repurchase program.

Conference call

The senior management team of Scripps Networks Interactive will discuss the company’s second quarter results during a telephone conference call at 10 a.m. ET today. Scripps Networks Interactive will offer a live webcast of the conference call. To access the webcast, visit www.scrippsnetworksinteractive.com and follow the Investors link at the top of the page. The webcast link can be found next to the microphone icon on the investor relations landing page.

To access the conference call by telephone, dial 800-288-9626 (U.S.) or 612-332-0634 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, “SNI Second Quarter Earnings Call,” to be granted access. Callers also will be asked to provide their name and company affiliation. The media and general public are granted access to the conference call on a listen-only basis.

A replay line will be open from 12:30 p.m. ET Aug. 8 until 11:59 p.m. ET Aug. 22. The domestic number to access the replay is 800-475-6701 and the international number is 320-365-3844. The access code for both numbers is 297234. A replay of the conference call also will be available online. To access the audio replay, visit www.scrippsnetworksinteractive.com approximately four hours after the call, choose Investors then follow the Audio Archives link on the top right side of the investor relations landing page.

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 on page F-3 of its 2012 Form 10-K filed with the Securities and Exchange Commission.

The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

About Scripps Networks Interactive

Scripps Networks Interactive is one of the world’s leading developers of lifestyle-oriented content for television and the Internet, generating more than 2,000 hours a year of original on-air programming. The company’s television programming can be seen in 170 countries across all seven continents. Its media portfolio includes popular lifestyle and Internet brands HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country.

# # #

Contact: Scripps Networks Interactive, Inc.

Mark Kroeger, 865-560-5007, mark.kroeger@scrippsnetworks.com

Mike Gallentine, 865-560-4473, mgallentine@scrippsnetworks.com

| 3 |

SCRIPPS NETWORKS INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

| 4 |

SCRIPPS NETWORKS INTERACTIVE, INC.

CONSOLIDATED BALANCE SHEETS

| 5 |

SCRIPPS NETWORKS INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

| 6 |

NON-GAAP FINANCIAL MEASURES

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 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 (“GAAP”).

Items excluded from segment profit 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.

A reconciliation of segment profit to operating income determined in accordance with GAAP for each business segment is as follows:

| 7 |

The Company defines free cash flow as cash provided by operating activities less dividends paid to noncontrolling interests and acquisitions of property and equipment. The Company measures free cash flow as it believes it is an important indicator for management and investors as to the Company’s liquidity, including its ability to reduce debt, make strategic investments and return capital to shareholders. A reconciliation of free cash flow is as follows:

Since segment profit and free cash flow are non-GAAP measures, they should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance reported in accordance with GAAP.

| 8 |

SUPPLEMENTAL FINANCIAL INFORMATION

Our Lifestyle Media division earns revenue primarily from the sale of advertising time on our national television networks, affiliate fees paid by cable and satellite television operators that carry our network programming, the licensing of its content to third parties, the licensing of its brands for consumer products such as books and kitchenware, and from the sale of advertising on our Lifestyle Media affiliated websites.

Supplemental information for Lifestyle Media is as follows:

| 9 |