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Tickers in this Article: SNI, DISCA, TVL, EVC
Scripps Networks Interactive Inc. (SNI) has reported weak financial results for the fourth quarter of 2012, which fell below the Zacks Consensus Estimate.Quarterly GAAP net income from continuing operations was $305.8 million or $2.02 per share compared with $135 million or 84 cents per share in the prior-year quarter. However, the fourth-quarter 2012 adjusted earnings per share of 84 cents were way below the Zacks Consensus Estimate of 91 cents. Quarterly total revenue of $604.7 million increased 9.2% on an annualized basis, but fell below the Zacks Consensus Estimate of $617 million. The fourth-quarter gross profit was $438.8 million compared with $409.9 million recorded in the prior-year quarter. Quarterly gross margin was 72.6% compared with 74.1% in the prior-year quarter. Quarterly operating income dropped 6.1% year over year to $218.9 million. Operating margin in the reported quarter was 36.2% compared with 42.1% in the prior-year quarter.

During fiscal 2012, Scripps Networks generated $614.7 million of cash from operations compared with $728.9 million in fiscal 2011. Free cash flow in fiscal 2012 was $384.9 million compared with $591.1 million in fiscal 2011. At the end of fiscal 2012, Scripps Networks had $437.5 million in cash & marketable securities and $1,384.2 million of outstanding debt on its balance sheet compared with $760.1 million in cash & marketable securities and $1,383.9 million of outstanding debt at the end of 2011. At the end of 2012, debt-to-capitalization ratio was 0.21 compared with 0.45 at the end of 2011.

Lifestyle Media Segment

Quarterly revenue came in at $584.9 million, showing an annualized growth of 6.8%. Within this segment, Advertising revenue climbed 4.3% year-over-year to $409.4 million. Network Affiliate fee revenue stood at $167 million, up 14.7% year over year and Other revenue slipped 13.9% year over year to $8.5 million. Total segment profit was $287.5 million, up 2.4% year over year.

Brand wise, HGTV revenue was approximately $200.2 million, up 5.1% year over year. Total subscriber base was 98.8 million, down 0.1% year over year. Food Network revenue was $214.6 million, up 5.2% year over year. Total subscriber base stood at 99.7 million, up 0.1% year over year. Travel Channel revenue was $71.1 million, up 5.9% year over year. Total subscriber base slid 0.2% year over year to 94.7 million.

DIY Network revenue was $30.4 million, up 12.9% year over year. Total subscriber base was 58.4 million, up 3.4% year over year. Cooking Channel revenue was $24.7 million, up 38.4% year over year. Total subscriber base was 60.1 million, up 3.3% year over year. Great American Country revenue was $7.6 million, up 15.8% year over year. Total subscriber base stood at 62.7 million, up 0.8% year over year. SN Digital revenue increased 9.1% annually to $33.2 million. Other revenue was $3.2 million, down 26.7% year over year.

Corporate Segment

Quarterly total revenue of around $19.8 million was up by a whopping 252.4% year over year. However, segment loss was $21.6 million, down 7.3% year over year.

Other Stocks to Consider

Scripps Networks currently has a Zacks Rank #4 (Sell). However, other stocks in the Media/Broadcast industry, which look attractive, include Entravision Communications Corp. (EVC), LIN TV Corp. (TVL) and Discovery Communications Inc. (DISCA). While Entravision and LIN TV both carry a Zacks Rank #1 (Strong Buy), Discovery has a Zacks Rank #2 (Buy).

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