Scripps Networks Interactive Inc.
) has reported strong financial results for the third quarter of
2012.Increased marketing efforts, continuous growth in
advertising and affiliate fee revenues and gradual share
repurchasemainly contributed to the outperformance.
Quarterly GAAP net income from continuing operation was $118.4
million or 78 cents per share compared with $98.6 million or 65
cents per share in the prior-year quarter. Reported earnings per
share of 78 cents easily outpaced the Zacks Consensus Estimate of
75 cents. Quarterly total revenue of $566.2 million increased
12.4% on a yearly basis, surpassing the Zacks Consensus Estimate
of $556 million.
Third-quarter gross profit was $409.9 million compared with
$356.2 million recorded in the prior-year quarter. Quarterly
gross margin was 72.4% compared with 70.7% in the prior-year
quarter. Third-quarter operating income rose 13.4% year over year
to $222.1 million. Operating margin in the reported quarter was
39.2% compared with 38.9% in the prior-year quarter.
During the first nine months of 2012, Scripps Networks
generated $433.6 million of cash from operations compared with
$545.4 million in the prior-year period. Free cash flow (cash
flow from operations less capital expenditures) in the first nine
months of 2012 was $399.5 million compared with $508.1 million in
the year-ago period.
At the end of the third quarter of 2012, Scripps Networks had
$916.8 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 the
reported quarter, debt-to-capitalization ratio was 0.42 compared
with 0.45 at the end of 2011.
Lifestyle Media Segment
Quarterly revenue came in at $551.9 million, showing an
annualized growth of 11.2%. Within this segment, Advertising
revenue climbed 9.2% annually to $374.6 million; Network
Affiliate fee revenue stood at $168.4 million, up 15% year over
year and Other revenue jumped 28.9% year over year to $9 million.
Total segment profit was $273 million, up 15.8% year over
Brand wise, HGTV revenue was approximately $195.4 million, up
8.1% year over year. Total subscriber base was 98.4 million, down
0.2% year over year. Food Network revenue was $198.9 million, up
10.5% year over year. Total subscriber base stood at 99.1
million, down 0.3% year over year. Travel Channel revenue was
$68.9 million, up 10.1% year over year. Total subscriber base
slid 0.4% year over year to 94.2 million.
DIY Network revenue was $29.9 million, up 26% year over year.
Total subscriber base was 57.1 million, up 6.7% year over year.
Cooking Channel revenue was $21.6 million, up 30.5% year over
year. Total subscriber base was 59.2 million, up 3.1% year over
year. Great American Country revenue was $6.9 million, up 14.5%
year over year. Total subscriber base stood at 61.7 million, up
4.2% year over year. SN Digital revenue increased 12.3% annually
to $27.7 million. Other revenue was $2.6 million, up 26% year
Quarterly total revenue of around $14.3 million was up by a
whopping 90.6% year over year. However, segment loss was $22
million, up 27.2% year over year.
Despite facingstiff competition from other media companies,
Discovery Communications Inc.
LIN TV Corp.
), Scripps Networks has successfully differentiated its offerings
on multiple video screens and other platforms including
tablets.We maintain our long-term Neutral recommendation
Currently, ithas a Zacks #3 Rank, implying a short-term Hold
rating on the stock.
DISCOVERY COM-A (DISCA): Free Stock Analysis
SCRIPPS NETWRKS (SNI): Free Stock Analysis
LIN TV CORP -A (TVL): Free Stock Analysis
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