Profits at Scripps Networks Interactive (NYSE: SNI) rose 14 percent to $65.3 million in the third quarter, while total revenue were flat. The Cincinnati-based owner of cable TV networks Food Network and HGTV, said that the revenues in the Lifestyle segment, which includes those channels website ad sales, was up a respectable 4.3 percent. The unit’s profit was up 8.3 percent to $150 million in Q3. This week, Scripps confirmed its $975 million deal to acquire 65 percent stake in the Travel Channel from Cox Communications,
But the cable network’s Interactive Services segment, which includes online comparison shopping services Shopzilla and BizRate, fared less well in the third quarter. It was down 25 percent to $39 million.
|3Q 2009||3Q 2008||Estimate|
During the earnings call, Ken Lowe, Scripps Networks’ chairman, president and CEO, began to discuss the Travel Channel deal following an overview of the company’s ratings fairly solid ratings performance. “I have to say, it was one of the worst kept secrets in M&A history, so I’m sure the announcement didn’t take many of you by surprise,” Lowe said, before describing what he said was a “tremendous opportunity” to add a major lifestyle category to Scripps Networks’ existing home and food channels.
When asked by Deutsche Bank’s Doug Mitchelson if the Travel Channel’s is likely to bring in $200 million in revenue, execs said that was a “fair estimate for 2010.” As other analysts asked about further acquisitions in the travel space. “Our intention is to dominate the travel space, but it’s a little early to begin thinking of other acquisitions,” said CFO Joe NeCastro.
JP Morgan analyst Alexia Quadrani sought out details on the company’s direct response ad inventory, which she noted represents about 10 percent of Scripps Networks’ online ad space NeCastro said that after some difficulties in Q1 due to the economy, the company has seen gradual improvement. “And in Q4, we’re back to normalized levels of DR in terms of inventory usage.” That said, the company said its not giving any specific guidance about its overall ad revenues.