Scripps Weighs Sale of Channel
By Greg Paeth
The E.W. Scripps Co. said Thursday that it is considering options for its financially struggling Shop At Home TV channel, including selling the property.
Cincinnati-based Scripps said it recorded a $90.6 million non- cash, after-tax write down on goodwill and other intangible assets of Shop At Home in the fourth quarter because of operating losses and a “longer than previously anticipated path to profitability.”
Losses by Shop At Home and costs associated with consolidating newspaper operations in Denver were cited as the primary reasons for the media company’s fourth-quarter loss of $603,000, compared with a profit of $91.3 million, or 55 cents a share, for the fourth quarter of last year. Without the one-time charge associated with the Shop At Home, fourth quarter earnings would have been 54 cents a share, Scripps said.
Consolidated revenues for the quarter were $707 million, an increase of 17 percent over the fourth quarter of 2004.
Analysts polled by Reuters had been predicting earnings of 49 cents for the quarter, and investors reacted favorably Thursday. The stock climbed $2 (4.5 percent) to $50.25 on the day.
The 24-hour home shopping channel is distributed to about 5.3 million homes through five broadcast TV stations. It also is available on some cable systems and as a satellite service.
Scripps bought Shop At Home and the five TV stations in two transactions with Summit America Television for $233.5 million. Scripps also forgave a $47.5 million loan that it had made to Summit.
Scripps executives told analysts Thursday that options under consideration include selling the network or operating it with a partner. Joseph G. NeCastro, Scripps chief financial officer, said that after the writedown the company believes Shop At Home is worth $50 million while the five TV stations have a value of $170 million.
The company’s lifestyle cable TV networks, which include HGTV, the Food Network, DIY, Fine Living and Great American Country, produced revenues of $247 million for the quarter, a 21 percent increase over the fourth quarter of 2004.
The company’s newspaper division, which includes The Post, reported revenues of $192 million for the quarter, an increase of 3.7 percent over the 2004 period. For the full year, net income from continuing operations fell to $223 million, or $1.35 per share, vs. $301 million, or $1.82 per share, last year. Scripps reported revenues of just over $2.5 billion, up 16 percent from the previous year.
The company also announced Thursday that is has entered into a 50- 50 partnership with MediaNews Group to handle both companies’ business operations for their newspapers in Eastern Colorado. Included in the new partnership are Scripps’ Boulder Daily Camera and Colorado Daily and the twice-weekly Broomfield Enterprise and MediaNews’ Fort Morgan Times, Journal-Advocate in Sterling and Lamar Daily News, all of which are published daily. Five other non- dailies owned by MediaNews are covered by the agreement.