Declaring this a "momentous month" for the E.W. Scripps Company with last week’s announcement of plans to split in two (10/17/07 TVBR #203), CEO Ken Lowe reported yesterday that the separation plan is on track to be completed in Q2 of 2008.
Scripps Networks, the cable TV networks, which will anchor the spin-off company, Scripps Networks Interactive, was again the star performer in Q3, with revenues up 16%, even exceeding Wall Street expectations. Look for that strong performance to continue. The company says Scripps Networks revenues are expected to grow 10-12% in Q4. Meanwhile, TV is pacing down 15-20% in Q4 against tough political comps, after declining 10.3% in Q3. Newspaper revenues are projected to fall 5-7% in Q4, after dropping 7.8% in Q3, which was a smaller than expected decline.
For the newspaper/TV company that will remain once the cable/interactive properties are spun-off, Lowe said Scripps believes in the future of its local markets, in particular the Florida and California markets currently suffering from the housing slump. The TV group is looking forward to heavy political spending in 2008. For Q3, "We saw some improvement in local and national advertising, but those results were tempered somewhat by softer automotive than we’d hoped," Lowe noted.
TVBR/RBR observation: Meredith CEO Stephen Lacy raised the issue a day earlier when asked whether his company might join the parade of splitters. "Will it, in fact, unlock value?" he asked. Well, Scripps’ stock had jumped on the split announcement last week, but then fell right back down to where it had been previously – before bumping up yesterday on its good earnings and guidance. Belo has also given up some of its split announcement price bump. So, the jury is still out on whether investors really like these splits as much as they thought they would when they pressured management to make the move.
