Scripps Reports First-Quarter Results

CINCINNATI, May 10, 2011 /PRNewswire/ -- The E.W. Scripps Company (NYSE: SSP) reported operating results for the first quarter of 2011 that reflect stronger revenue performance from the company's television stations, and increases in costs that were in line with guidance and reflect the company's strategy to be the leading multi-platform news organization in each of its markets.

Consolidated revenues from continuing operations were $180 million, a decrease of 2.1 percent from $184 million in the first quarter of 2010.

Costs and expenses, excluding restructuring costs, totaled $178 million, the same figure as in the fourth quarter, but a 5.0 percent increase compared with the year-ago quarter. Pre-tax restructuring costs, largely for the ongoing efforts to standardize and centralize certain functions in the newspaper division, dropped to $2.1 million, compared with $3.3 million in 2010 quarter.
The operating loss was $10.5 million, in the first quarter of 2011, compared with a $1.2 million loss in the same period a year ago.

In the first quarter of 2011, the company reported a loss from continuing operations before income taxes of $11.6 million, compared with a loss of $2.4 million in the 2010 quarter. The loss from continuing operations, net of tax, was $8.9 million, or 15 cents per share, in the 2011 quarter, compared with a loss from continuing operations, net of tax, of $2.1 million, or 4 cents per share, in the year-ago quarter.

On April 27, 2010, Scripps announced that it had signed an agreement to sell its character licensing business, United Media Licensing, to Iconix Brand Group for $175 million in cash. The sale closed on June 3, 2010. Operating results of the licensing business now are reported as discontinued operations for all periods presented.

"Our first quarter results were largely as projected, with the exception being the weaker-than-anticipated newspaper advertising that affected the entire industry," said Rich Boehne, president and CEO. "Television, despite a number of headwinds, reported one of the best revenue increases in the industry, leading us to believe audiences are responding to our commitment to strengthen our news organizations in the communities we serve.

"Expenses in both divisions rose as expected, and we continue to move ahead with the latter phases of a broad reorganization of newspaper operations and an aggressive plan to increase the quantity and quality of local news content in the television division.

"We knew going in that the first quarter would provide difficult comparisons for both revenues and expenses, but we chose to deploy resources where we believe there is an opportunity for a long-term return on investment. We also took advantage of our strong cash position and invested in the businesses we know best by repurchasing $7 million of our own shares during the quarter."

First-quarter results by segment are as follows:

Newspapers
Revenue from Scripps newspapers declined 5.7 percent year over year to $106 million in the first quarter of 2011. Print advertising revenue was down 7.8 percent to $63.1 million. Both figures were affected, in part, by timing issues. The 2010 quarter benefited from higher-than-usual advertising volume ahead of the Easter holiday on April 4. With Easter falling on April 24 in 2011, virtually no Easter spending affected the first quarter.

Print advertising revenue broken down by category was:
Local, down 10 percent to $21.3 million
Classified, down 3.9 percent to $20.9 million
National, down 28 percent to $3.6 million
Preprint and other, down 3.3 percent to $17.3 million

Within the classified advertising category, real estate remained weak due to the company's heavy exposure in California and Florida, but automotive was up 3.8 percent in the first quarter, and help wanted rose nearly 14 percent.

Circulation revenue in the first quarter was $31.6 million, a 1.8 percent decrease compared to the year-ago period.

Digital revenues, which include advertising on our newspaper Web sites, digital advertising provided through audience-extension programs such as our arrangement with Yahoo!, and other digital marketing services such as managing an advertiser's search engine marketing efforts, decreased 5.7 percent to $6.3 million. In 2011, we began reporting revenue from certain of our digital offerings net of the amounts paid to our digital partners. If 2010 revenues had been reported on this net basis, digital revenues in the first quarter of 2011 would have increased 1 percent and pure-play digital advertising would have increased 2.3 percent.

Consistent with management's guidance in February, newspaper segment expenses in the first quarter rose 4.9 percent, to $101 million, due to higher costs for newsprint and employee benefits. Employee costs rose 4.8 percent, driven by the reinstatement of the 401(k) matching program in mid-2010 and a rise in health care costs as the company put seed money into the Health Savings Accounts of an increasing number of employees. A 20 percent increase in the price of newsprint in the first quarter resulted in an 8.0 percent increase in the expense for newsprint and press supplies.

First-quarter segment profit in the newspaper division was $5.4 million, compared with segment profit of $16.6 million in the first quarter of 2010.

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