By: E&P Staff The E.W. Scripps Co. reported increases in operating revenue and net income for Q3 due mainly to strong growth in the company's television networks and Shopzilla, the online shopping service acquired in June.
Operating revenue for Q3 grew 19% to $595 million compared to the same period last year. Net income increased 47.8% to $82.2 million. (Q3 2004 net income included the financial impact of hurricanes Frances and Jeanne on the company's Florida properties.)
Net income for Q3 also included a $40.8 million cash payment that resulted from the company's decision to discontinue publishing its afternoon daily newspaper in Birmingham, Ala. The payment represents cash consideration the company received for agreeing to end its joint operating agreement in Birmingham. The net effect of the Birmingham JOA's termination increased Q3 net income by $.15 per share.
It also includes the non-cash effect of a decision to consolidate newspaper production operations in Denver. Net income was reduced by $0.03 per share reflecting the shortened useful life and subsequent higher depreciation expense for existing production equipment that will be replaced.
When the $130 million consolidation project is completed, a single production facility will be used to print and distribute the Rocky Mountain News -- the company's JOA partner in the Denver Newspaper Agency -- and The Denver Post, which is owned by MediaNews Group. Consolidating production of both morning newspapers is expected to further reduce production costs and increase operating efficiencies in Denver over the long term.
The Denver Newspaper Agency will be recording higher depreciation expense until May 2007. The accelerated depreciation on existing fixed assets will reduce Scripps earnings from its equity investment in the Denver JOA by $40 million over the next two years, with $9 million recorded in the current quarter.
The Rocky Mountain News reported that the paper contributed $1.6 million to Q3 profits, down from $3.2 million for the same period last year. The figure does not include the effects of $9 million in non-cash expenses.
For its newspaper division, segment profit was down 23.3% to $41.6 million compared with $54.2 million for the same period last year. The decline is primarily attributable to the decision to consolidate production operations in Denver and the resulting decreases in equity income form the Denver Newspaper Agency.
Ad revenue at the newspaper division (managed by Scripps only) was up 6.3% to $140 million. Local ad revenue was down 0.5% to $37.2 million. National was up 5.2% to $10.6 million and classified was up 8.2% to $57 million. Preprint and other revenue was up 12% to $34.8 million.
Circulation revenue was down 0.4% to $30.7 million.
Newsprint expenses increased 9.2% on a 14% increase in newsprint prices.
Comments
No comments on this item Please log in to comment by clicking here