Executives say that three quarters of the year-over-year revenue jump will come from political advertising. Company’s second-quarter results show broadcasting grew just 3.9% compared with 2005.
The Scripps TV station group expects a strong third quarter with political advertising driving revenue up from 10% to 14%.
“The value of geography, especially at our television stations, will become increasingly apparent as election campaigns get into full swing during the third quarter,ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€šÃ‚Â Scripps President/CEO Ken Lowe told analysts this morning after releasing the second-quarter earnings report. “Our stations in Florida, Ohio and Michigan are in excellent position to fully capitalize on the return of political advertiser in the weeks ahead.ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€šÃ‚Â
Three-quarters of the revenue gain in the third quarter will come from campaign coffers, the company said.
The company also said that it expects to garner about $25 million in political advertising this year, despite less-than-expected returns in the first half as primary races in Ohio and Florida failed to generate much heat or spending.
In the second quarter, political revenue was $2.7 million, up from $400,000 in the same period of 2005.
Although less than expected, the second-quarter political money buoyed the station division. For the quarter, total station revenue was up 3.9% over last year to $86.4 million. Local spot was up 2.6% to $54.1 million, while national spot rose just 1.4% to $26.9 million.
Profit for the station group in the quarter actually fell slightly from $27.1 million in the prior year to $26.9 million. But the company noted that the 2005 comp was inflated by a $1.8 million hurricane recovery insurance settlement.
The company’s decision to shut down its Shop At Home network earlier this year orphaned five Scripps TV stations that carried the service. Lowe said the company has put the stations on the block and is now “evaluating expressions of interestÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€šÃ‚Â in them. The stations are licensed to San Francisco, Boston, Cleveland, Raleigh-Durham and New York (Bridgeport, Conn.).
In response to a question, Lowe said the company has no intention of selling its other TV stations, noting that they have helped the cable networks prosper. Scripps has leveraged the stations’ retransmission consent rights for carriage of networks and the stations actively promote programming on the networks. Viewership of Scripps’s cable networks is 22% higher in markets with Scripps stations than elsewhere, he said.
The Scripps station group includes six ABC-affiliated stations, three NBC affiliates and one independent. Scripps operates the stations in Detroit; Cleveland; Cincinnati; Phoenix; Tampa, Fla.; Baltimore; Kansas City, Mo.; West Palm Beach, Fla.; Tulsa, Okla.; and Lawrence, Kan.
Overall, Scripps enjoyed a strong quarter, with new media (cable networks and Web sites) pulling along the old media (newspapers and TV stations).
Consolidated revenue from continuing operations rose 19% year-over-year during 2Q to $642 million. On a pro forma basis, counting the e-commerce Web sites Shopzilla and uSwitch as if Scripps had owned them since Jan. 1, 2005, revenue increased 12%.Income from continuing operations was $105 million, or 64 cents per share, compared with $103 million, or 62 cents per share, during the same period a year earlier. Earnings were affected, in part, by the expensing of employee stock options, which commenced on Jan.1. The stock option expense reduced earnings for the period by $2.7 million after tax, or 2 cents per share.Total revenue at Scripps Networks, the division led by HGTV and the Food Network, increased 17% to $286 million with ad revenue growing 15% to $233 million. Network profit was up 22% year-over-year to $150 million.
At the company’s interactive media division, which includes Shopzilla and uSwitch, second-quarter profit reached $16.5 million on revenue of $65.0 million. On a pro forma basis, as if Scripps had owned Shopzilla and uSwitch since Jan. 1, 2005, the division revenue nearly doubled.