Scripps sees network ad revenue climb to $477.5M

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Scripps Networks Interactive today reported third-quarter results, highlighted by a 6.6 percent increase in advertising revenues for its U.S. Networks segment.

U.S. Networks -- which includes Food Network, Travel Channel, HGTV and the DIY Network -- brought in $477.5 million in ad revenue during the quarter, bringing its operating revenue up 3.8 percent to $686.3 million.

“This improvement reflects the continued strength in the U.S. advertising market for our lifestyle brands and overall ratings improvement,” the company wrote, adding that ratings grew at five of its six U.S. networks.

Meanwhile, Scripps’ U.S. Networks distribution revenues dropped 2.5 percent to $194.3 million due to rate equalization of certain distributor agreements caused by industry consolidation, and subscriber declines. In all, the U.S. Networks segment operating income fell 2.6 percent to $298.8 million because of programming expenses due to the timing of program premieres.

Scripps International Networks’ operating revenues fell 3.8 percent to $123.2 million, and the segment’s operating loss widened to $14.9 million, compared to $6 million in the year-ago quarter.

"Scripps Networks Interactive delivered solid revenue growth at both our U.S. and international business segments, helping drive a double-digit improvement in net income,” said Kenneth W. Lowe, president, chairman and CEO at Scripps, in a statement. “Our successful strategy to focus on our differentiated lifestyle brands in the home, food and travel genres continues to pay off. Our popular networks are available on more platforms and reaching more new audiences than before, positioning the company for continued growth.”

While Scripps’ consolidated operating revenues increased 3.5 percent during the quarter, the company’s consolidated operating income declined 4.8 percent. But net income climbed to $146 million (on $1.12 per diluted share), up from $124.6 million (on 96 cents per diluted share) last year.

Jefferies analyst John Janedis said Scripps’ ad revenue growth was better than expected while the decline in affiliate revenue was expected.

“SNI continues to manage expenses more so than expected while posting industry leading ad growth. We assume some costs may have been shifted into 4Q, but the co. appears to be tracking ahead of its op. inc. guidance of +8% for '16. In our view, the stock will trade higher today,” wrote Janedis in a research note.