Scripps' Q4 earnings sink after $58M write-down

Cooks vs. Cons Geoffrey Zakarian (Scripps)
Scripps Networks Interactive owns cable networks including The Food Network. (Scripps)

Scripps Networks Interactive saw its earnings drop considerably during its latest quarter.

For the fourth quarter, consolidated net income slipped to $52.1 million, down from $164.7 million during the year-ago quarter. The company attributed the fall primarily to a noncash goodwill write-down of $57.9 million.

While consolidated operating revenues for the quarter rose to $888.7 million, up 4.3% annually, and advertising revenues climbed 7.5% to $641.5 million, consolidated operating income fell 17.2% to $227.8 million. Scripps blamed the previously mentioned noncash accounting adjustment.

Meanwhile, Scripps’ U.S. networks quarterly operating revenues jumped 4.1% to $730.6 million on the strength of advertising revenues that rose 9.4% to $523.3 million. Scripps attributed the rise in ad revenue to the continued strength in the U.S. advertising market for its lifestyle brands and overall ratings improvement in the quarter. While ad revenue rose for its U.S. networks segment, distribution revenues fell 3.1% to $193.4 million in part because of the company’s decision not to extend “certain SVOD agreements” and subscriber declines.

RELATED: Scripps not renewing Netflix distribution deal

“Finally, we assessed and analyzed the SVOD universe and made the strategic decision not to extend our agreement with Netflix past the end of this year. In the end, it really is not the kind of dual revenue model that best monetizes our content over the long term,” the company said in November regarding its decision to part ways with Netflix.

Despite the blow to distribution revenues, Scripps’ U.S. networks segment still grew its quarterly operating income by 6.1% to $301.4 million.

While fourth-quarter results were somewhat mixed, Scripps claimed record results for the full year 2016. The company reported record consolidated advertising revenues of $2.4 billion, up 17.2%. In the U.S., ad revenues passed $2 billion for the first time ever, the company said, driven in part by improved ratings for HGTV, DIY Network and Cooking Channel.

“[Scripps] increased ratings and engagement with audiences across our linear and digital platforms and expanded our international reach to new markets,” said Kenneth Lowe, Scripps CEO, in a statement. “This standout performance is a direct result of our relentless focus on operational execution and the deliberate investment we’ve made in programming, international businesses and in Scripps Lifestyle Studios. Looking ahead to 2017 and beyond, we continue to be focused on sustainable long-term growth, driven by the strength of our inspiring brands and content, and growing our reach across different platforms and geographies. We have the right strategic priorities and team to continue delivering increased shareholder value.”