Despite a challenging advertising market and pallid results at its online shopping services, Scripps Networks Interactive saw second-quarter profit soar 49 percent to $79.5 million, or 48 cents per share, versus $53.2 million, or 33 cents a share, in the year-ago period.
The company’s lifestyle media segment, which includes the cable properties Food Network and HGTV, saw Q2 ad sales revenue drop 3.8 percent to $261 million, while affiliate revenue was up 15 percent to $80 million.
Sequentially, ad sales were up 16 percent versus the first three months of 2009, when the networks sold $225 million in inventory. That revenue figure represented a 4.6 percent decline versus the first quarter of 2008.
The cable nets took in $351 million in total revenue, up 1 percent from $349 million in the year-ago period.
Speaking on Scripps Nets’ Thursday morning earnings call, chairman and CEO Ken Lowe said the company continue to plug away in the upfront. “You know the story. It’s going much later this year as both sides of the equation balance the lingering effects of the advertising downturn,” Lowe said. “We can report that we are talking to advertisers and some deals are being done, but we still have a ways to go.”
With the upfront far from wrapped, Lowe wouldn’t disclose how Scripps Nets are advancing on pricing and volume. “We’re not comfortable just yet saying how the marketplace will settle out for us,” Lowe said. “We’re encouraged by the amount of activity we’re seeing and the level of interest in our categories and our networks.”
If the upfront outlook remains murky, some improvement is being seen in scatter. “In the second quarter we experienced the highest scatter volume in our history,” said Lowe, adding that “a fair degree of uncertainty persists as advertisers continue to place orders very close to airtime. It’s difficult to forecast ad sales for the rest of the year with any certainty.”
While scatter volume is improving, third-quarter cancellations were up in the low- to mid-teens, on a percentile basis. “Fewer dollars were canceled in the third quarter, but we’re seeing the same percentage as the second quarter, more or less,” said executive vp and president John Lansing. “Scatter is coming in at four to five points above last year’s upfront pricing.”
Lansing also declined to provide any details about how upfront CPMs were shaking out, or how much inventory the Scripps nets would hold back for scatter. That said, he was rather bullish on the company’s prospects: “It’s fair to say that wherever the pricing ends up, Scripps Networks will be at or near the top of cable pricing.”
As the cable networks thrive, SNI’s interactive services unit continues to drag down the company’s fundamentals. The segment, which includes Shopzilla and BizRate, posted revenues of $40.8 million, down 29 percent from $57.2 million in the second quarter of 2008. Profit dropped 43.4 percent to $7.3 million, off from $12.9 million in the year-ago period.
In the Q&A portion of the SNI earnings call, Lowe addressed a query about the company’s interest in Cox Communications’ Travel Channel, which has been the source of speculation since June. “We’ll be taking a look at it just as we always do whenever a cable property of this magnitude comes on the marketplace,” Lowe said.
Although Cox won’t comment on whether Travel Channel is up for sale, it has said that it received unsolicited inquiries about the network earlier this summer.
Shares of Scripps Networks were up 7 cents, to $32.81, in mid-afternoon trading.