Analysts: Rosy Future for Scripps Networks

Wall Street is bullish on Scripps Networks Interactive, as analysts foresee a return to form for the programmer in the coming year.In a note to investors, Oppenheimer media analyst Jason Helfstein revised his estimates for SNI, eyeballing the company’s 2010 ad sales revenue at $1.21 billion, up from an earlier projection of $1.17 billion.Oppenheimer’s outlook sees SNI’s ad sales haul increasing by 21 percent in 2010, up from the estimated $1 billion it took in last year. (While the company isn’t due to release its Q4 ’09 earnings until Feb. 10, Oppenheimer pegs ad sales revenue for the final three months of 2009 at $277 million; should that number hold, SNI will have increased its year-over-year take by 5.3 percent from $263 million in Q4 ’08.)Home to the lifestyle cable powerhouses HGTV and Food Network, SNI began turning things around in the third quarter of last year, when it managed to increase its ad sales intake by 0.5 percent, to $271 million. Only Rainbow Media, Turner Broadcasting and Discovery Communications matched that feat, as cable continued to endure the impact of the global recession.SNI’s decline was relatively brief, as the programmer suffered just two quarters of declining ad sales activity. Q1 ad sales revenue dropped 4.6 percent to $225 million, and Q2 sales dipped 3.8 percent to $261 million.The increase in ad dollars follows a stellar year at the twin flagship networks. Food Network in 2009 boosted its prime time deliveries by 26 percent to 1.12 million total viewers, while growing its 18-49 audience 27 percent. HGTV’s ratings were up 10 percent to 1.2 million total nightly viewers, making it the 14th most-watched channel on ad-supported cable.Despite an ongoing feud with Cablevision that has reduced SNI’s overall sub count by some 3.1 million households, Oppenheimer notes that the programmer has deftly gone about renewing its other carriage agreements. “Nearly 80 percent of Food Network’s contracts came up for negotiations at the end of the calendar year. With the exception of Cablevision––which accounts for only 2 percent of the network’s total viewership––we estimate that management has achieved its goals.” Oppenheimer projects SNI’s affiliate revenue will add up to $482 million in 2010, up 50.6 percent from last year’s $320 million in carriage fees. Along with the lift SNI should get via ratings growth and an improving advertising environment, the company will also reap the rewards of bringing Travel Channel into the fold. In December, SNI closed a $1.1 billion deal to acquire a 65 percent stake in Travel. Per UBS estimates, Travel in 2009 took in $120 million in ad sales revenue, on average prime time deliveries of 265,000 adults 25-54 (up 20 percent from its year-ago average). UBS analyst Michael Morris anticipates further ad sales gains for Travel in 2010, predicting an 8 percent increase in ad sales revenue, to $130 million. Looking further ahead, UBS sees Travel raising its carriage fees from 8 cents per sub per month to 14 cents, although the network isn’t likely to have any outstanding affiliate deals to hash out until 2012. On Jan. 11, SNI announced it had named Greg Regis senior vp, advertising sales, Travel Channel. Regis most recently had served as vp, ad sales for Food Net, eastern region.

Convergent TV

Analysts: Rosy Future for Scripps Networks

Anthony Crupi

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Anthony Crupi