21 February 2017
Record full year revenues driven by strength in U.S. advertising and expanding international business

Full Year 2016 Financial Highlights:

  • Record consolidated operating revenues of $3.4 billion, an increase of 12.7%;
  • Record consolidated advertising revenues of $2.4 billion, an increase of 17.2%;
  • Consolidated operating income of $1.1 billion, an increase of 4.0%; and
  • Consolidated adjusted segment profit(1) of $1.4 billion, an increase of 10.1%.

KNOXVILLE, Tenn., Feb. 21, 2017 (GLOBE NEWSWIRE) -- Scripps Networks Interactive, Inc. (Nasdaq:SNI) today reported full year and fourth quarter 2016 operating results.

For 2016, the company reported record consolidated advertising revenues of $2.4 billion, an increase of 17.2%. In the U.S., advertising revenues increased 9.6% and surpassed $2.0 billion for the first time ever, driven by improved ratings for all six U.S. networks in total day for the C-3 viewing window. Scripps Networks Interactive was the only U.S. media group to achieve this. Notably, HGTV, DIY Network and Cooking Channel had their highest-rated and most watched year ever. HGTV also finished the year ranked third among all cable networks for total adults.

Reaching new audiences and monetizing content on emerging digital platforms continues to be a strategic focus of the company. In 2016, revenues for the digital businesses improved 9.4% compared to the prior year. Contributing to this growth is Scripps Lifestyle Studios' focus on increasing social media and online engagement. In 2016, Scripps Lifestyle Studios delivered more than 5 billion total video views across various digital platforms.

TVN, Poland's leading multi-platform media business, continued to see growth across the entire portfolio and grew its ratings 3.5% with its key audience at TVN Group for the full year. In January 2017, the company launched HGTV in Poland, the network's first full launch in Europe and the largest HGTV international launch to date. HGTV has already secured a strong position, earning the second highest market share for lifestyle channels in Poland, behind only TVN Style.

"2016 was an extraordinary year for Scripps Networks Interactive. We achieved record levels of revenue and significantly improved our earnings. We increased ratings and engagement with audiences across our linear and digital platforms and expanded our international reach to new markets," said Kenneth W. Lowe, Chairman, President and Chief Executive Officer. "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."

Full Year 2016 Consolidated Results
Consolidated operating revenues for 2016 were $3.4 billion, an increase of 12.7% compared with the prior-year. Advertising revenues were $2.4 billion, an increase of 17.2%, and distribution revenues were $894.4 million, an increase of 2.2% compared with the prior-year.

Full year 2016 consolidated operating income was $1.1 billion, an increase of 4.0% from the prior-year. Included in the increase is a non-cash accounting adjustment related to the write-down of goodwill and related intangible assets for certain international investments acquired in 2012 and 2013. Consolidated adjusted segment profit(1) was $1.4 billion, an increase of 10.1%. The year-over-year improvement in both operating income and consolidated adjusted segment profit(1) was primarily due to the growth in revenues and the inclusion of TVN for the full year, partially offset by an increase in programming amortization.

Consolidated net income attributable to Scripps Networks Interactive in 2016 increased 11.0% to $673.6 million, or $5.18 per diluted share. Consolidated adjusted net income(1) increased 7.0% to $686.8 million, and consolidated adjusted diluted earnings per share(1) increased to $5.29. The improvement in consolidated adjusted net income(1) was primarily due to the growth in operating revenues and the inclusion of TVN. This was partially offset by the combination of favorable and unfavorable tax settlements in 2015 and 2016 respectively, higher interest expense, lower equity in earnings of affiliates, due to the sale of Fox Sports South in 2016 and a non-cash charge related to the write-down of an equity-method investment.

Fourth Quarter 2016 Consolidated Results
Consolidated operating revenues for the fourth quarter of 2016 were $888.7 million, an increase of 4.3% over the prior-year period. Advertising revenues were $641.5 million, an increase of 7.5%, and distribution revenues were $221.2 million, a decrease of 2.1%, over the prior-year period.

Fourth quarter 2016 consolidated operating income was $227.8 million, a decrease of 17.2% from the prior-year period. The decline was driven by the previously mentioned non-cash accounting adjustment. Consolidated adjusted segment profit(1) was $340.5 million, an increase of 3.4%. The improvement was primarily due to the growth in operating revenues.

Consolidated net income attributable to Scripps Networks Interactive in the fourth quarter of 2016 was $52.1 million, or $0.40 per diluted share compared with $164.7 million, or $1.27 per diluted share for the prior-year period. The decline was primarily driven by the previously mentioned non-cash accounting adjustment, tax effects and non-cash write-down of an equity-method investment. Also contributing to the decline was foreign currency transaction exchange losses primarily due to the strengthening of the U.S. dollar. Fourth quarter consolidated adjusted net income(1) decreased to $133.7 million, and consolidated adjusted diluted earnings per share(1) decreased to $1.02. This decrease was primarily due to the previously mentioned tax effects and foreign exchange losses.

Fourth Quarter 2016 Segment Results

Segment Profit and Adjusted Segment Profit - Q4 2016 and 2015  
  U.S. Networks   International Networks   Corporate and Other   Consolidated  
  Three months ended   Three months ended   Three months ended   Three months ended  
  December 31,   December 31,   December 31,   December 31,  
(in thousands) 2016   2015   2016   2015   2016   2015   2016   2015  
Operating income (loss)   301,441     284,123     (42,584 )   19,448     (31,106 )   (28,480 )   227,751     275,091  
Depreciation   15,285     14,842     3,240     4,649     (722 )   969     17,803     20,460  
Amortization   10,079     10,106     30,876     12,274     -     -     40,955     22,380  
Goodwill write-down   -     -     57,878     -     -     -     57,878     -  
Segment profit (loss) (1) $ 326,805   $ 309,071   $ 49,410   $ 36,371   $ (31,828 ) $ (27,511 ) $ 344,387   $ 317,931  
TVN transaction and integration expenses   -     11     32     3,593     996     1,893     1,028     5,497  
TVN purchase price accounting impact   -     -     (8,501 )   -     -     -     (8,501 )   -  
Restructuring costs   -     1,286     -     -     -     1,639     -     2,925  
Reorganization costs   1,779     3,041     -     -     1,815     31     3,594     3,072  
Adjusted segment profit (loss) (1) $ 328,584   $ 313,409   $ 40,941   $ 39,964   $ (29,017 ) $ (23,948 ) $ 340,508   $ 329,425  

U.S. Networks' operating revenues for the fourth quarter of 2016 were $730.6 million, an increase of 4.1% compared with the prior-year quarter. Advertising revenues were $523.3 million, an increase of 9.4%. This improvement reflects the continued strength in the U.S. advertising market for our lifestyle brands and overall ratings improvement in the quarter. U.S. Networks' distribution revenues decreased by 3.1% to $193.4 million. This decline was driven by the previously disclosed rate equalization and our strategic decision not to extend certain SVOD agreements, as well as subscriber declines compared to the prior year quarter. This decline was partially offset by annual rate increases and revenues generated from new over-the-top and non-linear distribution platforms.

U.S. Networks' operating income for the fourth quarter of 2016 was $301.4 million, an increase of 6.1% compared with the prior-year quarter. U.S. Networks' adjusted segment profit(1) was $328.6 million, an increase of 4.8%, reflecting the growth in operating revenues.

International Networks' operating revenues for the fourth quarter of 2016 were $165.4 million, an increase of 1.5% compared with the prior-year quarter. Revenues at TVN increased 2.8% in local currency for the quarter. International Networks' operating loss was $42.6 million compared with operating income of $19.4 million in the prior-year quarter, a result of the previously mentioned non-cash accounting adjustment. Adjusted segment profit(1) for International Networks was $40.9 million compared to $40.0 million in the fourth quarter of 2015, reflecting the increase in operating revenues.

(1) This earnings release includes several metrics, including consolidated segment profit, adjusted segment profit, adjusted net income, adjusted net income per diluted share and free cash flow that are not calculated in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"). See the Non-GAAP Financial Measures section of this press release for discussion of consolidated segment profit, adjusted segment profit, adjusted net income, adjusted net income per diluted share and free cash flow and a reconciliation to their respective most comparable financial measure calculated in accordance with GAAP.

Guidance
The company will provide full year 2017 guidance on its earnings call. Details on how to access the call are included below.

Conference Call Information
The senior management team of

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