05 May 2016
Increases full-year adjusted segment profit guidance
 

Editors note: Access the full earnings release with tables on the SNI Investor Relations page

First quarter 2016 financial highlights:

  • Consolidated revenues of $816.9 million, a 24.1% increase;
  • U.S. Networks advertising revenue of $487.3 million, a 13.7% increase;
  • Consolidated segment profit of $338.4 million, a 31.7% increase;
  • Adjusted segment profit of $346.8 million, a 27.4% increase;
  • Net income attributable to SNI of $290.9 million, a 134.9% increase; and
  • Adjusted net income attributable to SNI of $1.37 per diluted share, an increase of 34.3%

KNOXVILLE, Tenn.--(BUSINESS WIRE)--May 5, 2016-- Scripps Networks Interactive, Inc. (Nasdaq: SNI) today reported first-quarter 2016 operating results.

The company reported an increase of more than 24% in revenues for the quarter, with segment profit up 32% compared with the prior year period. The strong performance in the U.S. was driven by the increase in ratings at all six U.S. networks, coupled with the strong advertising market. This translated into the highest quarter-over-quarter advertising percentage growth for the U.S. Networks' segment in five years. The company's double-digit international revenue growth was driven by the inclusion of TVN, Poland's leading multi-platform media business.

With the strong performance both in the U.S. and internationally, coupled with the ongoing strength of the U.S. advertising market, the company increased adjusted segment profit guidance to 8% for the full-year.

"This has been a tremendous quarter for Scripps Networks Interactive. The power and appeal of our lifestyle networks continues to grow in the U.S. as evidenced by the increase in ratings at all of the U.S. networks and strongest advertising growth in five years. Meanwhile, our international business is really delivering on the high expectations that we have for the segment," said Kenneth W. Lowe, Chairman, President and Chief Executive Officer of Scripps Networks Interactive. "The consistent financial performance that our networks produce demonstrates our ability to deliver on our proven strategy of developing lifestyle content and creating deeper connections with consumers around the world."

During the first quarter, Scripps Networks Interactive was the only major media company to generate positive ratings growth at all of its U.S. television networks compared with the prior year period, making it one of the best quarters in the company's history. HGTV had its highest rated quarter ever for adult 25 to 54 viewers. Food Network and Travel Channel both continued their primetime ratings growth while DIY Network delivered its highest rated quarter among adults 18 and over. Cooking Channel had its highest rated quarter ever, and Great American Country had its highest rated quarter since 2008, both in the important primetime adult 25 to 54 demographic.

Internationally, the company continues to deliver strong growth. TVN realized mid-single digit revenue growth in local currency, and, for the just completed fiscal year, UKTV experienced double-digit revenue growth in local currency.

First Quarter Results
Consolidated revenues for the quarter were $816.9 million, an increase of 24.1% compared with the prior-year period. Consolidated advertising revenues were $571.9 million, an increase of 31.4%, and consolidated distribution revenues were $228.1 million, an increase of 9.1%, compared with the prior-year period.

Consolidated segment profit was $338.4 million, an increase of 31.7%, compared with the prior-year period. Adjusted consolidated segment profit was $346.8 million, an increase of 27.4%.(a) The year-over-year improvement was driven by a boost in revenue, which reflects the inclusion of TVN and growth in both advertising and distribution revenues from U.S. Networks, partially offset by additional programing costs for U.S. Networks and increased international operating expenses as a result of the inclusion of TVN.

First quarter consolidated net income attributable to Scripps Networks Interactive was $290.9 million, or $2.24 per diluted share, compared with $123.8 million, or $0.94 per diluted share, in the prior year period. First quarter adjusted consolidated diluted earnings per share increased 34.3% to $1.37 per share.(b) This increase was primarily due to improved operating performance as a result of strong revenues and international expansion.

Segment Results

      Three months ended
      March 31,
(in thousands)     2016     2015     Change
Segment operating revenues                  
U.S. Networks     $ 702,195       $ 638,904       9.9 %
International Networks       121,338         24,065       404.2 %
Corporate and other       (6,655 )       (4,719 )     (41.0 )%
Total segment operating revenues     $ 816,878       $ 658,250       24.1 %
Segment profit (loss)                  
U.S. Networks     $ 359,497       $ 300,504       19.6 %
International Networks       9,789         (5,879 )     266.5 %
Corporate and other       (30,896 )       (37,709 )     18.1 %
Total segment profit     $ 338,390       $ 256,916       31.7 %
                   

U.S. Networks' revenues for the first quarter of 2016 were $702.2 million, an increase of 9.9%, driven by both advertising and distribution revenue growth. Advertising revenues were $487.3 million, an increase of 13.7%, reflecting continued strength in the advertising market for our lifestyle brands coupled with ratings growth at all six networks. Distribution revenues were $202.1 million, an increase of 2.2%, primarily driven by negotiated rate increases and additional distribution from new over-the-top entrants, partially offset by a one-time rate equalization of certain distributor agreements that are being consolidated and overall subscriber declines.

U.S. Networks' segment profit for the first quarter of 2016 was $359.5 million, an increase of 19.6%. U.S. Networks' adjusted segment profit was $363.3 million, an increase of 19.6%.(a) This reflects revenue growth, partially offset by a slight increase in expenses. The increase in cost of services expenses was largely offset by decreases in selling, general and administrative expenses, reflecting a deferral of marketing expenses and ongoing operating efficiencies achieved from the restructuring and early retirement program.

International Networks' revenues for the first quarter of 2016 were $121.3 million compared with $24.1 million in the prior-year quarter, and segment profit was $9.8 million compared with a loss of $5.9 million in the first quarter of 2015, both primarily due to the inclusion of TVN.

Corporate and Other included a segment loss of $30.9 million in the first quarter of 2016 compared with a segment loss of $37.7 million in the prior year quarter. Corporate and Other adjusted segment loss was $26.3 million, compared with a loss of $25.8 million in the prior year first quarter.(a)

(a) refer to Adjusted Segment Profit - Q1 2016 and 2015 table
(b) refer to Adjusted Net Income - Q1 2016 and Adjusted Net Income - Q1 2015 tables

Updated 2016 Guidance
The company provided the following updated outlook for 2016. All guidance is based on total company performance and excludes restructuring expenses. Due to stronger than expected advertising pricing and continued positive ratings from the U.S. Networks, the company now expects full-year adjusted segment profit to increase 8%, up from the previously issued 7%. All other guidance remains unchanged.

Conference Call
The senior management team of Scripps Networks Interactive will discuss the company's first quarter 2016 results during a telephone conference call at 11 a.m. ET today. Scripps Networks Interactive will offer a live webcast of the conference call. To access the webcast, visit www.scrippsnetworksinteractive.com and follow the Investors link at the top of the page. The webcast link can be found next to the microphone icon on the investor relations landing page.

To access the conference call by telephone, dial 877-260-8896 (U.S.) or 612-332-0636 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, "SNI First Quarter Earnings Report," to be granted access. Callers also will be asked to provide their name and company affiliation. The media and general public are granted access to the conference call on a listen-only basis.

A replay line will be open from 1:00 p.m. on May 5 until 11:59 p.m. ET on May 19. The domestic number to access the replay is 800-475-6701, and the international number is 320-365-3844. The access code for both numbers is 391241.

A replay of the conference call will also be available online. To access the audio replay, visit www.scrippsnetworksinteractive.com approximately four hours after the call, choose the Investors page, then follow the Audio Archives link at the top of the Investor Relations page.

Forward-looking statements
This press release contains certain forward-looking statements related to the company's businesses that are based on management's current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The company's written policy on forward-looking statements can be found on page F-2 of its 2015 Form 10-K filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

About Scripps Networks Interactive
Scripps Networks Interactive (Nasdaq: SNI) is one of the leading developers of engaging lifestyle content in the home, food and travel categories for television, the Internet and emerging platforms. The company's lifestyle media portfolio comprises popular television and Internet brands HGTV, DIY Network, Food Network, Cooking Channel, Travel Channel and Great American Country, which collectively engage more than 190 million U.S. consumers each month. International operations include TVN, Poland's premier multi-platform media company; UKTV, an independent commercial joint venture with BBC Worldwide; Asian Food Channel, the first pan-regional TV food network in Asia; and lifestyle channel Fine Living. The company's global networks and websites reach millions of consumers across North and South America, Asia, Europe, the Middle East and Africa. Scripps Networks Interactive is headquartered in Knoxville, Tenn. For more information, please visit http://www.scrippsnetworksinteractive.com.

                   
SCRIPPS NETWORKS INTERACTIVE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                   
      Three months ended March 31,
(Unaudited)     2016     2015     Change
Operating revenues:                  
Advertising     $ 571,855       $ 435,268       31.4 %
Distribution       228,068         209,008       9.1 %
Other       16,955         13,974       21.3 %
Total operating revenues       816,878         658,250       24.1 %
Cost of services, excluding depreciation and amortization of intangible assets       279,667         199,147 </
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