Scripps Networks Interactive Earnings Call Nuggets: Advertising Growth and Food Network

Scripps Networks Interactive Inc (NYSE:SNI) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.

Advertising Growth

Townsend Buckles – JPMorgan: This is Townsend Buckles for Alexia with a few questions. First looking at your guidance with a bit of moderation and growth still implied in the back half of the year, it sounds like advertising is facing a bit stronger than expected – than you expected early in the year. So are there other offsets we should keep in mind?

Kenneth W. Lowe – Chairman, President and CEO: I’ll take that. No, there is nothing you should concern yourself about. I think we obviously – we project with some caution and things we don’t know yet. But we feel confident about it.

Townsend Buckles – JPMorgan: Do you see advertising growth continuing about double-digits ahead or sliding somewhat?

Kenneth W. Lowe – Chairman, President and CEO: Well, I think the guidance we gave today gives you the numbers.

Townsend Buckles – JPMorgan: Then just lastly, if you could talk about how you see profitability progressing at your international networks as you continue to develop them?

Joseph G. NeCastro – CFO and CAO: Well, certainly. I think the international operations for us are one of our most important investment opportunities for the Company, and we’re going to continue to invest where we see opportunities. We obviously take a longer term view of that avenue for growth and that opportunity to build value, so we’ll invest where it’s appropriate. I think in the markets where we achieve scale, we certainly expect to turn profitable. But overall, we’re going to continue to invest wherever we think there is an attractive return available.

Food Network

Eric Handler – MKM Partners: With regard to the ratings at Food Network, you talked about Food Network Star being up 10% year-over-year, Mystery Diners up 20%, Restaurant; Impossible was up double digits to DDD, it was positive growth. What’s been the drag on the performance and as you get into August now where your comparison should be a lot easier to some of those tough comparisons go away.

John F. Lansing – President, Scripps Networks: Eric, this is John. I’ll take that. You’re absolutely right. The comps for Food Network ratings will ease as we move forward through August and into the fourth quarter. You pointed out the strength of certain programs, the reality is in the first quarter and into the beginning of the second quarter, we were pacing against unusually successful and high ratings from the prior-year. And notwithstanding some of the drag there we were still turning in the second or third highest quarter in the history of the network. As we moved into June, we saw the declines move from mid-teens to high singles and into July, they moderated even some more and I fully expect to see us begin to move into the positive territory and year-over-year comps coming up in the next month or two looking forward.

A Closer Look: Scripps Networks Interactive Earnings Cheat Sheet>>