Earnings: EW Scripps Posts Loss On $48.8 Million In Writedowns
This story was written by David Kaplan.
Pointing to the same set of troubles pressing down on the newspaper industry, E.W. Scripps (NYSE: SSP) posted an operating income loss of $19.4 million before taxes and "minority interests" while its revenues decreased 6.2 percent to $265 million in Q4. And in another sign of how the economy has devastated both sides of the advertising fence, online ad revenues, once considered the main bright spot for newspapers' quarterly earnings, are now just as typically down as print. In EW Scripps' case, newspaper web revs fell 13.1 percent to $8 million in Q4. In the case of its online newspapers, there was one glimmer of good news: Revenue from pure-play advertisers who only purchase ads on the company's newspaper websites more than doubled to $3.7 million, suggesting that most newspapers move away from print upsells should help them draw more ad dollars on the digital side. Essentially, EW Scripps' online revs were the victim of enormous pressure on classifieds, which are tied to print and also severely impacted by the economy, especially in the employment, auto and real estate sections. (More on the newspaper segment in general after the jump).
Among the costs leading to yet another loss for the Cincinnati publisher of the troubled Rocky Mountain News in Denver and Memphis' Commercial Appeal, was $5 million in severance costs related to the 400 job cuts it announced in Q308, $1.9 million in costs tied to the separation of the Scripps Networks (NYSE: SNI) and interactive media divisions, the write-down of a number of "long-lived" assets in the TV division totaling $31 million, and $10.9 million in charges on the company's investment in its Colorado newspaper partnership, for a total of $48.8 million in write-downs. More after the jump
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Newspapers: Year-over-year revenue fell 16.5 percent to $137.5 million at EW Scripps solely-managed papers. Ad revenue was down 19.8 percent to $104.8 million. Ad revs broken down by category were:
Local, down 15.1 percent to $32.1 million
Classified, down 31.2 percent to $27.7 million
National, down 18.0 percent to $7.5 million
Preprint and other, down 13.8 percent to $29.5 million
Online, down 13.1 percent to $8.0 million
JOA and Newspaper Partnerships: Scripps reported $51,000 in equity in earnings from joint operating agreements, compared to $11.0 million in Q407. That dramatic decline was pinned on the end of cash distributions from the Denver Newspaper Agency in the second half of '08, as well as the change in the reporting of earnings from the Albuquerque partnership. As a result of the closure of The Albuquerque Tribune and termination of the Albuquerque JOA in early 2008, the company's residual interest in the Albuquerque partnership is now treated as a passive investment. Consequently, the results of the JOAs and newspaper partnerships reduced the segment's profit by $8.4 million in the quarter, compared with a contribution to segment profit of $3.5 million the year before.
Rocky Mountain News: For the full year, newsroom expenses for the Rocky were roughly $16 million higher than equity in earnings from the Denver Newspaper Agency, excluding a one-time gain from the sale of real estate in the first quarter. A the end of last year, EW Scripps said it would sell the paper. The company will announce the fate of the Rocky before the end of Q1.
By David Kaplan