'Chopped' on the Food Network

Analyst sees scatter advertising healthy for owner of lifestyle cablers

Scripps Networks Interactive said first-quarter net income dipped 6.2% as the costs of investing in and marketing programming offset increases in advertising and affiliate revenue.

The owner of Food Network, HGTV, DIY and other cablers, said expenses in the quarter rose 17%, to $347 million. The rises were attributed to the company investing in efforts to drive viewership, employee costs, as well as “investments in planned domestic and international growth initiatives.” That served to mask the company’s revenue growth in the quarter. Revenue rose 11% to $594 million, up from $535 million in the year-earlier period.

Scripps said ad revenue rose 11% in the quarter to $395 million, and affiliate fee revenue rose to $187 million, a rise of 11% year over year.

In all, Scripps said net income came to $107.8 million, or 72 cents a share, down from $114.9 million, or 73 cents a share, a year earlier.

In a research note Thursday, Nomura Securities said the company’s TV nets enjoyed “healthy” scatter advertising rates, or prices for ads that are purchased much closer to air date, which “than offset some choppiness at Food Network, while HGTV and Travel continue to contribute nicely. Food Network revenue growth in 1Q was +5% Y/Y, while HGTV was up +11%, Travel up +15%, and Cooking Channel up +33%.”

Scripps acquired the Asian Food Channel, based in Singapore, during the quarter. The price was not disclosed.

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