SNI Scripps Networks Interactive, (delisted)

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): NOVEMBER 9, 2015

 

SCRIPPS NETWORKS INTERACTIVE, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Registrant’s Telephone Number, Including Area Code: (865) 694-2700

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On November 9, 2015, Scripps Networks Interactive, Inc. (the “Company”) released information regarding results of operations for the quarter ended September 30, 2015. A copy of the press release is attached as Exhibit 99.

The information in this Form 8-K and the attached Exhibit is being furnished pursuant to Item 2.02 “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure.

On November 9, 2015, the Company announced its financial results for the quarter ended September 30, 2015. The full text of the press release is set forth in Exhibit 99. The Company has also released certain supplemental financial information that can be accessed through the Company’s website at www.scrippsnetworksinteractive.com.

The information in this Form 8-K and the attached Exhibit as well as the supplemental information referenced above is being furnished pursuant to Item 7.01 “Regulation FD Disclosure” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

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Exhibit Index

 

 

Exhibit 99

 

 

Scripps Networks Interactive reports third quarter 2015 financial results

 

 

 

 

For immediate release

Nov. 9, 2015

 

KNOXVILLE, Tenn. — Scripps Networks Interactive, Inc. (NYSE: SNI) today reported third-quarter 2015 operating results.

 

"This has been a transformative quarter for Scripps Networks Interactive. Our international business has been bolstered by the successful acquisition of Poland's leading multi-platform media company, TVN. Our networks continue to thrive in the United States, and their success is reflected in strong growth in both advertising and affiliate revenues. With a strategy that enables us to create deeper connections with consumers across the world, we are focused on delivering long-term growth and enhanced shareholder value," said Kenneth W. Lowe, Chairman, President and Chief Executive Officer

 

During the quarter, the company successfully completed its acquisition of 100 percent of TVN. TVN is a world-class operation with stellar management that has a proven record of connecting consumers with compelling content in multiple ways. Scripps Networks Interactive is actively integrating TVN’s operations and realizing the benefits of its financial results, which drove a nearly 400 percent increase in International Networks’ segment revenue and resulted in the first profitable quarter for Scripps’ international operations.  

 

Consolidated revenues for the quarter were $776.1 million, an increase of 20.4 percent, or

$131.7 million, from the prior-year period. Results for the three-month period ended Sept. 30, 2015, included advertising revenue of $527.9 million, an increase of 22.2 percent, or $95.8 million; and affiliate fee revenue of $224.9 million, an increase of 13.5 percent, or $26.7 million, compared with the prior-year period.

 

 

 

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Total segment profit was $312.3 million, an increase of 15.7 percent, or $42.3 million, compared with the prior-year period. This improvement reflects revenues from TVN and growth in both advertising and affiliate fees from the core business, partially offset by increased international operating costs as a result of TVN, and additional programming costs. Also included in operating expenses in the third quarter of 2015 were $8.4 million of transaction and integration expenses related to the TVN acquisition, and $2.8 million of costs related to the previously announced restructuring program. Excluding the impact of the integration and acquisition expenses as well as restructuring charges, segment profit would have been $323.5 million, an increase of 19.8 percent.

 

Third-quarter net income attributable to Scripps Networks Interactive was $124.6 million, or

$0.96 per diluted share, compared with $131.3 million, or $0.93 per diluted share, in the prior year. Earnings in the third quarter of 2015 were negatively impacted by:

 

 

Excluding the impact of these items, net income attributable to Scripps Networks Interactive would have been $137.6 million, or $1.06 per share.

 

Segment results

 

 

U.S. Networks revenues for the third quarter of 2015 were $660.9 million, an increase of

6.2 percent, or $38.4 million, driven by both advertising revenue and affiliate fee growth. Total advertising revenue was $447.8 million, an increase of 5.2 percent, or $22.0 million, reflecting a strengthening in the advertising market. Affiliate fee revenue was $199.2 million, an increase of 6.3 percent, or $11.8 million, primarily driven by annual contractual rate increases, expanded distribution for DIY Network and Cooking Channel with our traditional partners and additional distribution from new OTT entrants.

 

U.S. Networks segment profit was $330.3 million, an increase of 12.2 percent, or $36.0 million. This reflects revenue growth, partially offset by a slight increase in operating expenses, including

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$0.9 million of restructuring charges. Excluding these restructuring related costs, segment profit was $331.2 million, an increase of 12.5 percent.

 

International Networks revenues for the third quarter of 2015 were $118.7 million compared with $23.8 million in the prior-year third quarter, primarily due to the consolidation of TVN operations.

 

Driven by the consolidation of TVN, International Networks segment profit was $10.9 million,  compared with a loss of $5.9 million in the third quarter of 2014.

 

Corporate and Other included a segment loss of $28.9 million in the third quarter of 2015 compared with a segment loss of $18.4 million in the prior year third quarter. The results include

$7.8 million of TVN transaction and integration expenses and $1.9 million of restructuring charges. Excluding these amounts, the segment loss would have been $19.2 million, a slight increase from prior year, reflecting the benefits of the restructuring initiated in the fourth quarter of 2014.  

 

2015 Updated Full-year Guidance

The company now expects full-year revenue to increase approximately 13 percent. Due to the impact of purchase accounting, depreciation and amortization is now expected to be approximately $145 million. Finally, as a result of our 100 percent ownership of TVN, we now expect interest expense to be approximately $110 million.

 

Conference call

The senior management team of Scripps Networks Interactive will discuss the company’s third quarter results during a telephone conference call at 10 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 (800) 230-1059 (U.S.) or (612) 234-9959 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, "SNI Third 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 12:15 p.m. ET on Nov. 9 until 11:59 p.m. ET on Nov. 23. 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 370757.

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

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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-4 of its 2014 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 (NYSE: 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.

 

 

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Contact:  Scripps Networks Interactive, Inc.

Investors:  Mike Gallentine, 865-560-4473, mgallentine@scrippsnetworks.com

Media:  Dylan Jones, 865-560-5068, DJones@scrippsnetworks.com, or

Lee Hall, 865-560-3853, LHall@scrippsnetworks.com

 

 

 

 

 

 

 

 

 

 

 

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NON-GAAP FINANCIAL MEASURES

 

Our Chief Operating Decision Maker evaluates the operating performance of our businesses and makes decisions about the allocation of resources to the businesses using a measure we call segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, investment results and certain other items that are included in net income determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  

 

Items excluded from segment profit generally result from decisions made in prior periods or from decisions made by corporate executives rather than the managers of the businesses. Depreciation and amortization charges are the result of decisions made in prior periods regarding the allocation of resources and are, therefore, excluded from the measure. Financing, tax structure and divestiture decisions are generally made by corporate executives. Excluding these items from the performance measure of our businesses enables us to evaluate operating performance based upon current economic conditions and decisions made by the managers of those businesses in the current period.

 

In the fourth quarter of 2014, we modified our management reporting structure related to the operating results from our uLive business. In conjunction with this change in our reporting structure, we now report the results of uLive within the U.S. Networks segment rather than within Corporate and Other.

 

As a result of the acquisition of N-Vision B.V. (“N-Vision”), the majority shareholder of TVN, the international operating segment that was previously not significant, has become significant. Therefore, the Company now has two reportable segments: U.S. Networks, previously referred to as Lifestyle Media, and International Networks. Accordingly, we made changes to the disclosures related to these reportable segments beginning in the third quarter of 2015.

 

For comparability purposes, prior period and prior year segment results have been recast to reflect the impact of these management reporting changes.

    

The International Networks segment includes the lifestyle oriented channels available in the United Kingdom, Europe, Middle East, Africa, Asia-Pacific and Latin America. Additionally, the International Networks segment includes TVN.

 

Corporate and Other includes the results of businesses not separately identified as reportable segments for external financial reporting purposes and will continue to be disclosed separately from the results of the U.S. Networks and International Networks segments. The Company does not allocate corporate employee-related overhead costs to its reportable segments, but rather classifies these expenses within Corporate and Other. However, certain corporate costs, including information technology, pension and other employee benefits and shared service functions, are allocated to our businesses. The allocations are generally amounts agreed upon by management, which may differ from amounts that would be incurred if such services were purchased separately by the businesses.

 

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A reconciliation of segment profit to operating income determined in accordance with GAAP for each business segment is as follows:

 

 

We define free cash flow as cash provided by operating activities less dividends paid to non-controlling interests and acquisitions of property and equipment. We measure free cash flow as we believe it is an important indicator for management and investors as to our liquidity, including our ability to reduce debt, make strategic investments and return capital to shareholders. A reconciliation of free cash flow is as follows:

 

 

 

 

 

Since segment profit and free cash flow are non-GAAP measures, they should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance reported in accordance with GAAP.

 

The table below reconciles certain non-GAAP measures related to TVN transaction and integration expenses, TVN derivative contracts, foreign currency effects on TVN funds and restructuring costs with the most directly comparable GAAP financial measures: cost of services, excluding depreciation and amortization of intangible assets, selling general and administrative, net income attributable to SNI and diluted earnings per share. 

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SUPPLEMENTAL FINANCIAL INFORMATION

 

U.S. Networks earns revenue primarily from the sale of advertising time on our national television networks and interactive platforms, affiliate fees paid by cable and television systems and telecommunication service providers and other distributors that carry our network programming and the licensing of our content to third parties and brands for consumer products, such as videos, books, kitchenware and tools.

 

Supplemental information for U.S. Networks is as follows: