It's not been easy lately for traditional media companies. The online world is slowly eating away at such things as newspapers, magazines, and even television.
E.W. Scripps Co. (NYSE:SSP) brought some cheer to shareholders this week; the stock increased by $2 to $50.25 on Thursday.
In the fourth quarter, revenues increased 16.5% to $706.8 million. The company did, however, lose $603,000, which was down from earnings of $91.3 million in the same period a year ago.
Why the fall? Well, the company took a massive write-off for its Shop At Home cable channel (this is essentially a QVC-type direct sales venture). In fact, Scripps is looking for a buyer for the channel.
And, yes, the newspaper business was lackluster. Revenues increased 3.7% in the quarter to $192 million. Then again, it is a cash cow, evidenced by segment profits of $55.4 million.
But the company has been able to find growth via its specialty cable channels, such as HGTV, Food Network, DIY Network, Fine Living, and Great American Country. Revenues in this segment increased 21% to $247 million and segment profits increased 34% to $122 million, on strength in advertising revenues.
Interestingly enough, Scripps has an aggressive Internet strategy. Last year, the company bought Shopzilla, which is a shopping comparison site. Revenues were $63.2 million and profits came to $20.3 million in the fourth quarter, which was up from revenues of $25.1 million and segment profits of $5.6 million.
Actually, the Shopzilla acquisition may be a rare example of traditional media leveraging growth from New Media. Basically, Scripps' advertisers are looking for more channels for their advertising dollars -- and this means going online. The benefit here, as it relates to advertisers, is the ability to more concretely demonstrate the incremental returns on advertising dollars. Which is to say, are my ad dollars resulting in purchases of my products? With an e-commerce price comparison engine, advertisers have a greater degree of visibility into the aforementioned.
Looking towards the longer-term, I think Scripps is going where the advertisers want to go. Specialty cable still has growth potential, since advertisers realize that these networks offer a unique ability to target customers. And advertisers like Shopzilla because they can see if it results in products being sold.
While Scripps had a relatively good quarter, the fact is that the traditional media category is in a tough spot -- in part evidenced by the company's relatively flat results. Recent moves show hedge funds moving in on the media sector in a fairly big way. Personally, I wouldn't be too surprised if these companies were to actually go private or sell to other players. In the interim, though, I wouldn't expect too much.
Fool contributor Tom Taulli does not own shares of any stock mentioned in this article.
