Television media giant Scripps Networks (SNI) today posted second-quarter financial results that beat Wall Street expectations on both the top and bottom lines. Revenue ticked higher by 3% as profits leaped 39% above the prior year.
Here's a big-picture look at how the results stacked up against analysts' forecasts:
|Revenue||$729 million||$732 million|
|Profit||$1.26 per share||$1.49 per share|
Scripps' diverse portfolio of lifestyle channels attracted a growing audience this quarter. The flagship HGTV channel logged its 13th straight quarter of ratings gains while notching its second-best quarter by that metric in the company's 20-year history.
HGTV and Food Network, Scripps' two biggest properties, were both within the top 10 cable networks in desirable audience demographics. Meanwhile, Scripps' smaller channels also performed well: DIY Network, Cooking Channel, and Great American Country all achieved near record ratings in the quarter.
Distribution fee revenue, which Scripps collects from TV service providers, leaped higher by 9%, nearly doubling the 4.9% pace from last year. But advertising, which accounts for a larger proportion of the business, rose by a relatively weak 1%. That uninspiring result was due to softness in the broader ad market along with slipping ratings at the Travel Channel. The Travel Channel is Scripps' third-biggest property and its operating revenue is running at 4% below last year's result.
Still, Scripps' overall portfolio performance was strong, and it provides a good base for both advertising delivery and distribution fee raises. "These results validate the continued strength of our brands, fortified by the close relationships we've forged with millions of engaged, upscale consumers, and the advertisers and distributors that want to reach them," said CEO Kenneth W. Lowe.
Meanwhile, cost cuts drove a surprisingly large boost to the bottom line this quarter. Operating expenses shrank by 6% even as revenue rose by 3%. The result was a profit margin that jumped to 45% of sales from 40% of sales in the prior-year period. Scripps collected $194 million in net income this quarter, up 26% over last year.
Management isn't expecting cost savings to have quite the same dramatic impact on full-year results, though. Executives are forecasting slightly higher expenses through 2015 as Scripps ramps up investments in programming and show premiers.
As for the top line, revenue should rise by a hefty 12% this year, according to the company. That boost will come from steadily growing advertising and distribution fees that are aided by Scripps' acquisition of Polish media company TVN, which closed last month.