Scripps Says Split On Track For June
Lowe to Become CEO of Scripps Networks Interactive
By Mike Farrell -- Multichannel News, 1/8/2008 9:51:00 AM
E.W. Scripps executive vice president of finance and administration Joseph NeCastro said the company’s plan to cleave into two separate publicly traded entities – one which would house its cable networks and the other its television stations and newspapers – should be completed by June 30.
Scripps said in October that it would split into two separate publicly traded companies – Scripps Networks Interactive, housing its cable networks HGTV, Food Network, DIY, Great American Country and Fine Living and their related web sites; and E.W. Scripps, including its 10 TV stations and daily and community newspapers in 17 markets.
NeCastro, who will become executive vice president and CFO of Scripps Networks Interactive after the split, said that the company has already filed a request with the Internal Revenue Service for the transaction to be tax-free and expects to file its Form 10 registration statement with the Securities and Exchange Commission concerning the break-up in late February. That process should take a few months to complete, he said.
“We should be trading by the end of June or the first of July,” NeCastro said.
Scripps Networks Interactive is expected to be the larger of the two companies, with $1.5 billion in annual revenue and about $600 million in annual operating cash flow. E.W. Scripps should have annual revenue in the $1 billion range with operating cash flow of between $225 million and $250 million.
E.W. Scripps CEO Ken Lowe, who will become CEO of Scripps Networks Interactive after the split, said the decision process leading up to the split took about one year. He added that the Scripps board of directors decided to cleave the company to allow it to be more focused and flexible in its respective businesses.
“By that I mean allowing the management of two very good strong companies to focus on just those given businesses and have the flexibility, especially in capital allocation, to allocate the capital necessary to run those businesses and allocate capital in a manner that fits a company of that size and of those assets,” Lowe said at the Citigroup Entertainment, Media & Telecommunications conference in Phoenix.
Lowe added that employee compensation concerns also led to the decision to split the company up.
“It’s difficult in a company where you have newspapers that are in some cases over 130 years old and interactive business that are months old, coming up with a compensation plan and things like pension plans and non-pension plans and how that relates to the different division and to employees across divisions,” Lowe said. “Lastly this will allow our shareholders to more focus in on the different priories of these locally-based businesses, namely our newspapers and television stations, and our national and global businesses in our cable networks and interactive businesses.”
NeCastro said that Scripps’ cable networks have agreed to compensate its television stations for retransmission consent after the split. The amount of that compensation is currently being negotiated, he said.
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