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Drop at Home for Scripps

2/02/2006 5:08 AM Eastern

The E.W. Scripps Co. said Thursday that it is in the process of exploring strategic alternatives for Shop at Home.

The company said it recorded a $90.6 million noncash, after-tax charge in the fourth quarter, reflecting a write-down of goodwill and other intangible assets related to the electronic-commerce subsidiary, due to continuing operating losses at Shop at Home and a “longer than previously anticipated path to profitability.”

As a result, Scripps reported a net loss of $603,000 for the fourth quarter of 2005 versus net income of $91.3 million, or 55 cents per share, in the prior-year period. Excluding the Shop at Home charge, Scripps’ earnings per share for the fourth quarter were 54 cents.

Shop at Home’s fourth-quarter revenue rose 1.7% to $90.9 million, but its segment loss at Scripps was $10.4 million for the period.

"Scripps Networks and Shopzilla delivered outstanding financial performance during the fourth quarter, but the good news at our fastest-growing businesses was tempered by our need to write down goodwill and other intangible assets at Shop at Home," Scripps CEO Kenneth W. Lowe said in a prepared statement.

“Despite our best efforts, we haven't been able to secure consistently strong channel positions on cable systems across the country, which has hindered retail sales and profitability at Shop at Home," Lowe added. "While Internet sales are growing at a rapid pace, product sales generated by our television broadcasts have lagged because of the challenges we've had gaining affordable access to permanent, high-quality cable distribution for the network.”

He continued, “Those factors, among others, prompted us to write down our investment during the fourth quarter and undertake a deliberate and careful assessment of strategic alternatives for Shop at Home. Our intention going forward is to maximize the value of Shop at Home for the benefit of our shareholders.”

At Scripps Networks, segment profit was $122 million, up 34% from $91 million in the fourth quarter of 2004.

Scripps Networks’ advertising revenue jumped 27% to $202 million, while affiliate-fee revenue was $41.8 million, up 2.8%.

As for the individual Scripps Network services:

• Home & Garden Television contributed $81.7 million to segment profit, up 28% from the year-ago period, on revenue growth of 17% to $119 million;

• Food Network contributed $65.8 million to segment profit, up 29%, on revenue growth of 18% to $102 million;

• Revenue at DIY was $11.5 million versus $8.8 million in the previous-year quarter, and the network contributed $1.3 million to segment profit compared with $2.3 million in the fourth quarter of 2004;

• Fine Living revenue jumped to $7.5 million from $5.1 million in the fourth quarter of 2004, and the network contributed $121,000 to segment profit versus a segment loss of $2.9 million in the year-ago quarter; and

• Revenue at Great American Country was $4.7 million, with the network contributing $136,000 to segment profit.

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