(Updated: 11:30 a.m. ET)
Scripps Networks Interactive reported higher second quarter profits and said the ad market looked stronger than expected for the rest of the year.
Net income rose 12.2% to $160 million, or $1.08 a share, in the second quarter, from $142 million, or 93 cents a share, a year ago. Revenues rose 11% to $655 million.
The results were in line with analysts' expectations.
"The growth story at Scripps Networks Interactive continued during the second quarter, driven by the tremendous popularity of our lifestyle television networks with media consumers, advertisers and content distributors," CEO Ken Lowe said in a statement. "We've succeeded in creating a valuable portfolio of networks - as well as industry-leading websites and apps - that attract a highly engaged audience of food, home and travel enthusiasts. Those distinctly unique attributes drive our company's consistently solid operating results."
Scripps Networks raised its financial guidance for the full year. It said total revenue is now expected to be up 9% to 10% because of ongoing strength in the advertising market. Previously, the company said it expected growth of 7% to 9%. Selling, general and administrative expenses are now expected to rise 9% to 11%, because of the acquisition of the Asian Food Channel and other international investment. Previously, expenses were slated to rise 7% to 9%.
Expenses rose 9.2% to $345 million in the second quarter, driven by program amortization expenses as the company invests to increase viewership at its television networks.
Profit at the company's networks segment rose 12.1% to $347.9 million in the quarter because of advertising and affiliate fee growth. Revenues rose 9.5% to $647.1 million. Advertising revenue rose 10% to $456 million. Affiliate fee revenue grew 9.5% to $182 million.
On the company’s conference call with analysts, Lowe said that Scripps completed its upfront negotiations, getting price increase in the high single digit range, with volume topping $1 billion for the second consecutive year.
CFO Joe NeCastro said that the ad market has continued to be strong in the third quarter, with scatter prices up mid- to high single digits over last year and mid- to high-teens over upfront rates.
Most of the company's individual networks reported operating revenues rising by double digits, with the exception of Food Network. HGTV was up 13.1% to $231.7 million; Food Network was up 2.7% to $224.5 million; Travel Channel was up 13.7% to $83.9 million; DIY Network was up 14.6% to $38.7 million; Cooking Channel was up 27.7% to $28.6 million and GAC was up 40.7% to $7 million. The company's digital businesses were up 1.1% to $28.6 million.
On the conference call, Scripps Network president John Lansing said he expected to see improvement at Food Network, partly because ratings were not as strong in the second half of last year as they were in the first half of last 2012, creating easier comparisons.
NeCastro said Scripps remains interested in buying the portion of Food Network it doesn’t already own when Tribune Co. is ready to sell. “We’ll continue to be here and be patient about it,” he said.