Scripps Networks Interactive has said it is focused on Millennial-friendly interactive services going forward, amid duller than expected fourth-quarter earnings.
The company, the home of Food Network, HGTV and other lifestyle networks, has an impressive track record, having delivered positive earnings surprises in each of the last four quarters, with an average beat-the-street percentage of 27.89%. But for the fourth quarter of 2016, Scripps Networks’ earnings (excluding special items) of $1.02 per share fell short of the $1.06 per share that analysts were expecting, meaning they declined significantly on a year-over-year basis. In general, analysts were looking for earnings of $879 million in revenue.
Revenue was a different story: Scripps Networks reported operating revenues of $888.7 million, up 4.3% on a year-on-year basis, which beat the Zacks Consensus Estimate of $881.2 million. Operating revenues in the US networks segment climbed 4.1%, on the back of impressive advertising revenue growth. Operating revenues in the international networks segment also grew on a year-on-year basis.
For the full year, Scripps says that it expects revenues to climb 6% to $3.6 billion, above the $3.5 billion that the Street was expecting.
Scripps Networks CEO Ken Lowe, speaking on the company’s earnings call, said that despite the earnings hiccup, strong digital growth and Millennial interest wouldcarry it forward.
“We right now feel like we're, I think, in very good shape because of the growth that we've seen in Millennials in all of our categories,” he said. “And of course, this is coming predominantly from social media. You’ve heard me refer to this before: there's a certain lifestyle change, I don't want to say it's 30 years of age, but let's talk about the home category. We're seeing engagement among Millennials who as they age over the past several years, have grown into our linear television viewing.”
Social engagement among the younger populace, he said, was at an all-time high, especially for reality-based programming.
“What we're finding in non-fiction viewing, there's a lot more engagement,” Lowe noted. “There's a lot more of live, ‘did you see this?’ ‘Which home do you think they're going to choose?’ By the way, on Chopped, this is the missing ingredient, whereas scripted, there's less of an opportunity while the actual show is going on to interact... So I think in the next two years in your time window, we're going to see more emphasis on the engagement part of it, more on the information part of it.”
This dovetails with Scripps Networks’ digital push as well. It launched a new business division*in 2015*in 2015 to drive digital content innovation and advertising solutions, dubbed Scripps Lifestyle Studios. It’s a full-service editorial unit that has been spearheading the development of what the company calls “compelling lifestyle experiences” across multiple platforms, including social media, apps, websites and third-party digital media outlets.
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