More trouble for E.W. Scripps after the split-off of its cable and Internet businesses from its newspapers and TV stations.
The company may write-down the value of its newspaper and local broadcast TV assets in Q3, said CEO Richard Boehne, on the company’s earnings call. “Based on the stock price of the company, and continued effects of the economy on newspapers, we will test our assets for impairement,” he said, which could lead to a “non-cash charge for impairment that will be recorded in Q3.”
The potential charge is independent from Scripps’ already-weak guidance for its newspapers. The company is expecting a revenue drop between 13% and 15% in Q3. Local station revenue is expected to go up 15% to 17%, largely due to political advertising at stations in Florida and Ohio.
It’s a different story for Scripps Networks Interactive (SNI), the cable networks and Internet businesses, which was spun off and will report separately in Q3. Revenue for SNI’s lifestyle cable and Internet properties, including HDTV and Food Network, will be up 5% to 7%, hobbled partly by NBC U’s broadcast of the Olympics, which is taking dollars away from competing networks. Interactive services, including Shopzilla, BizRate and uSwitch, will earn $8 to $10 million profit in Q3.
In its last quarter reporting as a combined company, operating income slipped 1.3% to $164.6 million and revenue increased 3.8% to $664.1 from the prior-year quarter. Newspapers were down 13% to $144 million, and local TV was down 5% to $80.5 million, while cable network revenue rose 13% to $349 million and interactive revenue was up 13% to $66.9 million.
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