Scripps thrives with new media

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E.W. Scripps Co. could have been just another old-line newspaper company grappling for a future in 2006, but it smartly began porting publishing profits into new media-in 1935. Scripps bought its first radio stations that year and added TV stations in the late '40s. It expanded in the '80s into cable systems (later sold). In 1994, it launched Home & Garden Television, a cable home run. Now it's building a thriving online business.

It's an intriguing tale of how an old-media company-begun in 1878 with the now-defunct Cleveland Penny Press-continually reinvented itself. Scripps built a diversified company that has delivered for advertisers and, since its 1988 IPO, shareholders.

As CEO Ken Lowe explained at a Merrill Lynch conference this month: "Over the years, we have carefully allocated the company's generous free cash flow to invest in promising new media businesses that stay ahead of the changing habits of media consumers and of our advertising customers."

Scripps is still in newspapers, but cable is bigger. Lowe expects revenue for Scripps Networks-cable channels and online extensions-to top $1 billion this year, up from nearly nothing 12 years ago. That's not quite the zero-to-$5 billion revenue amassed by Yahoo over that time, but it's impressive.

Scripps Networks had first-half operating margins of a whopping 49% and now generates about 60% of company profits. The division this year expects to collect about $50 million in online revenue. Lowe says Scripps routinely sells out inventory on its sites-with CPMs up to five times what they are on its cable channels.

The company also has a growing interactive business: It's spent $936 million over the past year to buy sites Shopzilla and uSwitch.

Scripps sometimes stumbles; it sold an also-ran home-shopping channel this year after taking a big '05 write-down. It has no magic bullet for newspapers, where its circulation and profits have been falling. But Scripps has proved its ability to adapt, and that's the way to build a media enterprise that can thrive over time.
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