Media
24/7 Wall St.'s Take on Scripps & Media Break-Ups (SSP, BLC, TRB, JRC)
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EW Scripps Co. (NYSE:SSP) is following the media trend of separating its operations into more pure play media sectors. The good news here is that the valuable interactive unit will no longer have to be tied to newspapers. The bad news is that the stations have to go with the paper unit, but arguably that might be construed well by some. Scripps will split operations and become "Scripps Networks Interactive" and "The E.W. Scripps Company."
Scripps Networks Interactive will have an estimated $1.4 Billion in annual revenues with some 2,100 employees and will consist of:
The E. W. Scripps Company will have combined annual revenues of $1.1 Billion and some 7,100 employees and will include:
If you have seen 24/7 Wall St. for very long, or if you have read all the reports out there on what is happening with newspapers, you’ll know that the media sector is looking for ways to get away from newspaper revenues. Unfortunately, old fashioned newspaper readers are dropping off at a faster clip than smokers. The next wave of cuts the industry will feel is when newspapers get cut more from many hotel chains that leave them at the front door of each occupied room.
If you enjoy reading about break-ups and other special situations we produce our own "Special Situation Investing Newsletter" for subscribers. We will be reviewing this for subscribers as the break-up gets closer. Unfortunately, the company believes this tax-free spin-off will not be completed until the end of the second quarter of 2008. There is a lot of calendar between now and then, and many more months of bad news out of newspaper companies. One thing may help papers in 2008: the presidential election. Depending upon how the valuations are laid out, it is even conceivable that the interactive content unit might have predators looking at it right out of the gate.
The market is reacting with enthusiasm to the Scripps plan. Shares are up almost 8% at $45.50, back in the middle of its $37.89 to $53.39 trading range over the last 52-weeks.
Jon C. Ogg
October 16, 2007
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