E.W. Scripps To Spin Off Interactive Assets

The beat goes of for many publishing stocks, with the New York Times Co. (NYT-NYSE) flirting with fresh 52-week lows and McClatchy Co. (MNI-NYSE) stock continuing to grind lower in what can only be described as a short sellers dream.

E.W. Scripps (SSP-NYSE) is bucking the trend however, and figured out a way to win in an unforgiving climate. A shareholder friendly family is a refreshing change in the newspaper business, as we noted a month ago:

The Scripps family might not interfere with a sale process, unlike some other families in the newspaper business. Now that is a refreshing change. 9.20.07

The transaction follows on the heels on the recent Belo deal, and will separate divisions with differing models:

This move is all about unburdening Scripps Networks Interactive from the slow-growth broadcast and newspaper operations. According to the release, Scripps Networks Interactive has annual revenue of $1.4 billion and 2,100 employees, while E.W. Scripps has just $1.1 billion in revenue, but has 7,100 employees. SNI assets include HGTV, The Food Network, DIY Network, the Fine Living Television Network and Great American Country, along with its major internet properties, like Foodnetwork.com, Shopzilla.com and Uswitch.com, among others....... 

The company also indicated that it’s likely to do more interactive acquisitions in the $25-$100 million range going forward. Following the separation, which is expected in Q208, current CEO Kenneth Lowe will become CEO of Scripps Networks Interactive, while E.W. Scripps will be helmed by COO Richard A. Boehne. Paid Content

The deal sets up Scripps Networks Interactive division to go on the offensive, a rarity in today’s media climate.

Recent deals might turn the spotlight back on the New York Times franchise. The dual-class voting structure insures the Sulzberger family remains in the drivers seat. Recent moves to cut expenses and bolster the online properties are a step in the right direction, but hardly transformative moves, and the management seems to remain on the defensive.

Pinch Sulzberger’s long-time friendship with one-time media banker and Quadrangle founder Steven Rattner has not resulted in any masterstrokes, surely these two executives must have brainstormed to come up with a solution to the Gray Lady’s shriveling stock quote.

The silence is deafening, and continued erosion might finally spur Pinch to action. Of course, it might not happen until the stock is well into the teens.

E.W. Scripps to Split in Two; Scripps Networks Interactive to be Spun Off to Shareholders
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position SSP, NYT, MNI

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