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We reaffirm our long-term Neutral recommendation on Scripps Networks Interactive Inc. (SNI - Analyst Report). The company reported strong financial results for second quarter of 2013, beating the Zacks Consensus Estimate. We believe the stock is currently fairly valued as it moved up nearly 33% in the last year.

Why Kept at Neutral?

Scripps Networks is generating healthy growth in Advertising and Affiliate-fee revenues at its flagship Lifestyle Media businesses and higher segment profits. Scripps Network is gradually diversifying into mobile platforms for its contents. Additionally, the company is expanding its reach in Europe and Asia through a series of takeovers.

We believe that both Advertising revenues and Affiliate fee revenues will remain strong in the near future.  The company is expected to benefit as the U.S. housing sector is slowly coming out of its prolonged downtrend.

Scripps Networks is a pure-play lifestyle cable network consisting of six channels. All these cable channels have loyal audiences, who also view Scripps Networks contents on several non-TV platforms. This helps the company to explore the non-TV verticals, such as magazines (print media) and websites (Internet).

In the reported quarter, Scripps Networks improved with respect to several financial metrics compared with the year-ago quarter. The total revenue was up 10.7% and the total segment profit was up 12.3%. Affiliate fee revenues were up 9.5% year over year. Advertising revenues were up 9.9%.

Other Stocks to Consider

Scripps Networks carries a Zacks Rank #3 (Hold). Other stocks in the media industry that warrant a look includes Phoenix New Media Ltd. (FENG - Snapshot Report), Cumulus Media Inc. (CMLS - Snapshot Report) and LIN Media LLC. (LIN - Snapshot Report). Phoenix currently has a Zacks Rank #1 (Strong Buy) whereas both Cumulus and LIN have a Zacks Rank #2 (Buy).

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