Scripps Networks Raised Dividend

Yesterday, Scripps Networks Interactive Inc. (SNI - Analyst Report) has raised its quarterly dividend rate by a massive 33%. The board of directors of Scripps Networks has authorized to increase quarterly dividend from 7.5 cents per share to 10 cents per share. We believe the primary reason behind this decision is the company’s robust financial results for the first quarter of 2011 and a clear visibility of its businesses for the rest of 2011.

First-quarter 2011 consolidated revenue of $536 million was up 14.2% year over year. The striking top-line performance in the previous quarter was primarily attributable to significant growth in advertising and affiliate-fee revenue at the company’s flagship Lifestyle Media business together with an equally impressive performance at Interactive Services. Advertising revenue was $321.8 million, up 12% year over year, Affiliates fee revenue was $144.1 million, up 6% year over year.

During the first quarter of 2011, Scripps Networks generated $225.9 million of cash from operations compared with $159 million in the prior-year quarter. Free cash flow in the reported quarter was $210.4 million compared with $142.8 million in the year-ago quarter. At the end of the previous quarter, the debt-to-capitalization ratio was 0.30 compared with 0.32 at the end of fiscal 2010. Management anticipated that Lifestyle Media segment revenue will increase in the range of 10%-12% year over year.

Acquisition of the controlling stake in the Travel Channel has lifted Scripps Networks as the global market leader in lifestyle programming. The company now has three very powerful and completely distinct programming categories namely, home, food, and travel. In the U.S., Travel Channel is a high-margin business and is among the top 10 cable networks in terms of primetime ratings growth that can be incorporated into other platforms like Internet, mobile, and social media applications.

Scripps Networks has entered into a new distribution agreement with AT&T (T - Analyst Report) for its lifestyle networks, which will be viewed nearly 3 million U-verse network subscribers of AT&T. Recently, the company has entered into a definitive agreement to sell its online shopping channel, Shopzilla Inc. to a private equity firm, Symphony Technology Group for $165 million.