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We expect Scripps Network Interactive Inc. (SNI - Analyst Report), a pure-play lifestyle cable network company, to beat expectations when it reports its first-quarter 2013 results before the market opens on May 2, 2013.

Why a Likely Positive Surprise?

Our proven model shows that Scripps Network is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.35%. This is a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank #3 (Hold): Scripps Networks currently has a Zacks Rank #3 (Hold). Note that the stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) and 3 (Hold) have a significantly higher chance of beating earnings. 

The combination of Scripps Network’s Zacks Rank #3 (Hold) and +1.35% ESP makes us confident of a positive earnings beat on May 2, 2013.

What is Driving the Better-Than-Expected Earnings?

We expect Scripps Network to deliver positive results based on solid growth in advertising and affiliate-fee revenues from its flagship Lifestyle Media businesses. Recently, HGTV – a subsidiary of Scripps – formed a multi-year partnership with interactive channel retailer, HSN Inc. This will bring HGTV HOME Outdoor Living show on HSN.

Additionally, Scripps entered into a content licensing deal with Amazon.Com, which will allow the latter’s subscription-based video streaming subscribers to view past episodes of Scripps Network’s popular TV channels. This deal will allow Scripps to earn additional revenues from its past shows. However, the company continues to face stiff competition in both its Lifestyle Media and Interactive Services businesses from alternative providers of similar services.

Other Stocks to Consider

Other companies you may consider on the basis of our model, which have the right combination of elements to post an earnings beat this quarter are as follows:

Comcast Corporation (CMCSA - Analyst Report) has an Earnings ESP of +4.08% and holds a Zacks Rank #3 (Hold).

Telus Corporation (TU - Analyst Report) currently has an Earnings ESP of +3.77% and holds a Zacks Rank #3 (Hold).

Dish Network Corporation (DISH - Analyst Report) has an Earnings ESP of +1.89% and carries a Zacks Rank #3 (Hold).

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