Why isn’t E.W. Scripps a Raging Short?

Will someone please explain to me why Scripps (NYSE:SSP) is not a raging short? Much like my earlier call on some of the overpriced aspirational restaurants, i.e., PFCB, CAKE, etc., that are concentrated in subprime-struck regions, Scripps strikes me as another company over-levered to subprime’s toxic byproducts, and yet holding up past the point where it should be declining.

Consider: While the E.W. Scripps Company (NYSE:SSP) is a big, diversified media company, it does garner a very large share of its revenue — and recent growth — from lifestyle-related media products.  Specifically, the Scripps-owned Scripps Network has Home & Garden Television (HGTV), Food Network, DIY Network (DIY), and Fine Living as television media properties. The Network, driven by these properties, contributed around 40% of E.W. Scripps’s revenue last year, and much of its growth. Given that these bubble-channel properties must be seeing falling revenues — and despite the car-crash fascination of unintentionally hilarious programming like “My House is Worth What?” — it is baffling that the company’s stock has held up.

How much longer can the disconnect persist? Am I missing something in my late-night puzzlement?


  1. This is total speculation, but those channels seem like they would be helped, significantly, by the writers’ strike. They are almost all reality-based (i.e. no writers) and, as “bubble channels” are exactly the kind of programming that are likely to be watched “when nothing else good is on.” Any data on recent ratings?

  2. Alternative theory: Reality-based programming is ridiculously cheap to produced, and reality production skill is easily transferable to other genres.
    I wouldn’t be surprised if Scripps branched out into a variety of other reality-based programming appealing to different sectors that leveraged it’s pre-existing media relationships.

  3. Ditto the above re benefiting from writers strike and reality based programming.
    In addition, there seems to be a bid under the stock on a break-up play. The company announced it will split into two stocks, separating the newspapers and network/interactive side.
    People believe this will unlock the value of the network (which has been depressed due to newspapers) and make it a pure-play network ripe for acquisition by a larger Viacom or Disney.

  4. I dunno about the stock, but you are DEFINITELY missing something on the channels. Do you watch them, or did you just look at the titles on the guide and try to find the most bubbliscious ones?
    * crafting is an inexpensive hobby
    * Decorating Cents, Design on a Dime, Design Remix – all about doing design on a budget. Think there would be demand for that show in a tight economy?
    * Designed to Sell, Curb Appeal – what better time for tips on improving the selling price of your home than now, esp. if you have to sell for a relo or reset?
    * gardening ain’t an expensive hobby, either, and a tight economy might encourage a few folks to learn about it rather than pay a landscaping service
    Food Network:
    Oh, please! Cooking shows should be a HUGE hit since people on tight budgets won’t want to eat out! Also, a lot of the travel and eating out shows are about doing so on a BUDGET, which should be in demand in a slow economy. Right?
    DIY Network:
    More people doing things themselves because they can’t afford to hire a contractor.
    Fine Living:
    I have to admit I don’t watch this one. Ooops!

  5. What about the pure escapist facet of these shows?

  6. Bill
    Yes, I have seen them — way more than I’d like to, as a matter of fact. I generally find them irritating, and I don’t buy the argument that their stainless-fixated, uber-kitchen-centric style is actually economically-insulated frugality in disguise.

  7. It’s not, but that’s not the basis for their popularity. Indeed, it may well be the opposite.
    People get to watch happy people making interesting foods (some of which are things they would never eat; some are staples, and some are interesting concepts).
    I would expect those channels to become more popular (cet. par. even if the strike[s] is[are] settled), for the same reason people collect travel brochures.
    They will stop being popular iff people end up canceling their cable (generic term) in large numbers.
    The audience for those shows isn’t the people who aspire to being master chefs or Teresa Nielsen Hayden. There aren’t enough of those people to support even basic cable.
    They’re fantasy shows, presenting a mythical world where all the food is easy to prepare and delicious, all the plants thrive and appear even better than they do on the package, and all the home improvement efforts are complete on time, on budget, and look as if Architectural Digest should be dropping in.
    They should be MORE popular as that sucking sound the economy has been making gets louder.

  8. I’m personally a little amazed at your heavy-handedness and lack of logic on this post – have you been hanging around Barry too much? You mention four networks but only mention ONE show (“My House is Worth What?”) as being indicative of all four networks and indicative of “bubble-channels” with “car crash fascination” – Huh? I challenge you to put the damn TV on each one of those channels and watch a full sample of the programming, and then revisit this post of yours.
    The amount of programming devoted to living well on a budget far exceeds the amount of programming devoted to ostentatious wealth and consumption, or to real-estate-related themes. You should probably check out some of the shows I mentioned by name in the first post, and see if they’re aimed at people on a budget, or not.
    ASS-U-ME-ing an economic downturn (which I’m not convinced of), the person who would have contracted out various jobs will be more likely, at the margin, to attempt them himself – adding to the popularity of many of the shows. Rarely is there a show on remodeling or redecorating that DOESN’T stress how much is saved by doing the work oneself, or how they can match “high style” cheaply, with redesign budgets that would easily be blown out of the water by NYC night out among business partners.
    The person who gardens will probably keep watching “Gardening by the Yard” regardless of his home’s price; possibly the person who has a hired gardener might START watching “Gardening by the Yard” if he has to take over those duties himself.
    “über-kitchen-centric?” I dunno about the left coast, but here in flyover country, the kitchen is an important part of life. You see, outside of the money culture, people actually cook and eat meals together as a family. Other than “Iron Chef,” practically all of the cooking shows are aimed at family fare and food that the housewife (we have *those* in flyover country BTW) can cook with ingredients from the local mega-mart, and many of these shows are aimed at the “busy housewife” like “30 Min Meals,” “Semi-Homemade Cooking,” etc.
    Now, about the “disconnect” from the stock – who knows? ASS-U-ME-ing the fundamentals of the company are flawed (which I don’t know that they are), stock prices have been known to disconnect from fundies for long periods of time, in both directions.

  9. “ASS-U-ME-ing”
    Don’t do that. Seriously.

  10. Paul’s point still stand. Who cares if people still watch? They make their money on advertising. Housing related companies are not going to be doing a lot of that. Trust me.

  11. With people still watching comes people paying to advertise. I see advertising from all realms on these channels. I’m home (in Dallas) for the holidays and they now keep Food Network on at the nearby gym. If anything, that particular station is growing its viewers.

  12. They just split Scripps into 2 businesses. One is the old media part (newspapers, cable, etc). The other is internet-related media.
    It’s likely that one will spin-off the other in the not too distant.