Scripps Splits to Free Interactive to Grow as Traditional Slows

The E. W. Scripps Company division into separate traditional and interactive units won’t have much impact on advertisers, according to the company. The split, announced yesterday, will free the interactive elements of the firm from the more slowly growing newspaper and television businesses, and to improve the overall stock evaluation of the company. The traditional print and TV businesses will be managed by the E. W. Scripps Company, while the cable and interactive elements will be operated by Scripps Networks Interactive.

The separation won’t have a dramatic effect on advertisers and marketers looking to buy cross-media campaigns, however, as Scripps has always maintained separate ad sales staffs for each of its divisions, according to Cindy McConkey, senior vice president of communications for Scripps Networks.

“We did not have a joint ad sales group with those heritage businesses. The newspaper division handled its ad sales separately from the broadcast TV division, and all were separate from Scripps Networks and our Interactive Group. It doesn’t change the way we do business at Scripps Networks or with our interactive properties,” McConkey said. “This positions Scripps Networks Interactive and the Scripps Networks brands for growth and exploring new business opportunities.”

The new interactive company will consist of lifestyle cable television and online media brands including HGTV, Food Network, Shopzilla, uSwitch, and others. The traditional company will include newspapers in 17 U.S. markets, 10 broadcast television stations and other assets.

The Scripps separation is expected to be finalized next year, with Kenneth Lowe, current president and CEO becoming president and CEO of Scripps Networks Interactive. At The E. W. Scripps Company, Richard Boehne, current executive vice president and COO, is expected to become president and CEO.

The move by Scripps is similar to one made by another long time media outlet, Belo, which said it intends to spin out its television businesses as separate from its newspaper operations.

“There is a trend going on caused by the lower and lower valuation of newspaper properties, and the understanding that those newspaper properties are a drag on the parent company’s share price,” said Ken Doctor, media analyst for Outsell Inc., a research and consultancy covering the information industry.

“They are seeing if they can raise valuation of their assets by having them in two or three portfolios rather than in one portfolio where the legacy assets are weighing them down,” he continued. Doctor said his firm expects to see slower growth for the traditional newspaper industry this year results and in coming years; meanwhile online media are growing at a much faster clip.

“It’s a separation there to try to free up the faster growing part of the business,” said Doctor. “It’s interesting that what they are essentially doing is separating the parents from the kids in this kind of split.”