E.W. Scripps Co., the Cincinnati-based media giant and parent of the Rocky Mountain News, might consider splitting off its newspaper business – or selling some properties – as it concentrates on higher-growth TV and Internet assets.
Joseph NeCastro, Scripps chief financial officer, said during an investor conference Tuesday in Las Vegas that the company is exploring options.
“There might be a better opportunity for these papers to survive with different ownership, certainly with a different capital structure,” NeCastro said, according to Bloomberg News. “We don’t want an asset that’s generating less cash next year than it is this year.”
Scripps shares surged Wednesday on the comments, jumping $1.92, or nearly 4 percent, to $51.92 on the New York Stock Exchange.
Potential buyers of Scripps papers could include private-equity firms and other newspaper publishers, including Denver-based ap. MediaNews, the nation’s fourth-largest newspaper publisher and owner of The Denver Post, has the right of first refusal to purchase the News under their joint operating agreement. Business operations are combined, but the newsrooms of The Post and the News are competitive and independent.
William Dean Singleton, vice chairman and chief executive of MediaNews, declined to comment Wednesday.
Industry analyst John Morton said even if the News were for sale and MediaNews were interested, it’s unlikely such a deal could gain regulatory approval.
“I want to reassure everyone that there is no sale imminent,” Deb Goeken, managing editor of the News, wrote in an internal memo posted on www.poynter.org, a journalism website.
Goeken declined to comment further.
Besides the News, Scripps owns the Daily Camera in Boulder, the Commercial Appeal in Memphis, Tenn., and 10 broadcast television stations scattered nationwide. It also owns cable- TV stations such as the Food Network and Home & Garden Television, as well as Shopzilla, an online-shopping website.
Scripps’ newspapers last year accounted for about 29 percent of the company’s total revenue, which was an estimated $2.53 billion, according to a Goldman Sachs report.
The company’s cable networks accounted for 42 percent of its revenue; its broadcast stations provided 14 percent; and its interactive media ventures accounted for 12 percent, according to Goldman Sachs.
A sale of the Scripps newspapers would come as shareholders have become increasingly restless with the performance of newspaper stocks. Knight Ridder sold itself last year under pressure from shareholders, and Chicago-based Tribune Co. has been considering selling or splitting the company.
Although newspapers continue to generate new revenue through their websites, the gains have not exceeded the advertising and circulation losses from their print editions, Morton said.
That has caused investors to become increasingly skeptical about the long-term future of print publications, a fact that might prompt Scripps to split its slower-growing newspaper assets from its faster-growing cable and Internet holdings, Morton said.
“The newspapers are viewed as a drag on Scripps’ revenue and earnings growth,” said Morton, based in Silver Spring, Md.
If Scripps decides to do a deal, Morton said, the company would likely spin off its newspapers into a stand-alone business. Another possibility is to sell the papers as a whole or one by one to another publisher or to a private-equity group.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
