Scripps Networks Interactive Reports Fourth Quarter Financial Results

  Scripps Networks Interactive Reports Fourth Quarter Financial Results

  *Revenues of $605 million, up 9.2 percent
  *Segment profit of $266 million, up 3.3 percent
  *Income from continuing operations of $2.02 per share, including
    adjustments

Business Wire

KNOXVILLE, Tenn. -- February 7, 2013

Scripps Networks Interactive, Inc. (NYSE: SNI) today reported operating
results for the fourthquarter 2012.

Consolidated revenues for the quarter increased 9.2 percent to $605 million
from the prior-year period. Results for the three-month period ended Dec. 31
reflect solid advertising revenue of $414million, up 5.1percent, and
affiliate fee revenue of $174 million, up 18 percent year-over-year.

Expenses for the quarter increased 14 percent from the prior-year period to
$339 million. The increase wasdriven primarily by higher employee costs and
investments in planned domestic and international growth initiatives. Also
contributing to the increase was higher programming amortization and marketing
expenses to drive viewership at all of the company’s lifestyle television
networks.

Total segment profit increased 3.3 percent to $266 million. (See note 2 for a
definition of segment profit.)

Fourth quarter income from continuing operations attributable to Scripps
Networks Interactive was $306million, or $2.02 per diluted share, compared
with $135 million, or $0.84 in the fourth quarter of 2011. Included in the
fourth quarter 2012 figure are:

  *Favorable tax adjustments of $202 million, or $1.33 per diluted share; and
  *Asset impairment charges of $22 million, net of tax, or $0.15 per diluted
    share.

In the prior-year period, net income from continuing operations included
favorable tax adjustments of $10.5million, or $0.07 per diluted share.

Excluding these items in both the current and prior-year periods, fourth
quarter 2012 income from continuing operations attributable to Scripps
Networks Interactive was $0.84, compared with $0.77 in thefourth quarter of
2011. (See note 1.)

“Our solid fourth-quarter and full-year operating results demonstrate the
popularity and superior marketing power of our lifestyle television networks
and related interactive businesses,” said KennethW.Lowe, chairman, president
and chief executive officer of Scripps Networks Interactive. “Sincethe launch
of HGTV in 1994, our lifestyle media businesses have generated 18 consecutive
years of growth, creating tremendous value for our shareholders, delivering
uncommon value to our advertisersand distributors and engaging media
consumers at the highest levels. Underpinning the company’s success is our
commitment to remain focused on lifestyle content categories that touch and
inspire the everyday lives of media consumers.”

Revenues by network were as follows:

  *Food Network, $215 million, up 5.2 percent.
  *HGTV, $200 million, up 5.1 percent.
  *Travel Channel, $71.1 million, up 5.9 percent.
  *DIY Network, $30.4 million, up 13 percent.
  *Cooking Channel, $24.7 million, up 38 percent.
  *Great American Country (GAC), $7.6 million, up 16 percent.

Revenue from the company’s digital businesses, which include its
network-branded websites, was $33.2million, up 9.1 percent.

Full-year Results

Consolidated operating revenue in 2012 was $2.3 billion, up 11 percent from
the prior year. Advertising revenue was $1.6 billion, up 9.0 percent from the
prior year. Affiliate fee revenue was $688 million, up 17percent from the
prior year.

Segment profit increased to $1.0 billion, up 6.5 percent from the prior year.

Consolidated income from continuing operations attributable to Scripps
Networks Interactive was $681million, or $4.44 per share, compared with $473
million, or $2.86 per share in 2011. Consolidated income from continuing
operations and per share amounts reflect the items disclosed in note 1 to the
results of operations.

2013 Full-year Guidance

The company provided the following outlook for 2013.

Total revenue is expected to increase 7 percent to 9 percent.

Cost of services are expected to increase 12 percent to 14 percent.

Selling, general and administrative expenses are expected to increase 7
percent to 9 percent.

Other items:

  *Depreciation and amortization, $115 million to $125 million.
  *Interest expense, $50 million to $55 million.
  *Effective tax rate, 28 percent to 30 percent.
  *Noncontrolling share of net income, $175 million to $185 million.
  *Capital expenditures, $65 million to $70 million.

Conference call

The senior management team of Scripps Networks Interactive will discuss the
company’s fourth quarter results during a telephone conference call at 10 a.m.
ET today. Scripps Networks Interactive will offer a live webcast of the
conference call. To access the webcast, visit
www.scrippsnetworksinteractive.com and follow the Investors link at the top of
the page. The webcast link can be found next to the microphone icon on the
investor relations landing page.

To access the conference call by telephone, dial 800-230-1092 (U.S.) or
612-288-0337 (international) approximately ten minutes before the start of the
call. Callers will need the name of the call, “SNI Fourth Quarter Earnings
Call,” to be granted access. Callers also will be asked to provide their name
and company affiliation. The media and general public are granted access to
the conference call on a listen-only basis.

A replay line will be open from 12:30 p.m. ET Feb. 7 until 11:59 p.m. ET Feb.
21. The domestic number to access the replay is 800-475-6701 and the
international number is 320-365-3844. The access code for both numbers is
279208. A replay of the conference call also will be available online. To
access the audio replay, visit www.scrippsnetworksinteractive.com
approximately four hours after the call, choose Investors then follow the
Audio Archives link on the top right side of the investor relations landing
page.

Forward-looking statements

This press release contains certain forward-looking statements related to the
company’s businesses that are based on management’s current expectations.
Forward-looking statements are subject to certain risks, trends and
uncertainties, including changes in advertising demand and other economic
conditions that could cause actual results to differ materially from the
expectations expressed in forward-looking statements. All forward-looking
statements should be evaluated with the understanding of their inherent
uncertainty. The company’s written policy on forward-looking statements can be
found on page F-3 of its 2011 Form 10-K filed with the Securities and Exchange
Commission.

The company undertakes no obligation to publicly update any forward-looking
statements to reflect events or circumstances after the date the statement is
made.

About Scripps Networks Interactive

Scripps Networks Interactive is one of the leading developers of
lifestyle-oriented content for television and the Internet, where on-air
programming is complemented with online video, social media areas and
e-commerce components on companion websites and broadband vertical channels.
The company’s media portfolio includes popular lifestyle television and
Internet brands Food Network, HGTV, Travel Channel, DIY Network, Cooking
Channel and country music network Great American Country.

                                                                             
SCRIPPS
NETWORKS
INTERACTIVE,
INC.
CONSOLIDATED
STATEMENTS OF                                                        
OPERATIONS
(unaudited)        Three months ended                      Twelve months ended
                   December 31,                            December 31,
(in thousands,
except per       2012        2011       Change     2012        2011       Change
share data)
                                                                                     
Operating        $ 604,665     $ 553,489     9.2 %       $ 2,307,182   $ 2,072,048   11.3 %
revenues
Cost of
services,
excluding
depreciation       (165,855)     (143,594)   15.5 %        (610,836)     (526,865)   15.9 %
and
amortization
of intangible
assets
Selling,
general and        (172,919)     (152,436)   13.4 %        (655,473)     (567,902)   15.4 %
administrative
Depreciation
and
amortization       (28,159)      (23,609)    19.3 %        (107,591)     (90,080)    19.4 %
of intangible
assets
Write-down of      (19,663)                                (19,663)
goodwill
Gains (losses)
on disposal of   856         (666)                754         (603)      
property and
equipment
                                                                                     
Operating          218,925       233,184     (6.1)%        914,373       886,598     3.1 %
income
Interest           (12,869)      (9,773)     31.7 %        (50,814)      (36,121)    40.7 %
expense
Equity in
earnings of        14,597        20,094      (27.4)%       60,864        49,811      22.2 %
affiliates
Miscellaneous,   651         6,316                13,340      (17,188)   
net
                                                                                     
Income from
continuing
operations         221,304       249,821     (11.4)%       937,763       883,100     6.2 %
before income
taxes
Income tax
benefit          123,170     (71,586)             (88,107)    (246,452)  (64.2)%
(provision)
                                                                                     
                                                                                     
Income from
continuing         344,474       178,235     93.3 %        849,656       636,648     33.5 %
operations,
net of tax
Income (loss)
from
discontinued                                               (61,252)   
operations,
net of tax
                                                                                     
Net income         344,474       178,235     93.3 %        849,656       575,396     47.7 %
Net income
attributable
to               (38,673)    (43,234)   (10.5)%    (168,178)   (163,838)  2.6 %
noncontrolling
interests
Net income
attributable    $ 305,801    $ 135,001             $ 681,478    $ 411,558    65.6 %
to SNI
                                                                                     
Income from
continuing
operations
attributable
to SNI common
shareholders
per basic       $ 2.03       $ 0.85                $ 4.48       $ 2.87       
share of
common stock
                                                                                     
Income from
continuing
operations
attributable
to SNI common
shareholders
per diluted     $ 2.02       $ 0.84                $ 4.44       $ 2.86       
share of
common stock
                                                                                     
Weighted
average basic    150,546     159,727              152,180     164,657    
shares
outstanding
                                                                                     
Weighted
average          151,711     160,399              153,327     165,572    
diluted shares
outstanding
                                                                                     
Net income per share amounts may not foot since each is calculated independently.

                                                             
SCRIPPS NETWORKS INTERACTIVE, INC.
CONSOLIDATED BALANCE SHEETS                                  
(unaudited)                                      As of
                                                 December 31,     December 31,
                                                2012             2011
(in thousands, except per share data)                        
                                                                  
ASSETS
Current assets:
Cash and cash equivalents                      $ 437,525        $ 760,092
Accounts receivable (less allowances: 2012-      565,298          553,022
$5,514; 2011- $5,000)
Programs and program licenses                    395,017          336,305
Deferred income taxes                            26,338           1,799
Other current assets                           60,098         64,750
Total current assets                             1,484,276        1,715,968
Investments                                      489,703          455,267
Property and equipment, net                      237,308          219,845
Goodwill                                         551,821          510,484
Other intangible assets, net                     678,500          556,095
Programs and program licenses (less current      371,856          299,089
portion)
Deferred income taxes                            148,501
Other non-current assets                       176,833        204,922
Total Assets                                  $ 4,138,798     $ 3,961,670
                                                                  
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                               $ 12,633         $ 12,482
Program rights payable                           36,274           50,402
Customer deposits and unearned revenue           44,903           52,814
Employee compensation and benefits               56,553           49,920
Accrued marketing and advertising costs          10,689           6,838
Other accrued liabilities                      91,577         60,443
Total current liabilities                        252,629          232,899
Deferred income taxes                                             100,002
Long-term debt                                   1,384,216        1,383,945
Other liabilities (less current portion)       237,402        148,429
Total liabilities                              1,874,247      1,865,275
Redeemable noncontrolling interest             136,500        162,750
Equity:
SNI shareholders' equity:
Preferred stock, $.01 par - authorized:
25,000,000 shares; none outstanding Common
stock, $.01 par:
Class A - authorized: 240,000,000 shares;
issued and outstanding: 2012 - 114,570,332       1,146            1,228
shares; 2011 - 122,828,359 shares
Voting - authorized: 60,000,000 shares;
issued and outstanding: 2012 - 34,317,173        343              343
shares; 2011 - 34,317,173 shares
Total                                            1,489            1,571
Additional paid-in capital                       1,405,699        1,346,429
Retained earnings                                452,598          364,073
Accumulated other comprehensive income         (38,862)       (33,347)
(loss)
Total SNI shareholders' equity                   1,820,924        1,678,726
Noncontrolling interest                        307,127        254,919
Total equity                                   2,128,051      1,933,645
Total Liabilities and Equity                  $ 4,138,798     $ 3,961,670

                                                               
SCRIPPS NETWORKS INTERACTIVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS                          
                                                     Twelve months ended
                                                     December 31,
                                                     2012            2011
(in thousands)                                    (unaudited)   
                                                                     
Cash Flows from Operating Activities:
Net income                                         $ 849,656       $ 575,396
Loss (income) from discontinued operations                     61,252
                                                                     
Income from continuing operations, net of tax        849,656         636,648
Depreciation and amortization of intangible          107,591         90,080
assets
Write-down of goodwill                               19,663
Amortization of network distribution costs           23,687          42,353
Program amortization                                 487,138         429,935
Equity in earnings of affiliates                     (60,864)        (49,811)
Program payments                                     (623,484)       (521,243)
Capitalized network distribution incentives          (2,948)         (6,872)
Dividends received from equity investments           61,896          39,420
Deferred income taxes                                (284,271)       34,300
Stock and deferred compensation plans                39,492          26,920
Changes in certain working capital accounts:
Accounts receivable                                  (4,461)         (48,029)
Other assets                                         (7,228)         628
Accounts payable                                     (2,157)         2,806
Accrued employee compensation and benefits           10,249          39
Accrued income taxes                                 (2,365)         21,497
Other liabilities                                    (5,688)         23,131
Other, net                                        8,777         (6,140)
Cash provided by (used in) continuing                614,683         715,662
operating activities
Cash provided by (used in) discontinued                        13,253
operating activities
Cash provided by (used in) operating              614,683       728,915
activities
                                                                     
Cash Flows from Investing Activities:
Additions to property and equipment                  (63,416)        (54,113)
Purchase of long-term investments                    (17,089)        (402,217)
Purchase of note receivable due from UKTV                            (137,308)
Collections (funds advanced) on note                 12,264
receivable
Purchase of subsidiary companies, net of cash        (119,036)
acquired
Purchase of noncontrolling interest                                  (3,400)
Other, net                                        (48,003)      1,881
Cash provided by (used in) continuing                (235,280)       (595,157)
investing activities
Cash provided by (used in) discontinued           10,000        141,786
investing activities
Cash provided by (used in) investing              (225,280)     (453,371)
activities
                                                                     
Cash Flows from Financing Activities:
Proceeds from long-term debt                                         599,390
Payments on long-term debt                                           (100,000)
Dividends paid                                       (73,109)        (61,788)
Dividends paid to noncontrolling interests           (166,351)       (70,500)
Noncontrolling interest capital contribution                         52,804
Repurchase of Class A common stock                   (600,285)       (500,048)
Proceeds from stock options                          121,665         24,491
Deferred loan costs                                                  (4,558)
Other, net                                        6,675         (5,517)
Cash provided by (used in) financing              (711,405)     (65,726)
activities
Effect of exchange rate changes on cash and       (565)         377
cash equivalents
Increase (decrease) in cash and cash                 (322,567)       210,195
equivalents
                                                                     
Cash and cash equivalents:
Beginning of year                                 760,092       549,897
                                                                     
End of period                                    $ 437,525      $ 760,092
                                                                     
Supplemental Cash Flow Disclosures:
Interest paid, excluding amounts capitalized       $ 46,682        $ 32,847
Income taxes paid                                 348,158       184,114
                                                                     

                        Notes to Results of Operations

1. OTHER CHARGES AND CREDITS

Income tax adjustments - Our tax provision in the fourth quarter of 2012
reflects an income tax benefit of $213million arising from the reversal of
valuation allowances on deferred tax assets related to capital loss carry
forwards. Previously, the Company had estimated that it would be unable to use
any of the capital loss carry forwards generated from the sales of the
Shopzilla and uSwitch businesses. As a consequence of a restructuring that was
completed to achieve a more efficient tax structure, the Company recognized a
$574 million capital gain that utilized substantially all of its capital loss
carry forwards. As the capital losses are not available in states in which the
Company does not file unitary income tax returns, state tax expenses totaling
$23.1 million were also recognized. Our fourth quarter 2012 tax provision also
includes an $11.8 million favorable tax adjustment that reflects expiring
statutes of limitations in certain tax jurisdictions and the related reduction
of our liability for uncertain tax positions. These fourth quarter 2012 income
tax adjustments increased year-to-date net income attributable to SNI by $202
million, $1.33 per share.

Our tax provision in the fourth quarter of 2011 includes a favorable tax
adjustment primarily attributed to expiring statutes of limitations in certain
tax jurisdictions and the related reduction of our liability for uncertain tax
positions. Net income attributable to SNI was increased $10.5 million, $0.07
per share. In the third quarter of 2011, we recorded $14.5 million of
favorable income tax adjustments attributed to reaching agreements with
certain tax authorities for positions taken in prior period returns and
adjustments to foreign income items, state apportionment factors and credits
reflected in our filed tax returns. These 2011 income tax adjustments
increased year-to-date net income attributable to SNI by $25.0 million,
$0.15per share.

Asset write-downs - In connection with our annual impairment test for
goodwill, we recorded a $19.7million non-cash charge in the fourth quarter of
2012 to write-down the goodwill associated with RealGravity to fair value.
Equity in earnings of affiliates for the fourth quarter of 2012 also reflects
a non-cash charge of $5.9million to reduce the carrying value of our
investments to their estimated fair value. These charges decreased net income
attributable to SNI by $22.0million, $0.15 per share.

UKTV - In August 2011, the Company announced that SNI would be acquiring a
50-percent equity interest in UKTV for £239million and £100million to
acquire the outstanding preferred stock and debt due to Virgin Media, Inc.
from UKTV. To minimize the cash flow volatility resulting from British Pound
to U.S. dollar currency exchange rate changes, we subsequently entered into
foreign currency forward contracts that effectively set the U.S. dollar value
for the transaction. We settled these foreign currency exchange forward
contracts around the September 30, 2011 closing of the transaction and
recognized losses from the contracts totaling $25.3 million. These losses
reported within the “Miscellaneous” caption in our consolidated statements of
operations reduced net income attributed to SNI $15.7 million, $0.10 per
share.

Operating results in 2011 include transaction related costs of $6.5 million
associated with our acquisition of a 50-percent equity interest in UKTV. Net
income attributable to SNI was decreased $4.0million, $0.02 per share.

Food Network Partnership noncontrolling interest -  In August 2010, we
contributed the Cooking Channel to the Food Network Partnership (the
“Partnership”). At the close of our 2010 fiscal year, the noncontrolling owner
had not made a required pro-rata capital contribution to the Partnership and
as a result its ownership interest was diluted from 31 percent to 25 percent.
Accordingly, following the Cooking Channel contribution, profits from the
partnership were allocated to the noncontrolling owner at its reduced
ownership percentage. In February 2011, the noncontrolling owner made the
pro-rata contribution to the Partnership and its ownership interest was
returned to the pre-dilution percentage as if the contribution had been made
as of the date of the Cooking Channel contribution. The retroactive impact of
restoring the noncontrolling owner’s interest in the Partnership increased net
income attributed to noncontrolling interest $8.0million in the first quarter
of 2011. Year-to-date net income attributable to SNI was decreased $4.7
million, $0.03per share.

Discontinued operations - Discontinued operations in 2011 reflect a loss on
divestiture of $54.8 million related to the sale of the Shopzilla business. No
income tax benefit related to the capital losses attributed to the sale was
recognized. Year-to-date net income attributable to SNI was decreased
$0.33per share.

2. SEGMENT INFORMATION

We determine our business segments based upon our management and internal
reporting structure. We manage our operations through one reportable operating
segment, Lifestyle Media.

Lifestyle Media includes our national television networks, Food Network, HGTV,
Travel Channel, DIY Network, Cooking Channel and Great American Country
(“GAC”). Lifestyle Media also includes websites that are associated with the
aforementioned television brands and other Internet-based businesses serving
food, home and travel related categories. The Food Network and Cooking Channel
are included in the Food Network Partnership of which we own approximately
69%. We also own 65% of Travel Channel. Each of our networks is distributed by
cable and satellite distributors and telecommunication service providers.

The results of businesses not separately identified as reportable segments are
included within our corporate and other caption. Corporate and other includes
the results of the lifestyle-oriented channels we operate in Europe, the
Middle East, Africa and Asia, operating results from the international
licensing of our national networks’ programming, and other interactive and
digital business initiatives that are not associated with our Lifestyle Media
or international businesses.

Our chief operating decision maker evaluates the operating performance of our
business segments and makes decisions about the allocation of resources to our
business segments using a measure we call segment profit. Segment profit
excludes interest, income taxes, depreciation and amortization, divested
operating units, restructuring activities, investment results and certain
other items that are included in net income determined in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”). Refer to Note 4—Non-GAAP Financial Measures, for reconciliations to
GAAP measures.

Items excluded from segment profit generally result from decisions made in
prior periods or from decisions made by corporate executives rather than the
managers of the business segments. Depreciation and amortization charges are
the result of decisions made in prior periods regarding the allocation of
resources and are therefore excluded from the measure. Financing, tax
structure and divestiture decisions are generally made by corporate
executives. Excluding these items from our business segment performance
measure enables us to evaluate business segment operating performance for the
current period based upon current economic conditions and decisions made by
the managers of those business segments in the current period.

Information regarding the operating performance of our business segments and a
reconciliation to our results of operations is as follows:

                                                                            
(in thousands)    Three months ended                      Twelve months ended     
                   December 31,                            December 31,
                2012       2011       Change      2012        2011       Change
                                                                      
Segment
operating
revenues:
Lifestyle        $ 584,851    $ 547,867      6.8 %       $   2,256,367   $ 2,045,030   10.3 %
Media
Corporate and
other /          19,814     5,622                 50,815      27,018     88.1 %
intersegment
eliminations
                                                                                       
Total
operating       $ 604,665   $ 553,489    9.2 %     $  2,307,182  $ 2,072,048  11.3 %
revenues
                                                                                       
Segment profit
(loss):
Lifestyle        $ 287,468    $ 280,729      2.4 %       $   1,135,557   $ 1,049,934   8.2 %
Media
Corporate and    (21,577)   (23,270)   (7.3)%      (94,684)    (72,653)   30.3 %
other
                                                                                       
Total segment      265,891      257,459      3.3 %           1,040,873     977,281     6.5 %
profit
Depreciation
and
amortization       (28,159)     (23,609)     19.3 %          (107,591)     (90,080)    19.4 %
of intangible
assets
Write-down of      (19,663)                                  (19,663)
goodwill
Gains (losses)
on disposal of     856          (666)                        754           (603)
property and
equipment
Interest           (12,869)     (9,773)      31.7 %          (50,814)      (36,121)    40.7 %
expense
Equity in
earnings of        14,597       20,094       (27.4)%         60,864        49,811      22.2 %
affiliates
Miscellaneous,   651        6,316                 13,340      (17,188)   
net
                                                                                       
Income from
continuing
operations      $ 221,304   $ 249,821    (11.4)%   $  937,763    $ 883,100    6.2 %
before income
taxes
                                                                                       

Operating results from our international operations and the costs associated
with other interactive and digital business initiatives increased the segment
loss at corporate and other by $1.6million in the fourth quarter of 2012 and
$18.8 million for the year-to-date period of 2012 compared with $3.1 million
in the fourth quarter of 2011 and $7.4 million for the year-to-date period of
2011.

Corporate costs in 2011 also include transaction related costs of $6.5 million
that were associated with our acquisition of a 50-percent equity interest in
UKTV.

3. SUPPLEMENTAL FINANCIAL INFORMATION

Our Lifestyle Media division earns revenue primarily from the sale of
advertising time on our national television networks, affiliate fees paid by
cable and satellite television operators that carry our network programming,
the licensing of its content to third parties, the licensing of its brands for
consumer products such as books and kitchenware, and from the sale of
advertising on our Lifestyle Media affiliated websites.

Supplemental information for Lifestyle Media is as follows:

                                                                        
(in              Three months ended                Twelve months ended
thousands)
                 December 31,                      December 31,
              2012      2011     Change    2012        2011       Change
                                                            
Operating
revenues by
brand:
                                                                             
Food Network   $ 214,584   $ 204,066   5.2 %     $ 830,746     $ 745,605     11.4 %
HGTV             200,212     190,576   5.1 %       786,285       731,769     7.4 %
Travel           71,133      67,174    5.9 %       280,387       262,055     7.0 %
Channel
DIY Network      30,391      26,915    12.9 %      121,612       102,995     18.1 %
Cooking          24,668      17,829    38.4 %      88,531        65,610      34.9 %
Channel
GAC              7,622       6,581     15.8 %      24,549        25,004      (1.8)%
Digital          33,183      30,420    9.1 %       111,629       101,890     9.6 %
Businesses
Other            3,238       4,416     (26.7)%     13,005        10,928      19.0 %
Intrasegment   (180)     (110)             (377)       (826)      
eliminations
                                                                             
Operating
revenues by
type:
                                                                             
Advertising    $ 409,405   $ 392,615   4.3 %     $ 1,554,422   $ 1,430,144   8.7 %
Network
affiliate        166,925     145,361   14.8 %      667,741       582,178     14.7 %
fees, net
Other          8,521     9,891    (13.9)%   34,204      32,708     4.6 %
                                                                             
Subscribers
(1):
                                                                             
Food Network                                       99,700        99,600      0.1 %
HGTV                                               98,800        98,900      (0.1)%
Travel                                             94,700        94,900      (0.2)%
Channel
DIY Network                                        58,400        56,500      3.4 %
Cooking                                            60,100        58,200      3.3 %
Channel
GAC                                      62,700      62,200     0.8 %
                                                                             
(1)Subscriber counts are according to the Nielsen Homevideo Index of homes that
receive cable networks.


4. NON-GAAP FINANCIAL MEASURES

In addition to the results prepared in accordance with GAAP provided in this
release, the Company has presented segment profit. A reconciliation of segment
profit to operating income determined in accordance with GAAP for each
business segment is as follows:

                                                            
(in thousands)                  Three months ended     Twelve months ended
                                 December 31,            December 31,
                              2012      2011      2012        2011
                                                                  
Operating income               $ 218,925   $ 233,184   $ 914,373     $ 886,598
Depreciation and
amortization of intangible
assets:
Lifestyle Media                  24,938      23,099      98,857        88,030
Corporate and other              3,221       510         8,734         2,050
                                                                       
Write-down of goodwill           19,663                  19,663
                                                                       
Losses (gains) on disposal
of property and equipment:
Lifestyle Media                  534         532         637           469
Corporate and other            (1,390)   134       (1,391)     134
                                                                       
Total segment profit          $ 265,891  $ 257,459  $ 1,040,873  $ 977,281
                                                                       

The Company defines free cash flow as cash provided by operating activities
less dividends paid to noncontrolling interests and acquisitions of property
and equipment. The Company measures free cash flow as it believes it is an
important indicator for management and investors as to the Company’s
liquidity, including its ability to reduce debt, make strategic investments
and return capital to shareholders. A reconciliation of free cash flow is as
follows:

                                                  
(in thousands)            Three months ended          Twelve months ended
                           December 31,              December 31,
                        2012       2011        2012        2011
                                                                
                                                                     
Segment profit           $ 265,891    $ 257,459      $ 1,040,873   $ 977,281
Income taxes paid          (93,412)     (46,732)       (348,158)     (184,114)
Interest paid              (7,083)      (158)          (46,682)      (32,847)
Working capital and      15,690     (27,099)    (31,350)    (44,658)
other
                                                                     
Cash provided by
continuing operating       181,086      183,470        614,683       715,662
activities
Dividends paid to
noncontrolling             (18,170)     (11,824)       (166,351)     (70,500)
interests
Additions to property    (29,358)   (16,758)    (63,416)    (54,113)
and equipment
                                                                     
Free cash flow          $ 133,558   $ 154,888    $ 384,916    $ 591,049
                                                                     

Since segment profit and free cash flow are non-GAAP measures, they should be
considered in addition to, but not as a substitute for, operating income, net
income, cash flow provided by operating activities and other measures of
financial performance reported in accordance with GAAP.

Contact:

Scripps Networks Interactive, Inc.
Mark Kroeger, 865-560-5007
mark.kroeger@scrippsnetworks.com
or
Mike Gallentine, 865-560-4473
mgallentine@scrippsnetworks.com
 
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