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The Memphis Week That Was

The Commercial Appeal's New Daddy


What's The Commercial Appeal worth? Wall Street is giving us some clues even if our local daily is snoozing away the lazy summer days.

The parent company of the CA, the E.W. Scripps Company, split itself into two separately traded companies this week. One is broadcast-oriented and is called Scripps Networks Interactive (the trading symbol is SNI). The other is the newspaper and television station division, and the trading symbol is SSP. If you owned shares of “Scripps” before the split, you got one share of SNI for every share of SSP.

The bottom line: SNI is the prize, and newspapers are chump change in the modern media world. One share of SSP was worth $2.91 Thursday. The total stock market value was $478 million. One share of SNI was worth $42 Thursday, and the stock market value was $5.2 billion.

To prop up the anemic price of the newspaper division, Scripps will hold a special stockholders meeting July 15th in Cincinnati to approve a three-for-one reverse split. In other words, if you have 300 shares of SSP, you will have 100 shares post-split, assuming shareholders approve -- which they will, because the E.W. Scripps Trust owns 31 percent of the stock, more than enough to call the shots in a transaction like this.

"The primary purpose of the proposed split is to combine our issued and outstanding shares into a smaller number of shares and enable the shares to trade at a higher price following the spin-off of Scripps Networks Interactive," the company said.

Institutional shareholders don't like stocks under $5, which is not to say that SSP won't fall below that in the future even with a reverse split.

What does this mean to Memphis? In the short term, not much. The CA is one of 18 newspapers in the Scripps chain and its revenues can only be guessed at because Scripps does not provide financials for individual papers. Fifteen or twenty years ago, it was a cash cow for Scripps with a 36-percent profit margin (The Flyer uncovered financials during a lawsuit), but circulation has fallen more than 30 percent since then.

These days, a daily newspaper in Memphis is about as interesting as a Class A affiliate of the New York Yankees. There are no Memphians among the 16 members of management listed in the proxy statement of the parent company, which is based in Cincinnati. There was not so much as a blurb about the spin-off, which occurred on Tuesday, in the CA on Tuesday, Wednesday, or Thursday.

In the long term, it could possibly stir some talk of a sale of all or parts of SSP, although terms of the E.W. Scripps Trust make that difficult. Not that print newspapers are hot properties anywhere.

SNI is the hottie. A team led by SNI president and CEO Kenneth Lowe rang the opening bell at the New York Stock Exchange this week to mark the first day of trading in the new stock. Lowe called it "a tremendously exciting day," but that didn't ring anyone's bell over at 495 Union Avenue, where the focus is on cost-cutting.

The Scripps PR machine described SNI as a company "focused on global lifestyle media and interactive services," including HGTV, The Food Network, DIY Network, Fine Living, and Great American Country. The "other" company consists of "market-leading local media franchises."

For an insider's perspective on the deal, see this week's story by reporter Allison Bruce in the Scripps-owned Ventura County Star in California.

When I searched for "Scripps Networks Interactive" on the CA's website, the most recent story I found was from June 14th. The only newspaper industry news that made the business section this week was a short item on layoffs at The Los Angeles Times.

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