E.W. Scripps executive vice president of finance and administration Joseph NeCastro said the company’s plan to cleave into two separate publicly traded entities — one which would house its cable networks and the other its television stations and newspapers — should be completed by June 30.
Scripps said in October it would split into two separate publicly traded companies — Scripps Networks Interactive, housing cable networks HGTV, Food Network, DIY, Great American Country and Fine Living and their related Web sites; and E.W. Scripps & Co., including its 10 TV stations and daily and community newspapers in 17 markets.
NeCastro, who will become executive vice president and chief financial officer of Scripps Networks Interactive after the split, said the company has already filed a request with the Internal Revenue Service for the transaction to be tax-free and expects to file its Form 10 registration statement with the Securities and Exchange Commission concerning the breakup in late February. That process should take a few months to complete, he said.
“We should be trading by the end of June or the first of July,” NeCastro said at the Citigroup Entertainment, Media & Telecommunications conference in Phoenix last week.
Scripps Networks Interactive is expected to be the larger of the two companies, with $1.5 billion in annual revenue and about $600 million in annual operating cash flow. E.W. Scripps should have annual revenue in the $1 billion range with operating cash flow of between $225 million and $250 million.
E.W. Scripps CEO Ken Lowe, who will become CEO of Scripps Networks Interactive after the split, said the decision process leading up to the transaction took about a year. The Scripps board of directors decided to cleave the company to allow it to be more focused and flexible in its respective businesses, he added.
“By that, I mean allowing the management of two very good strong companies to focus on just those given businesses and have the flexibility to allocate the capital necessary to run those businesses and allocate capital in a manner that fits a company of that size and of those assets,” Lowe said at the conference.
Lowe added that employee compensation concerns also led to the decision to split the company up.
“It’s difficult in a company where you have newspapers that are in some cases over 130 years old, interactive business that are months old, coming up with a compensation plan and things like pension plans and non-pension plans how that relates to the different division and to employees across divisions,” Lowe said. “This will allow our shareholders to focus on the different priories of these locally-based businesses, namely our newspapers and television stations, and our national and global businesses in our cable networks and interactive businesses.”
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