We upgrade our recommendation for Scripps Networks (SNI) to Outperform. According to our assessment, both advertising revenue and affiliate fee revenue will remain strong in the near future due to an improving U.S. economy.
Nearly 80% of the company’s revenue is derived from advertising spending by the corporate sector. The company has successfully hiked fees it charges to cable operators. Its acquisition of the majority stake in the high-margin Travel Channel has already improved Scripps Networks financials. We consider Travel Channel to be a long-run positive for the company.
The strategic move for new acquisitions, geographic expansions and re-branding of FLN as the Cooking Channel will also help the company to maintain its future growth.Zacks Investment Research
