EX-99.1 21 l30635aexv99w1.htm EX-99.1 EX-99.1
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Exhibit 99.1
(E. W. SCRIPPS COMPANY LOGO)
[THE E. W. SCRIPPS COMPANY]
 
, 2008
 
Dear E. W. Scripps Company Shareholder:
 
We are pleased to inform you that on [          , 2008], the Board of Directors of The E. W. Scripps Company approved the spin-off of Scripps Networks Interactive, Inc., a wholly-owned subsidiary of The E. W. Scripps Company. Following the spin-off, Scripps Networks Interactive, Inc.’s assets and businesses will consist largely of those that The E. W. Scripps Company attributes to its existing networks and interactive media businesses and that are reported as its networks and interactive media business segments in its financial statements.
 
The spin-off of Scripps Networks Interactive, Inc. will occur on [          , 2008], by way of a pro rata distribution of 100 percent of the shares of Scripps Networks Interactive, Inc. by The E. W. Scripps Company to The E. W. Scripps Company’s shareholders. In the distribution, each of The E. W. Scripps Company shareholders will receive one Class A Common Share of Scripps Networks Interactive, Inc. for each Class A Common Share of The E. W. Scripps Company and one Common Voting Share of Scripps Networks Interactive, Inc. for each Common Voting Share of The E. W. Scripps Company, each as held at 5:00 p.m., New York City time, on [          , 2008], which is the record date of the spin-off. [The dividend of the Class A Common Shares will be paid in book-entry form, and physical share certificates therefore will be issued only upon request.] The dividend of the Common Voting Shares will be paid in certificate form, with physical share certificates issued to the holders of Common Voting Shares of The E. W. Scripps Company as of the record date of the spin-off. If you own your shares through a broker, your brokerage account will be credited with the new shares of Scripps Networks Interactive. If you have an account with E. W. Scripps’ transfer agent, the new shares of Scripps Networks Interactive will be credited to your account at Bank of New York Mellon. The number of Class A Common Shares or Common Voting Shares of The E. W. Scripps Company that you currently own will not change as a result of the distribution.
 
Based on a letter ruling we received from the U.S. Internal Revenue Service, your receipt of Scripps Networks Interactive, Inc. shares in the spin-off will be tax-free for U.S. federal income tax purposes. You should, of course, consult your own tax advisor as to the particular consequences of the spin-off to you.
 
Following the spin-off, you will own shares in both The E. W. Scripps Company and Scripps Networks Interactive, Inc. The E. W. Scripps Company Class A Common Shares will continue to trade on the New York Stock Exchange under the symbol “SSP.” We intend to apply to have Scripps Networks Interactive, Inc. Class A Common Shares authorized for listing on the New York Stock Exchange under the symbol “SNI.”
 
We believe the spin-off, which will create two distinct companies with separate ownership and management, will enhance value for The E. W. Scripps Company shareholders.
 
Approval of the spin-off by the vote of holders of our Class A Common Shares is not required. Approval of the spin-off by the vote of holders of our Common Voting Shares is expected at our annual meeting of shareholders scheduled for [          , 2008]. You are not required to take any affirmative action to receive your Scripps Networks Interactive, Inc. shares.
 
Because this strategic separation will result in the value of our networks and interactive media businesses being transferred to Scripps Networks Interactive, Inc., the value of the shares of The E. W. Scripps Company will decrease upon completion of the separation.
 
The enclosed information statement, which is being mailed to all of The E. W. Scripps Company shareholders, describes the spin-off in detail and contains important information about Scripps Networks Interactive, Inc., including its financial statements. We urge you to read this information statement carefully.
 
We want to thank you for your continued support of The E. W. Scripps Company, and we look forward to your support of Scripps Networks Interactive, Inc. in the future. We remain committed to working on your behalf to build long-term shareholder value.
 
Sincerely,
 
William R. Burleigh
Chairman of the Board
Kenneth W. Lowe
President and Chief Executive Officer


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Preliminary Information Statement
Subject to Completion Dated [          ], 2008
 
[Scripps Networks Interactive, Inc. logo]

Information Statement

Distribution of

Class A Common Shares and Common Voting Shares of

SCRIPPS NETWORKS INTERACTIVE, INC.
by

THE E. W. SCRIPPS COMPANY
 
Class A Common Shares
(par value $.01 per share)
 
Common Voting Shares
(par value $.01 per share)
 
This information statement is being furnished in connection with the distribution to holders of Class A Common Shares and Common Voting Shares of The E. W. Scripps Company (“E. W. Scripps”) of all of the outstanding Class A Common Shares and Common Voting Shares of Scripps Networks Interactive, Inc. (“Scripps Networks Interactive”).
 
Scripps Networks Interactive is currently a wholly-owned subsidiary of E. W. Scripps. Following the distribution, the assets and businesses of Scripps Networks Interactive will consist largely of those that E. W. Scripps attributes to its existing networks and interactive media businesses and that are reported in its financial statements as its networks and interactive media business segments.
 
Shares of Scripps Networks Interactive will be distributed, subject to certain customary conditions, to the shareholders of record of E. W. Scripps as of the close of business of the New York Stock Exchange on [          , 2008], which will be the record date for the spin-off. These shareholders will receive one Class A Common Share of Scripps Networks Interactive for each Class A Common Share of E. W. Scripps and one Common Voting Share of Scripps Networks Interactive for each Common Voting Share of E. W. Scripps, each as held on the record date. The dividend of the Scripps Networks Interactive Class A Common Shares will be made in book-entry form, and physical certificates therefore will be issued only upon request. The dividend of the Common Voting Shares will be made in certificate form, with physical share certificates issued to the holders of Common Voting Shares of The E. W. Scripps Company as of the record date of the spin-off. The spin-off will be effective at 12:01 a.m., New York City time on [          , 2008], the distribution date.
 
You are not required to take any further action in connection with the spin-off. We are not asking you for a proxy, and you should not send us a proxy. You will not be required to pay for the shares of Scripps Networks Interactive you are to receive in the spin-off or to surrender or exchange shares of E. W. Scripps in order to receive your shares of Scripps Networks Interactive.
 
There is no current trading market for the Scripps Networks Interactive shares. We expect that a limited market, commonly known as a “when-issued” trading market, for Scripps Networks Interactive Class A Common Shares will develop on or shortly before the record date for the spin-off and continue through the distribution date, and we expect that “regular-way” trading of Scripps Networks Interactive Class A Common Shares will begin on the first trading day after the distribution date. We intend to apply to have the Scripps Networks Interactive Class A Common Shares authorized for listing on the New York Stock Exchange under the symbol “SNI.” Scripps Networks Interactive Common Voting Shares will not be listed on any exchange, and we do not expect a trading market to develop in those shares.
 
References in this information statement to (1) “E. W. Scripps” refers to The E. W. Scripps Company and its direct and indirect subsidiaries, and (2) the “Company,” “Scripps Networks Interactive,” “we,” “us” or “our” refer to Scripps Networks Interactive, Inc. and its direct and indirect subsidiaries. The transaction in which Scripps Networks Interactive will be separated from E. W. Scripps and become a separately-traded public company is referred to in this information statement as the “spin-off” or the “separation.”
 
In reviewing this information statement, you should carefully consider the matters described under “Risk Factors” beginning on page [  ].
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.
 
This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.
 
 
 
 
The date of this information statement is [          , 2008].
 
This information statement was first mailed to E. W. Scripps shareholders on or about [          , 2008]


 

 
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This information statement is being furnished solely to provide information to The E. W. Scripps Company shareholders who will receive Class A Common Shares and Common Voting Shares of Scripps Networks Interactive, Inc. in the spin-off. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any securities of Scripps Networks Interactive, Inc. or any securities of The E. W. Scripps Company. This information statement describes the business of Scripps Networks Interactive, Inc., the relationship between Scripps Networks Interactive, Inc. and The E. W. Scripps Company, how the spin-off affects The E. W. Scripps Company and its shareholders, and provides other information to assist you in evaluating the benefits and risks of holding or disposing of the shares that you will receive in the spin-off. You should be aware of certain risks relating to the spin-off, the business of Scripps Networks Interactive, Inc. and ownership of your shares. These risks are described under the heading “Risk Factors.”
 
You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date. Neither Scripps Networks Interactive nor E. W. Scripps undertakes any obligation to update the information in this information statement, except in the normal course of their respective public disclosure obligations and practices.


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QUESTIONS AND ANSWERS ABOUT SCRIPPS NETWORKS INTERACTIVE AND THE SPIN-OFF
 
Q: What is the spin-off?
 
A: The spin-off is the overall transaction of separating Scripps Networks Interactive from E. W. Scripps, which will be accomplished through a series of transactions that will result in Scripps Networks Interactive owning the assets and liabilities of the existing networks and interactive media business segments operated by E. W. Scripps and separately reported as such in its financial statements. If you are a holder of shares of E. W. Scripps on the record date for the distribution of shares of Scripps Networks Interactive, you will be entitled to receive one Class A Common Share of Scripps Networks Interactive for each Class A Common Share of E. W. Scripps that you hold on the record date and one Common Voting Share of Scripps Networks Interactive for each Common Voting Share of E. W. Scripps that you hold on the record date. No action on your part is required for you to participate in the distribution. You do not have to surrender or exchange your shares of E. W. Scripps or pay cash or any other consideration to receive the Scripps Networks Interactive shares. The number of shares of E. W. Scripps that you currently own will not change as a result of the distribution. This information statement describes the business of Scripps Networks Interactive, the relationship of Scripps Networks Interactive with E. W. Scripps and how this transaction affects E. W. Scripps and its shareholders, and provides other information to assist you in evaluating the benefits and risks of holding or disposing of the Scripps Networks Interactive shares that you will receive in the distribution.
 
Q: What is Scripps Networks Interactive, Inc.?
 
A: Scripps Networks Interactive is currently an existing wholly-owned indirect subsidiary of E. W. Scripps and is incorporated in the State of Ohio. Following the spin-off, Scripps Networks Interactive will be an independent publicly-traded company.
 
Q: Why is E. W. Scripps separating its national television networks and interactive media businesses from its newspaper publishing, broadcast television and licensing and syndication businesses?
 
A: The E. W. Scripps Board of Directors has authorized the separation of Scripps Networks Interactive into its own publicly traded company because it believes the separation will be beneficial to E. W. Scripps and its shareholders. The separation will create two publicly traded companies: one focused on creating national lifestyle media brands and the other on building market-leading local media franchises. This will allow each company to have a sharpened strategic focus to foster continued growth, solid operating performance and a clear strategic vision of how best to build upon its competitive strengths and allocate its financial resources. The market price of Scripps Networks Interactive common shares and E. W. Scripps common shares is expected to more closely reflect the true enterprise value of the companies than the market price of E. W. Scripps common shares currently does. As a result, we believe the separation will better align management’s strategies with shareholder interests and improve each company’s performance.
 
For a further explanation of the reasons for the spin-off and more information about the business of Scripps Networks Interactive, see “The Separation — Reasons for the Separation” and “Business” herein.
 
Q: Why is the separation of the two companies structured as a spin-off?
 
A: The E. W. Scripps Board of Directors believes that a tax-free spin-off of shares of Scripps Networks Interactive is a cost-effective and tax efficient way to separate the business segments to accomplish the business purposes underlying the spin-off, including creation of long-term value for the E. W. Scripps shareholders. The equity capital and governance structure of Scripps Networks Interactive is designed to be substantially similar to that of E. W. Scripps.
 
Q: What is the record date for the distribution?
 
A: The record date is [          , 2008], and ownership will be determined as of the close of business of the New York Stock Exchange on that date. References to the “record date” in this information statement mean that time and date.


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Q: When will the distribution occur?
 
A: Shares will be distributed on [          , 2008], which is sometimes referred to in this information statement as the “distribution date.”
 
Q: Can E. W. Scripps decide to cancel the distribution of the Scripps Networks Interactive shares even if all of the conditions have been met?
 
A: Yes. The distribution is conditioned upon satisfaction or waiver of certain conditions. See “The Separation — Conditions to the Distribution” herein. E. W. Scripps has the right to terminate the distribution of the shares, even if all of these conditions are met, if at any time the E. W. Scripps Board of Directors determines, in its sole discretion, that the business purposes for the spin-off may not be realized or that E. W. Scripps is otherwise better served by keeping the business segments combined in one company, thereby making the distribution not in the best interest of E. W. Scripps and its shareholders, or that market conditions are such that it is not advisable to spin-off the networks and interactive media business segments.
 
Q: What will happen to the listing of the Class A Common Shares of E. W. Scripps?
 
A: The Class A Common Shares of E. W. Scripps will continue to be traded on the New York Stock Exchange (“NYSE”) under the symbol “SSP.”
 
Q: What will I receive in the spin-off?
 
A: In the spin-off, you will receive one Class A Common Share of Scripps Networks Interactive for each Class A Common Share of E. W. Scripps that you own as of the record date for the spin-off and one Common Voting Share of Scripps Networks Interactive for each Common Voting Share of E. W. Scripps that you own as of the record date for the spin-off. Immediately after the spin-off, you will still own your shares of E. W. Scripps.
 
After the spin-off, the certificates and book-entry interests representing E. W. Scripps shares will represent such shareholders’ interests in the businesses remaining with E. W. Scripps following the spin-off. After the spin-off, the certificates and book-entry interests representing Scripps Networks Interactive shares that shareholders receive in the spin-off will represent their interest in the networks and interactive media business segments formerly operated by E. W. Scripps.
 
If you own E. W. Scripps Class A Common Shares as of the close of business on the record date, E. W. Scripps, with the assistance of Bank of New York Mellon, the distribution agent, will electronically issue Class A Common Shares of Scripps Networks Interactive to you or to your brokerage firm on your behalf by way of direct registration in book-entry form. Scripps Networks Interactive will not issue paper share certificates for your Class A Common Shares unless you request it to. If you own E. W. Scripps Common Voting Shares as of the close of business on the record date, E. W. Scripps, with the assistance of the distribution agent, will issue paper share certificates to you for your Common Voting Shares of Scripps Networks Interactive. If you are a registered shareholder (meaning you own your shares directly through an account with E. W. Scripps’ transfer agent), the distribution agent will mail you a book-entry account statement that reflects the number of Scripps Networks Interactive shares you own. If you own your E. W. Scripps shares through a bank or brokerage account, your bank or brokerage firm will credit your account with the Scripps Networks Interactive shares.
 
Following the distribution, if your shares are held at the transfer agent, you may request that your shares of either E. W. Scripps or Scripps Networks Interactive be transferred to a brokerage or other account at any time. You should consult your broker if you wish to transfer your shares.
 
Q: What do I need to do now?
 
A: You do not need to take any action, although we urge you to read this information statement carefully. The approval of the holders of the Class A Common Shares of E. W. Scripps is not required or sought to effect the spin-off. Thus E. W. Scripps is not seeking a proxy from the holders of any Class A Common Shares and the holders of any Class A Common Shares are not being asked to send us a proxy. The holders of the Common Voting Shares of E. W. Scripps are expected to approve the spin-off at the annual meeting to be held on [          , 2008]. See “Shareholder Vote and Dissenters’ Rights” herein.


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Q: Will I have to pay anything or surrender any shares?
 
A: You will not be required to pay anything for the Scripps Networks Interactive shares distributed in the spin-off or to surrender any shares of E. W. Scripps. You should not return your E. W. Scripps share certificates to the Company. You will automatically receive your shares of Scripps Networks Interactive when and if the spin-off is consummated.
 
Q: Will any anti-takeover protections exist following the distribution?
 
A: Following the distribution, The Edward W. Scripps Trust will hold approximately 88 percent of our Common Voting Shares. Given the concentration of ownership of our Common Voting Shares in the Trust, no potential merger, takeover or other change of control transaction will occur without the approval of the Trust. See “Risk Factors — Risks Relating to Our Class A Common Shares” and “The Separation — Matters Related to The Edward W. Scripps Trust”. Certain provisions of our articles of incorporation and certain provisions of the inter-company agreements that will be entered into between E. W. Scripps and Scripps Networks Interactive in connection with the distribution could discourage potential acquisition proposals. See “Our Relationship with E. W. Scripps Following the Spin-Off” and “Description of Our Capital Stock.”
 
Q: What are the U.S. Federal Income Tax consequences of the spin-off to E. W. Scripps shareholders?
 
A: Based on the private letter ruling that E. W. Scripps has received from the Internal Revenue Service, you will not recognize gain or loss on the receipt of shares of Scripps Networks Interactive in the spin-off. You will allocate your tax basis in your E. W. Scripps shares between E. W. Scripps and Scripps Networks Interactive shares in proportion to the relative fair market values of such shares at the time of the spin-off. See “The Separation — Certain U.S. Federal Income Tax Consequences of the Distribution.” You should consult your tax advisor about how this allocation will work in your situation (including a situation where you have purchased E. W. Scripps shares at different times or for different amounts) and regarding any particular consequences of the distribution to you, including the application of state, local and foreign tax laws.
 
Q: What if I want to sell my shares of E. W. Scripps or Scripps Networks Interactive?
 
A: You should consult with your own financial advisor, such as your stockbroker, bank or tax advisor. Neither E. W. Scripps nor Scripps Networks Interactive makes any recommendation on the purchase, retention or sale of shares of E. W. Scripps or those of Scripps Networks Interactive to be distributed.
 
If you do decide to sell any shares, you should make sure your stockbroker, bank or other nominee understands whether you want to sell some or all of your E. W. Scripps shares, your Scripps Networks Interactive shares after the distribution, or both.
 
Q: Where will I be able to trade Class A Common Shares of Scripps Networks Interactive?
 
A: There is not currently a public market for the Class A Common Shares of Scripps Networks Interactive. We intend to apply to have our Class A Common Shares authorized for listing on the NYSE under the symbol “SNI”. Trading in Scripps Networks Interactive Class A Common Shares is expected to begin on a “when-issued” basis on or shortly before the record date and “regular-way” trading in such shares is expected to begin on the first trading day following the distribution date. If trading does begin on a “when-issued” basis, you may purchase or sell your Scripps Networks Interactive Class A Common Shares after that time, but your transaction will not settle until after the distribution date. On the first trading day following the distribution date, “when-issued” trading in respect of Scripps Networks Interactive Class A Common Shares will end and “regular-way” trading will begin. We cannot estimate trading prices, either before or after the distribution date, for Scripps Networks Interactive Class A Common Shares.
 
Q: What will be the relationship between E. W. Scripps and Scripps Networks Interactive following the separation?
 
A: The separation will establish Scripps Networks Interactive and E. W. Scripps as separate public companies. Both companies will, however, continue to benefit from certain commercial arrangements between them. For a period after the transaction, transition service agreements will be in place to provide certain services between the two companies. Other agreements will be in place to provide for the allocation between us and E. W. Scripps


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of E. W. Scripps’ assets, liabilities and obligations attributable to periods prior to our separation from E. W. Scripps and will cover such matters as employee benefits, intellectual property and tax-related assets and liabilities.
 
Each company will have a separate board of directors. The majority of directors of Scripps Networks Interactive will not be directors of E. W. Scripps, although it is currently expected that three directors of Scripps Networks Interactive will also be members of the E. W. Scripps Board of Directors.
 
Q: Will the distribution of Scripps Networks Interactive Class A Common Shares affect the market price of my E. W. Scripps Class A Common Shares?
 
A: Yes. As a result of the distribution, we expect the trading price of E. W. Scripps Class A Common Shares immediately following the distribution to be lower than immediately prior to the distribution because the trading price will no longer reflect the value of the networks and interactive media businesses. Furthermore, until the market has fully analyzed the value of E. W. Scripps without those businesses, the price of E. W. Scripps shares may experience volatility. There can be no assurance that the combined trading prices of E. W. Scripps Class A Common Shares and Scripps Networks Interactive Class A Common Shares after the distribution will not be less than the trading price of shares of E. W. Scripps Class A Common Shares before the distribution.
 
Q: Who will be the distribution agent, transfer agent and registrar for shares of Scripps Networks Interactive?
 
A: The Bank of New York Mellon
Shareholder Services
P.O. Box 11258
Church Street Station
New York, New York 10286
Toll-Free Shareholder Services Line:
(800) 524-4458
 
Q: Where can I get more information?
 
A: Before the distribution, if you have any questions, you should contact:
 
E. W. Scripps
Investor Relations
[          ]
[          ]
Telephone: [          ]
 
After the distribution, if you have any questions relating to your Scripps Networks Interactive shares, you should contact:
 
Scripps Networks Interactive
Investor Relations
[          ]
[          ]
Telephone: [          ]


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SUMMARY
 
This summary highlights information contained elsewhere in this information statement and may not contain all of the information that may be important to you. For a complete understanding of the networks and interactive media business segments and the spin-off, you should read this summary together with the more detailed information and the financial statements appearing elsewhere in this information statement. You should read this entire information statement carefully, including the “Risk Factors” and “Forward-Looking Statements” sections.
 
Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement, including the combined financial statements of the networks and interactive media businesses of E. W. Scripps, which consist of the assets and liabilities involved in managing and operating such businesses, assumes the completion of all the transactions referred to in this information statement in connection with the separation and distribution.
 
References in this information statement to (1) the “Company,” “Scripps Networks Interactive,” “we,” “us” or “our” refer to Scripps Networks Interactive, Inc. and its direct and indirect subsidiaries, and (2) “E. W. Scripps” refers to The E. W. Scripps Company and its direct and indirect subsidiaries. The transaction in which Scripps Networks Interactive will be separated from E. W. Scripps and become a separately-traded public company is referred to in this information statement from time to time as the “spin-off” or the “separation.”
 
Our Business
 
Scripps Networks Interactive is a leading lifestyle content and Internet search company with respected, high-profile television and interactive brands. Our national television networks and interactive services engage audiences and efficiently serve advertisers by delivering entertaining and highly useful content that focuses on specifically defined topics of interest.
 
We manage our operations through two reportable operating segments: (i) Lifestyle Media (formerly Scripps Networks), which includes HGTV, Food Network, DIY Network (“DIY”), Fine Living, Great American Country (“GAC”), a minority interest in Fox-BRV Southern Sports Holdings LLC, and Internet-based businesses, including RecipeZaar.com, HGTVPro.com and FrontDoor.com, that are associated with the aforementioned television brands; and (ii) Interactive Services (formerly Interactive Media), which includes online comparison shopping and consumer information services; Shopzilla, BizRate, uSwitch and UpMyStreet.
 
Our Lifestyle Media segment derives revenue principally from advertising sales, affiliate fees and ancillary sales, including the sale and licensing of consumer products. Revenues from the Interactive Services segment are generated primarily from referral fees and commissions paid by merchants and service providers for online leads generated by our comparison shopping Web sites. Revenues from the Lifestyle Media segment accounted for 83 percent, 80 percent and 90 percent of our combined revenues for 2007, 2006 and 2005, respectively, and revenues from the Interactive Services segment accounted for 17 percent, 20 percent and 10 percent for those periods, respectively.
 
Scripps Networks Interactive engages audiences that are highly desirable to advertisers with entertaining and informative lifestyle content that is produced for television, the Internet and any other media platforms consumers choose. We intend to expand and enhance our Lifestyle Media brands through the creation of popular new programming and content, the use of new distribution platforms, such as high definition television channels, mobile phones and video-on-demand, and the licensing and sale of branded consumer products. We are particularly focused on the internal development and acquisition of interactive, digital media brands that are related to the lifestyle content categories popularized by our television networks and associated Internet enterprises. At our Interactive Services businesses, we aggregate large audiences on the Internet by organizing searchable and highly useful consumer information. We intend to enhance our Interactive Services businesses by improving the overall search capabilities of our Web sites, diversifying sources of revenue, increasing the volume of user-generated consumer information and developing new international and domestic markets.
 
Scripps Networks Interactive was organized as an Ohio corporation in 2007 and our principal offices are located at 312 Walnut Street, Suite XX, Cincinnati, Ohio, 45202, and our telephone number is (513) XXX-XXXX. Our Web site address is www.scrippsnetworksinteractive.com.


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We describe in this information statement the Lifestyle Media and Interactive Services operations to be distributed to us by E. W. Scripps in connection with the spin-off as if it were our business for all historical periods described. However, we are a newly-formed entity that will not independently conduct any operations before the spin-off. References in this document to our historical assets, liabilities, products, employees or activities generally refer to the historical assets, liabilities, products, employees or activities of the contributed businesses as they were conducted as part of E. W. Scripps before the spin-off. Our historical financial results as part of E. W. Scripps contained in this information statement may not be indicative of our financial results in the future as an independent company or reflect what our financial results would have been had we been an independent company during the periods presented.
 
Overview of the Separation
 
On October 16, 2007, E. W. Scripps announced that its Board of Directors had preliminarily approved a plan to separate E. W. Scripps into two independent, publicly traded companies — one for the national television networks and interactive media businesses and the other for E. W. Scripps’ newspaper publishing, broadcast television and syndication and licensing businesses.
 
On          , 2008, the Board of Directors of E. W. Scripps approved the distribution of all of the common shares of Scripps Networks Interactive, a wholly-owned subsidiary of E. W. Scripps that holds directly or indirectly the assets and liabilities associated with the national television networks and interactive services businesses. Following the distribution, E. W. Scripps shareholders will own 100 percent of the common shares of Scripps Networks Interactive.
 
Before our separation from E. W. Scripps, we will enter into a Separation and Distribution Agreement and several other agreements with E. W. Scripps to effect the separation and distribution. These agreements will govern the relationships between Scripps Networks Interactive and E. W. Scripps subsequent to the completion of the separation plan and will provide for the allocation between us and E. W. Scripps of E. W. Scripps’ assets, liabilities and obligations attributable to periods prior to our separation from E. W. Scripps.
 
The E. W. Scripps Board of Directors believes that separating the Scripps Networks Interactive business from the E. W. Scripps business is in the best interests of E. W. Scripps and its shareholders and has concluded that the separation will provide each separated company with certain opportunities and benefits. The management of each separated company will be able to focus on its respective businesses and pursue its specific growth and development agendas, design and implement corporate policies and strategies that are based primarily on the business characteristics of each company, and concentrate financial resources wholly on its own operations. The creation of separate equity securities for each of the businesses will facilitate incentive compensation arrangements for employees more directly tied to the performance of the relevant company’s business.
 
The E. W. Scripps Board of Directors considered a number of potentially negative factors in evaluating the separation, including risks relating to the creation of a new public company and possible increased costs, but concluded that the potential benefits of the separation outweighed these factors. For more information, see the sections entitled “The Separation — Reasons for the Separation” and “Risk Factors” included elsewhere in this information statement.
 
The distribution of our common shares as described in this information statement is subject to the satisfaction or waiver of certain conditions. For more information, see the section entitled “The Separation — Conditions to the Distribution” included elsewhere in this information statement.
 
The Spin-Off
 
The following is a summary of the material terms of the spin-off and related transactions. Please see “The Separation” for a more detailed description of the matters described below.
 
Distributing company The E. W. Scripps Company
 
Distributed company Scripps Networks Interactive, Inc.
 
Distribution ratio Each holder of E. W. Scripps Class A Common Shares will receive one Class A Common Share of Scripps Networks Interactive for each


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Class A Common Share of E. W. Scripps, and each holder of E. W. Scripps Common Voting Shares will receive one Common Voting Share of Scripps Networks Interactive for each Common Voting Share of E. W. Scripps, in each case as held on          , 2008, the record date for the distribution.
 
Securities to be distributed Class A Common Shares and Common Voting Shares of Scripps Networks Interactive, which will constitute all of the outstanding shares of Scripps Networks Interactive immediately after the spin-off and of which none will be owned by E. W. Scripps. Based on the approximately          Class A Common Shares and approximately          Common Voting Shares of E. W. Scripps outstanding on           , 2008, and applying the one-for-one distribution ratio described above, approximately           Class A Common Shares and           Common Voting Shares of Scripps Networks Interactive will be distributed to E. W. Scripps shareholders as of the record date.
 
Record date The record date for the distribution is [          , 2008]. In order to be entitled to receive shares of Scripps Networks Interactive in the spin-off, you must be a holder of shares of E. W. Scripps as of the close of business of the New York Stock Exchange on the record date.
 
Distribution date The distribution date will be [          , 2008].
 
Distribution method Scripps Networks Interactive Class A Common Shares will be issued only in book entry form. Paper stock certificates for such shares will be issued only upon request. Scripps Networks Interactive Common Voting Shares will be issued in the form of paper stock certificates.
 
Relationship between Scripps Networks and E. W. Scripps following the spin-off After the spin-off, neither E. W. Scripps nor Scripps Networks Interactive will have any ownership interest in the other, and each of E. W. Scripps and Scripps Networks Interactive will be an independent public company. Two of the initial directors of Scripps Networks Interactive are expected to be directors of E. W. Scripps. These directors are the trustees of The Edward W. Scripps Trust. If the Trust fills the seat of a recently retired trustee, that person is expected to be a director of both companies. In connection with the spin-off, we are entering into a number of agreements with E. W. Scripps that will govern various relationships between us and E. W. Scripps following the distribution date. These agreements are expected principally to cover the provision of certain interim transitional services, allocation of certain tax benefits and liabilities and employee liabilities arising from periods prior to the spin-off, and perpetual licenses permitting us to use certain trademarks, trade names and software owned by E. W. Scripps. See “Our Relationship with E. W. Scripps Following the Spin-Off” herein. In addition, both Scripps Networks Interactive and E. W. Scripps will be under the control of The Edward W. Scripps Trust. See “Risk Factors — Common Voting Shares are principally held by The Edward W. Scripps Trustherein.
 
Directors of Scripps Networks Interactive Following the spin-off, we expect to have an initial board of directors (the “Board”) consisting of [ten] members. After the initial term, directors will be elected each year at an annual meeting of shareholders. See “Management — Board of Directors.”
 
Description of indebtedness Upon the closing of the spin-off, we expect to have approximately $375 million outstanding under a $550 million 5-year unsecured revolving credit facility.


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Tax considerations Assuming the distribution, together with certain related transactions, qualifies as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, no gain or loss will be recognized by a shareholder, and no amount will be included in the income of a shareholder, upon the receipt of our common shares pursuant to the distribution.
 
Conditions to the distribution The distribution is subject to the satisfaction or, if permissible under the Separation and Distribution Agreement, waiver by E. W. Scripps of the following conditions, among other conditions described in this information statement:
 
• the SEC shall have declared effective our registration statement on Form 10, of which this information statement is a part, with no stop order relating to the registration statement being in effect;
 
• our Class A Common Shares shall have been accepted for listing on the NYSE, on official notice of issuance;
 
• E. W. Scripps shall have received a private letter ruling from the IRS substantially to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, and such ruling shall be in form and substance satisfactory to E. W. Scripps;
 
• E. W. Scripps shall have received an opinion of Baker & Hostetler LLP substantially to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, and such opinion shall be in form and substance satisfactory to E. W. Scripps;
 
• no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the separation, distribution or any of the transactions contemplated by the Separation and Distribution Agreement or any ancillary agreement, shall be in effect; and
 
• no other events or developments shall have occurred that, in the judgment of the E. W. Scripps Board of Directors, would result in the distribution having a material adverse effect on E. W. Scripps or its shareholders.
 
The fulfillment of the foregoing conditions does not create any obligation on the part of E. W. Scripps to effect the distribution, and the E. W. Scripps Board of Directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the distribution, including by accelerating or delaying the timing of the consummation of all or part of the distribution, at any time prior to the distribution date.
 
Stock exchange listing We intend to file an application to list our Class A Common Shares on the NYSE under the ticker symbol “SNI.”
 
Dividend policy We expect that following the spin-off we will adopt a policy of paying, subject to legally available funds, a quarterly dividend of [$     ] per Class A Common Share and [$     ] per Common Voting Share. All decisions regarding the declaration and payment of dividends will be evaluated from time to time in light of our financial condition, earnings, growth prospects, funding requirements, applicable law and other factors deemed relevant by our board of directors.


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Voting rights and controlling interests We will have two classes of shares: Common Voting Shares and Class A Common Shares. Holders of Class A Common Shares will be entitled to elect one-third of the board of directors, but will not be permitted to vote on any other matters except as required by Ohio law. Holders of Common Voting Shares will be entitled to elect the remainder of the board and to vote on all other matters. The Edward W. Scripps Trust will hold approximately 88 percent of our Common Voting Shares. As a result, the Trust will be able to elect two-thirds of the board of directors and to direct the outcome of any matter that does not require a vote of the Class A Common Shares. Given the concentration of ownership of the Common Voting Shares in The Edward W. Scripps Trust, no potential merger, takeover or other change of control transaction will occur without its approval.
 
Shareholder approval Although it is not clear under Ohio law that holders of E. W. Scripps Common Voting Shares must approve the spin-off, E. W. Scripps has decided nonetheless to submit the spin-off and related transactions for their approval. Ohio law does not require the approval of the holders of E. W. Scripps Class A Common Shares. The Edward W. Scripps Trust, which holds approximately 88 percent of our Common Voting Shares, intends to vote its shares in favor of the spin-off and related transactions at the E. W. Scripps annual meeting to be held on          , 2008.
 
Dissenters’ rights Although Ohio law is not clear on the matter of dissenters’ rights in connection with the spin-off, E. W. Scripps has decided to permit holders of E. W. Scripps Class A Common Shares, as well as holders of E. W. Scripps Common Voting Shares who do not vote in favor of the spin-off, to assert dissenters’ rights under Ohio law, subject to the right of E. W. Scripps to object to any such exercise and to oppose in an appropriate forum the availability of such rights under Ohio law. Instructions for perfecting any dissenters’ rights you may have may be found in this information statement at “Shareholder Vote and Dissenters’ Rights”.
 
Risk factors Our business is subject to both general and specific risks and uncertainties relating to our business, our relationship with E. W. Scripps and our being a separately publicly traded company. Our business is also subject to risks relating to the separation. You should read carefully the section entitled “Risk Factors” included elsewhere in this Information Statement.
 
Corporate Information and Structure
 
Scripps Networks Interactive is an Ohio corporation and an existing indirect, wholly-owned subsidiary of E. W. Scripps. Scripps Networks Interactive’s principal executive office is located at 312 Walnut Street, Suite [          ], Cincinnati, Ohio 45202, and its telephone number is (513) 977-3000. After the spin-off, Scripps Networks Interactive’s principal executive office will be located at 312 Walnut Street, Suite [          ], Cincinnati, Ohio 45202 and its telephone number will be (513) [          ].


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Summary Combined Financial Data
 
Summary Historical and Pro Forma Combined Financial Data
 
The following table presents summary historical and pro forma financial data. The combined statement of operations data for each of the years in the three-year period ended December 31, 2007 and the summary combined balance sheet data as of December 31, 2007 and 2006 have been derived from our audited combined financial statements included elsewhere in this information statement. The combined statement of operations data for the years ended December 31, 2004 and 2003 and the combined balance sheet data as of December 31, 2005, 2004 and 2003 are derived from our unaudited combined financial statements that are not included in this information statement. The summary combined financial data should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Unaudited Pro Forma Condensed Combined Financial Information” and our combined financial statements and related notes included elsewhere in this information statement.
 
The unaudited pro forma condensed statement of operations data for the year ended December 31, 2007 gives effect to the separation as if it occurred on January 1, 2007. The unaudited pro forma condensed combined balance sheet data assumes the separation occurred on December 31, 2007. The assumptions used and pro forma adjustments derived from such assumptions are based on currently available information and we believe such assumptions are reasonable under the circumstances. Such adjustments are subject to change based upon the finalization of the terms of the separation and the financing agreements. The unaudited pro forma condensed combined financial information is not necessarily indicative of the results of operations or financial condition which would have resulted had we been operating as an independent, publicly traded company during such periods. In addition, it is not necessarily indicative of our future results of operations or financial condition. Further information regarding the pro forma adjustments can be found within the “Unaudited Pro Forma Condensed Combined Financial Information” section of this information statement.
 
                                                 
    For the Years Ended December 31,  
    Pro Forma
                               
    2007     2007     2006     2005     2004     2003  
    (Unaudited)                       (Unaudited)  
    Dollars in thousands (except per share amounts)  
 
Combined statement of operations data:
                                               
Operating revenue(1)
                                               
Lifestyle Media
  $ 1,184,901     $ 1,184,901     $ 1,052,403     $ 903,014     $ 723,713     $ 535,013  
Interactive Services
    256,364       256,364       271,066       99,447              
                                                 
Total segment operating revenue
    1,441,265       1,441,265       1,323,469       1,002,461       723,713       535,013  
                                                 
Segment profit (loss)(1)(2)
                                               
Lifestyle Media
    605,014       605,014       517,572       414,369       304,367       204,297  
Interactive Services
    39,751       39,751       67,688       27,980              
Corporate
    (36,426 )     (35,006 )     (33,189 )     (25,182 )     (18,848 )     (14,690 )
                                                 
Total segment profit
    608,339       609,759       552,071       417,167       285,519       189,607  
                                                 
Income (loss) from continuing operations(3)(4)
    (116,077 )     (130,368 )     233,780       175,880       119,494       81,960  
Earnings (loss) per share
                                               
Basic
    (0.71 )     N/A       N/A       N/A       N/A       N/A  
Weighted average shares outstanding (000s)
                                               
Basic
    163,014       N/A       N/A       N/A       N/A       N/A  
 


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    As of December 31,  
    Pro Forma
                               
    2007     2007     2006     2005     2004     2003  
    (Unaudited)                 (Unaudited)  
 
Balance sheet data:
                                               
Total assets(4)
  $ 2,016,291     $ 2,017,827     $ 2,384,952     $ 2,011,333     $ 1,454,177     $ 990,816  
Long term debt (including current portion)
    375,000       503,361       764,956       824,238       531,047       507,084  
Total parent company equity
    1,116,613       1,013,288       1,185,578       797,320       587,503       226,740  
 
 
Notes:
 
(1) Operating revenue and segment profit represent the revenues and the profitability measures used to evaluate the operating performance of our reportable segments in accordance with Statement of Financial Accounting Standard (“FAS”) No. 131, Segment Reporting.
 
(2) Segment profit is a supplemental non-GAAP financial measure. GAAP means generally accepted accounting principles in the United States. Our chief operating decision maker (as defined by FAS 131) evaluates the operating performance of our reportable segments and makes decisions about the allocation of resources to our reportable segments using a measure we call segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, impairment of goodwill and intangible assets, divested operating units, 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. Lifestyle Media segment profits include equity in earnings of affiliates.
 
(3) The 2007 income from continuing operations includes impairment charges to goodwill of $312,116 and other intangibles assets of $98,890, relating to uSwitch.
 
(4) The following acquisitions accounted for the increase in operations and assets:
 
a. 2007- RecipeZaar.com, a user-generated recipe and community site. Pickle.com, a Web site that enables users to easily organize and share photos and videos from any camera or mobile phone device.
 
b. 2006- uSwitch, a Web-based comparison shopping service that helps consumers compare prices and arrange for the purchase of a range of essential home services and personal finance products.
 
c. 2005- Shopzilla, a Web-based product comparison shopping service.
 
d. 2004- The Great American Country network.

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RISK FACTORS
 
You should carefully consider each of the following risk factors and all of the other information set forth in this information statement. The risk factors generally have been separated into three groups: (i) risks relating to the separation; (ii) risks relating to our common shares; and (iii) risks relating to our business. Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company in each category of risk. The risks and uncertainties our company faces, however, are not limited to those set forth in the risk factors described below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.
 
In addition, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.
 
If any of the following risks or uncertainties develops into actual events, these events could have a material adverse effect on our business, financial condition or results of operations. In such case, the trading price of our common shares could decline.
 
Risks Relating to the Separation
 
We may not achieve the benefits expected from our separation from E. W. Scripps.
 
We expect that, as a stand-alone, independent public company, we will be able to design and implement corporate policies and strategies based primarily on the characteristics of our business, to focus our financial resources wholly on our own operations, and to implement and maintain a capital structure designed to meet our own specific needs. Nonetheless, we may not be able to achieve all or any of these benefits. Furthermore, by separating from E. W. Scripps there is a risk that we may be more susceptible to market fluctuations and other adverse events than we would have been were we still a part of the current E. W. Scripps. As part of E. W. Scripps, we enjoyed certain benefits, including operating diversity, purchasing and borrowing leverage, and available capital for investments. These benefits may not be as readily achievable as a smaller, stand-alone company.
 
The historical and pro forma financial information included in this information statement may not be indicative of our results as an independent company.
 
Prior to the separation, our business was operated by E. W. Scripps as part of its broader corporate organization, rather than as an independent company. E. W. Scripps or one of its affiliates performed various corporate functions for us, including, but not limited to, tax administration, cash management, accounting, information services, human resources, legal services, ethics and compliance, real estate management, investor and public relations, certain governance functions (including compliance with the Sarbanes-Oxley Act of 2002 and internal audit) and external reporting. Our historical financial results reflect allocations of corporate expenses from E. W. Scripps for these and similar functions. These allocations may be less than the comparable expenses we will incur as a separate, publicly traded company.
 
We may not achieve all the benefits of scale that the combined company currently achieves.
 
Our business is currently integrated with the other businesses of E. W. Scripps. Historically, we have shared economies of scope and scale in costs, employees, vendor relationships and customer relationships. While we expect to enter into short-term transition agreements that will govern certain commercial and other relationships between us and E. W. Scripps after the separation, those temporary arrangements may not capture the benefits our businesses have enjoyed as a result of being integrated with the other businesses of E. W. Scripps. Additionally, the cost of performing certain functions and the cost of agreements negotiated with third parties after the temporary arrangements with E. W. Scripps terminate may be higher than the costs that would have been incurred as a combined company. The loss of these benefits of scale could have an adverse effect on our business, results of operations and financial condition following the completion of the separation.


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In connection with the separation, we will rely upon E. W. Scripps to perform under various agreements.
 
In connection with the separation, Scripps Networks Interactive and E. W. Scripps will enter into various agreements, including a Separation and Distribution Agreement, a Tax Allocation Agreement, a Transition Services Agreement and an Employee Matters Agreement. The Separation and Distribution Agreement, Tax Allocation Agreement and Employee Matters Agreement will determine the allocation of assets and liabilities between the companies following the separation for those respective areas and will include any necessary indemnifications related to liabilities and obligations. The Transition Services Agreement will provide for the performance of certain services by each company on the other company’s behalf for a period of time after the separation until both companies are capable of providing such services on their own. We will rely on E. W. Scripps to satisfy its performance and payment obligations under these agreements. If E. W. Scripps were to be unable to satisfy its obligations under these agreements, including its indemnification obligations, we could incur operational difficulties or losses.
 
If the distribution, together with certain related transactions, were to fail to qualify as a reorganization for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code, then our shareholders, we or E. W. Scripps might be subject to significant tax liability.
 
E. W. Scripps has received a private letter ruling from the IRS substantially to the effect that the distribution, together with certain related transactions, will qualify for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code. In addition, E. W. Scripps intends to obtain an opinion from Baker & Hostetler LLP substantially to the effect that the distribution, together with certain related transactions, will so qualify. The IRS private letter ruling relies, and the opinion will rely, on certain representations, assumptions and undertakings, including those relating to the past and future conduct of our business, and neither the IRS private letter ruling nor the opinion would be valid if such representations, assumptions and undertakings were incorrect. Moreover, the IRS private letter ruling does not address all the issues that are relevant to determining whether the distribution will qualify for tax-free treatment. Notwithstanding the IRS private letter ruling and opinion, the IRS could determine that the distribution should be treated as a taxable transaction if it determines that any of the representations, assumptions or undertakings that were included in the request for the private letter ruling is false or has been violated or if it disagrees with the conclusions in the tax opinion that are not covered by the IRS ruling. For more information regarding the tax opinion and the private letter ruling, see the section entitled “Certain U.S. Federal Income Tax Consequences of the Distribution” included elsewhere in this information statement.
 
If the distribution fails to qualify for tax-free treatment, E. W. Scripps would be subject to tax as if it had sold the common shares of our company in a taxable sale for fair market value, and our initial public shareholders would be subject to tax as if they had received a taxable distribution equal to the fair market value of our common shares distributed to them. Under the Tax Allocation Agreement between E. W. Scripps and us, we would generally be required to indemnify E. W. Scripps against any tax resulting from the distribution to the extent that such tax resulted from (i) an acquisition of all or a portion of our shares or assets, whether by merger or otherwise, (ii) other actions or failures to act by us or (iii) any of our representations or undertakings being incorrect or violated. For a more detailed discussion, see the section entitled “Our Relationship With E. W. Scripps Following the Spin-Off — Tax Allocation Agreement” included elsewhere in this information statement. Our indemnification obligations to E. W. Scripps and its subsidiaries, officers and directors are not limited by any maximum amount. If we are required to indemnify E. W. Scripps or such other persons under the circumstances set forth in the Tax Allocation Agreement, we may be subject to substantial liabilities.
 
The tax rules applicable to the separation may restrict us from engaging in certain corporate transactions for a period of time after the separation.
 
To preserve the tax-free treatment to E. W. Scripps of the distribution, under the Tax Allocation Agreement that we will enter into with E. W. Scripps, for the two-year period following the distribution, we are subject to restrictions with respect to:
 
  •  entering into any transaction pursuant to which all or a portion of our shares would be acquired, whether by merger or otherwise, unless certain tests are met;


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  •  issuing equity securities beyond certain thresholds;
 
  •  repurchasing Scripps Networks Interactive common shares beyond certain thresholds;
 
  •  ceasing to actively conduct the Scripps Networks Interactive business; and
 
  •  taking any other action that prevents the spin-off and related transactions from being tax-free.
 
These restrictions may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that might increase the value of our business. For more information, see the sections entitled “Certain U.S. Federal Income Tax Consequences of the Distribution” and “Our Relationship With E. W. Scripps Following the Spin-Off — Tax Allocation Agreement” included elsewhere in this information statement.
 
In connection with the separation, E. W. Scripps will indemnify us for certain liabilities. There can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that E. W. Scripps’ ability to satisfy its indemnification obligations will not be impaired in the future.
 
Pursuant to the Separation and Distribution Agreement, E. W. Scripps will agree to indemnify us from certain liabilities, as discussed further in the section entitled “Our Relationship with E. W. Scripps Following the Spin-Off — Separation and Distribution Agreement — Indemnification Obligations” included elsewhere in this information statement. Third parties could seek to hold us responsible for any of the liabilities that E. W. Scripps has agreed to retain, and there can be no assurance that the indemnity from E. W. Scripps will be sufficient to protect us against the full amount of such liabilities, or that E. W. Scripps will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from E. W. Scripps any amounts for which we are held liable, we will be temporarily required to bear those losses ourselves until such recovery. Each of these risks could adversely affect our business, results of operations and financial condition.
 
After the separation, certain of our directors and officers may have actual or potential conflicts of interest because of their positions in Scripps Networks Interactive and E. W. Scripps and because of their share or option ownership in E. W. Scripps.
 
It is currently expected that two directors of Scripps Networks Interactive will also be members of the E. W. Scripps Board of Directors. These directors are trustees of The Edward W. Scripps Trust. If the Trust fills the seat of a recently retired trustee, that person is expected to be a director of both companies as well. These common directors could create, or appear to create, potential conflicts of interest when Scripps Networks Interactive’s and E. W. Scripps’ management and directors face decisions that could have different implications for the two companies.
 
Also, because of their current or former positions with E. W. Scripps, most of the persons we expect to be our directors and executive officers own E. W. Scripps Class A Common Shares, options to purchase shares of E. W. Scripps Class A Common Shares or other equity awards. Following the distribution, these officers and directors may own E. W. Scripps Class A Common Shares. The individual holdings may be significant for some of these persons compared to their total assets. This ownership may create, or, may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for E. W. Scripps and Scripps Networks Interactive. For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between Scripps Networks Interactive and E. W. Scripps regarding the terms of the agreements governing the separation and the relationship thereafter between the companies. Potential conflicts of interest could also arise if Scripps Networks Interactive and E. W. Scripps enter into any commercial arrangements with each other in the future.
 
Risks Relating to Our Class A Common Shares
 
There is no existing market for our Class A Common Shares, and a trading market that will provide you with adequate liquidity may not develop for our Class A Common Shares. In addition, once our Class A Common Shares begin trading, the market price of our shares may fluctuate widely.
 
There is currently no public market for our Class A Common Shares or Common Voting Shares. It is anticipated that on or prior to the record date for the distribution, trading of shares of our Class A Common Shares


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will begin on a “when-issued” basis and will continue up to and through the distribution date. There can be no assurance that an active trading market for our Class A Common Shares will develop as a result of the distribution or be sustained in the future. There is currently no public market for our Common Voting Shares and we do not anticipate that such a market will develop following the completion of the distribution.
 
We cannot predict the prices at which our Class A Common Shares may trade after the distribution. The market price may fluctuate widely, depending upon many factors, some of which may be beyond our control, including:
 
  •  our business profile and market capitalization may not fit the investment objectives of shareholders of E. W. Scripps, including shareholders who hold E. W. Scripps shares based on inclusion of E. W. Scripps in the Standard & Poor’s 500 Index (“S&P 500”) and other indices, as it is possible that our Class A Common Shares will not be included in the S&P 500 and certain of such other indices after the distribution;
 
  •  a shift in our investor base;
 
  •  our quarterly or annual earnings, or those of other companies in our industry;
 
  •  actual or anticipated fluctuations in our operating results;
 
  •  announcements by us or our competitors of significant acquisitions or dispositions;
 
  •  the failure of securities analysts to cover our Class A Common Shares after the distribution;
 
  •  changes in earnings estimates by securities analysts or our ability to meet our earnings guidance;
 
  •  the operating and share price performance of other comparable companies; and
 
  •  overall market fluctuations and general economic conditions.
 
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our Class A Common Shares.
 
Substantial sales of Class A Common Shares may occur in connection with this distribution, which could cause our Class A Common Share price to decline.
 
The Scripps Networks Interactive Class A Common Shares that E. W. Scripps distributes to its shareholders generally may be sold immediately in the public market. Although we have no actual knowledge of any plan or intention on the part of any 5 percent or greater shareholder to sell Scripps Networks Interactive Class A Common Shares following the separation, it is possible that some E. W. Scripps shareholders, including possibly some of E. W. Scripps’ large shareholders and index fund investors, will sell E. W. Scripps or Scripps Networks Interactive Class A Common Shares received in the distribution for various reasons — for example, our business profile or market capitalization as an independent company may not fit their investment objectives. The sales of significant amounts of our Class A Common Shares or the perception in the market that this will occur may reduce the market price of our Class A Common Shares.
 
Your percentage ownership in Scripps Networks Interactive may be diluted in the future.
 
As with any publicly traded company, your percentage ownership in Scripps Networks Interactive may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including equity awards that we expect will be granted to our directors, officers and employees. See “Executive Compensation — Compensation Program Elements — Employee Benefit Plans” herein.
 
Common Voting Shares will be principally held by The Edward W Scripps Trust, and this could inhibit potential changes of control.
 
We will have two classes of shares: Common Voting Shares and Class A Common Shares. Holders of Class A Common Shares will be entitled to elect one-third of the board of directors, but will not be permitted to vote on any other matters except as required by Ohio law. Holders of Common Voting Shares will be entitled to elect the remainder of the Board and to vote on all other matters. The Edward W. Scripps Trust will hold approximately


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88 percent of the Common Voting Shares. As a result, the Trust will be able to elect two-thirds of the board of directors and to direct the outcome of any matter that does not require a vote of the Class A Common Shares. Because this concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to our business, the market price of our Class A Common Shares could be adversely affected.
 
The combined post-distribution value of E. W. Scripps and Scripps Networks Interactive shares may not equal or exceed the pre-distribution value of E. W. Scripps shares.
 
After the distribution, E. W. Scripps Class A Shares will continue to be listed and traded on the New York Stock Exchange. Application will be made to list the shares of Scripps Networks Interactive Class A Shares on the New York Stock Exchange. We cannot assure you that the combined trading prices of E. W. Scripps Class A Shares and Scripps Networks Interactive Class A Shares after the distribution, as adjusted for any changes in the combined capitalization of these companies, will be equal to or greater than the trading price of E. W. Scripps Class A Shares prior to the distribution. Until the market has fully evaluated the business of E. W. Scripps without the businesses of Scripps Networks Interactive, the price at which E. W. Scripps Class A Shares trade may fluctuate significantly. Similarly, until the market has fully evaluated the businesses of Scripps Networks Interactive, the price at which Scripps Networks Interactive Class A Shares trade may fluctuate significantly.
 
The change in control severance plan that Scripps Networks Interactive expects to have in place following the distribution and certain provisions of the agreements that Scripps Networks Interactive and E. W. Scripps will enter into in connection with the distribution may discourage takeovers.
 
Effective on the distribution date, Scripps Networks Interactive will have in place a change in control severance plan covering specified participants that would be triggered if there is a “change in control” and a qualifying termination (or constructive termination) of employment during the twenty-four month period following a change in control. The triggering events would result in the payment of specified severance benefits (including a lump sum multiple of the terminated participant’s compensation), outplacement services, vesting of long-term incentive awards, and tax “gross-up” payment if necessary to satisfy certain tax obligations relating to the severance payments. This severance plan is substantially comparable to the change in control severance plan adopted by E. W. Scripps and could make it more expensive for a buyer of Scripps Networks Interactive to acquire control and therefore could discourage unsolicited offers.
 
If the distribution is considered part of a “plan (or series of related transactions)” pursuant to which 50 percent or more of the voting power or value of Scripps Networks Interactive stock is acquired, the distribution will be taxable to E. W. Scripps (but not to its shareholders) under Section 355(e) of the Internal Revenue Code. For this purpose, any acquisitions of Scripps Networks Interactive shares that occur within two years after the distribution (subject to certain exceptions including an exception for public trading) will be presumed to be part of such a plan, although E. W. Scripps may be able to rebut that presumption. Under the Tax Allocation Agreement to be entered into in connection with the distribution, we will agree to indemnify E. W. Scripps if the distribution is taxable to E. W. Scripps as a result of actions taken or permitted by us. Scripps Networks Interactive will also enter into a Separation and Distribution Agreement and an Employee Matters Agreement covering specified indemnification and other matters that may arise after the distribution. These agreements may have the effect of discouraging or preventing an acquisition of Scripps Networks Interactive or a disposition of its business.


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Federal law and Federal Communications Commission (“FCC”) regulations applicable because of E. W. Scripps’ and Scripps Networks Interactive’s common directors and voting shareholders may limit Scripps Networks Interactive’s activities, including the ability to own or operate media properties it does not presently own or operate.
 
For FCC purposes, the common directors and five percent or greater voting shareholders of E. W. Scripps and Scripps Networks Interactive will be deemed to hold attributable interests in each of the companies after the distribution. As a result, the business and conduct of one company may have the effect of limiting the activities or strategic business alternatives available to the other company.
 
Risks Relating to Our Business
 
A wide range of factors could materially affect future developments and performance. In addition to the factors affecting specific business operations, identified elsewhere in this information statement, the most significant factors affecting our operations include those listed below. References to events, statistics or other historical matters pertain to the national television networks and interactive media business segments as then operated by E. W. Scripps. In considering such historical matters, you should be mindful of the cautionary statements made in “Unaudited Pro Forma Combined Financial Data” herein.
 
Changes in public and consumer tastes and preferences could reduce demand for our services and reduce profitability of our businesses.
 
Each of our businesses provides content and services whose success is primarily dependent upon acceptance by the public. We must consistently create and distribute offerings that appeal to the prevailing consumer tastes at any point in time. Audience preferences change frequently and it is a challenge to anticipate what content will be successful at any point. Other factors, including the availability of alternative forms of entertainment and leisure time activities, general economic conditions and the growing competition for consumer discretionary spending may also affect the audience for our content and services. If our Lifestyle Media businesses do not achieve sufficient consumer acceptance, our revenue from advertising sales, which are based in part on network ratings, may decline and adversely affect our profitability. If our Interactive Services businesses are unable to provide service and content popular with the public, traffic to the sites will decrease, which may result in a decrease in referral revenue and profitability.
 
We are dependent upon the maintenance of distribution agreements with cable and satellite distributors on acceptable terms.
 
We enter into long-term contracts for the distribution of our national television networks on cable and satellite television systems. Our long-term distribution arrangements enable us to reach a large percentage of cable and direct broadcast satellite households across the United States. As these contracts expire, we must renew or renegotiate them. If we are unable to renew them on acceptable terms, we may lose distribution rights.
 
The loss of a significant number of affiliation arrangements on basic programming tiers could reduce the distribution of our national television networks, thereby adversely affecting affiliate fee revenue, and potentially impacting our ability to sell advertising or the rates we charge for such advertising.
 
Networks that are carried on digital tiers are dependent upon the continued upgrade of cable systems to digital capability and the public’s continuing acceptance of, and willingness to pay for upgrades to digital cable as well as our ability to negotiate favorable carriage agreements on widely accepted digital tiers.
 
Consolidation among cable television system operators has given the largest cable and satellite television systems considerable leverage in their relationship with programmers. The two largest cable television system operators provide service to approximately 43 percent of households receiving cable or satellite television service today, while the two largest satellite television operators provide service to an additional 31 percent of such households.


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Continued consolidation within the industry could reduce the number of distributors available to carry our programming, subject our affiliate fee revenue to greater volume discounts, and further increase the negotiating leverage of the cable and satellite television system operators.
 
Advertising and marketing spending by our customers is subject to seasonal and cyclical variations.
 
Revenues in our Lifestyle Media segment are influenced by advertiser demand and are generally higher in the second and fourth quarters due to the increased demand in the spring and holiday seasons. Referral fee revenues in our Interactive Services segment are highest in the fourth quarter primarily due to the increased online shopping activity during the holiday season. If a short-term negative impact on our business were to occur during a time of high seasonal demand, there could be a disproportionate effect on the operating results of that business for the year.
 
Significant competitive pressures may affect the profitability of our businesses.
 
We face substantial competition in our Lifestyle Media and Interactive Services businesses from alternative providers of similar services. Our national television networks compete for viewers with other broadcast and national television networks as well as with home video products and Internet usage, and they compete for carriage of their programming with other programming providers. Additionally, our national television networks compete for advertising revenues with a variety of other media alternatives including other broadcast and national television networks, the Internet, newspapers, radio stations, and billboards. Our Lifestyle Media branded Web sites compete for visitors and advertising dollars with other forms of media aimed at attracting similar audiences and must maintain popular content in order to maintain and increase site traffic. Our Interactive Services businesses compete for marketing service revenues with other comparison shopping services, general search engines, and other providers of information on shopping and essential home services. Our ability to maintain our relationship with participating retailers and service providers is largely dependent on our ability to provide them a cost effective means of attracting customers. Competition in each of these areas may divert consumers from our services, which could reduce the profitability of our businesses.
 
Changes in consumer behavior resulting from new technologies and distribution platforms may impact the performance of our businesses.
 
We must adapt to advances in technologies and distribution platforms related to content transfer and storage to ensure that our content remains desirable and widely available to our audiences. The ability to anticipate and take advantage of new and future sources of revenue from technological developments will affect our ability to continue to increase our revenue and expand our business. Additionally, we must adapt to the changing consumer behavior driven by advances such as video-on-demand, devices providing consumers the ability to view content from remote locations, and general preferences for user-generated and interactive content. Changes of these types may impact our traditional distribution methods for our services and content. If we cannot ensure that our distribution methods and content are responsive to our target audiences, there could be a negative effect on our business.
 
Our Lifestyle Media business is subject to risks of adverse laws and regulations.
 
Our programming services, and the distributors of the services, including cable operators, satellite operators and Internet companies, are regulated by U.S. federal laws and regulations issued and administered by various federal agencies, including the FCC, as well as by state and local governments. The U.S. Congress and the FCC currently have under consideration, and may in the future adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect our operations. For example, legislators and regulators continue to consider rules that would effectively require cable television operators to offer all programming on an à la carte basis (which would allow viewers to subscribe to individual networks rather than a package of channels) and/or require programmers to sell channels to distributors on an à la carte basis. Certain cable television operators and other distributors have already introduced tiers, or more targeted channel packages, to their customers that may or may not include some or all of our networks. The unbundling of program services at the retail and/or wholesale level could reduce distribution of certain of our program services, thereby leading to reduced viewership and increased marketing expenses, and could affect our ability to compete for or attract the same level of advertising dollars or distribution fees.


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We purchase keyword advertising on general search engines to attract consumers to our interactive media Web sites.
 
We attract traffic to our Interactive Services Web sites through search results displayed by Google, Yahoo! and other popular general search engines. Search engines typically provide two types of search results, algorithmic listings and sponsored listings. We rely on both algorithmic and sponsored listings to attract consumers to our comparison shopping Internet sites.
 
Algorithmic listings cannot be purchased, and instead are determined and displayed solely by a set of formulas designed and controlled by the search engine. Search engines revise their algorithms from time to time in an attempt to optimize their search result listings. Modification of such algorithms may result in fewer consumers clicking through to our Internet sites.
 
We also rely on purchased listings to attract consumers to our Web sites. Many general search engines also operate Internet shopping services. Modification or termination of our contractual relationships with general search engines to purchase keyword advertising could result in fewer consumers clicking through to our Internet site. We may incur additional expenses to replace this traffic.
 
Approximately 40 percent of our 2007 referral fee revenue came from one general search engine and a change in this relationship could reduce the revenue of the business.
 
We are currently operating under an agreement with a general search engine to participate in its sponsored links program. Under the agreement, which expires in October 2008, we display listings from the search engine’s advertisers as a part of our service and we receive a share of the revenues earned by the search engine when consumers visit the advertisers’ Web sites. Our revenues could be negatively impacted if this agreement is not renewed upon expiration or if the agreement is not renewed on similar terms.
 
Changes in economic conditions in the United States, the regional economies in which we operate or in specific economic sectors could adversely affect the profitability of our businesses.
 
Approximately 80 percent of our revenues in 2007 was derived from marketing and advertising spending by businesses operating in the United States. Advertising and marketing spending is sensitive to economic conditions, and tends to decline in recessionary periods. A decline in economic conditions could reduce advertising prices and volume, resulting in a decrease in our advertising revenues. A decline in economic conditions could also impact consumer discretionary spending. Such a reduction in consumer spending may impact the volume of online shopping, which could adversely affect our comparison shopping business.
 
We may not be able to protect intellectual property rights upon which our business relies, and if we lose intellectual property protection, we may lose valuable assets.
 
Our business depends on our intellectual property, including internally developed technology, data resources and brand identification. We attempt to protect these intellectual property rights through a combination of copyright, trade secret, patent and trademark law and contractual restrictions, such as confidentiality agreements. We also depend on our trade names and domain names. We file applications for patents, trademarks, and other intellectual property registrations, but we may not be granted such intellectual property protections. In addition, even if such registrations are issued, they may not fully protect all important aspects of our business and there is no guarantee that our business does not or will not infringe upon intellectual property rights of others. Furthermore, intellectual property laws vary from country to country, and it may be more difficult to protect and enforce our intellectual property rights in some foreign jurisdictions. In the future, we may need to litigate in the United States or elsewhere to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of others. This litigation could potentially be expensive and possibly divert the attention of our management.
 
Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our service, technology and other intellectual property, and we cannot be certain that the steps we have taken will prevent any misappropriation or confusion among consumers and merchants, or unauthorized use of


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these rights. If we are unable to protect and enforce our intellectual property rights, then we may not realize the full value of these assets, and our business may suffer.
 
Our Interactive Services businesses are subject to online security risks, including security breaches and identity theft.
 
Our Interactive Services businesses transmit confidential information over public networks. A significant number of participating retailers authorize us to bill their credit cards directly for referrals provided to the retailer. Consumers switching essential home services provide sensitive personal data when completing contracts with the service providers. We rely upon encryptions and authentication technology provided by third parties to secure transmission of such confidential information.
 
Our Web site infrastructure is vulnerable to computer viruses and similar disruptions, and we may be subject to “denial-of-service” attacks that might make our Web sites unavailable for periods of time.
 
We Could Suffer Losses Due to Asset Impairment Charges
 
We test our goodwill and intangible assets for impairment during the fourth quarter of every year and on an interim date should factors or indicators become apparent that would require an interim test, in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. If the fair value of a reporting unit or an intangible asset is revised downward due to declines in business performance, impairment under SFAS 142 could result and a non-cash charge could be required. This could materially affect our reported net earnings.
 
FORWARD-LOOKING STATEMENTS
 
This information statement and other materials filed or to be filed by us, as well as information in other statements made or to be made by us, contain statements, including in this document under the captions “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about beliefs or expectations, are forward-looking statements. You can identify these forward-looking statements by use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or the negative version of those words or other comparable words and phrases. Any forward-looking statements contained in this information statement are based on historical performance and current plans, estimates and expectations. We may make additional written or oral forward-looking statements from time to time in filings with the SEC or otherwise. Any forward-looking statement speaks only as of the date it is made. Forward-looking statements involve risks and uncertainties, and the inclusion of forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations that we contemplate will be achieved.
 
We believe that the factors that could cause actual results to differ materially include but are not limited to the factors we describe in this information statement, including under “Risk Factors,” “The Separation,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The following list represents some, but not necessarily all, of the factors that could cause our actual results to differ from our historical results or those anticipated or predicted by these forward-looking statements:
 
  •  any failure to realize expected benefits from the spin-off;
 
  •  a change in our revenue and operating cost following the spin-off;
 
  •  a determination by the IRS that the distribution should be treated as a taxable transaction;
 
  •  volatility in the equity market;
 
  •  competition in our industries;
 
  •  difficulty in implementing our business strategy;


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  •  our ability to respond to changing consumer preferences;
 
  •  our ability to maintain and expand our Internet operations; and
 
  •  our ability to attract and retain qualified personnel.
 
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this information statement. Many other important factors cannot be predicted or quantified and are outside of our control. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we may project. The forward-looking statements included in this information statement are made only as of the date of this information statement, and we undertake no obligation to publicly update or review any forward-looking statement we make, whether as a result of new information, future developments, subsequent events or circumstances or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting for or on our behalf are expressly qualified in their entirety by this section.
 
THE SEPARATION
 
On October 9, 2007, the Board of Directors of The E. W. Scripps Company (“E. W. Scripps”) preliminarily approved a plan to separate E. W. Scripps into two independent, publicly traded companies. As so approved, the separation was to occur through the distribution to E. W. Scripps shareholders of all of the common shares of a subsidiary of E. W. Scripps that holds or will hold, directly or indirectly, the assets and liabilities of the networks and interactive media businesses of E. W. Scripps.
 
In furtherance of this plan, on          , 2008, the E. W. Scripps Board of Directors approved the distribution of all shares of Scripps Networks Interactive held by E. W. Scripps to holders of E. W. Scripps shares.
 
On          , 2008, the distribution date, each E. W. Scripps shareholder will receive one Scripps Networks Interactive Class A Common Share for each E. W. Scripps Class A Common Share held of record on the record date and one Scripps Networks Interactive Common Voting Share for each E. W. Scripps Common Voting Share held of record on the record date. Following the distribution, E. W. Scripps shareholders will own 100 percent of each class of our common shares.
 
You will not be required to make any payment, surrender or exchange your shares of E. W. Scripps or take any other action to receive our common shares.
 
The distribution of our Class A Common Shares and Common Voting Shares as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see the caption entitled “Conditions to the Distribution” included elsewhere in this section.
 
Background
 
In 2006, management of E. W. Scripps commenced a review of long-term strategy for the company’s businesses against a background of changing media industry dynamics, including rapid worldwide broadband penetration and digital convergence and the advent of new advertising models brought about by the development of the Internet. National media, such as national television networks and interactive businesses, stood to benefit from the opportunities of digital transition, as distribution windows opened for traditional content and online audiences and advertising continued to grow. Traditional local media, such as newspapers and television stations, while able to benefit in a number of ways from changing conditions in the media industry, nonetheless continued to face challenges as needs and preferences of consumers and advertisers changed in the face of the Internet and other transforming technologies. These opportunities and challenges, in the midst of consolidation in the media industry and the proliferation of new media businesses, led management of E. W. Scripps to begin analyzing whether there were alternatives to the structure of E. W. Scripps that could be pursued to enhance shareholder value for the long term. In conjunction with this analysis, E. W. Scripps retained Goldman, Sachs & Co. to serve as its financial advisor.


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At a meeting in October 2006, the E. W. Scripps board met with management, representatives of Goldman, Sachs and outside legal advisors to discuss alternative strategies for the company. The board and management continued to explore alternative strategies at meetings in December 2006, February 2007 and May 2007.
 
At a meeting held on July 31, 2007, management and the financial advisor reported to the board on various structural alternatives for the E. W. Scripps businesses, principally focusing on possible separation of E. W. Scripps into two companies, one operating the networks and interactive businesses and the other operating the newspaper publishing, broadcast television and licensing and syndication businesses. After discussion, the board directed management to prepare, with advice of the company’s financial and legal advisors, a preliminary plan that would provide for the separation of E. W. Scripps along these lines.
 
At a board of directors meeting held on September 17, 2007, management presented a plan to separate the national and local media businesses of E. W. Scripps by spinning off the networks and interactive businesses to form a new public company, with the newspaper and broadcast divisions and certain other operations remaining in E. W. Scripps. Management reviewed with the board the potential timetable for a spin-off, the potential value created by a separation, various legal requirements, governance matters, management and financial tasks and other organizational matters. After discussion, the board directed management to prepare additional information, with assistance from the company’s financial advisor and legal counsel, to present to the board at a later meeting.
 
At a meeting of the board held on October 9, 2007, management presented additional information relating to the potential distribution of the networks and interactive businesses, including an analysis of the strategies, opportunities and risks for the resulting companies. Management presented information to the board along with financial plans and goals, proposed capital structures and dividend policies for the two companies that would result from a distribution. Representatives of Goldman Sachs reviewed other structural alternatives, discussed the merits of the distribution, and presented analyses relating to valuation, dividend policy, capitalization, governance structure, and other aspects of the companies resulting from the spin-off. Baker & Hostetler LLP reviewed with the board a proposed structure for the distribution, directors’ fiduciary duties and the potential tax treatment of the distribution. Following completion of all discussions, the board of directors unanimously approved proceeding with the proposed separation. The primary reasons for the board’s decision are described below under “The Separation — Reasons for the Separation.”
 
Reasons for the Separation
 
The E. W. Scripps Board of Directors determined that the separation is in the best interests of E. W. Scripps and its shareholders and approved the separation accordingly. A wide variety of factors were considered by the Board in evaluating the separation. The following matters are not intended to represent a complete list of considerations, but rather a list of some key factors contemplated during the decision process.
 
  •  Management focus — The separation will allow management of both companies to design and implement corporate strategies and policies that are based primarily on the business characteristics and strategic direction of the respective companies. Additionally, both companies can concentrate their financial resources solely on their own operations and will be better able to respond quickly to changes in their respective industries.
 
  •  Capital allocation — The separated companies will no longer need to compete internally for capital, and both companies will have direct access to capital markets to fund their agendas. This will provide each company’s management more control over capital resources from which to make strategic investments in their respective businesses.
 
  •  Management incentives — The separation will enable each company to create tailored equity-based incentives, including stock options and restricted shares, for its key employees. Separate equity-based compensation arrangements should more closely align the interests of management with the interests of shareholders and may improve each company’s performance.
 
  •  Investor appeal — The separation will provide investors with two individual investment options that may be more appealing than an investment in the current combined company. Separating the Scripps Networks Interactive businesses will result in each company representing more of a pure-play investment that will


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  appeal to the respective investor bases due to each company’s more defined and focused business model. This will allow investors to more appropriately value the merits, performance and future prospects of each company.
 
The E. W. Scripps Board of Directors also considered a number of potentially negative factors in evaluating the separation, including loss of synergies from operating as one company, increased costs, loss of joint purchasing power, disruptions to the businesses as a result of the separation, the limitations placed on Scripps Networks Interactive as a result of the Tax Allocation Agreement and other agreements it is expected to enter into with E. W. Scripps in connection with the spin-off, the risk of being unable to achieve expected benefits from the separation, the risk that the plan of separation might not be completed and the one-time and ongoing costs of the separation. The E. W. Scripps Board of Directors concluded that the potential benefits of the separation outweighed these factors.
 
Formation of a Holding Company Prior to Our Distribution
 
In connection with and prior to our distribution, E. W. Scripps organized Scripps Networks Interactive as an Ohio corporation on October 23, 2007 for the purpose of transferring to it all of the assets and liabilities, including certain entities holding such assets and liabilities, of the networks and interactive media businesses.
 
When and How You Will Receive the Dividend
 
E. W. Scripps will distribute our Class A Common Shares and Common Voting Shares on          , 2008, the distribution date. E. W. Scripps’ transfer agent and registrar will serve as transfer agent and registrar for the Scripps Networks Interactive Class A Common Shares and Common Voting Shares and as distribution agent in connection with the distribution of Scripps Networks Interactive Class A Common Shares and Common Voting Shares.
 
If you own E. W. Scripps Class A Common Shares or Common Voting Shares as of the close of business on the record date, the Scripps Networks Interactive Class A Common Shares or Common Voting Shares that you are entitled to receive in the distribution will be issued, as of the distribution date, to your account as follows:
 
  •  Registered Shareholders.  If you own your E. W. Scripps shares directly (either in book-entry form through an account at E. W. Scripps’ transfer agent, Mellon, or if you hold physical paper share certificates), you will receive your Scripps Networks Interactive Class A Common Shares by way of direct registration in book-entry form and your Scripps Networks Interactive Common Voting Shares in the form of a physical paper certificate.
 
Commencing on or shortly after the distribution date, if you hold physical paper share certificates that represent your E. W. Scripps Class A Common Shares and you are the registered holder of the shares represented by those certificates, the distribution agent will mail to you an account statement that indicates the number and class of Scripps Networks Interactive Class A Common Shares that have been registered in book-entry form in your name.
 
If you have any questions concerning the mechanics of having shares registered in book-entry form, we encourage you to contact Mellon at the address set forth on page    of this information statement.
 
  •  Beneficial Shareholders.  Most shareholders hold their E. W. Scripps shares beneficially through a bank or brokerage firm. In such cases, the bank or brokerage firm is said to hold the shares in “street name” and ownership is recorded on the bank or brokerage firm’s books. If you so hold your E. W. Scripps shares, your bank or brokerage firm will credit your account for the Scripps Networks Interactive shares that you are entitled to receive in the distribution. If you have any questions concerning the mechanics of having shares held in “street name,” we encourage you to contact your bank or brokerage firm.
 
Results of the Separation
 
After our separation from E. W. Scripps, we will be a separate publicly-traded company. Immediately following the distribution, we expect to have approximately           holders of record of our Class A Common Shares, based on the number of holders of record of E. W. Scripps Class A Common Shares on          , 2008, and


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approximately           holders of record of our Common Voting Shares, based on the number of holders of record of E. W. Scripps Common Voting Shares on          , 2008, with           Class A Common Shares and          Common Voting Shares outstanding, based on the number of E. W. Scripps Class A Common Shares and Common Voting Shares outstanding on          , 2008. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise of E. W. Scripps options between the date the E. W. Scripps Board of Directors declares the dividend for the distribution and the record date for the distribution.
 
Before the separation, we will enter into a Separation and Distribution Agreement and several other agreements with E. W. Scripps to effect the separation and provide a framework for our relationships with E. W. Scripps after the separation. For a more detailed description of these agreements, see the section entitled “Our Relationship With E. W. Scripps Following the Spin-Off” included elsewhere in this information statement.
 
The distribution will not affect the number of outstanding E. W. Scripps Class A Common Shares or E. W. Scripps Common Voting Shares or any rights of E. W. Scripps shareholders.
 
Incurrence of Debt
 
Upon the closing of the spin-off, we expect to have approximately $375 million principal amount of indebtedness outstanding under a $550 million 5-year unsecured revolving credit facility. We expect to have obtained a commitment from certain financial institutions to form a syndicate to provide the revolving credit facility. We expect that the revolving credit facility will be available for the cash dividend of $375 million to E. W. Scripps and to provide liquidity for general corporate needs. Amounts outstanding under the revolving credit facility are expected to bear interest, at our option, at either a rate equal to (i) a floating base rate or (ii) an adjusted LIBOR rate plus an applicable margin. We expect to pay certain customary fees with respect to the revolving credit facility. We expect that the revolving credit facility will contain customary affirmative and negative covenants.
 
Trading Between the Record Date and Distribution Date
 
Beginning on or shortly before the record date and continuing through the distribution date, we expect that there will be two markets in E. W. Scripps Class A Common Shares: a “regular-way” market and an “ex-distribution” market. E. W. Scripps Class A Common Shares that trade on the “regular-way” market will trade with an entitlement to Scripps Networks Interactive Class A Common Shares distributed pursuant to the spin-off. E. W. Scripps Class A Common Shares that trade on the “ex-distribution” market will trade without an entitlement to Scripps Networks Interactive Class A Common Shares distributed pursuant to the spin-off. Therefore, if you sell shares of E. W. Scripps Class A Common Shares in the “regular-way” market through the distribution date, you will be selling your right to receive Scripps Networks Interactive Class A Common Shares in the distribution. If you own E. W. Scripps Class A Common Shares at the close of business on the record date and sell those shares on the “ex-distribution” market through the distribution date, you will receive the Scripps Networks Interactive Class A Common Shares that you are entitled to receive pursuant to your ownership as of the record date of the E. W. Scripps Class A Common Shares.
 
Furthermore, beginning on or shortly before the record date and continuing up to and including through the distribution date, we expect that there will be a “when-issued” market in our Class A Common Shares. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for Scripps Networks Interactive Class A Common Shares that will be distributed to holders of E. W. Scripps Class A Common Shares on the distribution date. If you owned E. W. Scripps Class A Common Shares at the close of business on the record date, you would be entitled to our Class A Common Shares distributed pursuant to the distribution. You may trade this entitlement to shares of Scripps Networks Interactive Class A Common Shares, without the E. W. Scripps Class A Common Shares you own, on the “when-issued” market. On the first trading day following the distribution date, “when-issued” trading with respect to our Class A Common Shares will end, and “regular-way” trading will begin.


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Conditions to the Distribution
 
We expect that the distribution will be effective on          , 2008, which is the distribution date, provided that, among other conditions described in this information statement, the following conditions shall have been satisfied or, if permissible under the Separation and Distribution Agreement, waived by E. W. Scripps:
 
  •  The Securities and Exchange Commission shall have declared effective our registration statement on Form 10, of which this information statement is a part, and no stop order relating to the registration statement shall be in effect.
 
  •  The Scripps Networks Interactive Class A Common Shares shall have been accepted for listing on the NYSE, on official notice of issuance.
 
  •  E. W. Scripps shall have received a private letter ruling from the IRS substantially to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, and such ruling shall be in form and substance satisfactory to E. W. Scripps in its sole discretion.
 
  •  E. W. Scripps shall have received an opinion of Baker & Hostetler LLP substantially to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, and such opinion shall be in form and substance satisfactory to E. W. Scripps in its sole discretion.
 
  •  No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the separation, distribution or any of the transactions contemplated by the Separation and Distribution Agreement or any ancillary agreement, shall be in effect.
 
  •  Such other actions as the parties may reasonably request be taken prior to the separation in order to assure the successful completion of the separation and the other transactions contemplated by the Separation and Distribution Agreement shall have been taken.
 
  •  The Separation and Distribution Agreement shall not have been terminated.
 
  •  Any material government approvals and other consents necessary to consummate the distribution shall have been obtained and be in full force and effect.
 
  •  No other events or developments shall have occurred that, in the judgment of the E. W. Scripps Board of Directors, would result in the distribution having a material adverse effect on E. W. Scripps or its shareholders.
 
The fulfillment of the foregoing conditions does not create any obligation on E. W. Scripps’ part to effect the distribution, and the E. W. Scripps Board of Directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the distribution, including by accelerating or delaying the timing of the consummation of all or part of the distribution, at any time prior to the distribution date.
 
Separation Costs
 
In connection with the consummation of the separation plan, E. W. Scripps expects to incur one-time, non-recurring pre-tax separation costs of approximately $      million. These one-time costs are expected to consist of, among other things: financial, legal, tax, accounting and other advisory fees; [non-income tax costs and] regulatory fees incurred as part of the separation; NYSE listing fees, investor and other stakeholder communications, printing costs, and fees of the distribution agent; and employee recruiting fees and incentive compensation, among other things. Nearly all of these costs will be incurred by E. W. Scripps prior to the distribution [and do not include incremental capital expenditures related to the spin-off]. After the spin-off, to the extent additional one-time costs are incurred by Scripps Networks Interactive in connection with the separation, they will be the responsibility of Scripps Networks Interactive; however, we cannot currently estimate such costs. In addition, we expect approximately $      to $      million of total net incremental costs to be incurred on a going-forward basis in connection with operating Scripps Networks Interactive as an independent publicly traded company. These costs will be our


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responsibility and are discussed elsewhere in this information statement in the section entitled “Unaudited Pro Forma Combined Financial Data.”
 
Certain U.S. Federal Income Tax Consequences of the Distribution
 
The following discussion summarizes certain U.S. federal income tax consequences of the distribution for a beneficial owner of E. W. Scripps Class A Common Shares or Common Voting Shares that holds such shares as a capital asset for tax purposes. The discussion is of a general nature and does not purport to deal with persons in special tax situations, including, for example, financial institutions, insurance companies, regulated investment companies, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, tax exempt entities, persons holding E. W. Scripps Class A Common Shares or Common Voting Shares in a tax-deferred or tax-advantaged account, or persons holding E. W. Scripps Class A Common Shares or Common Voting Shares as a hedge against currency risk, as a position in a “straddle,” or as part of a “hedging” or “conversion” transaction for tax purposes.
 
For purposes of this summary, a “U.S. holder” is a beneficial owner of E. W. Scripps Class A Common Shares or Common Voting Shares that is an individual U.S. citizen or resident, a U.S. domestic corporation, or otherwise subject to U.S. federal income tax on a net income basis in respect of such shares, and a “non-U.S. holder” is a beneficial owner of E. W. Scripps Class A Common Shares or Common Voting Shares that is not a U.S. holder (and is not treated as a partnership for U.S. federal income tax purposes). We use the term “holder” to refer to both U.S. holders and non-U.S. holders.
 
This summary does not address all of the tax considerations that may be relevant to a holder of E. W. Scripps Class A Common Shares or Common Voting Shares. In particular, we do not address:
 
  •  The U.S. federal income tax consequences applicable to a shareholder of E. W. Scripps that is treated as a partnership for U.S. federal income tax purposes.
 
  •  The U.S. federal income tax consequences applicable to shareholders in, or partners, members or beneficiaries of, an entity that holds E. W. Scripps Class A Common Shares or Common Voting Shares.
 
  •  The U.S. federal estate, gift or alternative minimum tax consequences of the distribution.
 
  •  The tax considerations relevant to U.S. holders whose functional currency is not the U.S. dollar.
 
  •  The tax considerations relevant to holders of E. W. Scripps employee stock options, restricted shares, or other compensatory awards.
 
  •  Any state, local or foreign tax consequences of the distribution.
 
This summary is based on laws, regulations, rulings, interpretations and decisions now in effect, all of which are subject to change, possibly on a retroactive basis. It is not intended to be tax advice.
 
You should consult your own tax advisor as to all of the tax consequences of the distribution to you in light of your own particular circumstances, including the consequences arising under state, local and foreign tax laws, as well as possible changes in tax laws that may affect the tax consequences described herein.
 
It is a condition to the distribution that E. W. Scripps receive an Internal Revenue Service private letter ruling and/or an opinion from its special counsel, Baker & Hostetler LLP, to the effect that, on the basis of certain facts, assumptions, representations and undertakings set forth in such ruling and/or opinion, the distribution will qualify as a distribution that is tax-free under Section 355 and other related provisions of the Internal Revenue Code of 1986, as amended. Except as otherwise noted, it is assumed for purposes of the following discussion that the distribution will so qualify.
 
If the distribution qualifies as tax-free, then:
 
  •  No gain or loss will be recognized by, and no amount will be includible in the income of, E. W. Scripps as a result of the distribution, other than with respect to any “excess loss account” or “intercompany transaction” required to be taken into account under Treasury regulations relating to consolidated returns.


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  •  No gain or loss will be recognized by, and no amount will be included in the income of, a U.S. holder solely as a result of the receipt of our Class A Common Shares or Common Voting Shares in the distribution.
 
  •  A non-U.S. holder will not be subject to any U.S. federal gross income or withholding tax solely as a result of our Class A Common Shares or Common Voting Shares in the distribution.
 
  •  The holding period for our Class A Common Shares or Common Voting Shares received in the distribution will include the period during which E. W. Scripps Class A Common Shares or Common Voting Shares were held.
 
  •  The tax basis of E. W. Scripps Class A Common Shares or Common Voting Shares immediately prior to the distribution will be apportioned between E. W. Scripps Class A Common Shares or Common Voting Shares and our Class A Common Shares or Common Voting Shares received based upon relative fair market values at the time of the distribution.
 
Although an Internal Revenue Service private letter ruling generally is binding on the Internal Revenue Service, if the facts, assumptions, representations or undertakings set forth in the ruling request are incorrect or violated in any material respect, the ruling may be retroactively modified or revoked by the Internal Revenue Service. An opinion of counsel represents counsel’s best legal judgment but is not binding on the Internal Revenue Service or any court. If, on audit, the Internal Revenue Service held the distribution to be taxable, the above consequences would not apply and both E. W. Scripps and its shareholders could be subject to tax.
 
If the distribution were taxable to E. W. Scripps and its shareholders then:
 
  •  E. W. Scripps would recognize a gain equal to the excess of the fair market value of our Class A Common Shares or Common Voting Shares on the date of the distribution over its tax basis therein.
 
  •  Each holder that receives our Class A Common Shares or Common Voting Shares in the distribution would be treated as if the holder received a taxable distribution equal to the full value of our Class A Common Shares or Common Voting Shares received, which would be taxed (i) as a dividend to the extent of the holder’s pro rata share of E. W. Scripps’ current and accumulated earnings and profits (including the gain to E. W. Scripps described in the preceding bullet point), then (ii) as a non-taxable return of capital to the extent of the holder’s tax basis in its E. W. Scripps Class A Common Shares or Common Voting Shares, and finally (iii) as capital gain with respect to the remaining value.
 
  •  An individual U.S. holder would generally be subject to U.S. federal income tax at a maximum rate of 15 percent with respect to the portion of the distribution that was treated as a dividend or capital gain, subject to exceptions for certain short term and hedged positions (including positions held for one year or less, in the case of a capital gain), which could give rise to tax at ordinary income rates.
 
  •  A non-U.S. holder would generally be subject to U.S. federal gross income and withholding tax with respect to the portion of the distribution that was treated as a dividend, at a rate of 30 percent or such lower rate as may be provided for in an applicable income tax treaty.
 
  •  A non-U.S. holder would generally not be subject to U.S. federal income tax with respect to the portion of the distribution that was treated as a capital gain, unless the non-U.S. holder was an individual who qualified as a U.S. resident due to his presence in the United States for 183 days or more in the taxable year of the distribution and satisfaction of certain other conditions.
 
  •  A holder would not be subject to U.S. federal income tax with respect to the portion of the distribution that was treated as a return of capital, although its tax basis in its E. W. Scripps Class A Common Shares or Common Voting Shares would be thereby reduced.
 
If, due to any of our representations or undertakings being incorrect or violated, the Internal Revenue Service held the distribution on audit to be taxable, we could be required to indemnify both E. W. Scripps and its shareholders for the taxes described above and related losses. In addition, current tax law generally creates a presumption that the distribution would be taxable to E. W. Scripps, but not to its shareholder, if we or our shareholders were to engage in a transaction that would result in a 50 percent or greater change by vote or by value in our stock ownership during the four-year period beginning on the date that begins two years before the


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distribution date, unless it is established that the distribution and the transaction are not part of a plan or series of related transactions to effect such a change in ownership. If the distribution were taxable to E. W. Scripps due to such a 50 percent or greater change in our share ownership, E. W. Scripps would recognize a gain equal to the excess of the fair market value of our Class A Common Shares or Common Voting Shares on the date of the distribution over E. W. Scripps’ tax basis therein and we could be required to indemnify E. W. Scripps for the tax on such gain and related losses. See “Our Relationship With E. W. Scripps Following the Spin-Off — Agreements with The E. W. Scripps Company — Tax Allocation Agreement.”
 
Matters Related to the Edward W. Scripps Trust
 
The Edward W. Scripps Trust owns approximately 88 percent of the E. W. Scripps Common Voting Shares and approximately 31 percent of the E. W. Scripps Class A Common Shares, and immediately following the spin-off will own like percentages of our Common Voting Shares and Class A Common Shares. As the controlling shareholder of E. W. Scripps, the Trust is able to elect two-thirds of the directors of E. W. Scripps and to control the vote of shareholders on all matters other than in certain limited circumstances where the holders of E. W. Scripps Class A Common Shares are entitled under Ohio law to vote as a separate class. Following the spin-off, the Trust will be the controlling shareholder of our company with the same voting power that it now holds with respect to E. W. Scripps.
 
Information Reporting
 
Current Treasury regulations require each U.S. holder who receives our Class A Common Shares or Common Voting Shares pursuant to the distribution to attach to such holder’s U.S. federal income tax return for the year in which the distribution occurs a detailed statement setting forth such data as may be appropriate in order to show the applicability to the distribution of Section 355 and other related provisions of the Internal Revenue Code of 1986, as amended. E. W. Scripps will provide to each holder of record of E. W. Scripps Class A Common Shares or Common Voting Shares as of the record date appropriate information to be included in such statement.
 
Treatment of Stock Options and Restricted Stock
 
Pursuant to the E. W. Scripps 1997 Long-Term Incentive Plan, as amended, officers, directors and employees of E. W. Scripps have been granted options to purchase E. W. Scripps Class A Common Shares and have received awards of E. W. Scripps restricted Class A Common Shares. Under the anti-dilution provisions of the E. W. Scripps Long-Term Incentive Plan, as amended, the compensation committee of E. W. Scripps has the authority to make equitable adjustments to outstanding options and restricted share awards in the event of certain transactions, including the spin-off of Scripps Networks Interactive. The compensation committee of E. W. Scripps has determined to make various adjustments to outstanding E. W. Scripps options and restricted share awards, as described below, to preserve the economic benefits of the original options and awards following the spin-off. These adjustments will be made in the same manner for all holders of such options and restricted shares, including officers and directors, depending on whether such holders become employees, officers or directors of E. W. Scripps or of Scripps Networks Interactive upon consummation of the spin-off, as detailed below. All options to purchase, or restricted share awards relating to, Scripps Networks Interactive Class A Common Shares issued in connection with these adjustments will be our obligations. All options exercisable for, and all restricted share awards relating to, E. W. Scripps Class A Common Shares, regardless of any adjustment, will remain obligations of E. W. Scripps. We intend to file a registration statement with respect to our Class A Common Shares issuable upon exercise of the options or vesting of the restricted share awards that we issue, including options and restricted share awards issued in connection with the foregoing adjustments, as soon as practicable following consummation of the spin-off.
 
Option Awards
 
Our Officers and Employees.  As of the distribution date, E. W. Scripps options held by E. W. Scripps officers and employees who become our officers and employees (or by individuals considered our former employees) will be converted to options for Scripps Networks Interactive Class A Common Shares. The exercise price and the number of shares subject to these options will be adjusted to maintain the economic value of the options. All other terms of the options will remain the same. The adjustments to the exercise price and the number of shares


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underlying the options will be based on a conversion ratio calculated by taking the 10-day weighted average price of Scripps Networks Interactive Class A Common Shares immediately following the distribution date and dividing it by the price of E. W. Scripps Class A Common Shares immediately prior to the distribution date.
 
E. W. Scripps Officers and Employees.  
 
Vested options.  As of the distribution date, vested E. W. Scripps options held by persons who remain officers or employees of E. W. Scripps (or persons considered former employees of E. W. Scripps) following the spin-off will be converted such that 20 percent of the underlying shares will remain E. W. Scripps Class A Common Shares and 80 percent will be converted to Scripps Networks Interactive Class A Common Shares. The exercise price and number of shares of each option for Scripps Networks Interactive Class A Common Shares will be based on a conversion ratio calculated by taking the 10-day weighted average price of Scripps Networks Interactive Class A Common Shares immediately following the distribution date and dividing it by the price of E. W. Scripps Class A Common Shares immediately prior to the distribution date. The exercise price and number of shares of each option for E. W. Scripps Class A Common Shares will be based on a conversion ratio calculated by taking the 10-day weighted average price of E. W. Scripps Class A Common Shares immediately following the distribution date and dividing it by the price of E. W. Scripps Class A Common Shares immediately prior to the distribution date. All other terms of the options will remain the same.
 
Unvested options.  All options held by persons who remain officers or employees of E. W. Scripps following the spin-off that have not vested as of the distribution date will remain as options for E. W. Scripps Class A Common Shares, with the exercise price and the number of shares underlying such options adjusted to maintain the economic value of the options based on a conversion ratio calculated by taking the 10-day weighted average price of E. W. Scripps Class A Common Shares immediately following the distribution date and dividing it by the price of E. W. Scripps Class A Common Shares immediately prior to the distribution date. All other terms of the unvested options will remain the same.
 
Directors.  Each director of E. W. Scripps who resigns from the E. W. Scripps Board of Directors and becomes a director of Scripps Networks Interactive will be treated the same way as employees of E. W. Scripps who become our employees for purposes of adjusting their E. W. Scripps options. E. W. Scripps options (vested and nonvested) held by directors of E. W. Scripps who remain on the E. W. Scripps board following the spin-off (and former E. W. Scripps Directors) will be treated in the same manner as the E. W. Scripps options (vested and nonvested) held by employees who remain E. W. Scripps employees following the spin-off. Each E. W. Scripps director who will following the spin-off be a member of both the E. W. Scripps Board of Directors and our board will have half of such E. W. Scripps options treated as if he/she were a remaining employee of E. W. Scripps and half of such options treated as if he/she were becoming an employee of ours.
 
Restricted Shares, Restricted Share Units and Phantom Stock Units
 
Our Officers and Employees.  
 
Restricted shares.  As of the distribution date, each E. W. Scripps officer and employee who becomes our officer or employee and who holds E. W. Scripps restricted Class A Common Shares will receive one Scripps Networks Interactive restricted Class A Common Share for each E. W. Scripps restricted Class A Common Share pursuant to the spin-off. Thereafter each of his E. W. Scripps restricted Class A Common Shares will be converted to Scripps Networks Interactive restricted Class A Common Shares based on a conversion ratio equal to the 10-day weighted average price of E. W. Scripps Class A Common Shares immediately following the distribution date divided by the 10-day weighted average price of Scripps Networks Interactive Class A Common Shares immediately following the distribution date. All restricted shares will retain the same restrictions as the original restricted share awards.
 
Restricted share units.  Each restricted share unit held by an E. W. Scripps officer who becomes our officer will be treated in a fashion similar to restricted shares, with such officer receiving such number of our restricted share units as equals the number of E. W. Scripps Class A Common Shares to which he would be entitled had the E. W. Scripps restricted share units represented actual E. W. Scripps Class A Common Shares as of the record date for the distribution, and with E. W. Scripps restricted share units held as of the distribution date being converted into


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our restricted share units based on the same conversion ratio used to convert E. W. Scripps restricted Class A Common Shares into our restricted Class A Common Shares. All other terms and conditions of our restricted share units will be substantially similar to those applicable to the corresponding E. W. Scripps restricted share units converted as described.
 
E. W. Scripps Officers and Employees.  As of the distribution date, each person who will remain an officer or employee of E. W. Scripps will retain his E. W. Scripps restricted Class A Common Shares and receive pursuant to the spin-off one Scripps Networks Interactive restricted Class A Common Share for each E. W. Scripps restricted Class A Common Share. All restricted shares will retain the same restrictions as the original restricted share awards. No person who will remain an officer or employee of E. W. Scripps holds an E. W. Scripps restricted share unit.
 
Directors.  The directors of E. W. Scripps do not hold any E. W. Scripps restricted Class A Common Shares. However, they may hold phantom stock units under the 1997 Deferred Compensation and Stock Plan for Directors. Each director who remains an E. W. Scripps director and does not become a director of ours will receive such number of our phantom stock units as equals the number of our Class A Common Shares to which he would have been entitled had his E. W. Scripps phantom stock units represented actual E. W. Scripps Class A Common Shares as of the record date. Each of our directors who holds E. W. Scripps phantom stock units as of the distribution date shall receive such number of our phantom stock units as equals the number of our Class A Common Shares to which he would have been entitled had the E. W. Scripps phantom stock units represented actual E. W. Scripps Class A Common Shares as of the record date. Thereafter, the E. W. Scripps phantom stock units held by such director shall be converted into our phantom stock units by application of the same conversion ratio used to convert E. W. Scripps restricted Class A Common Shares to our restricted Class A Common Shares as described above. Each director of E. W. Scripps who remains on the E. W. Scripps Board and joins our board as well shall have one-half of his E. W. Scripps phantom stock units adjusted in the manner that applies to our directors and one-half in the manner that applies to E. W. Scripps directors.
 
Listing and Trading of Scripps Networks Interactive Class A Common Shares
 
There is currently no public market for our Class A Common Shares. We intend to apply to have our Class A Common Shares authorized for listing on the NYSE under the symbol “SNI.”
 
We cannot predict what the trading prices for our Class A Common Shares will be before or after the distribution date. Until Scripps Networks Interactive Class A Common Shares are fully distributed and an orderly market develops, the price at which they trade may fluctuate and may be lower or higher than the price that would be expected for a fully distributed issue. See “Risk Factors — Risk Factors Relating to Scripps Networks Interactive Class A Common Shares.”
 
The Scripps Networks Interactive Class A Common Shares distributed to E. W. Scripps shareholders will be freely transferable except for shares received by persons who may be deemed to be “affiliates” of Scripps Networks Interactive under the Securities Act of 1933, which will be referred to as the “Securities Act.” Persons that may be considered affiliates of Scripps Networks Interactive after the spin-off generally include individuals or entities that control, are controlled by or are under common control with Scripps Networks Interactive. This may include some or all of our officers and directors as well as principal shareholders of Scripps Networks Interactive. Persons that are affiliates of Scripps Networks Interactive will be permitted to sell their shares only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Section 4(1) of the Securities Act or Rule 144 thereunder. Sales under Rule 144 are subject to provisions relating to notice, manner of sale, volume limitation, and the availability of current public information about Scripps Networks Interactive. Affiliates of Scripps Networks Interactive, including The Edward W. Scripps Trust, will hold approximately [      percent] of our Class A Common Shares and [      percent] of our Common Voting Shares following the distribution. See “Security Ownership of Certain Beneficial Owners and Management” for more information.


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Spin-Off Steps
 
Pursuant to the spin-off, Scripps Networks Interactive will be separated from E. W. Scripps and become a separate publicly-traded company. The spin-off involves the following steps:
 
Before the distribution date:
 
  •  Scripps Networks Interactive will be organized as an Ohio corporation and wholly-owned subsidiary of Scripps Howard Broadcasting Company.
 
  •  E. W. Scripps will cause its wholly-owned subsidiary Scripps Howard Broadcasting Company to contribute 100 percent of the shares of Scripps Shop at Home Inc. and its 50 percent interest in Cable Program Management Company, GP (a partnership which owns a 10 percent interest in Food Network) to Scripps Networks Interactive.
 
  •  Scripps Howard Broadcasting Company will distribute all of the issued and outstanding shares of Scripps Networks Interactive to E. W. Scripps.
 
  •  E. W. Scripps will contribute all of the issued and outstanding shares of Shopzilla, Inc. and Ulysses U.K., Inc. and all of the issued and outstanding interests in uSwitch, LLC to Scripps Networks Interactive.
 
  •  The Internal Revenue Service will advise E. W. Scripps that the spin-off transaction will qualify as a tax-free transaction under Section 355 of the Internal Revenue Code.
 
  •  The Securities and Exchange Commission (“SEC”) will declare effective under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the registration statement of which this information statement is a part.
 
  •  E. W. Scripps will mail this information statement to its shareholders.
 
  •  E. W. Scripps Board of Directors will determine the record date for the dividend of Scripps Networks Interactive shares to E. W. Scripps shareholders, declare that dividend subject to shareholder approval described below and establish the distribution date.
 
  •  The holders of E. W. Scripps Common Voting Shares will approve the spin-off and certain precedent transactions at the annual meeting of E. W. Scripps shareholders to be held on [          , 2008]. (No vote of the holders of E. W. Scripps Class A Common Shares is required or will be sought in connection with the spin-off.)
 
  •  Our Class A Common Shares are expected to begin trading on a “when issued” basis on or shortly before the record date for the spin-off.
 
  •  E. W. Scripps, as sole shareholder of Scripps Networks Interactive, will:
 
i. elect the Scripps Networks Interactive Board of Directors;
 
ii. approve the adoption of certain benefit plans; and
 
iii. approve various other actions related to the spin-off as described in this information statement.
 
  •  The Scripps Networks Interactive Board of Directors will approve:
 
iv. The adoption of certain benefit plans.
 
v. Certain corporate governance documents and policies for Scripps Networks Interactive.
 
vi. Various other actions related to the spin-off as described in this information statement.
 
On or before the distribution date:
 
  •  We will have entered into numerous agreements with E. W. Scripps that relate to the spin-off or that will govern our relationship with E. W. Scripps following the completion of the spin-off, including:
 
vii. the Separation and Distribution Agreement;
 
viii. the Transition Services Agreement;


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ix. the Employee Matters Agreement; and
 
x. the Tax Allocation Agreement.
 
On the distribution date:
 
  •  E. W. Scripps will receive an opinion of counsel as to the tax-free nature of the distribution.
 
  •  E. W. Scripps will distribute all of the Class A Common Shares of Scripps Networks Interactive pro rata to the holders of record of E. W. Scripps Class A Common Shares as of the record date and all of the Common Voting Shares of Scripps Networks Interactive pro rata to all of the holders of record of E. W. Scripps Common Voting Shares as of the record date.
 
Following the distribution date:
 
  •  We expect that our Class A Common Shares will begin trading on the NYSE on a “regular-way” basis under the symbol “SNI” on the first trading day following the distribution date.
 
  •  We will operate as a separate publicly-traded company.
 
Vote of the Holders of Common Voting Shares of E. W. Scripps and Rights of Dissenting Shareholders
 
E. W. Scripps will seek approval of the spin-off by the holders of its Common Voting Shares at the company’s annual meeting of shareholders to be held on [          , 2008]. No vote of the holders of E. W. Scripps Class A Common Shares is required or will be sought in connection with the spin-off. While it is clear under Ohio law that no vote of the holders of E. W. Scripps Class A Common Shares is required in connection with the spin-off, it is not clear whether E. W. Scripps must have approval of the holders of its Common Voting Shares; therefore, E. W. Scripps has decided as a precaution to submit the spin-off to such holders for their approval. The Edward W. Scripps Trust owns approximately 88 percent of the Common Voting Shares of E. W. Scripps and is expected to vote in favor of the spin-off at the meeting, thus assuring approval. If it were determined under Ohio law that the holders of E. W. Scripps Common Voting Shares must approve the spin-off, the holders of E. W. Scripps Class A Common Shares and certain holders of E. W. Scripps Common Voting Shares may have dissenters’ rights under Ohio law. For more information on these matters, including information relating to how to preserve any dissenters’ rights you may have, see “Shareholder Approval and Dissenters’ Rights” herein.
 
Reason for Furnishing this Information Statement
 
This information statement is being furnished solely to provide information to E. W. Scripps shareholders who will receive shares of Scripps Networks Interactive in the spin-off. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any securities. We believe that the information contained in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither E. W. Scripps nor Scripps Networks Interactive undertakes any obligation to update the information except in the normal course of its respective public disclosure obligations.
 
DIVIDEND POLICY
 
Following the spin-off, we intend to adopt a policy of paying, subject to legally available funds, a quarterly cash dividend of [$     ] per Class A Common Share and [$     ] per Common Voting Share. All decisions regarding the declaration and payment of dividends will be evaluated from time to time in light of our financial condition, earnings, growth prospects, funding requirements, applicable law and other factors deemed relevant by our board of directors.


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CAPITALIZATION
 
The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2007:
 
  •  On an actual basis.
 
  •  On a pro forma basis to give effect to the pro forma adjustments included in our unaudited pro forma condensed combined financial information.
 
The pro forma adjustments are based upon available information and assumptions that management believes are reasonable; however such adjustments are subject to change based on the finalization of the terms of the Distribution and the agreements which define our relationship with Scripps after the Distribution. In addition, such adjustments are estimates and may not prove to be accurate.
 
You should read the information in the following table together with “Selected Historical and Pro Forma Combined Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Condensed Combined Financial Information” and our audited combined financial statements and the related notes included elsewhere in this information statement.
 
                 
As of December 31, 2007
  Historical     Pro Forma(*)  
          (Unaudited)  
    (In thousands)
 
 
Cash and cash equivalents
  $ 12,532     $ 12,532  
                 
Long term borrowings
    503,361       375,000  
Total equity
    1,013,288       1,116,613  
                 
Total capitalization
  $ 1,516,649     $ 1,491,613  
                 
 
 
(*) The pro forma long-term debt of approximately $375 million reflects borrowings that we intend to make under the $550 million unsecured revolving credit facility to be negotiated for Scripps Networks Interactive prior to the separation. The proceeds of these borrowings will be used to pay a $375 million cash dividend to Scripps immediately prior to the distribution, which Scripps expects to use to repay outstanding indebtedness.
 
We expect that we would have had, on a pro forma basis, approximately 163 million shares of common stock outstanding as of December 31, 2007, based on each holder of E. W. Scripps common stock receiving a dividend of one share of our common stock for each share of E. W. Scripps common stock, there being approximately 163 million shares of E. W. Scripps common stock outstanding on that date, assuming no exercise of outstanding options.


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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
Our unaudited pro forma condensed combined financial information presented below has been derived from our audited combined financial statements for the year ended December 31, 2007. The pro forma adjustments and notes to the unaudited pro forma condensed combined financial information give effect to the legal formation and capitalization of Scripps Networks Interactive and the contribution of assets and liabilities of the Scripps Networks and Interactive Media businesses by E. W. Scripps. This unaudited pro forma condensed combined financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited combined financial statements and the notes to those statements included elsewhere in this information statement.
 
Our unaudited pro forma condensed combined statement of income for the year ended December 31, 2007, has been prepared as though the distribution had occurred on January 1, 2007. The unaudited pro forma condensed combined balance sheet has been prepared as though the distribution had occurred on December 31, 2007. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable, that reflect the expected impacts of events that are directly attributable to the [distribution] and related transaction agreements and that are factually supportable and expected to have a continuing impact on us; however such adjustments are subject to change based on the finalization of the terms of the distribution and the transaction agreements (See “Separation and Distribution Agreement”). In addition, such adjustments are estimates and may not prove to be accurate.
 
For the fiscal year ended 2007, E.W. Scripps allocated expenses to us in the amount of $47.2 million representing the cost of certain corporate functions performed on our behalf. The expense allocation includes costs related to human resources, finance, information technology, legal, internal audit and other services. After the separation from E.W. Scripps, we will have our own corporate infrastructure and will assume responsibility for all of these functions and the related costs. We expect the costs for such corporate functions, in aggregate, to be approximately $   million on an annual basis going forward. No adjustments have been made to the unaudited pro forma condensed combined financial information below to reflect these costs.
 
The net change in expenses associated with replacing these functions and establishing our own infrastructure related thereto have not been reflected in the unaudited pro forma condensed combined financial information presented below. This net change in expenses is not to be realized until the transition is complete.
 
In addition, following the [distribution] date, Scripps Networks Interactive will provide to E. W. Scripps and E. W. Scripps will provide to Scripps Networks Interactive certain services for a limited period, as stipulated in the Transition Service Agreement. Such services will be, but not limited to, information technology support, accounting services, and risk management support. These transitional costs have not been reflected in the unaudited pro forma condensed combined financial information.
 
In connection with the distribution, we expect to replace funding provided through E. W. Scripps intercompany arrangements with alternative sources at market rates available to us. In addition, we expect to make a dividend payment to E. W. Scripps in an amount equal to $375 million.
 
The pro forma adjustments include the following items:
 
  •  The distribution of approximately 163 million of shares of our common stock to the stockholders of E. W. Scripps and the payment of a cash dividend to Scripps of $375 million.
 
  •  Compensation expense related to equity awards granted to E.W. Scripps employees that will become employees of Scripps Networks Interactive.
 
  •  Adjustments related to pension.
 
  •  The replacement of intercompany debt payable to E.W. Scripps with other funding obtained by us that we intend to have in place on or prior to the distribution.


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The unaudited pro forma condensed combined financial information are provided for illustrative and informational purposes only and do not reflect what our combined balance sheet and statement of income would have been had the distribution occurred at the beginning of all periods presented and are not necessarily indicative of our future financial condition and future results of operations.
 
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2007
 
                                 
          Pro Forma
             
    Historical     Adjustments     Notes     Pro Forma  
    (In thousands)  
 
Assets:
                               
Current assets:
                               
Cash and cash equivalents
  $ 12,532     $ 375,000       (b )   $ 12,532  
              (375,000 )     (c )        
Accounts and notes receivable, less allowance
    364,824                       364,824  
Programs and program licenses
    212,868                       212,868  
Other current assets
    12,533                       12,533  
                                 
TOTAL CURRENT ASSETS
    602,757                       602,757  
                                 
Investments
    38,444                       38,444  
Property, plant and equipment, net
    173,255                       173,255  
Goodwill and other intangible assets, net
    794,539                       794,539  
Other non current assets
    408,832       (1,536 )     (a )     407,296  
                                 
TOTAL OTHER ASSETS
    1,415,070       (1,536 )             1,413,534  
                                 
TOTAL ASSETS
  $ 2,017,827     $ (1,536 )           $ 2,016,291  
                                 
Liabilities and Parent Company Equity:
                               
Current liabilities:
                               
Accounts payable
  $ 8,010                     $ 8,010  
Customer deposits and unearned revenue
    15,018                       15,018  
            $ (5,757 )     (a )        
Accrued liabilities
    121,552       35,855       (d )     151,650  
                                 
TOTAL CURRENT LIABILITIES
    144,580       30,098               174,678  
                                 
Deferred income taxes
    115,474       2,976       (f )     118,450  
              (503,361 )     (a )        
Long-term debt
    503,361       375,000       (b )     375,000  
Other long-term liabilities
    102,626       (9,574 )     (e )     93,052  
                                 
TOTAL LIABILITIES
    866,041       (104,861 )             761,180  
                                 
Minority interests
    138,498                       138,498  
                                 
Parent Company Equity:
                               
Parent Company Investments, net
    971,889       (971,889 )     (g )      
Common stock
          1,630       (h )     1,630  
Paid-in-Capital
          1,073,584       (h )     1,073,584  
Accumulated other comprehensive income
    41,399                       41,399  
                                 
TOTAL PARENT COMPANY EQUITY
    1,013,288       103,325               1,116,613  
                                 
TOTAL LIABILITIES AND PARENT COMPANY EQUITY
  $ 2,017,827     $ (1,536 )           $ 2,016,291  
                                 
 
See notes to the unaudited pro forma condensed combined financial information


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Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2007
 
                                 
          Pro Forma
             
    Historical     Adjustments     Notes     Pro Forma  
    (In thousands except per share data)  
 
Operating revenue
                               
Advertising
  $ 928,758                     $ 928,758  
Referral fees
    254,343                       254,343  
Network affiliate fees, net
    235,248                       235,248  
Other
    22,916                       22,916  
                                 
Total operating revenue
    1,441,265                       1,441,265  
                                 
Costs and Expenses
                               
            $ 1,392       (i )        
Employee compensation and benefits
    243,222       28       (j )     244,642  
Program and program licenses
    239,343                       239,343  
Marketing and advertising
    186,999                       186,999  
Other costs and expenses
    179,545                       179,545  
                                 
Total costs and expenses
    849,109       1,420               850,529  
                                 
Depreciation
    41,248                       41,248  
Amortization
    45,446                       45,446  
Loss on disposal of property, plant & equipment
    687                       687  
Write-down of uSwitch goodwill and other intangible assets
    411,006                       411,006  
                                 
Operating income
    93,769       (1,420 )             92,349  
                                 
              312       (j )        
Interest expense
    (36,770 )     23,804       (k )     (12,654 )
Equity in earnings of affiliates
    17,603                       17,603  
Miscellaneous, net
    3,951                       3,951  
                                 
Operating income before taxes and minority interest
    78,553       22,696               101,249  
                                 
Provision for income taxes
    126,387       8,405       (l )     134,792  
                                 
Operating income (loss) before minority interest
    (47,834 )     14,291               (33,543 )
                                 
Minority interest
    82,534                       82,534  
                                 
Net income (loss) from continuing operations
  $ (130,368 )   $ 14,291             $ (116,077 )
                                 
Pro forma loss per common share — basic
    N/A               (m )     (0.71 )
                                 
Pro forma shares used in computing earnings per common share — basic
    N/A               (m )     163,014  
                                 
 
See notes to the unaudited pro forma condensed combined financial information


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Notes to Unaudited Pro Forma Condensed Combined Financial Information
 
(a) Represents the elimination of $503,361 of amounts due to E. W. Scripps and affiliates and $5,757 of accrued interest. The related outstanding amount of debt issuance costs written off is $1,536.
 
(b) Represents the amount drawn out of the $550,000 credit facility. At the spin-off date, Scripps Networks Interactive expects to enter into a five year term revolving credit facility of up to $550 million bearing interest at LIBOR plus an applicable margin.
 
(c) Represents a $375,000 dividend payment to E. W. Scripps.
 
(d) Represents the payment of breakage fees of $33,000 due to the extinguishment of the debt due to E. W. Scripps and the payment of $2,855 related to treasury call options. SNI entered into two treasury call options in order to hedge its exposure to any downside in the interest rate, which could have increased the amount of breakage fees. The amount of breakage fees has been estimated based on interest rates in effect as of December 31, 2007, and the extinguishment of the debt as of June 1, 2008. The breakage fees attributable to the debt will be charged to the statement of income as interest expense. However, the breakage fees have been excluded from the pro forma condensed combined statement of income as they are not expected to have a continuing impact on operations.
 
(e) Represents the adjustment to the pension liability of $9,574 to reflect the pension liability based on E. W. Scripps corporate employees that will become employees of Scripps Networks Interactive after the distribution. Historically, projected benefit obligations of corporate employees have been allocated based on revenue (see (j)).
 
(f) Represents the net increase in deferred income taxes of $2,976 due to the net change in debt issuance costs, pension liabilities [and stock options].
 
(g) Represents increase to parent company equity to reflect the followings:
 
  •  The write off of outstanding debt issuance costs of $967, net of tax.
 
  •  The breakage fees of $35,855 (see (d)).
 
  •  The payment of the dividend of $375,000.
 
  •  The adjustment to pension and other benefits of $6,598, net of tax.
 
  •  The elimination of the outstanding debt due to Scripps and accrued interest for $509,118.
 
  •  The reclassification of parent company equity into common stock and paid-in-capital (see (h) for $1,075,214).
 
(h) Represents the capitalization of Scripps Networks Interactive, including the assumed issuance of approximately 163 million Scripps Networks Interactive common stock at $0.01 par value (based on an estimate of the number of Scripps shares outstanding at December 31, 2007).
 
(i) Represents the adjustment of historical stock based compensation expense of $1,392 to reflect the incremental value of the stock based compensation attributable to unvested stock options. That incremental value has been triggered by the modification of the terms of the awards due to the equity restructuring. The total incremental value of unrecognized compensation costs related to stock options is $1,599 and is expected to be recognized over a weighted average period of 2 years. The total amount of stock based compensation attributable to vested stock options is $5,047. This expense will be charged to the statement of operations of Scripps Networks Interactive at the date of the spin-off. However, this expense has been excluded from the unaudited pro forma condensed combined statement of operations as it is not expected to a have a continuing impact on operations.
 
The incremental stock compensation attributable to vested and unvested stock options has been determined based on E.W. Scripps corporate employees that will become employees of Scripps Networks Interactive after the distribution. Historical stock compensation expenses for corporate employees were allocated based on revenue.
 
(j) Represents the adjustment of historical pension expenses of $28 and deferred compensation interest expense of $312 to reflect the pension expense for E. W. Scripps corporate employees that will become Scripps


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Networks Interactive employees after the spin. In the 2007 historical carve out statement of operations, pension expenses of corporate employees and share service centre employees have been allocated based on revenue.
 
(k) Represents increase to interest expense to reflect the followings:
 
  •  The reversal of existing interest expense of $34,177 related to the amount of debt due to E. W. Scripps.
 
  •  The reversal of the amortization expenses of $2,565 related to the debt issuance costs of the debt due to E. W. Scripps.
 
  •  The interest expense of $12,938 is related to the new revolving credit facility. The interest expense has been calculated using an interest rate of LIBOR in effect as of December 31, 2007, plus an applicable margin, and assuming the average amount drawn on the revolving credit facility would be $375,000. Each one-eight of one percent change in LIBOR would result in a change in interest expense of $469.
 
(l) Represents $37.0% statutory tax impact of pro forma adjustments (i), (j) and (k).
 
(m) The calculation of pro forma basic earnings per share and average shares outstanding is based on the average number of shares of E. W. Scripps common stock outstanding for the year ended December 31, 2007, assuming the distribution ratio of one share of Scripps Networks Interactive for every share of E. W. Scripps. The calculation of pro forma diluted earnings per share and shares outstanding is based on the average number of shares of common stock outstanding for the year ended December 31, 2007 and average diluted shares of common stock outstanding for the year ended December 31, 2007. This calculation may not be indicative of the dilutive effect that will actually result from the replacement or adjustment of E. W. Scripps stock based awards held by Scripps Networks Interactive employee and employees of E. W. Scripps or the grant of new stock-based awards. The number of dilutive shares of Scripps Networks Interactive common stock that will result from E. W. Scripps stock options and restricted stock units held by Scripps Networks Interactive employees will not be determined until immediately after the distribution.


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SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
 
The following table set forth selected historical and pro forma combined financial data. The combined statement of income data for each of the years in three-year period ended December 31, 2007, and the combined balance sheet data as of December 31, 2007 and 2006, have been derived from our audited combined financial statements included elsewhere in this information statement. The combined statement of income data for the years ended December 31, 2004 and 2003 and the combined balance sheet data as of December 31, 2005, 2004 and 2003 are derived from the un-audited combined financial statements not included elsewhere in this information statement. The unaudited pro forma statement of income and financial data have been derived from our combined financial statements for the year ended December 31, 2007, and include adjustments that give effect to transactions contemplated by the separation and distribution agreement.
 
The selected historical and pro forma combined financial data below should be read in conjunction with our audited combined financial statements and accompanying notes “Unaudited Pro Forma Condensed Combined Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this information statement. The combined financial information may not be indicative of our future performance and does not necessarily reflect what the financial position and results of operations would have been had we operated as an independent, publicly-traded company during the periods presented, including changes that will occur in our operations and capitalization as a result of the separation and distribution from E.W. Scripps. See “Unaudited Pro Forma Condensed Combined Financial Information” for additional discussion of the anticipated changes.


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Selected Historical and Pro Forma Combined Financial Data
 
                                                 
    For the Years Ended December 31,  
    Pro Forma
                               
    2007     2007     2006     2005     2004     2003  
    (Unaudited)                       (Unaudited)  
    Dollars in thousands (except per share amounts)  
 
Combined statement of operations data:
                                               
Operating revenue(1)
                                               
Lifestyle Media
  $ 1,184,901     $ 1,184,901     $ 1,052,403     $ 903,014     $ 723,713     $ 535,013  
Interactive Services
    256,364       256,364       271,066       99,447              
                                                 
Total segment operating revenue
    1,441,265       1,441,265       1,323,469       1,002,461       723,713       535,013  
                                                 
Segment profit (loss)(1)(2)
                                               
Lifestyle Media
    605,014       605,014       517,572       414,369       304,367       204,297  
Interactive Services
    39,751       39,751       67,688       27,980              
Corporate
    (36,426 )     (35,006 )     (33,189 )     (25,182 )     (18,848 )     (14,690 )
                                                 
Total segment profit
    608,339       609,759       552,071       417,167       285,519       189,607  
                                                 
Depreciation of property, plant and equipment
    41,248       41,248       29,020       19,599       12,631       10,900  
Amortization of intangible assets
    45,446       45,446       41,685       17,614       968       2,226  
Interest expense
    (12,654 )     (36,770 )     (54,045 )     (36,961 )     (29,441 )     (29,696 )
Income (loss) from continuing operations(3)(4)
    (116,077 )     (130,368 )     233,780       175,880       119,494       81,960  
Earnings (loss) per share
                                               
Basic
    (0.71 )     N/A       N/A       N/A       N/A       N/A  
Weighted average shares outstanding (000s)
                                               
Basic
    163,014       N/A       N/A       N/A       N/A       N/A  
 
                                                 
    As of December 31,  
    Pro Forma
                               
    2007     2007     2006     2005     2004     2003  
    (Unaudited)                 (Unaudited)  
 
Balance sheet data:
                                               
Total assets(4)
  $ 2,016,291     $ 2,017,827     $ 2,384,952     $ 2,011,333     $ 1,454,177     $ 990,816  
Long term debt (including current portion)
    375,000       503,361       764,956       824,238       531,047       507,084  
Total parent company equity
    1,116,613       1,013,288       1,185,578       797,320       587,503       226,740  
 
 
Notes:
 
(1) Operating revenue and segment profit represent the revenues and the profitability measures used to evaluate the operating performance of our reportable segments in accordance with Statement of Financial Accounting Standard (“FAS”) No. 131, Segment Reporting.
 
(2) Segment profit is a supplemental non-GAAP financial measure. GAAP means generally accepted accounting principles in the United States. Our chief operating decision maker (as defined by FAS 131) evaluates the operating performance of our reportable segments and makes decisions about the allocation of resources to our reportable segments using a measure we call segment profit. Segment profit excludes interest, income taxes,


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depreciation and amortization, impairment of goodwill and intangible assets, divested operating units, 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. Lifestyle Media segment profits include equity in earnings of affiliates. For a reconciliation of this financial measure to operating income see the table below.
 
                                                 
    For the Years Ended December 31,
    Pro Forma
                   
    2007   2007   2006   2005   2004   2003
    (Unaudited)               (Unaudited)
    (In thousands)
 
Operating income
  $ 92,349     $ 93,769     $ 467,424     $ 368,791     $ 261,591     $ 166,625  
Equity in earnings of affiliates
    17,603       17,603       13,378       11,120       10,329       9,333  
Losses on disposal of property, plant and equipment
    687       687       564       43             523  
Impairment of goodwill and intangible assets
    411,006       411,006                          
Depreciation
    41,248       41,248       29,020       19,599       12,631       10,900  
Amortization of intangible assets
    45,446       45,446       41,685       17,614       968       2,226  
                                                 
Segment profit
  $ 608,339     $ 609,759     $ 552,071     $ 417,167     $ 285,519     $ 189,607  
                                                 
 
(3) The 2007 income from continuing operations includes impairment charges to goodwill of $312,116 and other intangibles assets of $98,890, relating to uSwitch.
 
(4) The following acquisitions accounted for the increase in operations and assets:
 
a. 2007- RecipeZaar.com, a user-generated recipe and community site. Pickle.com, a Web site that enables users to easily organize and share photos and videos from any camera or mobile phone device.
 
b. 2006- uSwitch, a Web-based comparison shopping service that helps consumers compare prices and arrange for the purchase of a range of essential home services and personal finance products.
 
c. 2005- Shopzilla, a Web-based product comparison shopping service.
 
d. 2004- The Great American Country network.


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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
This discussion and analysis of financial condition and results of operations is based upon the combined financial statements and the notes thereto. You should read this discussion and analysis in conjunction with those combined financial statements.
 
Forward-Looking Statements
 
This discussion and the information contained in the notes to the combined financial statements contain certain forward-looking statements that are based on our current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from the expectations expressed in the forward-looking statements. Such risks, trends and uncertainties, which in most instances are beyond our control, include changes in advertising demand and other economic conditions; consumers’ tastes; program costs; labor relations; technological developments; competitive pressures; interest rates; regulatory rulings; and reliance on third-party vendors for various products and services. The words “believe,” “expect,” “anticipate,” “estimate,” “intend” and similar expressions identify forward-looking statements. All forward-looking statements, which are as of the date of this filing, should be evaluated with the understanding of their inherent uncertainty. We undertake no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.
 
Executive Overview
 
On October 16, 2007, The E. W. Scripps Company (“E. W. Scripps”) announced that its Board of Directors unanimously authorized management to pursue a plan to separate into two publicly traded companies. The proposed separation will create a new company, Scripps Networks Interactive, Inc. (“Scripps Networks Interactive”), which will include E.W. Scripps’ national lifestyle media brands (HGTV, Food Network, DIY Network, Fine Living Network and Great American Country and their category-leading Internet businesses) and online comparison shopping services (Shopzilla and uSwitch and their associated Web sites). E. W. Scripps will continue to include the newspaper publishing, broadcast television, licensing and syndication businesses, and the Scripps Media Center in Washington, DC. The separation will allow the management teams to focus on the respective opportunities for each company and pursue specific growth and development strategies that are based on the distinct characteristics of the two companies’ local and national media businesses. The transaction is expected to take the form of a tax-free dividend of Scripps Networks Interactive shares to all E. W. Scripps shareholders on a one-for-one basis. The separation is contingent upon approval of the final plan by the board of directors and the holders of E. W. Scripps Common Voting Shares and the filing and effectiveness of this information statement with the Securities and Exchange Commission.
 
Scripps Networks Interactive is a leading lifestyle content and Internet search company with respected, high-profile television and interactive brands. Our national television networks and interactive services engage audiences and efficiently serve advertisers by delivering entertaining and highly useful content that focuses on specifically defined topics of interest.
 
We manage our operations through two reportable operating segments: (i) Lifestyle Media (formerly Scripps Networks), which includes HGTV, Food Network, DIY Network (DIY), Fine Living, Great American Country (GAC), a minority interest in Fox-BRV Southern Sports Holdings LLC, and Internet-based businesses, including RecipeZaar.com, HGTVPro.com and FrontDoor.com; and (ii) Interactive Services (formerly Interactive Media), which includes online comparison shopping and consumer information services, Shopzilla, BizRate and uSwitch.
 
Lifestyle Media continued to demonstrate industry-leading growth in 2007. Revenues were up 13 percent year-over-year, led by the continuing success of our flagship networks, HGTV and Food Network, but also helped by double-digit revenue growth at our three emerging networks. Ratings at HGTV in 2007 were the highest ever as programming like House Hunters and Designed to Sell continued to draw viewers, and the network continues to attract audiences across key demographics. At Food Network, ratings strengthened in the latter part of 2007 as programming targeted at younger viewers, such as Ace of Cakes, attracted a growing audience. Our newer networks are also demonstrating success as they continue to broaden their distribution. DIY and FLN are pushing the


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50-million subscriber mark and GAC surpassed that mark during 2007. Our branded Web sites are also helping us build a leading presence on the Internet. FoodNetwork.com attracted a record 13 million unique visitors in December 2007, making it the top Web site in the food and cooking category. We continue to take steps to broaden our Internet presence, such as the acquisition of RecipeZaar.com and the launch of FrontDoor.com. Lifestyle Media continues to focus on driving ratings growth at HGTV and Food Network through popular programming, expanding the distribution of our emerging networks, broadening our Internet-based offerings, and identifying opportunities to extend our nationally recognized brands to create new revenue streams.
 
In our Interactive Services division, we continue to adapt to a changing competitive landscape that affected results throughout 2007. Falling energy prices in the United Kingdom resulted in less switching activity and lower revenue at uSwitch during 2007 compared with previous years. While we have made efforts to grow other service categories at uSwitch, including personal finance and insurance products, our revenue remains concentrated in the energy market. This concentration, combined with the changes in the energy markets in the United Kingdom, led to lowered future cash flow expectations for uSwitch, which resulted in a non-cash impairment charge of $411 million in the fourth quarter. At Shopzilla, we began to see improvement in the latter half of 2007, with revenue improving in the fourth quarter in comparison with the same period a year ago. We are continuing our efforts to become more efficient at acquiring paid traffic and attracting free traffic to the site. During December 2007, we topped 26 million visitors to the Shopzilla sites for the first time. To enhance the customer experience at Shopzilla and drive traffic to the site, we continue to focus on expanding the amount and relevance of product information on the site. At uSwitch, we have aligned costs with the current business conditions to reduce the impact of the lower switching activity experienced in recent periods.
 
Critical Accounting Policies and Estimates
 
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make a variety of decisions which affect reported amounts and related disclosures, including the selection of appropriate accounting principles and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience, actuarial studies and other assumptions. We are committed to incorporating accounting principles, assumptions and estimates that promote the representational faithfulness, verifiability, neutrality and transparency of the accounting information included in the financial statements.
 
Note 2 to the Combined Financial Statements describes the significant accounting policies we have selected for use in the preparation of our financial statements and related disclosures. We believe the following to be the most critical accounting policies, estimates and assumptions affecting our reported amounts and related disclosures.
 
Programs and Program Licenses — Production costs for programs produced by us or for us are capitalized as program assets. Such costs include direct costs, production overhead, development costs and acquired production costs. Capitalized program assets are amortized to expense over the estimated useful lives of the programs based on expected future cash flows. Estimated future cash flows can change based upon market acceptance, advertising and network affiliate fee rates, the number of cable and satellite television subscribers receiving our networks and program usage. Accordingly, we periodically review revenue estimates and planned usage and revise our assumptions if necessary. If actual demand or market conditions are less favorable than projected, a write-down to fair value may be required. Development costs for programs that we have determined will not be produced are written off.
 
Program licenses generally have fixed terms, limit the number of times we can air the programs and require payments over the terms of the licenses. Licensed program assets and liabilities are recorded when the programs become available for broadcast. Program licenses are amortized based upon expected cash flows over the term of the license agreement.
 
The net realizable value of programs and program licenses is reviewed for impairment using a day-part methodology. A day-part is defined as an aggregation of programs broadcast during a particular time of day or programs of a similar type. Our day-parts are: early morning, daytime, late night, and primetime.


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Estimated values are based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than our projections, programming cost write-downs may be required.
 
Revenue Recognition — Revenue is recognized when persuasive evidence of a sales arrangement exists, delivery occurs or services are rendered, the sales price is fixed or determinable, and collectibility is reasonably assured. When a sales arrangement contains multiple elements, such as the sale of advertising and other services, revenue is allocated to each element based upon its relative fair value. Revenue is reported net of our remittance of sales taxes, value added taxes, and other taxes collected from our customers.
 
We have revenue recognition policies for our operating segments that are specific to the circumstances of each business. See Note 2 to the Combined Financial Statements for a summary of these revenue recognition policies.
 
Acquisitions — Financial Accounting Standards No. (“FAS”) 141, Business Combinations, requires assets acquired and liabilities assumed in a business combination to be recorded at fair value. We generally determine fair values using comparisons to market transactions and discounted cash flow analyses. The use of a discounted cash flow analysis requires significant judgment to estimate the future cash flows derived from the asset and the expected period of time over which those cash flows will occur and to determine an appropriate discount rate. Changes in such estimates could affect the amounts allocated to individual identifiable assets. While we believe our assumptions are reasonable, if different assumptions were made, the amount allocated to intangible assets could differ substantially from the reported amounts.
 
Goodwill and Other Indefinite-Lived Intangible Assets — FAS 142, Goodwill and Other Intangible Assets, requires that goodwill for each reporting unit be tested for impairment on an annual basis or when events occur or circumstances change that would indicate the fair value of a reporting unit could be below its carrying value. For purposes of performing the impairment test for goodwill, our reporting units are Lifestyle Media, Shopzilla and uSwitch. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value.
 
FAS 142 also requires us to compare the fair value of each indefinite-lived intangible asset to its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized.
 
To determine the fair value of our reporting units and indefinite-lived intangible assets, we generally use market data, appraised values and discounted cash flow analyses. The use of a discounted cash flow analysis requires significant judgment to estimate the future cash flows derived from the asset or business and the period of time over which those cash flows will occur and to determine an appropriate discount rate. Changes in our estimates and projections or changes in our established reporting units could materially affect the determination of fair value for each reporting unit.
 
Our 2007 annual impairment analysis, which was performed during the fourth quarter, resulted in a non-cash impairment charge of $312 million to write-down the value of goodwill related to our uSwitch business. The write-down is primarily attributed to lower energy switching activity. Due to our high concentration in the energy market, the decline in switching activity adversely impacted our forecast of uSwitch’s future results.
 
Finite-Lived Intangible Assets — In determining whether finite-lived intangible assets (e.g., customer lists, trade name, patents, technology, networks distribution relationships) are impaired, FAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, does not provide for an annual impairment test. Instead it requires that a triggering event occur before testing an asset for impairment. Such triggering events include the significant disposal of a portion of such assets or the occurrence of an adverse change in the market involving the business employing the related asset. Once a triggering event has occurred, the impairment test employed is based on whether the intent is to hold the asset for continued use or to hold the asset for sale. If the intent is to hold the asset for continued use, the impairment test first requires a comparison of undiscounted future cash flows against the carrying value of the asset. If the carrying value of such asset exceeds the undiscounted cash flows, the asset would be deemed to be impaired. Impairment would then be measured as the difference between the fair value of the asset and its carrying value. Fair value is generally determined by discounting the future cash flows associated with that asset. If the intent is to hold the asset for sale and certain other criteria are met (e.g., the asset can be disposed of currently, appropriate levels of authority have approved the sale or there is an actively pursuing buyer), the


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impairment test involves comparing the asset’s carrying value to its fair value. To the extent the carrying value is greater than the asset’s fair value, an impairment loss is recognized for the difference.
 
Significant judgments in this area involve determining whether a triggering event has occurred and the determination of the cash flows for the assets involved and the discount rate to be applied in determining fair value. Upon completing our impairment test in the fourth quarter of 2007, we determined that the carrying value of our uSwitch business exceeded its fair value. Accordingly our 2007 results include a write down of intangible assets totaling $99 million.
 
Income taxes — We account for uncertain tax positions in accordance with Financial Accounting Standards Board (the “FASB”) Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109. The application of income tax law is inherently complex. As such, we are required to make many assumptions and judgments regarding our income tax positions and the likelihood of whether such tax positions would be sustained if challenged. Interpretations and guidance surrounding income tax laws and regulations change over time. As such, changes in our assumptions and judgments can materially affect amounts recognized in the combined financial statements.
 
We have deferred tax assets primarily related to state net operating loss carryforwards and capital loss carryforwards. We record a tax valuation allowance to reduce such deferred tax assets to the amount that is more likely than not to be realized. We consider ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event we determine the deferred tax asset we would realize would be greater or less than the net amount recorded, an adjustment would be made to the tax provision in that period.
 
In 2007, we changed our estimate of the realizable value of certain uSwitch deferred tax assets. Our tax provision was increased $9.5 million. Modifications to our state tax filing positions in certain jurisdictions and changes in our estimates of unrealizable state operating loss carryforwards reduced the tax provision $15.8 million in 2006.
 
Pension Plans — The measurement of our pension obligations and related expense is dependent on a variety of estimates, including: discount rates; expected long-term rate of return on plan assets; expected increase in compensation levels; and employee turnover, mortality and retirement ages. We review these assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when appropriate. In accordance with accounting principles generally accepted in the United States of America, the effects of these modifications are recorded currently or amortized over future periods. We consider the most critical of our pension estimates to be our discount rate and the expected long-term rate of return on plan assets.
 
The discount rate used to determine our future pension obligations is based upon a dedicated bond portfolio approach that includes securities rated Aa or better with maturities matching our expected benefit payments from the plans. The rate is determined each year at the plan measurement date and affects the succeeding year’s pension cost. At December 31, 2007, the discount rate was 6.25 percent as compared with 6.0 percent at December 31, 2006. Discount rates can change from year to year based on economic conditions that impact corporate bond yields. A decrease in the discount rate increases pension expense. A 0.5 percent change in the discount rate as of December 31, 2007, to either 5.75 percent or 6.75 percent, would increase or decrease our pension obligations as of December 31, 2007, by approximately $4 million and increase or decrease 2007 pension expense by approximately $2 million.
 
The expected long-term rate of return on plan assets is based primarily upon the target asset allocation for plan assets and capital markets forecasts for each asset class employed. Our expected rate of return on plan assets also considers our historical compound rate of return on plan assets for 10- and 15-year periods. At December 31, 2007, the expected long-term rate of return on plan assets was 8.25 percent. For the ten-year period ended December 31, 2007, our actual compounded rate of return was 8.0 percent. A decrease in the expected rate of return on plan assets increases pension expense. A 0.5 percent change in the expected long-term rate of return on plan assets, to either 7.75 percent or 8.75 percent, would increase or decrease our 2007 pension expense by approximately $0.2 million.
 
We had cumulative unrecognized actuarial losses for our pension plans of $21.0 million at December 31, 2007. Unrealized actuarial gains and losses result from deferred recognition of differences between our actuarial assumptions and actual results. In 2007, we had an actuarial loss of $17.5 million, primarily due to mortality


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table, termination rates and retirement rates. The cumulative unrecognized net loss is primarily due to declines in corporate bond yields and the unfavorable performance of the equity markets between 2000 and 2002. Amortization of unrecognized actuarial losses may result in an increase in our pension expense in future periods. Based on our current assumptions, we anticipate that 2008 pension expense will include $1.5 million in amortization of unrecognized actuarial losses.
 
New Accounting Pronouncements
 
As more fully described in Note 2 to the Combined Financial Statements, we adopted FAS 123(R), Share-Based Payment on January 1, 2006, FAS 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB statements No. 87, 88, 106 and 132(R) effective December 31, 2006 and FIN 48, Accounting for Uncertainty in Income Taxes on January 1, 2007.
 
In September 2006, the FASB issued FAS 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of FAS 157 are effective as of the beginning of our 2008 fiscal year. We do not expect a material impact to our combined financial statements upon adoption.
 
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115 (FAS 159), which permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of FAS 159 are effective as of the beginning of our 2008 fiscal year. We do not expect a material impact to our combined financial statements upon adoption.
 
In June 2007, the FASB ratified EITF 06-11, Accounting for the Income Tax Benefits of Dividends on Share-Based Payment Awards. EITF 06-11 provides that tax benefits associated with dividends on share-based payment awards be recorded as a component of additional paid-in capital. EITF 06-11 is effective, on a prospective basis, for fiscal years beginning after December 15, 2007. We do not expect a material impact to our combined financial statements upon adoption.
 
In December 2007, the FASB issued FAS 141(R), Business Combinations, and FAS 160, Non-controlling Interests in Consolidated Financial Statements. FAS 141(R) provides guidance relating to recognition of assets acquired and liabilities assumed in a business combination. FAS 160 provides guidance related to accounting for non-controlling (minority) interests as equity in the consolidated financial statements. FAS 141(R) and FAS 160 are effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact of these standards on the combined financial statements.
 
Results of Operations
 
The trends and underlying economic conditions affecting the operating performance and future prospects differ for each of our business segments. Accordingly, we believe the following discussion of our combined results of operations should be read in conjunction with the discussion of the operating performance of our business segments that follows on pages 49 through 53.


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Combined Results of Operations — Combined results of operations were as follows:
 
                                         
    For the Years Ended December 31,  
    2007     Change     2006     Change     2005  
    (In thousands)  
 
Operating revenues
  $ 1,441,265       8.9 %   $ 1,323,469       32.0 %   $ 1,002,461  
Costs and expenses
    (849,109 )     8.2 %     (784,776 )     31.6 %     (596,414 )
Depreciation and amortization of intangibles
    (86,694 )     22.6 %     (70,705 )     90.0 %     (37,213 )
Write down of uSwitch goodwill and intangible assets
    (411,006 )                            
Losses on disposal of property, plant & equipment
    (687 )     21.8 %     (564 )             (43 )
                                         
Operating income
    93,769       (79.9 )%     467,424       26.7 %     368,791  
                                         
Interest expense
    (36,770 )     (32.0 )%     (54,045 )     46.2 %     (36,961 )
Equity in earnings of affiliates
    17,603       31.6 %     13,378       20.3 %     11,120  
Miscellaneous, net
    3,951               696               (293 )
                                         
Income from continuing operations before income taxes and minority interests
    78,553       (81.6 )%     427,453       24.7 %     342,657  
                                         
Provision for income taxes
    126,387       4.6 %     120,877       7.6 %     112,346  
                                         
Income (loss) from continuing operations before minority interests
    (47,834 )             306,576       33.1 %     230,311  
                                         
Minority interests
    82,534       13.4 %     72,796       33.7 %     54,431  
                                         
Income (loss) from continuing operations
    (130,368 )             233,780       32.9 %     175,880  
                                         
Income (loss) from discontinued operations, net of tax
    3,961               (41,856 )     (64.2 )%     (117,032 )
                                         
Net income (loss)
  $ (126,407 )           $ 191,924             $ 58,848  
                                         
 
Discontinued Operations — In accordance with the provisions of FAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the results of Shop at Home are presented as discontinued operations.
 
Operating results for our discontinued operations were as follows:
 
                         
    For the Years Ended December 31,  
    2007     2006     2005  
    (In thousands)  
 
Operating revenues
  $ 1,323     $ 168,183     $ 359,256  
                         
Income (loss) from operations
  $ 1,146     $ (57,371 )   $ (141,427 )
Loss from divestiture
    (255 )     (10,431 )      
                         
Income (loss) from discontinued operations before tax
    891       (67,802 )     (141,427 )
Income taxes (benefit)
    (3,070 )     (25,946 )     (24,395 )
                         
Income (loss) from discontinued operations
  $ 3,961     $ (41,856 )   $ (117,032 )
                         
 
On April 24, 2007, we closed the sale of the two Shop at Home-affiliated stations located in Lawrence, MA and Bridgeport, CT for a cash consideration of $61 million.
 
Operating results of our discontinued operations in 2005 include a non-cash charge of $103.1 million to write-down Shop At Home’s goodwill and certain intangible assets.
 
Shop At Home’s loss from operations in 2006 includes $30.1 million of costs associated with employee termination benefits, the termination of long-term agreements and charges to write-down certain assets of the


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network. The loss on divestiture in 2006 includes $12.1 million of losses on the sale of property and other assets to Jewelry Television.
 
The tax benefit that was recognized in 2007 is primarily attributed to differences that were identified between our prior year tax provision and tax returns.
 
Continuing Operations
 
2007 compared with 2006
 
Operating revenues were up 8.9 percent in 2007 compared with 2006. Increases in revenues at our national television networks were partially offset by lower revenues in our online comparison shopping businesses. Increases in advertising revenues, both on television and the Internet, and higher affiliate fee revenue contributed to the increase in revenues at our Lifestyle Media division. Declines in revenues at our Interactive Services businesses were primarily attributed to reduced online energy switching activity at uSwitch and lower referral fee revenue at Shopzilla.
 
Costs and expenses in 2007 were primarily impacted by the expanded hours of original programming at our national networks and costs related to the leadership transition at Shopzilla.
 
Depreciation incurred on capitalized software development costs at our Interactive Services businesses contributed to the increase in depreciation and amortization. Additionally, we wrote down intangible assets $5.2 million as a result of changes to the terms of a distribution agreement at our Shopzilla business in 2007.
 
In conjunction with our annual impairment test of goodwill and intangible assets, we determined that the carrying value of our uSwitch business exceeded its fair value. Accordingly, our 2007 results include a write-down of goodwill and intangible assets totaling $411 million.
 
Interest expense includes interest incurred on our outstanding borrowings and deferred compensation and other employment agreements. Interest incurred on our outstanding borrowings decreased in 2007 due to lower average debt levels. The average balance of outstanding borrowings was $649 million at an average rate of 5.0 percent in 2007 and $946 million at an average rate of 5.1 percent in 2006.
 
Our effective tax rate was 160.9 percent in 2007 and 28.3 percent in 2006. The comparability of the year-over-year effective tax rate is affected by the write-off of uSwitch non-deductible goodwill totaling $312 million. Additionally, our effective income tax rate is affected by the growing profitability of Food Network. Food Network is operated pursuant to the terms of a general partnership, in which we own an approximate 69 percent residual interest. Income taxes on partnership income accrue to the individual partners. While the income before income tax reported in our financial statements includes all of the income before tax of the partnership, our income tax provision does not include income taxes on the portion of Food Network income that is attributable to the non-controlling interest.
 
Minority interest increased year-over-year primarily due to the increased profitability of the Food Network. Food Network’s profits are allocated in proportion to each partner’s residual interests in the partnership, of which we own approximately 69 percent.
 
2006 compared with 2005
 
The increase in operating revenues was primarily due to the continued growth in advertising and network affiliate fee revenues at our national television networks, the June 2005 acquisition of Shopzilla, and the March 2006 acquisition of uSwitch. The growth in advertising revenues was primarily driven by increased demand for advertising time and higher advertising rates at our networks. The growth in affiliate fee revenues is attributed to scheduled rate increases and wider distribution of our networks.
 
Costs and expenses were primarily impacted by the expanded hours of original programming and costs to promote our national networks and the acquisitions of Shopzilla and uSwitch. In addition, we adopted the requirements of FAS 123(R) effective January 1, 2006, and began recording compensation expense on stock options


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granted to employees. Stock option expense, including the costs of immediately expensed options granted to retirement eligible employees, increased our costs and expenses $8.9 million in 2006.
 
Depreciation and amortization increased primarily as a result of the acquisitions of Shopzilla and uSwitch.
 
Interest expense includes interest incurred on our outstanding borrowings and deferred compensation and other employment agreements. Interest incurred on our outstanding borrowings increased in 2006 due to higher average debt levels attributed to the Shopzilla and uSwitch acquisitions. In connection with the June 2005 acquisition of Shopzilla, we issued $150 million in 5-year notes at a rate of 4.3 percent. We financed the remainder of the Shopzilla and uSwitch transactions with commercial paper. The average outstanding commercial paper balance in 2006 was $349 million at an average rate of 5.0 percent compared with $148 million at an average rate of 3.3 percent in 2005.
 
The effective tax rate was 28.3 percent in 2006 and 32.8 percent in 2005. The effective tax rate is affected by the growing profitability of Food Network and the portion of Food Network income that is attributed to the non-controlling interest. Income before income tax includes amounts attributed to the non-controlling interest in Food Network of $72.9 million in 2006 and $54.4 million in 2005.
 
Minority interest increased year-over-year primarily due to the increased profitability of the Food Network.
 
Business Segment Results
 
As discussed in Note 19 to the Combined Financial Statements, our chief operating decision maker (as defined by FAS 131, Segment Reporting) evaluates the operating performance of 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.
 
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 based upon current economic conditions and decisions made by the managers of those business segments in the current period.


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Information regarding the operating performance of our business segments determined in accordance with FAS 131 and a reconciliation of such information to the combined financial statements is as follows:
 
                                         
    For the Years Ended December 31,  
(In thousands)   2007     Change     2006     Change     2005  
 
Segment operating revenue:
                                       
Lifestyle Media
  $ 1,184,901       12.6 %   $ 1,052,403       16.5 %   $ 903,014  
Interactive Services
    256,364       (5.4 )%     271,066               99,447  
                                         
Total operating revenue
    1,441,265       8.9 %     1,323,469       32.0 %     1,002,461  
                                         
Segment profit (loss):
                                       
Lifestyle Media
    605,014       16.9 %     517,572       24.9 %     414,369  
Interactive Services
    39,751       (41.3 )%     67,688               27,980  
Corporate
    (35,006 )     5.5 %     (33,189 )     31.8 %     (25,182 )
Depreciation and amortization of intangibles
    (86,694 )     22.6 %     (70,705 )     90.0 %     (37,213 )
Write down of uSwitch goodwill and intangible assets
    (411,006 )                            
Interest expense
    (36,770 )     (32.0 )%     (54,045 )     46.2 %     (36,961 )
Loss on the disposal of property, plant and equipment
    (687 )     21.8 %     (564 )             (43 )
Miscellaneous, net
    3,951               696               (293 )
                                         
Income from continuing operations before income taxes and minority interest
  $ 78,553       (81.6 )%   $ 427,453       24.7 %   $ 342,657  
                                         
 
Lifestyle Media — Lifestyle Media includes five national television networks and their affiliated Web sites, HGTV, Food Network, DIY Network (“DIY”), Fine Living, and Great American Country (“GAC”); and our 7.25 percent interest in FOX-BRV Southern Sports Holdings, LLC which comprises the Sports South and Fox Sports Net South regional television networks. Our networks also operate internationally through licensing agreements and joint ventures with foreign entities.
 
Advertising and network affiliate fees provide substantially all of each network’s operating revenues and employee costs and programming costs are the primary expenses. The demand for national television advertising is the primary economic factor that impacts the operating performance of our networks.


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Operating results for Lifestyle Media were as follows:
 
                                         
    For the Years Ended December 31,  
    2007     Change     2006     Change     2005  
    (In thousands)  
 
Segment operating revenues:
                                       
Advertising
  $ 928,221       11.1 %   $ 835,848       15.0 %   $ 726,602  
Network affiliate fees, net
    235,248       20.8 %     194,662       16.6 %     167,012  
Other
    21,432       (2.1 )%     21,893               9,400  
                                         
Total segment operating revenues
    1,184,901       12.6 %     1,052,403       16.5 %     903,014  
                                         
Segment costs and expenses:
                                       
Employee compensation and benefits
    146,576       15.0 %     127,510       11.5 %     114,389  
Program and program licenses
    239,343       22.1 %     196,052       12.8 %     173,823  
Other segment costs and expenses
    211,571       (5.8 )%     224,647       6.2 %     211,553  
                                         
Total segment costs and segments
    597,490       9.0 %     548,209       9.7 %     499,765  
                                         
Segment profit before equity in earnings of affiliates
    587,411       16.5 %     504,194       25.0 %     403,249  
Equity in earnings of affiliates
    17,603       31.6 %     13,378       20.3 %     11,120  
                                         
Segment profit
  $ 605,014       16.9 %   $ 517,572       24.9 %   $ 414,369  
                                         
Supplemental information
                                       
Billed network affiliate fees
  $ 255,874             $ 211,579             $ 187,774  
Program payments
    291,713               287,494               218,377  
Depreciation and amortization
    24,015               20,777               18,160  
Capital expenditures
    35,306               17,579               22,635  
Business acquisitions and other additions to long lived assets, primarily program assets
    317,566               286,130               210,219  
                                         
 
Advertising revenues increased primarily due to an increased demand for advertising time and higher advertising rates at our networks. Improved ratings and viewership, particularly at HGTV, and strong pricing in the scatter advertising market contributed to the increases in advertising revenues.
 
Distribution agreements with cable and satellite television systems currently in force require the payment of affiliate fees over the terms of the agreements. The increase in network affiliate fees over each of the last three years reflects both scheduled rate increases and wider distribution of the networks.
 
On December 31, 2006, HGTV’s affiliation agreements with Time Warner and Comcast expired. During 2007, we entered into new long-term affiliation agreements with both of these providers which secured distribution to approximately 42 percent of HGTV’s subscribers.
 
We continue to successfully develop our network brands on the Internet and through merchandise sales. Our Internet sites had revenues of $74.0 million in 2007, $57.0 million in 2006, and $36.0 million in 2005. In the third quarter of 2007, Kohl’s began selling a Food Network branded line of home goods.
 
Employee compensation and benefits increased primarily due to the hiring of additional employees to support the growth of Lifestyle Media. In addition, the expensing of stock options starting in 2006 increased employee compensation and benefits $4.0 million in 2007 and $3.5 million in 2006 as compared with 2005.
 
Programs and program licenses increased due to the improved quality and variety of programming, and expanded programming hours.
 
Capital expenditures in 2007 and 2006 include the costs related to the expansion of the Lifestyle Media headquarters in Knoxville. Capital expenditures in 2005 include the costs of upgrading our broadcast operations.


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Supplemental financial information for Lifestyle Media is as follows:
 
                                         
    For the Years Ended December 31,  
(In thousands)   2007     Change     2006     Changes     2005  
 
Operating revenues by brand:
                                       
HGTV
  $ 580,461       12.6 %   $ 515,734       13.4 %   $ 454,629  
Food Network
    476,483       11.5 %     427,425       19.7 %     357,043  
DIY
    55,573       13.2 %     49,075       10.1 %     44,577  
Fine Living
    45,844       24.0 %     36,963       37.2 %     26,934  
GAC
    25,360       25.1 %     20,269       30.8 %     15,502  
Other
    1,180       (59.8 )%     2,937       (32.2 )%     4,329  
                                         
Total segment operating revenue
  $ 1,184,901       12.6 %   $ 1,052,403       16.5 %   $ 903,014  
                                         
Homes reached in December(1)
                                       
HGTV
    95,800       5.0 %     91,200       2.6 %     88,900  
Food Network
    95,800       5.2 %     91,100       3.5 %     88,000  
DIY
    46,900       11.1 %     42,200       22.3 %     34,500  
Fine Living
    49,900       17.7 %     42,400       46.2 %     29,000  
GAC
    53,100       14.9 %     46,200       17.3 %     39,400  
 
 
(1) Approximately 100 million homes in the United States receive cable or satellite television. Homes reached are according to the Nielsen Homevideo Index (“Nielsen”), with the exception of Fine Living which is not yet rated by Nielsen and represent comparable amounts estimated by us.
 
Interactive Services — Interactive Services includes our online comparison shopping services, Shopzilla and uSwitch.
 
Shopzilla, acquired on June 27, 2005, operates a product comparison shopping service that helps consumers find products offered for sale on the Web by online retailers. Shopzilla aggregates and organizes information on millions of products from thousands of retailers. Shopzilla also operates BizRate, a Web-based consumer feedback network that collects millions of consumer reviews of stores and products each year.
 
We acquired uSwitch on March 16, 2006. uSwitch operates an online comparison service that helps consumers compare prices and arrange for the purchase of a range of essential home services including gas, electricity, home phone, broadband providers, auto insurance and personal finance products primarily in the United Kingdom.
 
Our Interactive Services businesses earn revenue primarily from referral fees and commissions paid by participating online retailers and service providers.
 
Financial information for Interactive Services is as follows:
 
                                         
    For the Years Ended December 31,  
    2007     Change     2006     Change     2005  
    (In thousands)  
 
Segment operating revenues
  $ 256,364       (5.4 )%   $ 271,066             $ 99,447  
Segment costs and expenses
    216,613       6.5 %     203,378               71,467  
                                         
Segment profit
    39,751       (41.3 )%     67,688               27,980  
                                         
Supplemental information
                                       
Depreciation and amortization
    62,678               49,803               18,738  
Write-down of uSwitch
    411,006                              
Capital expenditures
    35,564               21,534               5,561  
Business acquisitions and other additions to long lived assets
                  372,157               535,127  
                                         


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On a pro forma basis, assuming we had owned Shopzilla and uSwitch for all of 2006 and 2005, operating revenues would have been $281.3 million in 2006 and $180.1 million in 2005. Operating revenues in 2007 were affected by changing market conditions within these businesses. Lower energy prices in the United Kingdom have resulted in lower switching activity and revenue at uSwitch, and increased competition in comparison shopping has made it more costly to acquire and monetize traffic at Shopzilla.
 
At uSwitch, we are continuing our efforts to grow revenues from service categories other than energy. Excluding energy related switches, other switching revenues are up nearly 27 percent in 2007 compared with 2006. Despite these efforts to grow our other service offerings, uSwitch’s revenues continue to be highly concentrated in energy related switches. Approximately 63 percent of uSwitch’s revenues were derived from energy related switches in 2007. Due primarily to the general decline in the energy switching activity at uSwitch and the negative impact this decline is expected to have on uSwitch’s future results, we recorded a non-cash charge in 2007 of $411 million to write-down uSwitch’s goodwill and intangible assets.
 
Our strategy at uSwitch going forward is to continue to align costs with the current market conditions we are experiencing and continue to diversify the business to reduce its dependence on energy switching.
 
In the latter half of 2007, we began to see improvement at Shopzilla. Revenue in the fourth quarter of 2007 increased slightly compared with the fourth quarter of 2006 primarily due to traffic acquisition efficiencies. In addition, Shopzilla’s Web sites continue to rank in the top 10 of all U.S. retail Web properties.
 
Segment profit in 2007 was impacted by $10 million of costs that were incurred in the first quarter to build brand awareness for uSwitch and $7 million of costs incurred related to a management transition at Shopzilla.
 
Capital expenditures in 2007 and 2006 primarily relate to capitalized software development costs.
 
Liquidity and Capital Resources
 
Our primary source of liquidity is our cash flow from operating activities. Marketing services, including advertising and referral fees, provide approximately 80 percent of total operating revenues, so cash flow from operating activities is adversely affected during recessionary periods. Information about our use of cash flow from operating activities is presented in the following table:
 
                         
    For the Years Ended December 31,  
    2007     2006     2005  
    (In thousands)  
 
Net cash provided by continuing operating activities
  $ 383,221     $ 293,143     $ 166,684  
Net cash provided by (used in) discontinued operations
    44,225       95,218       (22,240 )
Distributions paid to minority interest
    (62,968 )     (38,157 )     (29,042 )
Change in parent company investment, net
    (3,557 )     136,517       148,234  
                         
Cash flow available for acquisitions, investments and debt repayment
  $ 360,921     $ 486,721     $ 263,636  
                         
Sources and uses of available cash flow:
                       
Business acquisitions
  $ (29,880 )   $ (372,157 )   $ (522,786 )
Capital expenditure
    (73,093 )     (40,417 )     (29,026 )
Other investing activity
    (242 )     (98 )     (243 )
(Decrease) increase in long term debt
    (261,282 )     (59,611 )     293,959  
                         
 
Our cash flow has been used primarily to fund acquisitions and investments, develop new businesses, and repay debt. Net cash provided by operating activities has increased year-over-year due to the improved operating performance of our business segments.
 
In July 2007, we reached agreements to acquire the Web sites RecipeZaar.com and Pickle.com for total cash consideration of approximately $30 million.


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On April 24, 2007, we closed the sale for the two Shop At Home-affiliated stations located in Lawrence, MA, and Bridgeport, CT, which provided cash consideration of approximately $61 million.
 
In 2006, we closed the sale of the Shop At Home-affiliated stations located in San Francisco, CA, Canton, OH and Wilson, NC for cash consideration of $109 million.
 
In 2006, we sold certain assets of our Shop At Home business for cash consideration of approximately $17 million. Cash expenditures associated with the termination of long-term agreements and employee termination benefits at Shop At Home totaled approximately $15 million in 2006.
 
In March 2006, we acquired 100 percent of the common stock of uSwitch for approximately $372 million, net of cash and short-term investments acquired.
 
On June 27, 2005, we acquired 100 percent ownership of Shopzilla for approximately $570 million in cash. Assets acquired in the transaction included approximately $34 million of cash and $12 million of short-term investments. The acquisition was financed using a combination of cash on hand and additional borrowings.
 
Pursuant to the terms of the Food Network general partnership agreement, the partnership is required to distribute available cash to the general partners. Cash distributions to Food Network’s non-controlling interests were $63.0 million in 2007, $38.2 million in 2006 and $29.0 million in 2005.


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Contractual Obligations
 
The following table provides a summary of our contractual cash commitments as of December 31, 2007 is as follows:
 
                                         
    Less than
    Years
    Years
    Over
       
    1 Year     2 & 3     4 & 5     5 Years     Total  
    (In thousands)  
 
Long-term debt:
                                       
Principal amounts(1)
  $ 40,000     $ 199,100     $ 264,959     $     $ 504,059  
Interest on notes
    23,243       40,019       17,929             81,191  
Network launch incentives:
                                       
Network launch incentive offers accepted
    4,616       6,738                   11,354  
Incentives offered to cable television systems
    2,574       6,599       1,091             10,264  
Programming:
                                       
Available for broadcast
    16,555                         16,555  
Not yet available for broadcast
    75,132       37,080       353             112,565  
Employee compensation and benefits:
                                       
Deferred compensation and benefits
    940       1,880       1,880       15,010       19,710  
Employment and talent contracts
    22,157       9,239                   31,396  
Operating leases:
                                       
Non-cancelable
    15,021       29,845       26,839       63,595       135,300  
Cancelable
    248       123       6,116       1,730       8,217  
Pension obligations:
                                       
Minimum pension funding
    912       1,805       1,678       7,448       11,843  
Other commitments:
                                       
Distribution agreements
    1,573       3,289       3,420       3,049       11,331  
Satellite transmission
    5,460       10,380       8,160       27,880       51,880  
Non-cancelable purchase and service commitments
    8,397       1,372       31             9,800  
Other purchase and service commitments
    26,242       20,197       2,552             48,991  
                                         
Total contractual cash obligations
  $ 243,070     $ 367,666     $ 335,008     $ 118,712     $ 1,064,456  
                                         
 
 
(1) The long-term debt obligations above reflect our historical debt level, which is not representative of the debt repayment that will be due under our anticipated indebtedness of $375 million. We will describe the terms of the new credit facilities once we have negotiated the terms with the lenders under the bank facility.
 
In the ordinary course of business we enter into long-term contracts to obtain distribution of our networks, to license or produce programming, to secure on-air talent, to lease office space and equipment, to obtain satellite transmission rights, and to purchase other goods and services.
 
Long-Term Debt — Principal payments on long-term debt reflect the repayment of our fixed-rate notes in accordance with their contractual due dates. Principal payments also include the repayment of our outstanding variable rate credit facilities assuming repayment will occur upon the expiration of the facility in June 2011.
 
Interest payments on our fixed-rate notes are projected based on each note’s contractual rate and maturity. Interest payments on our variable-rate credit facilities assume that the outstanding balance on the facilities and the related variable interest rates remain unchanged until the expiration of the facilities in June 2011.
 
Network Launch Incentives — We may offer incentives to cable and satellite television systems in exchange for long-term contracts to distribute our networks. Such incentives may be in the form of cash payments or an initial


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period in which the payment of affiliate fees is waived. We become obligated for such incentives at the time a cable or satellite television system launches our programming.
 
Amounts included in the above table for network launch incentive offers accepted by cable and satellite television systems include both amounts due to systems that have launched our networks and estimated incentives due to systems that have agreed to launch our networks in future periods.
 
We have offered launch incentives to cable and satellite television systems that have not yet agreed to carry our networks. Such offers generally expire if the system does not launch our programming by a specified date. We expect to make additional launch incentive offers to cable and satellite television systems to expand the distribution of our networks.
 
Programming — Program licenses generally require payments over the terms of the licenses. Licensed programming includes both programs that have been delivered and are available for telecast and programs that have not yet been produced. If the programs are not produced, our commitments would generally expire without obligation.
 
We also enter into contracts with certain independent producers for the production of programming that airs on Scripps Networks. Production contracts generally require us to purchase a specified number of episodes of the program.
 
We expect to enter into additional program licenses and production contracts to meet our future programming needs.
 
Talent Contracts — We secure on-air talent for Scripps Networks through multi-year talent agreements. Certain agreements may be terminated under certain circumstances or at certain dates prior to expiration. We expect our employment and talent contracts will be renewed or replaced with similar agreements upon their expiration. Amounts due under the contracts, assuming the contracts are not terminated prior to their expiration, are included in the contractual commitments table.
 
Operating Leases — We obtain certain office space under multi-year lease agreements. Leases for office space are generally not cancelable prior to their expiration. Leases for operating and office equipment are generally cancelable by either party on 30 to 90 day notice. However, we expect such contracts will remain in force throughout the terms of the leases. The amounts included in the table above represent the amounts due under the agreements assuming the agreements are not canceled prior to their expiration.
 
We expect our operating leases will be renewed or replaced with similar agreements upon their expiration.
 
Pension Funding — We sponsor qualified defined benefit pension plans that cover substantially all employees. We also have a non-qualified Supplemental Executive Retirement Plan (“SERP”).
 
Contractual commitments summarized in the contractual obligations table include payments to meet minimum funding requirements of our defined benefit pension plans in 2007 and estimated benefit payments for our unfunded non-qualified SERP plan.
 
Estimated payments for the SERP plan have been estimated over a ten-year period. Accordingly, the amounts in the over 5 years column include estimated payments for the periods of 2013-2017. While benefit payments under these plans are expected to continue beyond 2017, we believe it is not practicable to estimate payments beyond this period.
 
Income Tax Obligations — The Contractual Obligations table does not include any reserves for income taxes recognized under FIN 48 due to the fact that we are unable to reasonably predict the ultimate amount or timing of settlement of our reserves for income taxes. As of December 31, 2007, our reserves for income taxes totaled $37.8 million which is reflected as an other long-term liability in our consolidated balance sheets. (See Note 7 to the Consolidated Financial Statements for additional information on Income Taxes).


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Purchase Commitments — We obtain satellite transmission, audience ratings, market research and certain other services under multiyear agreements. These agreements are generally not cancelable prior to expiration of the service agreement. We expect such agreements will be renewed or replaced with similar agreements upon their expiration.
 
We may also enter into contracts with certain vendors and suppliers. These contracts typically do not require the purchase of fixed or minimum quantities and generally may be terminated at any time without penalty.
 
Included in the table of contractual commitments are purchase orders placed as of December 31, 2007. Purchase orders placed with vendors, including those with whom we maintain contractual relationships, are generally cancelable prior to shipment. While these vendor agreements do not require us to purchase a minimum quantity of goods or services, and we may generally cancel orders prior to shipment, we expect expenditures for goods and services in future periods will approximate those in prior years.
 
Quantitative and Qualitative Disclosures about Market Risk
 
Earnings and cash flow can be affected by, among other things, economic conditions, interest rate changes, and foreign currency fluctuations.
 
In connection with the separation, Scripps Networks Interactive intends to incur approximately $375 million of variable-rate debt. Each quarter point change in interest rates would result in a $0.9 million change in annual interest expense.
 
Our primary exposure to foreign currencies is the exchange rates between the U.S. dollar and the British pound and the Euro. Reported earnings and assets may be reduced in periods in which the U.S. dollar increases in value relative to those currencies. Included in shareholders’ equity is $55.0 million of foreign currency translation adjustment gains resulting primarily from the devaluation of the U.S. dollar relative to the British pound since our acquisition of uSwitch in March 2006.
 
Our objective in managing exposure to foreign currency fluctuations is to reduce volatility of earnings and cash flow. Accordingly, we may enter into foreign currency derivative instruments that change in value as foreign exchange rates change, such as foreign currency forward contracts or foreign currency options. We held no foreign currency derivative financial instruments at December 31, 2007.


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BUSINESS
 
Overview
 
Scripps Networks Interactive is a leading lifestyle content and interactive services company with respected, high-profile television and interactive brands. Our national television networks and interactive services engage audiences and efficiently serve advertisers by delivering entertaining and highly useful content that focuses on specifically defined topics of interest.
 
We manage our operations through two reportable operating segments: (i) Lifestyle Media (formerly Scripps Networks), which includes HGTV, Food Network, DIY Network (“DIY”), Fine Living, Great American Country (“GAC”), a minority interest in Fox-BRV Southern Sports Holdings LLC, and Internet-based businesses, including RecipeZaar.com, HGTVPro.com and FrontDoor.com, that are associated with the aforementioned television brands; and (ii) Interactive Services (formerly Scripps Interactive Media), which includes online comparison shopping and consumer information services, Shopzilla, BizRate and uSwitch.
 
Our Lifestyle Media segment derives revenue principally from advertising sales, affiliate fees and ancillary sales, including the sale and licensing of consumer products. Revenues from the Interactive Services segment are generated primarily from referral fees and commissions paid by merchants and service providers for online leads generated by the company’s comparison shopping Web sites. Revenues from the Lifestyle Media segment accounted for 83 percent, 80 percent and 90 percent of our consolidated revenues for 2007, 2006 and 2005, respectively, and revenues from the Interactive Services segment accounted for 17 percent, 20 percent and 10 percent of our consolidated revenues for those periods, respectively.
 
We seek to engage audiences that are highly desirable to advertisers with entertaining and informative lifestyle content that is produced for television, the Internet and any other media platforms consumers choose. We intend to expand and enhance our Lifestyle Media brands through the creation of popular new programming and content, the use of new distribution platforms, such as high definition television channels, mobile phones and video-on-demand, and the licensing and sale of branded consumer products. We are particularly focused on the internal development and acquisition of interactive, digital media brands that are related to the lifestyle content categories popularized by our television networks and associated Internet enterprises. At our Interactive Services businesses, we aggregate large audiences on the Internet by organizing searchable and highly useful consumer information. We intend to enhance our Interactive Services businesses by improving the overall search capabilities of our Web sites, diversifying sources of revenue, increasing the volume of user-generated consumer information and developing new international and domestic markets.
 
Our Competitive Strengths
 
A leading food, shelter and lifestyle media company, with nationally recognized brands that are attractive to advertisers
 
Scripps Networks Interactive has the largest collection of programming directed at the food, shelter and lifestyle categories. Our national television networks reach more than 96 million U.S. households, and our brands appeal to a demographic audience sought after by advertisers. Scripps Networks Interactive’s broad distribution to specialized audiences and our focus on connecting with our audiences make our networks an attractive vehicle for advertisers.
 
A strong connection with audiences and a proven ability to create new popular programming to add to an already valuable entertainment library
 
We have a strong understanding of our audiences, which enhances our ability to develop original and creative programming. The programming covers a broad spectrum and appeals to a variety of audiences, with new series continually being developed and debuted throughout the year. As a result of our capabilities in program development, we believe we have assembled a library with significant future revenue potential.


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An established and expanding presence across multiple media outlets
 
Our national television networks provide a strong foundation for the Lifestyle Media business through an existing customer base and brand recognition from which to build additional media platforms and revenue sources. The Lifestyle Media segment operates a number of Web sites in the food and shelter category, which collectively attracted over 21 million unique visitors in December 2007. We continue to expand our online presence through the acquisition and launch of complementary sites that include broadband content, social networking and video-on-demand offerings across our properties. Our portfolio of Web-based media is the leader in the food and shelter categories.
 
A secure distribution platform
 
Our programming services are made available to consumers through affiliation agreements with cable and satellite television system operators. The agreements are generally long-term and provide for built-in rate increases and protected distribution. We believe that our strong relationships with affiliates, the quality and popularity of our networks and our ability to create new programming that is appealing to viewers have enabled us to renew existing affiliation agreements and obtain new distribution for existing networks.
 
Proprietary technology for retrieving, organizing and presenting information in the comparison shopping space
 
Our Interactive Services businesses present consumers with information on a comprehensive array of products and services available for purchase on the Internet. We continuously update our proprietary technology and associated Web sites so that consumers can easily find and compare data on the specific products and services they are seeking. Our search technology generates useful content that gives consumers the ability to make quick, informed purchasing decisions. We believe the proprietary nature of our search algorithms and our ability to improve comparison shopping search technologies provides us with a competitive market advantage.
 
Attractive pricing model for advertisers and merchants
 
Our online price comparison shopping services provide participating advertising merchants with an efficient cost-per-click pricing structure that allows them to accurately evaluate the return on investment they earn on the money they spend to utilize our services. We believe our proprietary, automated services to advertising merchants and service providers, including real-time reporting systems, provides our comparison shopping services with a competitive advantage over more traditional advertising models.
 
Solid financial profile
 
We have a balanced portfolio of high-margin national television networks and fast-growing internet assets, providing the potential for substantial revenue and operating income growth. Additionally, we believe our strong balance sheet and free cash flow will give us the ability to fund investments in both organic and acquisition-based growth opportunities.
 
An experienced management team
 
Scripps Networks Interactive will be led by a management team that has demonstrated the expertise and vision to capitalize on its current operational strengths and strategically invest in new businesses that complement its existing portfolio of businesses. The management team consists of leaders in the media industry with established track records of success.
 
Our Strategy
 
Our mission is to be the leading lifestyle content media company with best-in-class brands that spread across multiple consumer-focused media platforms. We plan to achieve this by enhancing and extending our existing


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brands across multiple media platforms, developing new brands to be utilized in a multiplatform strategy and being focused on the consumer experience in all aspects of our business. More specifically, we intend to do the following:
 
Enhance and extend existing Lifestyle Media brands
 
We will continue investing in programming to increase the popularity and distribution of our existing brands and to continually improve the content library to be used on other platforms. These investments will allow us to grow our audience base and advertising revenue streams. Additionally, we expect to extend our brands through new channels such as the licensing and sale of branded consumer products.
 
Expand our growing multiplatform presence and develop new brands
 
We expect to continue to take advantage of emerging technology and consumer preferences by distributing our brands and related content across a variety of new distribution channels, including high-definition programming, mobile devices and video-on-demand. As part of this expansion, we expect to demonstrate organic growth and look for strategic partnerships and acquisitions that fit with our existing brand portfolio.
 
Continuously improve the online shopping experience for consumers
 
We plan to continuously improve the customer experience and build brand loyalty by enhancing the speed and accuracy of search results, refining and updating the respective user interfaces of our Web sites and increasing the range of information presented to help consumers make better educated purchasing decisions. We believe this will allow us to grow our presence in the markets in which we currently operate and provide us with a foundation to continually evaluate expansion into additional markets.
 
Broaden Interactive Services through geographic and product diversity
 
We plan to continue growth of our Interactive Services businesses in promising international markets, with an immediate focus on online comparison shopping for retail products in the United Kingdom, France and Germany. In the United Kingdom, we also plan to accelerate expansion of our uSwitch subsidiary into a wider range of service categories, with an immediate focus on price comparison and switching services for auto insurance and personal finance products.
 
Build on status as one of top companies on the Web
 
We plan to continue to invest in Web-based technologies both internally and through acquisition to develop user-centric applications and communities online. Ours is a consumer-focused strategy intending to increase user-generated content and engage users through multimedia experiences and useful and entertaining content. These initiatives should increase traffic to our Web sites and create additional advertising revenue streams.
 
Business Segments
 
LIFESTYLE MEDIA
 
Our Lifestyle Media businesses own and operate national television programming services, Internet businesses and other electronic content services primarily in the United States. The segment generates revenue principally from the sale of advertising time on national television networks and associated interactive media platforms and from affiliate fees paid by cable television operators, direct-to-home satellite services and other distributors that carry our network programming. In 2007, revenues from advertising sales and affiliate fees were approximately 80 percent and 20 percent, respectively, of total revenue for the Lifestyle Media segment. Our Lifestyle Media segment also derives revenue from the licensing of its content to third parties, primarily in international markets, and the licensing of its brands for consumer products such as books and kitchenware.
 
The advertising revenue generated by our national television networks depends on the number of households subscribing to each service and on viewership ratings as determined by Nielsen Media Research and other third party research companies.


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HGTV and Food Network and their targeted food and shelter programming categories appeal strongly to women viewers with higher incomes in the 18 to 49 age range, an audience demographic that is highly valued by advertisers. GAC also appeals to women viewers, while DIY typically has a higher percentage of adult male viewers. Fine Living is not yet a rated programming service, but is intended to appeal to both higher income men and women. Our advertising revenue is typically highest in the fourth quarter. Advertising revenue can fluctuate relative to the popularity of specific programs and blocks of programming during defined periods of the day.
 
Affiliate fee revenues are negotiated with individual cable television and direct to home satellite operators and other distributors. The negotiations typically result in multi-year carriage agreements with scheduled, graduated rate increases. As an incentive to obtain long-term distribution agreements for its newer networks, we may make cash payments to cable and direct to home satellite operators, provide an initial period during which a distributor’s affiliate fee payments are waived, or both. The amount of the fee we receive can be determined by the number of subscribers with access to our network programming and the ratings success of the programming.
 
Lifestyle Media Web sites and other interactive businesses are making an increasingly important contribution to the segment’s operating results. Accordingly, we are developing and acquiring interactive businesses that are intended to diversify sources of revenue and enhance our competitive advantage as a leading provider of food, shelter and lifestyle content. Revenue generated by Lifestyle Media interactive businesses is derived primarily from the sale of display and banner advertising and sponsorships.
 
Lifestyle Media operates nine Web sites, including FoodNetwork.com, HGTV.com, DIYNetwork.com, FineLiving.com and GACTV.com, all of which serve as home Web sites for the segment’s television programming networks. The segment’s network-branded Web sites also provide informational and instructional content on specific topics within their broader lifestyle content categories. Such features as HGTV KitchenDesign, HGTV BathDesign, HGTV Simply Quilts, DIY Automotive, DIY Crafts, DIY Gardening, DIY Home Improvement, DIY Woodworking and GAC Still Rollin’ are intended to aggregate engaged audiences with interests in specific lifestyle topics. All of the segment’s interactive services benefit from archived television network programming that is 95 percent owned by the company. Our ownership of programming enables us to efficiently and economically repurpose it for use on our Internet and other interactive distribution channels, including mobile and video-on-demand.
 
Other digital services operated by the Lifestyle Media segment include HGTVPro.com, which appeals to construction professionals and advanced do-it-yourself enthusiasts; RecipeZaar.com, a recipe-sharing social networking Web site; and FrontDoor.com, a local real estate search and consumer information site. Lifestyle Media interactive businesses accounted for about six percent of the segment’s total revenue in 2007. The strategic focus at our interactive businesses is to increase the number of page views and video plays and attract more unique visitors to our Web sites.
 
In anticipation of broad consumer acceptance of high definition television, the company is developing an increasing amount of original programming in high-definition format. Lifestyle Media has launched two high definition channels, HGTV-HD and Food Network-HD, which are distributed by cable television and direct-to-home satellite system operators.
 
HGTV
 
HGTV is America’s leader in home and lifestyle television programming and is one of cable and satellite television’s top-rated networks. HGTV reaches about 96 million domestic households via cable and direct satellite television services. The network’s companion Web site is one of the nation’s leading online home and garden destinations, attracting an average of about 5 million unique visitors per month. HGTV owns 33 percent of HGTV Canada. The network’s programming also can be seen in 47 other countries. The company owns 100 percent of HGTV.
 
HGTV television programming and Internet content commands an audience interested specifically in home and shelter-related topics. HGTV is television’s only network dedicated solely to such topics as decorating, interior design, home remodeling, home improvement, landscape design and real estate. HGTV strives to engage audiences by creating original programming that is entertaining, instructional and informative.


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Programming highlights in 2007 included HGTV Design Star, Designed to Sell, House Hunters, My House is Worth What?, My First Place and Spice Up My Kitchen. The network also has developed successful programming events, including the HGTV Dream Home Giveaway and HGTV Green Home Giveaway and annual live coverage of the Rose Bowl Parade.
 
HGTV reached approximately 96 million U.S. television households as of December 31, 2007. HGTV Design Star was the network’s highest rated program in 2007, attracting about 45 million viewers over a six-week period.
 
FOOD NETWORK
 
Food Network is a leading cable and satellite television network that has defined the television food genre. The network engages viewers with likable hosts and personalities who explore interesting and different ways to approach food and food-related topics. Food Network is available in 96 million U.S. television households and its programming can be seen internationally in 191 countries and territories. The network’s Web site, FoodNetwork.com, consistently ranks as America’s top food and cooking Internet destination, with an average of about 9 million unique visitors per month. The company owns approximately 69 percent of the Food Network and is the managing partner. The Tribune Company has a minority interest of approximately 31 percent in Food Network.
 
Food Network programming and Internet content attracts audiences interested in food-related topics. Food Network is television’s only network dedicated solely to such topics as food preparation, dining out, entertaining, food-related travel, food manufacturing, nutrition and healthy eating. Food Network engages audiences by creating original programming that is entertaining, instructional and informative.
 
Programming highlights in 2007 included Next Food Network Star, Ace of Cakes, Iron Chef America, Diners, Drive-ins and Dives and Food Network Challenge. Many of the programs on Food Network feature or are hosted by high-profile television personalities such as Rachael Ray, Giada De Laurentiis, Alton Brown and Paula Deen.
 
Food Network reached approximately 96 million U.S. television households as of December 31, 2007. Next Food Network Star was the network’s highest rated program in 2007, attracting an average 1.7 million viewers an episode.
 
DIY NETWORK (DIY)
 
DIY is America’s only television network and Web site dedicated solely to presenting entertaining and informational programming and content across a broad range of do-it-yourself categories including home building; home improvement; automotive restoration and repair; crafts; gardening; landscaping, hobbies and woodworking. The network is available in approximately 48 million U.S. households via cable and direct satellite television services. DIY programming also is distributed internationally in 28 countries and territories. The television network’s companion Web site — DIYNetwork.com — consistently ranks among America’s top fifteen home and garden Internet destinations with an average of about 3 million unique visitors per month. The Web site features step-by-step instructions for the network’s on-air programming. The company owns 100 percent of DIY. Programming highlights in 2007 at DIY included Ask This Old House, Bob Vila’s Home Again, DIY to the Rescue, New Yankee Workshop, The Carol Duval Show, Man Caves and This Old House. The network also has developed successful quarterly events including Blog Cabin, DIY’s Great Garage Giveaway and DIY’s Kitchen and Bath Giveaway.
 
FINE LIVING
 
Fine Living is the first television programming service in the U.S. that was created to provide entertaining and informative content to viewers who are interested in quality lifestyle experiences. One of America’s fastest growing emerging television networks, Fine Living is available in about 50 million households. Original television programming and Internet content categories include adventure, weekend escapes, smart shopping, real estate, buyers’ guides, design and food and drink. Fine Living programming also can be seen internationally in 84 countries and territories. Programming highlights in 2007 included The Martha Stewart Show, Real Estate Confidential, What You Get for Your Money and I Want That. The company owns approximately 90 percent of Fine Living.


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GREAT AMERICAN COUNTRY (GAC)
 
GAC is America’s television and online destination for a pure country music experience. Distributed in the U.S. via cable and direct satellite television services, the network reaches about 53 million households with original programming, special musical performances and live concerts. GAC also is the exclusive television home of the Grand Ole Opry. The network operates a companion Web site, GACTV.com. The company owns 100 percent of GAC. The network differentiates itself as television’s only pure country music destination. GAC programming includes music videos by notable country music artists, hosted interviews, industry news, live concerts and other original content relevant to country music and the genre’s fans. Programming highlights in 2007 included Opry Live, Top 20 Country Countdown, The Edge of Country and GAC Nights.
 
HGTVPro.com
 
HGTVPro.com is a video-rich interactive service delivered via the Internet which appeals to professional builders, remodelers and contractors. Content includes professional-level best practices, tips and techniques, new product information and industry trends. HGTVPro.com attracts about 1 million unique visitors per month. HGTVPro.com is an authoritative source of information on the Internet for home construction professionals and advanced do-it-your self, home-improvement enthusiasts. The Web site features original video content, industry news and detailed tips and instructions on a wide variety of home construction topics.
 
RECIPEZAAR.com
 
RecipeZaar.com is a leading user-generated recipe and community Internet site featuring more than 230,000 recipes. RecipeZaar.com provides food enthusiasts with a browsing tool, search capabilities and personalized features. Recipezaar, one of the Internet’s top 10 food and cooking category sites, attracts about 4 million unique visitors per month. RecipeZaar.com aggregates an audience on the Internet by creating an engaged community of food enthusiasts interested in home recipes, menu planning and other food-related topics. The social-networking Web site features volumes of user-generated content, including recipes, photos, menus and reviews.
 
FRONTDOOR.com
 
FrontDoor.com is an online real estate listing service that provides localized, in-depth information on homes in neighborhoods and communities across the U.S. The interactive service provides consumers with original video content, financial tools and calculators. FrontDoor.com is a comprehensive resource on the Internet for home buyers and home sellers. The Web site features searchable national real estate listings, video of featured properties for sale, buyers’ and sellers’ guides, calculators and other tools, and a library of video content on real estate-related topics.
 
INTERACTIVE SERVICES
 
Our Interactive Services segment owns and operates Internet-based businesses that strive to simplify online shopping for consumers by aggregating, organizing, ranking and displaying relevant and searchable consumer information. Consumers who use our Interactive Services Web sites are presented with easy-to-use search results generated from continuously growing databases of information on a wide range of products and services that are offered for sale on the Internet by third-party retailers and service providers.
 
Our Interactive Services businesses operate principally in the United States, the United Kingdom, France and Germany.
 
The segment’s businesses strive to help online consumers make educated purchasing decisions by ranking products and services on such factors as comparative pricing, availability, quality and reliability. The quality and reliability of individual online merchants and service providers are ranked based on the collective, shared experiences of consumers using the segment’s Web sites. Users also are presented with supporting consumer news and information, user-generated and professional product reviews, calculators and other tools that are intended to help them complete their purchasing decisions.


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The Interactive Services segment derives the largest percentage of its revenue from direct referral fees paid by online merchants and service providers (advertisers) that enter into contractual agreements that allow them to place text-based, linked advertisements on the segment’s Web sites. The referral fees paid by advertisers are based on a cost-per-click pricing structure, which means that advertisers pay only when consumers click on their linked ads. Cost-per-click pricing provides advertisers with an efficient means of evaluating the effectiveness of their advertising. Of particular importance for advertisers is the number of sales resulting from users clicking on their linked advertising. The segment’s search businesses encourage sustained advertising relationships with merchants and service providers by demonstrating a measurable return on investment for the referral fees they pay.
 
The advertising links placed by merchants and service providers serve as the primary database of information for the segment’s Web sites. Because the success of our Interactive Services businesses depends largely on a quality user experience and repeated visits by users, ad links are intentionally presented in an unobtrusive and uniform format that provides users with impartial and factual information on products and services.
 
The Interactive Services segment also derives revenue from contractual advertising agreements with general search engines such as Google and Yahoo!. The agreements allow the general search engines to leverage relationships with their respective advertisers by placing sponsored links on our Interactive Services Web sites. Similar to our direct advertising relationships with merchants and service providers, the general search engines pay referral fees on a cost-per-click basis.
 
In addition to referral fees from linked ads and advertising links sponsored by general search engines, the segment’s Web sites also derive revenue from “switching” fees earned in the U.K. for administering purchase transactions between consumers and service providers and from the sale of banner display advertising on all of the segment’s Web sites.
 
Revenue categories as a percentage of total Interactive Services segment revenue are as follows:
 
  •  Direct referral fees from advertising merchants and service providers, 44 percent in 2007 vs. 49 percent in 2006.
 
  •  Sponsored link referral fees from general search engines, 36 percent in 2007 vs. 31 percent in 2006.
 
  •  Switching fees from advertising relationships with service providers in the U.K., 14 percent in 2007 vs. 16 percent in 2006.
 
The Interactive Services segment measures operating performance in terms of net revenue, which is defined as total revenue minus traffic acquisitions costs. Traffic acquisition costs are those marketing expenses related to generating user traffic to the segment’s Web sites. The success of the segment’s businesses is largely dependent on their ability to efficiently and economically attract a high volume of user traffic.
 
The segment’s businesses use a combination of online and off-line strategies to increase consumer awareness and subsequently generate user traffic. They include:
 
  •  Search Engine Marketing.  Search Engine Marketing refers to the purchase of text-based advertising links on general search engines such as Google and Yahoo!. The positioning and display of those paid advertising links is dependent on the acquisition of relevant keywords that determine the quality and effectiveness of general search results. The segment’s businesses participate in continuous keyword bidding auctions that are hosted by general search engines with the objective of acquiring keywords that result in the most advantageous positioning and display of purchased advertising links adjacent to general search results.
 
  •  Search Engine Optimization.  Search Engine Optimization refers to the continuous, algorithmic selection of relevant keywords that, when used by general search engine users, result in the most advantageous positioning and display of links to the segment’s Web sites within general search results. Traffic generated by Search Engine Optimization generally results in higher net revenues for the segment’s businesses than traffic generated by Search Engine Marketing.
 
  •  Offline advertising and marketing techniques, which refers to the purchase of television, newspaper, magazine, outdoor and other more traditional forms of advertising, and the execution of effective public relations campaigns, to increase brand awareness for the segment’s businesses.


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The company expects all of its Interactive Services businesses to benefit from the growth in online shopping and overall consumer acceptance of Internet commerce internationally and in the United States.
 
SHOPZILLA
 
Shopzilla is a network of online search and comparison shopping services that helps consumers find and compare prices of millions of products that are offered for sale by thousands of retail merchants via the Internet.
 
Shopzilla network brands include Shopzilla.com, BizRate.com and LowPriceShopper.com in the United States; Shopzilla.co.uk and BizRate.co.uk in the United Kingdom; Shopzilla.fe in France; and Shopzilla.de in Germany. Shopzilla Web sites in the United States collectively attract 20 to 25 million unique visitors each month.
 
Shopzilla has established BizRate.com and Shopzilla.com as leading online search and comparison shopping Web sites by aggregating one of the Internet’s largest organized indexes of products and services. Shopzilla comparison shopping services are free to consumers who access the index via simplified, intuitively designed Internet home pages that feature prominently displayed and easy-to-use search boxes. Shopzilla also operates a consumer feedback network within the BizRate brand that annually collects and publishes on its Web sites millions of consumer reviews of stores and products.
 
Shopzilla’s proprietary shopping search logic system and patented relevance function, ShopRank, make it possible for consumers to instantly obtain accurate search results for specific products and services. Search query results are organized and displayed on graphically designed, layered presentation pages that include product listings, images, comparative pricing information, links to online merchants and service providers and user-generated and professional product reviews. Search results also include merchant reliability rankings based on the shared experiences of Shopzilla users.
 
The index of products and services serves as the primary database for Shopzilla Web sites. The database is aggregated using a highly automated system for identifying products, building online catalogs and classifying and organizing product information feeds from merchants and service providers. Shopzilla builds advertising relationships with participating online merchants by providing them with a scalable, self-service sign-up process, an efficient cost-per-click pricing structure and a real-time reporting system that enables them to manage the return on the investment they are making to advertise on Shopzilla.
 
Shopzilla devotes considerable time and financial resources to continuously improving the user experience, the effectiveness of its proprietary search logic system for consumers and merchant advertisers, the design of its Web sites and the expansion of its searchable index of products and services.
 
USWITCH
 
uSwitch operates two Web sites — uSwitch.com and buy.co.uk — in the United Kingdom that were created to make it easy for consumers to shop for and compare prices on a range of home services, including gas, electricity, water, heating cover, car insurance, home telephone, digital television, broadband, credit cards, personal loans, secured loans and current accounts.
 
The uSwitch business model capitalizes on growing consumer acceptance of broadband Internet services and growth in the comparison shopping and switching market in the U.K. uSwitch is the U.K.’s leading provider of energy-related price comparison and switching services, but also has completed multiple product launches in a diverse range of other vertical markets.
 
uSwitch derives revenue primarily from fees paid by service providers for consumer leads that are delivered via the Internet and converted into actual sales. The value of uSwitch is directly proportional to the number of leads directed to service providers that are converted into sales. The business closely monitors user traffic characteristics and conversion ratios.
 
Consumers who use uSwitch are presented with a continuously updated and proprietary dataset of information including prices and product characteristics, impartial content listings of industry suppliers, service ratings and customer advice. Consumers also are presented with online calculators and other personalization tools that are


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designed to help them evaluate purchase decisions. uSwitch Web sites feature simple, easy-to-use home pages with intuitive, prominently displayed search boxes. The Web site’s proprietary search algorithm enables consumers to quickly and easily identify and switch to service providers that offer the most economically advantageous rates, fees or costs.
 
User traffic at uSwitch is generated through a variety of marketing techniques, including offline advertising that builds brand awareness and encourages direct access by consumers to the uSwitch Web site. Search engine optimization, search engine marketing, personal e-mail alert services and contractual partnerships with affiliate Internet services featuring links to uSwitch Web sites also are employed to generate user traffic. uSwitch relies on effective and proactive public relations campaigns to generate general consumer interest in switching services.
 
The quality of the user experience at uSwitch relies on strong, contractual relationships the business has established with a diverse a range of service providers and other strategic partners. uSwitch is not reliant on any single service provider in any of its product verticals. Suppliers provide continuously updated pricing and product information that serves as the primary database of information accessed by consumers. Fees are paid by suppliers on a cost-per-click and space-rental basis, and are dependant on the number of switches that are ultimately converted.


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MANAGEMENT
 
Executive Officers Following the Separation
 
All of our executive officers are currently employees of E. W. Scripps. After the spin-off, none of these individuals will continue to be employees of E. W. Scripps. The following table sets forth information as of          , 2008, regarding the individuals who are expected to serve as our executive officers following the spin-off.
 
             
Name
 
Age
 
Position
 
Kenneth W. Lowe
    57     Chairman, President and Chief Executive Officer
Joseph G. NeCastro
    51     Executive Vice President and Chief Financial Officer
Anatolio B. Cruz III
    49     Executive Vice President, Chief Legal Officer and Corporate Secretary
Mark S. Hale
    49     Senior Vice President/Technology Operations and Chief Technology Officer
Lori A. Hickok
    44     Senior Vice President/Finance
John F. Lansing
    50     Senior Vice President/Scripps Networks Interactive
Jennifer L. Weber
    41     Senior Vice President/Human Resources
 
Kenneth W. Lowe.  Mr. Lowe is expected to serve as Chairman, President and Chief Executive Officer of Scripps Networks Interactive. He currently serves as President and Chief Executive Officer of E. W. Scripps and has held that position since October 2000. Prior to that time, Mr. Lowe served as President and Chief Operating Officer from January 2000 to October 2000 and as Chief Executive Officer from 1994 to 2000 of E. W. Scripps’ Scripps Networks division.
 
Joseph G. NeCastro.  Mr. NeCastro is expected to serve as Executive Vice President and Chief Financial Officer of Scripps Networks Interactive. Mr. NeCastro joined E. W. Scripps in May 2002 as Chief Financial Officer and since 2006 has served as Executive Vice President and Chief Financial Officer. Prior to joining E. W. Scripps, Mr. NeCastro was the Chief Financial Officer of Penton Media Inc. from 1998 to May 2002.
 
Anatolio B. Cruz III.  Mr. Cruz is expected to serve as Executive Vice President, Chief Legal Officer and Corporate Secretary of Scripps Networks Interactive. He currently serves as Executive Vice President and General Counsel of E. W. Scripps, a position he has held since 2007. Mr. Cruz joined E. W. Scripps in March 2004 as Senior Vice President and General Counsel. From 1999 until joining E. W. Scripps in 2004, Mr. Cruz was Vice President, Deputy General Counsel and Assistant Secretary of BET Holdings Inc.
 
Mark S. Hale.  Mr. Hale is expected to serve as Senior Vice President/Technology Operations and Chief Technology Officer of Scripps Networks Interactive. He currently serves as Senior Vice President of Technology Operations of E. W. Scripps and Executive Vice President of Operations of its Scripps Networks division, positions he has held since August 2006. Mr. Hale joined E. W. Scripps in 1994 as a member of the original management team that oversaw the launch of HGTV and was promoted to Vice President of Technology Operations for E. W. Scripps in 2005.
 
Lori A. Hickok.  Ms. Hickok is expected to serve as Senior Vice President/Finance. She currently serves as Vice President/Controller of E. W. Scripps, a position she has held since June 2002.
 
John F. Lansing.  Mr. Lansing is expected to serve as Senior Vice President/Scripps Networks Interactive. He currently serves as a Senior Vice President of E. W. Scripps and President of its Scripps Networks division, positions he has held since January 2005. He served as Executive Vice President of the Scripps Networks division from 2004 to 2005, Senior Vice President of Scripps Television Station Group from 2002 through 2004, Vice President of Scripps Television Station Group from 2001 through 2002, and Vice President and General Manager of WEWS-TV (Cleveland), an E. W. Scripps property, from 1997 through 2001.
 
Jennifer L. Weber.  Ms. Weber is expected to serve as Senior Vice President/Human Resources of Scripps Networks Interactive. She joined E. W. Scripps in 2005 and currently serves as its Senior Vice President of Human


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Resources. Prior to joining E. W. Scripps, Ms. Weber was managing principal of Towers Perrin HR Services in Cincinnati from 2002 to 2005.
 
Board of Directors Following the Separation
 
Scripps Networks Interactive currently has no active operations and its board of directors consists of certain executive officers of E. W. Scripps. Prior to the spin-off, we expect that E. W. Scripps will appoint the individuals set forth in the table, all of whom are on the current E. W. Scripps Board of Directors, to serve on our board of directors. It is currently expected that two of such individuals who will become our directors will continue to be members of the E. W. Scripps board of directors following the spin-off. These individuals, Nackey E Scagliotti and John H. Burlingame, are the trustees of The Edward W. Scripps Trust. We intend to add two individuals to our board, one of whom we expect will be a trustee of the Trust, prior to or following completion of the spin-off. We expect that such new trustee of the Trust will become a member of the E. W. Scripps Board of Directors following completion of the spin-off. The table below sets forth information as of January 31, 2008, regarding the individuals who are expected to be members of our board of directors. For the biographical information of Mr. Lowe, please see the section entitled “Executive Officers Following the Separation” immediately preceding this section.
 
             
Name
 
Age
 
Title
 
Kenneth W. Lowe
    57     Chairman, President, Chief Executive Officer
Nicholas B. Paumgarten
    62     Lead Director
John H. Burlingame
    74     Director
David A. Galloway
    64     Director
Jarl Mohn
    56     Director
Jeffrey Sagansky
    56     Director
Nackey E. Scagliotti
    62     Director
Ronald W. Tysoe
    54     Director
 
Nicholas B. Paumgarten.  Mr. Paumgarten has been a director of E. W. Scripps since 1988. He has served as Chairman of Corsair Capital LLC (an investment firm) since March 2006. He served as Managing Director of J.P. Morgan Chase and the Chairman of J.P. Morgan Corsair II Capital Partners L.P. from February 1992 to March 2006. He is a director of Compucredit (a credit card company) and Sparta Insurance.
 
John H. Burlingame.  Mr. Burlingame has been a director of E. W. Scripps since 1988 and is a trustee of The Edward W. Scripps Trust. From 1963 to 2003 he was a partner in the law firm of Baker & Hostetler LLP, serving as its Executive Partner from 1982 to 1997.
 
David A. Galloway.  Mr. Galloway has been a director of E. W. Scripps since 2002. He served as President and Chief Executive Officer of Torstar Corporation (a media company listed on the Toronto Stock Exchange) from 1988 until his retirement in May 2002. He is chairman of the Bank of Montreal and of Harris Bankmont (a Montreal bank and subsidiary of the Bank of Montreal) and is a director of Toromont Industries (an equipment dealer and gas compression company).
 
Jarl Mohn.  Mr. Mohn has been a director of E. W. Scripps since 2002. He has been a Trustee of the Mohn Family Trust since September 1991, served as Interim CEO at MobiTV from May 2007 to October 2007, served as President and Chief Executive Officer of Liberty Digital, Inc. from January 1999 to March 2002 and President and CEO of E! Entertainment Television from January 1990 to December 1998. He is a director and non-executive Chairman of CNET (an advertising-supported collection of special interest web sites), and a director of XM Satellite Radio Holdings, Inc. (a satellite radio service provider), MobiTV (a private company that provides live television and video programming to cell phones), KickApps (a software company with applications to create social networks and community), and Vuze (a peer-to-peer video distribution platform).
 
Jeffrey Sagansky.  Mr. Sagansky has been a director of E. W. Scripps since August 2003. He has served as Co-Chairman and CEO of Peace Arch Entertainment since November 2007, Chairman of Elmtree Partners since January 2007 and Chairman of People’s Choice Cable TV since January 2005. He served as Vice Chairman from December 2002 to August 2003 and CEO from 1998 to December 2002 of Paxson Communications. He was


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Co-President of Sony Pictures Entertainment from 1996 to 1998 and President of CBS Entertainment from 1990 to 1994. He is a director of American Media (a publishing company).
 
Nackey E. Scagliotti.  Ms. Scagliotti has been a director of E. W. Scripps since 1999 and is a trustee of The Edward W. Scripps Trust. She has been Chairman of the Board of Directors of The Union Leader Corporation (publisher of daily and weekly newspapers) since May 1999. She served as the Assistant Publisher of Union Leader Corporation from 1996 to May 1999. She served as President from 1999 to 2003 and Publisher in 1999 and 2000 of Neighborhood Publications, Inc. (publisher of weekly newspapers).
 
Ronald W. Tysoe.  Mr. Tysoe has been a director of E. W. Scripps since 1996. He served as a Senior Advisor of Perella Weinberg Partners LP from October 2006 until September 2007. He served as Vice Chairman of Federated Department Stores, Inc. (now Macy’s, Inc.) from April 1990 to October 2006. He is a director of Canadian Imperial Bank of Commerce, Cintas (a company providing specialized services, including uniform programs and other products to businesses), NRDC Acquisition Corp. (a special purpose acquisition corporation) and Taubman Centers, Inc. (a real estate company that owns and operates regional shopping centers).
 
Composition of Scripps Networks Interactive Board of Directors
 
Upon the consummation of our separation, our Board of Directors will consist of ten members, all but one of whom we expect to satisfy the independent standards established by the Sarbanes-Oxley Act and the applicable rules of the SEC and the New York Stock Exchange (“NYSE”).
 
The NYSE requires listed companies to have a majority of independent directors on their boards and to ensure that their compensation committee and governance committee are composed of a majority of independent directors. Companies that qualify as “controlled companies” do not have to comply with these strictures so long as they disclose to shareholders that the company qualifies as a “controlled company” and is relying on this exemption. A “controlled company” is a listed company of which more than 50 percent of the voting power is held by an individual, a group, or another company. Because The Edward W. Scripps Trust will hold a majority of our outstanding Common Voting Shares, we could qualify as a “controlled company” and could rely on the NYSE exemption. At this time, we have no intention of relying on this exemption.
 
Committees of Scripps Networks Interactive Board of Directors
 
Our board of directors will establish the following standing committees in connection with the discharge of its responsibilities. The charters of these committees will be modeled on the charters of the E. W. Scripps committees.
 
Executive Committee.  Nicholas B. Paumgarten (lead director), John H. Burlingame and Kenneth W. Lowe (chairman) will be the members of the executive committee. The board may delegate authority to the executive committee to exercise certain powers of the board in the management of the business and affairs of the Company between board meetings.
 
Audit Committee.  Ronald W. Tysoe (chair), Jeffrey Sagansky and [          ] will be the members of the audit committee. The purpose of the committee will be to assist the board in fulfilling its oversight responsibility relating to the integrity of our financial statements and financial reporting process, our systems of internal accounting and financial controls and our internal audit functions. The committee will be responsible for the annual independent audit of our financial statements, the engagement of the independent auditors and the evaluation of the independent auditors’ qualifications, independence, performance and fees; our compliance with legal and regulatory requirements, including disclosure controls and procedures; the evaluation of enterprise risk issues; and the fulfillment of all other responsibilities to be outlined in its charter. Each expected member of the audit committee is financially literate, under applicable SEC and NYSE standards. In addition, Mr. Tysoe is an “audit committee financial expert,” as defined under SEC regulations. No member of the committee may receive any compensation, consulting, advisory or other fee from us, other than the board compensation described elsewhere in this information statement, as determined in accordance with applicable SEC and NYSE rules. Members serving on the audit committee will be limited to serving on two other audit committees of public companies, unless our board of directors evaluates and determines that commitments in excess of such limit would not impair his or her effective service to us.


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Compensation Committee.  David A. Galloway (chair), John H. Burlingame, Jarl Mohn and Ronald W. Tysoe will be the members of the compensation committee. The committee will review and approve our goals and objectives relevant to compensation of senior management and evaluate the performance of senior management in light of those goals and objectives. With respect to the senior managers, the committee will establish base compensation levels, the terms of incentive compensation plans and equity-based plans and post-service arrangements. The committee will review all of the components of the chief executive officer’s compensation, including goals and objectives, and make recommendations to the board of directors. With respect to any funded employee benefit plans, the committee will appoint and monitor named fiduciaries. On an annual basis, the committee will review the operation of our compensation program to evaluate its coordination and execution and review any management perquisites. The committee will review succession planning relating to positions held by senior officers and make recommendations with respect thereto to the board of directors. The committee will review and make recommendations with respect to director compensation. The committee will have the authority to engage outside consultants to assist in determining appropriate compensation levels for the chief executive officer, other senior managers and directors.
 
Nominating & Governance Committee.  Nackey E. Scagliotti (chair), John H. Burlingame, Nicholas B. Paumgarten, Jeffrey Sagansky and [          ] will be the members of the nominating and governance committee. The purpose of the committee will be to assist the board by identifying individuals qualified to become board members and to recommend director nominees to the board; to recommend to the board corporate governance guidelines; to lead the board in an annual review of the board’s performance; and to recommend nominees for each committee of the board.
 
Selection of Nominees for Scripps Networks Interactive Board of Directors
 
In determining candidates for nomination, the nominating and governance committee will seek the input of our chairman and chief executive officer and may engage outside search firms to assist it in identifying and contacting qualified candidates. All candidates will be evaluated by the committee using the qualification guidelines included as part of the corporate governance guidelines we expect to adopt. We expect these guidelines to be modeled on the guidelines of E. W. Scripps. As part of the selection process, the committee and the board of directors will examine candidates’ business skills and experience, personal integrity, judgment, and ability to devote the appropriate amount of time and energy to serving the best interests of shareholders.
 
Shareholders wishing to recommend individuals for consideration as directors will be able to contact the nominating and governance committee by writing to our corporate secretary. Recommendations by shareholders will be evaluated in the same manner as committee recommendations. Shareholders who want to nominate directors for election at our next annual meeting of shareholders will be required to follow the procedures described in our corporate governance guidelines.
 
Compensation Committee Interlocks and Insider Participation
 
With the exception of Mr. Lowe, none of our executive officers will serve as a member of our Board of Directors. Mr. Lowe will not serve on our compensation committee. Following the spin-off, none of our executive officers will serve as a member of the compensation committee of any entity that has one or more executive officers serving on our compensation committee.
 
Related Party Transactions
 
Under its charter, the audit committee of our board of directors will be responsible for reviewing any proposed related party transaction. We expect our audit committee to approve a statement of policy with respect to related party transactions which will be modeled on the E. W. Scripps policy and recognize that such transactions can present a heightened risk of conflicts of interest or improper valuation or the perception thereof. We expect that this policy will define the term “related party,” will require management to present to the audit committee for its approval any related party transaction, and will set forth appropriate disclosure procedures.
 
Prior to the distribution date, Scripps Networks Interactive will adopt a written Code of Business Conduct and Ethics, patterned after E. W. Scripps’ code of the same name, which will set forth Scripps Networks Interactive’s


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policy that all directors, officers, and employees avoid business and personal situations that may give rise to a conflict of interest. A “conflict of interest” under the code will occur when an individual’s private interest significantly interferes or appears to significantly interfere with Scripps Networks Interactive’s interest. The code will provide that the audit committee (or its designee) is generally responsible for enforcement of the code relating to members of the board of directors and that Scripps Networks Interactive’s management committee (or its designee) will be responsible for enforcement of the code relating to officers and employees. Scripps Networks Interactive expects to have procedures pursuant to which significant transactions and transactions that are related party transactions under Securities and Exchange Commission rules will be subject to disclosure and review by an appropriate disinterested party (which may include one or more directors or executive officers).


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COMPENSATION DISCUSSION AND ANALYSIS
 
This Compensation Discussion and Analysis describes The E. W. Scripps Company’s (“E. W. Scripps”) compensation philosophy for named executive officers for 2007, and the ways in which Scripps Networks Interactive, Inc. (“Scripps Networks Interactive”) anticipates that its compensation philosophy will differ from that of E.W. Scripps after Scripps Networks Interactive becomes a separate public company. Initially, Scripps Networks Interactive’s compensation program will be similar to those applicable to the executive officers at Scripps and Scripps Networks Interactive does not anticipate that there will be many differences immediately following the separation. The compensation committees of both of Scripps and Scripps Networks Interactive will review the impact of the separation on all aspects of compensation and make appropriate adjustments.
 
For purposes of this Compensation Discussion and Analysis, Scripps Networks Interactive’s named executive officers are Messrs. Lowe, NeCastro, Lansing, Cruz and Hale. These individuals are referred to collectively as Named Executive Officers (“NEOs”). Each of these NEOs, other than Mr. Hale, is also a NEO of Scripps.
 
Overview of Compensation Program
 
Objectives
 
Historically.  E. W. Scripps’ executive compensation program is designed to meet the following three objectives that align with and support E. W. Scripps’ strategic business goals:
 
  •  Attract and retain executives who lead Scripps’ efforts to build long-term value for shareholders.
 
  •  Reward annual operating performance and increases in shareholder value.
 
  •  Emphasize the variable performance-based components of the compensation program more heavily than the fixed components.
 
These objectives will remain the same following the separation.
 
Compensation Elements
 
Historically.  The key elements of Scripps’ executive compensation program are base salary, annual incentives, long-term incentives consisting of stock options and performance-based restricted stock, and retirement benefits. The compensation program has also included certain perquisites, but these perquisites are not a key element of compensation. Each element of compensation is designed to fulfill Scripps’ compensation objectives discussed above.
 
             
        Fixed or
   
Program
 
Form
 
Variable
 
Objectives
 
Base Salary
  Cash   Fixed   • Serves as attraction and retention incentive
• Rewards individual performance
Annual incentive
  Cash   Variable   • Rewards annual operating results
• Emphasizes variable performance-based compensation
Long-term incentive, which includes:
performance-based restricted shares, and stock options
  Equity   Variable   • Serves as attraction and retention incentive
• Rewards for increasing stock price and enhancing long-term value
• Aligns interests with shareholders
• Rewards annual operating results
• Emphasizes variable performance-based compensation
Retirement benefits, including the pension plan, the Supplemental Executive Retirement Plan and the Executive Deferred Compensation Plan   Cash   Fixed   • Serves as attraction and retention incentive


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Going Forward.  Following the separation, Scripps Networks Interactive expects to continue to use the mix of compensation elements described above.
 
Use of Market Data
 
Historically.  E. W. Scripps believes that each element of the compensation program should remain competitive in order to attract and retain key executive talent. To help determine the competitive market, the E. W. Scripps Compensation Committee relies, in part, on market compensation data of comparable executive positions within similarly-sized media companies.
 
E. W. Scripps considers this market information when establishing base salary, annual incentive and long-term equity opportunities, and generally strives to structure each element close to the median of the market data. However, the E. W. Scripps Compensation Committee retains the flexibility to make adjustments in order to respond to market conditions, promotions, individual performance or other circumstances. In addition, the E. W. Scripps Compensation Committee considers the value of the total compensation package when making decisions for each element of compensation. The E. W. Scripps Compensation Committee also monitors the competitiveness of the company’s retirement and perquisite programs on an annual basis; although, these benefit programs generally do not change from year-to-year.
 
As in prior years, the company prepared a market analysis for each of the NEOs positions using media industry survey data. The market analysis included compensation at the median and 75th percentile for each of the following elements:
 
  •  Base salary.
 
  •  Total cash compensation, which is base salary plus actual cash incentive compensation.
 
  •  Total direct compensation, which is total cash compensation plus equity awards.
 
The E. W. Scripps Compensation Committee selected a peer group of companies from the survey that were comparable in size, business and ownership to the company and therefore compete with the company for executive talent. A revenue-based regression analysis for each NEO position was included in the market analysis to further refine the comparison. The following table lists the companies included in this group as of 2007:
 
     
Towers Perrin Media Survey
Public Companies with Revenues Greater than $500 million
   
ADVO
  McGraw-Hill
Belo
  Media General
Cablevision Systems
  Meredith
CBS
  New York Times
Charter Communications
  R.R. Donnelley
Clear Channel Communications
  Sinclair Broadcast Group
Comcast Cable Communications
  Thomson
Discovery Communications
  Time Warner
Dow Jones
  Tribune
Gannett
  Univision Communications
Hearst-Argyle Television
  Viacom
IAC/InterActive
  Walt Disney
John Wiley & Sons
  Washington Post
Lions Gate Entertainment Corp. 
  Yahoo!
McClatchy
   
 
The market analysis included market data for each component described above, plus historical base salary, annual incentive and equity grants of the NEOs for the prior three years. The E. W. Scripps Compensation


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Committee used this report in establishing each component of compensation, as described in more detail under “Analysis of Each Compensation Element.”
 
Going Forward.  Some of the companies represented in the peer group analysis for E. W. Scripps include companies that are primarily in the newspaper or broadcast industry, which is no longer an appropriate comparison group for Scripps Networks Interactive. Scripps Networks Interactive will closely examine the survey to determine whether a more appropriate peer group can be established. If a satisfactory peer group cannot be identified for Scripps Networks Interactive, then it will use the full media industry survey and use a revenue-based regression analysis to appropriately size executive pay.
 
Variable Compensation
 
Historically.  A significant portion of E. W. Scripps’ executive compensation program is “variable” or “at risk.” This means that a significant portion of total direct compensation is contingent upon achieving specific results that are essential to E. W. Scripps’ long-term success and growth in stockholder value. As described in the table above, the variable components of the compensation program include annual incentives, performance-based restricted shares and stock options. Each of these components is described in more detail under the heading “Analysis of Each Compensation Element.”
 
The E. W. Scripps Compensation Committee has not established a specific formula for the allocation of fixed and variable compensation components and instead retains the discretion to modify the allocation from year to year. For 2007, an average of 68 percent of total direct compensation levels (assuming target performance) for the NEOs (other than Mr. Lowe) was weighted towards variable components. The total direct compensation for the CEO was roughly 81 percent variable, which reflects a greater focus on performance-based pay as a percent of total compensation. The E. W. Scripps Compensation Committee believes this approach directly aligns the CEO with shareholder interests and is reflective of his greater responsibilities.
 
As illustrated below, for the NEOs, E. W. Scripps’ pay mix between fixed and variable is relatively consistent with the market:
 
(PERFORMANCE GRAPH)
 
Going Forward.  It is expected that Scripps Networks Interactive will take a similar approach to determining the weighting and mix of fixed and variable compensation elements.
 
Analysis of Each Compensation Element
 
Following is a brief summary of each element of the 2007 compensation program for NEOs, which was established by the E. W. Scripps Compensation Committee. For each element, Scripps Networks Interactive has identified changes to the compensation program that have occurred in 2008 and how Scripps Networks Interactive anticipates that the compensation program will operate after Scripps Networks Interactive becomes an independent public company.


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Base Salary
 
E. W. Scripps provides competitive base salaries to attract and retain key executive talent. The E. W. Scripps Compensation Committee believes that a competitive base salary is an important component of total compensation because:
 
  •  It is not variable or “at risk,” meaning that it provides a degree of financial stability for the executives.
 
  •  It is used to compensate NEOs for the value of their role and contributions to the company.
 
Base salary also forms the basis for calculating other compensation opportunities for NEOs:
 
  •  It is used to establish annual incentive opportunities (see “Annual Incentive”).
 
  •  It is included in “final average compensation” for purposes of determining retirement benefits (see “Retirement Plans”).
 
  •  It is included in the formula for calculating separation pay due upon a qualifying termination of employment (see “Employment Agreements and Change in Control Plan”).
 
Base salaries are designed to be competitive with base salaries paid by the companies in the market survey data to executives with similar responsibilities. In order to ensure that E. W. Scripps paid a competitive base salary in 2007, the E. W. Scripps Compensation Committee considered the market analysis prepared for each NEO, which reflected the median and 75th percentile base salary levels.
 
The base salaries for the NEOs were targeted at the median level within the survey data, adjusted to reflect the individual’s scope of responsibilities, level of experience and skill, and the caliber of his or her performance over time. When making these adjustments, the E. W. Scripps Compensation Committee considered the historical base salary level for each NEO for the past three years and the impact that base salary increases would have on the amount of the NEOs retirement benefits. The E. W. Scripps Compensation Committee also took into account the total direct compensation levels of each NEO, which includes base salary, annual and long-term incentives, when setting the base salary and the other elements of total direct compensation. Mr. Lowe, as Chief Executive Officer, also provided the E. W. Scripps Compensation Committee an annual evaluation of the performance of each executive officer reporting to him and his recommendations for base salary adjustments.
 
After discussing the individual performance of each NEO and pay recommendations, and after making its own assessment of the performance of each such executive officer, the E. W. Scripps Compensation Committee established the base salaries for each NEO. As seen in the chart below, base salary increases were larger for those NEOs whose base salary was substantially lower than the market median (Messrs. NeCastro, Lansing and Cruz) in order to be more competitive with the market, and in the case Mr. Cruz, to reflect his promotion to executive vice president. Mr. Lowe and Mr. Hale received a base salary increase that maintains his base salary at a level close to the market median.
 
                 
    2006 Base Salary
       
    as Percent of
    2007 Base Salary
 
NEO
  Market Median     Increase Percent  
 
Lowe
    100 %     4.8 %
NeCastro
    79 %     9.1 %
Lansing
    75 %     13.0 %
Cruz
    83 %     16.9 %
Hale
    93 %     5.7 %
 
Please refer to the “Salary” column of the Summary Compensation Table for the 2007 base salaries of the NEOs.
 
Going Forward.  The E. W. Scripps Compensation Committee will review the base salaries of our NEOs to determine the impact of becoming an independent public company. It is anticipated that following the separation the base salary of each of our NEOs will be reviewed following the end of each calendar year and adjusted based on the principles similar to the ones outlined above.


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Annual Incentive
 
Historically.  E. W. Scripps maintains the Executive Annual Incentive Plan under which NEOs are eligible to receive annual cash payments based on the extent to which certain operational goals are achieved. The E. W. Scripps Compensation Committee believes that a competitive annual incentive program is an important component of total compensation because:
 
  •  It rewards executives for achieving annual operating results.
 
  •  It is a performance-based component that provides variable or “at risk” compensation.
 
  •  It forms the basis for calculating separation pay due upon a qualifying termination of employment (see “Employment Agreements and Change in Control Plan”).
 
Target Incentive Opportunities
 
Under the Executive Annual Incentive Plan, NEOs had the opportunity to earn targeted incentive cash payments that were calculated as a percentage of each executive’s annual base salary. These percentages were developed by the E. W. Scripps Compensation Committee according to each executive’s position and level of responsibility.
 
In order to ensure that E. W. Scripps offered competitive annual incentive opportunities in 2007, the E. W. Scripps Compensation Committee considered the overall performance of each NEO as well as market survey data and recommendations of the CEO. The survey data reflected the median and 75th percentile total cash compensation, which is base salary plus actual cash incentive compensation.
 
In general, the E. W. Scripps Compensation Committee attempted to target the total cash compensation of the NEOs to the median total cash compensation levels of the survey data. However, the E. W. Scripps Compensation Committee also believed that it was important to provide similar annual incentive opportunities for each group of NEOs that has similar levels of operational responsibility within the company.
 
Performance Goals
 
For 2007, the annual incentive awards were based on a formula that took into consideration the achievement of segment profit and earnings per share goals during the year. The goals were established by the E. W. Scripps Compensation Committee in February 2007 and took into account the strategic business plans approved by the E. W. Scripps Board of Directors. In 2007, the target segment profit and earnings per share goals, and the weight given to each goal, were:
 
                         
    Target
                 
    Annual
                 
    Incentive
                 
    (As a
    Weights
          Percent of Target
    Percent of
    Segment
  Targets Segment
  Actual Segment
  Achieved Segment
NEO
  Base Pay)     Profit/EPS   Profit/EPS   Profit/EPS   Profit/EPS
 
Lowe
    120 %   60/40   $890.3 mil/$2.44   $826.1 mil/$2.31   92.79%/94.67%
NeCastro
    60 %   60/40   $890.3 mil/$2.44   $826.1 mil/$2.31   92.79%/94.67%
Cruz
    55 %   60/40   $890.3 mil/$2.44   $826.1 mil/$2.31   92.79%/94.67%
Lansing
    60 %   60/40   $595.9 mil/$2.44   $603.5 mil/$2.31   101.27%/94.67%
Hale(1)
    50 %   30/30/40   $890.3 mil/$595.9 mil/$2.44   $826.1 mil/$603.5 mil/$2.31   92.79%/101.27%/94.67%
 
 
(1) (30 percent consolidated and 30 percent Networks segment profits)
 
These performance goals were used because:
 
  •  Segment profit.  Segment profit is the measure in which E. W. Scripps evaluates the operating performance of each business segment and the measure of performance most frequently used by investors to determine the value of the company. Segment profit is defined as E. W. Scripps’ net income determined in accordance with accounting principles generally accepted in the United States excluding interest, income taxes, depreciation and amortization, divested operating units, restructuring activities, investment results and certain other


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  items. For NEOs whose primary responsibilities are corporate-wide (Messrs. Lowe, NeCastro and Cruz), the segment profit goal was based on the consolidated performance of all the divisions of E. W. Scripps. For Mr. Lansing, whose primary responsibility is managing Scripps Networks, the segment profit goal was based on performance of that division. Mr. Hale has a dual role that is both corporate wide and divisional. His segment profit goal is therefore split between the consolidated performance of all the divisions of E. W. Scripps and the performance of Scripps Networks.
 
  •  Earnings per share.  Earnings per share represent the portion of a company’s profit allocated to each outstanding share of common stock and is the most comprehensive measure of the company’s profitability.
 
  •  Adjustments.  E. W. Scripps’ actual segment profit and earning per share results will be adjusted to determine the percent of target achieved. Adjustments are required to eliminate the impact of extraordinary events, such as hurricanes, on the company’s financial results and to ensure that sound business decisions, such as restructurings, are not postponed until the current compensation cycle is complete. These items are excluded because E. W. Scripps does not want NEOs to be inappropriately rewarded or penalized for unexpected events. E. W. Scripps also wants to encourage the NEOs to make sound operating decisions without being influenced by fluctuations in annual incentive payouts.
 
Payout Percentages
 
For 2007, the annual incentive opportunity could vary from 0 percent to 165 percent of the targeted percentage of base salary, according to the level of overall performance achieved for the year relative to the established performance goal. This payout schedule is a sliding scale that was designed to motivate and reward exceptional performance. The payout percentage decreases if targeted performance is not achieved, and the payout percentage increases if the company surpasses its targeted goals. For example:
 
  •  If performance is less than 75 percent of target, no annual incentive is earned.
 
  •  If performance equals 75 percent of target, only 5 percent of the target incentive award is earned.
 
  •  If performance equals 100 percent of target, then the entire target award is achieved.
 
  •  If performance equals or exceeds 125 percent of target, then 165 percent of the target award is achieved.
 
Achievement at maximum performance results in total cash compensation levels at approximately the 75th percentile of the market survey. The following table reflects the actual achievement level for each performance goal along with the payout percentage for each performance goal for 2007. Based on the criteria established at the beginning of the performance period, the E. W. Scripps Compensation Committee was required to adjust the consolidated segment profit and earnings per share results in 2007 to take into account severance costs associated with staff reductions at several of the E. W. Scripps newspapers, costs related to the upcoming separation, and an impairment charge related to losses and challenging business conditions at uSwitch. Furthermore, the E. W. Scripps Compensation Committee exercised negative discretion by decreasing the earnings per share portion of the annual incentive payout for Messrs. Lowe, NeCastro and Cruz by 50 percent to reflect the disappointing business results that led to the impairment charge.
 
             
            Final Payout Percent
    Percent of Target Achieved
  Preliminary Payout Percent
  Segment Profit/EPS
NEO
  Segment Profit/EPS   Segment Profit/EPS   (After Negative Discretion)
 
Lowe
  92.79%/94.67%   83.37%/89.01%   83.37%/44.51%
NeCastro
  92.79%/94.67%   83.37%/89.01%   83.37%/44.51%
Cruz
  92.79%/94.67%   83.37%/89.01%   83.37%/44.51%
Lansing
  101.27%/94.67%   102.54%/89.01%   102.54%/89.01%
Hale
  92.79%/101.27%/94.67%   83.37%/102.54%/89.01%   83.37%/102.54%/89.01%
 
Additional Information
 
For more information on the 2007 annual incentive opportunity for NEOs, please refer to the “Grants of Plan-Based Awards” table. The “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column of that table provides the estimated payouts for NEOs at threshold, target and maximum performance levels. Please refer to


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the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the actual amounts earned by each NEO under the Executive Annual Incentive Plan for the 2007 performance period.
 
Going Forward.  In connection with the separation, Scripps Networks Interactive will adopt the Executive Annual Incentive Plan. Each NEO will participate in the plan following the separation on terms commensurate with his post-separation level of responsibility. It is anticipated that the initial performance period under the new Executive Annual Incentive Plan will commence following the separation and will end December 31, 2008, and that the target incentive opportunities, performance goals and payout percentages will be established based on principles similar to the ones currently used by E. W. Scripps.
 
Long-Term Incentives
 
Historically.  In 2007, the E. W. Scripps Compensation Committee granted awards of performance-based restricted shares and stock options to the NEOs. The E. W. Scripps Compensation Committee believes that a competitive long-term incentive program is an important component of total compensation because it:
 
  •  Enhances retention.
 
  •  Rewards executives for increasing stock price and enhancing long-term value.
 
  •  Provides executives with an opportunity for stock ownership to align their interests with shareholders.
 
  •  Helps to emphasizes variable or “at risk” compensation.
 
  •  Rewards executives for achieving annual operating results.
 
Long-Term Incentive Opportunities
 
Under the E. W. Scripps long-term incentive program, the NEOs were granted equity awards as recommended by the E. W. Scripps CEO and approved by the E. W. Scripps Compensation Committee. The E. W. Scripps Compensation Committee approved the target value of the equity award for each NEO based on each NEO’s position and level of responsibility, the historical equity grants and a total assessment of the market analysis. The E. W. Scripps Compensation Committee did not consider existing ownership levels in establishing long-term incentive opportunities, as it wanted to encourage stock ownership among the NEOs. Decisions regarding long-term incentive grants were made based on role, amount of impact and retention objectives. Survey data was referenced, but is generally unreliable since it fluctuates from year-to-year.
 
For 2007 the target value of the equity award for each executive was as follow:
 
         
    Target Value of 2007
 
    Long-Term Incentive
 
NEO
  Equity Award  
 
Lowe
  $ 3.285 million  
NeCastro
  $ 1.314 million  
Cruz
  $ 0.657 million  
Lansing
  $ 0.854 million  
Hale
  $ 0.526 million  
 
Once the E. W. Scripps Compensation Committee established the target value of each of the NEOs equity awards, one half of the value was awarded as stock options while the other half was awarded as performance-based restricted stock. The E. W. Scripps Compensation Committee believes that using a combination of performance-based restricted shares and stock options strikes an appropriate balance between focusing executives on achieving specified operational goals and increasing long-term shareholder value, as more fully described below.
 
Stock Options
 
The stock options were granted with an exercise price equal to the fair market value of E. W. Scripps’ Class A common shares on the date of grant, have an eight-year term and vest in three annual installments, beginning on the first anniversary of the date of grant.


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Because the value of stock options increases when the stock price increases, stock options align the interests of NEOs with those of shareholders. In addition, stock options are intended to help retain key executives because they vest over three years and, if not vested, are forfeited if the employee leaves E. W. Scripps before retirement.
 
For more information on the stock options granted to NEOs in 2007, including the number of shares underlying each option grant and its exercise price, please refer to the “Grants of Plan-Based Awards” table. For information about the total number of stock options outstanding as of the end of 2007 with respect to each NEO, please refer to the “Outstanding Equity Awards at Fiscal Year-End” table.
 
Performance-Based Restricted Stock Awards
 
The performance-based restricted stock awards provided NEOs with an opportunity to receive restricted shares based on the extent to which E. W. Scripps attains specified levels of segment profit during the year. The restricted shares that are earned vest in installments on each March 15 of the succeeding three years (25 percent in the year after the end of the performance period, 25 percent in the second year, and 50 percent in the third year). Half of the vesting occurs in the third year to further enhance retention.
 
The performance-based restricted shares are consistent with the overall objective of rewarding operational performance, since the number of shares earned depends on the extent to which E. W. Scripps achieves the specified consolidated segment profit level during the year. Moreover, the vesting schedule of the restricted shares ultimately earned provides retention incentives for NEOs and also helps to focus them on increasing the value of the company over time.
 
The segment profit goal was based on the consolidated performance of all the divisions of E. W. Scripps. This goal was selected for all of the NEOs instead of a combination of consolidated and divisional because, as a long-term reward vehicle, E. W. Scripps wanted the focus to be on increasing the value of the company as a whole. This approach encourages cooperation among the operating divisions of E. W. Scripps. For 2007, the goal for consolidated segment profit was $890.3 million.
 
The actual number of restricted shares earned was determined based on the achievement of the consolidated segment profit goal for the year. The number of restricted shares earned could vary, from 0 percent to 165 percent of the targeted number of shares granted, according to the level of consolidated performance achieved for the year relative to the performance goal. The payout schedule was the same as the one used for the annual incentive program. The restricted shares earned will vest 25 percent in the first and second years and 50 percent in the third year.
 
For 2007, the earned number of restricted shares was 83.37 percent of the targeted number of restricted shares. This was based on a consolidated segment profit achievement of $826 million which represented 92.79 percent of the targeted consolidated segment profit goal.
 
In addition, Mr. Cruz received a second grant, valued at $533,000 in recognition of his promotion to Executive Vice President and General Counsel, effective June 1, 2007. The grant was a combination of stock options and restricted shares that vest equally over three years.
 
Additional Information
 
For more information on the performance-based restricted stock awards granted to NEOs in 2007, please refer to the “Grants of Plan-Based Awards” table. The “Estimated Future Payouts Under Equity Incentive Plan Awards” column of that table provides the estimated number of restricted shares earned for each NEO at threshold, target and maximum performance levels. For information about the total number of restricted shares outstanding as of the end of 2007 with respect to each NEO, please refer to the “Outstanding Equity Awards at Fiscal Year-End” table.
 
For 2008, the E. W. Scripps Compensation Committee will grant time-based restricted shares to our NEOs in lieu of performance-based restricted shares. The E. W. Scripps Compensation Committee believes that the time-based restricted shares will enhance our retention incentives during the separation transaction. The restricted shares will vest in equal installments on the first three anniversaries of the date of grant, provided that the executive remains with E. W. Scripps on the vesting date.


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In preparation for the separation, the E. W. Scripps Compensation Committee decided that, effective as of the separation, these awards will be converted into awards of Scripps Networks Interactive Class A common stock in a manner designed to preserve the intrinsic value of those awards, as described in more detail under the Employee Matters Agreement. The E. W. Scripps Compensation Committee adopted this approach in an effort to directly align the interests of Scripps Networks Interactive employees with the new company and the growth value of the stock. The awards will remain subject to the same vesting and exercise restrictions as applied prior to the separation.
 
Going Forward.  Scripps Networks Interactive will adopt the 2008 Long-Term Incentive Plan. Each NEO will participate in the plan following the separation commensurate with his post-separation level of responsibility. Scripps Networks Interactive will continue to establish the long-term incentive target value for each NEO based on the principles outlined above and that the target value will be allocated equally between stock options and performance-based restricted shares. The terms of the equity awards will generally mirror those described above.
 
Equity Grant Practices
 
Historically.  The E. W. Scripps Incentive Plan Committee (a sub-committee of the E. W. Scripps Compensation Committee) grants annual equity awards at the February meeting of the committee. This meeting date is set typically two years in advance. The E. W. Scripps Incentive Plan Committee does not grant equity compensation awards in anticipation of the release of material nonpublic information. Similarly, E. W. Scripps does not time the release of material nonpublic information based on equity award grant dates.
 
Going Forward.  Scripps Networks Interactive intends to adopt equity grant practices that are substantially similar to the ones described above.
 
Retirement Plans
 
Historically.  E. W. Scripps maintains a defined benefit pension plan and a 401(k) plan, which cover NEOs along with substantially all other non-union employees of the company and its subsidiaries.
 
In order to attract and retain key executive talent, the E. W. Scripps Compensation Committee believes that it is important to provide the executive officers, including NEOs, with retirement benefits that are in addition to those generally provided to its employees. As a result:
 
  •  E. W. Scripps supplements the pension plan for all executives whose pay and contributions exceed the IRS limitations through the E. W. Scripps Supplemental Executive Retirement Plan (“SERP”). For more information on the pension plan and the SERP, please refer to the “Pension Benefits” table.
 
  •  NEOs may also defer specified portions of their compensation under the Executive Deferred Compensation Plan and receive matching contributions in each case in excess of what they are able to defer under the 401(k) Plan due to IRS limitations. For more information about the Executive Deferred Compensation Plan, please refer to the “Non-Qualified Deferred Compensation” table.
 
The E. W. Scripps Compensation Committee believes that the SERP and the Executive Deferred Compensation Plan are important retention and recruitment tools, as many of the companies in which E. W. Scripps competes for executive talent provide similar benefits to their senior executives.
 
Going Forward.  In connection with the separation, Scripps Networks Interactive will establish a defined benefit pension plan, a 401(k) plan, SERP and Executive Deferred Compensation Plan that are substantially similar to the corresponding E. W. Scripps plans described above. Scripps Networks Interactive will also assume the obligations for benefits accrued by our employees, including our NEOs, under those E. W. Scripps plans.
 
Health, Welfare and Other Personal Benefits
 
Historically.  In addition to the principal compensation components described above, the NEOs were entitled to participate in all health, welfare, fringe benefit and other arrangements generally available to other employees of E. W. Scripps.


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E. W. Scripps also provided the NEOs with a financial planning benefit pursuant to the terms of their employment agreements, plus an additional payment to cover the taxes associated with the compensation value of this benefit. E. W. Scripps also provided perquisites that facilitate involvement of executive officers in the business community by sponsoring membership in luncheon and business clubs, and with respect to Mr. Lowe, a country club membership per his employment agreement.
 
For more information about the perquisites provided in 2007 to each NEO, please refer to the “All Other Compensation” column of the Summary Compensation Table.
 
Going Forward.  Scripps Networks Interactive intends to take the same approach as E. W. Scripps with respect to granting minimal perquisites and other personal benefits to executives.
 
Employment Agreements and Change in Control Plan
 
The E. W. Scripps Compensation Committee believes that employment agreements convey E. W. Scripps’ commitment to each NEO while offering flexibility for any potential changes. Accordingly, E. W. Scripps provides severance protections for NEOs under their respective employment agreements and the Change in Control Plan.
 
Employment Agreements
 
Historically.  Each NEO (other than Mr. Hale) would be entitled to severance benefits under his employment agreement in the event of a termination of employment by E. W. Scripps without “cause” or a termination by the executive for “good reason,” death or disability. The severance benefits are generally determined as if the executive continued to remain employed by E. W. Scripps through the remainder of the term covered by the employment agreement, consistent with market practices.
 
In exchange for the severance benefits, the NEOs agree not to disclose E. W. Scripps’ confidential information and agree not to compete against E. W. Scripps or solicit its employees or customers for a period of time after termination. These provisions protect E. W. Scripps’ interests and help to ensure its long-term success.
 
Please refer to the “Potential Payments Upon Termination or Change in Control” section of this information statement for information regarding potential payments and benefits, if any, that each NEO is entitled to receive under his employment agreement in connection with his termination of employment. Please refer to the narrative following the Summary Compensation Table for a description of the compensation and benefits provided under the employment agreements.
 
Going Forward.  In connection with the separation, Scripps Networks Interactive will enter into an employment agreement with each of Messrs. NeCastro and Cruz that is substantially comparable to the corresponding E. W. Scripps employment agreement for each individual. In addition, in an effort to standardize employment agreements after the separation, Scripps Networks Interactive will enter into an employment agreement with Messrs. Lowe, Lansing and Hale that is substantially similar to the one covering Messrs. NeCastro and Cruz.
 
Change in Control Plan
 
Historically.  All NEOs are provided change in control protection. For Mr. Lowe, the terms of his change in control protection are covered in his employment agreement. The other NEOs are covered under the Senior Executive Change in Control Plan. Under this plan, a NEO would be entitled to certain severance benefits if a “change in control” were to occur and E. W. Scripps terminated the executive’s employment without “cause” or the executive terminated his employment with E. W. Scripps for “good reason” within a two-year period following the change in control. For Mr. Lansing, whose primary responsibility is managing Scripps Networks, his employment agreement also provides change in control protections in the event of a sale of Scripps Networks. The severance levels were established by the E. W. Scripps Compensation Committee.
 
The E. W. Scripps Compensation Committee believes that the occurrence, or potential occurrence, of a change in control transaction will create uncertainty regarding the continued employment of NEOs. The change in control protections allow NEOs to focus on the company’s business and objectively evaluate any future proposals during potential change in control transactions without being distracted by potential job loss. It also enhances retention


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following a change in control, as the severance benefits are payable only if the executive incurs a qualifying termination within a certain period following a change in control, rather than merely as a result of the change in control.
 
All equity awards held by NEOs would immediately vest upon a change in control. Unlike the cash severance described above, the vesting is not contingent upon a qualifying termination within a certain period following a change in control. This “single trigger” is appropriate because the equity of the Company will change and the E. W. Scripps Compensation Committee believes NEOs should have the same opportunity to realize value as common shareholders.
 
Please refer to the “Potential Payments Upon Termination or Change in Control” section for information regarding potential payments and benefits, if any, that each executive is entitled to receive in connection with a change in control.
 
Going Forward.  In connection with the separation, Scripps Networks Interactive will adopt an Executive Change in Control Plan that provides benefits substantially comparable to the benefits provided under the E. W. Scripps Senior Executive Change in Control Plan. Mr. Lowe will also participate in the Change in Control Plan in lieu of the protections contained in his existing employment agreement.
 
EXECUTIVE COMPENSATION TABLES
 
Set forth below is information concerning the compensation earned in 2006 and 2007 by the Named Executive Officers of Scripps Networks Interactive (“NEOs”). All compensation amounts set forth in the following tables represent compensation paid to the applicable NEO in connection with his service to The E. W. Scripps Company (“E. W. Scripps”). As described in the Compensation Discussion and Analysis (“CD&A”), the compensation and benefits provided to the NEOs by Scripps Networks Interactive, Inc. (“Scripps Networks Interactive”) may differ from the compensation and benefits historically provided to the NEOs by E. W. Scripps because historical compensation was determined by E. W. Scripps and future compensation will be determined based on compensation policies, programs and procedures to be established by Scripps Networks Interactive’s compensation committee.
 
Summary Compensation Table
 
The following table presents information concerning compensation paid to the NEOs in 2006 and 2007.
 
                                                                         
                                        Change in
             
                                        Pension Value
             
                                        and
             
                                        Nonqualified
             
                                  Non-Equity
    Deferred
             
                      Stock
    Option
    Incentive Plan
    Compensation
    All Other
       
Name and
        Salary
    Bonus
    Awards
    Awards
    Compensation
    Earnings
    Compensation
    Total
 
Principal Position
  Year     ($)     ($)     ($)(1)     ($)(1)     ($)(2)     ($)(3)     ($)(4)     ($)  
 
Kenneth W. Lowe
    2007       1,100,000       0       2,598,016       2,399,907       895,277       840,348       75,973       7,909,521  
Chairman & Chief Executive
    2006       1,050,000       0       3,536,808       2,923,091       1,260,000       1,083,392       69,980       9,923,271  
Officer
                                                                       
Joseph G. NeCastro
    2007       600,000       0       493,274       453,140       244,166       85,598       137,557       2,013,735  
Executive Vice President &
    2006       550,000       0       426,705       433,832       330,000       61,247       129,648       1,931,432  
Chief Financial Officer
                                                                       
John F. Lansing
    2007       650,000       0       400,540       311,144       378,799       183,198       36,750       1,960,431  
President/Scripps Networks
    2006       575,000       0       363,056       297,820       306,176       128,919       34,250       1,705,221  
Anatolio B. Cruz III
    2007       493,750       0       266,881       256,417       177,826       51,476       34,115       1,280,465  
Executive Vice President,
    2006       385,000       0       193,733       191,643       200,061       36,552       28,960       1,035,949  
Chief Legal Officer and
Corporate Secretary
                                                                       
Mark Hale
    2007       415,000       0       126,800       235,206       189,607       87,900       29,707       1,084,220  
Senior Vice President
    2006       392,500       0       54,300       238,484       176,613       64,689       24,525       951,111  
Technology Operations and
Chief Technology Officer
                                                                       
 
(1) Represents the expense recognized in E. W. Scripps’ financial statement related to restricted stock and stock option awards granted in 2007 and in prior years. Because Mr. Lowe is eligible for retirement, the entire grant


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date fair value of his awards was fully expensed in the year of grant. The expense was determined in accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004), Share Based Payment (“FAS 123(R)”), but disregards the impact of estimated forfeitures relating to service-based vesting conditions. See footnote 19 of the Consolidated Financial Statements contained in E. W. Scripps’ Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 Annual Report”) for an explanation of the assumptions used in the valuation of these awards. For information about the awards granted in 2007, please refer to the Grants of Plan-Based Awards table and to the CD&A. For information on all outstanding equity awards as of December 31, 2007, please refer to the Outstanding Equity Awards at Fiscal Year-End table.
 
(2) Represents the annual incentive earned by each NEO under the E. W. Scripps Executive Bonus Plan for the applicable calendar year. For additional information about the 2007 annual incentive opportunities under the E. W. Scripps Executive Bonus Plan, please refer to the Grants of Plan-Based Awards table and CD&A.
 
(3) Represents the increase in the present value of the accumulated benefits under the pension plan and the E. W. Scripps Supplemental Executive Retirement Plan (“SERP”) for the applicable calendar year. For information on these plans, please refer to the Pension Benefits table. The NEOs did not accrue any preferential or above-market earnings on non-qualified deferred compensation.
 
(4) Represents the perquisites and other benefits outlined in the table below. For more information about these benefits, please refer to the CD&A.
 
                                         
    Financial
    Club
    Tax
    Matching
       
    Planning
    Dues
    Gross-Up
    Contribution
    Total
 
Name
  ($)(i)     ($)(ii)     ($)(iii)     ($)(iv)     ($)  
 
Mr. Lowe
    15,000       13,964       14,009       33,000       75,973  
Mr. NeCastro
    10,000       2,060       107,497       18,000       137,557  
Mr. Lansing
    10,000       0       7,250       19,500       36,750  
Mr. Cruz
    10,000       2,060       7,242       14,813       34,115  
Mr. Hale
    10,000       0       7,257       12,450       29,707  
 
(i) Represents all amounts paid by E. W. Scripps for financial planning services.
 
(ii) Represents all amounts paid by E. W. Scripps for dining, business and country clubs.
 
(iii) Represents reimbursement of taxes imposed on the financial planning benefit. This column also includes the tax gross-up paid to Mr. NeCastro on his loan repayment. To assist Mr. NeCastro in satisfying an obligation with his previous employer, E. W. Scripps loaned him $356,905 in 2002. Mr. NeCastro was obligated to repay the loan, with interest at 4.75 percent per year, by July 26, 2007. Until such time, E. W. Scripps withheld an amount of his annual incentive to repay interest and principal on the loan in an amount equal to the lesser of (i) 50 percent of his annual incentive earned for each year, or (ii) $80,000. E. W. Scripps agreed to pay Mr. NeCastro an additional bonus, the net amount of which equaled the taxes applicable to the portion of the annual incentive withheld for the loan payment. Mr. NeCastro’s obligation was paid in full in 2007.
 
(iv) Represents the amount of all matching contributions made under E. W. Scripps’ 401(k) Plan and Executive Deferred Compensation Plan.
 
Salary and Bonus in Proportion to Total Compensation
 
The NEOs generally receive 42 percent to 55 percent of their total direct compensation in the form of base salary and cash incentive awards under the Executive Bonus Plan. Please see the CD&A for a description of the objectives of E. W. Scripps’ compensation program and overall compensation philosophy.
 
Employment Agreements
 
Four of the NEOs have entered into employment agreements with E. W. Scripps. These employment agreements enhance retention incentives for NEOs and also protect E. W. Scripps’ interests by imposing


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confidentiality, noncompetition, nonsolicitation and other restrictive covenants on the executives. Following is a brief summary of the employment agreements.
 
Employment Agreement for Mr. Lowe
 
On June 16, 2003, E. W. Scripps entered into an employment agreement with Mr. Lowe, pursuant to which he serves as President and Chief Executive Officer and as a member of the Board of Directors. On July 31, 2007, the agreement was extended through June 20, 2010. During the term, Mr. Lowe is entitled to: (i) a base salary that is not less than that paid to him for the immediately preceding year and an annual target bonus opportunity equal to no less than 80 percent of his salary; (ii) participate in all equity incentive, employee pension, welfare benefit plans and fringe benefit programs on a basis no less favorable than the most favorable basis provided other senior executives of E. W. Scripps; (iii) life insurance equal to his base salary; and (iv) reimbursement for tax and financial planning up to maximum of $15,000 per year, the annual membership fees and other dues associated with one country club and one luncheon club, and the costs of an annual physical examination.
 
Employment Agreement for Mr. Lansing
 
Effective January 1, 2004, E. W. Scripps entered into an employment agreement with Mr. Lansing. The term of the agreement expires on December 31, 2008. During the term, Mr. Lansing is entitled to an annual base salary of no less than $550,000 and a target annual incentive opportunity of no less than 50 percent of base salary. Mr. Lansing is also entitled to all benefits provided to senior level executives in accordance with E. W. Scripps’ policies in effect from time to time.
 
Employment Agreements for Mr. NeCastro and Mr. Cruz
 
In June 2006, E. W. Scripps entered into an employment agreement with Mr. NeCastro. On July 31, 2007, E. W. Scripps entered into an employment agreement with Mr. Cruz in connection with his promotion to the position of Executive Vice President. Each of these agreements has a three-year term that extends for an additional year on each anniversary of the first day of the terms, unless E. W. Scripps provides notice not to extend. During the term, (i) the annual base salary for each executive will be no less than $550,000 for Mr. NeCastro, and $525,000 for Mr. Cruz; (ii) the target bonus opportunity will be 60 percent of base salary for Mr. NeCastro and 55 percent of base salary for Mr. Cruz; (iii) each executive is eligible to participate in all equity incentive plans, employee retirement, pension and welfare benefit plans available to similarly situated executives of E. W. Scripps; and (iv) each executive is also entitled to reimbursement for tax and financial planning up to a maximum of $15,000 per year, the annual membership fees and other dues associated with one luncheon club, and the costs of an annual physical examination.
 
Please refer to the “Potential Payments Upon Termination or Change in Control” section for information regarding potential payments and benefits, if any, that each executive is entitled to receive under his employment agreement in connection with his termination of employment or change in control, along with a brief description of the applicable non-competition, non-solicitation, confidentiality and other restrictions applicable to each executive.
 
Letter Agreement with Mr. Hale
 
On July 7, 2005, E. W. Scripps entered into a letter agreement with Mr. Hale to confirm his then-current compensation arrangements. The letter agreement was not intended to serve as an employment agreement and does not provide for any severance benefits.


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Grants of Plan-Based Awards
 
The following table sets forth information for each NEO regarding (i) estimated payouts of the annual cash incentive opportunities granted under the E. W. Scripps Executive Bonus Plan during 2007, (ii) estimated number of restricted shares that could be delivered under the performance-based restricted stock awards granted during 2007, (iii) restricted stock awards granted during 2007, and (iv) stock options granted in 2007: