1.	Description of Business and Basis of Presentation

Description of Business

Scripps Networks Interactive, Inc. (referred to herein as “Scripps,” “the Company,” “SNI,” “we,” “us,” “our” or similar terms) operates in the media industry and has interests in national television networks and internet-based media outlets.

Scripps acquired 100% of TVN S.A. (“TVN”) through a series of three distinct transactions in the third quarter of 2015 (see Note 4 – Acquisitions). As a result of this acquisition, the Company now has two reportable segments: U.S. Networks, previously referred to as Lifestyle Media, and International Networks. U.S. Networks includes our six national television networks: HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country. Additionally, U.S. Networks includes websites associated with the aforementioned television brands and other internet-based businesses serving home, food and travel-related categories.

International Networks includes the lifestyle-oriented channels available in the United Kingdom (“UK”), other European markets, the Middle East and Africa (“EMEA”), Asia Pacific (“APAC”) and Latin America. Additionally, International Networks includes TVN, which operates a portfolio of free-to-air and pay TV lifestyle and entertainment channels, including TVN, TVN24, TVN Style, TTV, TVN Turbo, TVN24 Biznes i Świat. Also included in TVN is TVN Media, an advertising sales house.

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended. These unaudited condensed consolidated financial statements and the related notes hereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2014 Annual Report on Form 10-K.

In the opinion of management, the accompanying condensed consolidated balance sheets and related interim condensed consolidated statements of operations, comprehensive income, cash flows and shareholders’ equity include all adjustments, consisting only of normal recurring adjustments, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, and revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results and outcomes may differ materially from management’s estimates and assumptions.

Interim results are not necessarily indicative of the results that may be expected for any future interim periods or for a full year.

Reclassifications

Certain amounts in the operating activities section of our condensed consolidated statement of cash flows for the nine months ended September 30, 2014 have been reclassified to conform with current year presentation. During 2015, amounts totaling $2.5 million previously reported within stock and deferred compensation plans have been reclassified to other, net, while amounts totaling $2.4 million previously reported within other, net have been reclassified to (gain) loss on derivatives. Amounts totaling $11.0 million previously reported within accrued employee compensation and benefits have been reclassified to other liabilities. Additionally, amounts totaling $26.9 million previously reported in other liabilities have been reclassified to customer deposits and unearned revenue. These reclassifications did not have an impact on the reported cash provided by operating activities in our condensed consolidated statements of cash flows for the nine months ended September 30, 2014.

We also made a reclassification in our condensed consolidated statement of operations for the three and nine months ended September 30, 2014 between miscellaneous, net and gain (loss) on derivatives totaling $2.0 million and ($2.4) million, respectively. This adjustment did not impact reported net income for either of these periods.

As part of our normal operations, we develop and, in some instances, purchase content in the United States and license it to certain of our international operations. In conjunction with our change in reporting to two reportable segments, we changed where we present intercompany program license revenues. Accordingly, we reclassified $9.8 million of revenues previously recorded in Corporate and Other to U.S. Networks for the first six months of 2015 relating to these activities. Additionally, revenues of $1.8 million and $5.3 million from these activities for the three and nine months ended September 30, 2014, respectively, from these activities are now reflected in U.S. Networks.

In addition to the segment changes noted above, we modified our management reporting structure related to the operating results from our uLive business in the fourth quarter of 2014. In conjunction with this change in reporting structure, we began reporting the results of uLive within Lifestyle Media, now called U.S. Networks, rather than within Corporate and Other. This reclassification only affected our segment reporting and did not change our condensed consolidated operating revenues, operating income or net income.

As a result of these changes to our reportable segments, certain prior period and prior year disclosures have been recast to reflect the current presentation. A reconciliation of those impacts to the segment information included in Note 16 – Segment Information follows:


	Three months ended September 30, 2014									Nine months ended September 30, 2014
(in thousands)	As Reported			Amounts Reclassified			Revised			As Reported			Amounts Reclassified			Revised
Segment operating revenues
U.S. Networks	$	618,090		$	4,422		$	622,512		$	1,926,102		$	12,736		$	1,938,838
International Networks		-			23,768			23,768			-			62,896			62,896
Corporate and Other		26,333			(28,190	)		(1,857	)		70,202			(75,632	)		(5,430	)
Total segment operating revenues	$	644,423		$	-		$	644,423		$	1,996,304		$	-		$	1,996,304

Segment profit (loss):
U.S. Networks	$	296,639		$	(2,330	)	$	294,309		$	970,104		$	(7,309	)	$	962,795
International Networks		-			(5,933	)		(5,933	)		-			(33,827	)		(33,827	)
Corporate and Other		(26,676	)		8,263			(18,413	)		(110,122	)		41,136			(68,986	)
Total segment profit	$	269,963		$	-		$	269,963		$	859,982		$	-		$	859,982


	As of December 31, 2014
				Amounts
(in thousands)	As Reported			Reclassified			Revised
Assets:
U.S. Networks	$	2,864,089		$	-		$	2,864,089
International Networks		-			660,216			660,216
Corporate and Other		1,803,543			(660,216	)		1,143,327
Total assets	$	4,667,632		$	-		$	4,667,632