Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

17. Segment Information

The Company’s operating segments are determined based upon our management and internal reporting structure.  

As a result of the Transactions (see Note 4 – Acquisitions), the international operating segment that was previously not significant, has become significant.  Therefore, the Company now has two reportable segments: U.S. Networks, previously referred to as Lifestyle Media, and International Networks. As a result, certain prior period segment results have been recast to reflect the current presentation.

U.S. Networks includes our six domestic television networks: HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country. U.S. Networks also includes websites associated with the aforementioned television brands and other internet and mobile businesses serving home, food, travel and other lifestyle-related categories. U.S. Networks also includes our digital content studio, Scripps Networks Lifestyle Studio. The Food Network and Cooking Channel are included in the Partnership, of which we own 68.7 percent. Each of our networks is distributed by cable and satellite distributors, telecommunication service providers and certain non-linear providers, such as those providing streaming or on-demand services. U.S. Networks earns revenue primarily from the sale of advertising time and from distribution fees paid by distributors of our content. U.S. Networks also earns revenue from licensing of content to third parties and of brands for consumer products, such as videos, books, kitchenware and tools.

International Networks includes the TVN lifestyle-oriented networks as well as those available in the UK, EMEA, APAC and Latin America.  

Corporate and Other includes the results of businesses not separately identified as reportable segments for external financial reporting purposes and will continue to be disclosed separately from the results of U.S. Networks and International Networks.  The Company generally does not allocate employee-related corporate overhead costs to its reportable segments, but rather classifies these expenses within Corporate and Other. However, certain corporate costs, including information technology, pension and other employee benefits and other shared service functions, are allocated to our reportable segments. These allocations are generally amounts agreed upon by management, which may differ from amounts that would be incurred if such services were purchased separately by the reportable segments.

Intersegment revenue eliminations are included in Corporate and Other and totaled $6.5 million and $5.1 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $13.1 million and $9.8 million for the six months ended June 30, 2016 and June 30, 2015, respectively.

Our Chief Operating Decision Maker (“CODM”), whom we have identified as our Chief Executive Officer, evaluates the operating performance of our businesses and makes decisions about the allocation of resources to the businesses using a measure we refer to as segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, investment results and certain other items included in net income determined in accordance with GAAP.

Information regarding our segments is as follows:

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2016			2015			2016			2015
Segment operating revenues:
U.S. Networks	$	752,321		$	715,100		$	1,454,516		$	1,354,004
International Networks		147,044			22,088			268,382			46,153
Corporate and Other		(6,594	)		(5,086	)		(13,249	)		(9,805	)
Total operating revenues	$	892,771		$	732,102		$	1,709,649		$	1,390,352
Cost of services, excluding depreciation and amortization		286,999			195,087			566,666			394,234
Selling, general and administrative		191,133			178,498			389,954			380,685
Total segment profit	$	414,639		$	358,517		$	753,029		$	615,433
Depreciation		16,089			14,798			33,628			31,693
Amortization		25,654			11,640			56,716			23,335
Loss (gain) on disposal of property and equipment		-			44			(242	)		2,560
Total operating income		372,896			332,035			662,927			557,845
Interest expense, net		(33,175	)		(16,835	)		(66,920	)		(29,802	)
Equity in earnings of affiliates		21,712			27,290			47,390			46,235
Gain on derivatives		8,267			37,198			11,033			43,131
(Loss) gain on sale of investments		(16,373	)		-			191,824			-
Miscellaneous, net		(21,672	)		(13,194	)		(15,606	)		(13,596	)
Income from operations before income taxes	$	331,655		$	366,494		$	830,648		$	603,813
Segment profit (loss):
U.S. Networks	$	401,139		$	397,332		$	760,636		$	697,836
International Networks		37,369			(10,495	)		47,158			(16,374	)
Corporate and Other		(23,869	)		(28,320	)		(54,765	)		(66,029	)
Total segment profit	$	414,639		$	358,517		$	753,029		$	615,433
Depreciation:
U.S. Networks	$	12,716		$	12,848		$	26,869		$	27,560
International Networks		3,114			949			6,239			2,078
Corporate and Other		259			1,001			520			2,055
Total depreciation	$	16,089		$	14,798		$	33,628		$	31,693
Amortization:
U.S. Networks	$	10,022		$	10,021		$	20,043		$	19,961
International Networks		15,632			1,619			36,673			3,374
Corporate and Other		-			-			-			-
Total amortization	$	25,654		$	11,640		$	56,716		$	23,335
Loss (gain) on disposal of property and equipment
U.S. Networks	$	-		$	34		$	42		$	3,581
International Networks		-			9			(284	)		9
Corporate and Other		-			1			-			(1,030	)
Total loss (gain) on disposal of property and equipment	$	-		$	44		$	(242	)	$	2,560
Equity in earnings of affiliates:
U.S. Networks	$	9,014		$	14,486		$	16,746		$	24,507
International Networks		12,698			12,804			30,644			21,728
Corporate and Other		-			-			-			-
Total equity in earnings of affiliates	$	21,712		$	27,290		$	47,390		$	46,235

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2016		2015		2016		2015
Additions to property and equipment:
U.S. Networks	$	8,567	$	8,582	$	17,238	$	16,251
International Networks		4,385		496		7,059		776
Corporate and Other		-		1		-		1,451
Total additions to property and equipment	$	12,952	$	9,079	$	24,297	$	18,478
Operating revenues by geographic location:
United States	$	755,427	$	717,081	$	1,457,315	$	1,359,886
Poland		120,095	$	-		217,853		-
Other International		17,249	$	15,021		34,481		30,466
Total operating revenues	$	892,771	$	732,102	$	1,709,649	$	1,390,352
					As of
					June 30, 2016		December 31, 2015
Assets:
U.S. Networks					$	2,903,981	$	2,937,428
International Networks						3,165,665		3,276,989
Corporate and Other						443,069		457,897
Total assets					$	6,512,715	$	6,672,314
Long-lived assets by geographic location:
United States					$	1,862,190	$	1,903,918
Poland						2,333,333		2,406,842
Other International						481,687		541,719
Total long-lived assets					$	4,677,210	$	4,852,479

No single customer provides more than 10.0 percent of our revenues.

Assets held by our businesses and physically located outside of the United States totaled $3,104.0 million and $3,238.2 million at June 30, 2016 and December 31, 2015, respectively.