sni-10k_20161231.htm

Securities registered pursuant to Section 12(b) of the Act: Class A Common Shares, Par Value $0.01 Per Share, traded on The NASDAQ Stock Market LLC.

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☒ NO ☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). YES ☒ NO ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The aggregate market value of Class A Common Shares of the registrant held by non-affiliates of the registrant on June 30, 2016, was approximately $5,005,000,000. All Class A Common Shares beneficially held by executives and directors of the registrant and signatories to the Scripps Family Agreement have been deemed, solely for the purposes of the foregoing calculation, to be held by affiliates of the registrant. There is no active market for our Common Voting Shares.

As of January 31, 2017, there were 95,530,861 of the registrant’s Class A Common Shares, $0.01 par value per share, outstanding and 33,850,481 of the registrant’s Common Voting Shares, $0.01 par value per share, outstanding.

Portions of the Registrant’s Definitive Proxy Statement relating to the 2017 Annual Meeting of Shareholders are incorporated by reference into Part III of this Report.

INDEX TO SCRIPPS NETWORKS INTERACTIVE, INC. ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2016

SCRIPPS NETWORKS INTERACTIVE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENT INFORMATION

As used in this Annual Report on Form 10-K, the terms “SNI,” “Scripps,” “the Company,” “we,” “our,” “us” or similar terms may, depending on the context, refer to Scripps Networks Interactive, Inc., to one or more of its consolidated subsidiary companies or to all of them taken as a whole.

Our Company website is www.scrippsnetworksinteractive.com. Copies of all of our filings with the U.S. Securities and Exchange Commission (the “SEC”), including the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed with or furnished to the SEC under Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website as soon as reasonably practicable after such material is filed with, or furnished to, the SEC. The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Our website also includes copies of the charters for our Compensation, Nominating & Governance and Audit Committees, our Corporate Governance Principles, our Insider Trading Policy, our Code of Ethics, our Code of Business Conduct and Ethics for the Chief Executive Officer (“CEO”) and Senior Financial Officers and our Policy Against Bribery and Corruption.

We use our website as a means of complying with our disclosure obligations under SEC Regulation Fair Disclosure (“FD”). The information contained on, or accessible through, our website shall not constitute incorporation by reference of the information contained on the website and shall not be deemed to be part of this Annual Report on Form 10-K.

Our Annual Report on Form 10-K contains 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 without limitation, changes in advertising demand and other economic conditions; changing consumers’ tastes and viewing habits; program costs; labor relations; technological developments; risks related to international operations; competitive pressures; industry consolidation; interest rates; regulatory rulings; reliance on third-party vendors for various products and services; and other risks, trends and uncertainties disclosed under “Risk Factors” in Part I, Item 1A and elsewhere in this Annual Report on Form 10-K. 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 as of which the statement is made.

SNI was incorporated under the laws of the State of Ohio on October 27, 2007, in connection with the July 1, 2008 spin-off from The E.W. Scripps Company.

We are a global media company with respected high-profile brands and are a leading developer of lifestyle-oriented content, providing primarily home, food, travel and other lifestyle-related programming. Our content is distributed via multiple methods, including television, the internet, digital platforms and licensing arrangements. The SNI portfolio of networks includes HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country within and outside the United States (“U.S.”), with the exception of Great American Country, which is only distributed in the United States, and Fine Living, Asian Food Channel (“AFC”) and TVN S.A.’s (“TVN”) portfolio of networks outside the United States. Additionally, outside the United States, we participate in UKTV, a joint venture

with BBC Worldwide Limited (the “BBC”). Our businesses engage audiences and efficiently serve advertisers by producing and delivering entertaining and highly-useful content that focuses on specifically-defined topics of interest.

We intend to expand and enhance our lifestyle brands by: growing our brands through the creation of popular new programming and content; reaching additional demographics; extending distribution on various platforms, such as over-the-top and digital entrants providing streaming and/or on-demand services; and increasing our international footprint. We have a large library of content which we produced and own the rights to indefinitely, enabling us to exploit original programming quickly and/or repackage content in a cost-effective manner.

We are focused on strengthening our networks and expanding reach, including in both the digital arena and international market. As part of our effort to expand in the digital arena, we launched Scripps Lifestyle Studios in the fourth quarter of 2015.

Segment data and other information for the years ended December 31, 2016, 2015 and 2014 are included in Note 21 – Segment Information to the consolidated financial statements included in Item 8 of this Form 10-K.

Our Chief Operating Decision Maker (“CODM”) 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 is defined as operating income excluding depreciation, amortization and goodwill write-downs. Because segment profit is based on operating income, it excludes interest expense, equity in earnings of affiliates, gain on derivatives, gain on sale of investments, other miscellaneous non-operating expenses and income taxes, which are included in net income determined in accordance with generally accepted accounting principles in the United States (“GAAP”).

Depreciation and amortization charges are a result of decisions made in prior periods regarding the allocation of resources and are, therefore, excluded from segment profit. Also excluded from segment profit are financing, tax structuring and acquisition and divestiture decisions, which are generally made by corporate executives. Excluding these items from the performance measure of our businesses enables management to evaluate operating performance based on current economic conditions and decisions made by the managers of the businesses in the current period.

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 and digital businesses serving home, food, travel and other lifestyle-related categories. U.S. Networks also includes our digital content studio, Scripps Lifestyle Studios. We own 100.0 percent of each of our networks, with the exception of Food Network and Cooking Channel, of which we own 68.7 percent. Each of our networks is distributed by cable and satellite operators, telecommunication suppliers and other distributors, including digital service providers.

U.S. Networks generates revenues primarily from advertising sales and distribution fees earned from the right to distribute our programming content. U.S. Networks also earns revenues from licensing content to third parties and brands for consumer products.

Advertising revenues generated by our domestic television networks depend on viewership ratings, as determined by Nielsen Media Research and other third-party research companies, and advertising rates paid by customers for delivery of advertisements to certain viewer demographics. Revenues from advertising sales are subject to seasonality, market-based variations and general economic conditions. Advertising revenues are typically highest in the second and fourth quarters and can fluctuate relative to the popularity of specific programming, time of day an advertisement is run and seasonal demand of advertisers.

Revenues from distribution fees are typically the result of multi-year carriage agreements that contain scheduled rate increases. Distribution fees are determined by the number of subscribers with access to the content of our various networks.

Our lifestyle-oriented interactive businesses are focused on the internal development and acquisition of interactive media that is intended to diversify sources of revenue and enhance our competitive advantage as a leading provider of home, food, travel and other lifestyle-oriented content.

The lifestyle-oriented interactive businesses consist of our presence on multiple social media applications, TV Everywhere watch sites, mobile applications and desktop websites, including, but not limited to, our six network-branded websites: HGTV.com, Foodnetwork.com, Travelchannel.com, DIYNetwork.com, Cookingchanneltv.com and Greatamericancountry.com. In addition to serving as websites for the television networks, the websites provide informational and instructional content on specific topics within their respective lifestyle content categories. Revenues generated by our lifestyle interactive businesses are derived primarily from the sale of display, banner and video advertising through all of these platforms. All of our interactive businesses benefit from archived television network programming, of which we own approximately 94.2 percent. Owning our programming enables us to efficiently and economically repurpose it for use on websites and digital platforms, including video‑on‑demand and streaming services.

The lifestyle-oriented websites accounted for approximately 5.2 percent of U.S. Networks’ total operating revenues in 2016. The strategic focus of the lifestyle-oriented interactive businesses is to grow advertising revenues by increasing views and video plays and attracting more unique visitors to our websites through site enhancements and additional video. Our strategy also includes attracting a broader audience through placing our video programming on national video streaming sites, developing new sources of revenue that capitalize on traffic growth on our digital platforms and capitalizing on the movement of advertising dollars to mobile platforms.

Programming expenses, employee costs and marketing and advertising expenses are the primary operating costs of U.S. Networks. Marketing and advertising expenses are incurred to support brand-building initiatives at all of our networks.

HGTV is available in approximately 91.6 million domestic television households and is simulcast in high definition (“HD”). HGTV programming content commands an audience interested specifically in home-related topics, such as decorating, interior design, home remodeling, landscape design and real estate. HGTV engages audiences by creating original programming that is entertaining, instructional and informative. HGTV appeals more strongly to female viewers with higher incomes in the 18 to 49 and 25 to 54 age ranges. HGTV ranked second among women in the 25 to 54 age range for cable networks. Also, HGTV ranked third among all adult viewers and eighth among adult viewers in the 25 to 54 age range for cable networks.

Programming on HGTV includes House Hunters, House Hunters International, Fixer Upper, Flip or Flop, The Property Brothers and Beachfront Bargain Hunt. The network also has developed successful programming events, including the HGTV Dream Home Giveaway, HGTV Smart Home Giveaway, HGTV Urban Oasis Giveaway and annual live coverage of the Tournament of Roses Parade. Many of the programs on HGTV feature, or are hosted by, high-profile television personalities such as Chip and Joanna Gaines, Tarek and Christina El Moussa, Drew and Jonathan Scott, David Bromstad and Egypt Sherrod.

Food Network is available in approximately 93.4 million domestic television households and is simulcast in HD. We currently own 68.7 percent of the Food Network and are the managing partner. The Tribune Media Company (“Tribune”) has a non-controlling interest of 31.3 percent in Food Network.

Food Network programming content attracts audiences interested specifically in food-related topics, such as food preparation, dining out, entertaining, competition, nutrition and healthy eating. Food Network engages audiences

by creating original programming that is entertaining, instructional and informative. Food Network appeals more strongly to female viewers with higher incomes in the 18 to 49 and 25 to 54 age ranges. Food Network ranked within the top 15 cable networks for adults in the 25 to 54 age range.

Programming on Food Network includes primetime series Beat Bobby Flay, Chopped, Diners, Drive-ins and Dives, Food Network Star and Guy’s Grocery Games, as well as daytime series Giada in Italy, The Kitchen, Pioneer Woman and Trisha’s Southern Kitchen. Food Network hosts include high-profile television personalities such as Ted Allen, Alton Brown, Anne Burrell, Giada De Laurentiis, Bobby Flay, Guy Fieri, Alex Guarnaschelli, Geoffrey Zakarian, Ree Drummond, Trisha Yearwood and Valerie Bertinelli.

Travel Channel is available in approximately 85.4 million domestic television households and is simulcast in HD. Travel Channel programming content attracts travel enthusiasts and adventurous personalities. Travel Channel appeals more strongly to viewers who are more affluent than the average viewer.

Programming on Travel Channel includes Hotel Impossible, Mysteries at the Museum, Bizarre Foods, Trip Flip, Booze Traveler and Expedition Unknown. Many of the programs on Travel Channel feature, or are hosted by, high-profile television personalities such as Andrew Zimmern, Samantha Brown, Don Wildman, Anthony Melchiorri, Bert Kreischer, Jack Maxwell, Josh Gates and Zak Bagans.

DIY Network is available in approximately 59.6 million domestic television households and is simulcast in HD. DIY Network programming content attracts do-it-yourself audiences and provides entertaining and informational content across a broad range of categories, including home building, home improvement and renovations, gardening and landscaping. DIY Network appeals more strongly to male viewers with higher incomes in the 18 to 49 and 25 to 54 age ranges.

Programming on DIY Network includes Rehab Addict, Vanilla Ice Project, Building Alaska, First Time Flippers, Tiny House Big Living and Texas Flip N Move. Many of the programs on DIY Network feature, or are hosted by, television personalities such as Nicole Curtis, Vanilla Ice, Alison Victoria and Chris Lambton.

Cooking Channel is available in approximately 65.1 million domestic households and is simulcast in HD. We currently own 68.7 percent of Cooking Channel, which represents a controlling interest. Tribune has a non-controlling interest of 31.3 percent in Cooking Channel.

Cooking Channel programming content caters to avid food lovers by focusing on food information, food exploration and instructional cooking. The Cooking Channel appeals more strongly to female viewers with higher incomes in the 18 to 49 and 25 to 54 age ranges.

Programming on Cooking Channel includes Big Bad BBQ Brawl, Beach Bites with Katie Lee, Carnival Eats, Cheap Eats, Dinner at Tiffani’s, Food Fact or Fiction and Man Fire Food. Cooking Channel hosts include notable television personalities such as Katie Lee, Michael McKean and Tiffani Thiessen.

Great American Country is available in approximately 57.0 million domestic television households and is simulcast in HD. Great American Country provides its viewers with programming content that celebrates the country lifestyle and includes the country music experience, music performance specials, live concerts and country music videos.

Programming on Great American Country includes Going RV, Flea Market Flip, Log Cabin Living, Living Alaska and the Top 20 Country Countdown.

International Networks includes the TVN portfolio of networks and other lifestyle-oriented networks available in the United Kingdom (“UK”), other European markets, the Middle East and Africa (“EMEA”), Asia Pacific (“APAC”) and Latin America.

International Networks generates revenues primarily from advertising sales, distribution fees earned from the right to distribute our programming content and program licensing to third parties. Satellite transmission fees, programming expenses, employee costs and marketing and advertising expenses are the primary operating costs of International Networks.

We currently distribute HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel, AFC and Fine Living Network, as well as the TVN network portfolio, in more than 175 countries and territories around the world. Our networks are broadcast in 30 languages via 41 unique channel feeds reaching more than 300 million cumulative subscribers. In addition to the broadcast networks, we also license a portion of our programming to other broadcasters around the world.

Internationally, we also have joint-venture partnerships with the BBC for UKTV and its suite of 10 general entertainment and lifestyle networks in the UK and with Corus Entertainment for HGTV, DIY Network, Food Network and Cooking Channel in Canada.

In 2010, the Company launched its first international pay-television channel through Food Network in the UK. The channel first launched on pay-television, then expanded its distribution in 2012 to free-to-air on Freeview, initially in primetime and then as a full 24-hour broadcast channel in 2013. Currently, Food Network is the third most viewed lifestyle channel and the fifth most viewed non-scripted factual channel in the UK. Food Network is also available across EMEA, APAC and Latin America.

In 2012, Travel Channel International Ltd. (“TCI”) was acquired, along with its base of operations in London. TCI is broadcast in 29 languages across a wide network of affiliates throughout EMEA and APAC. In 2014, TCI also became available on Freeview in primetime in the UK.

In 2013, the Company acquired AFC, a complementary channel brand to Food Network. AFC, which is based in Singapore, broadcasts 24 hours a day, seven days a week and reaches about 10.4 million subscribers in 11 markets.

In early 2014, we launched the Fine Living Network in Italy on the digital terrestrial television. Since its launch, over 48.2 percent of Italy’s television population has tuned into the channel. In late 2014, we launched HGTV in Singapore. HGTV is the first channel dedicated to the home and lifestyle category across APAC.

During 2015, we acquired TVN, a Polish media company, which operates a portfolio of 13 free-to-air and pay-TV lifestyle and entertainment networks, including TVN, TVN24, TVN Style, TTV, TVN Turbo, TVN24 Biznes i Świat. Also included in TVN is TVN Media, an advertising sales house. Also in 2015, we launched Travel Channel as a 24/7 free-to-air channel in the UK; expanded distribution of Food Network across Latin America and HGTV in APAC; launched Food Network in Australia in partnership with Special Broadcasting Service (“SBS”); secured a large volume output deal with Nine in Australia to launch Food Network and HGTV-branded blocks on newly-established 9LIFE, Australia’s first free-to-air lifestyle network.

In the second quarter of 2016, we launched HGTV as a free-to-air channel in New Zealand as a first of its kind offering in the region. In the fourth quarter of 2016, we launched HGTV in the Middle East and North Africa. Also during the fourth quarter of 2016, we launched Cooking Channel in Canada, marking the first time we distributed this network outside the United States and Caribbean.

Cable, satellite and telecommunications network programming is a highly-competitive business in the U.S. and worldwide. Our television networks and interactive businesses generally compete for advertising revenue with other

cable and broadcast television networks, online and mobile outlets, radio programming and print media. Our television networks and interactive business also compete for their target audiences with all forms of programming and other media provided to viewers, including broadcast networks, local over-the-air television stations, competitors’ pay and basic cable television networks and video-on-demand services, streaming services, online activities and other forms of news, information and entertainment. Additionally, our networks compete with other television networks for distribution fees derived from agreements with cable and satellite operators, telecommunication suppliers and other distributors, including digital service providers.

Our intellectual property (“IP”) assets include copyrights in television content, trademarks and servicemarks in brands, names and logos, websites, and licenses from third parties. To defend these assets, we rely upon a combination of common law, statutory and contractual legal protections. There can be no assurance, however, of the degree to which these measures will be successful. Moreover, effective IP protection may be either unavailable or limited in certain foreign territories. Policing unauthorized use of our products and services and related IP is difficult and costly. Third parties may challenge the validity or scope of our IP from time to time, and the success of any such challenges could result in the limitation or loss of IP rights. Irrespective of their validity, such claims may result in substantial costs and diversion of resources which could have an adverse effect on our operations. In addition, piracy, which encompasses the theft of our signal and unauthorized use of our content in the digital environment, continues to present a threat to revenues.

The Company is subject to and affected by laws and regulations of U.S. federal, state and local governmental authorities as well as to the laws and regulations of international countries and bodies, such as the European Union (the “EU”). These laws and regulations are subject to change. Additionally, in the U.S. the Federal Communications Commission (the “FCC”) regulates cable television and satellite operators and telecommunication suppliers, which could affect our networks indirectly.

All of our cable networks must provide closed-captioning programming for the hearing impaired. The 21st Century Communications and Video Accessibility Act of 2011 also requires us to provide closed captioning on certain video programming that we offer on the internet.

FCC rules require multichannel video programming distributors to ensure that all commercials comply with specified volume standards. Our distribution agreements generally require us to certify compliance with such standards.

The FCC’s implementation of the statutory “must-carry” obligations requires cable operators and multichannel video programming distributors to give broadcasters preferential access to channel space. In contrast, cable programming television networks, such as ours, have no guaranteed right of carriage on these systems. This may reduce the amount of channel space that is available for carriage of our television networks by these systems.

We operate numerous websites and make available mobile applications (“apps”) which we use to distribute information about our programs and to engage more deeply with our viewers. The operation of these websites and apps is subject to a range of international, federal, state and local laws, such as privacy and consumer protection regulations.

As of December 31, 2016, we had approximately 3,600 full-time equivalent employees globally.

A number of significant risk factors could materially affect our specific business operations and cause our performance to differ materially from any future results projected or implied by our prior statements. Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company. 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 effect on our business, financial condition or results of operations. In such case, the trading price of our Class A Common Shares could decline.

Changes in public and consumer tastes and preferences could reduce demand for our services and reduce profitability of our businesses.

Each of our networks provides content and services whose success is primarily dependent on widespread acceptance by the public. We must consistently create and distribute offerings that appeal to the prevailing consumer tastes at any point in time, which is difficult to predict and can change rapidly. The Company must invest substantial amounts in the production and marketing of its content before it learns whether such content will reach anticipated levels of popularity with consumers. The popularity of the Company’s content depends on many factors, only some of which are within the Company’s control. Examples include the popularity of competing content, the availability of alternative forms of leisure and entertainment activities, general economic conditions, the growing competition for consumer discretionary spending and the Company’s ability to maintain or develop strong brand awareness with key target audiences.

There is a premium on live viewers of content, including the quality of the audience, which is driven by viewer income and spending habits. The anticipated demographics which our advertising customers seek drives pricing strength, which could be negatively impacted should widespread customer acceptance of our content not occur.

Any event that could cast negative light on our entertainment personalities or negatively impact our brands and brand reputation could have a material impact on our earnings.

If we are unable to maintain distribution agreements at acceptable rates, packaging and terms, our revenues and profitability could be negatively affected.

We enter into multi-year contracts for our national television networks with distributors. Our long-term distribution arrangements enable us to reach a large percentage of households receiving multichannel video programming distribution across the United States. As these contracts expire, we must renew or renegotiate them. If we are unable to renew them on acceptable terms or at rates and/or packaging similar to those in other distribution contracts, we may lose distribution rights and/or distribution fee revenues.

These distribution agreements may also include “most favored nation” (“MFN”) clauses. Such clauses typically provide that, in the event we enter into an agreement with another distributor on more favorable terms, those terms must be offered to the distributor holding the MFN right, subject to certain exceptions and conditions. The MFN clauses within our distribution agreements are generally complex. Parties may interpret them differently and reach a conflicting view of compliance of that held by the Company, which, if proven correct, could have an adverse effect on our financial condition or results of operations.

The loss of a significant distribution arrangement on basic programming tiers could reduce distribution of our networks, thereby adversely affecting distribution revenues, subjecting certain of our intangible assets to possible impairments and potentially impacting our ability to sell advertising at acceptable rates.

Three of our networks that are carried on digital tiers are dependent upon the willingness of consumers to pay for such tiers, as well as our ability to negotiate favorable carriage agreements on widely accepted digital tiers.

Further consolidation among cable and satellite operators and telecommunications suppliers could adversely affect our revenues, profitability and financial condition of our businesses. Consolidation among distributors has given the largest cable and satellite operators considerable leverage in their relationship with content providers. The four largest distributors in the United States provide service to approximately 79.8 percent of U.S. paid television households receiving cable or satellite television service today.

Continued consolidation within the industry could reduce the number of distributors available to carry our programming, subject our distribution revenue to greater volume discounts and further increase the negotiating leverage of the cable and satellite operators and telecommunications suppliers, which could have an adverse effect on our financial condition or results of operations.

Additionally, deficiencies with the methodologies of audience measurement techniques on tablets, mobile devices and emerging technologies may adversely impact our ability to monetize the use of our content.

Service disruptions and/or the failure of communications relied on by the Company could have a negative impact on the profitability of our business.

Our business relies heavily on communications satellites and transmitter facilities to transmit our programming to distributors. Shutdowns of satellites and transmitter facilities or service disruptions pose significant risks to the Company’s operations. Such disruptions may be caused by power outages, natural disasters, extreme weather, terrorist attacks, failures or impairments of communication satellites or on-ground uplinks or downlinks used to transmit programming or other similar events. If a satellite is not able to transmit the Company’s programming, the Company may not be able to secure an alternative communication satellite in a timely manner because there are a limited number of communications satellites available for the transmission of programming. If such an event were to occur, there could be a disruption in the delivery of the Company’s programming, which could harm the Company’s reputation and adversely affect the Company’s results of operations.

Our networks face significant competitive pressures related to attracting consumers and advertisers. Failure by us to maintain our competitive advantage may affect the profitability of our networks.

We face substantial competition from alternative providers of similar services. Our national television networks compete for viewers with other broadcast and national television networks and with home video products and internet usage, as well as with other content providers for carriage of programming. 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 print media. Our websites compete for visitors and advertising dollars with other forms of media aimed at attracting similar audiences and, therefore, must provide popular content in order to maintain and increase site traffic. Competition may divert consumers from our services, which could reduce the profitability of our networks.

Changes in consumer behavior resulting from new technologies and distribution platforms may impact the performance of our networks.

We must adapt to advances in technologies and distribution platforms related to content transfer 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 in technology, such as video-on-demand, and devices, such as tablets and mobile, providing consumers the ability to view content from remote locations and enabling general preferences for user-generated and interactive

content. Changes of these types may impact our traditional distribution methods for our content. If we cannot ensure that our distribution methods and content allow us to reach our target audiences, there could be a negative effect on our business.

We face cybersecurity, information security, systems security, privacy and similar risks, which could result in the disclosure of confidential information, disruption of our programming services, damage to our brands and reputation, legal exposure and financial losses.

Our online, mobile and app offerings, as well as our internal systems, involve the storage and transmission of our and our users’ proprietary information. Additionally, we and our partners rely on various technology systems in connection with the production and distribution of our programming. Although we monitor our security measures regularly, they may be breached due to employee error, computer malware, viruses, hacking and phishing attacks or otherwise. Additionally, outside parties may attempt to fraudulently induce employees or users to disclose sensitive, private or confidential information in order to gain access to our data or our users’ data. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any such breach or unauthorized access could result in a loss of our or our users’ proprietary information, a disruption of our services or a reduction of the revenues we are able to generate from such services, damage to our brands and reputation, a loss of confidence in the security of our offerings and services and/or significant legal and financial exposure, each of which could potentially have an adverse effect on our business.

The loss of key talent or inability to identify and locate new and engaging talent could disrupt our business and adversely affect the profitability of our businesses.

Our business depends upon the continued efforts, abilities and expertise of our corporate and divisional executive teams and entertainment personalities. We employ or contract with entertainment personalities who may have loyal audiences. These individuals are important to audience endorsement of our programs and other content. There can be no assurance that these individuals will remain with us or retain their current audiences. If we fail to retain key individuals or if our entertainment personalities lose their current audience base, our operations could be adversely affected.

Any event that could negatively impact our brands and brand reputation could have a material impact to our earnings.

We have operations and investments in a number of foreign jurisdictions. The inherent economic risks of doing business in international markets that are beyond our control include, among other things (i) changes in the economic environment, (ii) changes in local regulatory requirements, including restrictions on content, imposition of local content quotas and restrictions on foreign ownership, (iii) differing degrees of protection for IP and varying attitudes towards the piracy of IP, (iv) exchange controls, tariffs and other trade barriers, (v) foreign taxation, (vi) anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery Act that impose stringent requirements on how we conduct our foreign operations and changes in these laws and regulations, (vii) foreign privacy and data protection laws and regulation and changes in these laws, (viii) shifting consumer preferences regarding the viewing of video programming, (ix) corruption, (x) confiscation, (xi) currency inconvertibility, (xii) nationalization of assets and (xiii), in some markets, increased risk of economic and geopolitical instability. Additionally, the local currencies in which our international operations conduct their business could change in value relative to the U.S. Dollar (“USD”), exposing our results to exchange rate fluctuations.

Events or developments related to these and other risks associated with international trade could adversely affect our revenues from non-U.S. sources, which could have a material adverse effect on our business, financial condition, results of operations, liquidity and prospects.

Furthermore, some foreign markets where we and our partners operate may be more adversely affected by current economic conditions than the U.S. We also may incur substantial expense as a result of changes, including the imposition of new restrictions, in the existing economic or political environment in the regions where we do business. Acts of terrorism, hostilities, or financial, political, economic or other uncertainties could lead to a reduction in revenue or loss of investment, which could adversely affect our results of operations.

Our programming services and the distributors of our programming, including cable and satellite operators, telecommunication suppliers and other distributors, 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 networks, 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 network packages, to their customers that may or may not include some or all of our networks. The unbundling of programming could reduce distribution of certain of our networks, thereby leading to reduced viewership and increased marketing expenses and affecting our ability to compete for or attract the same level of advertising dollars or distribution fees.

We could be subject to material liabilities as a result of changes in tax laws, regulations and policies

We are subject to taxation in the U.S. and numerous international jurisdictions. Our tax rates are impacted by the tax laws, regulations and policies in federal, state and local and international territories where our businesses operate and may be subject to significant change. In addition, our tax returns may be audited and settlements or litigation may occur. Such changes, audit settlements or litigation may result in the recognition of an additional charge to our income tax provision in the period and may adversely affect our effective income tax rate or require additional cash payments which may impact our operating results, cash flows and financial condition.

Changes in global economic conditions, economic conditions in the United States and the regional economies in which we operate or in specific industry sectors could adversely affect the profitability of our businesses.

Approximately 84.8 percent of our consolidated revenues in 2016 were derived from marketing and advertising spending in the United States, and approximately 13.0 percent of our consolidated revenues in 2016 were derived from marketing and advertising spending in Poland, including revenues from our advertising representation business in Poland. Advertising and marketing spending is sensitive to economic conditions and tends to decline in recessionary periods. A global or regional economic decline could reduce advertising prices and volume, resulting in a decrease in our advertising revenues.

Our business is significantly affected by prevailing economic conditions and by disruptions to financial markets. We derive substantial revenues from advertisers, and these expenditures are sensitive to general economic conditions and consumer buying patterns. Financial instability or a general decline in economic conditions in the U.S. and other countries where our networks are distributed could adversely affect advertising rates and volume, resulting in a decrease in our advertising revenues.

Decreases in consumer discretionary spending in the U.S. and other countries where our networks are distributed may affect cable television and other video service subscriptions, in particular with respect to digital service tiers on which certain of our programming networks are carried. This could lead to a decrease in the number of subscribers receiving our programming from multi-channel video programming distributors, which could have a negative impact on our viewing subscribers and revenues from distribution fees. Similarly, a decrease in viewing subscribers would also have a negative impact on the number of viewers actually watching the programs on our programming networks, which could also impact the rates we are able to charge advertisers.

Economic conditions affect a number of aspects of our businesses worldwide and impact the businesses of our partners who purchase advertising on our networks and reduce their spending on advertising. Economic conditions can also negatively affect the ability of those with whom we do business to satisfy their obligations to us. The general worsening of current global economic conditions could adversely affect our business, financial condition or results of operations, and the worsening of economic conditions in certain parts of the world could impact the expansion and success of our businesses in such areas.

Our operations outside the United States may be adversely affected by the operation of laws in those jurisdictions.

Our operations in non-U.S. jurisdictions are in many cases subject to the laws of the jurisdictions in which they operate rather than U.S. law. Laws in some jurisdictions differ in significant respects from those in the U.S., and these differences can affect our ability to react to changes in our business and our rights or ability to enforce rights may be different than would be expected under U.S. law.

Moreover, enforcement of laws in some overseas jurisdictions can be inconsistent and unpredictable, which can affect both our ability to enforce our rights and to undertake activities that we believe are beneficial to our business. In addition, the business and political climate in some jurisdictions may encourage corruption, which could reduce our ability to compete successfully in those jurisdictions while remaining in compliance with local laws or United States anti-corruption laws applicable to our businesses. As a result, our ability to generate revenue and our expenses in non-U.S. jurisdictions may differ from what would be expected if U.S. law governed these operations.

Increased costs associated with programming may adversely impact our ability to profitably produce new content.

Our business relies on our ability to profitably produce quality programming that is widely accepted by our target demographics. Our core business involves the production, marketing and distribution of lifestyle content, the costs of which can be significant. Our investments in original programming and development are significant and involve complex negotiations with multiple parties. These costs may not be recouped when the content is broadcast or distributed and higher costs may lead to decreased profitability or potential write-downs. Increased competition from new entrants into the market for development and production of original programming increases our content costs, as creating competing high quality, original content can require significant investment.

We may incur additional debt in the future. Such debt could adversely affect our business, financial condition or results of operations. Financial market conditions may impede access to or increase the cost of financing our operations and investments.

We currently depend on cash on hand and cash flows from operations to make scheduled principal and cash interest payments on our debt. We expect to be able to meet the estimated principal and interest payments on our debt through a combination of cash on hand, expected cash flows from operations and the use of our revolving credit facility. Additionally, we may incur further debt in the future for other corporate purposes.

Increased volatility and disruptions in the U.S. and global financial and equity markets may make it more difficult for us to obtain financing for our operations or investments or increase the cost of obtaining financing. Our borrowing costs can be affected by short and long-term debt ratings assigned by independent ratings agencies which are based, in significant part, on our performance as measured by credit metrics such as interest coverage and leverage ratios. A low rating could increase our cost of borrowing or make it more difficult for us to obtain future financing. Unforeseeable changes in foreign currencies could negatively impact our results of operations and calculations of interest coverage and leverage ratios.

Foreign exchange rate fluctuations may adversely affect our operating results and financial condition.

We have significant operations in a number of foreign jurisdictions and certain of our operations are conducted and certain of our debt obligations are denominated in foreign currencies. The value of these currencies fluctuates relative to the USD. As we have expanded our international operations, our exposure to exchange rate fluctuations has increased. As a result, we are exposed to exchange rate fluctuations, which could have an adverse effect on our

results of operations and net asset balances. There is no assurance that downward trending currencies will rebound or that stable currencies will remain unchanged in any period or for any specific market.

The concentrated ownership of our Common Voting Shares limits the ability of the holders of our Class A Common Shares to influence corporate matters.

We have two classes of common stock: Common Voting Shares and Class A Common Shares. Holders of Class A Common Shares are entitled to elect the greater of three or one-third of the members of the Board of Directors (the “Board”), but are not permitted to vote on any other matters except as required by Ohio law. Holders of Common Voting Shares are entitled to elect the remainder of the Board and to vote on all other matters. Approximately 92 percent of the Common Voting Shares are subject to the Amended and Restated Scripps Family Agreement (the “Scripps Family Agreement”). The provisions of the Scripps Family Agreement fully govern the transfer and voting of Common Voting Shares subject to the agreement. As a result, the holders of the Common Voting Shares subject to the Scripps Family Agreement currently have the ability to elect two-thirds of the Board and to direct the outcome of any matter that does not require a vote of the Class A Common Shares. Additionally, some of the signatories to the Scripps Family Agreement are also directors of the Company, which could create conflicts of interest in certain situations. This concentrated control limits the ability of the holders of Class A Common Shares to influence corporate matters and could potentially enable the Company to take actions that these shareholders would not view as beneficial. As a result, the market price of our Class A Common Shares could be adversely affected.

We own approximately 621,000 square feet of office space, including our corporate headquarters in Knoxville, TN and our TVN headquarters in Warsaw, Poland. Additionally, we lease approximately 820,000 square feet of other facilities to support our global operations in other locations, including New York, NY, Washington D.C., Miami, FL, London, England, Sao Paulo, Brazil and Singapore.

Management believes its properties are adequate to support the business efficiently and that the properties and equipment therein have been well maintained.

The Company is party to various lawsuits and claims in the ordinary course of business.

From time to time, we receive notices from third parties claiming that we are infringing their IP rights. Claims of IP infringement could require us to enter into royalty or licensing agreements on unfavorable terms, incur substantial monetary liability or be enjoined preliminarily or permanently from further use of the IP in question. In addition, certain agreements may require us to indemnify the other party for certain third-party IP infringement claims, which could increase our damages and our costs of defending against such claims. Even if the claims are without merit, defending against the claims can be time-consuming and costly.

The costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims and changes in those matters (including those matters described above) and developments or assertions by or against us relating to IP rights and IP licenses could have a material effect on the Company’s business, financial condition and operating results. No current legal matters are expected to result in a material loss.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Our Class A Common Shares are traded on the NASDAQ listing exchange under the ticker symbol “SNI.” As of January 31, 2017, there were approximately 71,800 owners of our Class A Common Shares based on security position listings and 80 owners of our Common Voting Shares, which do not have an established public trading market.

The following table reflects the range of high and low selling prices of our Class A Common Shares by quarterly period:

2016	High		Low
First quarter	$	66.99	$	50.81
Second quarter	$	68.44	$	58.73
Third quarter	$	68.34	$	59.32
Fourth quarter	$	73.71	$	60.63

2015	High		Low
First quarter	$	77.65	$	68.44
Second quarter	$	72.11	$	64.47
Third quarter	$	68.45	$	47.62
Fourth quarter	$	62.30	$	47.72

The following table provides information about the Company’s purchases of equity securities that are registered by the Company pursuant to section 12 of the Exchange Act (i.e., our Class A Common Shares) during the quarter ended December 31, 2016:


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
10/1/16 - 10/31/16		-	$	-		-	$	1,512,536,943
11/1/16 - 11/30/16		-		-		-		1,512,536,943
12/1/16 - 12/31/16		-		-		-		1,512,536,943
Total		-	$	-		-	$	1,512,536,943

Under the existing share repurchase programs (the “Repurchase Programs”), the Company is permitted to acquire up to a cumulative amount of $3,000.0 million of Class A Common Shares. There is no expiration date for the Repurchase Programs, and we are under no commitment or obligation to repurchase any particular amount of Class A Common Shares under the Repurchase Programs.

There were no sales of unregistered equity securities during the year ended December 31, 2016.

The Company paid a quarterly cash dividend of $0.25 per share, $0.23 per share and $0.20 per share for all four quarters in 2016, 2015 and 2014, respectively, to the shareholders of its Class A Common Shares and Common Voting Shares. The declaration and payment of dividends is evaluated by the Company’s Board. Future dividends are subject to, among other things, our earnings, financial condition and capital allocation requirements.

The following graph compares the cumulative total stockholder return on the Company’s Class A Common Shares with the comparable cumulative return of the S&P 500 index and a peer group of media companies (the “Peer Group Index”) for the five years ended December 31, 2016. The Peer Group Index is comprised of companies that engage in cable television programming as a significant portion of their business. However, some of the companies included in the Peer Group Index also engage in businesses in which the Company does not participate. The performance graph assumes that the value of the investment in our Class A Common Shares, the S&P 500 index and the Peer Group Index was $100 on December 31, 2011 and that all dividends were reinvested.

The Company previously included the NYSE index in its cumulative total return comparison. During 2016 we moved our exchange listing from the NYSE to the NASDAQ Global Select Market and we no longer consider NYSE to be a relevant comparison.

The Selected Financial Data required by this item is filed as part of this Form 10-K and incorporated into this Item 6 by reference. See Index to Consolidated Financial Statement Information of this Form 10-K.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations required by this item is filed as part of this Form 10-K and incorporated into this Item 7 by reference. See Index to Consolidated Financial Statement Information of this Form 10-K.

The market risk information required by this item is filed as part of this Form 10-K and incorporated into this Item 7A by reference. See Index to Consolidated Financial Statement Information of this Form 10-K.

The Financial Statements and Supplementary Data required by this item are filed as part of this Form 10-K and incorporated into this Item 8 by reference. See Index to Consolidated Financial Statement Information of this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The Controls and Procedures required by this item are filed as part of this Form 10-K and incorporated into this Item 9A by reference. See Index to Consolidated Financial Statement Information of this Form 10-K.

Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G(3) to Form 10-K.

Information required by Item 10 of Form 10-K relating to directors is incorporated by reference to the material captioned “Election of Directors” in our definitive proxy statement (“Proxy Statement”) for the Annual Meeting of Shareholders. Information regarding Section 16(a) compliance is incorporated by reference to the material captioned “Section 16(a) Beneficial Ownership Compliance” in the Proxy Statement.

We have adopted a code of ethics that applies to all employees, officers and directors of SNI. We also have a Code of Business Conduct and Ethics for the CEO and Senior Financial Officers. These codes meet the requirements defined by Item 406 of Regulation S-K and the requirement of a code of business conduct and ethics under NASDAQ listing standards. Copies of our codes of ethics are posted on our website at www.scrippsnetworksinteractive.com. In addition, we will provide a printed copy of our code of ethics, free of charge, upon written request to: Investor Relations, Scripps Networks Interactive, Inc., 9721 Sherrill Blvd., Knoxville, TN 37932.

Information regarding our audit committee financial experts is incorporated by reference to the material captioned “Corporate Governance” in the Proxy Statement.

The Proxy Statement will be filed with the SEC in connection with our 2017 Annual Meeting of Shareholders.

The information required by Item 11 of Form 10-K is incorporated by reference to the materials captioned “Compensation Discussion and Analysis,” “Executive Compensation Tables” and “Director Compensation” in the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 of Form 10-K is incorporated by reference to the materials captioned “Report on the Security Ownership of Certain Beneficial Owners” and “Equity Compensation Plan Information” in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 of Form 10-K is incorporated by reference to the materials captioned “Proposal 4 – Ratification of Independent Registered Public Accountants” and “Related Party Transactions” in the Proxy Statement.

The information required by Item 14 of Form 10-K is incorporated by reference to the material captioned “Independent Auditors” in the Proxy Statement.

(a) The consolidated financial statements of SNI are filed as part of this Form 10-K. See Index to Consolidated Financial Statement Information.

The reports of Deloitte & Touche LLP, an Independent Registered Public Accounting Firm, dated February 24, 2017, are filed as part of this Form 10‑K. See Index to Consolidated Financial Statement Information.

(b) The Company’s consolidated supplemental schedule is filed as part of this Form 10-K. See Index to Consolidated Financial Statement Schedules.

The information required by this item appears in the Exhibits Index as part of this Form 10-K.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Kenneth W. Lowe	Chairman, President and	February 24, 2017
Kenneth W. Lowe	Chief Executive Officer
	(Principal Executive Officer)

/s/ Lori A. Hickok	Executive Vice President, Chief Financial Officer	February 24, 2017
Lori A. Hickok	(Principal Financial and Accounting Officer)

/s/ Gina L. Bianchini	Director	February 24, 2017
Gina L. Bianchini

/s/ Michael R. Costa	Director	February 24, 2017
Michael R. Costa

/s/ David A. Galloway	Director	February 24, 2017
David A. Galloway

/s/ Donald E. Meihaus	Director	February 24, 2017
Donald E. Meihaus

/s/ Jarl Mohn	Director	February 24, 2017
Jarl Mohn

/s/ Richelle P. Parham	Director	February 24, 2017
Richelle P. Parham

/s/ Nicholas B. Paumgarten	Director	February 24, 2017
Nicholas B. Paumgarten

/s/ Mary Peirce	Director	February 24, 2017
Mary Peirce

/s/ Jeffrey Sagansky	Director	February 24, 2017
Jeffrey Sagansky

/s/ Wesley W. Scripps	Director	February 24, 2017
Wesley W. Scripps

/s/ Ronald W. Tysoe	Director	February 24, 2017
Ronald W. Tysoe

Selected Financial Data
Five-Year Financial Highlights
	Year ended December 31,
(in thousands, except per share data and cash dividends)	2016			2015 (9)			2014			2013			2012
Summary of Operations
Operating revenues (1)(3):
U.S. Networks	$	2,871,424		$	2,716,663		$	2,588,357		$	2,466,061		$	2,257,625
International Networks		557,052			327,891			90,180			75,677			49,444
Corporate and Other		(27,041	)		(26,327	)		(13,081	)		(10,929	)		113
Total operating revenues	$	3,401,435		$	3,018,227		$	2,665,456		$	2,530,809		$	2,307,182
Segment profit (loss) (1)(2)(3):
U.S. Networks	$	1,413,450		$	1,337,189		$	1,268,417		$	1,212,767		$	1,128,639
International Networks		100,397			30,893			(41,854	)		(17,535	)		(2,290	)
Corporate and Other		(112,373	)		(122,391	)		(104,802	)		(92,772	)		(85,476	)
Total segment profit	$	1,401,474		$	1,245,691		$	1,121,761		$	1,102,460		$	1,040,873
Net income attributable to SNI common shareholders (4)	$	673,595		$	606,828		$	545,275		$	505,070		$	681,478
Per Share Data
Net income attributable to SNI common shareholders per share of common stock (4)
Basic	$	5.20		$	4.68		$	3.86		$	3.43		$	4.48
Diluted	$	5.18		$	4.66		$	3.83		$	3.40		$	4.44


Cash dividends declared	$	1.00		$	0.92		$	0.80		$	0.60		$	0.48
Balance Sheet Data
Total assets	$	6,200,294		$	6,672,314		$	4,657,481		$	4,438,447		$	4,138,798
Total debt (5)(6)(7)(8)(10)	$	3,202,386		$	4,010,272		$	2,369,254		$	1,384,488		$	1,384,216

(1) Operating revenues and segment profit (loss) represent the measures used to evaluate the operating performance of our business segments in accordance with financial accounting standards for disclosures about segments of an enterprise and related information. See “Business Segment Results” in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(2) Segment profit is a supplemental financial measure. Our CODM 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 is defined as operating income excluding depreciation, amortization and goodwill write-downs. Because segment profit is based on operating income, it excludes interest expense, equity in earnings of affiliates, gain on derivatives, gain on sale of investments, other miscellaneous non-operating expenses and income taxes, which are included in net income determined in accordance with GAAP. For a reconciliation of this financial measure to operating income, see “Business Segment Results” in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(3) As a result of the acquisition of N-Vision B.V., a Dutch Limited Liability Company (“N-Vision”) (see Note 4 – Acquisitions), our international operating segment became significant. Therefore, the Company has two reportable segments: U.S. Networks and International Networks. As a result of the above-mentioned changes, certain prior period segment results have been recast to reflect the current presentation.

(4) Our income tax provision in 2012 reflects a $213.0 million income tax benefit as a result of the reversal of valuation allowances on deferred tax assets related to capital loss carry-forwards. Previously, we had estimated that it would be unable to use any of the capital loss carry-forwards generated from the sale of our Shopzilla and uSwitch businesses. As a consequence of a restructuring that was completed to achieve a more efficient tax structure, the Company recognized a $574.0 million capital gain that utilized substantially all of its capital loss carry-forwards. This income tax benefit was partially offset by $23.1 million of state income tax expenses recognized on the capital gain that utilized these capital loss carry-forwards.

(5) In December 2009, we acquired a 65.0 percent controlling interest in Travel Channel. In connection with this acquisition, we completed a private placement of $885.0 million aggregate principal amount of 3.55% Senior Notes (the “2015 Notes”) that matured and were repaid in 2015.

(6) In 2011, we completed the sale of $500.0 million aggregate principal amount of 2.70% Senior Notes due 2016 (the “2016 Notes”). The 2016 Notes matured and were repaid in 2016.

(7) In November 2014, we completed the sale of $500.0 million aggregate principal amount of 2.75% Senior Notes due 2019 (the “2019 Notes”) and $500.0 million aggregate principal amount of 3.90% Senior Notes due 2024 (the “2024 Notes”).

(8) In May 2015, we amended our revolving credit facility (“Amended Revolving Credit Facility”) to permit borrowings up to an aggregate principal amount of $900.0 million, which may be increased to $1,150 million at our option. In June 2015, we completed the sale of $600.0 million aggregate principal amount of 2.80% Senior Notes due 2020 (the “2020 Notes”), $400.0 million aggregate principal amount of 3.50% Senior Notes due 2022 (the “2022 Notes”) and $500.0 million aggregate principal amount of 3.95% Senior Notes due 2025 (the “2025 Notes”). Also during June 2015, we entered into a $250.0 million senior unsecured loan (“Term Loan”) that matures in June 2017.

On September 15, 2015, TVN executed a partial pre-payment of the 2020 TVN Notes totaling €45.1 million, comprised of principal of €43.0 million, accrued interest of €0.8 million and premium of €1.3 million.

On November 16, 2015, TVN Finance Corporation III AB (“TVN Finance Corp.”), an indirect wholly-owned subsidiary of the Company, executed a second partial pre-payment of the 2020 TVN Notes totaling €45.6 million, comprised of principal of €43.0 million, accrued interest of €1.3 million and premium of €1.3 million. At December 31, 2015, €344.0 million was outstanding on the 2020 TVN Notes.

On November 16, 2015, TVN Finance Corp. executed a full early redemption of 7.88% Senior Notes due 2018 (the “2018 TVN Notes”) totaling €118.9 million, comprised of principal of €116.6 million, accrued interest of a nominal amount and premium of €2.3 million. An additional €4.6 million was paid simultaneously in fulfillment of the November 15 coupon payment due.

On September 20, 2016, TVN Finance Corp. executed a third partial pre-payment of the 2020 TVN Notes totaling €45.1 million, comprised of principal of €43.0 million, accrued interest of €0.8 million and premium of €1.3 million.

On December 15, 2016, TVN Finance Corp. executed a full early redemption for the balance of the 2020 TVN Notes outstanding totaling €323.2 million, comprised of principal of €301.0 million, accrued interest of €11.1 million and premium of €11.1 million.

(10) In connection with the adoption of the FASB guidance on Imputation of Interest, we reclassified $10.2 million from other non-current assets to debt (less current portion) in 2014 and an immaterial amount from other non-current assets to current portion of debt in 2014.

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 consolidated financial statements and the notes thereto. This discussion should be read in conjunction with those financial statements.

We are a global media company with respected high-profile brands and are a leading developer of lifestyle-oriented content, providing primarily home, food, travel and other lifestyle-related programming. Our content is distributed via multiple methods, including television, the internet, digital platforms and licensing arrangements. The SNI portfolio of networks includes HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country within and outside the United States, with the exception of Great American Country, which is only distributed in the United States, and Fine Living, AFC and TVN’s portfolio of networks outside the United States. Additionally, outside the United States, we participate in UKTV, a joint venture with the BBC. Our businesses engage audiences and efficiently serve advertisers by producing and delivering entertaining and highly-useful content that focuses on specifically-defined topics of interest.

The growth of our international business, through acquisition and joint ventures, as well as organically, has been, and continues to be, a strategic priority for the Company. During the fourth quarter of 2016, we launched Cooking Channel in Canada, marking the first time we distributed this network outside the United States and Caribbean. Also in the fourth quarter of 2016, we launched HGTV in the Middle East and North Africa. In the second quarter of 2016, we launched HGTV as a free-to-air channel in New Zealand as a first-of-its-kind offering in the region. During 2015, we acquired TVN, a Polish media company, which operates a portfolio of 13 free-to-air and pay-TV lifestyle and entertainment networks. Also in 2015, we launched Travel Channel as a 24/7 free-to-air channel in the UK; expanded distribution of Food Network across Latin America and HGTV in APAC; launched Food Network in Australia in partnership with SBS; secured a large volume output deal with Nine in Australia to launch Food Network and HGTV-branded blocks on newly-launched 9LIFE, Australia’s first free-to-air lifestyle network.

Consolidated operating revenues increased $383.2 million, or 12.7 percent, in 2016 compared with 2015 and $352.8 million, or 13.2 percent, in 2015 compared with 2014. The growth in year-over-year consolidating operating revenues in 2016 compared with 2015 was partially attributed to the inclusion of TVN’s results for the entire twelve months in 2016 compared with only six months in 2015, while the growth in year-over-year consolidated operating revenues in 2015 compared with 2014 was partially attributed to the inclusion of TVN’s results for six months in 2015 compared with not at all in 2014. Consolidated income from operations before income taxes increased $155.9 million, or 13.9 percent, in 2016 compared with 2015, primarily driven by the flow through of the 12.7 percent increase in consolidated operating revenues and a $191.8 million gain on sale of investments, partially offset by a $32.4 million reduction in gain on derivatives and $21.4 million of incremental interest expense in 2016. Consolidated income from operations before income taxes increased $94.0 million, or 9.1 percent, in 2015 compared with 2014, primarily driven by the flow through of the 13.2 percent increase in consolidated operating revenues and a $47.4 million increase in gain on derivatives, more than offset by $55.4 million of incremental interest expense in 2015.

Although the international business experienced growth, primarily through the acquisition of TVN, U.S. Networks continues to account for the majority of the Company’s performance. U.S. Networks generated operating revenues of $2,871.4 million, representing 84.4 percent of consolidated operating revenues, for the year ended December 31, 2016 compared with $2,716.7 million, representing 90.0 percent of consolidated operating revenues, for the year ended December 31, 2015 and $2,588.4 million, representing 97.1 percent of consolidated operating revenues, for the year ended December 31, 2014.

The reduced contribution of U.S. Networks’ operating revenues as a percentage of consolidated operating revenues in 2016 compared with the same periods in 2015 and 2014 was primarily driven by the inclusion of TVN’s results for the entire twelve months in 2016, only six months in 2015 and not at all in 2014.

International Networks generated operating revenues of $557.1 million, representing 16.4 percent of consolidated operating revenues, for the year ended December 31, 2016 compared with $327.9 million, representing 10.9 percent of consolidated operating revenues, for the year ended December 31, 2015 and $90.2 million, representing 3.4 percent of consolidated operating revenues, for the year ended December 31, 2014.

The increased contribution of International Networks’ operating revenues as a percentage of consolidated operating revenues in 2016 compared with the same periods in 2015 and 2014 was primarily driven by the inclusion of TVN’s results for the entire twelve months in 2016, only six months in 2015 and not at all in 2014.

	Year ended December 31,
( in thousands)	2016			2015			$ Change Fav / (Unfav)			% Change Fav / (Unfav)
Operating revenues:
Advertising	$	2,416,403		$	2,062,530		$	353,873			17.2	%
Distribution		894,367			874,984			19,383			2.2	%
Other		90,665			80,713			9,952			12.3	%
Total operating revenues		3,401,435			3,018,227			383,208			12.7	%
Operating expenses:
Cost of services, excluding depreciation and amortization		1,193,228			987,357			(205,871	)		(20.9	)%
Selling, general and administrative		806,733			785,179			(21,554	)		(2.7	)%
Depreciation		71,559			73,112			1,553			2.1	%
Amortization		123,442			68,647			(54,795	)		(79.8	)%
Goodwill write-down		57,878			-			(57,878	)	NM
Total operating expenses		2,252,840			1,914,295			(338,545	)		(17.7	)%
Operating income		1,148,595			1,103,932			44,663			4.0	%
Interest expense, net		(129,441	)		(108,047	)		(21,394	)		(19.8	)%
Equity in earnings of affiliates		71,382			80,916			(9,534	)		(11.8	)%
Gain on derivatives		17,868			50,256			(32,388	)		(64.4	)%
Gain on sale of investments		191,824			-			191,824		NM
Miscellaneous, net		(22,450	)		(5,193	)		(17,257	)		(332.3	)%
Income from operations before income taxes		1,277,778			1,121,864			155,914			13.9	%
Provision for income taxes		430,330			343,391			(86,939	)		(25.3	)%
Net income		847,448			778,473			68,975			8.9	%
Less: net income attributable to non-controlling interests		(173,853	)		(171,645	)		(2,208	)		(1.3	)%
Net income attributable to SNI	$	673,595		$	606,828		$	66,767			11.0	%

Consolidated operating revenues increased $383.2 million, or 12.7 percent, for the year ended December 31, 2016 compared with the same period in 2015, primarily attributed to the inclusion of TVN’s results for the entire twelve months in 2016 as well as growth in both advertising sales and distribution fees revenues. Consolidated advertising sales increased $353.9 million, or 17.2 percent, in 2016 compared with the respective period in 2015, primarily driven by the inclusion of TVN’s results for the entire twelve months in 2016 as well as strong pricing in the U.S. market. Consolidated advertising sales represented 71.0 percent and 68.3 percent of consolidated total operating revenues in 2016 and 2015, respectively.

Consolidated advertising sales growth was supplemented with consolidated distribution fees growth of $19.4 million, or 2.2 percent, in 2016 compared with the respective period in 2015, also primarily driven by the inclusion of TVN’s results for the entire twelve months in 2016 as well as negotiated contractual rate increases partially offset by a rate equalization resulting from the consolidation of certain distributor agreements and a decrease in the number of subscribers receiving our networks. Consolidated distribution fees represented 26.3 percent and 29.0 percent of consolidated total operating revenues in 2016 and 2015, respectively.

Cost of services, which consists of program amortization and costs associated with distributing our content, increased $205.9 million, or 20.9 percent, for the year ended December 31, 2016 compared with the respective period in 2015, inclusive of TVN’s results for the entire twelve months in 2016. Program amortization, which represents the largest expense and is the primary driver of fluctuations in cost of services, increased $151.0 million, or 19.3 percent, in 2016 compared with the same period in 2015, reflecting our continued investment in the improved quality and variety of programming on our networks and higher than normal program impairments. Cost of services included $5.5 million of costs related to the integration of our domestic networks (the “Reorganization”) incurred during 2016, while $2.8

million of costs related to the closure of the Cincinnati office and elimination of certain roles within the Company (the “Restructuring Plan”) were incurred during 2015.

Selling, general and administrative, which primarily consists of employee costs, marketing and advertising expenses, administrative costs and costs of facilities, increased $21.6 million, or 2.7 percent, for the year ended December 31, 2016 compared with the respective period in 2015, inclusive of TVN’s results for the entire twelve months in 2016. Selling, general and administrative included $15.1 million of TVN transaction and integration related expenses and $10.8 million of Reorganization costs incurred during 2016. Selling, general and administrative included $28.2 million of TVN transaction and integration related expenses, $13.3 million of costs related to the Restructuring Plan and $3.2 million of Reorganization costs incurred during 2015.

Amortization, which reflects the expense associated with intangible assets, primarily identified through business acquisitions, increased $54.8 million, or 79.8 percent, for the year ended December 31, 2016 compared with the same period in 2015, primarily driven by the long-lived assets recognized as a result of the Acquisition as well as $15.9 million of accelerated amortization related to the write-down of certain long-lived intangible assets in our APAC reporting unit within International Networks.

Goodwill write-down increased $57.9 million for the year ended December 31, 2016 compared with the same period in 2015 as a result of the impairment of the APAC and EMEA reporting units within International Networks.

Interest expense, net primarily reflects the interest incurred on our outstanding borrowings. Interest expense, net increased $21.4 million, or 19.8 percent, for the year ended December 31, 2016 compared with the same period in 2015 due to higher average debt levels. We increased our borrowing activity in the second quarter of 2015 to generate funds necessary to complete the Acquisition, a tender offer (the “Tender Offer”) and subsequent squeeze-out (the “Squeeze-out”), together the “Transactions.” The additional debt included the 2020 Notes, the 2022 Notes and the 2025 Notes, as well as the Term Loan, all of which were outstanding the entire twelve months in 2016 and approximately seven months in 2015. Interest expense, net also includes interest income of $7.2 million and $6.9 million in 2016 and 2015, respectively, primarily related to the UKTV note.

Equity in earnings of affiliates, which represents the proportionate share of net income or loss from each of our equity method investments, decreased $9.5 million, or 11.8 percent, for the year ended December 31, 2016 compared with the same period in 2015, primarily driven by the sale of our 7.3 percent equity interest in Fox BRV Southern Sports Holdings (“Fox Sports South”) in the first quarter of 2016. Included in equity in earnings of affiliates is our proportionate 50.0 percent share of results from UKTV. Amortization expense attributed to intangible assets recognized upon acquiring our interest in UKTV reduces equity in earnings we recognize from our UKTV investment. Accordingly, equity in earnings of affiliates includes our $46.0 million and $46.5 million proportionate share of UKTV’s results in 2016 and 2015, respectively, which were reduced by amortization of $12.9 million and $16.8 million in 2016 and 2015, respectively. Equity in earnings of affiliates also included profits of $7.4 million and losses of $0.7 million related to nC+ and Onet, TVN’s equity investments, in 2016 and 2015, respectively, which were reduced by amortization of $0.9 million and $4.9 million in 2016 and 2015, respectively.

Gain on derivatives represents realized and unrealized positions on derivative contracts, primarily related to foreign currency hedges. We recognized a $32.4 million, or 64.4 percent, decrease in net gains for the year ended December 31, 2016 compared with the same period in 2015, primarily as a result of various foreign currency hedge contracts executed for the Transactions in 2015.

Gain on sale of investments totaled $191.8 million for the year ended December 31, 2016, with a $208.2 million gain from the sale of our 7.3 percent equity interest in Fox Sports South in the first quarter of 2016, partially offset by a $16.4 million loss incurred on the sale of a cost method investment in the second quarter of 2016.

Miscellaneous, net includes foreign currency exchange transaction gains and losses, which represented a $16.1 million net loss for the year ended December 31, 2016 compared with a $22.4 million net loss in the same period in 2015 and the $10.7 million impact of the write-down associated with a certain equity method investment in 2016. Also included in miscellaneous, net is a $6.7 million and $8.3 million gain on extinguishment of debt in 2016 and 2015, respectively, related to the pre-payments of the 2020 TVN Notes in 2016 and to the pre-payment of the 2018 TVN Notes and the 2021 PIK Notes and to the partial pre-payment of the 2020 TVN Notes in 2015.

Our effective tax rate was 33.7 percent for the year ended December 31, 2016 compared with 30.6 percent for the respective period in 2015, primarily attributable to a combination of unfavorable and favorable tax settlements that occurred in 2016 and 2015, respectively, and the goodwill write-down in 2016, which was not deductible for income tax purposes.

Non-controlling owners hold a 31.3 percent interest in the Food Network Partnership (the “Partnership”). The non-controlling owners’ proportionate share of the results of this business are captured in the net income attributable to non-controlling interests caption within the consolidated statements of operations and represents the continued profitability of the Partnership.

	Year ended December 31,
( in thousands)	2015			2014			$ Change Fav / (Unfav)			% Change Fav / (Unfav)
Operating revenues:
Advertising	$	2,062,530		$	1,816,388		$	246,142			13.6	%
Distribution		874,984			799,178			75,806			9.5	%
Other		80,713			49,890			30,823			61.8	%
Total operating revenues		3,018,227			2,665,456			352,771			13.2	%
Operating expenses:
Cost of services, excluding depreciation and amortization		987,357			778,896			(208,461	)		(26.8	)%
Selling, general and administrative		785,179			764,799			(20,380	)		(2.7	)%
Depreciation		73,112			73,849			737			1.0	%
Amortization		68,647			55,603			(13,044	)		(23.5	)%
Total operating expenses		1,914,295			1,673,147			(241,148	)		(14.4	)%
Operating income		1,103,932			992,309			111,623			11.2	%
Interest expense, net		(108,047	)		(52,687	)		(55,360	)		(105.1	)%
Equity in earnings of affiliates		80,916			85,631			(4,715	)		(5.5	)%
Gain on derivatives		50,256			2,810			47,446		NM
Miscellaneous, net		(5,193	)		(212	)		4,981		NM
Income from operations before income taxes		1,121,864			1,027,851			94,013			9.1	%
Provision for income taxes		343,391			301,043			(42,348	)		(14.1	)%
Net income		778,473			726,808			51,665			7.1	%
Less: net income attributable to non-controlling interests		(171,645	)		(181,533	)		9,888			5.4	%
Net income attributable to SNI	$	606,828		$	545,275		$	61,553			11.3	%

Consolidated operating revenues increased $352.8 million, or 13.2 percent, for the year ended December 31, 2015 compared with the same period in 2014, primarily attributed to the inclusion of TVN’s results for six months in 2015 as well as growth in both advertising sales and distribution fees revenues from our domestic television networks. Consolidated advertising sales increased $246.1 million, or 13.6 percent, in 2015 compared with the respective period in 2014, primarily driven by the inclusion of TVN’s results for six months in 2015 as well as strong pricing in the U.S. market. Consolidated advertising sales represented 68.3 percent and 68.1 percent of consolidated total operating revenues in 2015 and 2014, respectively.

Consolidated advertising sales growth was supplemented with consolidated distribution fees growth of $75.8 million, or 9.5 percent, in 2015 compared with the respective period in 2014, also primarily driven by the inclusion of TVN’s results for six months in 2015 as well as negotiated contractual rate increases partially offset by a decrease in the number of subscribers receiving our networks. Consolidated distribution fees represented 29.0 percent and 30.0 percent of consolidated total operating revenues in 2015 and 2014, respectively.

Cost of services increased $208.5 million, or 26.8 percent, for the year ended December 31, 2015 compared with the respective period in 2014, inclusive of TVN’s results for six months in 2015. Program amortization increased $162.2 million, or 26.1 percent, in 2015 compared with the same period in 2014, reflecting our continued investment in the improved quality and variety of programming on our networks and higher than normal program impairments. Cost of services included $2.8 million of costs related to the Restructuring Plan incurred during 2015, while $3.9 million of costs reacted to the Restructuring Plan were incurred during 2014.

Selling, general and administrative increased $20.4 million, or 2.7 percent, for the year ended December 31, 2015 compared with the respective period in 2014, inclusive of TVN’s results for six months in 2015. Selling, general and administrative included $28.2 million of TVN transaction and integration related expenses, $13.3 million of costs related to the Restructuring Plan and $3.2 million of Reorganization costs incurred during 2015. Selling, general and administrative included $10.5 million of costs related to the Restructuring Plan and $9.7 million related to contract termination costs incurred during 2014.

Amortization increased $13.0 million, or 23.5 percent, for the year ended December 31, 2015 compared with the same period in 2014, primarily driven by the long-lived assets recognized as a result of the Acquisition.

Interest expense, net increased $55.4 million, or 105.1 percent, for the year ended December 31, 2015 compared with the same period in 2014 due to higher average debt levels. At December 31, 2014, we had the 2015 Notes outstanding throughout 2014 that were repaid in January 2015 and the 2016 Notes that were outstanding throughout all of 2014 and 2015. In November 2014, we issued the 2019 Notes and the 2024 Notes. Additionally, we increased our borrowing activity in the second quarter of 2015 to generate funds necessary to complete the Transactions. The additional debt included the 2020 Notes, the 2022 Notes and the 2025 Notes, as well as the Term Loan, all of which were outstanding for approximately seven months in 2015 and not at all in 2014. We also assumed debt as part of the Transactions, including the 2018 TVN Notes, the 2020 TVN Notes, an outstanding revolving credit facility (the “TVN Facility”) and a cash loan (the “Cash Loan”). Interest expense, net also includes interest income of $6.9 million and $6.7 million in 2015 and 2014, respectively, primarily related to the UKTV note.

Equity in earnings of affiliates decreased $4.7 million, or 5.5 percent, for the year ended December 31, 2015 compared with the same period in 2014. Included in equity in earnings of affiliates is our proportionate 50.0 percent share of results from UKTV. Amortization expense attributed to intangible assets recognized upon acquiring our interest in UKTV reduces equity in earnings we recognize from our UKTV investment. Accordingly, equity in earnings of affiliates includes our $46.5 million and $44.5 million proportionate share of UKTV’s results in 2015 and 2014, respectively, which were reduced by amortization of $16.8 million and $19.0 million in 2015 and 2014, respectively. Equity in earnings of affiliates also included a loss of $0.7 million related to nC+ and Onet, TVN’s equity investments, in 2015, which was reduced by amortization of $4.9 million in 2015.

Gain on derivatives represents realized and unrealized positions on derivative contracts, primarily related to foreign currency hedge contracts. We recognized a $47.4 million increase in net gains for the year ended December 31, 2015 compared with the same period in 2014, primarily as a result of various foreign currency hedge contracts executed for the Transactions in 2015.

Miscellaneous, net includes foreign currency exchange transaction gains and losses, which represented a $22.4 million net loss for the year ended December 31, 2015 compared with a $4.2 million net loss in the same period in 2014. Also included in miscellaneous, net is an $8.3 million gain on extinguishment of debt related to the pre-payment of the 2018 TVN Notes and the 2021 PIK Notes and to the partial pre-payment of the 2020 TVN Notes in 2015.

Our effective tax rate was 30.6 percent for the year ended December 31, 2015 compared with 29.3 percent for the respective period in 2014, primarily driven by a decrease in the tax impact of our non-controlling interest benefit in 2015, state taxes in connection with changes in state tax laws and rates enacted in 2015 and certain non-deductible expenses incurred in 2015 related to the Transactions.

As discussed in Note 21-Segment Information to the consolidated financial statements, our CODM 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 is defined as operating income excluding depreciation, amortization and goodwill write-downs. Because segment profit is based on operating income, it excludes interest expense, equity in earnings of affiliates, gain on derivatives, gain on sale of investments, other miscellaneous non-operating expenses and income taxes, which are items included in net income determined in accordance with GAAP.

Total segment profit is the aggregate of the segment profit for each of our two reportable segments. Total segment profit is a financial measure that is not intended to replace operating income, the most directly comparable GAAP financial measure. Our management believes that total segment profit is a useful measure of the operating profitability of our business since the measure allows for an evaluation of the performance of our segments without regard to the effect of interest, depreciation and amortization and certain other items. For this reason, operating performance measures, such as total segment profit, are used by analysts and investors in our industry. Total segment profit is not a measure of consolidated operating results under GAAP and should not be considered superior to, as a substitute for or as an alternative to, operating income or any other measure of consolidated operating results under GAAP.

Information regarding the operating performance of our business segments, including a reconciliation of segment profit to operating income determined in accordance with GAAP, is as follows:

	Year ended December 31,
(in thousands)	2016			2015			$ Change Fav / (Unfav)			% Change Fav / (Unfav)
Operating revenues:
U.S. Networks	$	2,871,424		$	2,716,663		$	154,761			5.7	%
International Networks		557,052			327,891			229,161			69.9	%
Corporate and Other		(27,041	)		(26,327	)		(714	)		(2.7	)%
Total operating revenues		3,401,435			3,018,227			383,208			12.7	%
Cost of services, excluding depreciation and amortization		1,193,228			987,357			(205,871	)		(20.9	)%
Selling, general and administrative		806,733			785,179			(21,554	)		(2.7	)%
Total segment profit		1,401,474			1,245,691			155,783			12.5	%
Depreciation		71,559			73,112			1,553			2.1	%
Amortization		123,442			68,647			(54,795	)		(79.8	)%
Goodwill write-down		57,878			-			(57,878	)	NM
Operating income		1,148,595			1,103,932			44,663			4.0	%
Interest expense, net		(129,441	)		(108,047	)		(21,394	)		(19.8	)%
Equity in earnings of affiliates		71,382			80,916			(9,534	)		(11.8	)%
Gain on derivatives		17,868			50,256			(32,388	)		(64.4	)%
Gain on sale of investments		191,824			-			191,824		NM
Miscellaneous, net		(22,450	)		(5,193	)		(17,257	)		(332.3	)%
Income from operations before income taxes	$	1,277,778		$	1,121,864		$	155,914			13.9	%
Segment profit (loss):
U.S. Networks	$	1,413,450		$	1,337,189		$	76,261			5.7	%
International Networks		100,397			30,893			69,504			225.0	%
Corporate and Other		(112,373	)		(122,391	)		10,018			8.2	%
Total segment profit	$	1,401,474		$	1,245,691		$	155,783			12.5	%

	Year ended December 31,
(in thousands)	2015			2014			$ Change Fav / (Unfav)			% Change Fav / (Unfav)
Operating revenues:
U.S. Networks	$	2,716,663		$	2,588,357		$	128,306			5.0	%
International Networks		327,891			90,180			237,711			263.6	%
Corporate and Other		(26,327	)		(13,081	)		(13,246	)		(101.3	)%
Total operating revenues		3,018,227			2,665,456			352,771			13.2	%
Cost of services, excluding depreciation and amortization		987,357			778,896			(208,461	)		(26.8	)%
Selling, general and administrative		785,179			764,799			(20,380	)		(2.7	)%
Total segment profit		1,245,691			1,121,761			123,930			11.0	%
Depreciation		73,112			73,849			737			1.0	%
Amortization		68,647			55,603			(13,044	)		(23.5	)%
Operating income		1,103,932			992,309			111,623			11.2	%
Interest expense, net

Ohio	61-1551890
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
9721 Sherrill Boulevard Knoxville, Tennessee	37932
(Address of principal executive offices)	(Zip Code)

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a small reporting company)	Small reporting company	☐

Name	Age	Position
Kenneth W. Lowe	66	Chairman, President and Chief Executive Officer (since July 2008); President, Chief Executive Officer and Director, The E.W. Scripps Company (2000 to 2008)
Lori A. Hickok	53	Executive Vice President, Chief Financial Officer (since February 2015); Executive Vice President, Finance (2010 to 2015); Senior Vice President, Finance (2008 to 2010); Vice President and Controller, The E. W. Scripps Company (2002 to 2008)
Burton Jablin	56	Chief Operating Officer (since September 2015); President, Scripps Networks (2013 to 2015); President, Home Category (2010 to 2013); President, HGTV (2008 to 2010); President HGTV, The E. W. Scripps Company (2001 to 2008)
Cynthia L. Gibson	52	Executive Vice President, Chief Legal Officer and Corporate Secretary (since December 2012); Executive Vice President, Legal Affairs (2009 to 2012)
Mark S. Hale	58	Executive Vice President, Global Operations and Chief Technology Officer (since February 2010); Senior Vice President, Technology Operations and Chief Technology Officer (2008 to 2010); Senior Vice President/Technology Operations, The E. W. Scripps Company (2006 to 2008)
Nello-John Pesci, Jr.	55	Executive Vice President, Chief Human Resources Officer (since February 2015); Executive Vice President, Human Resources (2014 to 2015); Senior Vice President, Human Resources (2010 to 2014); Global Human Resources Leader, The Procter & Gamble Company (1991 to 2010)

Item No.		Page

Available Information		4

Forward-Looking Statements		4

PART I

1.	Business	4

1A.	Risk Factors	10

1B.	Unresolved Staff Comments	15

2.	Properties	15

3.	Legal Proceedings	15

4.	Mine Safety Disclosures	15

PART II

5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16

6.	Selected Financial Data	18

7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

7A.	Quantitative and Qualitative Disclosures About Market Risk	18

8.	Financial Statements and Supplementary Data	18

9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	18

9A.	Controls and Procedures	19

9B.	Other Information	19

PART III

10.	Directors, Executive Officers and Corporate Governance	19

11.	Executive Compensation	19

12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	19

13.	Certain Relationships and Related Transactions, and Director Independence	19

14.	Principal Accountant Fees and Services	20

PART IV

15.	Exhibits and Financial Statement Schedule	20

16.	Form 10-K Summary	20

	SCRIPPS NETWORKS INTERACTIVE, INC.

Dated: February 24, 2017	By:	/s/ Kenneth W. Lowe
		Kenneth W. Lowe
		Chairman, President and Chief
		Executive Officer