E.W. Scripps Company: An Unconventional Bursting Housing Bubble Play

Most people investing around the popping housing bubble have been doing it directly, via the homebuilders themselves. Some investors are beginning to play with the CME real estate futures (plugged in today's WSJ (sub. req.) by Bob Shiller), but there are other options.

One possibility is via the housing bubble media. An entire home improvement media has appeared around the housing bubble, with such programs playing seemingly non-stop, both on regularly network television, as well as on niche cable channels, like HGTV.

With the preceding in mind, I have been idly looking at the E.W. Scripps Company (SSP), which operates HGTV, the Food Network, the DIY Network, etc. It is currently trading not far from five-year highs, and network advertising represents around 25% of overall revenues.

SSP 1-yr chart:

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Comments

[James Marsh:]

Paul - usually think your analysis is spot-on, but not here. Have you watched HGTV lately? Apparently not. If you had, you would find it difficult to see a link between HGTV and Food Network programming and the housing bubble. Ratings drive cable network advertising growth and I think you will have difficulty finding any correlation between HGTV and Food Network audience ratings and the housing boom.
I would counter this stock is cheap based on its growth rate and its newspaper peer group. Better shorts would be some of SSP's newspaper peers that have exposure to highly profitable real estate classified. Look at MNI, NYT and GCI for above average real estate classified exposure. RE classified has driven newspaper revenue growth for the past 5 years, once it turns profits will drop rapidly.

2006 Aug 30 06:42 PM

[Christopher...:]

Paul - This is a little too cute...just because housing sales slow, it doesn't necessarilly follow that HGTV's ratings will drop...

They could change their programming to reflect the fact that market has turned diffucult... How about a show on homeowners who successfully prevented foreclosure? They already hava a show called "BuyMe" that documents the real life struggles of people trying to sell their home...

2006 Sep 19 12:27 PM