Edgar Filing: SCRIPPS E W CO /DE

Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

Commission File Number 0-16914

THE E. W. SCRIPPS COMPANY

(Exact name of registrant as specified in its charter)


Ohio		31-1223339
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

312 Walnut Street Cincinnati, Ohio		45202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (513) 977-3000


Title of each class		Name of each exchange on which registered
Securities registered pursuant to Section 12(b) of the Act: Class A Common Shares, $.01 par value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: Not applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. Yes ¨ No x

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 x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of Class A Common Shares of the registrant held by non-affiliates of the registrant, based on the $48.80 per share closing price for such stock on June 30, 2005, was approximately $4,258,000,000. All Class A Common Shares beneficially held by executives and directors of the registrant and The Edward W. Scripps Trust have been deemed, solely for the purpose of the foregoing calculation, to be held by affiliates of the registrant. There is no active market for our common voting shares.

As of February 28, 2006, there were 127,026,354 of the registrant’s Class A Common Shares, $.01 par value per share, outstanding and 36,668,226 of the registrant’s Common Voting Shares, $.01 par value per share, outstanding.

Certain information required for Part III of this report is incorporated herein by reference to the proxy statement for the 2006 annual meeting of shareholders.

Index to The E. W. Scripps Company Annual Report on Form 10-K for the Year Ended December 31, 2005


Item No.		Page
Additional Information		3
Forward-Looking Statements		3

PART I

1. Business
Scripps Networks		3
Newspapers		5
Broadcast Television		8
Shop At Home		10
Shopzilla		11
Licensing and Other Media		12
Employees		13
1a. Risk Factors		13
1b. Unresolved Staff Comments		16
2. Properties		16
3. Legal Proceedings		16
4. Submission of Matters to a Vote of Security Holders		17

PART II

5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities		18
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		18
9b. Other Information		18

PART III

10. Directors and Executive Officers of the Registrant		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		19
14. Principal Accountant Fees and Services		19

PART IV

15. Exhibits and Financial Statement Schedules		19

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

Additional Information

You can inspect and copy, at prescribed rates, our annual, quarterly and current reports, proxy statements and other information filed with the Securities and Exchange Commission (“SEC”) at the public reference facilities of the SEC at Room 1024, 450 Fifth Street N.W., Washington D.C., 20549. You can obtain information on the operation of the public reference facilities by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site (www.sec.gov) containing reports, proxy statements and other information. You can also inspect and copy the reports we file at the offices of the New York Stock Exchange, on which our Class A Common shares are listed, at 20 Broad Street, New York, New York, 10005.

Our Company Web site is www.scripps.com. Copies of all of our SEC filings filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on this Web site as soon as reasonably practicable after we electronically file the material with, or furnish it to, the SEC. Our Web site also includes copies of the charters for our Compensation, Nominating & Governance and Audit Committees, our Corporate Governance Principles, our Insider Trading Policy, our Ethics Policy and our Code of Ethics for CEO and Senior Financial Officers. All of these documents are also available to shareholders in print upon request.

Forward-Looking Statements

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 changes in advertising demand and other economic conditions; consumers’ taste; newsprint prices; program costs; labor relations; technological developments; competitive pressures; interest rates; regulatory rulings; and reliance on third-party vendors for various products and services. The words “believe”, “expect”, “anticipate”, “estimate”, “intend” and similar expressions identify forward-looking statements. All forward-looking statements, which are as of the date of this filing, should be evaluated with the understanding of their inherent uncertainty. We undertake no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

PART I

Item 1. Business

We are a diverse media concern with interests in national television networks (“Scripps Networks”), newspaper publishing, broadcast television, television retailing (“Shop At Home”), online comparison shopping (“Shopzilla”), interactive media and licensing and syndication. All of our media businesses provide content and advertising services via the Internet.

Financial information for each of our business segments can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page F-11 of this Form 10-K and in Note 1 on page F-37 and Note 17 on page F-48 of this Form 10-K.

Scripps Networks

Scripps Networks includes five national lifestyle television networks: Home & Garden Television (“HGTV”), Food Network, DIY Network (“DIY”), Fine Living and Great American Country (“GAC”). We conceived of and launched HGTV, DIY and Fine Living. We acquired controlling interest in Food Network in 1997. We acquired GAC in the fourth quarter of 2004. Scripps Networks produced approximately 36% of our total operating revenues in 2005, up from 29% in 2003.

Scripps Networks also includes our online channels, HGTVPro.com and HGTVKitchenDesign.com, and our 12% interest in FOX Sports Net South, a regional television network. In addition, our networks operate internationally through licensing agreements and joint ventures with foreign entities. All of our national television networks are targeted, lifestyle-oriented networks. HGTV began telecasting in 1994 and is successfully attracting viewers and serving advertisers by airing a full schedule of quality, original programming related to home repair, decorating, design, remodeling, and crafts. Food Network began telecasting in 1993. Programming hits such as “Iron Chef”, “Emeril Live!” and “30-Minute Meals” have raised the network’s public profile and increased viewer interest and advertiser demand. DIY began telecasting in 1999 and features detailed how-to, step-by-step programming and information on a variety of topics including autos and boats, crafts, gardening, hobbies, home building, home improvement and woodworking. Fine Living, which began telecasting in March 2002, features television programming and Web site content designed to appeal to viewers and Internet users looking for information on quality life experiences, consumer products and consumer services. Programming concentrates on a variety of related lifestyle categories including adventure, personal space, transportation, everyday living and favorite things. We acquired GAC in the fourth quarter of 2004. GAC is a 24-hour country music video network that began telecasting in 1996. GAC’s programming primarily features country music videos complemented by talk shows, celebrity interviews, exclusive performances and general lifestyle information.

Our initial focus in launching a network is to gain distribution on cable and satellite television systems. To obtain long-term distribution contracts, we may make cash payments to cable

and satellite television systems, provide an initial period in which a system’s affiliate fee payments are waived, or do both. We also create new and original programming and undertake promotion and marketing campaigns designed to increase viewer awareness.

We expect to incur operating losses until our network distribution and audience size are sufficient to attract national advertisers. As the distribution of our networks increase, we make additional investments in the quality and variety of programming and increase the number of original programming hours offered on the network. Such investments are expected to result in increases in viewership, yielding higher advertising revenues.

Once a network is fully distributed, our strategy primarily focuses on optimizing the network’s ratings, revenue and profitability. We believe continuing investments in the high quality original programming and promotion of that programming are the primary drivers of ratings, revenue and profitability of a fully-distributed network.

HGTV and Food are generally distributed on the most widely available programming tiers offered by cable and satellite television systems. Each network reaches substantially all cable and satellite television households.

We continue to build the distribution of DIY, Fine Living and GAC. DIY, Fine Living and GAC are each among the top twelve cable television networks in terms of subscriber growth. Distribution on the most widely available basic cable tier is limited and, accordingly, growth in the number of households reached by DIY, Fine Living and GAC is largely dependent on increases in the number of subscribers to the expanded digital programming tiers offered by cable and satellite television systems. We also continue to make investments in programming and promotion campaigns to increase viewer awareness of our developing networks. We expect to make additional investments in programming and marketing of DIY in preparation for its initial Nielsen ratings in the fourth quarter of 2006.

Our relationships and agreements with cable and satellite television system operators are critical to our business as they provide us both with subscription revenue and access to an audience from which to earn advertising revenues. We believe we have good relationships with the cable and satellite television system operators that distribute our networks. We have been a leader in providing video on demand and similar programming services those systems use to enhance their digital programming tier offerings to subscribers.

We have also emerged as a leader in providing content specifically formatted for the growing number of video-on-demand and broadband services. We own approximately 95% of our original television programming, which gives us the capability to reformat archived video content for other uses, including the Internet. HGTVPro.com, our online channel for the building industry was launched in 2005 with more than 100 videos and articles available on the site. The channel’s content is designed to appeal to professional builders, remodelers and contractors and includes professional-level best practices, tips and techniques of the industry, new product information, and trends in the industry. We have recently launched HGTVKitchenDesign.com, an online broadband programming service. We expect to continue to develop and launch additional broadband vertical networks within the shelter and food categories.

Advertising provided approximately 80% of Scripps Networks segment operating revenues in 2005. Advertising purchased on our networks usually seeks to promote nationally recognized consumer products and brands. We sell advertising time in both the up-front and scatter markets. The mix between the up-front and scatter markets is based upon a number of factors, including the demand for advertising time, economic conditions and pricing. Due to increased demand in the spring and holiday seasons, the second and fourth quarters normally have higher advertising revenues than our first and third quarters.

Advertising is sold on the basis of audience size and demographics, price and effectiveness. We compete for advertising revenues with other local and national media, including other television networks, television stations, radio stations, newspapers, Internet sites and direct mail. Audience size and demographics are directly related to the number of homes in which our networks can be viewed and our success in producing and promoting programming that is popular with our target audience. In reaching our target audience, we compete for consumers’ discretionary time with all other information and entertainment media. We believe we are a leader in providing advertisers with solutions to reach a range of audience demographics. Our lifestyle networks reach an audience that is highly interested in the products likely to be advertised on our networks. We also provide advertisers sponsorship opportunities and the availability to reach audiences through our broadband programming networks.

Cable and satellite television systems generally pay a per-subscriber fee in exchange for the right to distribute our programming. Revenue from affiliate fees has been increasing at a double digit rate as our networks have gained popularity and as introductory carriage agreements with cable system operators expire and are renegotiated at higher rates. Network affiliate fees provided 18% of Scripps Networks segment operating revenues in 2005.

We compete with other national television networks for distribution on cable and satellite television systems. While no assurance can be given regarding renewal of our distribution contracts or our ability to negotiate renewals with similar terms, we have not lost carriage upon expiration and have generally negotiated new agreements that provided an increase in the per-subscriber fee.

Programming accounted for approximately 35% of our networks’ segment costs and expenses in 2005. We produce original programming and acquire programming from a variety of independent production companies. We also license certain programming that airs on our networks. We believe there are adequate sources of creative and original programming to meet the needs of our networks.

Our networks require traffic systems to schedule programs and to insert advertisements within programs. We transmit our programming to cable and satellite television systems via satellite. Transponder rights are acquired under the terms of long-term contracts with satellite owners.

Labor costs accounted for approximately 23% of segment costs and expenses in 2005.

Our networks are also subject to varying degrees of regulation by the Federal Communications Commission (“FCC”). The FCC regulates the providers of cable and satellite television programming, and the programmers themselves through regulation of program licensing and regulations with respect to matters such as indecency. Recently, the FCC’s Media Bureau has conducted a notice of inquiry regarding the feasibility of offering cable and satellite television programming on an “a la carte” basis or in smaller bundles as a means of giving subscribers more choice and reducing the cost of such services to subscribers. While the FCC’s Media Bureau concluded a la carte sales would not reduce costs to most consumers and would harm programmers, it is possible the United States Congress may consider such proposals in the future. The regulation of programming is subject to the political process and has been in flux over the past decade. Further changes in law and the regulatory process should be anticipated and there can be no assurance that our business would not be adversely affected by any change in future legislation, new regulation or deregulation.

Newspapers

We operate daily and community newspapers in 18 markets in the United States. Three of our newspapers are operated pursuant to the terms of joint operating agreements (“JOAs”). We also own and operate the Washington-based Scripps Media Center, home to the Scripps Howard News Service, a supplemental wire service covering stories in the capital, other parts of the United States and abroad. All of our newspapers subscribe to the wire service.

Newspaper operations are expanded into new markets primarily through the acquisition of daily newspapers. We grow in our existing markets through start-ups and acquisitions of niche weekly and specialty publications. In 2005, we acquired several newspapers and other publications in areas contiguous to our existing newspaper markets for approximately $8.5 million.

Our newspapers contributed approximately 29% of our company’s total operating revenues in 2005, down from 37% in 2003.

Newspapers managed solely by us – Information regarding the markets in which we publish and solely manage daily newspapers and the circulation of these daily newspapers is as follows:


(in thousands) (1) Newspaper	2005	2004	2003	2002	2001
Abilene (TX) Reporter-News	30	33	33	34	35
Anderson (SC) Independent-Mail	36	37	38	39	39
Boulder (CO) Daily Camera	32	33	33	33	34
Corpus Christi (TX) Caller-Times	50	58	61	63	63
Evansville (IN) Courier & Press	66	66	69	69	70
Henderson (KY) Gleaner	10	10	10	11	10
Kitsap (WA) Sun	30	30	30	31	33
Knoxville (TN) News-Sentinel	117	120	121	118	121
Memphis (TN) Commercial Appeal	165	172	173	172	170
Naples (FL) Daily News	58	57	57	56	55
Redding (CA) Record-Searchlight	35	35	35	35	34
San Angelo (TX) Standard-Times	25	26	27	28	28
Treasure Coast (FL) News/Press/Tribune	100	102	100	98	98
Ventura County (CA) Star	89	92	93	94	92
Wichita Falls (TX) Times Record News	30	32	32	32	34

Total Daily Circulation	873	902	911	912	914

Circulation information for the Sunday edition of our newspapers is as follows:


(in thousands ) (1) Newspaper	2005	2004	2003	2002	2001
Abilene (TX) Reporter-News	40	42	42	44	44
Anderson (SC) Independent-Mail	41	43	44	44	45
Boulder (CO) Daily Camera	39	40	40	41	41
Corpus Christi (TX) Caller-Times	71	76	78	80	81
Evansville (IN) Courier & Press	89	92	97	97	98
Henderson (KY) Gleaner	11	12	12	12	12
Kitsap (WA) Sun	33	33	34	36	37
Knoxville (TN) News-Sentinel	150	153	155	154	156
Memphis (TN) Commercial Appeal	216	236	235	234	232
Naples (FL) Daily News	70	69	69	68	67
Redding (CA) Record-Searchlight	39	39	40	40	39
San Angelo (TX) Standard-Times	30	31	32	33	34
Treasure Coast (FL) News/Press/Tribune (2)	112	115	113	111	110
Ventura County (CA) Star	100	106	107	107	105
Wichita Falls (TX) Times Record News	35	36	36	37	39

Total Sunday Circulation	1,075	1,123	1,133	1,137	1,142

(1)	Based on Audit Bureau of Circulation Publisher’s Statements (“Statements”) for the six-month periods ended September 30, except figures for the Naples Daily News, and the Treasure Coast News/Press-Tribune which are from the Statements for the twelve-month periods ended September 30.

(2)	Represents the combined Sunday circulation of the Stuart News, the Vero Beach Press Journal and the Ft. Pierce Tribune.

Our newspaper publishing strategy seeks to create local media franchises anchored by the market’s principal daily newspaper. Each newspaper manages its own news coverage, sets its own editorial policies and establishes local business practices. Our corporate staff sets the basic business, accounting and reporting policies, and provides other services and quality control.

We believe each of our newspapers has an excellent reputation for journalistic quality and content and that our newspapers are the leading source of local news and information in their markets. This strong brand recognition attracts readers and provides access to an audience from which to earn advertising revenues.

Over the years we have supplemented our daily newspapers with an array of niche products, including direct-mail advertising, total market coverage publications, zoned editions, youth-oriented and Spanish language specialty publications, and event-based publications. These product offerings allow existing advertisers to reach their target audience in multiple ways, while also giving us an attractive portfolio of products with which to acquire new clients, particularly small and mid-sized advertisers. While we strive to make such publications profitable in their own right, they also help retain advertising in the daily newspaper.

Our newspapers also operate leading local Internet sites, offering users information, comprehensive news, advertising, e-commerce and other services. Online advertising, particularly classified advertising has become one of the fastest growing revenue sources at our newspapers. Together with the mass reach of the daily newspaper, the Internet sites and niche publications enable us to maintain our position as a leading media outlet in each of our newspaper markets.

To protect and enhance our market position we must continually launch new products, offer good, relevant local content, ensure quality service, invest in new technology and cross-brand our newspapers, Internet sites and niche publications. We expect to continue to expand and enhance our online services and to use our local news platform to launch new products, such as streaming video or audio.

Advertising provided 80% of newspaper segment operating revenues in 2005. Newspaper advertising includes Run-of-Press (“ROP”) advertising, preprinted inserts, advertising on our Internet sites, advertising in niche publications, and direct mail. ROP advertisements, located throughout the newspaper, are classified into one of three categories: local, classified or national. Local ROP refers to any advertising purchased by in-market advertisers that is not included in the paper’s classified section. Classified ROP includes all auto, real estate and help-wanted advertising and other ads listed together in sequence by the nature of the ads. Classified sections are typically found in the back of the paper. National ROP refers to any advertising purchased by businesses that operate beyond our local market and who typically procure advertising from numerous newspapers by using advertising agency services. Preprint advertisements are generally printed by advertisers and inserted into the newspaper. Internet advertising ranges from simple static banners and listings appearing on a Web page to more complex, interactive, animated and video advertisements.

Typically, because it generates the largest circulation and readership, advertising rates and volume are higher on Sundays. Due to increased demand in the spring and Christmas seasons, the first and third quarters have lower advertising revenues than the second and fourth quarters.

Advertising revenues on a given volume of local and national ROP advertisements are generally greater than the revenues earned on the same volume of preprinted and other advertisements. Most of our newspaper markets have experienced a consolidation of retail department stores and the growth of discount retailers. Discount retailers do not traditionally rely on newspaper ROP advertising to deliver their commercial messages. The combination of these trends has resulted in a shift in advertiser demand away from the purchase of local ROP advertising and to the purchase of pre-printed advertising supplements. In response to the changing advertising trends, we have launched new products in each of our markets and continually work to upgrade our advertising sales force by providing advanced training and innovative sales strategies. These techniques have been effective in generating significant advertising sales from new customers and replacing lost advertising revenue.

Advertising is generally sold based upon audience size, demographics, price and effectiveness. Advertising rates and revenues vary among our newspapers depending on circulation, type of advertising, local market conditions and competition. Each of our newspapers operate in highly competitive local media marketplaces, where advertisers and media consumers can choose from a wide range of alternatives, including other newspapers, radio, broadcast and cable television, magazines, Internet sites, outdoor advertising, directories and direct-mail products.

Circulation provided approximately 18% of newspaper segment operating revenues in 2005. Circulation revenues are produced from selling home-delivery subscriptions of our newspapers and single-copy sales sold at retail outlets and vending machines. Our newspapers seek to provide quality, relevant local news and information to their readers. We compete with other news and information sources, such as television stations, radio stations and other print and Internet publications as a provider of local news and information.

Labor costs accounted for approximately 52% of segment costs and expenses in 2005. Our workforce is comprised of a combination of non-union and union employees. See “Employees.”

We use computer systems to write, edit, compose and produce the papers.

Most of our newspapers are printed in 50-inch web format using offset and flexographic presses. We consumed approximately 136,000 metric tons of newsprint in 2005. Newsprint is a basic commodity and its price is subject to changes in the balance of worldwide supply and demand. Mill closures have decreased overall newsprint capacity and increased the likelihood of future price increases.

During 2002 we established Media Procurement Services (“MPS”), a wholly owned subsidiary company. MPS provides newsprint and other paper procurement services for both our newspapers and other non-affiliated newspapers and printers. By combining the purchasing requirements of several companies for newsprint and other services, MPS is able to negotiate more favorable pricing with newsprint producers. MPS purchases newsprint from various suppliers, many of which are Canadian. Based on our expected newsprint consumption, we believe our supply sources are sufficient.

Newspapers operated under JOAs – Three of our newspapers are operated pursuant to the terms of JOAs. The Newspaper Preservation Act of 1970 provides a limited exemption from anti-trust laws, permitting competing newspapers in a market to combine their sales, production and business operations in order to reduce aggregate expenses and take advantage of economies of scale, thereby allowing the continued operation of both newspapers in that market.

Each newspaper maintains a separate and independent editorial operation.

Information regarding the markets in which we publish a daily newspaper pursuant to the terms of a JOA and the daily circulation of these newspapers are as follows:


(in thousands ) (1) Newspaper	2005	2004	2003	2002	2001
Albuquerque (NM) Tribune	12	13	15	16	17
Cincinnati (OH) Post	34	39	45	49	53
Denver (CO) Rocky Mountain News (2)	263	275	289	305	323

Total Daily Circulation	310	328	348	370	393

Sunday circulation information is as follows:


(in thousands ) (1) Newspaper	2005	2004	2003	2002	2001
Denver (CO) Rocky Mountain News (2)	725	751	786	789	801

(1)	Based on Audit Bureau of Circulation Publisher’s Statements for the six-month periods ended September 30.

(2)	The Denver JOA publishes the Rocky Mountain News and the Denver Post Monday through Friday, and a joint newspaper on Saturday and Sunday. Reported daily circulation represents the Monday through Friday circulation of the Rocky Mountain News.

The JOAs generally provide for automatic renewals unless an advance termination notice ranging from two to five years is given by either party. Gannett Co. Inc. (“Gannett”) has notified us of its intent to terminate the Cincinnati JOA upon its expiration in 2007.

The combined sales, production and business operations of the newspapers are either jointly managed or are solely managed by one of the newspapers. The combined operations of the two Denver newspapers are jointly managed by each of the newspapers. We have no management responsibilities for the combined operations of the other two JOAs.

The operating profits earned from the combined operations of each newspaper in a JOA are distributed to the partners in accordance with the terms of the joint operating agreement. We receive a 50% share of the Denver JOA profits, a 40% share of the Albuquerque JOA profits, and about 20% to 25% share of the Cincinnati JOA profits.

Our share of the operating profits of the combined newspaper operations in each JOA market is affected by similar operational, economic and competitive factors included in the discussion of newspapers managed solely by us.

Broadcast Television

Broadcast television includes six ABC-affiliated stations, three NBC-affiliated stations and one independent. Each station is located in one of the 61 largest television markets in the U.S. Our television stations reach approximately 10% of the nation’s television households.

Historically, we have expanded our broadcast television operations into new markets through the acquisition of television stations currently in operation.

Our broadcast television stations provided approximately 13% of our total operating revenues in 2005, down from 16% in 2003.

Information concerning our broadcast television stations, their network affiliations and the markets in which they operate is as follows:


Station	Market	Network Affiliation/ DTV Channel	Affiliation Expires in/ DTV Service Commenced	FCC License Expires in		Rank of Mkt (1)	Stations in Mkt (3)	Percentage of U.S. Television Households in Mkt (5)		2005	2004	2003	2002	2001
WXYZ-TV	Detroit, Ch. 7 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	ABC 41	2010 1998	2005	(6)	11	9	1.8	%	14 1	15 1	15 1	15 1	15 1
WFTS-TV	Tampa, Ch. 28 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	ABC 29	2010 1999	2013		12	12	1.6	%	6 4	5 4	6 4	6 4	7 4
KNXV-TV	Phoenix, Ch. 15 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	ABC 56	2010 2000	2006		14	14	1.5	%	7 5	5 5	6 5	6 5	6 5
WEWS-TV	Cleveland, Ch. 5 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	ABC 15	2010 1999	2005	(6)	16	11	1.4	%	11 1	10 3	12 1	12 1	13 1
WMAR-TV	Baltimore, Ch. 2 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	ABC 52	2010 1999	2012		24	6	1.0	%	7 3	7 3	7 3	7 3	7 3
KSHB-TV	Kansas City, Ch. 41 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	NBC 42	2010 2003	2006		31	8	0.8	%	7 4	8 4	8 4	7 4	7 4
KMCI-TV	Lawrence, Ch. 38 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	Ind. 36	N/A 2003	2006		31	8	0.8	%	2 8	2 7	2 7	1 7	2 7
WCPO-TV	Cincinnati, Ch. 9 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	ABC 10	2010 1998	2005	(6)	34	6	0.8	%	13 2	13 2	13 2	12 2	12 2
WPTV-TV	W. Palm Beach, Ch. 5 Digital Service Status Average Audience Share (2), (7) Station Rank in Market (4), (7)	NBC 55	2010 2003	2005	(6)	39	9	0.7	%	NA NA	16 1	16 1	17 1	16 1
KJRH-TV	Tulsa, Ch. 2 Digital Service Status Average Audience Share (2) Station Rank in Market (4)	NBC 56	2010 2002	2006		61	10	0.5	%	8 3	8 3	10 3	11 3	11 3

All market and audience data is based on the November Nielsen survey.

(1)	Rank of Market represents the relative size of the television market in the United States.

(2)	Represents the number of television households tuned to a specific station from 6 a.m. to 2 a.m. each day, as a percentage of total viewing households in the Designated Market Area.

(3)	Stations in Market does not include public broadcasting stations, satellite stations, or translators which rebroadcast signals from distant stations.

(4)	Station Rank in Market is based on Average Audience Share as described in (2).

(5)	Represents the number of U.S. television households in Designated Market Area as a percentage of total U.S. television households.

(6)	Renewal application pending. Under FCC rules, a license automatically is extended pending FCC processing and granting of the renewal application. Historically, we have been successful in renewing our expiring FCC licenses.

(7)	November Nielsen survey for this market was not available due to the 2005 hurricanes.

Our broadcast television strategy is to optimize the ratings, revenue and profit potential of each of our stations. We believe that local news leadership and the effective promotion of network and syndicated programs are the primary drivers of the ratings, revenue and profitability of our stations. In addition, we operate Internet sites in each of our broadcast television markets. Our Internet sites provide supplemental news, weather, information and entertainment content. We also believe the opportunities afforded by digital media, such as digital multi-casting, streaming broadband, video-on-demand and podcasts of local news and information programs is important to our future success. We devote substantial energy and resources to integrating such media into our business.

National television networks offer a variety of programs to affiliated stations, which have a limited right of first refusal before such programming may be offered to other television stations in the same market. Networks sell most of the advertising within the programs and may compensate affiliated stations for carrying network programming. Affiliated television stations may share in the cost of certain network programming, which is deducted from such compensation. We have reached agreement in principle on new affiliation agreements for our six ABC affiliated stations. The agreement will extend the ABC affiliation relationship for each of our stations through January 2010.

In addition to network programming, our broadcast television stations produce their own programming and air programming licensed from a number of different independent program producers and syndicators. News is the focus of our locally produced programming. To differentiate our programming from that of national networks available on cable and satellite television and other entertainment media, our stations have emphasized and increased hours dedicated to local news and entertainment.

The sale of local, national and political commercial spots accounted for 96% of broadcast television segment operating revenues in 2005. Automotive advertising provides approximately one-fourth of our local and national advertising revenues. In addition to advertising time, we also offer additional marketing opportunities, including sponsorships, community events, and advertising on our Internet sites.

Advertising revenues are also influenced by various cyclical factors, particularly the political cycle. Advertising revenues dramatically increase during even-numbered years, when congressional and presidential elections occur. Advertising revenues also are affected by whether our stations are affiliated with the national networks broadcasting major events, such as the Olympics or the Super Bowl. Due to increased demand in the spring and holiday seasons, the second and fourth quarters normally have higher advertising revenues than our first and third quarters.

Our television stations compete for advertising revenues primarily with other local media, including other television stations, radio stations, cable television systems, newspapers, other Internet sites and direct mail. Competition for advertising revenue is based upon market share, audience size, demographics, price and effectiveness.

The price of syndicated programming is directly correlated to the programming demands of other television stations within our markets. Syndicated programming costs were 20% of total segment costs and expenses in 2005.

Our broadcast television stations require studios to produce local programming and traffic systems to schedule programs and to insert advertisements within programs. Our stations also require towers upon which broadcasting transmitters and antenna equipment are located.

Labor costs accounted for approximately 53% of segment costs and expenses in 2005.

Federal Regulation of Broadcasting – Broadcast television is subject to the jurisdiction of the FCC pursuant to the Communications Act of 1934, as amended (“Communications Act”). The Communications Act prohibits the operation of broadcast television stations except in accordance with a license issued by the FCC and empowers the FCC to revoke, modify and renew broadcast television licenses, approve the transfer of control of any entity holding such licenses, determine the location of stations, regulate the equipment used by stations and adopt and enforce necessary regulations. The FCC also exercises limited authority over broadcast programming by, among other things, requiring certain children’s programming and limiting commercial content therein, regulating the sale of political advertising, and restricting indecent programming.

Broadcast television licenses are granted for a term of up to eight years and are renewable upon request, subject to FCC review of the licensee’s performance. While there can be no assurance regarding the renewal of our broadcast television licenses, we have never had a license revoked, have never been denied a renewal, and all previous renewals have been for the maximum term.

FCC regulations govern the multiple ownership of television stations and other media. Under the FCC’s current rules (as modified by Congress with respect to national audience reach), a license for a television station will generally not be granted or renewed if the grant of the license would result in (i) the applicant owning more than one television station, or in some markets under certain conditions, more than two television stations in the same market, or (ii) the grant of the license would result in the applicant’s owning, operating, controlling, or having an interest in television stations whose total national audience reach exceeds 39% of all television households. The current FCC rules also generally prohibit “cross ownership” of a television station and a daily newspaper in the same community. Our television station and daily newspaper in Cincinnati were owned by us at the time the cross-ownership rule was enacted and enjoy “grandfathered” status. These properties would become subject to the cross-ownership rule upon their sale.

In 1996, Congress directed the FCC to review all its media ownership rules biennially. The FCC concluded the 2002 biennial review of its media ownership rules by amending the rules so as to generally permit entities to own more television stations as well as a newspaper in some markets. However, after several parties appealed the rule changes, a federal court stayed the new rules from taking effect and directed the FCC to reconsider its actions. It is not possible to predict the timing or outcome of this ongoing review of the FCC’s ownership rules.

The FCC has adopted a series of orders to implement a transition from the current analog system of broadcast television to a digital transmission system. It granted most television stations a second channel on which to begin offering digital service, and each of our broadcast stations now offers digital as well as analog broadcast service. Congress recently set February 17, 2009, as the firm deadline for completing the digital transition and the return of broadcasters’ analog spectrum.

A substantial number of technical, regulatory and market-related issues remain unresolved regarding the transition to digital television. These issues include the timeliness with which the FCC can allocate a final digital channel to each broadcast station and otherwise prepare for the return of spectrum now used for analog broadcasting; whether the FCC will adopt new rules affecting broadcasters’ use of their digital spectrum; when and how Congress or the FCC will further address cable and satellite carriage of digital programming; concerns over protecting broadcasters’ digital signal coverage and protecting digital broadcast signals from illegal copying and distribution; and uncertainty over the level of consumer demand for new digital services. We cannot predict the effect of these uncertainties on our offering of digital service or our business.

Broadcast television stations generally enjoy “must-carry” rights on any cable television system defined as “local” with respect to the station. Stations may waive their must-carry rights and instead negotiate retransmission consent agreements with local cable companies. Our network-affiliated stations have generally elected to negotiate retransmission consent agreements, while independent station KMCI relies on must-carry rights. Similarly, satellite carriers, upon request, are required to carry the signal of those television stations that request carriage and that are located in markets in which the satellite carrier chooses to retransmit at least one local station. While the FCC has announced that a television station’s primary digital video transmission will enjoy cable must-carry rights, the FCC has declined to require carriage of a digital signal in addition to the station’s analog signal or to require carriage of the multiple program streams that broadcasters can present with digital technology. The FCC has not yet addressed satellite carriers’ obligation to carry local station’s digital signals except per congressional direction in Hawaii and Alaska.

Shop At Home

In February 2006 we announced our intention to seek strategic alternatives for Shop At Home. Our intention is to maximize the value of the Shop At Home asset to our shareholders. Shop At Home produced approximately 14% of our company’s total operating revenues in 2005.

We acquired our initial 70% controlling interest in Shop At Home from Summit America Television, Inc. (“Summit America,” formerly Shop At Home, Inc.) in October 2002. In April 2004, we acquired Summit America, which included a 30% minority interest in Shop At Home and five Shop At Home-affiliated broadcast television stations. The Shop At Home acquisition provided us with an existing infrastructure and workforce with retailing expertise, enabling us to quickly gain scale in a growing television retailing industry. The 2004 acquisition of Summit America provided us with 100% ownership of Shop At Home and secured distribution of the network in Summit America’s television markets.

Our strategy upon acquiring Shop At Home was to expand and improve the quality of the distribution of the network, improve the quality and mix of merchandise offered for sale and to leverage our cable network brands to build consumer awareness of Shop At Home.

Shop At Home is distributed by broadcast television and cable and satellite television affiliates that reach approximately 57 million full-time equivalent households, and can be viewed in more than 154 television markets, including 95 of the 100 largest television markets in the United States.

In television retailing the ability to secure a critical mass of high-quality, full-time basic cable households is critical to success. Channel positions in the “basic cable tier” tend to be lower on the channel guide and are generally adjacent to the most heavily watched channels. Consequently, this distribution tends to average greater revenue per household reached than the digital, satellite or higher channel positions that are generally available in the leased or spot markets. Average revenue per household reached is lower in digital tiers due, in part, to the expanded choice of viewing options and fragmentation of audience share. In addition, carriage outside the basic cable tier is often available only on a part-time or overnight basis and often lacks the channel guide branding that is standard in the longer-term permanent channel placement in the basic cable tier.

Securing carriage in the basic cable tier is particularly challenging, as the industry leaders QVC and HSN already occupy such scarce capacity and cable television system operators are reluctant to add additional shopping channels in the basic tier. As a result, Shop At Home has primarily grown its distribution through national satellite carriers or through the acquisition of part-time or overnight carriage. Approximately 42% of Shop At Home’s carriage is provided by satellite television systems. These distribution issues have adversely impacted Shop At Home’s operating results and contributed to the segment’s recurring operating losses.

Due in part to the difficulty of securing high quality distribution in the basic cable tier we have undertaken an effort to build an online retail destination. Our Internet site provided approximately 16% of total Shop At Home revenues in 2005, up from 9% in 2003.

Substantially all of Shop At Home’s revenues are derived from the sale of merchandise and related shipping and handling charges. We market home accessories, cookware, jewelry, electronics, beauty, fitness, collectibles and other products to consumers. A show-host approach is used with the host conveying information about the products and demonstrating use of the products.

The mix of products offered depends on a variety of factors including price, availability and customer response. During 2005 we continued to implement our merchandising plan and electronic commerce strategy to increase the sale of higher margin merchandise in the home and cookware categories and reduce our dependence on electronics and collectibles.

Viewers can order any product offered by us, subject to availability, 24 hours a day, seven days a week, over the Shop At Home Web site, directly from our telephone representatives or through a toll-free automated touch-tone system. Products are shipped from our warehouse facilities or are drop-shipped by selected vendors from their facilities. We offer our customers a full refund for merchandise returned within 30 days of purchase. A majority of customers pay for their purchases by credit card; however, we also accept money orders, checks, debit cards, electronic funds transfers and offer extended credit terms to our customers.

Due to increased demand during the holiday season, merchandise sales in the fourth quarter are typically higher than in other quarters.

We compete with three other large public companies (QVC, HSN and ShopNBC) and many smaller television retailers. QVC, HSN and ShopNBC are in nearly all of the television markets where our programming is available. QVC and HSN are the revenue leaders in the industry and each reaches a larger percentage of U.S. television households than Shop At Home. We also compete with store, catalog and Internet retailers.

Merchandise and network distribution costs are the primary operating expenses for the segment. We purchase merchandise from numerous vendors and sources. We monitor product sales and revise our product offerings to maintain an attractive merchandising mix while continually evaluating new products and sources to broaden and enhance our product selection. While a variety of sources are available for most products we sell, two vendors in two different product categories supply us with merchandise that accounts for a total of approximately 30% of total merchandise costs incurred in 2005. Our business could be adversely affected if these vendors ceased supplying merchandise.

Distribution agreements are typically for one-year terms, with automatic renewal unless either party provides a 30-day notice before the end of the term. Affiliates are generally paid a negotiated fee based on the number of cable and direct broadcast satellite households reached by the affiliate. In addition, under certain agreements, contingent payments may be due to affiliates if revenues generated by subscribers exceed pre-determined thresholds.

Programming is transmitted to network affiliates via satellite. Satellite transmission is obtained under long-term contracts with satellite owners.

Shopzilla

On June 27, 2005, we completed our acquisition of Shopzilla, Inc., a Web-based product comparison shopping service. The acquisition of Shopzilla enabled us to capitalize on the rapid growth and rising profitability of specialized Internet search businesses and expand our interactive media platform.

Shopzilla operates a comparison shopping service, available on proprietary Web sites, including Shopzilla.com and BizRate.com, in the United States. Shopzilla also operates the BizRate consumer feedback network that collects millions of consumer reviews of stores and products each year.

Shopzilla began operating comparison shopping sites serving the United Kingdom, France and Germany in 2004 and 2005. We expect to continue to extend the Shopzilla brand into international markets.

On a pro-forma basis, assuming we had owned Shopzilla for all of 2005; Shopzilla would have produced 6% of our total operating revenues.

Our comparison shopping service helps consumers find products offered for sale by online retailers. Shopzilla aggregates and organizes information on millions of products from thousands of retailers. Consumers use our Internet site to search or browse for products and then narrow their product choices by the specific criteria that match their needs, including price quotes from multiple retailers, brand, product quality reviews, merchant quality reviews and various other category-specific attributes. Our comparison shopping service enables consumers to find and compare products and services online conveniently and effectively, reducing the need to visit the Internet sites of multiple online merchants. We provide consumers with a deep link to the Internet site of participating merchants, enabling consumers to quickly purchase products in which they have an interest. Our service enables merchants to generate sales cost-effectively by connecting them with consumers who are actively shopping.

Online shopping in the United States has increased dramatically in recent years. Concurrently Internet users are increasingly utilizing search engines and other tools that enhance their experience on the Internet. We believe Shopzilla is well positioned to benefit from such macro economic trends.

Shopzilla earns revenue primarily from lead referrals provided to participating online merchants. Lead referrals occur when consumers using our Internet sites click through to participating online retailers. Our operating results are influenced by our ability to cost-effectively attract consumers to our Internet sites and our ability to provide relevant product and merchant information to consumers.

Participating merchants generally list their products on our Internet sites under the terms of short-term contracts. We determine minimum prices per lead referral by category and subcategory. Participating merchants may choose to increase the amount they are willing to pay per lead referral, which may heighten the prominence of their listing on our service.

We monitor total lead referrals and the average revenue per lead referral. We make adjustments to the taxonomy used to deliver search results and the manner in which such results are displayed in order to increase the referrals we provide to participating merchants.

The volume of lead referrals and the average revenue per lead referral are influenced by factors such as seasonality and category mix. Due to an increase in online shopping during the holiday season, our revenues in the fourth quarter are typically higher than in other quarters.

Marketing costs intended to attract traffic to the Shopzilla Internet site and costs to operate and develop our Internet sites are our primary expenses.

Consumers come to our Internet site through links from general search engines and other Internet sites and by directly entering our Internet sites. We purchase performance-based advertising from search engines and other Internet sites to expose our brand to consumers who are researching purchases. This advertising generally consists of keyword-based purchases, generally pursuant to contracts which we may terminate on 30 days notice. We continually monitor our campaigns and adjust them to achieve better results. We also enter into distribution agreements with companies that wish to feature our comparison shopping content on their Web sites. We either pay these companies a cost-per-click fee, or share the revenues we charge our merchants when consumers link from these distribution partner Web sites to a merchant Web site.

We also promote Shopzilla on other Internet sites, including those operated by Scripps Networks, our newspapers and our broadcast television stations. We expect to continue to undertake promotion efforts to increase consumer awareness of the Shopzilla brand and to attract consumers directly to our comparison shopping sites.

We compete for both consumer and merchant users of our service. We compete for consumers on the basis of brand recognition, coverage of products and merchants, quality of information and ease of use. We compete for merchants on the basis of the quantity of lead referrals, the likelihood that those lead referrals will convert into purchases, our ability to help merchants measure the results of their marketing expenditures on our service, and our ability to help them optimize such expenditures. Any service that helps consumers find, compare or buy products and services is a competitor to us.

Several companies operate Internet sites that focus exclusively on providing comparison shopping services. These direct competitors include Shopping.com (operated by Ebay), NexTag and PriceGrabber (operated by Experian). Our technology enables us to list considerably more products than our competitors. We believe the ability to list a greater depth and breadth of products provides us a competitive edge by enabling us to expand into additional product categories and to list additional products within categories. We must continually upgrade our technology to maintain our competitive position.

We also face competition from general search engines and portals, such as Yahoo! and Google which serve as origination Web sites for consumers to find products and merchants. Yahoo! (through Yahoo! Shopping) and Google (through Froogle) also provide services similar to ours.

We also face indirect competition from online retailers, such as Amazon.com. Typically, online retailers serve as destination Web sites from which consumers directly buy products, but they typically have more limited product selection than we do and do not offer pricing, availability, and other information on products offered by other retailers. However, many online retailers are skilled at building customer loyalty and generating repeat business. Certain online retailers, including Amazon.com, also provide listings of products offered by other merchants.

Licensing and Other Media

Licensing and other media aggregates operating segments that are too small to report separately, and primarily includes syndication and licensing of news features and comics. Under the trade name United Media, we distribute news columns, comics and other features for the newspaper industry. Newspapers typically pay a weekly fee for their use of the features. Included among these features is “Peanuts,” one of the most successful strips in the history of comic art.

United Media owns and licenses worldwide copyrights relating to “Peanuts,” “Dilbert” and other properties for use on numerous products, including plush toys, greeting cards and apparel, for promotional purposes and for exhibit on television and other media. Charles Schulz, the creator of “Peanuts,” died in February 2000. We continue syndication of previously published “Peanuts” strips, and retain the rights to license the characters. “Peanuts” provides approximately 95% of our licensing revenues. Licensing of comic characters in Japan provides approximately 45% of our international revenues, which are less than $60 million annually.

Merchandise, literary and exhibition licensing revenues are generally a negotiated percentage of the licensee’s sales. We generally negotiate a fixed fee for the use of our copyrighted characters for promotional and advertising purposes. We generally pay a percentage of gross syndication and licensing royalties to the creators of these properties.

We also represent the owners of other copyrights and trademarks, including Raggedy Ann and Precious Moments, in the U.S. and international markets. Services offered include negotiation of licensing agreements, enforcement of licensing agreements and collection of royalties. We typically retain a percentage of the licensing royalties.

Employees

As of December 31, 2005, we had approximately 9,600 full-time equivalent employees, of whom approximately 5,400 were with newspapers, 1,100 with Scripps Networks, 1,600 with broadcast television, 1,000 with Shop At Home, 200 with Shopzilla and 100 with licensing and other media. Various labor unions represent approximately 1,100 employees, primarily in newspapers. We have not experienced any work stoppages at our current operations since 1985. We consider our relationships with our employees to be generally satisfactory.

Item 1a. Risk Factors

For an enterprise as large and complex as ours, a wide range of factors could materially affect future developments and performance. In addition to the factors affecting specific business operations identified in connection with the description of these operations and the financial results of these operations elsewhere in this report, the most significant factors affecting our operations include the following:

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

Approximately 68% of our revenues in 2005 were derived from marketing and advertising spending by businesses operating in the United States. Advertising and marketing spending is sensitive to economic conditions, and tends to decline in recessionary periods. A decline in economic conditions could reduce advertising prices, resulting in a decrease in our advertising revenues. A decline in economic conditions could also impact consumers discretionary spending. Such a reduction in consumer spending may impact the volume of online shopping, which could adversely affect our comparison shopping business.

We derive a substantial portion of our advertising revenues from the automotive industry. For example, approximately 25% of total broadcast television advertising revenue came from the automotive category in 2005. A decline in advertising spending by auto manufacturers could adversely affect our advertising revenues.

Our traditional media businesses face substantial competition for advertising revenues with non-traditional digital media.

All of our advertising-supported businesses are subject to competition for advertising revenues. Competitors for advertising revenues include paid and free newspapers, magazines, broadcast, satellite and cable television, broadcast and satellite radio, video-on-demand services, Web sites, direct marketing and the Yellow Pages.

Competition for advertising revenue is increasingly intense with digital media platforms. The popularity of the Internet and low barriers to entry have led to a wide variety of alternatives available to advertisers and consumers. As media audiences fragment, advertisers are increasing the portion of their advertising budgets allocated to non-traditional media, such as Internet sites and search engines. Internet sites and search engines can offer more measurable returns than traditional media advertising through pay-for-performance and keyword-targeted advertising. We may also compete with companies that sell products and services online because these companies are trying to attract users to their Internet sites directly to search for information about their products and services.

In recent years, Internet sites dedicated to help wanted, real estate and automobile sales have become significant competitors for classified advertising. Entities with a large Internet presence are entering the classified market, heightening the risk of continued erosion. We may experience greater competition from specialized Internet sites in other areas, such as travel and entertainment advertising. Although the amount of advertising on our Internet sites has been increasing, we may experience a decline in advertising revenues if we are unable to attract advertising to our Internet sites in sufficient volume or at rates comparable to that of our traditional media businesses.

Television viewing audiences have fragmented, and further fragmentation could adversely affect our advertising revenues.

The expanded availability of digital cable television and the introduction of direct-to-home satellite distribution has greatly increased the options available to the viewing public. In addition, technological advancements in the video, telecommunications and data services industry is changing rapidly. Advances in technologies such as personal video recorders, video-on-demand and streaming video on broadband Internet connections enable viewers to time-shift programming or to skip commercial messages. These changes have subjected Scripps Networks and our broadcast television stations to increased competition and to new types of competition for both viewers and advertising revenues.

Continued fragmentation of the television audience and technological developments could affect the viewership levels of our businesses. Reductions in viewership levels could result in decreases in advertising revenues. Our ability to anticipate changes in, and adapt to, changes in technology and consumer tastes on a timely basis and exploit new sources of revenue from these changes is critical to our ability to increase our advertising revenues and to remain competitive.

We purchase keyword advertising on general search engines to attract consumers to our comparison shopping Internet site.

Many consumers access our service by clicking through search results displayed by Google, Yahoo! and other popular general search engines. Search engines typically provide two types of search results, algorithmic listings and purchased listings. We rely on both algorithmic and purchased listings to attract consumers to our comparison shopping Internet site.

Algorithmic listings cannot be purchased, and instead are determined and displayed solely by a set of formulas designed by the search engine. Search engines revise their algorithms from time to time in an attempt to optimize their search result listings. Modification of such algorithms may result in fewer consumers clicking through to our Internet site.

We also rely on purchased listings to attract consumers to our comparison shopping Internet site. Many general search engines also operate Internet shopping services. Modification or termination of our contractual relationships with general search engines to purchase keyword advertising could result in fewer consumers clicking through to our Internet site. We may incur additional expenses to replace this traffic.

Approximately 30% to 40% of our referral fee revenues in 2005 were with a general search engine and a change in this relationship could harm our business.

In August 2002, we entered into the first of three agreements with a general search engine to participate in its sponsored links program. Under each of these agreements, pursuant to a contractual agreement that expires in October 2008, we display listings from the search engine’s advertisers as a part of our service. We receive a share of the revenues earned by the search engine when consumers visit the advertisers’ websites. Our revenues could be affected if this agreement were not renewed upon expiration or if the agreement were not renewed on similar terms.

Advertising and referral fee revenues are subject to seasonal and cyclical variations.

Due to increased demand in the spring and holiday seasons, the second and fourth quarters normally have higher advertising revenues than our first and third quarters. Referral fee revenues are highest in the fourth quarter due in part to increased online shopping during the holiday season. In addition, advertising revenues in even-numbered years benefit from political advertising. If a short-term negative impact on our business were to occur during a time of high seasonal demand, there could be a disproportionate effect on the operating results of that business for the year.

Changes in public and consumer tastes and preferences for entertainment could reduce demand for our entertainment offerings and products and reduce profitability.

Our businesses create entertainment products whose success depends substantially on consumer tastes and preferences that change in often unpredictable ways. The success of our businesses depends on our ability to consistently create content and programming that meets the changing preferences of the consumer market. The acceptance of our offerings and products and their success depends on our ability to predict and adapt to changing consumer tastes and preferences. If our product offerings do not achieve sufficient consumer acceptance, our share of the viewing audience may be adversely affected. Declines in such audience shares could result in a reduction in advertising revenue.

Scripps Networks is dependent upon the maintenance of distribution agreements with cable and satellite distributors on acceptable terms.

We enter into long-term contracts for the distribution of our networks on cable and satellite television systems. Our long-term distribution arrangements enable us to reach a large percentage of cable and direct broadcast satellite households across the United States. As these contracts expire, we must renew or renegotiate the contracts, and if we are unable to renew them on acceptable terms, we may lose distribution rights.

The loss of a significant number of affiliation arrangements on basic programming tiers could reduce the distribution of HGTV and Food Network, thereby adversely affecting affiliate fee revenue and our ability to sell advertising or the rates we are able to charge for such advertising.

Our networks that are carried on digital tiers are dependent upon the continued upgrade of cable systems to digital capability and the public’s continuing acceptance of, and willingness to pay for upgrades to, digital cable, as well as our ability to negotiate favorable carriage agreements on widely accepted digital tiers.

Consolidation among cable television system operators has given the largest cable and satellite television systems considerable leverage in their relationship with programmers. In 1996, the two largest cable television system operators provided service to approximately 22% of households receiving cable or satellite television service. They provide service to approximately 45% of such households today, with the two largest satellite television operators providing service to an additional 28% of such households.

Continued consolidation within the industry could reduce the number of distributors available to carry our programming, subject our affiliate fee revenue to greater volume discounts, and further increase the negotiating leverage of the cable and satellite television system operators.

Decreases, or slow growth, in circulation adversely affects our circulation revenues and also our advertising revenues.

In recent years the newspaper industry has had difficulty increasing circulation volume and revenues. Since 2001 the daily and Sunday circulation of our newspapers has declined approximately 5%. The declines are due, in part, to competition from other forms of media, particularly the Internet. Regular newspaper buying has declined, particularly among young people who increasingly rely on the Internet and other non-traditional media for news.

A prolonged decline in circulation copies could have an effect on the rate and volume of advertising revenues, which are dependent on the size and demographics of the audience we provide to our advertisers. To maintain our circulation base, we may incur additional costs. We may not be able to recover these costs through increased circulation and advertising revenues.

The loss of affiliation agreements could adversely affect our broadcast television stations’ results of operations.

Our broadcast television station business owns and operates ten television stations. Six of the stations are affiliated with ABC and three are affiliated with NBC. These television networks produce and distribute programming in exchange for each of our stations’ commitment to air the programming at specified times and for commercial announcement time during the programming.

The non-renewal or termination of any of our other network affiliation agreements would prevent us from being able to carry programming of the relevant network. This loss of programming

would require us to obtain replacement programming, which may involve higher costs and which may not be as attractive to our target audiences, resulting in reduced revenues.

We continue to develop new products and services for evolving markets. There can be no assurance of the success of these efforts due to a number of factors, some of which are beyond our control.

There are substantial uncertainties associated with our efforts to develop new products and services for evolving markets, and substantial investments may be required. Initial timetables for the introduction and development of new products or services may not be achieved, and price and profitability targets may not prove feasible. External factors, such as the development of competitive alternatives, rapid technological change, regulatory changes and shifting market preferences, may cause new markets to move in unanticipated directions.

We cannot be certain that we will be successful in integrating businesses we may acquire with our existing businesses.

We may grow through acquisitions in certain markets, and we may also consider the acquisition of businesses that fall outside our traditional lines of business. For example, in recent years we have acquired GAC, but have also acquired Shop At Home and Shopzilla which are outside our traditional lines of business. Acquisitions involve risks, including difficulties in integrating acquired operations, diversions of management resources, debt incurred in financing such acquisitions and other unanticipated problems and liabilities. In addition, while we intend to implement appropriate controls and procedures as we integrate acquired companies, we may not be able to certify as to the effectiveness of these companies’ disclosure controls and procedures or internal control over financial reporting (as required by recent amendments to U.S. federal securities laws and regulations) until we have fully integrated those acquired businesses.

Macro economic factors may impede access to or increase the cost of financing our operations and investments.

Changes in U.S. and global financial and equity markets, including market disruptions and significant interest rate fluctuations, may make it more difficult for us to obtain financing for our operations or investments or increase the cost of obtaining financing. In addition, our borrowing costs can be affected by short and long-term debt ratings assigned by independent rating agencies which are based, in significant part, on our performance as measured by credit metrics such as interest coverage and leverage ratios. A decrease in these ratings could increase our cost of borrowing or make it more difficult for us to obtain financing.

Sustained increases in costs of pension and employee health and welfare benefits may reduce our profitability.

Employee compensation and benefits accounts for approximately 33% of our total operating expenses. Our profitability is substantially affected by costs of pension benefits and other employee benefits. In recent years, we have experienced significant increases in these costs as a result of macro economic factors beyond our control, including increases in health care costs, declines in investment returns on plan assets and changes in discount rates used to calculate pension and related liabilities. At least some of these macro economic factors may continue to put upward pressure on the cost of providing pension and medical benefits. Although we have actively sought to control increases in these costs, there can be no assurance that we will succeed in limiting cost increases, and continued upward pressure could reduce the profitability of our businesses.

We Could Suffer Losses Due to Asset Impairment Charges

We test our goodwill and intangible assets, including FCC licenses, for impairment during the fourth quarter of every year, and on an interim date should factors or indicators become apparent that would require an interim test, in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” If the fair value of a reporting unit or an intangible asset is revised downward, an impairment under SFAS 142 could result and a non-cash charge could be required. This could materially affect our reported net earnings.

In the fourth quarter of 2005, we recorded a $103.1 million charge to reduce the carrying value of the Shop At Home goodwill and intangible assets to fair value.

In February 2006, we announced we are exploring strategic alternatives for Shop At Home. We may incur additional operating losses as we explore such alternatives. If we determine the carrying value of the remaining assets is less than their fair value an additional non-cash charge will be required. Implementation of identified strategic alternatives may result in our incurring additional liabilities.

We may not be able to protect intellectual property rights upon which our business relies, and if we lose intellectual property protection, we may lose valuable assets.

Our business depends on our intellectual property, including internally developed technology and data resources and brand identification and journalistic reputation. We attempt to protect these intellectual property rights through a combination of copyright, trade secret, patent and trademark law and contractual restrictions, such as confidentiality agreements. We also depend on our trade names and domain names. We file applications for patents, trademarks, and other intellectual property registration where we deem it appropriate to our business, but such applications may not result in the issuance of patents, registered trademarks, service marks or other intellectual property registrations. In addition, even if such registrations are issued, they may not fully protect all important aspects of our business and there is no guarantee that our business does not or will not infringe upon intellectual property rights of others. Furthermore, intellectual property laws vary from country to country, and it may be more difficult to protect and enforce our intellectual property rights in some foreign jurisdictions. In the future, we may need to litigate in the United States or elsewhere to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of others. This litigation could potentially be expensive and possibly divert the attention of our management.

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our service, technology and other intellectual property, and we cannot be certain that the steps we have taken will prevent any misappropriation or confusion among consumers and merchants, or unauthorized use of these rights. If we are unable to procure, protect and enforce our intellectual property rights, then we may not realize the full value of these assets, and our business may suffer.

Our Common Voting shares are principally held by descendants of Edward W Scripps, through a family trust, and this control could create conflicts of interest or inhibit potential changes of control.

We have two classes of stock: Common Voting shares and Class A Common shares. Holders of Class A Common shares are entitled to elect one-third of the Board of Directors, but are not permitted to vote 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. Our Common Voting shares are principally held by descendants of Edward W Scripps. A family trust holds 87% of the Common Voting shares. As a result, the trust has the ability to elect two-thirds of the Board of Directors and to direct the outcome of any matter that does not require a vote of the Class A Common shares. Because this concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to our businesses, the market price of our Class A Common shares could be adversely affected.

Item 1b. Unresolved Staff Comments

The Company has received no written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more preceding the end of its 2005 fiscal year and that remain unresolved.

Item 2. Properties

Scripps Networks operates from an owned production and office facility in Knoxville. We also operate from a leased office facility in Knoxville and leased facilities in New York and Nashville. Substantially all equipment is owned by Scripps Networks. In 2005, we began to plan for another expansion of Scripps Networks headquarters in Knoxville.

We own substantially all of the facilities and equipment used in our newspaper operations. We completed the construction of new production facilities for our Knoxville newspaper in 2002 and for our Treasure Coast newspapers in 2004. We expect to begin construction of a new production facility for our Naples newspaper in 2006.

We own substantially all of the facilities and equipment used by our broadcast television stations. We own, or co-own with other broadcast television stations, the towers used to transmit our television signal. We completed the construction of new facilities for our West Palm Beach station in 2001 and for our Cincinnati station in 2004.

Shop At Home operates from facilities in Nashville, Tennessee. We own substantially all of the studios and the technical and television production facilities used by Shop At Home. Warehouse facilities are generally leased.

Shopzilla operates from leased facilities in Los Angeles and London, as well as a separate leased co-location facility in Los Angeles. We anticipate leasing a second co-location facility in 2006. Substantially, all of our equipment is owned by Shopzilla.

Item 3. Legal Proceedings

We are involved in litigation arising in the ordinary course of business, such as defamation actions and various governmental and administrative proceedings primarily relating to renewal of broadcast licenses, none of which is expected to result in material loss.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of 2005.

Executive Officers of the Company - Executive officers serve at the pleasure of the Board of Directors.


Name	Age	Position
Kenneth W. Lowe	55	President, Chief Executive Officer and Director (since October 2000)

Richard A. Boehne	49	Executive Vice President (since 1999)

Anatolio B. Cruz III	47	Senior Vice President and General Counsel (Since March 2004); Vice President, Deputy General Counsel and Assistant Secretary, BET Holdings, Inc. (1999 to 2004)

Frank Gardner	63	Senior Vice President and Chairman of Scripps Networks, Inc. (since 2001) – Retired December 31, 2005; Senior Vice President/Interactive Media (2000 to 2001); Senior Vice President/Television (1993 to 2000)

John F. Lansing	48	Senior Vice President/Scripps Networks (since February 2006); President, Scripps Networks, Inc. (Since January 2005); Executive Vice President, Scripps Networks, Inc. (January 2004 to January 2005); Senior Vice President/Television (2002 to 2005); Vice President/Television (2001 to 2002); Vice President/ General Manager, WEWS-TV (1997 to 2001)

Joseph G. NeCastro	49	Senior Vice President and Chief Financial Officer (since May 2002); Senior Vice President and Chief Financial Officer, Penton Media, Inc. (1998 to 2002)

Tim A. Peterman	38	Senior Vice President/Interactive Media (since November 2005); Vice President/Corporate Development (2002 to 2005); Chief Financial Officer/Broadcast Division, Chief Financial Officer/Cable Television Network Division, USA Networks (1999 to 2002)

William B. Peterson	62	Senior Vice President/Television Station Group (Since May 2004); Vice President/Station Operations (January 2004 to May 2004); Vice President/General Manager, WPTV-TV (2001 to 2004); Vice President/General Manager, WRAL-TV (1999 to 2001)

Jennifer L. Weber	39	Senior Vice President/Human Resources (since September 2005); Principal, Towers Perrin (2001 to 2005); Human Resources Consultant, Towers Perrin (1994 to 2001)

PART II

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

Our Class A Common shares are traded on the New York Stock Exchange (“NYSE”) under the symbol “SSP.” There are approximately 75,000 owners of our Class A Common shares, based on security position listings, and 19 owners of our Common Voting shares (which do not have a public market). We have declared cash dividends in every year since our incorporation in 1922. Future dividends are, however, subject to our earnings, financial condition and capital requirements.

The range of market prices of our Class A Common shares, which represents the high and low sales prices for each full quarterly period, and quarterly cash dividends are as follows:


Quarter	1st		2nd		3rd		4th		Total
2005
Market price of common stock:
High	$	49.25	$	52.91	$	51.19	$	50.50
Low		45.91		47.80		47.25		44.85

Cash dividends per share of common stock	$	0.10	$	0.11	$	0.11	$	0.11	$	0.43

2004

Market price of common stock:
High	$	50.56	$	54.65	$	53.31	$	50.55
Low		45.68		49.86		47.29		44.73

Cash dividends per share of common stock	$	0.0875	$	0.10	$	0.10	$	0.10	$	0.3875

The following table provides information about Company purchases of equity securities that are registered by the Company pursuant to section 12 of the Exchange Act during the quarter ended December 31, 2005:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Max. Number of Shares that May Yet Be Purchased Under the Plan or Programs
10/1/05 - 10/31/05	157,500	$	47.76	157,500	4,280,000
11/1/05 - 11/30/05	30,000		46.34	30,000	4,250,000
12/1/05 - 12/31/05					4,250,000

Total	187,500	$	47.53	187,500	4,250,000

Under a share repurchase program authorized by the Board of Directors on October 24, 2004, we are authorized to repurchase up to 5.0 million Class A Common shares. A total of 750,000 shares were repurchased in 2005 at prices ranging from $45 to $51 per share. There is no expiration date for the program and we are under no commitment or obligation to repurchase any particular amount of Class A Common shares under the program.

There were no sales of unregistered equity securities during the quarter for which this report is filed.

Item 6. Selected Financial Data

The Selected Financial Data required by this item is filed as part of this Form 10-K. See Index to Consolidated Financial Statement Information at page F-1 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. See Index to Consolidated Financial Statement Information at page F-1 of this Form 10-K.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

The market risk information required by this item is filed as part of this Form 10-K. See Index to Consolidated Financial Statement Information at page F-1 of this Form 10-K.

Item 8. Financial Statements and Supplementary Data

The Financial Statements and Supplementary Data required by this item is filed as part of this Form 10-K. See Index to Consolidated Financial Statement Information at page F-1 of this Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9a. Controls and Procedures

The Controls and Procedures required by this item is filed as part of this Form 10-K. See Index to Consolidated Financial Statement Information at page F-1 of this Form 10-K.

Item 9b. Other Information

Not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant

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

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 for the Annual Meeting of Shareholders (“Proxy Statement”). Information regarding Section 16(a) compliance is incorporated by reference to the material captioned “Report on 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 Scripps. We also have a code of ethics for the CEO and Senior Financial Officers. This code of ethics meets the requirements defined by Item 406 of Regulation S-K and the requirement of a code of business conduct and ethics under NYSE listing standards. Copies of our codes of ethics are posted on our Web site at www.scripps.com.

Information regarding our audit committee financial expert is incorporated by reference to the material captioned “Report of the Audit Committee of the Board of Directors” in the Proxy Statement.

The Proxy Statement will be filed with the Securities and Exchange Commission on or before March 31, 2006.

Item 11. Executive Compensation

The information required by Item 11 of Form 10-K is incorporated by reference to the material captioned “Executive Compensation” in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by Item 12 of Form 10-K is incorporated by reference to the material captioned “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions

The information required by Item 13 of Form 10-K is incorporated by reference to the material captioned “Certain Transactions” in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 of Form 10-K is incorporated by reference to the material captioned “Report of the Audit Committee of the Board of Directors” in the Proxy Statement.

PART IV

Item 15. Exhibits and Financial Statement Schedules

Financial Statements and Supplemental Schedule

(a)	The consolidated financial statements of Scripps are filed as part of this Form 10-K. See Index to Consolidated Financial Statement Information at page F-1.

The reports of Deloitte & Touche LLP, an Independent Registered Public Accounting Firm, dated March 14, 2006, are filed as part of this Form 10-K. See Index to Consolidated Financial Statement Information at page F-1.

(b)	The Company’s consolidated supplemental schedules are filed as part of this Form 10-K. See Index to Consolidated Financial Statement Schedules at page S-1.

Exhibits

The information required by this item appears at page E-1 of this Form 10-K.

Signatures

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


	THE E. W. SCRIPPS COMPANY

Dated: March 15, 2006	By:	/s/ Kenneth W. Lowe
		Kenneth W. Lowe
		President and Chief Executive Officer

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 in the capacities indicated, on March 15, 2006.


Signature		Title

/s/ Kenneth W. Lowe Kenneth W. Lowe		President, Chief Executive Officer and Director (Principal Executive Officer)

/s/ Joseph G. NeCastro Joseph G. NeCastro		Senior Vice President and Chief Financial Officer

/s/ William R. Burleigh William R. Burleigh		Chairman of the Board of Directors

/s/ John H. Burlingame John H. Burlingame		Director

/s/ David A. Galloway David A. Galloway		Director

/s/ Jarl Mohn Jarl Mohn		Director

/s/ Nicholas B. Paumgarten Nicholas B. Paumgarten		Director

/s/ Jeffrey Sagansky Jeffrey Sagansky		Director

/s/ Nackey E. Scagliotti Nackey E. Scagliotti		Director

/s/ Edward W. Scripps Edward W. Scripps		Director

/s/ Paul K. Scripps Paul K. Scripps		Director

/s/ Ronald W. Tysoe Ronald W. Tysoe		Director

/s/ Julie A. Wrigley Julie A. Wrigley		Director

The E. W. Scripps Company

Index to Consolidated Financial Statement Information


Item No.		Page
1.	Selected Financial Data	F-2

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

	Forward-Looking Statements	F-5

	Executive Overview	F-5

	Critical Accounting Policies and Estimates	F-6

	Results of Operations	F-9

	2005 Compared with 2004	F-9

	2004 Compared with 2003	F-11

	Business Segment Results	F-11

	Scripps Networks	F-13

	Newspapers	F-14

	Broadcast Television	F-16

	Shop At Home	F-17

	Shopzilla	F-18

	Liquidity and Capital Resources	F-18

3.	Quantitative and Qualitative Disclosures About Market Risk	F-21

4.	Controls and Procedures	F-23

5.	Reports of Independent Registered Public Accounting Firm	F-25

6.	Consolidated Balance Sheets	F-27

7.	Consolidated Statements of Income	F-28

8.	Consolidated Statements of Cash Flows	F-29

9.	Consolidated Statements of Comprehensive Income and Shareholders’ Equity	F-30

10.	Notes to Consolidated Financial Statements	F-31

F-1

Selected Financial Data

Eleven-Year Financial Highlights

(in millions, except per share data)


	2005 (1)			2004 (1)			2003 (1)			2002 (1)			2001 (1)			2000 (1)			1999 (1)			1998 (1)			1997 (1)			1996 (1)			1995 (1)
Summary of Operations (11)
Operating revenues:
Scripps Networks	$	903		$	724		$	535		$	415		$	337		$	296		$	213		$	133		$	57		$	30		$	19
Newspapers		729			704			692			682			677			687			654			623			483			415			387
Broadcast television		318			342			304			305			278			343			312			331			331			323			295
Shop At Home		359			293			238			42
Shopzilla		99
Licensing and other media		106			104			105			90			89			97			93			89			80			75			68

Total segment operating revenues		2,514			2,167			1,875			1,536			1,380			1,423			1,272			1,175			952			843			769
Divested operating units (1)																	11			23			25			44			61			44
RMN pre-JOA operating revenues (2)														12			221			210			200			197			183			184

Total operating revenues	$	2,514		$	2,167		$	1,875		$	1,536		$	1,392		$	1,654		$	1,505		$	1,401		$	1,193		$	1,086		$	997

Segment profit (loss):
Scripps Networks	$	414		$	304		$	204		$	125		$	76		$	69		$	34		$	6		$	(9	)	$	(14	)	$	(17	)

Newspapers managed solely by us		209			205			227			232			222			238			241			227			186			145			138
Newspapers operated pursuant to JOAs(9)		14			36			37			34			12			28			30			29			26			19			17

Total newspapers		223			241			264			267			234			266			271			255			213			163			155
Broadcast television		88			108			85			98			80			129			96			118			128			126			113
Shop At Home		(28	)		(22	)		(22	)		(2	)
Shopzilla		28
Licensing and other media		19			17			19			17			15			16			13			12			10			10			8
Corporate		(42	)		(38	)		(32	)		(28	)		(19	)		(20	)		(18	)		(16	)		(16	)		(17	)		(16	)

Total segment profit		701			610			519			477			386			461			396			375			326			268			244
Divested operating units (1)																				1			1			(1	)		5			4
Depreciation of PP&E		(70	)		(65	)		(62	)		(57	)		(54	)		(68	)		(65	)		(64	)		(53	)		(49	)		(45	)
Amortization of other intangible assets		(21	)		(4	)		(5	)		(4	)		(5	)		(4	)		(4	)		(5	)		(2	)		(3	)		(5	)
Gains (losses)on disposals of PP&E		(2	)		(3	)		(2	)		(1	)		(2	)		(1	)								(1	)		(1	)		(1	)
Amortization of goodwill and other intangible assets with indefinite lives (3)														(38	)		(36	)		(35	)		(35	)		(22	)		(17	)		(15	)
Write-off of goodwill and intangible assets (7)		(103	)
Gain on sale of production facility (4)					11
Restructuring charges, including share of JOA restructurings (5)								(2	)		4			(16	)		(10	)		(2	)								(4	)
Interest expense		(39	)		(31	)		(32	)		(28	)		(39	)		(52	)		(45	)		(47	)		(19	)		(10	)		(11	)
Interest and dividend income		5			3			5			2			1			1			1			2			3			1			3
Other investment results, net of expenses (6)					15			(3	)		(86	)		5			(25	)		1						(3	)		37
Gains on divested operations (1)																	6									48
Other gains (losses) (8)																													(15	)
Miscellaneous, net		1			1						(1	)								3			(2	)		1						(1	)
Income taxes (10)		(191	)		(194	)		(136	)		(113	)		(99	)		(106	)		(103	)		(91	)		(116	)		(83	)		(75	)
Minority interests		(58	)		(43	)		(14	)		(6	)		(4	)		(4	)		(4	)		(5	)		(5	)		(3	)		(3	)

Income from continuing operations	$	223		$	301		$	268		$	186		$	136		$	162		$	143		$	129		$	155		$	126		$	93

Per Share Data
Income from continuing operations	$	1.35		$	1.82		$	1.65		$	1.15		$	.85		$	1.02		$	.91		$	.79		$	.95		$	.78		$	.58

Cash dividends		.43			.39			.30			.30			.30			.28			.28			.27			.26			.26			.25
Market value of proceeds from Cable Transaction (11)																													9.92
Market Value of Common Shares at December 31
Per share	$	48.02		$	48.28		$	47.07		$	38.48		$	33.00		$	31.44		$	22.41		$	24.88		$	24.22		$	17.50		$	19.69
Total		7,859			7,879			7,622			6,159			5,227			4,951			3,502			3,908			3,906			2,827			3,153

Certain amounts may not foot since each is rounded independently.

As a result of the two-for-one stock split authorized and distributed in the third quarter 2004, all share and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

F-2

Notes to Selected Financial Data

Eleven-Year Financial Highlights

(in millions)


	2005 (1)			2004 (1)			2003 (1)			2002 (1)			2001 (1)			2000 (1)			1999 (1)			1998 (1)			1997 (1)			1996 (1)			1995 (1)
Cash Flow Statement Data (11)
Net cash provided by continuing operations	$	418		$	385		$	320		$	208		$	204		$	254		$	191		$	236		$	190		$	175		$	111
Investing activity:
Capital expenditures		(72	)		(77	)		(89	)		(88	)		(68	)		(75	)		(80	)		(67	)		(57	)		(53	)		(57	)
Business acquisitions and investments		(547	)		(320	)		(5	)		(118	)		(102	)		(139	)		(70	)		(29	)		(745	)		(128	)		(12	)
Other (investing)/divesting activity, net		13			12			7			15			16			62			33			10			31			35			(19	)
Financing activity:
Increase (decrease) in long-term debt, net		294			24			(216	)		1			9			(54	)		(1	)		(4	)		651			41			(30	)
Dividends paid		(111	)		(65	)		(50	)		(51	)		(51	)		(47	)		(47	)		(47	)		(46	)		(45	)		(43	)
Common stock issued (retired)		(37	)											(22	)		(5	)		(35	)		(108	)		(26	)
Other financing activity		20			35			34			29			16			6			1			6			4			9			6
Balance Sheet Data
Total assets		4,033			3,425			3,008			2,870			2,642			2,588			2,535			2,376			2,304			1,479			1,362
Long-term debt (including current portion)		826			533			509			725			724			715			769			771			773			122			81
Shareholders’ equity		2,287			2,096			1,823			1,515			1,352			1,278			1,164			1,070			1,050			945			1,194

Note: Certain amounts may not foot since each is rounded independently.

As used herein and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the terms “Scripps,” “we,” “our,” or “us” may, depending on the context, refer to The E. W. Scripps Company, to one or more of its consolidated subsidiary companies, or to all of them taken as a whole.

The income statement and cash flow data for the eleven years ended December 31, 2005, and the balance sheet data as of the same dates have been derived from our audited consolidated financial statements. All per share amounts are presented on a diluted basis. The eleven-year financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere herein.

Operating revenues and segment profit (loss) represent the revenues and the profitability measures used to evaluate the operating performance of our business segments in accordance with Financial Accounting Standard No. (“FAS”) 131. See page F-11.

(1)

In the periods presented we acquired and divested the following:

Acquisitions

2005- Shopzilla, a Web-based product comparison shopping service. Newspapers and other publications in Tennessee, California and Colorado.

2004- Summit America, including its remaining 30% interest in Shop At Home and its five owned and operated Shop At Home affiliated broadcast television stations. The Great American Country network.

2003- An additional interest of less than one percent in our Memphis newspaper.

2002- A 70% controlling interest in the Shop At Home television-retailing network. Additional 1.0% interest in Food Network and an additional interest of less than one percent in our Evansville newspaper.

2001- Additional 4.0% interest in Food Network and an additional interest of less than one percent in our Evansville newspaper.

2000- Daily newspapers in Ft. Pierce, Florida (in exchange for our newspaper in Destin, Florida, and cash) and Henderson, Kentucky; weekly newspaper in Marco Island, Florida; and television station KMCI in Lawrence, Kansas.

1999- Additional 7.0% interest in Food Network.

1998- Independent telephone directories in Memphis, Tennessee; Kansas City, Missouri; North Palm Beach, Florida; and New Orleans, Louisiana. Additional 1.0% interest in Food Network.

1997- Daily newspapers in Abilene, Corpus Christi, Plano, San Angelo and Wichita Falls, Texas; Anderson, South Carolina; and Boulder, Colorado (in exchange for our daily newspapers in Monterey and San Luis Obispo, California); community newspapers in the Dallas, Texas, market and an approximate 56% controlling interest in Food Network.

1996- Vero Beach, Florida, daily newspaper.

Divestitures

2000- Destin, Florida, newspaper (in exchange for Ft. Pierce, Florida, newspaper) and the independent yellow page directories. The divestitures resulted in net pre-tax gains of $6.2 million, increasing income from continuing operations by $4.0 million, $.03 per share.

1998- Dallas community newspapers, including the Plano daily, and Scripps Howard Productions, our television program production operation based in Los Angeles, California. No material gain or loss was realized as proceeds approximated the book value of net assets sold.

1997- Monterey and San Luis Obispo, California, daily newspapers (in exchange for Boulder, Colorado, daily newspaper). Terminated joint operating agency (“JOA”) and ceased operations of El Paso, Texas, daily newspaper. The JOA termination and the newspaper trade resulted in pre-tax gains totaling $47.6 million, increasing income from continuing operations by $26.2 mil- lion, $.16 per share.

1995- Watsonville, California, daily newspaper. No material gain or loss was realized as proceeds approximated the book value of net assets sold.

(2)

The Denver JOA commenced operations on January 22, 2001. Our 50% share of the operating profit (loss) of the Denver JOA is reported as “Equity in earnings of JOAs and other joint ventures” in our financial statements. The related editorial costs and expenses associated with the Rocky Mountain News (“RMN”) are included in “JOA editorial costs and expenses.” Our financial statements do not include the advertising and other operating revenues of the Denver JOA, the costs to produce, distribute and market the newspapers or related depreciation. To enhance comparability of year-over-year operating results, we have removed the operating revenues of the RMN prior to the formation of the Denver JOA from our newspaper operating revenues and separately reported those revenues.

F-3

Notes to Selected Financial Data (continued)

(3)

We adopted FAS 142 - Goodwill and Other Intangible Assets effective January 1, 2002. Recorded goodwill and intangible assets with indefinite lives are no longer amortized, but instead are tested for impairment at least annually. Other intangible assets are reviewed for impairment in accordance with FAS 144. Amortization of goodwill and other intangible assets with indefinite lives, primarily FCC licenses and broadcast television station network affiliation relationships, was as follows:

2001 - $38.1 million, $28.1 million after tax, $.18 per share.

2000 - $35.8 million, $26.5 million after tax, $.17 per share.

1999 - $34.7 million, $25.7 million after tax, $.16 per share.

1998 - $35.0 million, $25.9 million after tax, $.16 per share.

1997 - $21.8 million, $17.5 million after tax, $.11 per share.

1996 - $17.3 million, $15.0 million after tax, $.09 per share.

1995 - $15.1 million, $13.5 million after tax, $.08 per share.

(4)

2004-An $11.1 million gain on the sale of our Cincinnati television station’s production facility to the City of Cincinnati increased income from continuing operations by $7.0 million, $.04 per share.

(5)

Restructuring charges include our proportionate share of JOA restructuring activities. Our proportionate share of JOA restructuring activities is included in “Equity in earnings of JOAs and other joint ventures” in our financial statements. Restructuring charges consisted of the following:

2003- A $1.8 million charge for estimated severance costs to Cincinnati Post union-represented editorial employees was recorded as a result of Gannett notifying us that the Cincinnati JOA will not be renewed when it expires on December 31, 2007. The charge reduced income from continuing operations $1.2 million, $.01 per share.

2002- The Denver JOA consolidated its office space and sold its excess real estate. The $3.9 million gain on the sale increased income from continuing operations by $2.4 million, $.01 per share.

2001- Costs of $16.1 million associated with workforce reductions, including our $5.9 million share of such costs at the Denver JOA, reduced income from continuing operations by $10.1 million, $.06 per share.

2000- Expenses of $9.5 million associated with formation of the Denver JOA reduced income from continuing operations by $6.2 million, $.04 per share.

1999- Severance payments of $1.2 million to certain television station employees and $0.8 million of costs incurred to move Food Network’s operations to a different location in Manhattan reduced income from continuing operations by $1.2 million, $.01 per share.

1996- A $4.0 million charge for our share of certain costs associated with restructuring portions of the distribution system of the Cincinnati JOA reduced income from continuing operations by $2.6 million, $.02 per share.

(6)

Other investment results include i) gains and losses from the sale or write-down of investments and ii) accrued incentive compensation and other expenses associated with the management of the Scripps Ventures investment portfolios. Investment results include the following:

2004- Net realized gains of $14.7 million. Net investment results increased income from continuing operations by $9.5 million, $.06 per share.

2003- Net realized losses of $3.2 million. Net investment results decreased income from continuing operations by $2.1 million, $.01 per share.

2002- Net realized losses of $79.7 million. Charges associated with winding down the Scripps Ventures investment funds were $3.6 million. Net investment results decreased income from continuing operations by $55.6 million, $.34 per share.

2001- Net realized losses of $2.9 million. Accrued incentive compensation was decreased $11.5 million, to zero, in connection with the decline in value of the Scripps Ventures I investment portfolio. Net investment results increased income from continuing operations by $3.8 million, $.02 per share.

2000- Net realized losses of $17.5 million. Accrued incentive compensation was increased $4.5 million, to $11.5 million. Net investment results reduced income from continuing operations by $15.8 million, $.10 per share.

1999- Net realized gains of $8.6 million. Accrued incentive compensation was increased $7.0 million, to $7.0 million. Net investment results increased income from continuing operations by $0.4 million, $.00 per share.

1997- Net realized losses of $2.7 million. Net investment results reduced income from continuing operations by $1.7 million, $.01 per share.

1996- Net realized gains of $37.0 million. Net investment results increased income from continuing operations by $24.3 million, $.15 per share.

(7)

2005- As a result of our annual FAS 142 impairment test, a non-cash charge of $103.1 million, including $67.3 million of nondeductible goodwill, was recorded to reduce the carrying value of our Shop At Home segment’s goodwill and intangible assets to their fair values. The charge decreased income from continuing operations by $90.6 million, $.55 per share.

(8)

1996- A $15.5 million contribution of appreciated Time Warner stock to a charitable foundation decreased income from continuing operations by $5.2 million, $.03 per share.

(9)

2005-Plans to consolidate the Denver Newspaper Agency’s (“DNA”) production facilities will result in certain assets of the existing facilities being retired earlier than previously estimated. The reduction in these assets’ estimated useful lives increased DNA’s depreciation expense and decreased our equity in earnings from JOAs by $20.4 million. Income from continuing operations was decreased by $12.6 million, $.08 per share.

(10)

The provision for income taxes includes the following items which affect the comparability of the year-over-year effective income tax rate:

2003- Changes in the estimated tax liability for prior years and our estimate of unrealizable state net operating loss carryforwards reduced the tax provision, increasing income from continuing operations by $27.1 million, $.17 per share.

2002- A change in the estimated tax liability for prior years reduced the tax provision, increasing income from continuing operations by $9.8 million, $.06 per share.

2000- A change in the estimated tax liability for prior years reduced the tax provision, increasing income from continuing operations by $7.2 million, $.05 per share.

(11)

The eleven-year summary of operations excludes the operating results of the following entities and the gains on their divestiture as they are accounted for as discontinued operations:

2005- The Birmingham joint operating agreement was terminated and we ceased operation of our Birmingham Post-Herald newspaper. We received cash consideration of approximately $40.8 million from the termination of the JOA and sale of certain of the Birmingham newspapers’ assets. Net income was increased by $24.8 million, $.15 per share.

1996- Our cable television systems (“Scripps Cable”) were acquired by Comcast Corporation (“Comcast”) on November 13, 1996, (the “Cable Transaction”) through a merger whereby our shareholders received, tax-free, a total of 93 million shares of Comcast’s Class A Special Common Stock. The aggregate market value of the Comcast shares was $1.593 billion and the net book value of Scripps Cable was $356 million, yielding an economic gain of $1.237 billion to our shareholders. This gain is not reflected in our financial statements because accounting rules required us to record the transaction at book value.

F-4

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. You should read this discussion in conjunction with those financial statements.

Forward-Looking Statements

This discussion and the information contained in the notes to the consolidated financial statements contain certain forward-looking statements that are based on our current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from the expectations expressed in the forward-looking statements. Such risks, trends and uncertainties, which in most instances are beyond our control, include changes in advertising demand and other economic conditions; consumers’ taste; newsprint prices; program costs; labor relations; technological developments; competitive pressures; interest rates; regulatory rulings; and reliance on third-party vendors for various products and services. The words “believe,” “expect,” “anticipate,” “estimate,” “intend” and similar expressions identify forward-looking statements. All forward-looking statements, which are as of the date of this filing, should be evaluated with the understanding of their inherent uncertainty. We undertake no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

Executive Overview

The E. W. Scripps company is a diverse and growing media company with interests in national cable networks, newspaper publishing, broadcast television stations, electronic commerce, interactive media and licensing and syndication. The company’s portfolio of media properties includes: Scripps Networks, with such brands as HGTV, Food Network, DIY Network, Fine Living and Great American Country; daily and community newspapers in 18 markets and the Washington-based Scripps Media Center, home to the Scripps Howard News Service; 10 broadcast television stations, including six ABC-affiliated stations, three NBC affiliates and one independent; Shop At Home, which markets a growing range of consumer goods directly to television viewers in roughly 57 million U.S. households; Shopzilla, the online comparison shopping service that carries an index of more than 30 million products from approximately 65,000 merchants; and United Media, a leading worldwide licensing and syndication company that is the home of PEANUTS, DILBERT and approximately 150 other features and comics.

The company has a long-standing tradition of creating shareholder value by following a disciplined strategy of investing in growing media businesses. Starting with newspapers nearly 130 years ago and continuing with our acquisition of Shopzilla in June, 2005, we have stayed ahead of the ongoing migration of consumers and marketing dollars to new media marketplaces. This is evidenced by the dramatic change in our company’s profile during the last ten years. In 1994, the newspaper division contributed 50 percent of the company’s consolidated revenue. In 2005 it contributed 29 percent. The cable television networks, a business that did not exist in 1993, contributed 36 percent to the company’s revenue in 2005 while Shopzilla, our newly acquired comparison shopping Internet service, contributed 4 percent.

We expect to continue our tradition of increasing shareholder value by maximizing and allocating the cash flow generated by our mature media businesses to new or existing businesses. In the past we have used cash generated by our newspapers and broadcast television stations to develop HGTV, DIY and Fine Living and to acquire Food Network, Shop At Home, GAC and Shopzilla. The continued expansion of Scripps Networks, the support and development of Shopzilla’s rapid growth potential, investment in new and growing media businesses and maximizing Shop At Home’s value for our shareholders are the company’s top strategic priorities.

Scripps Networks is in a period of sustained growth. The Networks have successfully monetized ratings and viewership gains, especially at its two more established networks HGTV and Food Network. The appeal of our new programming has resonated with viewers and has resulted in an increasing number of younger viewers turning to our flagship networks. Primetime viewership during the fourth quarter of 2005 among adults 25-54 rose 16 percent at Food Network and was up 13 percent at HGTV. Our networks have also contributed to our growing status as one of the country’s leading Internet companies. The number of people visiting our network Web sites was up 15 percent for the quarter, demonstrating the appeal of our brands and the success we have had targeting consumers. We also have emerged as a leader in providing content that is specifically formatted for the growing number of video-on-demand and broadband services. In 2005, we launched our newest broadband channel — HGTV KitchenDesign. The channel launched in December with more than 200 videos taken directly from our extensive programming archives at Scripps Networks. We expect to launch similar broadband channels that will dig deep into such lifestyle topics as gardening, healthy eating and crafts. Top priorities at Networks are the ratings growth at HGTV and Food, the programming and distribution of our emerging networks, developing new revenue streams for our network brands such as product licensing and retail sales, and the growth of interactive revenue.

During the second quarter of 2005, we completed the acquisition of Shopzilla. Shopzilla operates a product comparison shopping service that helps consumers find products offered for sale on the Web by online retailers. Shopzilla aggregates and organizes information on millions of products from thousands of retailers. Shopzilla also operates BizRate, a popular Web-based consumer feedback network which collects millions of consumer reviews of stores and products each year. The acquisition enables us to capitalize on the rapid growth and rising profitability of specialized Internet search businesses and expands our electronic media platform. On a pro-forma basis, Shopzilla’s revenues over the second half of 2005 have more than doubled compared with the second half of 2004 due in part to Shopzilla’s increasing popularity with online shoppers.

F-5

We also have begun leveraging the cross-promotional power of all of our media businesses by driving traffic to Shopzilla via links on virtually all of our Web sites. In addition, our lifestyle networks and TV stations promoted Shopzilla throughout the holiday shopping season; and our newspapers ran ads and created a Shopzilla-branded, Smart Shopper column.

Recurring operating losses and a longer than expected path to profitability at Shop At Home resulted in a $103.1 million write-down of goodwill and other intangible assets in 2005. While we have made progress in improving the quality and variety of products that are offered to home shoppers and have continued to build the business through the Internet, we have encountered challenges in gaining affordable access to permanent, high quality cable distribution for the network. Accordingly, we are undertaking a deliberate and careful assessment of strategic alternatives for Shop At Home. While we believe there is still opportunity at Shop At Home, we are carefully assessing the capital decisions that may have to be made to maximize the value of Shop At Home for the benefit of our shareholders.

Our shareholders also continue to benefit from our local media businesses. Our daily and community newspapers and broadcast television stations are the foundation for our successful growth strategy.

At our newspapers, we are continuing efforts to strengthen the competitive position of our newspapers print and online businesses. We plan to grow the print business by expanding into surrounding markets and launching non-traditional and non-daily products within our local markets. We believe our online businesses will generate higher growth rates than our traditional print business and as a result are focusing heavily in this area. These local Web sites place a heavy emphasis on interactive, community-based content as well as live news updates. In 2005, along with MediaNews Group, our joint operating partner in Denver, we decided to consolidate newspaper production operations from two plants into a single facility. The consolidation of facilities seeks to reduce costs and increase efficiencies for the production of both newspapers.

Priorities at our broadcast television stations include concentrating on the branding of our local ABC and NBC affiliates, emphasizing local news and building out non-traditional revenue opportunities that target new advertisers. Improved ratings at ABC in 2005 and the outlook for 2006 bode well not only for revenue at our ABC stations from popular shows, but also for the lead-in they provide to late news. At the same time, Nielsen introduced its Local People Meter (“LPM”) technology and methodology to the Detroit market starting in 2006. LPM’s have reported less viewing to network affiliated stations in other markets, so we are closely monitoring the impact this technology has on our ratings and our revenue in Detroit. To date in 2006, the impact has been minimal. Political advertising is expected to increase our revenues in 2006. The Olympics and the return of the Super Bowl to ABC in 2006 should help boost revenue. Revenue and profits were expectedly lower due to the absence of political advertising in 2005.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make a variety of decisions which affect reported amounts and related disclosures, including the selection of appropriate accounting principles and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience, actuarial studies and other assumptions. We are committed to preparing financial statements incorporating accounting principles, assumptions and estimates that promote the representational faithfulness, verifiability, neutrality and transparency of the accounting information included in the financial statements.

Note 1 to the Consolidated Financial Statements describes the significant accounting policies we have selected for use in the preparation of our financial statements and related disclosures. We believe the following to be the most critical accounting policies, estimates and assumptions affecting our reported amounts and related disclosures.

Network Affiliate Fees – Cable and satellite television systems generally pay a per-subscriber fee (“network affiliate fees”) for the right to distribute our programming under the terms of long-term distribution contracts. Network affiliate fees are reported net of volume discounts earned by cable and satellite television system operators and net of incentive costs offered to system operators in exchange for initial long-term distribution contracts. Such incentives may include an initial period in which the payment of network affiliate fees by the system is waived (“free period”), cash payments (“network launch incentives”), or both. We recognize network affiliate fees as revenue over the terms of the contracts, including any free periods. Network launch incentives are capitalized as assets upon launch of our programming on the cable or satellite television system and are then amortized against network affiliate fees based upon the ratio of each period’s revenue to expected total revenue over the terms of the contracts.

The amount of network affiliate fees due to us, net of applicable discounts, are reported to us by cable and satellite television systems. Such information is generally not received until substantially after the close of the reporting period. Therefore, reported network affiliate fee revenues are based upon our estimates of the number of subscribers receiving our programming and the amount of volume-based discounts each cable and satellite television provider is entitled to receive. In addition, cable television systems acquired by a multiple system operator (“MSO”) may carry our programming under contracts with different rates, discounts or other terms than the MSO. The MSO may have the right to continue to apply the contract terms of the acquired system, to apply its contract term to the acquired system, or to apply the contract terms of the acquired systems to all of its systems. Agreements with cable television systems also typically permit the system to carry our programming while we negotiate volume discounts, rebates or other incentives, requiring us to estimate such amounts. We adjust the recorded amounts and our estimate of any remaining unreported periods based upon the actual amounts of network affiliate fees received.

F-6

Acquisitions – Financial Accounting Standards No. (“FAS”) 141 – Business Combinations requires assets and acquired liabilities assumed in a business combination to be recorded at fair value. Fair values are generally determined by independent appraisals using comparisons to market transactions and present value techniques. The use of a discounted cash flow technique requires significant judgments with respect to expected cash flows to be derived from the assets, the estimated period of time the assets will produce those cash flows and the selections of an appropriate discount rate. Changes in such estimates could change the amounts allocated to individual identifiable assets, the lives over which the assigned values are amortized and the amounts allocated to goodwill. While we believe our assumptions are reasonable, if different assumptions were made, the purchase price allocation and the estimated useful lives of amortizable assets could differ substantially from the reported amounts.

F-7

Goodwill and Other Indefinite-Lived Intangible Assets –FAS 142 - Goodwill and Other Intangible Assets, requires that goodwill for each reporting unit be tested for impairment on an annual basis or when events occur or circumstances change that would indicate the fair value of a reporting unit is below its carrying value. For purposes of performing the impairment test for goodwill, our reporting units are each of our national television networks, newspapers, broadcast TV, Shop At Home and Shopzilla. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value.

FAS 142 also requires us to compare the fair value of each indefinite-lived intangible asset to its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized.

To determine the fair value of our reporting units and indefinite-lived intangible assets, we generally use market multiples, appraised values and present value techniques (discounted cash flow). The use of a discounted cash flow technique requires significant judgments including the application of a discount rate, estimation of future cash flows, long-term rates of growth for our businesses, and the useful life over which cash flows will occur. Changes in our estimates and projections or changes in our established reporting units could materially affect the determination of fair value for each reporting unit.

Upon completing our impairment test in the fourth quarter of 2005, we determined that the carrying value of the Shop At Home business segment exceeded its fair value. Accordingly, our 2005 results include a write-down of goodwill and intangible assets totaling $103.1 million. While we believe the estimates and judgments used in determining Shop At Home’s fair values were appropriate, different assumptions with respect to future cash flows, long-term growth rates and discount rates could produce a different estimate of fair value. For example, a 1.0% change in the discount rate combined with a 0.25% change in the long-term growth rate would result in an approximate $20 million change in the estimated fair value of Shop At Home.

For our other reporting units with goodwill and intangible assets, no impairments of assets were identified. In addition, except for the recently acquired GAC and Shopzilla businesses, the estimated fair values of our reporting units substantially exceed their recorded carrying values.

Income Taxes – Accounting for income taxes is sensitive to interpretation of various laws and regulations. As a matter of course, our consolidated federal income tax returns and various state income tax returns are regularly audited by federal and state authorities. While we believe the positions we take on our tax returns comply with applicable laws, these audits may result in proposed adjustments that challenge the positions taken on our tax returns. We regularly review the adjustments proposed by federal and state tax authorities to our tax returns and the positions taken on tax returns that are not currently under examination. We record a provision for additional taxes that we believe are probable of payment. However, the ultimate resolution of these issues may differ from the amounts currently estimated, in which case an adjustment would be made to the tax provisions in that period.

In 2003, we reached agreement with the IRS on certain proposed adjustments to our 1996 through 2001 consolidated federal income tax returns. In addition, several open state tax years were closed without audit in 2003. As a result of reaching agreement on the proposed adjustment with the IRS and the closing of open state tax years, we reduced our provision for open tax years by $21.0 million in 2003. No significant adjustments were recorded to our tax provision in 2005 or 2004. The audit of our 1996 through 2001 federal income tax returns will remain open until two remaining issues are settled with the IRS. If the IRS accepts our positions on those issues, we will reduce our provision for income taxes by $2.0 million in the period those positions are accepted.

We have deferred tax assets primarily related to state net operating loss carryforwards and capital loss carryforwards. We record a tax valuation allowance to reduce such deferred tax assets to the amount that is more likely than not to be realized. We consider ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event we determine the deferred tax asset we would realize would be greater or less than the net amount recorded, an adjustment would be made to the tax provision in that period. In 2003, we reduced our estimates of state operating loss carryforwards that would not be realized by $6.1 million based upon the closing of several open state tax years and our projections of taxable income in the carryforward periods.

Pension Plans – We sponsor various noncontributory defined benefit pension plans covering substantially all full-time employees. Pension expense for those plans was $18.5 million in 2005, $23.1 million in 2004, and $25.4 million in 2003.

The measurement of our pension obligations and related expense is dependent on a variety of estimates, including: discount rates; expected long-term rate of return on plan assets; expected increase in compensation levels; and employee turnover, mortality and retirement ages. We review these assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when appropriate. In accordance with accounting principles generally accepted in the United States of America, the effects of these modifications are recorded currently or amortized over future periods. We consider the most critical of our pension estimates to be our discount rate and the expected long-term rate of return on plan assets.

The discount rate used to determine our future pension obligations is based upon a dedicated bond portfolio approach that includes securities rated Aa or better with maturities matching our expected benefit payments from the plans. The rate is determined each year at the plan measurement date and affects the succeeding year’s pension cost. At December 31, 2005, the discount rate was 5.75% as compared with 6.00% at December 31, 2004. Discount rates can change from year to year based on economic conditions that impact corporate bond yields. A decrease in the discount rate increases pension expense. A 0.5% change in the discount rate as of December 31, 2005, to either 5.25% or 6.25%, would increase or decrease our pension obligations as of December 31, 2005, by approximately $38.8 million and increase or decrease 2005 pension expense by approximately $5.0 million.

F-8

The expected long-term rate of return on plan assets is based primarily upon the target asset allocation for plan assets and capital markets forecasts for each asset class employed. Our expected rate of return on plan assets also considers our historical compound rate of return on plan assets for 10 and 15 year periods. At December 31, 2005, the expected long-term rate of return on plan assets was 8.25%. For the ten year period ended December 31, 2005, our actual compounded rate of return was 9.3%. A decrease in the expected rate of return on plan assets increases pension expense. A 0.5% change in the expected long-term rate of return on plan assets, to either 8.75% or 7.75%, would increase or decrease our 2005 pension expense by approximately $2.0 million.

We had cumulative unrecognized actuarial losses for our pension plans of $103 million at December 31, 2005. Unrealized actuarial gains and losses result from deferred recognition of differences between our actuarial assumptions and actual results. In 2005, we had an actuarial loss of $4.1 million, primarily due to the change in the discount rate. The cumulative unrecognized net loss is primarily due to declines in corporate bond yields and the unfavorable performance of the equity markets between 2000 and 2002. Amortization of unrecognized actuarial gains or losses is recognized in pension expense whenever the cumulative gain or loss is 10% or more of the greater of the pension obligation or the market-related fair value of plan assets. The gain or loss is amortized over the average remaining service period of the employees. Based on our current assumptions, we anticipate that 2006 pension expense will include $6.0 million in amortization of unrecognized actuarial losses.

The cost of plan amendments (“prior service cost”) is amortized on a straight-line basis over the average remaining service period of the employees.

Results of Operations

The trends and underlying economic conditions affecting the operating performance and future prospects differ for each of our business segments. Accordingly, we believe the following discussion of our consolidated results of operations should be read in conjunction with the discussion of the operating performance of our business segments that follows on pages F-11 through F-18.

In 2005, we reached agreement with Advance Publications, Inc., the publisher of the Birmingham News (“News”), to terminate the Birmingham joint operating agreement between the News and our Birmingham Post-Herald newspaper and sold certain assets to the News. We received cash consideration of approximately $40.8 million from these transactions. Net income was increased by $24.8 million, $.15 per share. In accordance with the provisions of FAS 144 – Accounting for the Impairment or Disposal of Long-Lived Assets, the results of the Birmingham Post-Herald have been treated as a discontinued operation for all periods presented within our results of operations.

Consolidated Results of Continuing Operations – Consolidated results of continuing operations were as follows:


	For the years ended December 31,
( in thousands )	2005			Change		2004			Change		2003
Operating revenues	$	2,513,890		16.0	%	$	2,167,443		15.6	%	$	1,874,778
Costs and expenses		(1,875,329	)	(14.6	)%		(1,636,124	)	(13.9	)%		(1,436,978	)
Depreciation and amortization of intangibles		(91,204	)	(32.7	)%		(68,721	)	(3.5	)%		(66,385	)
Losses on disposal of PP&E		(1,725	)	38.9	%		(2,823	)	(69.0	)%		(1,670	)
Write-down of Shop At Home goodwill and intangible assets		(103,124	)
Hurricane recoveries (losses), net		983					(2,654	)
Gain on sale of production facility							11,148
Restructuring charges												(1,847	)

Operating income		443,491		(5.3	)%		468,269		27.3	%		367,898
Interest expense		(38,791	)	(25.6	)%		(30,878	)	2.3	%		(31,593	)
Equity in earnings of JOAs and other joint ventures		61,926		(24.0	)%		81,453		0.7	%		80,883
Interest and dividend income		4,767		41.5	%		3,369		(33.4	)%		5,062
Other investment results, net of expenses							14,674					(3,200	)
Miscellaneous, net		978		4.7	%		934					(497	)

Income from continuing operations before income taxes and minority interests		472,371					537,821					418,553
Provision for income taxes		191,294					193,969					136,184

Income from continuing operations before minority interests		281,077					343,852					282,369
Minority interests		58,467					43,069					14,273

Income from continuing operations	$	222,610		(26.0	)%	$	300,783		12.2	%	$	268,096

Income from continuing operations per diluted share of common stock	$	1.35		(25.8	)%	$	1.82		10.3	%	$	1.65

2005 compared with 2004

The increase in operating revenues was primarily due to the continued growth in advertising and network affiliate fee revenues at our national television networks and our June 2005 acquisition of Shopzilla. The growth in advertising revenues was primarily driven by increased demand for advertising time and higher advertising rates at our networks. The growth in affiliate fee revenues is attributed to scheduled rate increases, wider distribution of our networks, and the impact of reaching renewal agreements with several cable television operators during the later half of 2004. Increases in operating revenues were also attributed to increases in merchandise sales at Shop At Home and improvement in local and classified advertising sales at our newspapers. These increases in revenue were partially offset by declines in revenue at our broadcast television stations attributed to the absence of political advertising.

F-9

Costs and expenses were affected by the expanded hours of original programming and costs to promote our national networks, increases in cost of merchandise sold at Shop At Home and increased personnel and infrastructure costs incurred to support the revenue growth at Shop At Home, and the acquisition of Shopzilla. Beginning in 2006, employee costs will include approximately $22 million related to the expensing of stock options granted to employees.

Depreciation and amortization increased primarily as a result of the acquisitions of Shopzilla, Summit America, and Great American Country. In 2006, we expect depreciation and amortization will be approximately $110 million to $115 million.

In conjunction with our annual impairment test of goodwill and intangible assets, we determined that the carrying value of the Shop At Home business segment exceeded its fair value. Accordingly, our 2005 results include a write-down of goodwill and intangible assets totaling $103.1 million.

Gains on disposal of property, plant and equipment in 2004 include an $11.1 million gain on the sale of our Cincinnati television station’s production facility to the City of Cincinnati.

Certain of our Florida operations were affected by hurricanes in 2005 and 2004. During 2005, we reached agreement with insurance providers and other responsible third parties on certain of our property and business interruption claims resulting from the 2004 hurricanes and recorded insurance recoveries of $2.2 million. These insurance recoveries were partially offset by hurricane losses of $1.2 million recorded in 2005. Operating results in 2004 include asset impairment losses and restoration costs from the hurricanes totaling $2.6 million. Estimated business interruption losses from the hurricanes were $2.3 million in 2005 and $4.2 million in 2004.

We are currently in discussions with our insurance carriers regarding property and business interruption claims sustained by our newspaper operations in the 2004 hurricanes totaling $3.1 million. Property and business interruption claims for the 2005 hurricanes have not yet been filed with our insurance carriers. Recoveries of these unsettled claims will not be recorded until settlement agreements are reached with insurance providers.

Interest expense includes interest incurred on our outstanding borrowings and interest incurred on deferred compensation and other employment agreements. Interest incurred on our outstanding borrowings increased in 2005 due to higher average debt levels attributed to the Shopzilla acquisition. In connection with the June 2005 acquisition, the Company issued $150 million in 5-year notes at a rate of 4.30%. We financed the remainder of the transaction with commercial paper. The average outstanding commercial paper balance for the second half of 2005 was $260 million at an average rate of 3.73% compared with $63 million at an average rate of 1.86% for the second half of 2004. In 2006, we expect interest expense will be approximately $40 million to $45 million.

In 2005, the management committee of the Denver Newspaper Agency (“DNA”) approved plans to consolidate DNA’s newspaper production facilities. As a result, assets used in certain of the existing facilities will be retired earlier than previously estimated. The reduction in these assets’ estimated useful lives increased DNA’s 2005 depreciation expense, resulting in a $20.4 million decrease in our equity in earnings from JOAs. The increased depreciation is expected to decrease equity in earnings from JOAs by approximately $3.0 million in each remaining quarter until the second quarter of 2007.

Interest and dividend income in 2005 reflects $3.0 million of interest income due to us as a result of favorable court rulings with respect to certain disputes with the IRS. Interest and dividend income in 2004 includes $1.3 million of interest earned on the Summit America Note receivable prior to the second quarter 2004 acquisition of Summit America.

Information regarding our effective tax rate is as follows:


(in thousands)	2005			Change		2004
Income from continuing operations before income taxes and minority interests as reported	$	472,371		(12.2	)%	$	537,821
Income of pass-through entities allocated to non-controlling interests		54,431		34.6	%		40,441

Income allocated to Scripps	$	417,940		(16.0	)%	$	497,380

Provision for income taxes	$	191,294		1.4	%	$	193,969

Effective income tax rate as reported		40.5	%				36.1	%
Effective income tax rate on income allocated to Scripps		45.8	%				39.0	%

Our effective tax rate is affected by the growing profitability of Food Network. Food Network is operated pursuant to the terms of a general partnership, in which we own an approximate 70% residual interest. Income taxes on partnership income accrue to the individual partners. While the income before income tax reported in our financial statements includes all of the income before tax of the partnership, our income tax provision does not include income taxes on the portion of Food Network income that is attributable to the non-controlling interest.

The comparability of our year-over-year effective tax rate is affected by the write-off of Shop At Home non-deductible goodwill totaling $67.3 million. The impact of this write-off increased our effective tax rate by 5.0% in 2005. We expect the effective tax rate to be between 35% and 36% in 2006.

Minority interest increased year-over-year primarily due to the increased profitability of the Food Network. Food Network’s profits are allocated in proportion to each partner’s residual interests in the partnership, of which we own approximately 70%. In 2006, we expect minority interest will be about $70 million.

F-10

2004 compared with 2003

The increase in operating revenues was primarily attributed to the continued growth in advertising and network affiliate fee revenues at our national television networks, increases in merchandise sales at Shop At Home, and the return of political advertising at our broadcast television stations. The growth in advertising revenues at Scripps Networks was primarily driven by increased viewership. The growth in affiliate fee revenues at Scripps Networks is attributed to scheduled rate increases, wider distribution of our networks, and reaching renewal agreements with several cable television operators.

Costs and expenses were affected by the expanded hours of original programming and costs to promote our national networks, increases in cost of merchandise sold at Shop At Home, newsprint prices and disability and health care costs.

Depreciation and amortization increased year-over-year primarily as a result of depreciation and amortization attributed to the acquisition of Summit America and Great American Country.

Gains on disposal of property, plant and equipment in 2004 include an $11.1 million gain on the sale of our Cincinnati television station’s production facility to the City of Cincinnati.

Restructuring charges in 2003 reflect a $1.8 million charge for estimated severance costs to Cincinnati Post and Kentucky Post editorial employees as stipulated by the terms of a collective bargaining agreement. The charge was recorded as a result of Gannett notifying us that the Cincinnati JOA will not be renewed when it expires on December 31, 2007.

Operating results in 2004 were affected by the impact of hurricanes at our Florida operations. Our Florida operations sustained wind and water damage and the hurricanes interrupted operations at our affected businesses and at certain of their customers, resulting in lost revenues. Estimated asset impairment losses and restoration costs totaled $2.6 million. Business interruption losses for 2004 were estimated to be approximately $4.2 million.

Interest expense includes interest incurred on our outstanding borrowings and interest incurred on deferred compensation and other employment agreements. Interest expense decreased in 2004 as lower average debt levels offset increases in interest rates. The average balance of outstanding borrowings was $513 million in 2004 and $608 million in 2003. The weighted-average interest rate on all borrowings was 4.73% in 2004 and 4.17% in 2003.

Interest and dividend income decreased in 2004 due to the loss of income on the Summit America Note receivable that was forgiven during our second quarter acquisition of Summit America. This reduction in income was partially offset by interest income earned on federal tax refunds received in 2004.

Other investment results include net realized gains and losses on the sale of investments and investment impairments resulting from other-than-temporary declines in the fair value of investments. Other investment results in 2004 represent realized gains from the sale of certain investments, including Digital Theater Systems. Other investment results in 2003 reflect a charge for write-downs associated with declines in value of certain investments in development-stage businesses.

The effective tax rate was 36.1% in 2004 and 32.6% in 2003. The comparability of our year-over-year effective tax rate is affected by changes in estimated liabilities for open tax years and state net operating loss carryforwards that reduced our tax provision by $27.1 million in 2003. These changes in estimates reduced the effective tax rate by 6.4% in 2003. In addition, our effective income tax rate is affected by the growing profitability of Food Network and the portion of Food Network income that is attributed to the non-controlling interest. Income before income tax attributed to the non-controlling interest in Food Network was $40.4 million in 2004 and $12.7 million in 2003.

Minority interest increased year-over-year primarily due to the operating performance of Food Network. Prior to the fourth quarter of 2003, Food Network profits were allocated solely to Class A partnership interests, of which we own approximately 87%. During the fourth quarter of 2003, Food Network profits began to be allocated in proportion to each partner’s residual interests in the partnership.

Business Segment Results – As discussed in Note 17 to the Consolidated Financial Statements our chief operating decision maker (as defined by FAS 131 – Segment Reporting) evaluates the operating performance of our business segments using a measure we call segment profits. Segment profits excludes interest, income taxes, depreciation and amortization, divested operating units, restructuring activities, investment results and certain other items that are included in net income determined in accordance with accounting principles generally accepted in the United States of America.

Items excluded from segment profits generally result from decisions made in prior periods or from decisions made by corporate executives rather than the managers of the business segments. Depreciation and amortization charges are the result of decisions made in prior periods regarding the allocation of resources and are therefore excluded from the measure. Financing, tax structure and divestiture decisions are generally made by corporate executives. Excluding these items from our business segment performance measure enables us to evaluate business segment operating performance for the current period based upon current economic conditions and decisions made by the managers of those business segments in the current period.

F-11

Information regarding the operating performance of our business segments determined in accordance with FAS 131 and a reconciliation of such information to the consolidated financial statements is as follows:


	For the years ended December 31,
(in thousands)	2005			Change		2004			Change		2003
Segment operating revenues:
Scripps Networks	$	902,925		24.8	%	$	723,713		35.3	%	$	535,013

Newspapers managed solely by us		728,373		3.5	%		703,857		1.8	%		691,591
Newspapers operated pursuant to JOAs		538					207		3.5	%		200

Total newspapers		728,911		3.5	%		704,064		1.8	%		691,791
Broadcast television		317,659		(7.3	)%		342,498		12.6	%		304,162
Shop At Home		359,256		22.6	%		293,092		22.9	%		238,484
Shopzilla		99,447
Licensing and other media		105,692		1.6	%		104,076		(1.2	)%		105,328

Total operating revenues	$	2,513,890		16.0	%	$	2,167,443		15.6	%	$	1,874,778

Segment profit (loss):
Scripps Networks	$	414,095		36.1	%	$	304,358		49.0	%	$	204,263

Newspapers managed solely by us		208,389		1.7	%		204,898		(9.8	)%		227,132
Newspapers operated pursuant to JOAs		14,314		(60.4	)%		36,177		(2.3	)%		37,032

Total newspapers		222,703		(7.6	)%		241,075		(8.7	)%		264,164
Broadcast television		87,954		(18.7	)%		108,243		27.0	%		85,218
Shop At Home		(28,343	)	(29.0	)%		(21,968	)	0.5	%		(22,075	)
Shopzilla		27,980
Licensing and other media		18,998		13.3	%		16,767		(12.8	)%		19,238
Corporate		(41,917	)	(10.0	)%		(38,103	)	(18.6	)%		(32,125	)

Total segment profit		701,470		14.9	%		610,372		17.7	%		518,683
Depreciation and amortization of intangibles		(91,204	)	(32.7	)%		(68,721	)	(3.5	)%		(66,385	)
Losses on disposal of PP&E		(1,725	)	38.9	%		(2,823	)	(69.0	)%		(1,670	)
Write-down of Shop At Home goodwill and intangible assets		(103,124	)
Hurricane asset impairment losses							(254	)
Gain on sale of production facility							11,148
Restructuring charges, including share of JOA restructurings												(1,847	)
Interest expense		(38,791	)	(25.6	)%		(30,878	)	2.3	%		(31,593	)
Interest and dividend income		4,767		41.5	%		3,369					5,062
Other investment results, net of expenses							14,674					(3,200	)
Miscellaneous, net		978		4.7	%		934					(497	)

Income from continuing operations before income taxes and minority interests	$	472,371		(12.2	)%	$	537,821		28.5	%	$	418,553

Discussions of the operating performance of each of our reportable business segments begin on page F-13.

Compliance with the Sarbanes-Oxley Act contributed to the increase in corporate expenses in 2005 and 2004 compared with 2003. Corporate expenses, including the impact of expensing stock options granted to employees, are expected to be approximately $50 million to $55 million for the full year of 2006.

Segment profits include our share of the earnings of JOAs and certain other investments included in our consolidated operating results using the equity method of accounting. Newspaper segment profits include equity in earnings of JOAs and other joint ventures. Scripps Networks segment profits include equity in earnings of FOX Sports Net South and other joint ventures.

A reconciliation of equity in earnings of JOAs and other joint ventures included in segment profits to the amounts reported in our Consolidated Statements of Income is as follows:


	For the years ended December 31,
(in thousands)	2005		Change		2004			Change		2003
Scripps Networks:
Equity in earnings of joint ventures	$	11,120	7.7	%	$	10,329		10.7	%	$	9,333
Newspapers:
Equity in earnings of JOAs		50,601	(29.0	)%		71,230		(0.5	)%		71,611
Equity in earnings (loss) of joint ventures		205				(106	)	(73.8	)%		(61	)

Total equity in earnings of JOAs and other joint ventures	$	61,926	(24.0	)%	$	81,453		0.7	%	$	80,883

Certain items required to reconcile segment profitability to consolidated results of operations determined in accordance with accounting principles generally accepted in the United States of America are attributed to particular business segments. Significant reconciling items attributable to each business segment are as follows:


	For the years ended December 31,
(in thousands)	2005			Change		2004			Change		2003
Depreciation and amortization:
Scripps Networks	$	17,370		(38.1	)%	$	12,575		(3.0	)%	$	12,203


Newspapers managed solely by us		21,721		0.3	%		21,778		5.7	%		23,106
Newspapers operated pursuant to JOAs		1,495		(3.0	)%		1,451		3.8	%		1,509

Total newspapers		23,216		0.1	%		23,229		5.6	%		24,615
Broadcast television		19,906		(1.9	)%		19,532		(0.6	)%		19,425
Shop At Home		8,826		16.2	%		10,534					7,341
Shopzilla		18,651
Licensing and other media		1,035		(55.2	)%		667		(6.9	)%		624
Corporate		2,200		(0.7	)%		2,184		(0.3	)%		2,177

Total	$	91,204		(32.7	)%	$	68,721		(3.5	)%	$	66,385

Asset write-downs and gains (losses) on disposal of PP&E:
Scripps Networks	$	(34	)								$	(512	)


Newspapers managed solely by us		(255	)	(75.5	)%	$	(1,040	)				(454	)
Newspapers operated pursuant to JOAs							2					(27	)

Total newspapers		(255	)	(75.4	)%		(1,038	)				(481	)
Broadcast television		(293	)				9,677					(569	)
Shop At Home		(104,247	)				(314	)				(13	)
Licensing and other media		(2	)									(6	)
Corporate		(18	)									(89	)

Total	$	(104,849	)			$	8,325				$	(1,670	)


JOA restructuring charges											$	1,847

Interest and dividend income:
Newspapers managed solely by us	$	289		15.1	%	$	251		(26.2	)%	$	340
Newspapers operated pursuant to JOAs		18		(21.7	)%		23		9.5	%		21

Total newspapers		307		12.0	%		274		(24.1	)%		361

Summit America note							1,306		(71.6	)%		4,591
Licensing and other media		631					26					4
Corporate		3,801					1,735					59
Other		28					28		(40.4	)%		47

Total	$	4,767		41.5	%	$	3,369		33.4	%	$	5,062

F-12

Scripps Networks – Scripps Networks includes our national television networks: Home & Garden Television (“HGTV”), Food Network, DIY Network (“DIY”), Fine Living, and Great American Country (“GAC”). Programming from our networks can be viewed on demand (“VOD”) on cable television systems in about 84 markets across the United States. Scripps Networks also includes our online channels, HGTVPro.com and HGTVKitchenDesign, and our 12% interest in FOX Sports Net South, a regional television network. Our networks also operate internationally through licensing agreements and joint ventures with foreign entities.

We launched HGTV in 1994. Food Network launched in 1993, and we acquired our controlling interest in 1997. We launched DIY in 1999 and Fine Living in 2002. We acquired GAC on November 17, 2004. We have used a similar strategy in developing each of our networks. Our initial focus is to gain distribution on cable and satellite television systems. We may offer incentives in the form of cash payments or an initial period in which payment of affiliate fees by the systems is waived in exchange for long-term distribution contracts. We create new and original programming and undertake promotion and marketing campaigns designed to increase viewer awareness. We expect to incur operating losses until network distribution and audience size are sufficient to attract national advertisers. As distribution of the network increases, we make additional investments in the quality and variety of programming and increase the number of hours of original programming offered on the network. Such investments are expected to result in increases in viewership, yielding higher advertising revenues.

While we have employed similar development strategies with each of our networks, there can be no assurance DIY, Fine Living and GAC will achieve operating performances similar to HGTV and Food Network. There has been considerable consolidation among cable and satellite television operators, with the eight largest providing services to approximately 95% of the homes that receive cable and satellite television programming. At the same time, there has been an expansion in the number of programming services seeking distribution on those systems, with the number of networks more than doubling since 1996.

The networks utilize common facilities and certain sales, operational and support services are shared by the networks. Expenses directly attributed to the operations of a network are charged directly to that network. The costs of shared facilities and services are not allocated to the individual networks for segment reporting purposes.

Financial information for Scripps Networks is as follows:


	For the years ended December 31,
(in thousands)	2005			Change		2004			Change		2003
Operating revenues:
HGTV	$	453,171		20.2	%	$	376,905		26.1	%	$	298,998
Food Network		357,043		21.0	%		294,957		42.3	%		207,260
DIY		44,577		41.5	%		31,504		55.2	%		20,305
Fine Living		26,934		50.0	%		17,953					8,308
GAC		15,502					1,650
Other		5,698					744					142

Total segment operating revenues	$	902,925		24.8	%	$	723,713		35.3	%	$	535,013

Contribution to segment profit (loss):
HGTV	$	298,535		31.1	%	$	227,647		28.8	%	$	176,719
Food Network		213,348		30.0	%		164,174		48.1	%		110,832
DIY		6,814		14.8	%		5,936					2,318
Fine Living		(437	)	95.5	%		(9,701	)	33.8	%		(14,657	)
GAC		(807	)				(7	)
Unallocated costs and other		(103,358	)	(23.5	)%		(83,691	)	(18.0	)%		(70,949	)

Total segment profit	$	414,095		36.1	%	$	304,358		49.0	%	$	204,263

Homes reached in December (1):
HGTV		88,900		1.7	%		87,400		3.4	%		84,500
Food Network		88,000		2.4	%		85,900		3.5	%		83,000
DIY		34,500		11.3	%		31,000		19.2	%		26,000
Fine Living		29,000		16.0	%		25,000		25.0	%		20,000
GAC		39,400		7.1	%		36,800		37.8	%		26,700

(1)

Approximately 94 million homes in the United States receive cable or satellite television. Homes reached are according to the Nielsen Homevideo Index (“Nielsen”), with the exception of DIY and Fine Living which are not yet rated by Nielsen and represent comparable amounts estimated by us.

Advertising and network affiliate fees provide substantially all of each network’s operating revenues and employee costs and programming costs are the primary expenses. The trends and underlying economic conditions affecting each of our networks are substantially the same as those affecting all of our networks, primarily the demand for national advertising.

F-13

Operating results for Scripps Networks were as follows:


	For the years ended December 31,
(in thousands)	2005			Change		2004			Change		2003
Segment operating revenues:
Advertising	$	726,602		28.1	%	$	567,426		30.7	%	$	434,175
Network affiliate fees, net		167,012		15.1	%		145,163		56.2	%		92,907
Other		9,311		(16.3	)%		11,124		40.3	%		7,931

Total segment operating revenues		902,925		24.8	%		723,713		35.3	%		535,013

Segment costs and expenses:
Employee compensation and benefits		114,389		(19.3	)%		95,917		(9.8	)%		87,346
Programs and program licenses		173,823		(5.5	)%		164,700		(23.2	)%		133,691
Other segment costs and expenses		211,465		(25.1	)%		169,067		(42.0	)%		119,046

Total segment costs and expenses		499,677		(16.3	)%		429,684		(26.3	)%		340,083

Hurricane recoveries (losses), net		(273	)

Segment profit before joint ventures		402,975		37.1	%		294,029		50.8	%		194,930
Equity in earnings of joint ventures		11,120		7.7	%		10,329		10.7	%		9,333

Segment profit	$	414,095		36.1	%	$	304,358		49.0	%	$	204,263

Supplemental Information:

Billed network affiliate fees	$	187,528				$	163,743				$	103,749

Network launch incentive payments		19,732					34,365					25,105

Payments for programming (greater) less than program cost amortization		(42,991	)				(21,560	)				(34,314	)

Depreciation and amortization		17,370					12,575					12,203

Capital expenditures		22,635					21,972					9,364

Business acquisitions and other additions to long-lived assets		209,335					332,060					199,303

Advertising revenues increased primarily due to an increased demand for advertising time and higher advertising rates at our networks. The appeal of new programming has positively impacted revenue by enabling us to increase the average net cost per spot charged on upfront and scatter units sold. In addition, higher revenues have resulted from increasing the amount of higher priced upfront and scatter units sold in lieu of lower priced direct response units.

The increase in network affiliate fees over each of the last three years reflects both scheduled rate increases and wider distribution of the networks. The increase in network affiliate fees for 2004 also reflects the fact that the charter distribution agreements for Food Network provided the programming to cable television systems without charge for the initial 10-year term of the agreements. Charter distribution agreements with cable and satellite television systems distributing our programming to approximately 25 million homes expired at the end of 2003. Distribution agreements with cable and satellite television systems currently in force require the payment of affiliate fees over the terms of the agreements.

We expect total operating revenues at Scripps Networks to increase approximately 18% to 20% for the full year of 2006.

Employee compensation and benefits increased primarily due to the hiring of additional employees to support the growth of Scripps Networks.

Programs and program licenses and other costs and expenses increased due to the improved quality and variety of programming, expanded programming hours and continued efforts to promote the programming in order to attract a larger audience.

Our continued investment in programming and consumer marketing to increase viewership at all of our networks is expected to increase total segment expenses approximately 14% to 16% for the full year of 2006.

Capital expenditures in 2005 include the costs of upgrading our broadcast operations. Capital expenditures in 2004 include costs for the new Food Network studio in New York.

Newspapers – We operate daily and community newspapers in 18 markets in the United States. Our newspapers earn revenue primarily from the sale of advertising space to local and national advertisers and from the sale of newspapers to readers. Three of our newspapers are operated pursuant to the terms of joint operating agreements. Each of those newspapers maintains an independent editorial operation and receives a share of the operating profits of the combined newspapers operations.

Newspapers managed solely by us – The newspapers managed solely by us operate in mid-size markets, focusing on news coverage within their local markets. Advertising and circulation revenues provide substantially all of each newspaper’s operating revenues and employee and newsprint costs are the primary expenses at each newspaper. Declines in circulation of daily newspapers have resulted in a loss of advertising market share throughout the newspaper industry. Further declines in circulation in our newspaper markets could adversely affect our newspapers.

The trends and underlying economic conditions affecting the operating performance of any of our newspapers are substantially the same as those affecting all of our newspapers. Our newspaper operating performance is most affected by newsprint prices and economic conditions, particularly within the retail, labor, housing and auto markets. While an individual newspaper may perform better or worse than our newspaper group as a whole due to specific conditions at the newspaper or within its local economy, we do not expect such near-term variances to significantly affect the overall long-term operating performance of the newspaper segment.

F-14

Operating results for newspapers managed solely by us were as follows:


	For the years ended December 31,
(in thousands)	2005			Change		2004			Change		2003
Segment operating revenues:
Local	$	168,951		1.8	%	$	165,980		(0.8	)%	$	167,343
Classified		226,767		5.6	%		214,775		2.4	%		209,724
National		42,762		1.9	%		41,956		7.0	%		39,225
Preprint and other		145,496		8.4	%		134,175		6.6	%		125,815

Newspaper advertising		583,976		4.9	%		556,886		2.7	%		542,107
Circulation		128,168		(2.0	)%		130,790		(3.5	)%		135,503
Other		16,229		0.3	%		16,181		15.7	%		13,981

Total operating revenues		728,373		3.5	%		703,857		1.8	%		691,591

Segment costs and expenses:
Employee compensation and benefits		271,497		(2.6	)%		264,547		(5.4	)%		251,029
Newsprint and ink		83,949		(5.6	)%		79,505		(9.2	)%		72,803
Other segment costs and expenses		164,432		(6.9	)%		153,812		(9.4	)%		140,566

Total costs and expenses		519,878		(4.4	)%		497,864		(7.2	)%		464,398

Hurricane recoveries (losses), net		(311	)				(989	)

Contribution to segment profit before joint ventures		208,184		1.6	%		205,004		(9.8	)%		227,193
Equity in earnings (loss) of joint ventures		205					(106	)	(73.8	)%		(61	)

Contribution to segment profit	$	208,389		1.7	%	$	204,898		(9.8	)%	$	227,132

Supplemental Information:

Depreciation and amortization	$	21,721				$	21,778				$	23,106

Capital expenditures		15,421					26,444					37,550

Business acquisitions and other additions to long-lived assets		9,338					80					3,904

Our 2005 and 2004 operating results were affected by the impact of hurricanes at our Florida operations. Our Florida operations sustained wind and water damage and the hurricanes interrupted operations at our affected businesses and at certain of our customers’ businesses, resulting in lost revenues. Advertising revenues at our other newspapers increased 2% in 2005 and 2004. The increase in advertising revenues was primarily due to increases in classified advertising and preprint and other advertising, particularly online revenue. The increase in classified advertising was primarily attributed to continued improvement in help wanted and real estate advertising. Increases in these categories helped offset declines in automotive advertising.

Increases in preprint and other advertising reflect the development of new print and electronic products and services. These products include niche publications such as community newspapers, lifestyle magazines, publications focused on the classified advertising categories of real estate, employment and auto, and other publications aimed at younger readers. Additionally, our Internet sites had advertising revenues of $23.0 million in 2005 compared with $14.9 million in 2004 and $11.5 million in 2003. Higher advertising rates, resulting from increases in the audience visiting our Web sites as well as an increase in our online product offerings contributed to the increase in online revenues. We expect continued growth in advertising on our Internet sites as we continue to leverage our local franchises in help wanted, automotive and real estate advertising.

Other operating revenues represent revenue earned on ancillary services offered by our newspapers. The increase in 2004 compared with 2003 is primarily attributed to increases in commercial printing revenues.

We expect total operating revenues at Newspapers to increase approximately 4% to 6% for the full year of 2006. We will continue our strategy of developing new print and online products to strengthen local advertising share. Growth in online revenue is expected to account for nearly one quarter of the year-over-year increase in total revenues.

An increase in health care and long-term disability costs of $4.8 million contributed to the increase in employee compensation and benefit expenses in 2004 compared with 2003.

Newsprint and ink costs increased primarily due to increases in newsprint prices. The average price of newsprint year-over-year increased 11% in 2005 and 10% in 2004. The increase in 2005 was partially offset by a 4% decrease in newsprint consumption.

Increases in other segment costs and expenses reflect costs associated with the development of new ancillary products and services.

Total newspaper costs and expenses, including the impact of expensing stock options granted to employees, are expected to increase 7% to 9% for the full year of 2006. The overall number of newspaper employees is expected to increase slightly as we shift resources to advertising sales and Internet-based businesses. We also expect to invest in our Florida markets to capitalize on the growth opportunities in those markets.

Capital expenditures in 2004 and 2003 include costs for the construction of a new production facility for our Treasure Coast, Florida newspapers.

Newspapers operated under Joint Operating Agreements: Three of our newspapers are operated pursuant to the terms of joint operating agreements (“JOAs”). See page 7 for information regarding the markets in which we publish a newspaper pursuant to the terms of a JOA.

The operating profits earned from the combined operations of the two newspapers in a JOA are distributed to the partners in accordance with the terms of the joint operating agreement. We receive a 50% share of the Denver JOA profits, a 40% share of the Albuquerque JOA profits, and approximately 20% to 25% share of the Cincinnati JOA profits.

F-15

Operating results for our newspapers operated under JOAs were as follows:


	For the years ended December 31,
(in thousands)	2005			Change		2004		Change		2003
Equity in earnings of JOAs included in segment profit:
Denver	$	15,854		(56.7	)%	$	36,630	(3.2	)%	$	37,854
Cincinnati		23,532		1.7	%		23,148	4.1	%		22,246
Albuquerque		11,215		(2.1	)%		11,452	(0.5	)%		11,511

Total equity in earnings of JOAs included in segment profit		50,601		(29.0	)%		71,230	(0.5	)%		71,611
Operating revenues		538					207				200

Total		51,139		(28.4	)%		71,437	(0.5	)%		71,811

JOA editorial costs and expenses:
Denver		24,473		(6.3	)%		23,012	(1.4	)%		22,692
Cincinnati		8,064		(0.6	)%		8,018	(1.7	)%		7,887
Albuquerque		4,288		(1.4	)%		4,230	(0.7	)%		4,200

Total JOA editorial costs and expenses		36,825		(4.4	)%		35,260	(1.4	)%		34,779

JOAs contribution to segment profit:
Denver		(8,142	)				13,759	(10.1	)%		15,303
Cincinnati		15,468		2.2	%		15,129	5.4	%		14,359
Albuquerque		6,988		(4.1	)%		7,289	(1.1	)%		7,370

Total JOA contribution to segment profit	$	14,314		(60.4	)%	$	36,177	(2.3	)%	$	37,032

Supplemental information:

Depreciation and amortization	$	1,495				$	1,451			$	1,509

Capital expenditures		1,477					613				567

Additional depreciation incurred by the Denver Newspaper Agency reduced equity in earnings of JOAs by $20.4 million for the full year of 2005 (See page F-10). The increased depreciation is also expected to decrease equity in earnings of JOAs by approximately $3.0 million in each remaining quarter until the second quarter of 2007.

We expect our JOA newspapers will contribute $18 million to $20 million to segment profit for the full year of 2006.

Gannett has notified us of its intent to terminate the Cincinnati JOA upon its expiration in 2007.

Broadcast Television – Broadcast television includes six ABC-affiliated stations, three NBC-affiliated stations and one independent. Each station is located in one of the 61 largest television markets in the U.S. Our broadcast television stations earn revenue primarily from the sale of advertising time to local and national advertisers.

National broadcast television networks offer affiliates a variety of programs and sell the majority of advertising within those programs. We may receive compensation from the network for carrying its programming. In addition to network programs, we broadcast locally produced programs, syndicated programs, sporting events, and other programs of interest in each station’s market. News is the primary focus of our locally-produced programming.

The trends and underlying economic conditions affecting the operating performance of any of our broadcast television stations are substantially the same as those affecting all of our stations. The operating performance of our broadcast television group is most affected by the health of the economy, particularly conditions within the retail and auto markets, and by the volume of advertising time purchased by campaigns for elective office and for political issues. The demand for political advertising is significantly higher in even-numbered years, when congressional and presidential elections occur, than in odd-numbered years. From time-to-time, individual television stations may perform better or worse than our television station group as a whole due to specific conditions at that station or within its local economy. We do not expect such near-term variances to significantly affect the overall operating performance of the broadcast television segment.

Operating results for broadcast television were as follows:


	For the years ended December 31,
(in thousands)	2005			Change		2004			Change		2003
Segment operating revenues:
Local	$	197,400		7.4	%	$	183,732		(0.4	)%	$	184,395
National		103,436		2.9	%		100,518		(0.2	)%		100,757
Political		3,973					41,546					3,356
Network compensation		5,177		(39.1	)%		8,505		(4.5	)%		8,905
Other		7,673		(6.4	)%		8,197		21.5	%		6,749

Total segment operating revenues		317,659		(7.3	)%		342,498		12.6	%		304,162

Segment costs and expenses:
Employee compensation and benefits		122,324		(1.0	)%		121,062		(4.1	)%		116,312
Programs and program licenses		47,343		2.2	%		48,402		(5.3	)%		45,965
Other segment costs and expenses		61,605		2.8	%		63,380		(11.8	)%		56,667

Total segment costs and expenses		231,272		0.7	%		232,844		(6.3	)%		218,944

Hurricane recoveries (losses), net		1,567					(1,411	)

Segment profit	$	87,954		(18.7	)%	$	108,243		27.0	%	$	85,218

Supplemental Information:

Payments for programming less (greater) than program cost amortization	$	(415	)			$	(606	)			$	579

Depreciation and amortization		19,906					19,532					19,425

Capital expenditures		13,524					17,543					34,742

Business acquisitions and other additions to long-lived assets												918

Our 2005 and 2004 operating results were affected by the impact of hurricanes at our Florida operations. Our Florida operations sustained wind and water damage and the hurricanes interrupted operations at our affected businesses and at certain of our customers’ businesses, resulting in lost revenues. Revenues at our other television stations decreased 7% in 2005 compared with 2004 and increased 12% in 2004 compared with 2003. Year-over-year changes in revenues are significantly affected by various cyclical factors, particularly the political cycle. Advertising revenues dramatically increase during even-numbered years, when congressional and presidential elections occur. Political advertising is expected to approximate $25 million in 2006 and advertising revenue tied to the Super Bowl and Olympics could reach $8 million.

Broadcast television has initiated a number of advertising strategies aimed at securing revenues from businesses that have not historically advertised on television. The increase in local advertising revenues in 2005 is primarily attributed to the revenues generated from the successful implementation of these strategies.

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We have reached agreement in principle on new affiliation agreements for our six ABC affiliated stations. The agreement will extend the ABC affiliation relationship for each of our stations through January of 2010. Network compensation in 2006 for our ABC affiliated stations will approximate the $4.9 million of revenue recognized by these stations in 2005. Our ABC affiliates recognized $8.2 million of network compensation in 2004 and $8.6 million in 2003.

We expect total operating revenues at our broadcast television stations to increase approximately 10% to 12% for the full year of 2006.

The increase in employee compensation and benefit expenses in 2004 compared with 2003 is primarily due to higher employee benefit costs, including a $1.9 million increase in health care and long-term disability costs.

Other segment costs and expenses reflect spending to promote our stations and research costs to better understand our target audience.

Total broadcast television costs and expenses, including the impact of expensing stock options granted to employees, are expected to increase 5% to 6% in 2006.

Capital expenditures in 2004 and 2003 include the construction of a new production facility for our Cincinnati television station.

Shop At Home – On April 14, 2004, we completed our acquisition of Summit America. Summit America owned a 30% minority interest in Shop At Home and operated five Shop At Home-affiliated broadcast television stations.

Shop At Home markets a range of consumer goods directly to television viewers and visitors to its Web site. Programming is distributed on a full or part-time basis under the terms of affiliation agreements with broadcast television stations and cable and satellite television systems. Affiliates are paid a fee (“network distribution fee”) based upon the number of cable and direct broadcast satellite households reached by the affiliate.

Retail merchandise sales provide substantially all of Shop At Home’s operating revenues and cost of merchandise sold and network distribution costs are the primary expenses. Shop At Home’s operating results are influenced by the distribution of the network, our ability to attract an audience, our selection and mix of product, and by consumers’ discretionary spending.

Operating results for Shop At Home were as follows:


	For the years ended December 31,
(in thousands)	2005			Change		2004			Change		2003
Segment operating revenues:
Retail merchandise	$	341,728		23.5	%	$	276,740		23.5	%	$	224,123
Shipping and handling		16,574		15.1	%		14,398		11.1	%		12,957
Other		954		(51.2	)%		1,954		39.2	%		1,404

Total segment operating revenues		359,256		22.6	%		293,092		22.9	%		238,484

Segment costs and expenses:
Cost of merchandise sold		238,580		(25.3	)%		190,376		(20.4	)%		158,149
Network distribution fees		61,817		(5.1	)%		58,798		2.9	%		60,532
Employee compensation and benefits		39,478		(19.5	)%		33,045		(39.4	)%		23,707
Other segment costs and expenses		47,724		(45.3	)%		32,841		(80.7	)%		18,171

Total segment costs and expenses		387,599		(23.0	)%		315,060		(20.9	)%		260,559

Segment profit (loss)	$	(28,343	)	(29.0	)%	$	(21,968	)	0.5	%	$	(22,075	)

Supplemental Information:
Interest and dividend income from Summit America						$	1,306				$	4,591
Depreciation and amortization	$	8,826					10,534					7,341
Write-off of goodwill and intangible assets		103,124

Capital expenditures		10,293					6,375					3,249
Business acquisitions and other additions to long-lived assets							228,810

Shop At Home programming reached an average full-time equivalent of 54.4 million homes in 2005, up from 50.4 million homes in 2004 and 46.4 million homes in 2003. During the past several years, Shop At Home has primarily grown its distribution through national satellite carriers or through the acquisition of part-time or overnight carriage, where the household productivity is significantly less than basic tier cable homes. In 2005, national satellite carriage represented approximately 42% of Shop At Home’s carriage. This carriage produces approximately 40% to 50% less revenue per household than a basic cable home due, in large part, to the expanded choice of viewing options and fragmentation of audience share. In addition, carriage secured on a part-time or overnight basis tends to be higher on the channel guide and often lacks the channel guide branding that is standard in longer-term permanent channel contracts. Shop At Home has sustained recurring operating losses due in part to the fact that we have not successfully secured consistently strong channel positions. As a result of these operating losses and a longer than anticipated path to profitability, we recorded a non-cash charge in 2005 of $103.1 million to write-down Shop At Home’s goodwill and intangible assets.

We are undertaking a deliberate and careful assessment of strategic alternatives for Shop At Home. While we believe there is still opportunity at Shop At Home, we are carefully assessing the capital decisions that may have to be made to maximize the value of Shop At Home for the benefit of our shareholders.

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We continue to implement our merchandising plan at Shop At Home which includes improving the mix, quality and appeal of the products offered for sale both online and on air. Sales of products in the home and cookware categories increased by 91% for the full-year of 2005 compared with 2004 and represent 16% of total revenue in 2005. Sales of products in these categories were 10% of total revenue in 2004 and 8% in 2003.

Increases in other costs and expenses reflect additional costs to support Shop At Home’s revenue growth. These costs include increases in the costs of facilities, outside services, uncollectible accounts receivable, marketing and consumer research costs.

In connection with the 2004 acquisition of Summit America, we assumed Summit America’s obligations to us under the $47.5 million secured loan and $3 million redeemable preferred stock extended to Summit America as part of the 2002 acquisition of the controlling interest in Shop At Home. We also assumed Summit America’s rights under the Shop At Home affiliation agreements with the Summit America broadcast television stations. Accordingly, interest and dividend income from Summit America and network distribution fees paid to the Summit America broadcast television stations ceased upon the acquisition of Summit America.

Shopzilla– On June 27, 2005, we completed our acquisition of Shopzilla, Inc., a Web-based product comparison shopping service.

Shopzilla operates a comparison shopping service that helps consumers find products offered for sale by online retailers. Shopzilla aggregates and organizes information on millions of products from thousands of retailers. Shopzilla also operates the BizRate consumer feedback network that collects millions of consumer reviews of stores and products each year.

Shopzilla earns revenue primarily from referral fees collected when consumers using our Web sites click through to participating online retailers. Marketing costs intended to attract traffic to the Shopzilla Web site are the primary expenses.

Operating results for Shopzilla from the June 27, 2005 acquisition date were as follows:


(in thousands)	For the period ended December 31, 2005
Segment operating revenues	$	99,447

Segment profit	$	27,980

Supplemental Information:
Depreciation and amortization	$	18,651

Capital expenditures		5,608
Business acquisitions and other additions to long-lived assets		535,127

On a pro-forma basis, assuming we had owned Shopzilla for all of 2005 and 2004, operating revenues were $154.8 million in 2005 and $67.4 million in 2004. Segment profits were $41.3 million in 2005 and $10.6 million in 2004.

The increase in revenue year-over-year is primarily attributed to an increase in referrals to participating online retailers. The use of online comparison shopping sites has increased as online retailing increases and as Internet users become more aware of our services.

Approximately 66% of the year-over-year increase in Shopzilla’s segment costs and expenses was attributed to marketing costs designed to attract traffic to our Web sites. A significant portion of our marketing costs is performance-based advertising to acquire Internet traffic from search engines and other Web sites.

Shopzilla is expected to generate segment profits of approximately $50 million to $55 million for the full-year of 2006.

Capital expenditures in 2006 are expected to be approximately $10 million.

Liquidity and Capital Resources

Our primary source of liquidity is our cash flow from operating activities. Advertising provides 65% of total operating revenues, so cash flow from operating activities is adversely affected during recessionary periods. Information about our use of cash flow from operating activities is presented in the following table:


	For the years ended December 31,
(in thousands)	2005			Change		2004			Change		2003
Net cash provided by continuing operating activities	$	417,521		8.5	%	$	384,675		20.4	%	$	319,629
Net cash provided by discontinued operating activities		29,359					1,489					2,917
Dividends paid, including to minority interests		(111,177	)				(65,006	)				(50,464	)
Employee stock option proceeds		32,345					28,108					33,180
Other financing activities		(11,847	)				6,480					545

Cash flow available for investments and debt repayment	$	356,201				$	355,746				$	305,807

Sources and uses of available cash flow:
Business acquisitions and net investment activity	$	(532,454	)			$	(312,756	)			$	2,775
Capital expenditures		(72,121	)				(76,775	)				(89,251	)
Other investing activity		(1,699	)				3,936					(217	)
Repurchase Class A Common Shares		(36,822	)
Increase (decrease) in long-term debt		293,859					23,901					(216,395	)

Our cash flow has been used primarily to fund acquisitions and investments and to develop new businesses. There are no significant legal or other restrictions on the transfer of funds among our business segments.

Net cash provided by operating activities has increased year-over-year due to the improved operating performance of our business segments. Cash required for the development of our emerging brands (DIY, Fine Living, VOD and Shop At Home) was approximately $40 million in 2005, $85 million in 2004, and $80 million in 2003.

We expect cash flow from operating activities in 2006 will provide sufficient liquidity to continue the development of our emerging brands and to fund the capital expenditures necessary to support our businesses. Capital expenditures are expected to be approximately $115 million to $130 million in 2006, including an expansion of the Scripps Networks headquarters in Knoxville.

In March 2006, we reached agreement in principal to acquire 100% of the common stock of uSwitch for approximately $366 million in cash. In connection with the agreement, we entered into a $100 million 364-day revolving credit facility. The remainder of the acquisition will be financed through cash on hand and additional borrowings on our existing credit facilities.

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In 2005, the management committee of the Denver JOA approved plans to consolidate the JOA’s newspaper production facilities and authorized the incurrence of up to $150 million of debt by the JOA to finance the building and equipment costs related to the consolidation.

In 2004, the Denver JOA entered into an $88 million financing agreement with a group of banks to construct a new office building for the non-production related employees of the Denver JOA and the editorial departments of both the Rocky Mountain News and MediaNews Group’s (“MNG”) Denver Post. Upon completing construction of the non-production facility, the Denver JOA will lease the building for an initial term of five years.

Scripps and MNG are not parties to either of these agreements and have not guaranteed any of the Denver JOA’s obligations under either of these arrangements. However, we expect that our cash distributions received from the Denver JOA will be reduced as the JOA will have additional cash requirements to satisfy debt and lease payments under the agreements. In addition, the Denver JOA will need to renegotiate an additional lease term, relocate to an alternative building or acquire the building upon the expiration of the lease for the non-production facility. Relocation or acquisition of the building may require capital contributions by the JOA partners.

On June 27, 2005, we acquired 100% ownership of Shopzilla for approximately $570 million in cash. Assets acquired in the transaction included approximately $34.0 million of cash and $12.3 million of short-term investments. The acquisition was financed using a combination of cash on hand and additional borrowings, including the issuance of $150 million of 4.3% notes due in 2010.

On November 17, 2004, we completed the acquisition of the Great American Country network. We paid approximately $140 million in cash, which we financed through additional borrowings on our existing credit facilities.

On April 14, 2004, we completed the acquisition of Summit America for approximately $180 million in cash. The acquisition of Summit America was financed through cash and short-term investments on hand and additional borrowings on our existing credit facilities.

Pursuant to the terms of the Food Network general partnership agreement, the partnership is required to distribute available cash to the general partners. Cash distributions to Food Network’s non-controlling interests were $29.0 million in 2005. In prior years, available cash was used by the partnership to repay loans to its partners. We expect cash distributions to Food Network’s non-controlling interests will approximate $35 million to $40 million in 2006.

We are authorized to repurchase up to 5 million of our Class A Common shares. We expect to repurchase sufficient shares to offset the dilution resulting from our stock compensation programs each year. In 2005, we repurchased 750,000 shares at a total cost of $36.8 million. The stock repurchase program can be discontinued at any time.

We have a credit facility that permits $450 million in aggregate borrowings and expires in July 2009. Total borrowings under the facility were $227 million at December 31, 2005.

Our access to commercial paper markets can be affected by macroeconomic factors outside of our control. In addition to macroeconomic factors, our access to commercial paper markets and our borrowing costs are affected by short and long-term debt ratings assigned by independent rating agencies.

We have a U.S. shelf registration statement which allows us to borrow up to an additional $300 million as of December 31, 2005.

Off-Balance Sheet Arrangements and Contractual Obligations

Off-Balance Sheet Arrangements

Off-balance sheet arrangements include the following four categories: obligations under certain guarantees or contracts; retained or contingent interests in assets transferred to an unconsolidated entity or similar arrangements; obligations under certain derivative arrangements; and obligations under material variable interests.

We may use derivative financial instruments to manage exposure to newsprint price, interest rate and foreign exchange rate fluctuations. We held no newsprint or foreign currency derivative financial instruments at December 31, 2005.

We primarily use interest rate swaps to manage the interest rate mix of our total debt portfolio and related overall cost of borrowing. In February 2003, we issued $50 million of 3.75% notes due in 2008. Concurrently, we entered into a receive-fixed, pay-floating interest rate swap, effectively converting the notes to a variable-rate obligation indexed to LIBOR. Since we account for the interest rate swap as fair value hedge of the underlying fixed-rate notes, changes in the fair value of the interest rate swap are offset by changes in the fair value of the swapped notes and no net gain or loss is recognized in earnings.

We have not entered into any other material arrangements which would fall under any of these four categories and which would be reasonably likely to have a current or future material effect on our results of operations, liquidity or financial condition.

Our contractual obligations under certain contracts are included in the following table.

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Contractual Obligations

A summary of our contractual cash commitments, as of December 31, 2005, is as follows:


(in thousands)	Less than 1 Year		Years 2 & 3		Years 4 & 5		Over 5 Years		Total
Long-term debt:
Principal amounts			$	150,260	$	477,393	$	200,850	$	828,503
Interest on notes	$	40,977		72,178		41,981		17,440		172,576

Network launch incentives:
Network launch incentive offers accepted		10,047		9,156		4,731				23,934
Incentives offered to cable television systems		20,422		11,227						31,649

Distribution agreements		70,315		9,150		5,775		4,500		89,740

Programming:
Available for broadcast		17,673		3,278		664				21,615
Not yet available for broadcast		109,997		103,536		73,193		18,347		305,073

Employee compensation and benefits:
Deferred compensation and benefits		5,807		11,616		11,602		15,025		44,050
Employment and talent contracts		44,202		48,984		10,125		3,423		106,734

Operating Leases:
Noncancelable		19,427		33,394		22,621		32,308		107,750
Cancelable		3,293		5,513		1,584		36		10,426

Pension Obligations:
Minimum pension funding		2,376		4,797		4,649		6,487		18,309

Purchase commitments:
Newsprint		3,372		4,496						7,868
Satellite transmission		9,631		10,020		9,630		36,040		65,321
Noncancelable purchase and service commitments		18,282		27,647		13,553		11,764		71,246
Capital expenditures		1,000		7,000						8,000
Other purchase and service commitments		112,953		16,563		11,751		2,939		144,206

Total contractual cash obligations	$	489,774	$	528,815	$	689,252	$	349,159	$	2,057,000

In the ordinary course of business we enter into long-term contracts to obtain distribution of our networks, to license or produce programming, to secure on-air talent, to lease office space and equipment, to obtain satellite transmission rights, and to purchase other goods and services.

Long-Term Debt – Principal payments on long-term debt reflect the repayment of our fixed-rate notes in accordance with their contractual due dates. Principal payments also include the repayment of our outstanding variable rate credit facilities assuming repayment will occur upon the expiration of the facility in July 2009.

Except for our $50 million, 3.75% notes due in 2008, interest payments on our fixed-rate notes are projected based on each notes’ contractual rates and maturity. For our notes due in 2008, we entered into a receive-fixed, pay-floating interest rate swap that expires upon the maturity of the notes. Interest payments on the these notes are calculated assuming the variable interest rate of 4.6% at December 31, 2005 will remain unchanged until the maturity of the notes in 2008. Interest payments on our variable-rate credit facilities assume that the outstanding balance on the facilities and the related variable interest rates remain unchanged until the expiration of the facilities in July 2009.

Network Launch Incentives – We may offer incentives to cable and satellite television systems in exchange for long-term contracts to distribute our networks. Such incentives may be in the form of cash payments or an initial period in which the payment of affiliate fees is waived. We become obligated for such incentives at the time a cable or satellite television system launches our programming.

Amounts included in the above table for network launch incentive offers accepted by cable and satellite television systems include both amounts due to systems that have launched our networks and estimated incentives due to systems that have agreed to launch our networks in future periods.

We have offered launch incentives to cable and satellite television systems that have not yet agreed to carry our networks. Such offers generally expire if the system does not launch our programming by a specified date. We expect to make additional launch incentive offers to cable and satellite television systems to expand the distribution of our networks.

Distribution Agreements – Distribution agreement commitments are primarily attributed to our Shop At Home business segment. Shop At Home programming is distributed on a full or part-time basis under the terms of affiliation agreements with broadcast television stations and cable and satellite television systems. Distribution agreements are commonly for one-year terms with automatic renewal unless either party provides notice of cancellation prior to renewal. Such agreements may also be canceled by us in certain circumstances. We also may enter into long-term distribution agreements. Long-term distribution agreements are generally noncancelable. While we continually review the profitability of our distribution, and may cancel low-yielding distribution, we would expect most of these distribution agreements to remain in effect and to be renewed upon their expiration.

Programming – Program licenses generally require payments over the terms of the licenses. Licensed programming includes both programs that have been delivered and are available for telecast and programs that have not yet been produced. If the programs are not produced, our commitments would generally expire without obligation.

We also enter into contracts with certain independent producers for the production of programming that airs on Scripps Networks. Production contracts generally require us to purchase a specified number of episodes of the program.

We expect to enter into additional program licenses and production contracts to meet our future programming needs.

Talent Contracts – We secure on-air talent for Scripps Networks and our broadcast television stations through multi-year talent agreements. Certain agreements may be terminated under certain circumstances or at certain dates prior to expiration. We expect our employment and talent contracts will be renewed or replaced with similar agreements upon their expiration. Amounts due under the contracts, assuming the contracts are not terminated prior to their expiration, are included in the contractual commitments table. Also included in the table are contracts with columnists and artists whose work is syndicated by United Media. Columnists and artists may receive fixed minimum payments plus amounts

F-20

based upon a percentage of net syndication and licensing revenues resulting from the exploitation of their work. Contingent amounts based upon net revenues are not included in the table of contractual commitments.

Operating Leases – We obtain certain office space under multi-year lease agreements. Leases for office space are generally not cancelable prior to their expiration.

Leases for operating and office equipment are generally cancelable by either party on 30 to 90 day notice. However, we expect such contracts will remain in force throughout the terms of the leases. The amounts included in the table above represent the amounts due under the agreements assuming the agreements are not canceled prior to their expiration.

We expect our operating leases will be renewed or replaced with similar agreements upon their expiration.

Pension Funding – We sponsor qualified defined benefit pension plans that cover substantially all non-union and certain union-represented employees. We also have a non-qualified Supplemental Executive Retirement Plan (“SERP”).

Contractual commitments summarized in the contractual obligations table includes payments to meet minimum funding requirements of our defined benefit pension plans in 2006 and estimated benefit payments for our unfunded non-qualified SERP plan. Estimated payments for the SERP plan have been estimated over a ten year period. Accordingly, the amounts in the after 5 years column include estimated payments for the periods of 2011-2015. While benefit payments under these plans are expected to continue beyond 2015, we believe it is not practicable to estimate payments beyond this period.

Purchase Commitments – We obtain satellite transmission, audience ratings, market research and certain other services under multi-year agreements. These agreements are generally not cancelable prior to expiration of the service agreement. We expect such agreements will be renewed or replaced with similar agreements upon their expiration.

We may also enter into contracts with certain vendors and suppliers, including most of our newsprint vendors. These contracts typically do not require the purchase of fixed or minimum quantities and generally may be terminated at any time without penalty. Included in the table of contractual commitments are purchase orders placed as of December 31, 2005. Purchase orders placed with vendors, including those with whom we maintain contractual relationships, are generally cancelable prior to shipment. While these vendor agreements do not require us to purchase a minimum quantity of goods or services, and we may generally cancel orders prior to shipment, we expect expenditures for goods and services in future periods will approximate those in prior years.

Redemption of Non-controlling Interests in Subsidiary Companies – The minority owners of Fine Living have the right to require us to repurchase their interests. The minority owners will receive fair market value for their interest at the time their option is exercised.

The Food Network general partnership agreement is due to expire on December 31, 2012, unless amended or extended prior to that date. In the event of such expiration, the assets of the partnership are to be liquidated and distributed to the partners in proportion to their partnership interests.

The table of contractual commitments does not include amounts for the repurchase of minority interests in Fine Living or Food Network.

Quantitative and Qualitative Disclosures about Market Risk

Earnings and cash flow can be affected by, among other things, economic conditions, interest rate changes, foreign currency fluctuations (primarily in the exchange rate for the Japanese yen) and changes in the price of newsprint. We are also exposed to changes in the market value of our investments.

We may use foreign currency forward and option contracts to hedge our cash flow exposures that are denominated in Japanese yen and forward contracts to reduce the risk of changes in the price of newsprint on anticipated newsprint purchases. We held no foreign currency or newsprint derivative financial instruments at December 31, 2005.

The following table presents additional information about market-risk-sensitive financial instruments:


(in thousands, except share data)	As of December 31, 2005				As of December 31, 2004
(in thousands, except share data)	Cost Basis		Fair Value		Cost Basis		Fair Value
Financial instruments subject to interest rate risk:
Variable rate credit facilities, including commercial paper	$	226,966	$	226,966	$	82,766	$	82,766

$100 million, 6.625% notes, due in 2007		99,975		102,638		99,960		107,500
$50 million, 3.75% notes, due in 2008		50,000		48,705		50,000		49,735
$100 million, 4.25% notes, due in 2009		99,623		96,975		99,527		100,038