The E.W. Scripps Company (SSP) 10-Q 2008 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

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)	(I.R.S. 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

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

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 and 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 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. (Check one):

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller Reporting Company  ¨

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of April 30, 2008 there were 126,632,058 of the Registrant’s Class A Common shares outstanding and 36,568,226 of the Registrant’s Common Voting shares outstanding.

INDEX TO THE E. W. SCRIPPS COMPANY

REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2008

Item No.		Page
	PART I - FINANCIAL INFORMATION
1	Financial Statements	3
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
3	Quantitative and Qualitative Disclosures About Market Risk	3
4	Controls and Procedures	3
	PART II - OTHER INFORMATION
1	Legal Proceedings	3
1A	Risk Factors	3
2	Unregistered Sales of Equity and Use of Proceeds	4
3	Defaults Upon Senior Securities	4
4	Submission of Matters to a Vote of Security Holders	4
5	Other Information	4
6	Exhibits	4
	Signatures	5

2

PART I

As used in this Quarterly Report on Form 10-Q, the terms “we,” “our,” “us” or “Scripps” 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.

ITEM 1. FINANCIAL STATEMENTS

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

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

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

PART II

ITEM 1. LEGAL PROCEEDINGS

We are involved in litigation arising in the ordinary course of business, such as defamation actions, employment and employee relations and various governmental and administrative proceedings, none of which is expected to result in material loss.

ITEM 1A. RISK FACTORS

There have been no material changes to the factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2007.

3

ITEM 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS

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

The following table provides information about Company purchases of Class A shares during the quarter ended March 31, 2008:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans Or Programs
1/1/08 - 1/31/08	252,000	$	40.77	252,000	1,298,000
2/1/08 - 2/29/08	28,000	$	41.53	28,000	1,270,000
3/1/08 - 3/31/08					1,270,000
Total	280,000	$	40.85	280,000	1,270,000

Under a share repurchase program authorized by the Board of Directors on October 28, 2004, we were authorized to repurchase up to 5.0 million Class A Common shares. Due to the pending separation of the Company, the repurchase of shares was suspended in the first quarter of 2008. 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.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

There were no defaults upon senior securities during the quarter for which this report is filed.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the quarter for which this report is filed.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The information required by this item is filed as part of this Form 10-Q. See Index to Exhibits at page E-1 of this Form 10-Q.

4

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE E. W. SCRIPPS COMPANY
Dated: May 12, 2008	BY:	/s/ Joseph G. NeCastro
		Joseph G. NeCastro
		Executive Vice President and Chief Financial Officer

5

THE E. W. SCRIPPS COMPANY

Index to Financial Information

Item	Page
Condensed Consolidated Balance Sheets	F-2
Condensed Consolidated Statements of Income	F-4
Condensed Consolidated Statements of Cash Flows	F-5
Condensed Consolidated Statements of Comprehensive Income and Shareholders’ Equity	F-6
Condensed Notes to Consolidated Financial Statements	F-7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements	F-26
Executive Overview	F-26
Critical Accounting Policies and Estimates	F-28
Results of Operations	F-28
Consolidated Results of Operations	F-29
Discontinued Operations	F-29
Continuing Operations	F-30
Business Segment Results	F-31
Scripps Networks	F-33
Newspapers	F-35
Broadcast Television	F-38
Interactive Media	F-39
Liquidity and Capital Resources	F-40
Quantitative and Qualitative Disclosures About Market Risk	F-41
Controls and Procedures	F-42

F-1

CONDENSED CONSOLIDATED BALANCE SHEETS

( in thousands )	March 31, 2008 (Unaudited)		As of December 31, 2007		March 31, 2007 (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	57,424	$	31,632	$	22,250
Short-term investments		34,459		44,831		1,609
Accounts and notes receivable (less allowances - $8,251, $8,414, $14,609)		550,110		561,929		486,794
Programs and program licenses		225,514		215,127		193,080
Deferred income taxes		19,024		17,124		20,244
Assets of discontinued operations		173		1,825		62,849
Miscellaneous		56,315		54,325		44,138
Total current assets		943,019		926,793		830,964
Investments		220,259		226,660		215,147
Property, plant and equipment		570,636		559,673		517,405
Goodwill and other intangible assets:
Goodwill		1,659,519		1,666,206		1,946,248
Other intangible assets		181,936		188,227		317,504
Total goodwill and other intangible assets		1,841,455		1,854,433		2,263,752
Other assets:
Programs and program licenses (less current portion)		265,063		265,938		260,576
Unamortized network distribution incentives		127,741		135,367		150,993
Prepaid pension		9,051		8,975		8,752
Miscellaneous		28,367		27,453		46,668
Total other assets		430,222		437,733		466,989
TOTAL ASSETS	$	4,005,591	$	4,005,292	$	4,294,257

See notes to condensed consolidated financial statements.

F-2

CONDENSED CONSOLIDATED BALANCE SHEETS

( in thousands, except share data )	March 31, 2008 (Unaudited)			As of December 31, 2007			March 31, 2007 (Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	85,430		$	78,923		$	78,568
Customer deposits and unearned revenue		54,376			57,174			57,422
Accrued liabilities:
Employee compensation and benefits		52,225			76,776			46,472
Network distribution incentives		4,899			4,616			4,127
Accrued income taxes		32,343			11,347			12,765
Accrued marketing and advertising costs		21,470			18,537			18,371
Accrued interest		4,581			5,757			8,344
Miscellaneous		58,667			70,005			60,891
Liabilities of discontinued operations		147			3,017			19,402
Other current liabilities		32,098			20,650			23,114
Total current liabilities		346,236			346,802			329,476
Deferred income taxes		362,015			362,234			338,548
Long-term debt		473,680			504,663			746,426
Other liabilities (less current portion)		205,835			199,302			176,023
Minority interests		108,032			141,930			100,865
Shareholders’ equity:
Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding
Common stock, $.01 par:
Class A - authorized: 240,000,000 shares; issued and outstanding: 126,532,158, 126,421,285; and 127,002,845 shares		1,265			1,264			1,270
Voting - authorized: 60,000,000 shares; issued and outstanding: 36,568,226, 36,568,226 and 36,568,226 shares		366			366			366
Total		1,631			1,630			1,636
Additional paid-in capital		486,452			475,055			451,346
Retained earnings		2,022,592			1,971,848			2,146,896
Accumulated other comprehensive income (loss), net of income taxes:
Unrealized gains on securities available for sale		1,047			4,338			8,010
Pension liability adjustments		(57,051	)		(57,673	)		(54,254	)
Foreign currency translation adjustment		55,122			55,163			49,285
Total shareholders’ equity		2,509,793			2,450,361			2,602,919
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	4,005,591		$	4,005,292		$	4,294,257

See notes to condensed consolidated financial statements.

F-3

CONDENSED CONSOLIDATED STATEMENTS OF INCOME ( UNAUDITED )

( in thousands, except per share data )	Three months ended March 31,
	2008			2007
Operating Revenues:
Advertising	$	430,559		$	415,189
Referral fees		76,530			62,085
Network affiliate fees, net		67,430			57,852
Circulation		30,514			30,878
Licensing		18,606			18,273
Other		18,835			17,147
Total operating revenues		642,474			601,424
Costs and Expenses:
Employee compensation and benefits		185,678			182,707
Production and distribution		70,858			72,300
Programs and program licenses		76,555			62,845
Marketing and advertising		59,261			61,661
Other costs and expenses		70,610			68,888
Total costs and expenses		462,962			448,401
Depreciation, Amortization, and (Gains) Losses:
Depreciation		22,463			18,547
Amortization of intangible assets		6,299			15,891
Losses on disposal of property, plant and equipment		867			89
Net depreciation, amortization and (gains) losses		29,629			34,527
Operating income		149,883			118,496
Interest expense		(5,832	)		(10,201	)
Equity in earnings of JOAs and other joint ventures		12,189			3,621
Miscellaneous, net		761			848
Income from continuing operations before income taxes and minority interests		157,001			112,764
Provision for income taxes		50,874			31,535
Income from continuing operations before minority interests		106,127			81,229
Minority interests		22,293			17,980
Income from continuing operations		83,834			63,249
Income from discontinued operations, net of tax		234			5,235
Net income	$	84,068		$	68,484
Net income per basic share of common stock:
Income from continuing operations	$	.52		$	.39
Income from discontinued operations		.00			.03
Net income per basic share of common stock	$	.52		$	.42
Net income per diluted share of common stock:
Income from continuing operations	$	.51		$	.38
Income from discontinued operations		.00			.03
Net income per diluted share of common stock	$	.51		$	.42

Net income per share amounts may not foot since each is calculated independently.

See notes to condensed consolidated financial statements.

F-4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ( UNAUDITED )

( in thousands )	Three months ended March 31,
	2008			2007
Cash Flows from Operating Activities:
Net income	$	84,068		$	68,484
Income from discontinued operations		(234	)		(5,235	)
Income from continuing operations		83,834			63,249
Adjustments to reconcile income from continuing operations to net cash flows from operating activities:
Programs and program licenses costs		76,555			62,845
Depreciation and intangible assets amortization		28,762			34,438
Network distribution incentive amortization		8,257			6,816
Equity in earnings of JOAs and other joint ventures		(12,189	)		(3,621	)
Deferred income taxes		8,767			(2,143	)
Excess tax benefits of stock compensation plans		(335	)		(1,646	)
Stock and deferred compensation plans		8,603			10,965
Minority interests in income of subsidiary companies		22,293			17,980
Program payments		(85,641	)		(85,542	)
Dividends received from JOAs and other joint ventures		12,230			10,771
Capitalized network distribution incentives and payments		(1,678	)		(2,595	)
Prepaid and accrued pension expense		5,294			4,242
Other changes in certain working capital accounts, net		(1,368	)		(7,373	)
Miscellaneous, net		4,128			866
Net cash provided by continuing operating activities		157,512			109,252
Net cash provided by (used in) discontinued operating activities		(984	)		2,620
Net operating activities		156,528			111,872
Cash Flows from Investing Activities:
Purchase of subsidiary companies, minority interest, and long-term investments		(664	)		(689	)
Additions to property, plant and equipment		(30,547	)		(20,632	)
Decrease in short-term investments		10,372			1,263
Sale of long-term investments		698			100
Miscellaneous, net		6			49
Net cash used in continuing investing activities		(20,135	)		(19,909	)
Net cash used in discontinued investing activities					(50	)
Net investing activities		(20,135	)		(19,959	)
Cash Flows from Financing Activities:
Increase in long-term debt		8,934
Payments on long-term debt		(40,026	)		(20,171	)
Dividends paid		(22,840	)		(19,697	)
Dividends paid to minority interests		(56,191	)		(39,544	)
Repurchase Class A Common shares		(11,442	)		(17,184	)
Proceeds from employee stock options		3,310			8,146
Excess tax benefits of stock compensation plans		335			1,646
Miscellaneous, net		7,196			(13,263	)
Net cash used in continuing financing activities		(110,724	)		(100,067	)
Net cash used in discontinued financing activities					(30	)
Net financing activities		(110,724	)		(100,097	)
Effect of exchange rate changes on cash and cash equivalents		123			(16	)
Increase (decrease) in cash and cash equivalents		25,792			(8,200	)
Cash and cash equivalents:
Beginning of year		31,632			30,450
End of period	$	57,424		$	22,250

See notes to condensed consolidated financial statements.

F-5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

AND SHAREHOLDERS’ EQUITY ( UNAUDITED )

( in thousands, except share data )	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
As of December 31, 2006	$	1,636		$	431,432		$	2,145,875		$	2,492		$	2,581,435
Comprehensive income:
Net income								68,484						68,484
Unrealized gains (losses) on investments, net of tax of $1,469											(2,581	)		(2,581	)
Amortization of prior service costs, actuarial losses, and transition obligations, net of tax of $(330)											579			579
Equity in investee’s adjustments for FAS 158, net of tax of $(19)											30			30
Currency translation, net of tax of $(72)											2,521			2,521
Total comprehensive income														69,033
FIN 48 transition adjustment								(30,869	)					(30,869	)
Dividends: declared and paid - $.12 per share								(19,697	)					(19,697	)
Repurchase 377,000 Class A Common shares		(4	)		(1,152	)		(16,897	)					(18,053	)
Compensation plans, net: 450,868 shares issued; 44,444 shares repurchased; 1,300 shares forfeited		4			18,638									18,642
Tax benefits of compensation plans					2,428									2,428
As of March 31, 2007	$	1,636		$	451,346		$	2,146,896		$	3,041		$	2,602,919
As of December 31, 2007	$	1,630		$	475,055		$	1,971,848		$	1,828		$	2,450,361
Comprehensive income:
Net income								84,068						84,068
Unrealized gains (losses) on investments, net of tax of $1,865											(3,291	)		(3,291	)
Amortization of prior service costs, actuarial losses, and transition obligations, net of tax of $(378)											669			669
Equity in investee’s adjustments for FAS 158, net of tax of $30											(47	)		(47	)
Currency translation adjustment, net of tax of $386											(41	)		(41	)
Total comprehensive income														81,358
Dividends: declared and paid - $.14 per share								(22,840	)					(22,840	)
Repurchase 280,000 Class A Common shares		(3	)		(955	)		(10,484	)					(11,442	)
Compensation plans, net: 445,079 shares issued;
47,565 shares repurchased; 6,641 shares forfeited		4			12,004									12,008
Tax benefits of compensation plans					348									348
As of March 31, 2008	$	1,631		$	486,452		$	2,022,592		$	(882	)	$	2,509,793

See notes to condensed consolidated financial statements.

F-6

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation- The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto included in our 2007 Annual Report on Form 10-K. In management’s opinion all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the interim periods have been made. Certain amounts in prior periods have been reclassified to conform to the current period’s presentation.

Results of operations are not necessarily indicative of the results that may be expected for future interim periods or for the full year.

Nature of Operations -We are a diverse media concern with interests in national television networks, newspaper publishing, broadcast television, interactive media, and licensing and syndication. All of our media businesses provide content and advertising services via the Internet. Our media businesses are organized into the following reportable business segments: Scripps Networks, Newspapers, Broadcast television, and Interactive media. Licensing and other media aggregates our operating segments that are too small to report separately, and primarily includes syndication and licensing of news features and comics. Additional information for our business segments is presented in Note 19.

Use of Estimates -The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make a variety of decisions that affect the reported amounts and the related disclosures. Such decisions include the selection of accounting principles that reflect the economic substance of the underlying transactions 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.

Our financial statements include estimates and assumptions used in accounting for our defined benefit pension plans; the recognition of certain revenues; rebates due to customers; the periods over which long-lived assets are depreciated or amortized; the fair value of such long-lived assets; income taxes payable; estimates for uncollectible accounts receivable; and self-insured risks.

While we re-evaluate our estimates and assumptions on an ongoing basis, actual results could differ from those estimated at the time of preparation of the financial statements.

Newspaper Joint Operating Agreements (“JOA”) -We include our share of JOA earnings in “Equity in earnings of JOAs and other joint ventures” in our Condensed Consolidated Statements of Income. The related editorial costs and expenses are included within costs and expenses in our Condensed Consolidated Statements of Income. Our residual interest in the net assets of the Denver JOA is classified as an investment in the Condensed Consolidated Balance Sheets.

Revenue Recognition -Revenue is recognized when persuasive evidence of a sales arrangement exists, delivery occurs or services are rendered, the sales price is fixed or determinable and collectibilty is reasonably assured. When a sales arrangement contains multiple elements, such as the sale of advertising and other services, revenue is allocated to each element based upon its relative fair value. Revenue recognition may be ceased on delinquent accounts depending upon a number of factors, including the customer’s credit history, number of days past due, and the terms of any agreements with the customer. Revenue recognition on such accounts resumes when the customer has taken actions to remove their accounts from delinquent status, at which time any associated deferred revenues would also be recognized. Revenue is reported net of our remittance of sales taxes, value added taxes and other taxes collected from our customers.

F-7

Our primary sources of revenue are from:

• The sale of print, broadcast, and Internet advertising.

• Referral fees and commissions from retailers and service providers.

• Fees for programming services (“network affiliate fees”).

• The sale of newspapers.

• Licensing royalties.

The revenue recognition policies for each source of revenue are described in our annual report on Form 10-K for the year ended December 31, 2007.

Stock-Based Compensation - -We have a Long-Term Incentive Plan (the “Plan”) which is described more fully in our Annual Report on Form 10-K for the year ended December 31, 2007. The Plan provides for the award of incentive and nonqualified stock options, stock appreciation rights, restricted and unrestricted Class A Common shares and performance units to key employees and non-employee directors.

In accordance with Financial Accounting Standard No. 123(R) - Share Based Payment (“FAS 123(R)”), compensation cost is based on the grant-date fair value of the award. The fair value of awards that grant the employee the right to the appreciation of the underlying shares, such as stock options, is measured using a lattice-based binomial model. The fair value of awards that grant the employee the underlying shares is measured by the fair value of a Class A Common share.

Certain awards of Class A Common shares have performance conditions under which the number of shares granted is determined by the extent to which such performance conditions are met. Compensation costs for such awards are measured by the grant-date fair value of a Class A Common share and the number of shares earned. In periods prior to completion of the performance period, compensation costs are based upon estimates of the number of shares that will be earned.

Compensation costs, net of estimated forfeitures due to termination of employment or failure to meet performance targets, are recognized on a straight-line basis over the requisite service period of the award. The requisite service period is generally the vesting period stated in the award. However, because stock compensation grants vest upon the retirement of the employee, grants to retirement-eligible employees are expensed immediately and grants to employees who will become retirement eligible prior to the end of the stated vesting period are expensed over such shorter period. The vesting of certain awards is also accelerated if performance measures are met. If it is expected those performance measures will be met, compensation costs are expensed over the accelerated vesting period.

Compensation costs of stock options are estimated on the date of grant using a lattice-based binomial model. The weighted-average assumptions used in the model are as follows:

	Three months ended March 31,
	2008			2007
Weighted-average fair value of options granted	$	9.18		$	12.58
Assumptions used to determine fair value:
Dividend yield		1.3	%		1.0	%
Risk-free rate of return		3.1	%		4.7	%
Expected life of options (years)		6.0			5.35
Expected volatility		19.3	%		20.6	%

Stock based compensation costs totaled $9.6 million for the first quarter of 2008 and $11.2 million for the first quarter of 2007.

F-8

Net Income Per Share- The following table presents information about basic and diluted weighted-average shares outstanding:

( in thousands )	Three months ended March 31,
	2008	2007
Basic weighted-average shares outstanding	162,653	163,400
Effect of dilutive securities:
Unvested restricted stock and share units held by employees	260	222
Stock options held by employees and directors	746	1,299
Diluted weighted-average shares outstanding	163,659	164,921

Stock options to purchase 8,635,714 common shares were anti-dilutive as of March 31, 2008, and are, therefore, not included in the computation of diluted weighted-average shares outstanding.

2. ACCOUNTING CHANGES AND RECENTLY ISSUED ACCOUNTING STANDARDS

Accounting Changes -In September 2006, the FASB issued FAS 157, Fair Value Measurements (“FAS 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. In February 2008, the FASB issued Staff Position 157-2 (“FSP”) which delays the effective date of FAS 157 for non-financial assets and liabilities, except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until January 1, 2009. Under the provisions of the FSP, we will delay application of FAS 157 for fair value measurements used in the impairment testing of goodwill and indefinite-lived intangible assets and eligible non-financial assets and liabilities included within a business combination. The adoption of FAS 157 did not have a material impact on our financial statements. See note 16, Fair Value Measurement, for additional information.

In February 2007, the FASB issued FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an amendment of FASB Statement No. 115 (“FAS 159”), which permits entities to choose to measure many financial instruments and certain other items at fair value. We adopted FAS 159 as of January 1, 2008. The adoption of FAS 159 had no impact on our financial statements.

Recently Issued Accounting Standards -In December 2007, the FASB issued FAS No. 141(R), Business Combinations (“FAS 141(R)”). FAS 141(R) provides guidance relating to recognition of assets acquired and liabilities assumed in a business combination. FAS 141(R) also establishes expanded disclosure requirements for business combinations. FAS 141(R) is effective for us on January 1, 2009, and we will apply SFAS 141(R) prospectively to all business combinations subsequent to the effective date.

In December 2007, the FASB issued FAS No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51 (“FAS 160”). FAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. FAS 160 provides guidance related to accounting for noncontrolling (minority) interests as equity in the consolidated financial statements at fair value. FAS 160 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact that the adoption of FAS 160 will have on our financial statements.

In March 2008, the FASB issued FAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133 (“FAS 161”). FAS 161 amends and expands the disclosure requirements of Statement 133 to provide a better understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and their effect on an entity’s financial position, financial performance, and cash flows. FAS 161 is effective for fiscal years beginning after November 15, 2008. We are currently evaluating the impact that the adoption of FAS 161 will have on our financial statements.

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3. ACQUISITIONS

2007 - In July 2007, we reached an agreement to acquire Fum Machineworks, Inc. d/b/a Recipezaar.com, a user-generated recipe and community site featuring more than 230,000 recipes, for cash consideration of approximately $25 million. We also acquired Incando Corporation d/b/a Pickle.com, a Web site that enables users to easily organize and share photos and videos from any camera or mobile phone device, for cash consideration of approximately $4.7 million. These acquisitions are part of our broader strategy at Scripps Networks to move our online businesses beyond extensions of our networks to become multi-branded, user-centric applications that create communities of online consumers in the home, food and lifestyle categories.   In the second quarter of 2007, we acquired newspaper publications in areas contiguous to our existing newspaper markets for total consideration of $2.0 million.

The following table summarizes the fair values of the assets acquired and the liabilities assumed for certain of our acquisitions.

( in thousands )	2007
	Recipezaar/ Pickle
Accounts receivable	$	135
Other current assets		95
Property, plant and equipment		4,787
Goodwill		24,968
Total assets acquired		29,985
Current liabilities		(71	)
Net purchase price	$	29,914

The allocation of the purchase price to the assets and liabilities of the Recipezaar and Pickle acquisitions are based upon preliminary estimates and are therefore subject to change.

Pro forma results are not presented for these 2007 acquisitions because the combined results of operations would not be significantly different from reported amounts.

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4. DISCONTINUED OPERATIONS

Our Cincinnati joint operating agreement with Gannett Co. Inc., was not renewed when the agreement terminated on December 31, 2007. In connection with the termination of the JOA, we ceased publication of our Cincinnati Post and Kentucky Post newspapers that participated in the Cincinnati JOA.

In the first quarter of 2006, we undertook a deliberate and careful assessment of strategic alternatives for Shop At Home which culminated in the sale of the operations of the Shop At Home television network and certain assets to Jewelry Television in June 2006 for approximately $17 million in cash. Jewelry Television also assumed a number of Shop At Home’s television affiliation agreements. We reached agreement in the third quarter of 2006 to sell the five Shop At Home-affiliated broadcast television stations for cash consideration of $170 million. On December 22, 2006, we closed the sale of the three stations located in San Francisco, CA, Canton, OH and Wilson, NC. The sale of the two remaining stations located in Lawrence, MA, and Bridgeport, CT closed on April 24, 2007.

In accordance with the provisions of FAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the results of businesses held for sale or that have ceased operations are presented as discontinued operations within our results of operations. Accordingly, these businesses have been excluded from segment results for all periods presented.

Operating results of our discontinued operations were as follows:

( in thousands )	Three months ended March 31,
	2008		2007
Operating revenues	$	5	$	1,107
Equity in earnings of JOA	$	331	$	3,928
Income from discontinued operations:
Income from discontinued operations, before tax	$	371	$	2,933
Income taxes (benefit)		137		(2,302	)
Income from discontinued operations	$	234	$	5,235

A tax benefit of $3.4 million was recognized in the first quarter of 2007 related to differences that were identified between our prior year provision and tax returns for our Shop At Home businesses.

Assets and liabilities of our discontinued operations for applicable periods consisted of the following:

( in thousands )	March 31, 2008		As of December 31, 2007		March 31, 2007
Assets:
Property, plant and equipment					$	4,792
Intangible assets						55,923
Deferred income taxes	$	49	$	842		852
Other assets		124		983		1,282
Assets of discontinued operations	$	173	$	1,825	$	62,849
Liabilities:
Deferred income taxes					$	16,170
Other liabilities	$	147	$	3,017		3,232
Liabilities of discontinued operations	$	147	$	3,017	$	19,402

F-11

5. OTHER CHARGES AND CREDITS

2007 - Due to changes in a distribution agreement at our Shopzilla business, we wrote down intangible assets during the first quarter of 2007 to reflect that certain components of the contract were not continued. This resulted in a charge to amortization of $5.2 million that reduced year-to-date net income $3.3 million.

In connection with the adoption of Financial Accounting Standards Board Interpretation No. 48 and the corresponding detailed review that was completed for our deferred tax balances, we identified adjustments necessary to properly record certain tax balances. These adjustments reduced the tax provision in the first quarter of 2007 increasing net income $4.0 million.

6. INCOME TAXES

We file a consolidated federal income tax return, consolidated unitary return in certain states, and other separate state income tax returns for certain of our subsidiary companies. Included in our federal and state income tax returns is our proportionate share of the taxable income or loss of partnerships and incorporated limited liability companies that have been elected to be treated as partnerships for tax purposes (“pass-through entities”). Our financial statements do not include any provision (benefit) for income taxes on the income (loss) of pass-through entities attributed to the non-controlling interests.

Food Network is operated under the terms of a general partnership agreement. Fine Living is a limited liability company and is treated as a partnership for tax purposes. As a result, federal and state income taxes for these pass-through entities accrue to the individual partners.

Consolidated income before income tax consisted of the following:

( in thousands )	Three months ended March 31,
	2008		2007
Income allocated to Scripps	$	134,686	$	94,780
Income of pass-through entities allocated to non-controlling interests		22,315		17,984
Income from continuing operations before income taxes and minority interest	$	157,001	$	112,764

The income tax provision for interim periods is determined based upon the expected effective income tax rate for the full year and the tax rate applicable to certain discrete transactions in the interim period. To determine the annual effective income tax rate, we must estimate both the total income before income tax for the full year and the jurisdictions in which that income is subject to tax. The actual effective income tax rate for the full year may differ from these estimates if income before income tax is greater or less than what was estimated or if the allocation of income to jurisdictions in which it is taxed is different from the estimated allocations. We review and adjust our estimated effective income tax rate for the full year each quarter based upon our most recent estimates of income before income tax for the full year and the jurisdictions in which we expect that income will be taxed.

F-12

Information regarding our expected effective income tax rate from continuing operations for the full year of 2008 and the actual effective income tax rate from continuing operations for the full year of 2007 is as follows:

	2008		2007
Statutory rate	35.0	%	35.0	%
Effect of:
State and local income taxes, net of federal income tax benefit	2.5		2.3
Income of pass-through entities allocated to non-controlling interests	(4.4	)	(4.3	)
Section 199 - Production Activities Deduction	(1.8	)	(1.9	)
Fin 48	1.4		0.9
Interest expense tax benefits from uSwitch	(1.0	)	(1.0	)
Adjustment of net operating loss carryforward valuation allowances	1.0		1.4
Miscellaneous	0.4		(1.0	)
Effective income tax rate excluding effects of uSwitch impairment	33.1	%	31.4	%
Impact of uSwitch impairment			38.2
Effective income tax rate	33.1	%	69.6	%

7. JOINT OPERATING AGREEMENT AND NEWSPAPER PARTNERSHIPS

Our Denver newspaper is operated pursuant to the terms of a joint operating agreement (“JOA”). 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 continuing operation of both newspapers in that market. Each newspaper in a JOA maintains a separate and independent editorial operation.

Information about our Denver JOA is as follows:

Newspaper	Publisher of Other Newspaper	Year JOA Entered Into	Year of JOA Expiration
Denver Rocky Mountain News	MediaNews Group, Inc.	2001	2051

The sales, production and business operations of the Denver newspapers are operated by the Denver Newspaper Agency, a limited liability partnership (the “Denver JOA”). Each newspaper owns 50% of the Denver JOA and shares management of the combined newspaper operations. We receive a 50% share of the Denver JOA profits.

In the first quarter of 2008, we ceased publication of our Albuquerque Tribune newspaper. We also reached an agreement with the Journal Publishing Company (“JPC”), the publisher of the Albuquerque Journal (“Journal”), to terminate the Albuquerque joint operating agreement between the Journal and our Albuquerque Tribune newspaper following the closure of our newspaper. Under an amended agreement with the JPC, we will continue to own an approximate 40% residual interest in the Albuquerque Publishing Company, G.P. (the “Partnership”) and we will pay JPC an annual amount equal to a portion of the editorial savings realized from ceasing publication of our newspaper. The Partnership will direct and manage the operations of the continuing Journal newspaper and we will receive a share of the Partnership’s profits commensurate with our residual interest.

We participate in a newspaper partnership with MediaNews Group, Inc. that operates certain of both companies’ newspapers in Colorado, including their editorial operations. We have a 50% interest in the partnership.

Our share of the operating profit (loss) of our JOA and our newspaper partnerships is reported as “Equity in earnings of JOAs and other joint ventures” in our financial statements.

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8. INVESTMENTS

Investments consisted of the following:

( in thousands, except share data )	March 31, 2008		As of December 31, 2007		March 31, 2007
Securities available for sale (at market value):
Time Warner (2,008,000 common shares)	$	28,152	$	33,152	$	39,488
Other available-for-sale securities		2,668		2,832		2,186
Total available-for-sale securities		30,820		35,984		41,674
Denver JOA		113,648		115,878		108,469
Colorado newspaper partnership		27,022		27,494		29,450
Joint ventures		40,158		39,240		27,493
Other equity securities		8,611		8,064		8,061
Total investments	$	220,259	$	226,660	$	215,147
Unrealized gains on securities available for sale	$	1,227	$	6,391	$	12,124

Investments available for sale represent securities of publicly-traded companies. Investments available for sale are recorded at fair value based upon the closing price of the security on the reporting date. As of March 31, 2008, there were no significant unrealized losses on our available-for-sale securities.

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9. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

( in thousands )	March 31, 2008		As of December 31, 2007		March 31, 2007
Land and improvements	$	79,519	$	79,555	$	77,106
Buildings and improvements		277,224		273,328		265,559
Equipment		663,213		650,526		614,575
Computer software		155,164		143,084		101,116
Total		1,175,120		1,146,493		1,058,356
Accumulated depreciation		604,484		586,820		540,951
Net property, plant and equipment	$	570,636	$	559,673	$	517,405

10. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consisted of the following:

( in thousands )	March 31, 2008			As of December 31, 2007			March 31, 2007
Goodwill	$	1,659,519		$	1,666,206		$	1,946,248
Other intangible assets:
Amortizable intangible assets:
Carrying amount:
Acquired network distribution		43,415			43,415			43,415
Broadcast television network affiliation relationships		26,748			26,748			26,748
Customer lists		227,157			227,064			226,686
Copyrights and other trade names		52,994			52,966			52,589
Other		32,669			32,657			32,366
Total carrying amount		382,983			382,850			381,804
Accumulated amortization:
Acquired network distribution		(11,263	)		(10,563	)		(8,449	)
Broadcast television network affiliation relationships		(3,856	)		(3,582	)		(2,752	)
Customer lists		(154,838	)		(151,194	)		(54,898	)
Copyrights and other trade names		(35,483	)		(34,793	)		(7,536	)
Other		(21,229	)		(20,113	)		(16,287	)
Total accumulated amortization		(226,669	)		(220,245	)		(89,922	)
Net amortizable intangible assets		156,314			162,605			291,882
Other indefinite-lived intangible assets:
FCC licenses		25,622			25,622			25,622
Total other intangible assets		181,936			188,227			317,504
Total goodwill and other intangible assets	$	1,841,455		$	1,854,433		$	2,263,752

In the course of performing impairment reviews in accordance with FAS 142 and FAS 144, we determined that the goodwill and other intangible assets of the uSwitch business were impaired. Accordingly, a pretax write-down of goodwill and other intangible assets totaling $411 million was recorded in the fourth quarter of 2007.

F-15

Activity related to goodwill, amortizable intangible assets and indefinite-lived intangible assets by business segment was as follows:

( in thousands )	Scripps Networks			Newspapers			Broadcast Television			Interactive Media			Licensing and Other		Total
Goodwill:
Balance as of December 31, 2006	$	240,502		$	777,902		$	219,367		$	723,262		$	18	$	1,961,051
Adjustment of purchase price allocations											(14,703	)				(14,703	)
Foreign currency translation adjustment, inclusive of impact of purchase price adjustments											(100	)				(100	)
Balance as of March 31, 2007	$	240,502		$	777,902		$	219,367		$	708,459		$	18	$	1,946,248
Balance as of December 31, 2007	$	265,436		$	785,621		$	215,414		$	399,717		$	18	$	1,666,206
Other adjustments					(6,721	)										(6,721	)
Adjustment of purchase price allocations		34														34
Balance as of March 31, 2008	$	265,470		$	778,900		$	215,414		$	399,717		$	18	$	1,659,519
Amortizable intangible assets:
Balance as of December 31, 2006	$	38,707		$	10,075		$	25,137		$	209,702				$	283,621
Adjustment of purchase price allocations											21,004					21,004
Foreign currency translation adjustment, inclusive of impact of purchase price adjustments											3,148					3,148
Amortization		(806	)		(455	)		(278	)		(14,352	)				(15,891	)
Balance as of March 31, 2007	$	37,901		$	9,620		$	24,859		$	219,502				$	291,882
Balance as of December 31, 2007	$	35,438		$	9,210		$	24,008		$	93,949				$	162,605
Foreign currency translation adjustment											8					8
Amortization		(815	)		(519	)		(281	)		(4,684	)				(6,299	)
Balance as of March 31, 2008	$	34,623		$	8,691		$	23,727		$	89,273				$	156,314
Other indefinite-lived intangible assets:
Balance for all respective periods presented							$	25,622							$	25,622

Estimated amortization expense of intangible assets for each of the next five years is expected to be $18.8 million for the remainder of 2008, $24.2 million in 2009, $21.1 million in 2010, $20.8 million in 2011, $17.3 million in 2012, $9.9 million in 2013 and $44.2 million in later years.

F-16

11. PROGRAMS AND PROGRAM LICENSES

Programs and program licenses consisted of the following:

( in thousands )	March 31, 2008		As of December 31, 2007		March 31, 2007
Cost of programs available for broadcast	$	1,067,102	$	985,570	$	860,639
Accumulated amortization		720,756		661,529		553,213
Total		346,346		324,041		307,426
Progress payments on programs not yet available for broadcast		144,231		157,024		146,230
Total programs and program licenses	$	490,577	$	481,065	$	453,656

In addition to the programs owned or licensed by us included in the table above, we have commitments to license certain programming that is not yet available for broadcast, including first-run syndicated programming. Such program licenses are recorded as assets when the programming is delivered to us and is available for broadcast. First-run syndicated programming is generally produced and delivered at or near its broadcast date. Such contracts may require progress payments or deposits prior to the program becoming available for broadcast. Remaining obligations under contracts to purchase or license programs not yet available for broadcast totaled approximately $281 million at March 31, 2008. If the programs are not produced, our commitment to license the programs would generally expire without obligation.

Progress payments on programs not yet available for broadcast and the cost of programs and program licenses capitalized totaled $72.9 million in 2008 and $75.6 million in 2007.

Estimated amortization of recorded program assets and program commitments for each of the next five years is as follows:

( in thousands )	Programs Available for Broadcast		Programs Not Yet Available for Broadcast		Total
Remainder of 2008	$	148,305	$	79,160	$	227,465
2009		117,209		134,809		252,018
2010		59,071		100,214		159,285
2011		21,445		68,868		90,313
2012		316		35,726		36,042
2013				5,619		5,619
Later years				427		427
Total	$	346,346	$	424,823	$	771,169

Actual amortization in each of the next five years will exceed the amounts presented above as our broadcast television stations and our national television networks will continue to produce and license additional programs.

F-17

12. UNAMORTIZED NETWORK DISTRIBUTION INCENTIVES

Unamortized network distribution incentives consisted of the following:

( in thousands )	March 31, 2008		As of December 31, 2007		March 31, 2007
Network launch incentives	$	84,558	$	90,542	$	106,401
Unbilled affiliate fees		43,183		44,825		44,592
Total unamortized network distribution incentives	$	127,741	$	135,367	$	150,993

Amortization recorded as a reduction to affiliate fee revenue in the consolidated financial statements, and estimated amortization of recorded network distribution incentives for each of the next five years, is presented below.

( in thousands )	Three months ended March 31,
	2008		2007
Amortization of network distribution incentives	$	8,257	$	6,816
Estimated amortization for the next five years is as follows:
Remainder of 2008			$	24,966
2009				36,699
2010				26,721
2011				23,463
2012				12,464
2013				1,105
Later years				2,323
Total			$	127,741

Actual amortization could be greater than the above amounts as additional incentive payments may be capitalized as we expand distribution of Scripps Networks.

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13. LONG-TERM DEBT

Long-term debt consisted of the following:

( in thousands )	March 31, 2008		As of December 31, 2007		March 31, 2007
Variable-rate credit facilities, including commercial paper	$	88,500	$	79,559	$	170,320
6.625% notes due in 2007						99,993
3.75% notes due in 2008				39,950		39,504
4.25% notes due in 2009		86,112		86,091		86,029
4.30% notes due in 2010		112,849		112,840		149,844
5.75% notes due in 2012		184,951		184,922		199,342
Other notes		1,268		1,301		1,394
Total long-term debt	$	473,680	$	504,663	$	746,426

We have Competitive Advance and Revolving Credit Facilities expiring in June 2011 (the “Revolver”) and a commercial paper program that collectively permit aggregate borrowings up to $750 million (the “Variable-Rate Credit Facilities”). Borrowings under the Revolver are available on a committed revolving credit basis at our choice of three short-term rates or through an auction procedure at the time of each borrowing. The Revolver is primarily used as credit support for our commercial paper program in lieu of direct borrowings under the Revolver. The weighted-average interest rate on borrowings under the Variable-Rate Credit Facilities was 2.5% at March 31, 2008, 4.9% at December 31, 2007, and 5.3% at March 31, 2007.

The scheduled $40 million principal payment on our 3.75% notes was paid in the first quarter of 2008. In the second and third quarters of 2007, we repurchased $37.1 million principal amount of our 4.30% notes due in 2010 for $35.8 million and repurchased $14.6 million principal amount of our 5.75% notes due in 2012 for $14.5 million.

Certain long-term debt agreements contain restrictions on the incurrence of additional indebtedness. We were in compliance with all debt covenants as of March 31, 2008.

Current maturities of long-term debt are classified as long-term to the extent they can be refinanced under existing long-term credit commitments.

As of March 31, 2008, we had outstanding letters of credit totaling $8.2 million.

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14. OTHER LIABILITIES

Other liabilities consisted of the following:

( in thousands )	March 31, 2008		As of December 31, 2007		March 31, 2007
Program rights payable	$	2,636	$	3,070	$	2,990
Employee compensation and benefits		40,417		41,418		40,003
Liability for pension benefits		80,534		75,935		56,751
Network distribution incentives		5,431		6,738		9,924
FIN 48 tax liability		57,750		53,830		48,468
Other		19,067		18,311		17,887
Other liabilities (less current portion)	$	205,835	$	199,302	$	176,023

15. MINORITY INTERESTS

Non-controlling interests hold an approximate 10% residual interest in Fine Living. The minority owners of Fine Living have the right to require us to repurchase their interests. We have an option to acquire their interests. The minority owners will receive the fair market value for their interests at the time their option is exercised. In 2006, we notified a minority owner that we were exercising our call option on their 3.75% interest in Fine Living. An independent valuation process to determine the exercise price is currently underway, and the exercise will be finalized once a fair value is agreed upon. The put options on the remaining non-controlling interest in Fine Living are currently exercisable. The call options become exercisable in 2016. No amounts have been recorded in our Consolidated Balance Sheets related to these options.

Non-controlling interests hold an approximate 30% residual interest in Food Network. 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 termination, the assets of the partnership are to be liquidated and distributed to the partners in proportion to their partnership interests.

Minority interests include non-controlling interests of approximately 4% in the capital stock of the subsidiary company that publishes our Memphis newspaper and approximately 6% in the capital stock of the subsidiary company that publishes our Evansville newspaper. The capital stock of these companies does not provide for or require the redemption of the non-controlling interests by us.

16. FAIR VALUE MEASUREMENT

We adopted FAS 157 as of January 1, 2008, with the exception of the statement to non-recurring, nonfinancial assets and liabilities. The adoption of FAS 157 did not have a material impact on our fair value measurements. FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value into three broad levels as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs, other than quoted market prices in active markets, that are observable either directly or indirectly.

• Level 3 – Unobservable inputs based on our own assumptions.

The following table sets forth our assets that are measured at fair value on a recurring basis at March 31, 2008:

( in thousands)	March 31, 2008
	Total		Level 1		Level 2	Level 3
Assets:
Short-term investments	$	34,459	$	34,459	$	$
Available-for-sale securities		30,820		30,820
Total assets measured at fair value	$	65,279	$	65,279	$	$
Liabilities:
Deferred compensation plan liabilities	$	23,721	$	23,721	$	$
Total liabilities measured at fair value	$	23,721	$	23,721	$	$

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17. SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents additional information about the change in certain working capital accounts:

( in thousands )	Three months ended March 31,
	2008			2007
Other changes in certain working capital accounts, net:
Accounts receivable	$	12,107		$	47,782
Inventories		(857	)		(1,519	)
Accounts payable		5,662			(2,119	)
Accrued income taxes		24,495			(20,479	)
Accrued employee compensation and benefits		(24,328	)		(25,842	)
Accrued interest		(1,176	)		(2,506	)
Other accrued liabilities		(10,787	)		(2,431	)
Other, net		(6,484	)		(259	)
Total	$	(1,368	)	$	(7,373	)

Information regarding supplemental cash flow disclosures is as follows:

( in thousands )	Three months ended March 31,
	2008			2007
Interest paid, excluding amounts capitalized	$	6,688		$	12,273
Income taxes paid continuing operations	$	17,759		$	54,150
Income taxes paid (refunds received) discontinued operations		(657	)		1,119
Total income taxes paid	$	17,102		$	55,269

18. EMPLOYEE BENEFIT PLANS

We sponsor defined benefit pension plans that cover substantially all non-union and certain union-represented employees. Benefits are generally based upon the employee’s compensation and years of service.

We also have a non-qualified Supplemental Executive Retirement Plan (“SERP”). The SERP, which is unfunded, provides defined pension benefits in addition to the defined benefit pension plan to eligible executives based on average earnings, years of service and age at retirement.

Substantially all non-union and certain union employees are also covered by a company-sponsored defined contribution plan. We match a portion of employees’ voluntary contributions to this plan.

Other union-represented employees are covered by defined benefit pension plans jointly sponsored by us and the union, or by union-sponsored multi-employer plans.

F-21

We use a December 31 measurement date for our retirement plans. Retirement plans expense is based on valuations performed by plan actuaries as of the beginning of each fiscal year. The components of the expense consisted of the following:

( in thousands)	Three months ended March 31,
	2008			2007
Service cost	$	4,934		$	4,646
Interest cost		7,523			6,748
Expected return on plan assets, net of expenses		(9,183	)		(8,849	)
Amortization of prior service cost		161			146
Amortization of actuarial (gain)/loss		292			188
Total for defined benefit plans		3,727			2,879
Multi-employer plans		318			330
SERP		2,079			1,800
Defined contribution plans		2,339			2,268
Total	$	8,463		$	7,277

We contributed $0.6 million to fund current benefit payments for our non-qualified SERP plan during the first quarter of 2008. We anticipate contributing an additional $2.1 million to fund the SERP’s benefit payments during the remainder of fiscal 2008. We have met the minimum funding requirements of our defined benefit pension plans. Accordingly, we do not anticipate making any contributions to these plans in 2008.

F-22

19. SEGMENT INFORMATION

We determine our business segments based upon our management and internal reporting structure. Our reportable segments are strategic businesses that offer different products and services.

Scripps Networks includes five national television networks and their affiliated Web sites, Home & Garden Television (“HGTV”), Food Network, DIY Network (“DIY”), Fine Living and Great American Country (“GAC”); and our 7.25% interest in Fox-BRV Southern Sports Holdings, which comprises the Sports South and Fox Sports Net South regional television networks. Our networks also operate internationally through licensing agreements and joint ventures with foreign entities. We own approximately 70% of Food Network and approximately 90% of Fine Living. Each of our networks is distributed by cable and satellite television systems. Scripps Networks earns revenue primarily from the sale of advertising time and from affiliate fees from cable and satellite television systems.

Our newspaper business segment includes daily and community newspapers in 15 markets in the U.S. Newspapers earn revenue primarily from the sale of advertising space to local and national advertisers and from the sale of newspapers to readers. We also have a newspaper that is operated pursuant to the terms of joint operating agreement. See Note 7. Each newspaper in a JOA maintains an independent editorial operation and receives a share of the operating profits of the combined newspaper operations.

Broadcast television includes six ABC-affiliated stations, three NBC-affiliated stations and one independent. Our television stations reach approximately 10% of the nation’s television households. Broadcast television stations earn revenue primarily from the sale of advertising time to local and national advertisers.

Interactive media includes our online comparison shopping services, Shopzilla and uSwitch. Shopzilla operates a product comparison shopping service that helps consumers find products offered for sale on the Web by online retailers. uSwitch operates an online comparison service that helps consumers compare prices and arrange for the purchase of a range of essential home services including gas, electricity, home phone, broadband providers and personal finance products, primarily in the United Kingdom. Our interactive media businesses earn revenue primarily from referral fees and commissions paid by participating online retailers and service providers.

Licensing and other media aggregates our operating segments that are too small to report separately, and primarily includes syndication and licensing of news features and comics.

The accounting policies of each of our business segments are those described in Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2007.

Each of our segments may provide advertising, programming or other services to our other business segments. In addition, certain corporate costs and expenses, including information technology, pensions and other employee benefits, and other shared services, are allocated to our business segments. The allocations are generally amounts agreed upon by management, which may differ from amounts that would be incurred if such services were purchased separately by the business segment. Corporate assets are primarily cash, cash equivalents and other short-term investments, property and equipment primarily used for corporate purposes, and deferred income taxes.

Our chief operating decision maker (as defined by FAS 131 – Segment Reporting) evaluates the operating performance of our business segments and makes decisions about the allocation of resources to our business segments using a measure we call segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, restructuring activities (including our proportionate share of JOA 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.

As discussed in Note 1, we account for our share of the earnings of our JOA and newspaper partnerships using the equity method of accounting. Our equity in earnings of our JOA and newspaper partnerships is included in “Equity in earnings of JOAs and other joint ventures” in our Condensed Consolidated Statements of Income. Newspaper segment profits include equity in earnings of JOAs and newspaper partnerships. Scripps Networks segment profits include equity in earnings of joint ventures.

F-23

Information regarding our business segments is as follows:

	Three months ended March 31,
( in thousands )	2008			2007
Segment operating revenues:
Scripps Networks	$	310,836		$	269,479
Newspapers:
Newspapers managed solely by us		155,599			169,751
JOAs and newspaper partnerships		61			58
Total newspapers		155,660			169,809
Broadcast television		76,019			76,508
Interactive media		77,496			62,934
Licensing and other media		22,443			23,200
Corporate		709			427
Intersegment eliminations		(689	)		(933	)
Total operating revenues	$	642,474		$	601,424
Segment profit (loss):
Scripps Networks	$	146,620		$	127,500
Newspapers:
Newspapers managed solely by us		25,550			36,691
JOAs and newspaper partnerships		2,015			(7,374	)
Total newspapers		27,565			29,317
Broadcast television		14,170			16,379
Interactive media		20,967			(381	)
Licensing and other media		2,172			2,978
Corporate		(19,810	)		(18,954	)
Intersegment eliminations		17			(195	)
Depreciation and amortization of intangibles		(28,762	)		(34,438	)
Losses on disposal of PP&E		(867	)		(89	)
Interest expense		(5,832	)		(10,201	)
Miscellaneous, net		761			848
Income from continuing operations before income taxes and minority interests	$	157,001		$	112,764
Depreciation:
Scripps Networks	$	5,976		$	4,604
Newspapers:
Newspapers managed solely by us		5,373			5,337
JOAs and newspaper partnerships		325			329
Total newspapers		5,698			5,666
Broadcast television		4,413			4,323
Interactive media		6,200			3,461
Licensing and other media		117			114
Corporate		59			379
Total depreciation	$	22,463		$	18,547

F-24

	Three months ended March 31,
( in thousands )	2008		2007
Amortization of intangibles:
Scripps Networks	$	815	$	806
Newspapers:
Newspapers managed solely by us		519		455
JOAs and newspaper partnerships
Total newspapers		519		455
Broadcast television		281		278
Interactive media		4,684		14,352
Total amortization of intangibles	$	6,299	$	15,891
Additions to property, plant and equipment:
Scripps Networks	$	8,809	$	5,045
Newspapers:
Newspapers managed solely by us		13,766		5,613
JOAs and newspaper partnerships		17		89
Total newspapers		13,783		5,702
Broadcast television		4,714		2,376
Interactive media		5,638		6,418
Licensing and other media		665		1,080
Corporate		787		1,234
Total additions to property, plant and equipment	$	34,396	$	21,855
Business acquisitions and other additions to long-lived assets:
Scripps Networks	$	72,961	$	75,228
Newspapers:
Newspapers managed solely by us
JOAs and newspaper partnerships		12		12
Total newspapers		12		12
Corporate		550		632
Total	$	73,523	$	75,872
Assets:
Scripps Networks	$	1,432,552	$	1,282,249
Newspapers:
Newspapers managed solely by us		1,109,877		1,109,908
JOAs and newspaper partnerships		152,803		151,340
Total newspapers		1,262,680		1,261,248
Broadcast television		468,174		476,400
Interactive media		623,580		1,018,211
Licensing and other media		30,236		27,945
Investments		39,611		49,664
Corporate		148,585		115,691
Total assets of continuing operations		4,005,418		4,231,408
Discontinued operations		173		62,849
Total assets	$	4,005,591	$	4,294,257

No single customer provides more than 10% of our revenue. We earn international revenues from our Shopzilla and uSwitch businesses. We also earn international revenues from the licensing of comic characters and programming from our national television networks in international markets. We anticipate that about 75% of our international revenues, which will approximate $130 million in 2008, will be provided from the United Kingdom and Japanese markets.

Other additions to long-lived assets include investments, capitalized intangible assets, and Scripps Networks capitalized programs and network launch incentives.

F-25

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 condensed consolidated financial statements and the condensed notes to the consolidated financial statements. You should read this discussion in conjunction with those financial statements.

FORWARD-LOOKING STATEMENTS

This discussion and the information contained in the condensed notes to the consolidated financial statements contains certain forward-looking statements related to our businesses, including the proposed separation plan, 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’ tastes; 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 (“Scripps”) is a diverse media company with interests in national television networks, newspaper publishing, broadcast television stations, 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 (“DIY”), Fine Living and Great American Country (“GAC”); daily and community newspapers in 15 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; Interactive media, our online comparison shopping services comprising our Shopzilla and uSwitch businesses; and United Media, a leading worldwide licensing and syndication company that is the home of PEANUTS, DILBERT and approximately 150 other features and comics.

On October 16, 2007, Scripps announced that its Board of Directors unanimously authorized management to pursue a plan to separate into two publicly traded companies. The proposed separation will create a new company called Scripps Networks Interactive, Inc. that will comprise Scripps’ national lifestyle media brands (HGTV, Food Network, DIY, Fine Living and GAC and their category-leading Internet businesses) and online comparison shopping services (Shopzilla and uSwitch and their associated Web sites). The E. W. Scripps Company will continue to include Scripps’ daily and community newspapers, broadcast television stations, character licensing and feature syndication businesses, and the Scripps Media Center in Washington, D. C. The separation will allow each company to have a sharpened strategic focus in an effort to foster continued growth, solid operating performance and a clear vision on how best to build on the specific strengths of the national and local media franchises. The transaction is expected to take the form of a tax-free dividend of Scripps Networks Interactive stock to all Scripps shareholders on a pro-rata basis. The separation is contingent upon approval of the final plan by the Board of Directors and holders of Scripps’ Common Voting Shares and the filing and effectiveness of a Form 10 registration statement with the Securities and Exchange Commission. During the first quarter, the company received a favorable ruling from the Internal Revenue Service on the tax-free nature of the transaction. The separation is on track to be completed by the end of the second quarter of 2008.

F-26

The first quarter of 2008 provided solid operating results despite a continued challenging environment in our local media businesses. On a consolidated basis, revenue increased 6.8 percent to $642 million compared with the same period a year ago, while net income was $84.1 million compared with $68.5 million for the same period in 2007. Consolidated results were led by the success of Scripps Networks during the quarter, while our interactive media businesses delivered improved results as well.

Scripps Networks generated strong operating results during the first quarter of 2008. Revenue and segment profit grew 15 percent compared with the same period a year ago to $311 million and $147 million, respectively. Positive viewership trends at HGTV and Food Network, combined with strong pricing in the scatter advertising market helped drive the growth. HGTV’s revenues were up 11% over the same quarter a year ago and Food Network’s revenues grew 19% compared with the same period in 2007. Our newer networks also generated successful results with DIY and Fine Living delivering revenue growth of 33% and 24%, respectively. Primetime and total-day viewership were both up at HGTV and Food Network, and we continue to focus on providing fresh, engaging programming on the networks to maintain this trend. Our newer networks are also starting to build audience bases, particularly at DIY where primetime and total-day viewership were up 68 percent and 41 percent, respectively, over the same period in 2007. At our newer networks, we continue to focus on building the carriage of the networks and developing quality programming.

Scripps Networks also continues to focus attention on the interactive side of the business. We continue to add content to our Web sites to drive unique visitors, and our sites have proven to be popular with consumers and advertisers alike. Our portfolio of Web sites has established Scripps Networks as a leading Internet destination for lifestyle content. Overall, the focus at Scripps Networks continues to be driving ratings growth at HGTV and Food Network through the development of popular programming, expanding the distribution of our emerging networks, expanding the content on our existing Web sites and increasing our Internet-based service offerings, and developing additional revenue streams by utilizing the recognition of our brands.

Our interactive media businesses delivered improved results compared with the same period in 2007. Revenue for the quarter grew 23 percent to $77.5 million, while segment profit was $21 million compared with a slight loss in the first quarter of 2007. The growth for the quarter was driven by improvements at Shopzilla that allowed the business to more efficiently increase and monetize user traffic. Increased energy switching activity and lower operating expenses at uSwitch drove improved results within that business. Additionally, interactive media segment profit was negatively impacted in the first quarter of 2007 by approximately $15 million due primarily to leadership transition costs at Shopzilla and increased marketing expenses at uSwitch. We continue to focus on making improvements to the consumer experience at Shopzilla and driving traffic to the site, and we plan to continue to operate uSwitch with a pared down cost structure to better manage through the changes in energy switching activity we have experienced in recent periods.

Our newspaper businesses are still operating in an extremely challenging environment as industry-wide weakness in local advertising persisted during the first quarter of 2008. Revenues declined 8.3% compared to the same quarter a year ago and were largely impacted by weakness in classified advertising, particularly in the employment and real estate areas. Our newspaper division’s exposure to the Florida and California markets has compounded the situation. We continue to focus on operating the business as efficiently as possible and were successful on that front during the first quarter. Newspaper expenses were down 2.5% compared to the same quarter a year ago, which helped offset the decline in revenue.

At our broadcast television stations, revenues declined slightly compared with the first quarter of 2007. The decline was attributable to weaker local and national advertising revenues during the quarter, which were partially offset by increased political advertising during the period.

F-27

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 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 included in our Annual Report on Form 10-K describes the significant accounting policies we have selected for use in the preparation of our financial statements and related disclosures. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in estimates that are likely to occur could materially change the financial statements. We believe the accounting for Network Affiliate Fees, Acquisitions, Goodwill and Other Indefinite-Lived Intangible Assets, Income Taxes and Pension Plans to be our most critical accounting policies and estimates. A detailed description of these accounting policies is included in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2007.

There have been no significant changes in those accounting policies or other significant accounting policies.

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-31 through F-39.

F-28

Consolidated Results of Operations - Consolidated results of operations were as follows:

( in thousands, except per share data )	2008			Year-to-date Change			2007
Operating revenues	$	642,474		6.8	%		$	601,424
Costs and expenses		(462,962	)	3.2	%			(448,401	)
Depreciation and amortization of intangibles		(28,762	)	(16.5	)%			(34,438	)
Losses on disposal of PP&E		(867	)					(89	)
Operating income		149,883		26.5	%			118,496
Interest expense		(5,832	)	(42.8	)%			(10,201	)
Equity in earnings of JOAs and other joint ventures		12,189				��		3,621
Miscellaneous, net		761		(10.3	)%			848
Income from continuing operations before income taxes and minority interests		157,001		39.2	%			112,764
Provision for income taxes		(50,874	)	61.3	%			(31,535	)
Income from continuing operations before minority interests		106,127		30.7	%			81,229
Minority interests		(22,293	)	24.0	%			(17,980	)
Income from continuing operations		83,834		32.5	%			63,249
Income from discontinued operations, net of tax		234		(95.5	)%			5,235
Net income	$	84,068		22.8	%		$	68,484
Net income per diluted share of common stock:
Income from continuing operations	$	.51					$	.38
Income from discontinued operations								.03
Net income per diluted share of common stock	$	.51					$	.42

Net income per share amounts may not foot since each is calculated independently.

Discontinued Operations- Discontinued operations include the Cincinnati Post and Kentucky Post newspapers that participated in the Cincinnati JOA, the Shop At Home television network and the five Shop At Home-affiliated broadcast television stations (See Note 4 to the Condensed Consolidated Financial Statements). In accordance with the provisions of FAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the results of businesses held for sale or that have ceased operations are presented as discontinued operations.

Operating results for our discontinued operations were as follows:

	Year-to-date
( in thousands )	2008		2007
Operating revenues	$	5	$	1,107
Equity in earnings of JOA	$	331	$	3,928
Income (loss) from discontinued operations:
Income (loss) from discontinued operations, before tax	$	371	$	2,933
Income taxes (benefit)		137		(2,302	)
Income (loss) from discontinued operations	$	234	$	5,235

We ceased publication of our Cincinnati Post and Kentucky Post newspapers effective with the termination of the Cincinnati JOA agreement on December 31, 2007. The Shop At Home television network was sold to Jewelry Television on June 21, 2006. The three Shop At Home-affiliated broadcast television stations located in San Francisco, CA, Canton, OH and Wilson, NC were sold on December 22, 2006 and the stations located in Lawrence, MA, and Bridgeport, CT were sold on April 24, 2007. The transactions impact the year-over-year comparability of our discontinued operations results.

A tax benefit of $3.4 million was recognized in the first quarter of 2007 related to differences that were identified between our prior year provision and tax returns for our Shop At Home businesses.

F-29

Continuing Operations- The increase in operating revenues for the first quarter of 2008 compared with the prior-year period was due to double-digit growth in advertising sales and affiliate fee revenue at our national television networks and increases in referral fee revenues at our interactive media division. The increase in advertising sales at Scripps Networks was primarily the result of improved audience viewership at HGTV and Food Network and strong pricing in the scatter advertising market. The increase in operating revenues at interactive media was attributed to Shopzilla effectively increasing and monetizing user traffic and increasing energy switching activity at uSwitch. Increases in revenues at Scripps Networks and interactive media were partially offset by lower advertising revenues at our newspaper division. The decline in revenues at our newspapers was attributed to lower local and classified advertising, including particularly weak real estate and employment classified advertising.

The increase in costs and expenses for 2008 was primarily attributed to the expanded hours of original programming at our national networks. Lower costs and expenses at our interactive media and newspapers divisions partially offset the increase at Scripps Networks. Interactive media’s costs and expenses in 2007 include approximately $15 million of costs related to a leadership transition at Shopzilla and increased marketing expenses at uSwitch. Our newspapers division reflects lower newsprint and ink costs due primarily to lower paper usage.

The decrease in depreciation and amortization was primarily attributed to the write-down of uSwitch’s intangible assets during the fourth quarter of 2007, which resulted in lower amortization expense during the first quarter of 2008.

Interest expense includes interest incurred on our outstanding borrowings and deferred compensation and other employment agreements. Interest incurred on our outstanding borrowings decreased in 2008 due to lower average debt levels. The average balance of outstanding borrowings was $487 million at an average rate of 4.6% in 2008 and $733 million at an average rate of 5.2% in 2007.

In the third quarter of 2005, the management committee of the Denver Newspaper Agency (“DNA”) approved plans to consolidate DNA’s newspaper production facilities resulting 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 through April 2007. The increased depreciation resulted in a $3.0 million decrease in our equity in earnings of JOAs in the first quarter of 2007.

The consolidation of DNA’s newspaper production facilities was completed in 2007. In the first quarter of 2008, DNA sold the production facility that was no longer being utilized in DNA’s operations. The gain from this transaction increased our 2008 equity in earnings from JOAs $4.4 million.

The income tax provision for interim periods is determined by applying the expected effective income tax rate for the full year to year-to-date income before income tax. Tax provisions are separately provided for certain discrete transactions in interim periods. To determine the annual effective income tax rate for the full-year period, we must estimate both the total income before income tax for the full year and the jurisdictions in which that income is subject to tax.

Our effective income 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.

Information regarding our effective tax rate, and the impact of the Food Network partnership on our effective income tax rate, is as follows:

	Year-to-date
( in thousands )	2008			2007
Income from continuing operations before income taxes and minority interests as reported	$	157,001		$	112,764
Income of pass-through entities allocated to non-controlling interests		22,315			17,984
Income allocated to Scripps	$	134,686		$	94,780
Provision for income taxes	$	50,874		$	31,535
Effective income tax rate as reported		32.4	%		28.0	%
Effective income tax rate on income allocated to Scripps		37.8	%		33.3	%

In connection with the 2007 adoption of Financial Accounting Standards Board Interpretation No. 48 and the corresponding detailed review that was completed for our deferred tax balances, we identified adjustments necessary to properly record certain tax balances. These adjustments reduced the tax provision $4.0 million in 2007.

F-30

Minority interest increased in the first quarter of 2008 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%.

Business Segment Results - As discussed in Note 19 to the Condensed 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 performance measure we call segment profit. Segment profit 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 profit 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 based upon current economic conditions and decisions made by the managers of those business segments in the current period.

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:

( in thousands )	2008			Year-to-date Change		2007
Segment operating revenues:
Scripps Networks	$	310,836		15.3	%	$	269,479
Newspapers:
Newspapers managed solely by us		155,599		(8.3	)%		169,751
JOAs and newspaper partnerships		61		5.2	%		58
Total newspapers		155,660		(8.3	)%		169,809
Broadcast television		76,019		(0.6	)%		76,508
Interactive media		77,496		23.1	%		62,934
Licensing and other media		22,443		(3.3	)%		23,200
Corporate		709		66.0	%		427
Intersegment eliminations		(689	)	(26.2	)%		(933	)
Total operating revenues	$	642,474		6.8	%	$	601,424
Segment profit (loss):
Scripps Networks	$	146,620		15.0	%	$	127,500
Newspapers:
Newspapers managed solely by us		25,550		(30.4	)%		36,691
JOAs and newspaper partnerships		2,015					(7,374	)
Total newspapers		27,565		(6.0	)%		29,317
Broadcast television		14,170		(13.5	)%		16,379
Interactive media		20,967					(381	)
Licensing and other media		2,172		(27.1	)%		2,978
Corporate		(19,810	)	4.5	%		(18,954	)
Intersegment eliminations		17					(195	)
Depreciation and amortization of intangibles		(28,762	)	(16.5	)%		(34,438	)
Losses on disposal of PP&E		(867	)				(89	)
Interest expense		(5,832	)	(42.8	)%		(10,201	)
Miscellaneous, net	��	761		(10.3	)%		848
Income from continuing operations before income taxes and minority interests	$	157,001		39.2	%	$	112,764

Corporate expenses, excluding costs that will be incurred as a result of the Company’s separation, are expected to be about $17 million in the second quarter.

Discussions of the operating performance of each of our reportable business segments begin on page F-33.

F-31

Segment profit includes our share of the earnings of JOAs and certain other investments included in our consolidated operating results using the equity method of accounting. A reconciliation of our equity in earnings of JOAs and other joint ventures included in segment profit to the amounts reported in our Condensed Consolidated Statements of Income is as follows:

	Year-to-date
( in thousands )	2008		2007
Scripps Networks:
Equity in earnings of joint ventures	$	3,676	$	3,970
Newspapers:
Equity in earnings of JOAs and newspaper partnerships		8,513		(349	)
Total equity in earnings of JOAs and other joint ventures	$	12,189	$	3,621

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:

	Year-to-date
( in thousands )	2008			2007
Depreciation and amortization:
Scripps Networks	$	6,791		$	5,410
Newspapers:
Newspapers managed solely by us		5,892			5,792
JOAs and newspaper partnerships		325			329
Total newspapers		6,217			6,121
Broadcast television		4,694			4,601
Interactive media		10,884			17,813
Licensing and other media		117			114
Corporate		59			379
Total	$	28,762		$	34,438
Gains (losses) on disposal of PP&E:
Scripps Networks	$	(764	)	$	(68	)
Newspapers:
Newspapers managed solely by us					(8	)
JOAs and newspaper partnerships		20			1
Total newspapers		20			(7	)
Broadcast television		(123	)		(14	)
Gains (losses) on disposal of PP&E	$	(867	)	$	(89	)

F-32

Scripps Networks - Scripps Networks includes five national television networks and their affiliated Web sites, HGTV, Food Network, DIY Network (“DIY”), Fine Living and Great American Country (“GAC”); and our 7.25% interest in Fox-BRV Southern Sports Holdings, LLC which comprises the Sports South and Fox Sports Net South regional television networks. Our networks also operate internationally through licensing agreements and joint ventures with foreign entities.

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 demand for national television advertising is the primary economic factor that impacts the operating performance of our networks.

Operating results for Scripps Networks were as follows:

( in thousands )	2008		Year-to-date Change			2007
Segment operating revenues:
Advertising	$	235,493	14.5	%		$	205,748
Network affiliate fees, net		67,430	16.6	%			57,852
Other		7,913	34.6	%			5,879
Total segment operating revenues		310,836	15.3	%			269,479
Segment costs and expenses:					��
Employee compensation and benefits		41,993	17.1	%			35,857
Programs and program licenses		64,997	27.6	%			50,946
Production and distribution		14,009	11.4	%			12,571
Other segment costs and expenses		46,893	0.7	%			46,575
Total segment costs and expenses		167,892	15.0	%			145,949
Segment profit before joint ventures		142,944	15.7	%			123,530
Equity in income of joint ventures		3,676	(7.4	)%			3,970
Segment profit	$	146,620	15.0	%		$	127,500
Supplemental Information:
Billed network affiliate fees	$	75,056				$	62,851
Program payments		73,924					73,266
Depreciation and amortization		6,791					5,410
Capital expenditures		8,809					5,045
Business acquisitions and other additions to long-lived assets, primarily program assets		72,961					75,228

Advertising revenues increased primarily due to an increased demand for advertising time and higher advertising rates at our networks. Improved ratings and viewership, particularly at HGTV and Food Network, and strong pricing in the scatter advertising market contributed to the increases in advertising revenues during the first quarter of 2008 compared with the first quarter of 2007.

Distribution agreements with cable and satellite television systems currently in force require the payment of affiliate fees over the terms of the agreements. The increase in network affiliate fees is primarily attributed to rate increases and our national television networks growth in distribution.

We continue to successfully develop our network brands on the Internet. Online advertising revenues were approximately $16.3 million in the first quarter of 2008 compared with $15.4 million in the first quarter of 2007.

We expect total operating revenues at Scripps Networks to increase approximately 10% to 12% year-over-year in the second quarter of 2008.

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

Programs and program licenses increased due to the improved quality and variety of programming, expanded programming hours, and higher costs attributed to investing in high-definition programming.

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Our continued investment in building consumer awareness and expanding distribution of our network and online lifestyle brands is expected to increase total segment expenses about 15% year-over-year in the second quarter of 2008.

Supplemental financial information for Scripps Networks is as follows:

( in thousands )	2008		Year-to-date Change		2007
Operating revenues:
HGTV	$	148,477	10.9	%	$	133,853
Food Network		127,799	18.6	%		107,789
DIY		15,348	32.9	%		11,548
Fine Living		12,755	23.7	%		10,315
GAC		5,915	5.8	%		5,589
Other		542	40.8	%		385
Total segment operating revenues	$	310,836	15.3	%	$	269,479
Homes reached in March (1):
HGTV		95,800	4.1	%		92,000
Food Network		95,500	3.9	%		91,900
DIY		47,100	8.3	%		43,500
Fine Living		49,700	11.2	%		44,700
GAC		52,700	13.1	%		46,600

(1) Approximately 100 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 Fine Living which is not yet rated by Nielsen and represent comparable amounts calculated by us.

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Newspapers - We operate daily and community newspapers in 15 markets in the U.S. Our newspapers earn revenue primarily from the sale of advertising space to local and national advertisers and from the sale of newspapers to readers. Our Denver newspaper is operated pursuant to the terms of a joint operating agreement (“JOA”). Each newspaper in a JOA maintains an independent editorial operation and receives a share of the operating profits of the combined newspaper 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. The operating performance of our newspapers is most affected by newsprint prices and economic conditions, particularly within the retail, labor, housing and auto markets.

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

( in thousands )	2008		Year-to-date Change		2007
Segment operating revenues:
Local	$	33,861	(8.4	)%	$	36,963
Classified		41,809	(19.1	)%		51,699
National		8,013	(10.3	)%		8,930
Preprint, online and other		36,462	(0.2	)%		36,524
Newspaper advertising		120,145	(10.4	)%		134,116
Circulation		30,514	(1.2	)%		30,878
Other		4,940	3.8	%		4,757
Total operating revenues		155,599	(8.3	)%		169,751
Segment costs and expenses:
Employee compensation and benefits		66,761	(1.5	)%		67,787
Production and distribution		38,989	(4.8	)%		40,973
Other segment costs and expenses		24,299				24,300
Total costs and expenses		130,049	(2.3	)%		133,060
Contribution to segment profit	$	25,550	(30.4	)%	$	36,691
Supplemental Information:
Depreciation and amortization	$	5,892			$	5,792
Capital expenditures		13,766				5,613

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The decrease in advertising revenues was primarily due to weakness in classified and local advertising in our newspaper markets. Decreases in real estate and employment advertising particularly impacted revenues at our Florida and California newspapers.

Preprint, online and other advertising reflect the development of new print and electronic products and services. Our Internet sites had advertising revenues of approximately $10 million in the first quarter of 2008 and 2007. 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 and audio.

Other operating revenues represent revenue earned on ancillary services offered by our newspapers.

We expect total operating revenues at newspapers will decrease approximately 8% to 10% year-over-year in the second quarter of 2008 due to continued weakness in classified and local advertising.

The reduction in employee compensation and benefit costs reflects the impact of voluntary separation offers that were accepted by 137 eligible employees in the second quarter of 2007.

The decrease in production and distribution costs of our newspapers was primarily due to a 12% decrease in newsprint consumption. Newsprint pricing was flat compared with the prior-year period.

We expect total costs and expenses to decrease approximately 7% year-over-year in the second quarter of 2008. Year-over-year newspaper expense reductions reflect $8.9 million in costs incurred during the second quarter of 2007 related to the accepted voluntary separation offers.

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Joint Operating Agreement and Newspaper Partnerships:Our Denver newspaper is operated pursuant to the terms of a joint operating agreement (“JOA”). Information about our Denver JOA is as follows:

Newspaper	Publisher of Other Newspaper	Year JOA Entered Into	Year of JOA Expiration
Denver Rocky Mountain News	MediaNews Group, Inc.	2001	2051

The sales, production and business operations of the Denver newspapers are operated by the Denver Newspaper Agency, a limited liability partnership (the “Denver JOA”). Each newspaper owns 50% of the Denver JOA and shares management of the combined newspaper operations. We receive a 50% share of the Denver JOA profits.

In the first quarter of 2008, we ceased publication of our Albuquerque Tribune newspaper. We also reached an agreement with the Journal Publishing Company (“JPC”), the publisher of the Albuquerque Journal (“Journal”), to terminate the Albuquerque joint operating agreement between the Journal and our Albuquerque Tribune newspaper following the closure of our newspaper. Under an amended agreement with the JPC, we will continue to own an approximate 40% residual interest in the Albuquerque Publishing Company, G.P. (the “Partnership”) and we will pay JPC an annual amount equal to a portion of the editorial savings realized from ceasing publication of our newspaper. The Partnership will direct and manage the operations of the continuing Journal newspaper and we will receive a share of the Partnership’s profits commensurate with our residual interest.

We participate in a newspaper partnership with MediaNews Group, Inc. that operates certain of both companies’ newspapers in Colorado, including their editorial operations. We have a 50% interest in the partnership.

Our share of the operating profit (loss) of our JOA and our newspaper partnerships is reported as “Equity in earnings of JOAs and other joint ventures” in our financial statements.

Operating results for our JOA and newspaper partnerships were as follows:

( in thousands )	2008			Year-to-date Change		2007
Equity in earnings of JOAs and newspaper partnerships included in segment profit:
Denver	$	6,905				$	(1,857	)
Albuquerque		1,780		(8.2	)%		1,938
Colorado		(172	)	60.7	%		(107	)
Other newspaper partnerships and joint ventures							(323	)
Total equity in earnings of JOAs		8,513					(349	)
Operating revenues of JOAs and newspaper partnerships		61		5.2	%		58
Total		8,574					(291	)
JOA editorial costs and expenses		6,559		(7.4	)%		7,083
Contribution to segment profit	$	2,015				$	(7,374	)
Supplemental Information:
Depreciation and amortization	$	325				$	329
Capital expenditures		17					89
Business acquisitions and other additions to long-lived assets		12					12

Additional depreciation incurred by the Denver News Agency (“DNA”) reduced equity in earnings of JOAs by $3.0 million in the first quarter of 2007 (See page F-30). In the first quarter of 2008, DNA sold real estate that was no longer being utilized in DNA’s operations. The gain from this transaction increased our 2008 equity in earnings of JOAs $4.4 million.

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Broadcast Television - Broadcast television includes six ABC-affiliated stations, three NBC-affiliated stations and one independent. Our television stations reach approximately 10% of the nation’s television households. 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 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 operating performance of our broadcast television group is most affected by the health of the local economy, particularly conditions within the retail, auto, telecommunications and financial services industries, and by the volume of advertising time purchased by campaigns for elective office and political issues. The demand for political advertising is significantly higher in even-numbered years, when congressional and presidential elections occur.

Operating results for broadcast television were as follows:

( in thousands )	2008		Year-to-date Change		2007
Segment operating revenues:
Local	$	45,746	(5.8	)%	$	48,541
National		22,104	(7.5	)%		23,884
Political		3,055				262
Network compensation		2,177	15.7	%		1,882
Other		2,937	51.5	%		1,939
Total segment operating revenues		76,019	(0.6	)%		76,508
Segment costs and expenses:
Employee compensation and benefits		34,400	4.8	%		32,818
Programs and program licenses		11,558	(2.9	)%		11,899
Production and distribution		3,985	(2.9	)%		4,104
Other segment costs and expenses		11,906	5.3	%		11,308
Total segment costs and expenses		61,849	2.9	%		60,129
Segment profit	$	14,170	(13.5	)%	$	16,379
Supplemental Information:
Program payments	$	11,717			$	12,276
Depreciation and amortization		4,694				4,601
Capital expenditures		4,714				2,376

The decrease in broadcast television operating revenues was primarily attributed to declines in local advertising with particular weakness in the automotive and retail categories. Additionally, while advertising revenue generally increase during even-numbered years, when congressional and presidential elections occur, our political advertising in the first quarter of 2008 was negatively impacted by the lack of democratic primaries in Florida and Michigan. We expect total operating revenues at our broadcast television stations to be flat to up slightly year-over-year in the second quarter of 2008.

Total broadcast television costs and expenses are expected to up in the mid-single digits year-over-year in the second quarter of 2008.

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Interactive Media -Interactive media includes our online comparison shopping services, Shopzilla and uSwitch.

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 Web-based consumer feedback network that collects millions of consumer reviews of stores and products each year.

uSwitch operates an online comparison service that helps consumers compare prices and arrange for the purchase of a range of essential home services including gas, electricity, home phone, broadband providers and personal finance products, primarily in the United Kingdom.

Our interactive media businesses earn revenue primarily from referral fees and commissions paid by participating online retailers and service providers.

Financial information for interactive media is as follows:

( in thousands )	2008		Year-to-date Change		2007
Segment operating revenues	$	77,496	23.1	%	$	62,934
Segment profit (loss)	$	20,967			$	(381	)
Supplemental Information:
Depreciation and amortization	$	10,884			$	17,813
Capital expenditures		5,638				6,418

Interactive Media’s segment profit increased in the first quarter of 2008 compared with the first quarter of 2007 due to improvements at Shopzilla that have resulted in the business being able to cost-effectively increase and monetize user traffic and increased energy switching at uSwitch in the United Kingdom. Segment results in the first quarter of 2007 were also impacted by $10 million of costs incurred to build brand awareness for uSwitch in the United Kingdom and $5 million of costs incurred related to the transition in leadership at Shopzilla.

Operating revenues at Shopzilla were $63.0 million in the first quarter of 2008 compared with $48.9 million in the first quarter of 2007. The increase was primarily attributed to paid session growth derived from an increase in bidding on keywords. Shopzilla’s net revenue, when considering search marketing costs incurred, increased 34% for the first quarter of 2008 compared with the first quarter of 2007.

uSwitch’s operating revenues in the first quarter of 2008 benefited from an increase in volatility in the energy markets which correlated to an increase in switching activity.

Interactive Media is expected to generate segment profit of $12 million to $14 million in the second quarter of 2008.

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LIQUIDITY AND CAPITAL RESOURCES

Our primary source of liquidity is our cash flow from operating activities. Marketing services, including advertising and referral fees, provide approximately 80% 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:

	Three months ended March 31,
( in thousands )	2008			2007
Net cash provided by continuing operating activities	$	157,512		$	109,252
Net cash provided by (used in) discontinued operations		(984	)		2,540
Dividends paid, including to minority interests		(79,031	)		(59,241	)
Employee stock option proceeds		3,310			8,146
Excess tax benefits on stock awards		335			1,646
Other financing activities		7,196			(13,263	)
Cash flow available for acquisitions, investments, debt repayment and share repurchase	$	88,338		$	49,080
Sources and uses of available cash flow:
Business acquisitions and net investment activity	$	10,406		$	674
Capital expenditures		(30,547	)		(20,632	)
Other investing activity		6			49
Repurchase Class A Common shares		(11,442	)		(17,184	)
Increase (decrease) in long-term debt		(31,092	)		(20,171	)

Our cash flow has been used primarily to fund acquisitions and investments, develop new businesses, and repay debt. We expect cash flow from operating activities in 2008 will provide sufficient liquidity to continue the development of our emerging brands and to fund the capital expenditures necessary to support our businesses.

The scheduled $40 million principal payment on our 3.75% notes was paid in the first quarter of 2008.

Estimated transaction and other costs related to the proposed separation of the Company are expected to result in cash expenditures totaling $60 million to $70 million in 2008.

Pursuant to the terms of the Food Network general partnership agreement, the partnership is required to distribute available cash to the general partners. We expect the cash distributions to the minority partner will approximate $80 million in 2008.

Under the authorization of a share repurchase program that was approved by the Board of Directors on October 24, 2004, we have been repurchasing our Class A Common shares over the course of the last three years to offset the dilution resulting from our stock compensation programs. Shares were repurchased at a total cost of $11.4 million in the first quarter of 2008 and $18.1 million in the first quarter of 2007. Due to the pending proposed separation of the Company, the repurchase of shares was suspended in the first quarter of 2008.

We have a revolving credit facility expiring in June 2011 that permits aggregate borrowings up to $750 million. Total commercial paper borrowings, which are supported by the facility, were $88.5 million at March 31, 2008.

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.

In the fourth quarter of 2006, we filed a shelf registration statement with the Securities and Exchange Commission under which an unspecified amount of public debt or equity securities may be issued, subject to approval by the Board of Directors. Proceeds from any takedowns off the shelf will be used for general corporate purposes, including capital expenditures, working capital, securities repurchase programs, repayment of long-term and short-term debt and the financing of acquisitions.

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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 and changes in the price of newsprint. We are also exposed to changes in the market value of our investments.

Our objectives in managing interest rate risk are to limit the impact of interest rate changes on our earnings and cash flows, and to reduce our overall borrowing costs. We manage interest rate risk primarily by maintaining a mix of fixed-rate and variable-rate debt.

Our primary exposure to foreign currencies is the exchange rates between the U.S. dollar and the Japanese yen, British pound and the Euro. Reported earnings and assets may be reduced in periods in which the U.S. dollar increases in value relative to those currencies. Included in shareholders’ equity is $55.1 million of foreign currency translation adjustment gains resulting primarily from the devaluation of the U.S. dollar relative to the British pound since our acquisition of uSwitch in March 2006.

Our objective in managing exposure to foreign currency fluctuations is to reduce volatility of earnings and cash flow. Accordingly, we may enter into foreign currency derivative instruments that change in value as foreign exchange rates change, such as foreign currency forward contracts or foreign currency options. We held no foreign currency derivative financial instruments at March 31, 2008.

We also may use forward contracts to reduce the risk of changes in the price of newsprint on anticipated newsprint purchases. We held no newsprint derivative financial instruments at March 31, 2008.

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

	As of March 31, 2008					As of December 31, 2007
( 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	$	88,500	$	88,500		$	79,559	$	79,559
3.75% notes due in 2008							39,950		39,913
4.25% notes due in 2009		86,112		86,250			86,091		84,950
4.30% notes due in 2010		112,849		112,930			112,840		110,592
5.75% notes due in 2012		184,951		185,445			184,922		185,366
Other notes		1,268		980			1,301		1,015
Total long-term debt including current portion	$	473,680	$	474,105		$	504,663	$	501,395
Financial instruments subject to market value risk:
Time Warner (2,008,000 common shares)	$	29,538	$	28,152		$	29,538	$	33,152
Other available-for-sale securities		55		2,668			55		2,832
Total investments in publicly-traded companies		29,593		30,820			29,593		35,984
Other equity securities		8,611		(a	)		8,064		(a	)

(a) Includes securities that do not trade in public markets, so the securities do not have readily determinable fair values. We estimate the fair value of these securities approximates their carrying value. There can be no assurance that we would realize the carrying value upon sale of the securities.

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CONTROLS AND PROCEDURES

Scripps’ management is responsible for establishing and maintaining adequate internal controls designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The company’s internal control over financial reporting includes those policies and procedures that:

1. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the company are being made only in accordance with authorizations of management and the directors of the company; and

3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error, collusion and the improper overriding of controls by management. Accordingly, even effective internal control can only provide reasonable but not absolute assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

The effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) was evaluated as of the date of the financial statements. This evaluation was carried out under the supervision of and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures are effective. There were no changes to the company’s internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

F-42

THE E. W. SCRIPPS COMPANY

Index to Exhibits

Exhibit No.	Item
12	Ratio of Earnings to Fixed Charges
31(a)	Section 302 Certifications
31(b)	Section 302 Certifications
32(a)	Section 906 Certifications
32(b)	Section 906 Certifications

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