Edgar Filing: SCRIPPS E W CO /DE

SSP-2013.06.30-10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended June 30, 2013



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

312 Walnut Street Cincinnati, Ohio (Address of principal executive offices)		45202 (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 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 þ No o

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

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



Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of June 30, 2013, there were 45,157,991 of the registrant’s Class A Common shares, $.01 par value per share, outstanding and 11,932,722 of the registrant’s Common Voting Shares, $.01 par value per share, outstanding.

Index to The E. W. Scripps Company Report

on Form 10-Q for the Quarter Ended June 30, 2013



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. Mine Safety Disclosures		4

5. Other Information		4

6. Exhibits		4

Signatures		5

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PART I

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



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, and governmental proceedings primarily relating to renewal of broadcast licenses, 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, 2012, except for the following risk factor which has been updated:

Ownership of our Common Voting Shares by descendants of our founder could inhibit potential change of control.

Certain descendants of Edward W. Scripps own approximately 93% of our Common Voting Shares and are signatories to the Scripps Family Agreement, which governs the transfer and voting of Common Voting Shares held by them.

As a result of the foregoing, these descendants have the ability to elect two-thirds of the Board of Directors and to direct the outcome of any matter on which Ohio law does not require a vote of the Class A Common Shares. Because this concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction, the market price of our Class A Common Shares could be adversely affected.

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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 Common shares during the quarter ended June 30, 2013 and the remaining amount that may still be purchased under the program:



Period	Total number of shares purchased	Average price paid per share		Total market value of shares purchased		Maximum value that may yet be purchased under the plans or programs

4/1/13 - 4/30/13	—	—		—		$	89,352,371
5/1/13 - 5/31/13	942,378	$	13.63	$	12,843,623	$	76,508,748
6/1/13 - 6/30/13	800,364	14.27		11,419,205		$	65,089,543
Total	1,742,742	$	13.92	$	24,262,828

In November 2012, our board of directors authorized a repurchase program of up to $100 million of our Class A Common shares through December 2014.



Item 3.	Defaults Upon Senior Securities

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



Item 4.	Mine Safety Disclosures

None.



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.

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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: August 9, 2013	By:	/s/ Douglas F. Lyons
		Douglas F. Lyons
		Vice President and Controller
		(Principal Accounting Officer)

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The E. W. Scripps Company

Index to Financial Information



Item	Page

Condensed Consolidated Balance Sheets		F-2

Condensed Consolidated Statements of Income		F-3

Condensed Consolidated Statements of Comprehensive Income		F-4

Condensed Consolidated Statements of Cash Flows		F-5

Condensed Consolidated Statements of Equity		F-6

Condensed Notes to Consolidated Financial Statements		F-7

Management’s Discussion and Analysis of Financial Condition and Results of Operations		F-18

Quantitative and Qualitative Disclosures About Market Risk		F-29

Controls and Procedures		F-30

F-1

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Condensed Consolidated Balance Sheets (Unaudited)



(in thousands, except share data)	As of June 30, 2013			As of December 31, 2012

Assets
Current assets:
Cash and cash equivalents	$	218,101		$	242,642
Restricted cash	8,210			10,010
Accounts and notes receivable (less allowances - $1,591 and $2,491)	130,059			125,639
Inventory	6,864			6,437
Deferred income taxes	7,210			7,210
Income taxes receivable	6,093			2,926
Miscellaneous	7,599			7,836
Total current assets	384,136			402,700
Investments	20,330			21,115
Property, plant and equipment	367,567			374,931
Goodwill	27,966			27,966
Other intangible assets	141,334			144,783
Deferred income taxes	32,360			36,095
Miscellaneous	19,238			23,178
Total Assets	$	992,931		$	1,030,768
Liabilities and Equity
Current liabilities:
Accounts payable	$	16,791		$	23,329
Customer deposits and unearned revenue	24,402			26,240
Current portion of long-term debt	27,200			15,900
Accrued liabilities:
Employee compensation and benefits	24,631			37,118
Miscellaneous	29,524			28,545
Other current liabilities	9,786			14,901
Total current liabilities	132,334			146,033
Long-term debt (less current portion)	160,950			180,200
Other liabilities (less current portion)	159,704			164,625
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: 45,157,991 and 43,594,229 shares	452			436
Voting — authorized: 60,000,000 shares; issued and outstanding: 11,932,722 and 11,932,735 shares	119			119
Total	571			555
Additional paid-in capital	520,196			517,688
Retained earnings	131,175			136,293
Accumulated other comprehensive loss, net of income taxes:
Unrealized loss on derivatives	(338		)	(1,009		)
Pension liability adjustments	(113,875		)	(115,831		)
Total The E.W. Scripps Company shareholders’ equity	537,729			537,696
Noncontrolling interest	2,214			2,214
Total equity	539,943			539,910
Total Liabilities and Equity	$	992,931		$	1,030,768

See notes to condensed consolidated financial statements.

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Condensed Consolidated Statements of Income (Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share data)	2013			2012			2013			2012

Operating Revenues:
Advertising	$	158,105		$	168,869		$	305,252		$	324,452
Subscriptions	28,096			28,642			58,567			60,267
Other	21,652			19,423			42,687			39,342
Total operating revenues	207,853			216,934			406,506			424,061
Costs and Expenses:
Employee compensation and benefits	96,129			97,152			196,828			197,863
Programs and program licenses	13,218			14,499			26,014			28,954
Newsprint, press supplies, and other printing costs	11,407			12,678			24,351			26,443
Newspaper distribution	11,941			12,320			24,214			25,533
Other expenses	51,246			48,929			100,127			96,528
Pension expense	2,569			1,819			4,538			3,775
Acquisition and related integration costs	—			—			—			5,826
Separation and restructuring costs	1,425			2,355			2,401			4,066
Total costs and expenses	187,935			189,752			378,473			388,988
Depreciation, Amortization, and (Gains) Losses:
Depreciation	10,035			10,832			20,137			21,362
Amortization of intangible assets	1,739			1,771			3,451			3,547
(Gains) losses, net on disposal of property, plant and equipment	(42		)	212			(37		)	(30		)
Net depreciation, amortization, and (gains) losses	11,732			12,815			23,551			24,879
Operating income	8,186			14,367			4,482			10,194
Interest expense	(2,656		)	(3,211		)	(5,269		)	(6,365		)
Miscellaneous, net	(1,634		)	(1,435		)	(2,938		)	(1,552		)
Income (loss) from operations before income taxes	3,896			9,721			(3,725		)	2,277
Provision (benefit) for income taxes	711			4,305			(4,239		)	1,276
Net income	3,185			5,416			514			1,001
Net income attributable to noncontrolling interests	—			—			—			—
Net income attributable to the shareholders of The E.W. Scripps Company	$	3,185		$	5,416		$	514		$	1,001
Net income per basic share of common stock attributable to the shareholders of The E.W. Scripps Company:	$	0.05		$	0.09		$	0.01		$	0.02
Net income per diluted share of common stock attributable to the shareholders of The E.W. Scripps Company:	$	0.05		$	0.09		$	0.01		$	0.02

See notes to condensed consolidated financial statements.

F-3

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Condensed Consolidated Statements of Comprehensive Income (Unaudited)



	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2013		2012			2013		2012

Net income	$	3,185	$	5,416		$	514	$	1,001
Changes in fair value of derivative, net of tax of $371, $(477), $406 and $(445)	612		(796		)	671		(742		)
Changes in defined benefit pension plans, net of tax of $1,001, $353, $1,299 and $691	1,105		591			1,956		1,152
Total comprehensive income	4,902		5,211			3,141		1,411
Less comprehensive income attributable to noncontrolling interest	—		—			—		—
Total comprehensive income attributable to the shareholders of The E.W. Scripps Company	$	4,902	$	5,211		$	3,141	$	1,411

See notes to condensed consolidated financial statements.

F-4

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Condensed Consolidated Statements of Cash Flows (Unaudited)



	Six Months Ended June 30,
(in thousands)	2013			2012

Cash Flows from Operating Activities:
Net income	$	514		$	1,001
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	23,588			24,909
Contract termination fees	—			5,663
Gains on sale of property, plant and equipment	(37		)	(30		)
Deferred income taxes	2,041			2,794
Excess tax benefits of share-based compensation plans	—			(4,311		)
Stock and deferred compensation plans	4,757			4,881
Pension expense, net of payments	3,113			1,863
Other changes in certain working capital accounts, net	(31,044		)	29,258
Miscellaneous, net	1,960			1,910
Net cash provided by operating activities	4,892			67,938
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(12,169		)	(6,086		)
Purchase of investments	(1,375		)	(1,272		)
Change in restricted cash	1,800			—
Miscellaneous, net	320			486
Net cash used in investing activities	(11,424		)	(6,872		)
Cash Flows from Financing Activities:
Payments on long-term debt	(7,950		)	(7,950		)
Repurchase of Class A Common shares	(34,910		)	(16,407		)
Proceeds from employee stock options	33,675			4,605
Tax payments related to shares withheld for RSUs	(5,970		)	(7,423		)
Excess tax benefits from stock compensation plans	—			4,311
Miscellaneous, net	(2,854		)	1,015
Net cash used in financing activities	(18,009		)	(21,849		)
(Decrease) increase in cash and cash equivalents	(24,541		)	39,217
Cash and cash equivalents:
Beginning of year	242,642			127,889
End of period	$	218,101		$	167,106
Supplemental Cash Flow Disclosures
Interest paid	$	3,917		$	4,735
Income taxes paid	$	111		$	741

See notes to condensed consolidated financial statements.

F-5

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Condensed Consolidated Statements of Equity (Unaudited)



(in thousands, except share data)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests		Total Equity

As of December 31, 2011	$	543		$	515,421		$	96,105		$	(97,548	)	$	2,480	$	517,001
Net income	—			—			1,001			—			—		1,001
Changes in defined benefit pension plans	—			—			—			1,152			—		1,152
Change in fair value of derivative	—			—			—			(742		)	—		(742		)
Repurchase 1,772,193 Class A Common Shares	(18		)	(16,389		)	—			—			—		(16,407		)
Compensation plans: 2,165,341 net shares issued *	21			2,026			—			—			—		2,047
Excess tax benefits of compensation plans	—			6,500			—			—			—		6,500
As of June 30, 2012	$	546		$	507,558		$	97,106		$	(97,138	)	$	2,480	$	510,552


As of December 31, 2012	$	555		$	517,688		$	136,293		$	(116,840	)	$	2,214	$	539,910
Net income	—			—			514			—			—		514
Changes in defined benefit pension plans	—			—			—			1,956			—		1,956
Change in fair value of derivative	—			—			—			671			—		671
Repurchase 2,684,876 Class A Common Shares	(27		)	(29,251		)	(5,632		)	—			—		(34,910		)
Compensation plans: 4,248,638 net shares issued *	43			31,759			—			—			—		31,802
As of June 30, 2013	$	571		$	520,196		$	131,175		$	(114,213	)	$	2,214	$	539,943

* Net of $5,970 in 2013 and $7,423 in 2012 of tax payments related to shares withheld for vested stock and RSUs.

See notes to condensed consolidated financial statements.

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Condensed Notes to Consolidated Financial Statements (Unaudited)

1. Summary of Significant Accounting Policies

As used in the Condensed Notes to Consolidated Financial Statements, the terms “Scripps,” “Company,” “we,” “our,” or “us” may, depending on the context, refer to The E. W. Scripps Company, to one or more of its consolidated subsidiary companies or to all of them taken as a whole.

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 2012 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 company with interests in television and newspaper publishing. All of our media businesses provide content and advertising services via digital platforms, including the Internet, mobile devices and tablets. Our media businesses are organized into the following reportable business segments: Television, Newspapers, and Syndication and other. Additional information for our business segments is presented in the Notes to our Condensed Consolidated Financial Statements.

Use of Estimates — Preparing 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 periods over which long-lived assets are depreciated or amortized; the fair value of long-lived assets, goodwill and indefinite lived assets; the liability for uncertain tax positions and valuation allowances against deferred income tax assets; 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.

Revenue Recognition — We recognize revenue when persuasive evidence of a sales arrangement exists, delivery occurs or services are rendered, the sales price is fixed or determinable and collectability is reasonably assured.

Our primary sources of revenue are from the sale of print, broadcast and digital advertising and the sale of newspaper subscriptions.

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, 2012.

Share-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, 2012. The Plan provides for the award of incentive and nonqualified stock options, stock appreciation rights, restricted stock units (RSUs), unrestricted Class A Common shares and performance units to key employees and non-employee directors.

Share-based compensation costs totaled $0.5 million and $1.6 million for the second quarter of 2013 and 2012, respectively. Year-to-date share-based compensation costs totaled $3.9 million and $4.7 million in 2013 and 2012, respectively.

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Earnings Per Share (“EPS”) — Unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our RSUs, are considered participating securities for purposes of calculating EPS. Under the two-class method, we allocate a portion of net income to these participating securities and therefore exclude that income from the calculation of EPS for common stock. We do not allocate losses to the participating securities.

The following table presents information about basic and diluted weighted-average shares outstanding:



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2013			2012			2013			2012

Numerator (for basic and diluted earnings per share)
Net income attributable to the shareholders of The E.W. Scripps Company	$	3,185		$	5,416		$	514		$	1,001
Less income allocated to RSUs	(89		)	(225		)	(16		)	(51		)
Numerator for basic and diluted earnings per share	$	3,096		$	5,191		$	498		$	950
Denominator
Basic weighted-average shares outstanding	57,448			55,146			56,894			54,961
Effect of dilutive securities:
Stock options held by employees and directors	1,299			340			1,172			221
Diluted weighted-average shares outstanding	58,747			55,486			58,066			55,182
Anti-dilutive securities ⁽¹⁾	—			5,824			—			5,824

⁽¹⁾ Amount outstanding at Balance Sheet date, before application of the treasury stock method and not weighted for period outstanding.

Derivative Financial Instruments — It is our policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. Derivative financial instruments are utilized to manage interest rate risks. We do not hold derivative financial instruments for trading purposes. All derivatives must be recorded on the balance sheet at fair value. Each derivative is designated as a cash flow hedge or remains undesignated. Changes in the fair value of derivatives that are designated and effective as cash flow hedges are recorded in other comprehensive income (loss) and reclassified to the statement of operations when the effects of the item being hedged are recognized in the statement of operations. These changes are offset in earnings to the extent the hedge was effective by fair value changes related to the risk being hedged on the hedged item. Changes in the fair value of undesignated hedges are recognized currently in the statement of operations. All ineffective changes in derivative fair values are recognized currently in earnings.

All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness, when applicable. If and when a derivative is determined not to be highly effective as a hedge, or the underlying hedged transaction is no longer likely to occur, or the hedge designation is removed, or the derivative is terminated, the hedge accounting discussed above is discontinued.

2. Recently Adopted Standards and Issued Accounting Standards

Recently Adopted Accounting Standards — In February 2013, the FASB issued new guidance regarding the disclosure of comprehensive income (loss). The update requires an entity to present either on the face of the statement where net income (loss) is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income (loss) by the respective line items of net income (loss) but only if the amount reclassified is required under US GAAP to be reclassified to net income (loss) in its entirety in the same reporting period. For other amounts that are not required under US GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under US GAAP that provide additional details about those amounts. The update was effective for us on January 1, 2013. The implementation of this amended accounting guidance did not have a material impact on our consolidated financial position and results of operations.

In July 2012, the FASB amended the guidance on testing indefinite-lived assets, other than goodwill, for impairment. Under the revised guidance, an entity testing an indefinite-lived intangible asset for impairment has the option of performing a qualitative assessment before performing quantitative tests. If the entity determines, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible asset is not more likely than not impaired, the entity would not need to perform the quantitative tests. This guidance will be effective for our annual impairment tests for the year ending December 31, 2013. The adoption of this guidance did not have a material impact on our financial statements; rather it may change our approach to testing indefinite-lived intangible assets for impairment.

3. Income Taxes

We file a consolidated federal income tax return, consolidated unitary tax returns in certain states, and other separate state income tax returns for our subsidiary companies.

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 (loss) before income tax for the full year and the jurisdictions in which that income (loss) is subject to tax. The actual effective income tax rate for the full year may differ from these estimates if income (loss) before income tax is greater or less than what was estimated or if the allocation of income (loss) 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 (loss) before income tax for the full year and the jurisdictions in which we expect that income will be taxed.

The effective income tax rate for the six months ended June 30, 2013 and 2012, was 114% and 56.0%, respectively. The primary reason for the difference between these rates and the U.S. Federal statutory rate of 35% is the impact of state taxes, non-deductible expenses and reserves for uncertain tax positions (including interest). We recognized $2.4 million of previously unrecognized tax benefits in the first six months of 2013 upon settlement of audits or when the statutes of limitations lapsed in certain tax jurisdictions.

Deferred tax assets totaled $39.6 million at June 30, 2013. Management believes that it is more likely than not that we will realize the benefits of our Federal deferred tax assets and therefore has not recorded a valuation allowance for our Federal deferred tax assets. If economic conditions worsen, future estimates of taxable income could be lower than our current estimates, which may require valuation allowances to be recorded in future reporting periods.

During the period ended June 30, 2013, deferred tax assets relating to employee share-based compensation from the vesting of RSU's and the exercise of stock options have not been recognized since we are in a net tax loss position as of June 30, 2013. The additional tax benefits will be reflected as net operating loss carryforwards when we file our tax return for 2013, but the additional tax benefits are not recorded under GAAP until the tax deduction reduces taxes payable. The amount of unrecognized tax deductions for the period ended June 30, 2013 was approximately $26 million.

4. Restricted Cash

At June 30, 2013 and December 31, 2012, we had $8.2 million and $10 million, respectively, in a restricted cash account on deposit with our insurance carrier. This account serves as collateral, in place of an irrevocable stand-by letter of credit, to provide financial assurance that we will fulfill our obligations with respect to cash requirements associated with workers compensation self-insurance. This cash is to remain on deposit with the carrier until all claims have been paid or we provide a letter of credit in lieu of the cash deposit.

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5. Goodwill and Other Intangible Assets

Other intangible assets consisted of the following:



(in thousands)	As of June 30, 2013			As of December 31, 2012

Amortizable intangible assets:
Carrying amount:
Television network affiliation relationships	$	78,844		$	78,844
Customer lists and advertiser relationships	22,304			22,304
Other	3,561			3,765
Total carrying amount	104,709			104,913
Accumulated amortization:
Television network affiliation relationships	(7,717		)	(5,755		)
Customer lists and advertiser relationships	(11,737		)	(10,346		)
Other	(1,736		)	(1,844		)
Total accumulated amortization	(21,190		)	(17,945		)
Net amortizable intangible assets	83,519			86,968
Other indefinite-lived intangible assets — FCC licenses	57,815			57,815
Total other intangible assets	$	141,334		$	144,783

Goodwill by business segment was as follows:



(in thousands)	Television			Newspapers			Total

Gross balance at December 31, 2012	$	243,380		$	778,900		$	1,022,280
Accumulated impairment losses	(215,414		)	(778,900		)	(994,314		)
Net balance as of December 31, 2012	$	27,966		$	—		$	27,966

Gross balance as of June 30, 2013	$	243,380		$	778,900		$	1,022,280
Accumulated impairment losses	(215,414		)	(778,900		)	(994,314		)
Net balance at June 30, 2013	$	27,966		$	—		$	27,966

Estimated amortization expense of intangible assets for each of the next five years is $3.6 million for the remainder of 2013, $6.8 million in 2014, $6.7 million in 2015, $6.7 million in 2016, $4.2 million in 2017, $4.2 million in 2018, and $51.3 million in later years.

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6. Long-Term Debt

Long-term debt consisted of the following:



(in thousands)	As of June 30, 2013		As of December 31, 2012

Variable rate credit facility	$	—	$	—
Term loan	188,150		196,100
Long-term debt	188,150		196,100
Current portion of long-term debt	27,200		15,900
Long-term debt (less current portion)	$	160,950	$	180,200
Fair value of long-term debt *	$	194,000	$	196,100

* Fair value was estimated based on current rates available to the Company for debt of the same remaining maturity and are classified as Level 2 in the fair value hierarchy.

We have a $312 million revolving credit and term loan agreement (“Financing Agreement”). The Financing Agreement, which expires in December 2016, includes a $212 million term loan and a $100 million revolving credit facility.

The Financing Agreement includes certain affirmative and negative covenants, including maintenance of minimum fixed charge coverage and leverage ratios, as defined in the Financing Agreement. We were in compliance with all covenants at June 30, 2013 and December 31, 2012.

Interest is payable at rates based on LIBOR plus a margin based on our leverage ratio ranging from 3.5% to 4.0%. As of June 30, 2013 and December 31, 2012, the interest rate was 3.70% and 3.72%, respectively. The Financing Agreement also includes a provision that in certain circumstances we must use a portion of excess cash flow to repay debt. As of June 30, 2013, the current portion of long-term debt includes $6.0 million for the expected additional principal payment based on excess cash flow for 2013. The weighted-average interest rate on borrowings was 3.70% and 4.25% for the six months ended June 30, 2013 and 2012, respectively.

Scheduled principal payments on long-term debt at June 30, 2013, are: $8.0 million for the remainder of 2013, $26.5 million in 2014, $26.5 million in 2015, and $127.2 million in 2016.

Under the terms of the Financing Agreement we granted the lenders mortgages on certain of our real property, pledges of our equity interests in our subsidiaries and security interests in substantially all other personal property, including cash, accounts receivables, inventories and equipment.

The Financing Agreement allows us to make restricted payments (dividends and share repurchases) up to $25 million plus additional amounts based on our financial results and condition, up to a maximum of $250 million over the term of the agreement. We can also make additional restricted payments for share repurchases equal to the amount of proceeds that we receive from the exercise of stock options held by our employees. We can make acquisitions up to $25 million plus additional amounts based on our financial results and condition, up to a maximum of $150 million.

Commitment fees of 0.50% per annum of the total unused commitment are payable under the revolving credit facility.

As of June 30, 2013 and December 31, 2012, we had outstanding letters of credit totaling $0.2 million and $1.1 million, respectively.

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7.	Financial Instruments

We are exposed to various market risks, including changes in interest rates. To manage risks associated with the volatility of changes in interest rates we may enter into interest rate management instruments.

We utilize interest rate swaps to manage our interest expense exposure by fixing our interest rate on portions of our floating rate term loan. We have entered into a $75 million notional value interest rate swap expiring in March 2016 which provides for a fixed interest rate of 1.08%. We did not provide or receive any collateral for this contract. The fair value of this financial derivative, which is designated as and qualifies as a cash flow hedge, is determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves and implied volatilities. In addition, credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential nonperformance risk.

Fair Value of Derivative Instruments

The notional amounts and fair values of derivative instruments designated as cash flow are shown below.



	As of June 30, 2013						As of December 31, 2012
	Notional		Fair value				Notional		Fair value
(in thousands)	amount		Asset		Liability ⁽¹⁾		amount		Asset		Liability ⁽¹⁾

Derivatives designated as cash flow hedges:
Interest rate swap	$	75,000	$	—	$	541	$	75,000	$	—	$	1,619

⁽¹⁾ Balance recorded in "Other liabilities"

The above derivative instrument that is designated and qualifies as a cash flow hedge and the effective portion of the unrealized gain and loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. Gain and loss on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.



	Three months ended June 30, 2013
(in thousands)	Effective portion recognized in Accumulated OCL, Gain/(Loss)		Reclassified from Accumulated OCL, Gain/(Loss)		Ineffective portion and amount excluded from effectiveness testing Gain/(Loss)

Derivatives designated as cash flow hedges:
Interest rate swap	$	817	$	167	$	—

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	Three months ended June 30, 2012
(in thousands)	Effective portion recognized in Accumulated OCL, Gain/(Loss)			Reclassified from Accumulated OCL, Gain/(Loss)		Ineffective portion and amount excluded from effectiveness testing Gain/(Loss)

Derivatives designated as cash flow hedges:
Interest rate swap	$	(1,401	)	$	160	$	—



	Six months ended June 30, 2013
(in thousands)	Effective portion recognized in Accumulated OCL, Gain/(Loss)		Reclassified from Accumulated OCL, Gain/(Loss)		Ineffective portion and amount excluded from effectiveness testing Gain/(Loss)

Derivatives designated as cash flow hedges:
Interest rate swap	$	745	$	333	$	—



	Six months ended June 30, 2012
(in thousands)	Effective portion recognized in Accumulated OCL, Gain/(Loss)			Reclassified from Accumulated OCL, Gain/(Loss)		Ineffective portion and amount excluded from effectiveness testing Gain/(Loss)

Derivatives designated as cash flow hedges:
Interest rate swap	$	(1,389	)	$	202	$	—


8.	Fair Value Measurement

We measure certain financial assets and liabilities at fair value on a recurring basis, such as derivatives. The fair value of these financial assets and liabilities were determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:


•	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 tables set forth our assets and liabilities that are measured at fair value on a recurring basis at June 30, 2013 and December 31, 2012:



	As of June 30, 2013
(in thousands)	Total			Level 1		Level 2			Level 3

Assets/(Liabilities):
Cash equivalents	$	52,000		$	52,000	$	—		$	—
Interest rate swap	(541		)	—		(541		)	—

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	As of December 31, 2012
(in thousands)	Total			Level 1		Level 2			Level 3

Assets/(Liabilities):
Cash equivalents	$	—		$	—	$	—		$	—
Interest rate swap	(1,619		)	—		(1,619		)	—

9. Other Liabilities

Other liabilities consisted of the following:



(in thousands)	As of June 30, 2013		As of December 31, 2012

Employee compensation and benefits	$	21,349	$	20,596
Liability for pension benefits	112,446		112,556
Liabilities for uncertain tax positions	10,885		12,534
Other	15,024		18,939
Other liabilities (less current portion)	$	159,704	$	164,625

10. Noncontrolling Interests

Individuals and other entities own a 4% noncontrolling interest in the capital stock of the subsidiary company that publishes our Memphis newspaper and a 6% noncontrolling interest in the capital stock of the subsidiary company that publishes our Evansville newspaper. We are not required to redeem the noncontrolling interests in these subsidiary companies.

11. Supplemental Cash Flow Information

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



	Six Months Ended June 30,
(in thousands)	2013			2012

Other changes in certain working capital accounts, net
Accounts and notes receivable	$	(4,420	)	$	7,494
Income taxes receivable/payable — net	(3,167		)	25,769
Accounts payable	(6,538		)	(3,220		)
Accrued employee compensation and benefits	(12,487		)	(2,607		)
Other accrued liabilities	467			(2,121		)
Other, net	(4,899		)	3,943
Total	$	(31,044	)	$	29,258

12. Employee Benefit Plans

We sponsor various noncontributory defined benefit plans covering substantially all full-time employees that began employment prior to June 30, 2008. We also have a non-qualified Supplemental Executive Retirement Plan ("SERP"). Effective June 30, 2009, we froze the accrual of benefits under our defined benefit pension plans that cover the majority of our employees and our SERP.

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We sponsor a defined contribution plan covering substantially all non-union and certain union employees. We match a portion of employees' voluntary contributions to this plan. In connection with freezing the accrual of service credits under certain of our defined benefit pension plans, we began contributing additional amounts to certain employees' defined contribution retirement accounts in 2011. These transition credits, which we will make through 2014, are determined based upon the employee’s age and compensation.

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.

The components of the expense consisted of the following:



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2013			2012			2013			2012

Service cost	$	17		$	13		$	34		$	26
Interest cost	5,975			6,470			11,951			12,940
Expected return on plan assets, net of expenses	(5,371		)	(5,642		)	(10,742		)	(11,283		)
Amortization of prior service cost	—			1			—			1
Amortization of actuarial loss	1,061			869			2,122			1,739
Total for defined benefit plans	1,682			1,711			3,365			3,423
Multi-employer plans	111			114			231			234
SERP	887			211			1,173			455
Defined contribution plans	2,907			2,693			6,286			5,429
Net periodic benefit cost	$	5,587		$	4,729		$	11,055		$	9,541

We contributed $1.3 million to fund current benefit payments for our SERP during the first six months of 2013. We anticipate contributing an additional $1.1 million to fund the SERP’s benefit payments during the remainder of 2013. We contributed $0.1 million to our defined benefit plans during the first six months of 2013.

A settlement charge of $0.6 million was recorded in the second quarter of 2013 for our SERP plan. We remeasured our SERP liability in the second quarter of 2013, reflecting the settlement of a significant portion of the plan's obligations. The actuarial assumptions used to remeasure the plan liability were substantially the same as those used in the December 31, 2012 measurement, except for an increase in the discount rate to 5%. The remeasurement reduced our pension liabilities and accumulated comprehensive loss by $3.3 million.

13. 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.

Television includes ten ABC affiliates, three NBC affiliates, one independent station and five Azteca affiliates. Our television stations reach approximately 13% of the nation’s television households. Television stations earn revenue primarily from the sale of advertising time to local and national advertisers.

Our newspaper business segment includes daily and community newspapers in 13 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 newspaper subscriptions to readers.

Syndication and other primarily includes syndication of news features and comics and other features for the newspaper industry.

We allocate a portion of certain corporate costs and expenses, including information technology, certain employee benefits, digital operations services and other shared services, to our business segments. The allocations are generally amounts agreed upon by management, which may differ from an arms-length amount. Corporate assets are primarily cash and cash equivalents, restricted cash and other short-term investments, property and equipment primarily used for corporate purposes, and deferred income taxes. A portion of our digital operations which are not allocated to our newspaper and television segments is included in shared services and corporate.

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Our chief operating decision maker evaluates the operating performance of our business segments and makes decisions about the allocation of resources to our business segments using a measure called segment profit. Segment profit excludes interest, defined benefit plan pension expense (other than current service cost), income taxes, depreciation and amortization, impairment charges, divested operating units, restructuring activities, investment results and certain other items that are included in net income (loss) determined in accordance with accounting principles generally accepted in the United States of America.

Information regarding our business segments is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2013			2012			2013			2012

Segment operating revenues:
Television	$	111,393		$	117,097		$	208,259		$	216,654
Newspapers	93,452			97,180			192,940			201,559
Syndication and other	3,008			2,657			5,307			5,848
Total operating revenues	$	207,853		$	216,934		$	406,506		$	424,061
Segment profit (loss):
Television	$	30,532		$	34,916		$	47,024		$	52,792
Newspapers	5,882			4,566			11,819			11,731
Syndication and other	(446		)	(401		)	32			408
Shared services and corporate	(12,056		)	(7,725		)	(23,903		)	(16,191		)
Depreciation and amortization of intangibles	(11,774		)	(12,603		)	(23,588		)	(24,909		)
Gains (losses), net on disposal of property, plant and equipment	42			(212		)	37			30
Pension expense	(2,569		)	(1,819		)	(4,538		)	(3,775		)
Interest expense	(2,656		)	(3,211		)	(5,269		)	(6,365		)
Acquisition and related integration costs	—			—			—			(5,826		)
Separation and restructuring costs	(1,425		)	(2,355		)	(2,401		)	(4,066		)
Miscellaneous, net	(1,634		)	(1,435		)	(2,938		)	(1,552		)
Income (loss) from continuing operations before income taxes	$	3,896		$	9,721		$	(3,725	)	$	2,277
Depreciation:
Television	$	5,616		$	5,768		$	11,207		$	11,389
Newspapers	4,004			4,823			8,117			9,473
Syndication and other	19			12			38			24
Shared services and corporate	396			229			775			476
Total depreciation	$	10,035		$	10,832		$	20,137		$	21,362
Amortization of intangibles:
Television	$	1,602		$	1,594		$	3,179		$	3,189
Newspapers	137			177			272			358
Total amortization of intangibles	$	1,739		$	1,771		$	3,451		$	3,547
Additions to property, plant and equipment:
Television	$	3,269		$	3,975		$	5,156		$	4,551
Newspapers	572			392			1,461			926
Shared services and corporate	3,349			582			5,552			609
Total additions to property, plant and equipment	$	7,190		$	4,949		$	12,169		$	6,086

No single customer provides more than 10% of our revenue.

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14. Spin-off of Scripps Networks Interactive, Inc.

On July 1, 2008, we distributed all of the shares of Scripps Networks Interactive, Inc. (“SNI”) to shareholders of record as of the close of business on June 16, 2008. SNI owned and operated our national lifestyle cable television networks and interactive media businesses.

In connection with the separation we entered into several agreements, including a Tax Allocation Agreement. This agreement sets forth the allocations between us and SNI with regards to liabilities for federal, state and local taxes for periods prior to the separation.

Under the terms of the Tax Allocation Agreement we receive any tax deductions for share-based compensation awards held by our employees in SNI. In the first half of 2013 and 2012, tax deductions resulting from the exercise of those awards totaled approximately $8.9 million and $11.1 million, respectively. At June 30, 2013, our employees held options on approximately 0.6 million SNI shares, which expire through 2015.

15. Capital Stock

Capital Stock — We have two classes of common shares, Common Voting Shares and Class A Common shares. The Class A Common shares are only entitled to vote on the election of the greater of three or one-third of the directors and other matters as required by Ohio law.

Share Repurchase Plan — In November 2012, our board of directors authorized a repurchase program of up to $100 million of our Class A Common shares through December 2014. Shares may be repurchased from time to time at management's discretion, either in the open market, through pre-arranged trading plans or in privately negotiated block transactions. The Company currently intends to fund approximately half of the buybacks from its cash balance and half using cash proceeds from the future exercise of employee stock options. Under the authorization, we repurchased $34.9 million of shares at prices ranging from $10.83 to $15.49 per share during the first half of 2013.

Information about options outstanding and options exercisable by year of grant as of June 30, 2013 is as follows:



			Options Outstanding and Exercisable
Year of Grant	Range of Exercise Prices	Average Remaining Term (in years)	Options on Shares Outstanding	Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)

2003 – expire in 2013	9-10	0.33	8,065	$	9.66	$	—
2004 – expire in 2014	10-11	0.73	355,154	10.55		1.8
2005 – expire in 2013	10	0.34	13,212	9.75		0.1
2006 – expire in 2014	10-11	0.70	518,844	10.38		2.7
2007 – expire in 2015	9-10	1.66	1,375,041	10.36		7.2
2008 – expire in 2016	7-10	2.75	2,326,834	8.70		16.0
Total	7-11	2.02	4,597,150	$	9.54	$	27.8

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16. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss ("AOCL") by component, including items reclassified out of AOCL, were as follows:



(in thousands)	Gains and Losses on Derivatives			Defined Benefit Pension Items			Other		Total

Beginning balance, March 31, 2013	$	(950	)	$	(115,337	)	$	357	$	(115,930	)
Other comprehensive income before reclassifications	509			—			—		509
Amounts reclassified from accumulated other comprehensive loss
Interest rate swap ^(a), net of tax of $63	103			—			—		103
Actuarial loss ^(b), net of tax of $1,001	—			1,105			—		1,105
Net current-period other comprehensive income	612			1,105			—		1,717
Ending balance, June 30, 2013	$	(338	)	$	(114,232	)	$	357	$	(114,213	)



(in thousands)	Gains and Losses on Derivatives			Defined Benefit Pension Items			Other		Total

Beginning balance, December 31, 2012	$	(1,009	)	$	(116,188	)	$	357	$	(116,840	)
Other comprehensive income before reclassifications	464			—			—		464
Amounts reclassified from accumulated other comprehensive loss
Interest rate swap ^(a), net of tax of $126	207			—			—		207
Actuarial loss ^(b), net of tax of $1,299	—			1,956			—		1,956
Net current-period other comprehensive income	671			1,956			—		2,627
Ending balance, June 30, 2013	$	(338	)	$	(114,232	)	$	357	$	(114,213	)

^(a)Included in interest expense on the Statement of Operations

^(b) Included in pension expense on the Statement of Operations

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

The E. W. Scripps Company ("Scripps") is a diverse media company with interests in television stations and newspaper publishing. The Company's portfolio of media properties includes: 19 television stations, including ten ABC-affiliated stations, three NBC affiliates, one independent station and five Azteca affiliates; daily and community newspapers in 13 markets; syndication of news features and comics; and the Washington-based Scripps Howard News Service.

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

Certain forward-looking statements related to our businesses are included in this discussion. Those forward-looking statements reflect 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. You should evaluate our forward-looking statements, which are as of the date of this filing, with the understanding of their inherent uncertainty. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date the statement is made.

Executive Overview

Our 2011 addition of nine local television stations in four markets through the acquisition of McGraw-Hill Broadcasting Company, Inc. (“McGraw-Hill”) signified our shift of the balance of the Company's assets toward the television business.

Our emphasis on positioning our television stations in their markets to be leaders in local news continues to show strong results. In the May 2013 ratings, 10 of our stations finished first or second in key adults demographics in at least one of the major local news time periods (6 a.m., 6 p.m. or late news). Thirteen of 14 stations improved their percentage of local news viewing in these time periods over the same time in May 2012. Our Denver and Phoenix television stations won coveted Peabody awards in 2013. We believe that our emphasis on the strategy of being the local news leader in our markets will drive stronger operating results.

We continued to see strong results from our programming strategy lessening our reliance on purchased syndicated shows. We have two original shows — a game show called Let's Ask America and a nightly infotainment magazine called The List — aired during the access period between evening news and prime time. These shows are airing in seven of our markets currently, with two additional markets being launched in the fall of this year. We have the intention of rolling them out in the rest of our markets when commitments to air other programming during that time period expire. We are also a partner in another original show called Right This Minute, a daily news and entertainment program, that currently airs on 12 of our stations.

In our Newspaper division, we saw the launch late in the first quarter of 2013 of our bundled-subscription strategy in our Memphis and Treasure Coast newspaper markets. At the end of the second quarter, all but two of our newspaper markets have introduced this strategy. Under our bundled strategy, subscribers receive access to all of our newspaper content on all platforms, and only limited digital content is available to non-subscribers. We expect to realize the financial benefits of the bundled subscription strategy later in the year as subscriptions renew.

We continue our investment in our digital initiatives. We are hiring and developing digital-only sales personnel, streamlining digital sales processes and creating digital content. We expect these investments to drive digital revenue growth in each of our divisions. We have hired 59 digital-only sales resources so far this year and expect to have approximately 100 on board by the end of 2013.

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

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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 Acquisitions, Long-Lived Assets, Goodwill and 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, 2012.

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

Recently Adopted Standards and Issued Accounting Standards

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Results of Operations

The trends and underlying economic conditions affecting the operating performance and future prospects differ for each of our business segments. Accordingly, you should read the following discussion of our consolidated results of operations in conjunction with the discussion of the operating performance of our business segments that follows.

Consolidated Results of Operations

Consolidated results of operations were as follows:



	Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	2013			Change		2012			2013			Change		2012

Operating revenues	$	207,853		(4.2	)%	$	216,934		$	406,506		(4.1	)%	$	424,061
Employee compensation and benefits	(96,129		)	(1.1	)%	(97,152		)	(196,828		)	(0.5	)%	(197,863		)
Programs and program licenses	(13,218		)	(8.8	)%	(14,499		)	(26,014		)	(10.2	)%	(28,954		)
Newsprint, press supplies, and other printing costs	(11,407		)	(10.0	)%	(12,678		)	(24,351		)	(7.9	)%	(26,443		)
Newspaper distribution	(11,941		)	(3.1	)%	(12,320		)	(24,214		)	(5.2	)%	(25,533		)
Other expenses	(51,246		)	4.7	%	(48,929		)	(100,127		)	3.7	%	(96,528		)
Pension expense	(2,569		)	41.2	%	(1,819		)	(4,538		)	20.2	%	(3,775		)
Acquisition and related integration costs	—					—			—					(5,826		)
Separation and restructuring costs	(1,425		)			(2,355		)	(2,401		)			(4,066		)
Depreciation and amortization of intangibles	(11,774		)			(12,603		)	(23,588		)			(24,909		)
Gains (losses), net on disposal of property, plant and equipment	42					(212		)	37					30
Operating income	8,186					14,367			4,482					10,194
Interest expense	(2,656		)			(3,211		)	(5,269		)			(6,365		)
Miscellaneous, net	(1,634		)			(1,435		)	(2,938		)			(1,552		)
Income (loss) from operations before income taxes