Scripps shares tumble post-split from cable unit

Shares dropped 18 cents, or 5.6 percent, to close at $3.01 Tuesday, after reaching a 52-week low of $2.70 earlier in the session.

Jefferies & Co. analyst Brian Shipman assumed coverage of the post-split E.W. Scripps with a "Hold" rating, saying continued fragmentation in the media industry will result in further market share decline for newspapers. And profit margins will continue to feel the squeeze from declining advertising revenue.

While broadcast stations should benefit from political advertising in the second half of the year, Shipman expects 2009 to be a more difficult year.

Tuesday's sell-off is likely due to the fact that holders of the pre-split entity no longer wanted traditional media assets, and index holdings no longer wanted the shares because E.W. Scripps is being replaced by Scripps Networks in the Standard & Poor's 500 index, Shipman said.

Though the shares appear relatively cheap at current levels, Shipman cautioned against holding the shares longer-term because of the structural weaknesses in traditional media assets.

Shares of Scripps Networks Interactive, which operates HGTV, Food Network, DIY Network, Fine Living Network and Great American Country Network along with comparison shopping services Shopzilla and uSwitch, began trading Tuesday on the New York Stock Exchange under the symbol "SNI."

The board authorized management in October to pursue the separation and shareholders approved the split earlier this month. E.W. Scripps shareholders continue to own stock in both companies.

Cincinnati-based E.W. Scripps now owns 10 broadcast stations, newspapers in 15 U.S. markets and other media properties.

Scripps Networks Interactive shares added $1.40, or 3.7 percent, to $39.75.