Morgan Stanley Reiterates Overweight Rating On SNI

Morgan Stanley is reiterating its OW rating on Scripps Networks Interactive, Inc. SNI, “which offers EBIT growth at the high end of Media peers over the next several years.” “We see SNI's cable networks delivering roughly 13% advertising growth in 2011, at the high end of peers, driven by strong upfront sales and continued scatter market strength. We expect that the company's recent ratings weakness will not materially limit ad growth, and we see long-term upside to affiliate revenue growth given the company's ratings levels, despite recent step-ups. “We expect affiliate fee growth to accelerate from roughly 7% in '11 to ~15% in '12, as the remaining Food Network contracts re-up and the Travel Channel begins to see renewals as well. “Although we remain Overweight, we are removing SNI from Morgan Stanley's ‘Best Ideas' list, as the timing around return of capital to shareholders remains opaque and consensus estimates have generally migrated upward toward our own.” Scripps Networks Interactive closed Friday at $51.78.