Home Shopping Network 2008 Annual Report Download - page 29

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26
Production and Programming Expense
2008
%
Change 2007
%
Change 2006
Production and programming expense 60,217$ 2% 59,051$ 4% 56,800$
As a percentage of HSN net sales 3% (4 bp) 3% 11 bp 3%
#REF!
#REF!
Year Ended December 31,
(Dollars in thousands)
Production and programming expense consists primarily of compensation and other employee-related costs
(including stock-based compensation) for personnel engaged in production and programming at HSN. Expenses
associated with on-air distribution of HSN, including expenses relating to pay television operators, are included in
selling and marketing expense.
Production and programming expense for 2008 increased 2% to $60.2 million compared to $59.1 million in
the prior year. The increase in production and programming costs is the result of a $5.3 million increase in labor
costs due to higher rates, offset by a $4.2 million decrease in satellite costs. The decrease in satellite costs compared
to 2007 is due to a termination fee assessed in 2007 for a satellite contract cancellation as a result of the shutdown of
America’s Store in April 2007. In addition, monthly satellite fees assessed in 2008 were less than 2007 as a result of
this termination.
Production and programming expense in 2007 increased $2.3 million from 2006, primarily due to an
increase of $2.9 million in compensation and other employee-related costs and a charge of $2.0 million in
connection with the termination of the satellite contract for America’s Store previously discussed. This fee was
partially offset by reduced broadcast rates upon cancellation of the satellite contract.
Depreciation
2008
%
Change 2007
%
Change 2006
HSN
27,348$ 8% 25,404$ (13%) 29,082$
Cornerstone 10,090 13% 8,959 9% 8,191
HSNi 37,438$ 9% 34,363$ (8%) 37,273$
As a percentage of total net sales 1% 14 bp 1% (11 bp) 1%
$
$
Year Ended December 31,
(Dollars in thousands)
Depreciation for 2008 increased $3.1 million as compared to the prior year, primarily due to the
incremental depreciation associated with capital expenditures made during 2007 and 2008, partially offset by certain
fixed assets becoming fully depreciated during the period.
Depreciation in 2007 decreased $2.9 million, primarily due to certain fixed assets becoming fully
depreciated, partially offset by the incremental depreciation associated with capital expenditures made throughout
2006 and 2007.