Food Feeds Scripps Success
Network's Popularity is Driving License-Fee Renewal Talks
by Mike Farrell -- Multichannel News, 12/14/2009 2:00:00 AM
Scripps Networks Interactive said Food Network's success is helping not only to drive negotiations for increases in that channel's affiliate fees, but could spread to other SNI properties, including its soon-to-be rebranded Cooking Channel and recently acquired Travel Channel.
SNI chairman and CEO Ken Lowe, speaking at the UBS Global Media and Communications conference in New York last week, said Food Network is involved in carriage-fee negotiations with most of its distributors.
In the past, Scripps has said it expects significant increases as the popularity of the network has skyrocketed over the years. According to SNL Kagan, Scripps is currently receiving about 9 cents per month per subscriber for Food Network and 12 cents per month per subscriber for HGTV.
“The focus at Food Network has been on renewing our affiliate agreement at rates that better reflect the tremendous value that we have created at the brand. I can report that we are fully and actively engaged with all of our distribution partners today,” Lowe said at the conference. “We are encouraged by the progress we are making thus far.”
However, Lowe said that because most of the deals don't officially expire until the end of the year, he could not offer more clarity on the negotiations.
“We'll certainly know a lot more after Dec. 31,” Lowe said.
But the obvious success of Food Network — it was a top-10-ranked cable network for the first time in the third quarter and averaged about 1.1 million nightly viewers — should have an impact, he said.
Food also has performed well financially. In the third quarter, operating revenue was up 5.1% to $119 million, and the network is in 99 million homes.
Formerly known as Fine Living, the Cooking Channel should complete its rebranding by the third quarter of 2010, Lowe said. Although the details are still being worked out, it is expected to be a complementary brand to Food with a slightly different look and feel but still tapping into the robust food-lovers market.
“Food Network's success tells us there is plenty of untapped consumer demand for creative, entertaining and informative food programming,” Lowe said. “We are clearly on the offensive.”
SNI chief financial officer Joe NeCastro said that once the rebranding is complete, Cooking Channel will adhere to Fine Living's old carriage agreements, most of which don't expire for a couple of years. He added that Scripps is receiving consents from carriers on the rebranding as they negotiate Food Network carriage deals.
“The rebrand is essentially just that; we're taking Fine Living Network and we're rebranding it in all of the homes where Fine Living exists at the moment,” NeCastro said. “We're getting consents from the carriers as we go through Food Network renewals; so far, we're getting very good reception there. The only one that doesn't come up [this year] is Comcast, so that will be a separate discussion.
“We don't think it has a long-term effect on Food Network renewals. We also think when it comes up in its natural time at the expiration of the existing Fine Living agreements, hopefully, we will have a good story to tell and be able to get reasonable increases there.”
Scripps also has high hopes for its latest acquisition, Travel Channel. That deal, which gave Scripps a 65% interest in the network for about $1 billion, is expected to close by the end of the year. Lowe said that plans for the network include creating a dedicated sales force to help further monetize the brand and create new programming.
Travel Channel is more skewed toward a male audience compared to the mostly female viewers for its other networks. The current question is whether Scripps would try to change Travel's programming mix slightly to skew more female or leave the channel as it is, NeCastro said.
NeCastro said that Travel Channel affiliate agreements don't expire until the 2012 to 2014 time frame, which gives the company time to mold the network in its own image.
“That works for us,” NeCastro said. “We have time to get the programming in place and get some momentum before we have to sit down with MSOs.”
NeCastro said that Scripps continues to be on the hunt for more cable networks — it has been vocal in its desire to buy the remaining 31% interest in Food that it doesn't already own — but added that there are few available networks dedicated to the Scripps niche of nonfiction programming centered on home and lifestyle.
“It's very hard for us to imagine another fully distributed cable network coming on the market that we'd have a clean shot at,” NeCastro said.
Scripps At A Glance
A snapshot of Scripps Networks cable channel performance in the third quarter (in thousands, except for percentages)
| Network | Operating Revenue | % Change | Subscribers |
| SOURCE: Scripps Networks |
|||
| HGTV | $152,547 | 6.4% | 98,800 |
| Food Network | $118,591 | 5.1% | 99,300 |
| DIY | $17,684 | 10.5% | 52,100 |
| Fine Living | $11,185 | (13.1%) | 55,700 |
| GAC | $6,449 | 9.5% | 57,200 |
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