E.W. Scripps Co.’s purchase of Great American Country won’t scuttle the company’s plans to eventually launch a Spanish-language cable network, CEO Ken Lowe told Wall Street analysts Thursday.
During a conference call on third-quarter earnings, Lowe was basically asked whether Scripps Networks would abandon its effort to create a Hispanic network. The issue came in the midst of questions about Scripps’ purchase of country-music-video network GAC from Jones Media Networks Ltd.
“No, we have not in any way given up on the whole Hispanic initiative,” Lowe said. “As we’ve said, from time to time, we’re just cautiously looking at what is about a 12 million- to 13 million-household marketplace and how the best way to attack that might be.”
Lowe added that Scripps, “before we get into maybe officially launching a Hispanic network, is testing the programming right now through syndicated programming on broadcast-television stations serving Hispanic markets. So [it is] still very much an alive initiative, and it’s still an area we have a great deal of passion about. Now it’s more in test-mode model, and as we ramp it up, you’ll hear more about that in the future.”
Scripps officials maintained that GAC strategically fits well with its portfolio of lifestyle networks, which includes Home & Garden Television, Food Network, Do It Yourself and Fine Living, along with Shop at Home.
Frank Gardner, chairman of Scripps Networks, said the company is buying GAC because “we’ve found a reasonably valued cable network with a widely recognized brand that provides us with the immediate entrée to 34 million television households.”
Back in 1997, Scripps’ purchase of 56% of Food from Belo Corp. amounted to more than $8 per subscriber, according to Gardner.
“If all goes as planned, we’ll be paying about $4 per sub for GAC,” he added. “So at that valuation, we think there’s a lot of potential for a very attractive return.”
He added that there won’t be any radical changes in GAC’s format. What Scripps will do is try to add to and improve the long-form lifestyle programming that’s also on the channel, citing “the rich potential for all sorts of related lifestyle programming that we believe can hit home with much of middle America.”
Scripps envisions GAC as a network built around the country format “but complimented by some high-quality, Americana-themed programming that you just can’t find anywhere else on the TV dial today,” according to Gardner.
“We’re talking about a Who’s Who of the best of all of the country-music artists with a good dose of Mom, the American flag and apple pie thrown in,” he added.
For the third quarter, Scripps’ cable networks posted a strong performance. Total revenue at Scripps Networks was up 38% to $168 million. Ad revenue increased 33% year-over-year to $128 million, while affiliate-fee revenue jumped 58% to $37.1 million.
Officials said that annualized operating losses at GAC will reduce Scripps Networks’ segment profits by $5 million-$10 million in 2005.