E.W. Scripps & Co. wants to put more Food — as in Food Network— on its menu.
During a conference call with analysts discussing the company's third-quarter earnings, Scripps president and CEO Ken Lowe said that Scripps is looking into possibly taking 100% control of the network in the future. Food, now in some 82 million homes, is 30% owned by Tribune Co.
"The basic contract we inherited when we acquired Food did not have any puts or calls which would force an action on Tribune's piece," Lowe said. "We've said numerous times, publicly and privately, that we'd very much like to acquire that, but I think they would tell you they've been pretty pleased with the job we've done in growing Food.
"Now that it's reaching a more mature stage — once you get past 80 million households — there might be an opportunity in the near future for us to do something with Tribune to do something about that. They're good partners. I think there will come a time when it will make sense for us to own all of Food and we'll just have to continue to talk to our friends at Tribune and figure that time out."
In the meantime, Scripps reported strong third-quarter earnings, fueled mainly by growth at its cable networks Home & Garden Television and Food.
For the period, net income was up 13.6% to $51.9 million (64 cents per share), compared to $45.7 million (57 cents per share) a year ago.
Revenue at Home & Garden Television increased 22% to $70.1 million and was up 23% at Food to $44.5 million. Ad revenue at the networks segment — including digital networks Do It Yourself and Fine Living — rose 29% to $96.6 million, while affiliate fees from cable operators and satellite service providers increased 12% in the quarter to $23.5 million.
During the conference call with analysts, Lowe said affiliate fees were likely to rise about 30% in the fourth quarter, based on stronger distribution of the networks and improved ratings. However, he added that Scripps does not expect a backlash from cable operators because the networks' fees are low to begin with.
On the call, Lowe said that primetime viewership of HGTV, now in 83 million households, grew 15% in the quarter. It climbed 20% for Food.
With DIY and Fine Living adding a total of 6 million households in the period — to reach 23 million homes and 19 million homes, respectively — Lowe said the goal is to further grow their distribution.
At Shop At Home, the cable shopping channel that Scripps purchased last year, revenue was up 10% and losses were slightly better at $3.8 million (4 cents per share) than expected. Lowe said Scripps was planning on several marketing initiatives to improve Shop At Home's results, including broadcasting from a furniture trade show in Highpoint, N.C. late last week, replete with personalities from other Scripps networks.
"The resources we have been allocating have been to make needed improvements," Lowe said. "We want to tie the network to our lifestyle networks more closely. We're testing our ability to drive business to Shop At Home."
Scripps Networks chairman Frank Gardner said the company is still investigating a planned Hispanic lifestyle network, but wouldn't say when the company expected to launch it.
"We have an active pilot, we're doing significant research, but we're not ready to pull the trigger on it yet," Gardner said.