The True Power of the Food Network

The True Power of the Food Network

The true power of the lifestyle-media brands that Scripps Networks Interactive has created over the years is only just being realized. With an incredibly focused content lineup and access to an affluent consumer base, Scripps' stable of popular networks gives the media company a unique advantage over industry peers like Discovery Communications and AMC Networks .

A focused network lineup
Management at Scripps Networks refers to the company's networks as lifestyle brands, as they each create and distribute content that revolves around specific portions of consumers' lives. Food Network and Cooking Channel appeal directly to viewers who are interested in learning more about food and developing advanced cooking skills. Similarly, Home & Garden TV appeals to homeowners interested in fixing or updating their various living spaces.

The direct focus of Scripps' key networks is unique among TV broadcasters. Although the approach is similar to Discovery Communications' focus on the natural world via popular networks like Discovery Channel and Animal Planet and AMC Networks' focus on blockbuster drama via its namesake AMC channel, at the present time Scripps may very well have some of the most finely tuned networks in all of television.

Many of Discovery's networks compete directly with the National Geographic suite of channels. Similarly, AMC Networks' signature drama channel forces it into direct competition with the likes of premium cable networks such as HBO and Showtime. While Discovery and AMC Networks both do admirable jobs at offering new content that appeals to their respective target audiences, they fall short compared to Scripps. The latter is unchallenged at offering totally unique content.

The reality is that there is no other channel that remains completely dedicated to food and cooking the way Food Network and Cooking Channel do. The same goes for the company's HGTV and Travel Channel, which remain extraordinarily committed to niche audiences. The most important benefit of this is that the networks have no direct competitors.

A powerful audience
While this direct approach may seem limiting in some regards, the facts speak for themselves. Scripps Networks' chairman and CEO Kenneth Lowe recently explained, "American consumers spend $3.9 trillion on home, food[,] and travel every year. And Scripps Networks Interactive is helping to shape the attitudes that drive those purchases."

The prominence of the company's brands is evident in the statistics. For example, Food Network, which just celebrated its 20th year on television, finished the third quarter ranked as the No. 12 cable network. Even more impressive has been HGTV, which remains the leader in home and lifestyle programming and reaches more than 99 million U.S. households.Incredibly, HGTV held the top cable network spot among upscale women for the eighth straight year.

Perhaps even more important is that the company's networks draw mostly live audiences, meaning a majority of Scripps' original shows are watched live and not on digital video recorders of any kind. The company's networks combined have a 94% live audience, which is more attractive to advertisers because it means audiences cannot skip commercials.

Most importantly, however, is the kind of audience Scripps boasts, a largely affluent and attentive one. Chief executive Lowe explained, "Our viewers pay attention, they watch the commercials and then they act on what they see. They represent the highest discretionary spending in all of cable."

An upscale and passionate audience that watches programs and buys products is inherently attractive to advertisers and Scripps Networks stands alone in this regard.

Solid growth
The combination of unique content and a loyal fan base has led to reliable but not industry-leading growth for Scripps Networks. The following is a breakdown of Scripps Networks' growth compared to Discovery Communications and AMC Networks:


AMC Networks

Discovery Communications

Scripps Networks

Revenue Growth 2014




EPS Growth 2014




Although Scripps Networks is expected to grow both revenue and earnings per share slower than Discovery and AMC Networks next year, the company's growth remains solid. Additionally, Scripps pays shareholders a dividend of $0.60, equal to a yield of 0.8%, while the other two listed competitors do not pay any dividends.

A stable investment
The best part of Scripps Networks' business is that it is inherently more reliable versus competitors. Similar to Discovery Communications, Scripps has one of the most predictably successful content lineups in television because its specific types of programming are not available from other competitors.

When compared to companies like AMC Networks, which remains almost completely dependent on a handful of blockbuster shows, the benefits of Scripps' focused networks becomes even more apparent.

For reliable growth in media, there may not be a more consistent and dependable business than that of Scripps Networks. The company's lifestyle brands are unmatched and almost certain to lead Scripps higher in the future.

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Philip Saglimbeni owns shares of Discovery Communications. The Motley Fool recommends AMC Networks and Scripps Networks Interactive. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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