Is The Food Network a Good Investment?
Friday, October 06, 2006 | posted by Mike
I’m really no expert when it comes to the stock market. Sure my 401(k) is doing pretty well, but I’m fairly hands-off. And, yes, I do remember thinking, just about six years ago, “Wait…it’s a company that’s based on trading energy? How can they be making that much money? This doesn’t make any sense.” And we all saw how that turned out.
But what I’m really no good at is the difference between putting out a good product and having a strong business plan. Yes, you can sometimes knock one out of the park by recognizing a great product and investing (“Gee…this search engine really works well!”), but you can get in trouble with a company that has something cool to sell but no infrastructure working in the background.
The difference between great product and sound investing principles is at the core of an article by Ben Ruddy on TheStockMasters.com under the title, “Can Giada Save E.W. Scripps (SSP)?” Ruddy is obviously a big fan of the shows and personalities on the Food Network, and that attraction is what sent him off to look at the finances and potential of Scripps. Again, he likes what he sees in the company’s current performance.
Where things start to go sour for Ruddy is when he starts to think the potential for less-than-stellar growth in the future. Because of the options for food programming on other networks, as well as stiff competition facing other components of the company like their e-commerce venture, Ruddy ultimately cools on his enthusiasm for investing:
We are going to lean back at the table, hold our stomachs, and pass on signing on to a whole order of the seemingly delectable desert that is SSP.But he does still like the shows, and we all know that’s what really counts.
Labels: Food Network