Food Network -- Too Profitable?!?
Thursday, January 11, 2007 | posted by Mike
I just blew your mind, didn't I?
I know that this sort of "inside baseball" financial and business stuff is interesting to a grand total of three or four of you, but I get a kick out of it, so here you go.
We've made quite a few mentions over the past few months about the continued, strong performance of the Food Network and its sister-networks like Home & Garden, DIY, etc. Now, from an entertainment industry standpoint, "strong performance" means lots of viewers, as reflected in the ratings that programs post. But, from a business standpoint, "strong performance" is much more closely tied to advertising revenue. Of course, having a lot of viewers (particularly the more affluent viewers who are attracted to these types of networks) means that you can charge more for your advertising, so it's all related.
The fact that advertising revenue for Food Network has been very good is welcome news to the folks at Scripps, the parent company of FN. Scripps has quite a number of media holdings in addition to FN, including a number of (mostly) smaller newspapers and the Scripps Howard News Service. They're also the people who sponsor the Spelling Bee every year, so that's nice.
As you undoubtedly know, newspapers are not nearly as profitable as they used to be. Thanks to cable news and, now, the Internet, fewer and fewer people are getting their daily information from print newspapers and the advertising revenue has dropped accordingly. So, now there is speculation (fueled by comments at a recent conference for investors) that Scripps may be looking to get out of the newspaper business, preferring to focus on the more profitable cable television networks (among other holdings). Forbes has the low-down. According to one analyst:
"We would also note that some investors are hesitant to own the stock due to the newspaper business, regardless of the faster overall growth rate."
Of course, the "faster overall growth" is due, in part, to the job that Food Network has been doing at attracting, building and retaining its audience. And, as the Network continues to create a more robust online presence, it will see larger and larger growth in the revenue from online advertising, adding to its profitability.
So, Food Network Watcher, this means that you're a key part of Scripps' business plan. And, we're guessing that since you're a Watcher and you're online, you're even more important to them.
That (and the fact that tomorrow is Friday) should put you in a good mood, right? Nothing like a feel-good business story!
Labels: Food Network
