Spotlight: Food Network's on Discovery's new menu

by Julia Pierrepont III

LOS ANGELES, Dec. 9 (Xinhua) -- Discovery, the 8th most successful cable network in America and owner of Animal Planet, takes a bite out of the competition this winter.

Not only did they increase their ownership of Oprah Winfrey's Network, OWN, but they just announced a 14.6 billion U.S. dollar (debt included) bid early December to buy Scripps Networks Interactive, the parent company of Food Network & HGTV.

Analysts report that Discovery's bold plays are not unexpected since the cable business has become a bit of a fixer upper the last couple of years as major shifts in the television industry and consumer viewing habits evolve, leading to increased cord-cutting by former cable-users defecting to satellite, wireless or online services.

INCREASED DIVERSIFICATION

Julie De Traglia, head of Advertising Sales Research for Hulu, told Xinhua Thursday, "Viewers' top priorities today are 'choice' and 'control.' They want to watch what they want, when they want it, on any platform they want."

So some savvy cable networks are increasingly diversifying into a wider range of media platforms to offset declines in cable subscribers.

Discovery Communications, with annual revenues of 6.5 billion U.S. dollars, owns the Discovery Channel, Discovery Family, Discovery Life, Discovery Espanol, The Learning Channel, Science, Destination America, and Animal Planet.

To expand their reach more aggressively beyond cable, in 2015 Discovery launched 'Discovery Go,' an online, on demand, view-anywhere, digital streaming service fueled by content from its cable networks.

"We will continue to invest in our premier global IP and brands to nourish fans across all screens, all platforms and all services to drive shareholder value and propel our business for years to come amid the rapidly changing media landscape," David Zaslav, President and CEO of Discovery Communications, told Xinhua.

To do so, Discovery Communications has to beef up acquisitions to keep pace with their cable rivals and the 800-lb gorilla online streaming giants, Netflix and Amazon, and position themselves to become a heftier player in a globally-aggregating marketplace where 'bigger is better.'

DISCOVERY'S AGGRESSIVE MOVES

Discovery paid 70 million U.S. dollars this past year to increase their ownership from 50 percent to 74.5 percent of OWN, which it co-founded in 2008 with the reigning queen of daytime talk shows, Oprah Winfrey.

OWN has become the top-rated network for African American women in the country and this transaction marks the first time she has taken money out of the venture.

Winfrey will continue to serve as chief executive of the network and as part of the deal, she will work exclusively for OWN in the basic cable space through 2025, a major coup for Discovery.

"This transaction allows Discovery and Oprah to unlock more value from our partnership; extends once more her commitment to the network; and lets us continue our strong work together to nourish OWN viewers with the content they love," announced David Zaslav in a recent statement.

Discovery has also waded into international waters, paying 939 million U.S. dollars in 2014 to acquire British studio, All3Media, in a 50/50 joint venture with their shareholder, Liberty Media, and in 2016 bought a minority stake in VS Media, a Hong Kong-based digital talent and content company.

But in an effort to upgrade its bargaining power with advertisers and distributors who generate Discovery's two largest revenue streams, Discovery Communications launched its biggest land grab to date with its bid buy Scripps Networks Interactive.

Scripps Networks Interactive is a media company with multiple television channels that grew out of newspaper syndicate, E.W. Scripps Company, founded by the Scripps brothers in 1878.

In 2007, Scripps divided into E.W. Scripps Co, which retained its newspaper, TV station, and licensing/syndication divisions; and Scripps Network Interactive, which owns the Food Network, Cooking Channel, Travel Channel, Great American Country; the humor website, Cracked.com; podcaster, Stitcher; and the hugely popular Do-It-Yourself home improvement network, HGTV.

The DYI zeal of Scripps Interactive may hail from its 140-year old founder motto, "Give light and the people will find their own way."

Scripps programming slate is chockfull of some of the most popular DIY, home improvement, home buying, cooking, and competition shows on television, which have rocketed HGTV to the fifth highest ranked cable net and Food Network to the sixteenth.

Propelling HGTV up the rankings and making them a plum acquisition target is the popularity and originality of their top shows. The clear frontrunner, Chip and Joanna Gaines' "Fixer Upper," nails 4.37 million viewers per episode; "Flip or Flop," "Brother vs Brother," and Ellen Degeneres' "Ellen's Design Challenge," all boasting more than two million viewers per episode.

Adding to HGTV's allure is their knack for creating full-blown, franchise-launching TV host-celebrities whose fame can be leveraged into spin off shows, high-traffic blogs, and profitable merchandizing and licensing deals.

Though scoring fewer viewers than HGTV, Food Network is no slouch either and is credited with launching America's current 'foodie' movement. Its star chefs soar higher than their souffles, many reaching international stardom and landing lucrative restaurant or licensing deals.

Discovery's acquisition of Scripps would unite the largely female-centric audiences of HGTV, Travel and Food Networks with the male-dominated audiences of Animal Planet and Discovery Channel to garner Discovery some valuable cross-gender content clout.

Discovery's aggressive strategy is paying off with annual revenues of 6.5 billion U.S. dollars, a 2 percent increase compared to the prior year when many cable net revenues are declining. Enditem