Scripps to acquire interest inTV Food Network
Fri, September 05, 1997 by Rich Boehne
CINCINNATI, Ohio – The E. W. Scripps Company today expanded its cable network operations by reaching an agreement to acquire controlling interest in the TV Food Network from A. H. Belo Corporation.Scripps, which owns 100 percent of Home & Garden Television, will receive 56 percent of the TV Food Network and $75 million in cash from Belo in exchange for television station KENS, a CBS affiliate, and radio station KENS-AM, both in San Antonio, Texas."The TV Food Network has carved out a valuable franchise in the rapidly changing television universe," said William R. Burleigh, Scripps president and chief executive officer. "TVFN is also a natural fit with our growing cable network operations at Home & Garden Television. This acquisition puts us in control of two fast-growing new networks that target complementary consumer categories and have substantial potential for development into much larger and broader businesses." The transaction is subject to regulatory approvals and the consent of TVFN's other partners. Also, Scripps is still in the process of acquiring the KENS stations from Harte-Hanks Communications and must receive federal approval to transfer the broadcast licenses to Belo.The TV Food Network, based in New York, was launched in 1993 and now reaches more than 25 million homes across the country through cable television systems and direct broadcast satellite. TVFN also has begun an international roll-out of its programming and services."One of our primary goals has been to build our cable network business through the creation or acquisition of additional services that target strong consumer categories related to home and family life," Burleigh said. "Thanks to what we have created and learned at HGTV, we have an outstanding opportunity to build value for shareholders through further investment in this evolving business." Scripps projects that TVFN will produce positive operating cash flow in three to four years, following cash operating losses accruing to Scripps of approximately $10 million in 1998, the first full year of control by Scripps.TVFN's programming focuses on cooking and food preparation, nutrition and healthy eating, and at-home entertaining and restaurants. Like Home & Garden Television, TVFN has gained rapid acceptance by national advertisers eager to reach a targeted audience.HGTV, which is projected to reach profitability in 1998, has been among the industry's fastest growing new networks. More than 13 million subscribers were added in the past 12 months for a total of 30 million viewing homes at Sept. 1. The network has an additional 5 million U.S. cable homes committed and preparing for launch. Internationally, HGTV programming can be seen in Europe, Japan, Australia and New Zealand, and in October HGTV/Canada will launch through a partnership with Atlantis Communications of Toronto. "HGTV and TVFN will continue to develop their separate brands and franchises, but bringing them under common control offers significant benefits and opportunities for both networks," said Ken Lowe, president and chief executive officer of Home & Garden Television.TVFN and HGTV both feature original programming – more than 90 percent of their schedules – which is mostly owned by the networks and a valuable resource for the development of related businesses. Both networks also have balanced audiences, appealing to both women and men, and seek to build interactive relationships with viewers through call centers, web sites, magazines and special events.The E. W. Scripps Company operates through three media divisions:Newspapers – Daily publications in 15 markets, plus community publications and the Scripps Howard News Service. In addition, Scripps is in the process of acquiring the six daily newspapers and community publications now owned by Harte-Hanks.Broadcast television – Network affiliates in nine large markets.Entertainment – Home & Garden Television; Cinetel Productions (programming for cable networks); Scripps Howard Productions (programming for broadcast networks); and United Media, a leading syndicator and licensor of news features and comics.