Scripps Networks Interactive, owner of half of UKTV, wants to be a bigger player in the UK, says Raymond Snoddy
The senior Scripps Networks Interactive executive does not deny recent reports that the American group, which specialises in lifestyle programming, is prepared to pay £500m for the half of UKTV it does not already own.
“We acquired the Travel Channel in the UK and we acquired the Asian Food Channel in Asia. To the extent that there are opportunities for us to increase our investment through acquisition, we will continue to do so,” says Jim Samples, Scripps’s International President. “I can’t speak specific opportunities, but I can say we are very pleased with our investment in UKTV.”
He is talking from its headquarters in Knoxville, Tennessee, following interesting travel of his own – a two-week walking holiday in the French Basque country.
It took Scripps three years of patient negotiation to buy its 50% stake in UKTV from Virgin Media, for £339m, including debt.
The company will play a long game to try to get the rest, although it is unclear when – or even if – the current owner, BBC Worldwide, would sell.
Is it true that Scripps is also interested in buying Channel 5, sold to Viacom in May for more than £450m?
“Over the last several years we have been active at looking at most assets of scale that would make sense, particularly if they have an affinity with our content, our audience, our name. I am sure we will pop up when any major asset is being marketed,” Samples admits.
The company is seen as firmly grounded in Knoxville, devoid of LA glitz, and supported by long-term investors who do not over-pay.
“I think all of that is true. It is a company that has been very prudently managed, and financially it has a strong balance sheet,” the International President adds.
If Scripps is happy with its UKTV investment, then Darren Childs, Chief Executive of the multichannel group, is equally content with his Tennessee partner.
“They have been really supportive of our strategy of investing heavily in content, increasing our content spend massively, launching new digital services and linear channels. I could not ask for better shareholders. They are totally supportive of management, they are hands-off and let us get on with it,” says the UKTV Chief Executive.
At the time, £339m seemed a high price, but it has turned into a great deal for the US group. UKTV, with Scripps’s support, has boosted programme investment, taking its total spending from £70m to £120m a year. Audiences have responded.
As a result, UKTV, according to Childs, is the fastest growing UK broadcaster, whose 10 channels now collectively beat Channel 4 on some days of the week.
In the first half of 2014 UKTV had a 9.1% share of commercial impacts compared with 7.6% a year ago.
Scripps is hardly a household name in European media circles, although that has started to change through international acquisitions and a growing presence in households around the world with its trademark networks devoted to food, travel and living.
The company, with its 136-year history in Middle American newspapers, and later cable and local television, launched its first network channel in the US – HGTV (formerly Home and Garden Television) – as recently as 1994.
Scripps quickly moved to dominate its lucrative niche in North America with lifestyle media brands that include The Travel Channel, the DIY Network and GAC (Great American Country), as well as The Cooking Channel. It then decided to take a range of channels around the world.
From Knoxville, the third-largest city in Tennessee, with a population of 170,000, Scripps arrived in the UK with the Food Network in 2009. Two years later, it really got itself noticed with the UKTV stake.
In a new study of multichannel television in the UK, Enders Analysis found that audience shares have been relatively stable since 2010. The main exceptions are UKTV – up 0.6%, helped by the launch of the Drama channel – and Discovery, up 0.3% on the back of the launch of Quest.
As for Scripps, Enders CEO Claire Enders believes that the company is a good, old-fashioned, steady, American business: “They are a good gang of people. It is obviously a small player compared with Time Warner or Universal, but it has found a niche for itself and it is not run in a grand or flashy way.
“I wouldn’t want to say humble, but Knoxville is not LA, it’s not New York or anything remotely like it. It’s not even Atlanta,” says Enders.
“It’s absolutely bonkers, but a lot of fun"
Scripps remains family controlled but publicly listed. The original EW Scripps Company combined newspapers and local US television stations, although the cable networks were sold.
Scripps Networks Interactive, which reported revenues of $644m (£380m) and profits of $271m in the first quarter of this year, became a separate entity only in 2008.
But, surely, as a relatively small player, Scripps Networks has come very late into the game?
Jonathan Sichel, Managing Director for Europe, Middle East and Africa, disagrees. “I say we are right on time, because we learn from some of the mistakes and challenges other media channels have faced,” says Sichel, who emphasises the importance of Scripps owning the vast majority of its content.
Aside from the search for possible acquisitions, the control of rights has enabled Scripps to create strong organic growth everywhere, from Poland and Russia to the Netherlands and the Balkans.
A big push is also under way in Latin America, where Scripps used to sell its programmes but is now planning to launch its own networks.
In Europe, Nick Thorogood, who launched the Food Network in the UK, is in charge of what appears on screen on three channel brands broadcast to a total of 130 countries from the UK.
The Travel Channel has the widest distribution, with Food Network in around 100 countries and Fine Living in 70 territories.
The variety of programme sources, he believes, is an important strength. Thorogood has access to around 3,000 hours of HD programmes a year from the US. The channels commission their own locally produced output and acquisitions include “Nigellas and Jamies that we got from Channel 4”.
Unlike Scripps’s management style, its programmes are full of glitz and gloss and fancy camera-work and cutting, and can cost up to $350,000 an hour. The company provides, safe, comfortable, family viewing that plays particularly well with up-scale women.
Apart from how-to cookery demonstrations and competitions, the subject matter can range from creating the most bizarre and amazing cakes, through “the million-dollar room”, to convincing viewers that they really could have a Mickey Mouse-shaped pool in their garden.
“It’s absolutely bonkers, but a lot of fun,” says the British executive.
Jim Samples accepts that Scripps is a new corporate name in the UK and Europe, although its programmes are already known.
“Much of our work has been introducing ourselves and building relationships, trust and confidence, and I think that the UKTV relationship has been instrumental in that,” says Samples. He insists that Scripps’s goal remains leadership in lifestyle, food and travel in as many major television markets as possible.
That is no small ambition.