NBC may buy Food Network, HGTV, Great American Country

[alexetel]

I think Canwest (owners of HGTV Canada, Food Network Canada and yet-to-be-launched DIY Canada) doesn't know how to run cable channels compared to much improved Astral [Astral launching HD versions of their channels left right and center!], I wonder if an NBC Uni influence on the U.S. originals will effect the Canadian verisons (??).


***

Would Scripps Interactive Sell The Networks?
Speculation Mounts With NBCU As Potential Suitor
-- Multichannel News, 7/13/2008 6:58:00 AM


With a little more than one week of trading as a separate company
under its belt, Scripps Networks Interactive is once again the topic
of merger speculation, with some analysts and observers predicting
that NBC Universal could end up with the group of lifestyle cable
networks.


HGTV's The Next Design StarSNI, which officially split from E.W.
Scripps and began trading as a separate stock on July 1, has been the
topic of merger speculation ever since the company announced the
separation plans in October. And as the home of popular (and
profitable) cable networks HGTV, Food Network, DIY, Fine Living and
Great American Country, Scripps Networks could attract a price well
above its market capitalization, currently about $6.5 billion.


While that would appear to be pricey — The Weather Channel last week
agreed to be sold for about $3.5 billion, Oxygen Network for about
$875 million — a look at SNI’s financials shows that it is not totally
out of line.


Scripps cited its policy not to comment on speculation.


According to Scripps Networks financial documents, the networks
tallied a $603.5 million combined segment profit (net income minus
interest, income taxes, depreciation and amortization, divested
operating units, restructuring activities, investment results and
certain other items) in 2007, so a $6.5 billion deal would represent a
multiple of 10 to 11 times segment profit. Historically, cable
networks have been valued at cash-flow multiples between 10 and 14.


In announcing the split in October, Scripps said it expected SNI to
record revenue of about $1.4 billion in 2008. E.W. Scripps, the unit
that would house the newspapers and television-station assets, would
generate about $1.1 billion in revenue, the company said.


SNI was expected to be the more growth-oriented company — its more
established HGTV and Food would continue to generate steady revenue
and earnings growth while niche networks DIY and Fine Living would
provide more-robust growth opportunities as they gained carriage. And
while the latter has happened — DIY and Fine Living have averaged 21%
revenue growth since 2005 and have increased their combined available
homes from 63.5 million to 93.8 million — HGTV and Food have managed
to maintain a very healthy growth rate despite their “maturity.”


HGTV was launched in 1994; Food, in 1993. DIY and Fine Living launched
in 1999 and 2002, respectively.


Food Network's Simply Delicioso, starring Ingrid HoffmanBut according
to financial documents filed with the Securities and Exchange
Commission, since 2005, HGTV has averaged annual revenue growth of
15.4%, and Food Network has averaged 17.4%. At the same time, the two
networks have brought in the bulk of SNI’s revenue, with HGTV
accounting for $580 million and Food $476 million of the company’s
$1.2 billion total in 2007.


And it is expected to get better.


Miller Tabak media analyst David Joyce said HGTV has enjoyed a ratings
and advertising-revenue growth spurt despite the sluggish economy.
“They have so many shows about how to create value in your home,” he
said. “It went from flipping homes and new real estate transactions to
what can you do with your space. That’s what’s made those shows more
attractive to advertisers.”


Joyce believes that, because of those attractive metrics, SNI will be
the target of strategic buyers, including NBC Universal and Time
Warner. “[NBC has] spent $4.5 billion in the past six months,” he
said. “They’ve bulked up their size so they can be more of the top
echelon of their peers. It also helps make the NBC ratings weakness
less of a part of the equation.”

[TJ77]

Canwest hasn't ruined Food/HGTV yet, and I'm praying that they don't. I really think that the US versions should have more leverage over the Cdn versions than they do [and the CRTC will allow.]

[nicohockey9]

In my mind, food tv has been getting better and HGTV has been getting worse.

[FootandMouth]

why is that?

[nicohockey9]

Just in terms of programming.