Food Network

Conception and Development

The Food Network (legally the Television Food Network, GP) was launched on Thanksgiving weekend 1993 in New York, NY as a channel that specialized in programs about cooking, hospitality, food, restaurants, and general kitchen culture. Its headquarters are stationed in New York City and offices are located in various cities scattered across the country, including Atlanta, Los Angeles, Chicago, Detroit and Knoxville. The Food Network is internationally available in Canada, Australia, Korea, Thailand, Singapore, the Philippines, Monaco, Andorra, Africa, France, and the French-speaking territories in the Caribbean and Polynesia.

In 1997, the E.W. Scripps Company purchased a majority share of the channel from A.H. Belo Corp., and has since bought out every minority shareholder except for Tribune Co., which maintains a 31% share of the estimated $1 billion channel.  Scripps Networks Interactive, an offshoot of E.W. Scripps Co., runs the Food Network inside a Lifestyle Media portfolio of channels, which includes HGTV, DIY Network, Cooking Channel, and Travel Channel. Further partnerships include purchasing featured kitchen utensils etc. on websites affiliated with the Scripps ownership, such as BizRate and Shopzilla.

The Food Network currently broadcasts to 99 million television household nationwide.  Globally, the Food Network has expanded well beyond this number, as they have begun to distribute to both the United Kingdom and Asia since November 9, 2009 and July 5, 2010, respectively.

Economic Evolution Under Providence and Scripps

Early on, the subject matter now covered under the cable umbrella of Scripps Networks Interactive was aired on PBS.  This included cooking shows like The French Chef with Julia Child and The Frugal Gourmet, as well as home, gardening and do-it-yourself programs like The New Yankee Workshop and This Old House.  The popularity of these shows caught the attention of the Providence Journal Company, which pitched the initial idea for a cable food channel.  Interest was immediate, as producers noted that such shows were inexpensive to produce and ripe for product placement, as 45 of the 100 top U.S. advertisers at the time were food-related.

Providence Co. effectively used synergy within their own corporate network to boost the Food Network in its early days.  They gathered investors from among a handful of its own media holdings (including the then-dubbed Scripps-Howard Inc.) that were endowed enough to wait several years on initial investment return, and then used Providence's own cable system, Colony Communication, to distribute.  As an early strategy, Colony leveraged the Food Network into American householods by offering the channel free of charge to any cable system that agreed to carry it to at least 80% of their subscribers.  Scripps used a similar tactic of synergy after it bought the Food Network in 1997, using its own ten TV broadcast stations to reach 10% of the national market, and then bartering offerings of the newly purchased HGTV for Food Network slots on another 54 stations.  Since then, 90% of the Food Network's production has been done under the Scripps corporate umbrella, keeping outsourced spending to a minimum, while Scripps has also maintained diverse holdings in retail markets, including BizRate, Shopzilla, and various other "lifestyle" channels and websites (which all advertise for each other) in order to boost profits.  Together these tactics demonstrate a successful example of corporate synergy that has returned initial investment and then some, garnering ever-growing profits for the Food Network and Scripps since the early 2000's.

Present Status and Success

The Food Network has expanded to provide online and print accompaniments through foodnetwork.com and Food Network Magazine.  Foodnetwork.com has enjoyed particular success, with over 198 million monthly hits among 7 million monthly visitors and an established audience base open to advertisers.  Indeed their site proudly displays audience demographics for available advertising, as the site has become such an integral and high-profile component to the Food Network's interactive brand.  Meanwhile published testimonials (like [this one] in the New York Times) of advertising success have given legitimacy to the site that now attracts more and more revenue.

Additionally, initial efforts to attract a wider demographic of young people and males have proven to be widely successful for Food Network profits.  Without alienating their original viewers (primarily older female "grocery decision makers"), the Food Network has managed to greatly appeal to the youth market in particular and subsequently sell that audience potential.  Food Network president Brooke Bailey Johnson notoriously won over such youth-oriented advertisers as McDonald's, Michelob, and Monster Worldwide after demographics began to noticeably change in 2006, and Food Network profits overall ended up boosting Scripps stocks by 22% in August of 2007 despite financial failures in every other media sector.

Cable Pricing Controversy

Since offering their channel for free in the mid 1990's, The Food Network and connected HGTV have evolved considerable independence and popularity to maintain consistently high Nielsen ratings in cable, while Food Network in particular has grown immensely in viewer base over the past five years.  Despite this fact, however, pricing is still being negotiated for the worth of these growing channels, and controversy has arisen as a result.  Cablevision famously spotlighted such a controversy last year, when it dropped the Food Network without a renewed contract on December 31, 2009 and pulled it off the air for the entire NY/NJ/CT tri-state area.  The dispute was rooted in Cablevision's price for the Food Network, which at the time was 25 cents per subscriber per month, a number Scripps officials found to be grossly below what the Food Network could have feasibly charged, which audiences agreed was around $1.03.

After a three-week debate, the Food Network was put back on the Cablevision airwaves (along with HGTV) with little damage to ratings.  Though the details of the pricing agreement were never disclosed, it was estimated that the Food Network received a raised rate to 49 cents during the negotiations, which would more than continue the channel's strong financial growth.