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, Atlanta, Los Angeles, Chicago, Detroit and Knoxville. International audiences can view the Food Network as well screening in countries including 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, a 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 within the past year.

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 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 its own cable system Colony Communication to distribute.  As an early strategy, Colony leveraged the Food Network into American householods by offering the channel for free to any cable system that would carry it to 80% of its 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 programming has been done under the Scripps corporate umbrella, while Scripps' has maintained diverse holdings in retail markets, including BizRate, Shopzilla, and various other "lifestyle" channels and websites, which all advertise for each other.  Thus this example of corporate synergy has been rewarded with ever-growing profits 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 profile, and 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 have proven to be widely successful for Food Network profits.  Without alienating their original older viewers, the Food Network has managed to greatly appeal to the youth market and subsequently sell that market to advertisers.  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, particularly after New York's Cablevision dropped the Food Network in a dipute last year over the channel's current price of 25 cents per subscriber, which Scripps officials find to be grossly under the $1.03 that the very popular Food Network could conceivably charge.

After a three-week debate, HGTV and the Food Network were put back on the Cablevision airwaves with little damage to ratings, though the details of the pricing agreement were never disclosed. Nevertheless it was estimated that the Food Network received a more accurate raised rate to 49 cents during the negotiations, and thus continues its strong financial growth.