Ken Lowe likes to say he can take the heat at least in the media kitchen. What else would one expect from the man who's the ultimate boss of Rachael Ray, Paula Dean and countless other celebrity chefs?
But these days, the 62-year-old CEO of Scripps Networks Interactive, the cable giant behind the Food Network, HGTV and the Travel Channel, is facing challenges hotter than a Bobby Flay "throwdown." While his Knoxville, Tenn. based company has been on a tear for much of the past decade in 2010, net income rose 37 percent, to $411 million ratings of the network's once-buzz-worthy lineup have softened, leading Goldman Sachs to issue a rare sell rating on the stock in February. The company's shares are down 6 percent year to date. Other analysts also note the sag in the network's souffl even fans like Eric Handler, of MKM Partners, who maintains a buy rating on the stock. ("Some of the network's shows are aging right now," he says.) And then, of course, there's the little matter of the queen of all media. Yup, Oprah's new network, in partnership with cable giant Discovery Communications, is chasing the lifestyles market too. O!
In all, that's a pretty tall order for Lowe, a broadcast-industry veteran who got his start when he ran his own pirate radio station as a child in rural North Carolina. But the executive clearly has a good feel for the terrain. Scripps Networks, which was spun off from parent E.W. Scripps in mid-2008, reaches roughly 100 million households through each of its three main networks; it plans to expand its audience both internationally and with new ventures (such as the Cooking Channel, which launched last year). And Lowe, who joined Scripps in 1980 as general manager of its radio division, is seen as a consistent innovator: It was he, after all, who came up with the idea for HGTV in the early 1990s, after visiting a home-improvement store and marveling that each aisle seemed to offer a show of its own. Indeed, even analysts who say Scripps' programming has lost some of its sheen note the company has one of the better management teams in the industry.
SmartMoney caught up with Lowe in Knoxville to hear him dish on his spin-off Cooking Channel, the threat of Oprah and why food is the new rock 'n' roll.
SmartMoney: These days, viewers are often turning to on-demand options on portable devices as a way to watch shows. What effect will that have on your viewership and advertising?
Ken Lowe: Our viewers can go to Hulu; they can go to a lot of different places. But to get all the stuff that really matters, they have to go to cable or a satellite provider. Somebody's got to pay the bill. You cannot produce the kind of programming you're seeing if viewers download it for free.
You've described your programming as being ideally suited for the grown-up version of the MTV generation. So is food the next rock 'n' roll?
Over the past couple of decades, the MTV generation has started buying homes and raising families. So all of a sudden, you might go to a little neighborhood gathering, and instead of talking about the new Springsteen video on MTV, somebody might say, "By the way, who's your plumber? Who's your landscaper?"
That said, your networks' audiences tend to be defined less by their age than by their gender, isn't that correct?
When I worked in radio in the '70s, men were valued somewhat more than women as consumers, so I saw that as an opportunity. And when we started HGTV in 1994, it was the same thing. There were very few cable channels targeted to women really, only Lifetime. [The Food Network launched in 1993 but did not become a ratings hit until after 1997, when Scripps acquired a majority interest in the channel.] But I knew that to reach women, I needed to spend a lot of time focusing on the background music and voice-overs. Women know how to multitask, and they have a great ear, so they can do a lot of different things when they turn on the TV. With guys, we just watch TV.
Can you talk a bit about plans for the future? Scripps has tried to extend its brands by launching spin-offs first with the home- and garden-oriented DIY Network as a companion to HGTV and more recently with the Cooking Channel. How many food channels do we need?
We think the demand is there. We learned with HGTV that as it began to evolve, it was more about design and decorating and less about how-to, so that created an opportunity to launch DIY. And Food Network has become a kind of pop-culture phenomenon, but that has left us with an opportunity to get back to basic stuff meaning cooking. The spin-offs are also a defensive move in case somebody decides to come after the Food Network and launch their own channel.
Speaking of defense, let's cut to the chase: What kind of threat does Oprah's network pose?
Right now we're not seeing it affecting our viewing. But Oprah is an incredible person and an incredible brand. Yes, she's going to be a competitor not just to us but to all of broadcast and cable TV going forward.