The finalized powerhouse merger between Discovery Inc. and Scripps Networks Interactive Inc. could mean viewers see more original content and variety instead of the cutbacks to which many mergers are prone. With rising production and talent costs across the TV industry, Scripps has capitalized on genres featuring unscripted programming, no actors, half-hour formats, and home improvement. Budgets for these types of formats are particularly low, especially when compared to scripted budgets in the industry. Comparing total programming costs from 2009 to 2017 for all Scripps networks, the costs have doubled for the majority, with HGTV (U.S.) and Food Network (U.S.) experiencing the greatest growth in the past nine years.
During the most recent upfront presentation on April 10, Scripps discussed its original programming hours expected in 2018. Loading up its lineup is HGTV, surpassing its sister networks with approximately 766 hours from 13 new and 40 returning series.
HGTV, the home improvement network, offers a plethora of home renovation and remodeling programming. During the course of the last nine years, the network has had a substantial spike in total programming expenses.
Even with the increase in original programming costs, the network continues to steer away from acquired programming. Original content can be more profitable and lead to more opportunities for content distribution, international success and secondary windows. The network's signature series such as "Fixer Upper," "Flip or Flop" and "Property Brothers" complement low-cost and long-running TV series like "House Hunters," currently in season 159; "House Hunters International," in season 124 as of April; and specials like "HGTV Dream Home Giveaway," "HGTV Smart Home Giveaway," and "HGTV Urban Oasis Giveaway," among others.
Emphasizing food-related content, Food Network is the second highest spender in the Scripps realm. The network continues to boost original fare and promises 650 hours of original programming in 2018. Highlights of new programming include "Worst Cooks in America: Celebrity Edition," "Iron Chef America," "Food Network Star,” “Food Network Star: Comeback Kitchen," "Chopped featuring Martha Stewart," and "Buddy vs. Duff." Looking at 2017 total programming costs, Food Network had a significant increase from 2009's total costs, according to Kagan estimates.
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Request DemoHeading over to the Travel Channel (U.S.), the network has remained relatively stationary in terms of programming hours and costs throughout the past nine years. Home to "Bizarre Foods: Delicious Destinations," "Expedition Unknown," "Mysteries at the Museum," and "The Zimmern List," the network has made minor increases to the total programming cost segment compared to its sister networks. The highest level for total programming spending was 2014. Looking at 2017, the most recent year analyzed, the Travel Channel continued to concentrate on comparatively low-budget travel shows. In 2017, the network introduced 390 new original hours.
DIY Network (U.S.) shares content with sister network HGTV, and it features its own home improvement content. Sharing between the networks can be a profitable strategy, and over the past three years DIY has subsequently reduced its number of original hours. In 2017, DIY had its highest number in total programming costs. The network plans to produce 250 hours of original programming this year. The new programming lineup includes "Hit Properties with Nathan Morris," "Lawn & Order," and "Wood Work with Clint Harp."
With a less aggressive content recipe is the other food-related network, Cooking Channel (U.S.). In comparison to Food Network, Cooking Channel has a significantly smaller programming budget per year. These two networks share content, and this could be a contributing factor for Cooking Channel's low programming costs. Cooking Channel plans to show new episodes of "Beach Bites," "Burgers, Brew & 'Que," "Man, Fire, Food," "Food: Fact or Fiction?" and overall 200 hours of original series in 2018.
Great American Country (U.S.), another lifestyle network, focuses on music entertainment and country lifestyle. It has a portfolio of original lifestyle programming, music performance, live concerts and country-music videos. Some of GAC's originals include "GAC Top 20 Country Countdown," "Going RV," "Log Cabin Kings," and "Farm Kings." Other programming comes from sister networks, for instance, HGTV's "Living Alaska," "Celebrity Motor Homes," "Flea Market Flip," DIY's "Docked Out," "Barnwood Builders,” and Cooking Channel's "Kimberly's Simply Southern." In regard to programming, the network has not increased costs dramatically. GAC had low programming costs in 2009, and the increase has not surpassed 12% in the past nine years, according to Kagan estimates.
Going forward, Kagan anticipates more content sharing between the Discovery family of networks, shared development, cross-promotion and crossover projects similar to the planned ones for 2018. This year will see HGTV's Drew Scott heading over to TLC for a special "Drew and Linda Say I Do" while "Buddy vs. Duff" features Food Network's Duff Goldman squaring off against TLC's Buddy Valastro of "Cake Boss" fame. Additionally, several renewals and new shows are slated to debut in the coming months.
In 2017, Scripps produced 2,500 hours of content for approximately $1.2 billion, which we estimate to be less than what Discovery spends to create the same amount of television. Moreover, Discovery recently shared that its average cost of content is $400,000 to $450,000 an hour. Discovery follows a similar content structure as Scripps: unscripted and documentary format, with the exception of a number of scripted series for OWN: Oprah Winfrey Network (U.S.). At an investor conference on March 6, Discovery CFO Gunnar Wiedenfels said, "We're spending more than $3 billion in content right now between Scripps and Discovery, both domestically and globally."
Economics of TV & Film is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.