The Food Network Wants a Bigger Slice
By Allison Romano -- Broadcasting & Cable, 9/5/2004 8:00:00 PM
On Food Network's 30 Minute Meals, perky 36-year-old chef Rachel Ray slices each ingredient with the same slender silver knife but never mentions the brand. When curious viewers bombarded the network's New York offices with inquiries about Ray's preferred cutlery, Food Network struck a deal with Ray and the manufacturer to sell the $70 Wusthof knife on its Web site. Since then, it has sold thousands of knives, and the three sides have split the profits. The deal is "almost a perfect example of how we'd like to do it," says Food Network President Brooke Johnson.
Since launching in 1993, Food Network has perfected the recipe for transforming chefs, such as Emeril Lagasse and Bobby Flay, into TV celebrities. Until recently, the network focused almost exclusively on the TV side of the business: making shows, selling advertising and growing distribution to 80 million homes. And although it dabbled in e-commerce, merchandising its chefs and its brand seemed to be an afterthought, amounting to only about $5 million a year.
Now, as Lagasse might say, Food Network is ready to "kick it up a notch," in concert with Shop at Home, the nation's fourth-largest home shopping channel. Both networks are part of the E.W. Scripps Co., a Cincinnati-based company hell-bent on tweaking the traditional recipe for making money on TV. Scripps, which bought Shop at Home for $285 million last year, plans to leverage its retail power with the fan base of its lifestyle networks—Food Network, HGTV, Fine Living, and DIY: Do It Yourself—to create the ultimate selling machine.
MIXING UP A NEW BUSINESS
To harness the networks' brand appeal for its retail operation, Scripps executives have mapped out a bold business strategy for the next few years. The company predicts that 90% of Shop at Home's sales will be "lifestyle-related" products—most of it associated with Scripps channels—compared with only 45% now. Food Network chefs will sell aprons, knives and spices on Shop at Home, for example, and networks and Web sites will likely cross-promote programming—and buying opportunities. Food is hawking its own brand, too: A second edition of Food Network Kitchens Cookbook, culled from its test-kitchen recipes, goes on sale in October, with more merchandise on the way.
In return for giving TV chefs direct access to potential buyers through Shop at Home, the network wants a bigger cut. When Lagasse signed a new five-year, multimillion-dollar deal last year, Food grabbed the video-on-demand and home-video rights to his series. Going forward, the network plans to develop more merchandise with its talent, from DVDs to dinner plates. One early example: a Southern-cooking–inspired product line for Paula Deen, who hosts Southern-themed Paula's Home Cooking.
"In the early days, we looked at ourselves as a television service," says Johnson. "Now we want to explore things that will have mutual benefits for the network and our talent." The strategy is based on a simple premise, she says: Viewers often covet the preferred products of favorite chefs, but, "if they go off to QVC or HSN, it doesn't do us any good."
Few TV genres are more ripe for ancillary profits than food shows, and new ventures could make sales even healthier for Food. The network will take in $242.1 million this year, up 20% from 2003, according to Kagan Research. But competition is stiff—Shop at Home's $235 million in sales is 5% of giant QVC's revenue—and past attempts to broaden the category beyond jewelry and clothing have had mixed success.
No ingredient in the new strategy is more crucial than the right chef. "They are huge personalities," says Jon Rosen, who represents Rachel Ray at William Morris Agency, "and advertisers—from food to appliances, even cosmetics—are seeing the value of these chefs."
Celebrity chefs drive a lucrative retail industry. Kitchen products, everything from Rachel Ray's knives to Naked Chef Jamie Oliver's line of T-Fal pots, generated about $20 billion in sales last year, according to the International Housewares Association and market-research firm NPD Housewares. Cookbooks alone are a $375 million business, according to Ipsos BookTrends, a market-research firm. "The chefs are great demonstrators. People trust what they say," says Shop at Home President Judy Girard, who once ran Food Network.
CHEFS BECOME STARS
Food's best-known chefs also heat up ratings for its top-rated shows, including 30 Minute Meals, Paula's Home Cooking, Emeril Live and Food Nation With Bobby Flay. In the second quarter of this year, Food was one of cable's top-rated networks, drawing 727,000 viewers in prime, a 20% jump from the same period a year ago. In total day, which includes instructional shows that air during the day and in fringe, the audience grew 23% to 456,000 viewers.
Lagasse, 45, has assembled the largest empire, with more than 150 products. Among them: three lines of pots and pans; Emerilware utensils and cutlery; the Emeril blender; 14 cookbooks; Emeril cooking clogs; 12 variations of Essence of Emeril spices, such as "Bayou Blast" and "Baby Bam! Essence"; a kid's version of the Bam! apron; Cajun cooking music; and an Emeril jacket.
For Bob Tushman, Food Network's head of daytime programming, discovering stars is Food's toughest assignment. "When you find the right person, they're gold," he says. Seasoned chefs like Ray, Mario Batali and Sarah Molton produce live-to-tape shows. With chefs not ready for prime time, the network infuses their shows with heavy post-production, editing and music to cover mistakes. Other cooks attend media courses, where they pore over TV-ready recipes and delivery of lines.
At Lisa Ekus' media training school in Connecticut, chefs learn how to make good TV. "What might take 40 minutes to prep in kitchen with six sous-chefs, you'll do in six minutes on air," she tells them. In the past year, three dozen pupils have paid $3,000 each to use her in-house studio, prepare demo tapes and get feedback.
"A good cook is not necessarily a good TV host," says Food's Paula Deen, 57, who started with a catering business selling fried chicken and other meals to Savannah, Ga., office workers and subsequently opened a restaurant and wrote a cookbook. Her Southern charm translated well during demonstrations on QVC, and so Food Network gave her a show.
Some of the best culinary stars are serendipitous discoveries. When Food Network needed a host for a simple Italian program, Tushman contacted well-known Los Angeles caterer Giada De Laurentiis, a slender, raven-haired Italian beauty. She wasn't a professional Italian cook, nor had she had been on television, so Tushman asked her to make a short tape of herself making a peanut-butter-and-jelly sandwich. "The video was something we would have been proud to produce, with music and views of the beautiful L.A. sun and throwing her hat in the air," he recalls. "She instantly won us over."
Discovering Ray, he says, was serendipitous, too. In 2001, she was working at a gourmet food store near Albany, N.Y., when a media trainer who works with Food Network heard her on local radio giving tips on quick and easy meals. He called the network. "She's everything we look for," Tushman says. "Compelling, charismatic, fun and upbeat, and articulate."
Her 30 Minute Meals won fans first. In April 2002, Ray debuted her second show, $40 a Day, about frugal travel and food. A third, Inside Dish, about celebrities and their favorite foods, arrives this fall. Ray's down-home, carefree attitude draws in three times more women than men on a typical day. "A lot of my success is luck," she says. "I never planned to be a TV chef." 30 Minute Meals is Food's top-rated show many weeks.
Celebrities like Ray or Lagasse can make as much as $25,000 an episode, amounting to $1 million or more in a 30-episode cycle, while lesser-known chefs might be paid as little as $5,000 an episode. Food would not comment on its deals. Ray claims to turn down "99.9%" of endorsement offers coming her way, even as she sketches designs for new plates and begins mulling a new line of casual furniture.
Not all TV chefs, though, seek to become a brand. Julia Child, the grande dame of TV cooking, refused to lend her name to any products. In an interview shortly before she died Aug. 12, she said, "I want to be completely honest about what I say and what I present. I don't want to have to avoid using anything simply because it may conflict with the views of a sponsor."
|Ray appeals to time-pressed women and younger viewers, while Lagasse draws a more gender-balanced audience.|
|30 Minute Meals||Demo||Emeril Live|
|Source: Nielsen Media Research. Third-quarter averages for 30 Minute Meals at 6 p.m. ET and Emeril Live at 8 p.m.
|236,000||W 18 -49||139,000|
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