'Flanker' Brands Score Big

Investment in emerging channels pays dividends for bigger siblings

There's more Cooking on cable.
More History too.

Cable programmers are pouring more
resources into emerging channels - which often serve up variations on the same
fare offered by the flagship brands - as a way to protect their mature networks
from rivals and grow revenue.

Take the Cooking Channel, started
by Food Network owner Scripps Networks Interactive a little more than three
years ago. Michael Smith, general manager of Cooking Channel, says Scripps'
recipe was part offensive and part defensive. "We saw demand for food
programming growing dramatically," Smith says. At the same time competitors'
appetites were being whetted because Fox and Bravo were showing that cooking
shows could draw viewers for them as well. "By creating a second channel of our
own we could blunt that activity."

The proof is in the pudding. In
its first year, Cooking Channel's ratings doubled Fine Living's. Last year, revenues
were up 34% to $89 million in 2012. Scripps has pursued a similar blueprint
when it launched the DIY Network to buttress HGTV. Both new networks programmed
how-to programming as the more mature networks went for more entertainment

Metastatic Momentum

Scripps isn't alone pursuing this
strategy. Last year, A+E Networks rebranded its History International channel
as H2. Ratings in the 25-to-54 year old demo were up 38% last year and are
pacing up 34% so far this year. A+E also recently hired BBC executive Jana
Bennett as president of its emerging Bio and LMN networks to strengthen A&E
and Lifetime. Given their position relative to the "quarterbacks" on the field,
some call these new ventures "flankers."

"The real growth opportunity from
an affiliate and a revenue standpoint is definitely from these emerging
networks," said Dirk Hoogstra, executive VP and general manager for History and

Discovery Communications sees
Science Channel as a growth engine. GM Deb Myers says that since 2008, ratings
have risen for 18 straight quarters, distribution is expected to hit 80 million
homes, up from 54 million, and ad sales have tripled.

The network has taken Discovery
Channel's core science mission and added some pop culture. It will be the home
for the company's first scripted show, 73
Seconds, The Challenger Investigation
, starring William Hurt as physicist
Richard Feynman. The show will be simulcast on Discovery.

"When we want to attract a bigger
audience, we will either give a window to Discovery or we will simulcast,"
Myers says. "It works the other way too," she added, noting that MythBusters will be airing on Science.

More Than Copycats

Cable programmers have been
launching related channels for a long time. There are a nest of ESPN Networks. VH1
was originally a grown-up version of MTV and now both brands come in a variety
of flavors. There are also the movie channel spinoffs from Lifetime and
Hallmark, which, according to Derek Baine, analyst at SNL Kagan, which were
built on programming synergies, but now do original programming.

"I think more interesting is what
Scripps is doing with Cooking and DIY," says Baine. "Cooking is really testing
new shows . . . and if they are very successful they can be ported over to the
bigger Food Network."

DIY and Cooking are doing "pretty
well" with advertising front and have gotten a good reception from operators. "I
think there is a place for these networks, but they have to be priced very
low," he says.

But original programming, the key
ingredient making the networks grow, is expensive. According to Kagan,
programming expenses rose 15% from 2012 to 2011 at the Cooking Channel. At DIY,
programming costs rose 9%. H2 recorded a 12.5% increase at H2.

Those investments in programming
seem to be paying off. In addition to the big gains Cooking Channel, net
operating revenue rose 18.1% at DIY 21.2% at H2, and 13.1% at Science, according
to Kagan.

The investment helps at time when
distributors are questioning carrying some little-watched channels.

"Operators are definitely looking
for networks to justify their value," says Smith. "One of the things we're
proud of at Cooking Channel is we do produce hundreds of hours of original

Each flanker network looks to
distinguish itself from its mother ship. Cooking aims to have a more
independent flavor while stocking up on genres no longer popular on Food
Network, such as in-studio instructional shows that are cheap to make. (About
30% of Cooking Channel viewers don't watch Food, Smith said.) Cooking recently
launched The Freshman Class, focusing
on people trying to turn their lives around by going back to cooking school. The
network also airs reruns of shows from Food, such as Iron Chef America and Good
. At the same time, some series, like Hungry Girl and Heatseekers,
move from Cooking to Food.)

Similarly, Hoogstra says that
History is "entertainment focused with the history baked in," while H2 is more
geared to pleasing viewers seeking information.

Coming up on H2 next year is The World Wars, from the producers who
did Men Who Built America for History.
It will focus on how World War II affected the people who became leaders during
that time. "It will be a really high-quality production," Hoogstra says.

How big can a flanker like H2 get? "I see
potential to continue to grow. Where it maxes out I don't know," Hoogstra says.
"I don't know what the ceiling is yet. But we will find it. We're going to push
and push and see how high we can take it."

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