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Scripps Networks Bosses See Rationalization in Subs Fees Debate - Broadcasting & Cable

Scripps Networks Bosses See Rationalization in Subs Fees Debate

Management tells investors that they've hit their goals with one notable exception - Cablevision
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Scripps Networks Interactive chiefs updated investors today
on their pay-TV renewals for Food Network and HGTV and their ongoing dispute
with New York
regional operator Cablevision.

Chief financial officer, Joe NeCastro, said: "We're looking
to significantly bring Food [network] more in line with what we're being paid
for HGTV and in all counts with one exception we've accomplished our goals. By
the time we report fourth quarter, we feel good about where we came out and
we're gratified that there is recognition-with one notable exception-as to the
value of these networks."

CEO Ken Lowe continued saying the cable industry is seeing
"a little more rationalization, it could be that retransmission consent
negotiations have something to do with that." Pressure from broadcast networks
now seeking fees from distributors is likely to make it harder for smaller
cable channels to make their case for rate increases.

Even so, content providers such as Scripps Networks
Interactive are arguing that they've invested significantly in improving
content and drawing passionate and engaged viewers that they ought to be
compensated accordingly. Scripps is currently lobbying Cablevision for an
additional 20 cents to 30 cents for its services. Lowe added that discussions
of "video on demand rights and TV Everywhere and video on broadband is going to
be a bigger part of negotiations going forward. As Comcast and NBCU goes
through, it's going to be a real proving ground for moving content from TV to
broadband and how it all plays out."

"This is a once in a five or ten year opportunity," said
NeCastro of the carriage renewal talks which are also in progress with Time
Warner Cable. "There is no one spike out there like there is for this one."
HGTV receives 13 cents per subscriber per household per month, while Food
receives eight cents, according to data from SNL Kagan.

Separately, Scripps revealed a few details on the rebranding
of Fine Living Network which will become The Cooking Channel. Lowe said the new
service would be much more targeted towards younger viewers than its culinary
sibling and that much of its programming would come from overseas markets. 

Internationally, Scripps intends to rollout several more
versions of Food Network in 2010. The network launched in the U.K. two months
ago. HGTV is also destined for overseas markets, though Lowe noted, "In HGTV's
case there is a difference with [measurements such as] two by fours. It's not
the same in certain parts of the world. We view it as entertainment and less
informational and that's how we position it." The company is also hoping to
further exploit its new ownership of Travel Channel in international markets.

The fate of the Tribune Co.'s stake in Food Network still
hangs in the balance and Scripps executives said they are still interested in
buying that minority stake but won't know more about its future until Tribune
emerges from bankruptcy and new management and a new board are in place.

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