Scripps Networks is putting the finishing touches on a company-wide strategy to launch by late 2005 or early 2006 a high-definition channel encompassing content from its four lifestyle brands.
The company’s HD roadmap includes significantly increasing the amount of content its four networks produce in HD next year to create the necessary building blocks for an all-HD channel that will meld content from HGTV, Food Network, Fine Living and DIY.
Scripps has amassed about 25 hours worth of HD content to date and hopes to reach 300 to 400 total hours by the end of next year for the channel launch, said Scripps Networks Executive VP John Lansing, who will become president Jan. 1. “If you believe the future is HD, then the sooner you produce, the sooner you become ready for the future,” he said.
Scripps is well positioned to create content in HD since it owns 90 percent of its programming library. Mr. Lansing feels that turning that library into a storehouse of HD content should only increase its value. “We want to use it as a business opportunity in the future. Getting there and beginning to develop the HD strategy is critical to us,” he said.
Mr. Lansing said Scripps is in the final stages of providing the budgetary blessing for the HD project, but all expectations are that it will be a go for next year.
Producing in HD should cost 20 percent to 30 percent more, which is less than expected, said Mark Hale, Scripps Networks executive VP of operations and production. “We had feared as far as 30 to 35 percent,” he said. Scripps will bear the increased cost of production since it owns most of its content.
HGTV, taking the lead, will over the next six months move 10 existing series and specials into HD production, including “Extreme Homes of Europe,” and will shoot three new series in HD. The new shows are “My First Space,” “Small Space, Big Style” and “Off Beat America.” The largest of the Scripps networks, HGTV is fully distributed in 89 million homes. As such, HGTV has the most resources and biggest programming budget of the networks.
Fine Living’s “America’s Dream 18” will be among the shows shot in HD next year, as well as Food Network special “Italian Holiday” and DIY special “Fly Fishing Yellowstone.” Scripps also plans to shoot “Smoky Mountain Tour” in HD for distribution on broadband. Scripps’ newest network, Great American Country, has not yet been incorporated in the HD strategy.
In mapping out which shows will begin production in HD next year, Scripps can pluck from a programming base of 1,000 hours each year on HGTV, 800 hours from the Food Network, and 400 hours each from Fine Living and DIY. In addition, some content will come from upconverting existing library material to HD. In addition to the cost to produce in HD, Scripps also plans to replace aging production equipment with HD-capable upgrades.
The Scripps HD channel will follow a model that has worked well for NBC Universal and Discovery Communications. Discovery HD Theater launched in 2002 with 100 hours of content and now counts about 1,000 total hours of content, including material amassed from its 13 networks and original productions shot exclusively for the channel. Universal HD, the HD service from NBC Universal that launched in 2003 as Bravo HD, draws from the company’s 10 cable channels as well as its film and television library. Universal HD plans to increase its output from 150 hours of HD content this year to more than 700 next year.
Mr. Lansing said that the yet-to-be-named HD channel will retain the distinct brands of the four different networks. “The specific attributes of those brands would still be distinguishable in the content of this channel, so we are not looking to blend the core brands into one brand,” he said. “In that regard we are recognizing what we think is a significant demand in the market for content from the Scripps Networks, and the MSOs [and satellite companies] have communicated the value of the quality of HD programming for their business and we are trying to be responsive.”
Scripps plans to begin talking to distributors about the service and carriage of HD programming early next year.
The timing of the HD launch makes sense. According to Kagan Research, the average price of an HD set is dropping 12 percent each year and averages about $2,000. However, many retailers, like Best Buy and Circuit City, are peddling 27-inch HD sets now for about $500. According to Frank N. Magid Associates, 47 percent of consumers in the market for a TV are “very” or “somewhat” likely to buy an HDTV between this holiday season and the end of 2005.
In addition, the mean household income of an HDTV owner is now $80,000 per year, compared with more than $95,000 last year, according to Leichtman Research Group.
The Consumer Electronics Association said the total number of HD sets shipped to retailers should hit 13.8 million by the end of this year. What’s more, that number represents nearly a doubling of the 7.8 million HD sets shipped from 1998 until the end of 2003.