Food Network Re-Slices the Pie

Aug 21, 2006  •  Post A Comment

Food Network wants to expand beyond television—and take its new celebrity chefs with it.

The network has begun negotiating deals with new talent that go beyond hosting shows and give the network a share in online ventures, merchandise and cookbook sales and other deals that have made folks like Emeril Lagasse rich.

Mr. Lagasse, who did his first Food Network show for $50 an episode, now generates $150 million a year, including $90 million from restaurants, according to Mr. Lagasse in an interview with Cigar Aficionado magazine last year. There are Emeril sausages, Emeril seasonings, Emeril bowls, Emeril knives and Emeril wines.

Food Network doesn’t get a piece of that, but it wants to in the future.

“Once we determine that somebody is going to be a Food Network talent, then on a going-forward basis for new talent it will be our position that it’s good for us and it’s good for them if we work together on all ancillary businesses,” said John Lansing, president of Scripps Networks, parent of Food Network.

With an eye on growing its nontelevision business, Scripps is also broadening Food Network President Brooke Johnson’s authority to include all brand activities. Ms. Johnson is looking to add a general manager to the network. The GM’s role will be either to handle the day-to-day operations of the channel or to oversee new business development.

“We’re getting into a position where the brand is going to be able to live in a lot of different venues and platforms,” Ms. Johnson said. “As we go into the future, we’re looking to a more partnership relationship with our talent than perhaps we had when we just thought of ourselves as a television brand.”

While Food Network may have missed the boat on some of Mr. Lagasse’s ventures, Ms. Johnson said that “we’ve gotten a great deal out of that relationship and it remains a really important relationship to us.” (The network does have an interest in the new King World-distributed syndicated talk show featuring Food personality Rachael Ray.)

But in the future, she’d like the network to be more like Nickelodeon, which profits from the billions of dollars in licensed merchandise its stars sell.

“That’s sort of the model,” she said, noting a key difference.

“They own SpongeBob; we don’t own Giada De Laurentiis,” she said.

Al Kahn, president of 4Kids Entertainment and an authority on licensing, said it’s natural for networks and producers to think that if they created some sort of celebrity, they should be able to “get some of the potential revenue that celebrity generates.”

Obviously that revenue can be huge. Martha Stewart, for example, didn’t make much money with her television show, but used the celebrity it generated to build a billion-dollars business.

Beyond money, the network also benefits from licensing through exposure in unconventional places, such as supermarkets and bookstores, Mr. Kahn said.

Divergent Interests

Mr. Kahn deals mainly with cartoon characters and said dealing with real people is “much more difficult. You’re into the foibles of a real live person.”

And often the interests of a real person can diverge from those of a network. After gaining fame on “American Idol,” some contestants have left the show rather than have their careers managed by its producers. Wrestlers have sued World Wrestling Entertainment over rights to their characters. Last month, seven top poker players sued the World Poker Tour over the use of their likenesses.

One agent said that working with a network like Food Network could have benefits for an aspiring personality, particularly if the network is proficient and aggressive in pursuing good opportunities.

“If they’re good at what they do instead of just locking up rights, there may be a business there, the agent said.

But, overall, the agent would recommend that clients resist network deals over the issue of control.

“They want to control it, and that makes it difficult to do other deals,” the agent said.

Food Network has already completed an agreement in its new style with Robin Miller, host of “Quick Fix Meals.”

Through a partnership with Taunton Press, the network will be involved in publishing Ms. Miller’s upcoming cookbook.

“We’ll be participating on the net profit side of that, but we’re allowing Robin to make more money working with us than she would working without us,” Mr. Lansing said.

Ms. Miller was on vacation and unavailable for comment.

The network is also in close conversations with Alton Brown, host of “Good Eats,” about a similar arrangement, Mr. Lansing said.

“The way we see it is that one or two good success stories will help make this make some sense for some other talent as we move forward,” he said. “But as we grow new talent, and they come in the door, our way of looking at our agreements will no longer be just pay for television, but rather an agreement that covers the whole waterfront of opportunity.”

At the same time, Ms. Johnson said, not all new Food Network hosts would have to sign away part of their marketing rights.

“That would be an exception to us,” she said. “We’ll be looking for people who want to do that. Not everybody is interested in building a brand. But if they do (aspire to brand-building) and if they recognize the platform that we present, then it’s likely that we’ll want to go into business together.”

Ms. Johnson said nontelevision businesses are now a small part of Food Network’s revenue.

“We’re convinced it’s going to grow,” she said. “There are so many things we can go into.”

The network is a trusted adviser when it comes to making food and cooking more fun and more accessible. “We can provide value to consumers and they will pay us for that, and over time, it could be substantial,” Ms. Johnson said.