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Change of Scene for Travel Channel

Oct 7, 2007  •  Post A Comment

Travel Channel President and General Manager Patrick Younge is packing up the network and taking it on a trip.
It’s moving a few miles from Discovery Communications’ head­quarters in Silver Spring, Md., to its own space in Friendship Heights, Md.
Discovery sold Travel Channel to Cox Communications as part of a deal announced in April that valued the network at $800 million.
Mr. Younge likes the change of scenery. “It’s been 128 days since we left, and I look at all the things we’ve done and that we’ve managed to maintain our mo­mentum, and it’s quite in­credible,” he said.
At Discovery, Travel Channel was like the kid who couldn’t do things that might affect his or her siblings.
Now “for the first time, we can take the stuff that’s working and really go after it,” Mr. Younge said. “We’ve got more money to spend on marketing, and it’s our business. We’re not deflected by the needs of other networks in the building.”
Mr. Younge, who joined the channel in 2005 from BBC Sport, said Cox’s CEO Pat Esser runs a very decentralized business.
“Business managers are given goals and they’re held accountable for them. It’s what [new CEO] David Zaslav is trying to introduce at Discovery for the network general managers. But at Cox it’s real,” he said.
Leaving also meant a logo change because Discovery took back its blue and green globe. Now a clearer blue one sits in the middle of the Travel Channel’s big T.
One analyst suggested Discovery might be better off as well after the sale. In a recent report, Richard Greenfield of Pali Research said, “The sale of the Travel Channel this past May removes a very low-margin network from the [Discovery Communications Inc.] domestic cable network group. On a full-year basis, the sale of Travel boosts margins by 200 basis points as its margin was sub-15 percent.”
Mr. Younge took issue with that assessment.
“I’m not going to divulge the margin. but if you’re going to move a network on the basis of the margin, Travel wouldn’t be the first one that you got rid of from a Discovery point of view,” he said. “Secondly, I don’t know where they got that figure from. They’re wrong.”
SNL Kagan Research estimates Travel Channel will have a 30 percent cash flow margin in 2007 as revenues rise to $903 million from $$746 million.
Certainly, Mr. Esser thinks Travel Channel is a good business for Cox.
“They have solid distribution, they’ve built a strong brand, and they are aggressively moving ahead with their VOD and HD efforts—areas that lend themselves particularly well to travel content,” said the Cox exec. “As we look at our businesses on the whole, there are endless opportunities for growth, not only in how they expand beyond linear television and into online and mobile applications, but also in how we work together to leverage Travel Channel’s content across various Cox platforms moving forward.”
The Travel Channel has already seen a major uptick by changing its video-on-demand strategy.
It has gone through its library of about 4,000 hours of travel footage and created 800 to 1,000 pieces of short-form content it is using on the Web and VOD.
“This change has seen a 14 per cent increase in take-up in the first month, [and] that’s a record level of take-up for us,” Mr. Younge said.
On the Web, it is delivering 70 percent more video than it was a year ago, and the Travel Channel site is third in the travel information category in terms of time spent, behind Trip Advisor and Yahoo.
Mr. Younge plans to use the channel’s video content on other platforms including mobile and GPS. It is geo-coding its clips and in August made a deal to provide video content to accompany Tele Atlas’ digital maps.
“The thing is that we’re in a position now where we can leverage our content,” he said.
Travel Channel also is looking at ways to work with other Cox businesses.
“You can imagine a Samantha Brown radio show or Samantha Brown syndicated column in all of the Cox newspapers,” Mr. Younge said. “You can imagine Travel Channel video content on Cox newspaper Web sites. So there’s a range of ways we can collaborate and create value for each other.”
Travel Channel retains several contractual relationships with Discovery.
Discovery’s ad sales team still sells ads on Travel Channel and Travel is still included in some multinetwork packages, a Discovery spokeswoman said.
Discovery also handles affiliate sales for current distributors, while the Travel Channel handles new business, such as the high-definition network it is launching in January. Discovery also uplinks the Travel Channel feeds.
Those relationships will continue. “As long as they keep working, great. But if they’re not, we’ll go somewhere else,” Mr. Younge said.
But the office move marks a new level of separation from Discovery’s mother ship.
“I think when we move offices, it will be an important part in our overall development as a network,” he said.
At that point, Travel’s staff will have doubled to add business affairs, legal, finance and information technology departments that report directly to Mr. Young.
“We’re a bit like a teenager going who’s about to go to college, ” Mr. Younge said. “We’re about to leave the nest and where we’re going is a bit scary, but we know we need to go there.”

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