In the past several years, many cable networks have spent heavily on dark dramas and quirky comedies about jaded ad executives, Russian spies and families dealing with a transitioning parent -- the kind of prestige shows that captivate television critics and inspire talk of a new golden age of television.
Continue Reading Below
But it turns out there is also a large and growing audience for programs about home renovations and cooking contests. The continuing demand for escapist lifestyle programming -- so-called comfort-food TV -- is a key reason that Discovery Communications Inc. has agreed to pay $11.9 billion for Scripps Networks Interactive Inc., parent company of HGTV and the Food Network.
The pairing will create an unscripted programming juggernaut that dominates the lifestyle genre, expanding on Discovery's networks that include Discovery Channel, TLC, Investigation Discovery and Animal Planet.
The deal will establish "a new global leader in real-life entertainment, " Discovery Chief Executive David Zaslav said on a call with analysts Monday.
"This is just the perfect marriage," said Scripps CEO Ken Lowe.
Although the Scripps channels don't have the sexiness associated with AMC, FX and TNT and most of their viewers aren't in the media capitals of New York and Los Angeles, they quietly dominate cable-TV ratings.
Continue Reading Below
HGTV, which stands for Home & Garden TV, has boosted its ratings by 29% since 2013, thanks to popular shows like "Fixer Upper" and "Property Brothers." It is drawing an average of 1.65 million viewers in prime time so far this year, making it one of the most-watched entertainment cable channels -- ahead of AMC, FX and TNT -- according to Nielsen.
Food Network -- known for hits like "Food Network Star" and "Diners, Drive-Ins and Dives" -- is averaging 1.02 million prime-time viewers this year, more than twice what MTV and Comedy Central draw.
The resiliency is notable as the broader television industry combats cord-cutting and the rise of on-demand streaming services, which are eating into ratings.
The lighter fare on Scripps's networks provides viewers with relief from the nonstop political combat dominating the news networks and marks the antithesis of the moody dramas and twisted comedies that have filled much of the recent era, dubbed peak TV because of the high number of shows being produced.
The audiences for Food Network and HGTV are among the most desired by advertisers. Both draw some of the highest percentages of female viewers in higher-than-average-income households.
"They are two of the most expensive networks we buy," said Darcy Bowe, senior vice president and media director at Starcom USA, a unit of advertising giant Publicis Groupe SA. "There are not really other networks devoted to lifestyle all the time."
Mr. Zaslav said that Discovery and Scripps together will be home to five of the top cable networks for women.
The lifestyle shows that populate the Scripps channels have seldom created the type of reality stars that fill other unscripted shows such as "Keeping up with the Kardashians" and the "Real Housewives," but that is starting to change.
On HGTV, some of the talent that has broken out includes Jonathan and Drew Scott of "Property Brothers" and Christina and Tarek El Moussa, the former wife and husband starring in the real-estate show "Flip or Flop," who are a regular presence in gossip magazines.
"HGTV has done a great job of cultivating personalities on the network," said Ms. Bowe.
At a time when Scripps's networks are on a tear, Discovery was able to convince the controlling Scripps family to sell by offering a 34% premium and 70% of the deal in cash. The two companies had discussed a tie-up more than once over the past decade.
Mr. Lowe -- who has been associated with Scripps since 1980, launched HGTV in 1994 and has led Scripps Networks since its spinoff from E.W. Scripps in 2008 -- is set to retire in 2019. Now he will join the Discovery board after the deal closes.
Not everyone has been bullish that the success of the Scripps channels can continue at the current pace. MoffettNathanson analyst Michael Nathanson recently downgraded Scripps and Discovery, saying the networks lacked the compelling programming like sports that draws a big live audience and the type of shows people seek out to watch on demand or on other platforms. In a report following the deal's announcement, Mr. Nathanson called the pairing a "shotgun marriage" and a sign that the future for cable networks will require "deep cost-cutting and increased scale."
The Scripps channels are seen by industry analysts as a good fit for Discovery, whose programming is also primarily made up of unscripted content, the majority of which appeals to men, though OWN and Investigation Discovery are hits with women.
"There is some opportunity and head room to move that up," Mr. Zaslav said.
In addition, the combination will make launching a direct-to-consumer service more viable, Mr. Zaslav said. Scripps, Discovery and Viacom Inc. (parent of MTV, Nickelodeon and Comedy Central) have had talks about teaming up to create such an offering.
"We can come together with a few others and do it ourselves," Mr. Zaslav said. "The direct-to-consumer business is a huge part of the future of our company."
(END) Dow Jones Newswires
July 31, 2017 12:55 ET (16:55 GMT)