Scripps Networks Interactive Inc. , a pure-play lifestyle cable network company, acquired Singapore-based Asian Food Channel (AFC) for an undisclosed amount. It is believed to be a strategic acquisition by the company to widen its presence in Asia.
AFC is a 24/7 broadcasting channel and displays substantial amount of Asian and international video content. Scripps Networks will also benefit from AFC’s increased number of original programs that are viewed by 8 million subscribers across 11 markets in Singapore. The company generates its revenue through regional advertising sales coupled with fees from pay-TV operators.
This is the second international deal by Scripps Networks within a month after the company’s wholly owned subsidiary, Home and Garden Television (HGTV), formed a multi-year partnership with interactive channel retailer, HSN Inc. . The cross brand initiative will showcase HGTV’s outdoor products on HSN’s outdoor living category.
Post the acquisition, Scripps Networks will have three lifestyle television brands in the key growth markets of Asia, as Food Network and Travel Channel have already been distributed in Asia.
Since 2009, Scripps Networks formed several partnerships and acquisitions to expand its international presence. Notably, the acquisition of a controlling stake in the Travel Channel has lifted Scripps Networks as the global market leader in lifestyle programming. Additionally, Scripps Networks has joined hands with Shaw Communications Inc. (SJR - Free Report) to broadcast HGTV, Food Network and DIY Network in Canada.
Emerging Asian markets hold great growth potential for Scripps Networks as the improving standard of living in the region will increase the demand for lifestyle channels. We believe that acquiring AFC will position Scripps Networks as a dominant lifestyle brand in Asia, particularly within the food programming segment.
Scripps Networks reported a healthy financial report where revenues jumped 9.2% in the fourth quarter of 2012. However, declining viewership remains a major concern for Scripps Networks, which accounts for a reduced advertising revenue for the company.
SNI currently carries a Zacks Rank #3 (Hold). Among the other companies in the industry, Liberty Global Inc. (LBTYA - Free Report) with a Zacks Rank #2 (Buy), is a better option for the investors.