If there's any doubt about the direction E.W. Scripps & Co. is taking, just look at who got named CEO: the man who put the old-line newspaper company into the cable-network business.
Scripps' board agreed Thursday to name Ken Lowe president and CEO of the Cincinnati-based company effective Oct. 1, succeeding William R. Burleigh, who will continue as chairman. A 20-year veteran of Scripps, Lowe is best known as the executive who shepherded the company's entry into cable networks, starting HGTV and acquiring TV Food Network. Over the past five years, the two networks have grown into an increasingly important part of Scripps' financial base, and the most important engine for the company's future growth.
Lowe sees extending the company's reach gradually into the Internet and interactive TV. "We like to say that Scripps is the oldest new-media company."
The century-old, family-controlled company has traditionally been fairly conservative, keeping debt low and even operating certain properties-notably cable systems-less aggressively than it could have. But backing Lowe's effort to start cable networks in 1994 was a departure, coming at a time when independent start-ups were faltering for lack of distribution clout with cable operators, and even major network groups like Discovery Communications or News Corp. faced paying $100 million to $200 million in launch fees for shelf space on cable systems.
Scripps started cautiously, seeking to spread the financial risk by taking on partners. But after a few years proved that HGTV's prospects were bright, the company bought out partners, then bought TV Food and began buying out its partners.
The networks have grown to account for approximately 20% of Scripps revenue and cash flow this year, up from 14% of revenues last year and around 9% of cash flow. The company's core 19 newspapers still generate the majority of revenues and cash flow, though that is falling from roughly 60% to about 50%. Scripps nine network-affiliated broadcast stations account for 20% of revenues and 23% of cash flow.
Lowe had been at Scripps since 1980, starting the company's radio-station division and heading programming and promotion for the TV stations in 1988. He was named president and COO of Scripps in January.
His biggest challenge is igniting growth at the company's newspapers-the star daily is its Rocky Mountain News-which have been fairly strong because of the robust economy but have seen readership slip. "The biggest challenge is just continuing to grow the customer base a little bit and definitely enhance its relationship with the subscriber," Lowe said, noting that around 65% of the homes in Scripps' markets buy at least the Sunday edition of the local papers. Fortunately, he said, neither readership nor the crucial classified-ad business seems to have been hurt by the Internet.
On the broadcast-station side, Lowe said he expects to increase the amount of local programming. But he is not further along than the rest of the industry in deciding how to use the digital-broadcast spectrum the stations have. Scripps is a partner in broadcast Internet datacaster iBlast.
"There's going to be a lot of experimentation and, at some point, consolidation among the different players," Lowe said. "I don't think datacasting is going to be a huge, huge part of our business in the near future."
He said he expects Scripps to also crank up a new network every two years or so, akin to the start-ups DIY (as in Do-It-Yourself) and Fine Living.
The most interesting bet could be interactive TV, if it develops into a real business.
"One of the great things with our cable networks is, they are information-driven, so there's a lot of interactivity possibilities out there. That's probably the next big thing for our networks. For entertainment, there's not as much opportunity."
