By MARILYN ALVA
It's small compared to many of the cable and broadcast giants it competes with.
But Scripps Networks Interactive (SNI) has been dishing up tasty results on the back of its iconic flagships, the Food Network and HGTV.
Two of the most popular cable TV channels, they draw high-margin advertising and affiliate fees to keep revenue and profit growth bubbling in double digits.
Ted Allen, star of the Food Network's "Chopped," at a party launching his cookbook in New York last May. View Enlarged Image
Each draw an average of more than 1 million household viewers a night.
Their appeal hasn't gone unnoticed by cable rivals, analysts say. Jason Bazinet of Citigroup ventured that the Walt Disney Co. (DIS) might move to acquire Scripps Networks to fill a "yawning gap" in a cable portfolio lacking "upscale, older women."
The buy would also make Disney's cable portfolio less reliant on sports cable network ESPN, he wrote in a report on Aug. 13.
"A Scripps acquisition would represent a nearly 50% increase in Disney's existing cable audience," which is dominated by Disney Channel and ESPN, he noted.
The company, through spokesman Mark Kroeger, had "no comment" on the speculation.
But others weren't so shy.
"It's a well—run company," said analyst Eric Handler of MKM Partners. "I don't think there is any great reason to sell right now. But it may make sense down the road. This is an industry that continues to consolidate."
Scripps Networks operates a bevy of lifestyle cable properties that also includes the Travel Channel, DIY, Cooking Channel and Great American Country.
It was spun off from 134-year-old media conglomerate E.W. Scripps Co. (SSP) in 2008 as a separate cable-TV content company.
Knoxville, Tenn.-based Scripps Networks is viewed as one of three pure-play cable companies, along with Discovery Communications (DISCA) and AMC (AMCX), home of the "Mad Men" series, IFC and The Sundance Channel. AMC broke off from New York media concern Cablevision (CVC) last year.
Handler says it would "make more sense" for Discovery and Scripps Networks to merge, with Discovery the acquirer.
Like Scripps, he says, Discovery has "nonfiction-type programming." It also has a bigger international footprint, something that Scripps is working to build, especially via the Travel Channel.
Other cable operators are part of much larger operations. For example, Disney's cable network is part of an entertainment and media enterprise that also includes parks and resorts, studio entertainment and consumer products.
Pending its planned split, News Corp. (NWS) still has newspapers, television stations, satellite TV and film under its wings.
"(Scripps Networks) is one of the smaller cable network owners but they definitely have two of the most in-demand networks in the Food Network and HGTV, particularly among women," Handler said.
A family trust controls 93% of Scripps Networks' voting shares and owns 26% of common class-A shares. As controlling shareholder, it has veto power over sales to Disney or any other company.
The trust is set to be broken up and its assets distributed to surviving heirs after the death of the founder's last surviving grandchild, Robert Scripps, who is in his 90s.
Some speculate that a sale, if it were to occur, wouldn't likely happen until after the break-up since not all Scripps' heirs have the same affinity for the business as prior generations.
While acquisition rumors swirl around it, Scripps Networks is focused on improving the businesses it has. High on the list is the Travel Channel, its third and slower-growing flagship.
In the second quarter, Travel Channel revenue grew 4.9% vs. the year earlier to $73.8 million. The Food Network, in contrast, put up 17% growth, for $218 million. HGTV grew 8.4% to $205 million.
"Travel Channel is where we see the biggest opportunity for the growth of the company," said spokesman Kroeger. "Defining that brand and genre is the company's leading priority."
Though the Travel Channel is losing globe-trotting "No Reservations" star Anthony Bourdain to CNN, it will be running a host of new programs including "Hotel Impossible," "Baggage Battles," "Trip Flip" and "Top Spot."
Scripps Networks acquired the Travel Channel in late 2009 to complement its home and food categories. It recently acquired U.K.- based Travel Channel International to help build a global travel platform.
"It's the lowest-hanging fruit," Handler said of the Travel Channel.
Meanwhile, Scripps' premium flank brands, the Cooking Channel and DIY Network, are cooking up strong growth.
Revenue in Q2 at DIY, which features rap-star-turned-contractor Vanilla Ice, grew 16% to $33.7 million while the Cooking Channel rose 41% to $22.4 million.
Scripps' one glaring laggard, Great American Country, is being tweaked with new country-lifestyle touches, Kroeger says. The music channel posted a 15% drop in revenue in Q2, to $5 million.
If it won't return value to shareholders through a sale, Scripps is doing so through share buybacks. A recently approved $1 billion share-buyback program follows a $1 billion one completed in Q2.
Meanwhile, shareholders have plenty of other good news to keep them content. Ad revenue in the second quarter rose 12% to $417 million while affiliate fees jumped 16% to $171 million.
Profit grew 19% to 93 cents a share. Analysts forecast full-year earnings of $3.37 a share, up 17% from a year earlier, according to Thomson Reuters. That takes into account higher programming expenses, which are expected to rise 13% to 15% in 2012.
CEO Kenneth Lowe said in the second-quarter conference call that the firm "broke through the $1 billion threshold" in total ad business booked for the first time in the company's history.
That puts it "in the same league with a very short list of other programming groups," he said.
Ad revenue is growing faster than the 5% growth in the overall cable industry.
"Clearly, we've created a distinct competitive advantage by uniquely defining and staying true to the lifestyle content categories that we own and it's paying off," Lowe said in the