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Scripps Networks Interactive, Inc. (NYSE:SNI)

October 11, 2011 9:00 am ET

Executives

Nick Thorogood - Managing Director of Food Network - Europe, Middle East and Africa

Jeff Meyer -

Jon Steinlauf -

Laureen Ong - President of Travel Channel

Kenneth W. Lowe - Chairman, Chief Executive Officer, President and Chairman of Executive Committee

Bobby Flay -

Joseph G. NeCastro - Chief Administrative Officer, Chief Financial Officer and Principal Accounting Officer

Burton Jablin - Executive Vice President

John Lansing - President of Scripps Networks LLC

Steve Gigliotti - President of National Advertising Sales & Marketing

Brooke Johnson - President of Food Network

Analysts

Benjamin Swinburne - Morgan Stanley, Research Division

Tuna N. Amobi - S&P Equity Research

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

Laura Martin - Needham & Company, LLC, Research Division

Matthew J. Harrigan - Wunderlich Securities Inc., Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

Unknown Analyst -

Michael C. Morris - Davenport & Company, LLC, Research Division

Bobby Flay

Now if you notice, over the last few years, some other networks have taken a little bit of the bite of the apple in the food world, and that's because the Food Network has really made food programming relevant. It's fun. It's educational. It's entertaining, and it's what people really want to watch. And as people -- as other networks start looking for other things to do, the Food Network will always be the place where we can find great food programming. I remember 17 years ago when I was first asked to come on a show on the Food Network -- well, first of all, if you couldn't there by subway, you couldn't get there, because they had no money. Of course, it was a start-up cable network. And a lot of my colleagues and friends who were chefs said, "I'm not going on -- I'm a chef. I'm not going on TV." And then 17 years later, they've all sent their tapes in over the years, because they want to be on the Food Network as well because obviously, it's part of our culture today.

As time has gone on, it started on -- it started out as -- I had a show called Grillin' & Chillin' many, many years ago. We shot 42 shows in 7 days, true story. Some people say that was my best television, but it was quite something. We just -- they just kind of threw the food at us on a picnic table and they said go. And then 7 days later, we had 42 half-hour programs. Obviously, it's not done that way anymore, although, sometimes, it's not a bad idea just to kind of go for it. But as time has gone on and Food Network has become part of my family, it's also become part of my business family as well. I mean, partnerships have become very, very important. They're very beneficial to the Food Network and to the Bobby Flay brand. I find it very weird to kind of talk about myself as a brand. But for the things that I do in the food world, when I wake up in the morning, the first thing I think about is food. And I live in this food universe, I call it, where I have my restaurants, which obviously are incredibly important to me, my books, my food television, my partnerships, things I do with the Food Network like Kohl's. You'll see Food Network for Kohl's, you'll see Bobby Flay for Kohl's and of course, partnering with our advertisers as well, which is incredibly important. There's always going to be advertisers who want to be part of the Food Network. There's just so many natural relationships. And of course, publishing. Cookbooks. And now of course, digital media, which is obviously -- we're just getting started in that department, and so the sky is the limit in terms of new partnerships on digital media and what kind of finances that can bring to everybody and of course, just growing the brand more and more. But I find the Food Network as a place of trust. I always feel like I can always tell the Food Network how I'm feeling about something, give them my opinions about my shows or other people's shows in the network and sort of help grow that brand. I like to think of myself as not just a talent on the Food Network but also somebody who produces other shows. And sometimes, I'm actually called in as an unofficial mentor to help some of the newer talent so they don't become problem talent like me. So it's all sort of part of the experience.

The consumer interest in this genre is just huge, and I always tell people that Food Network has become part of pop culture, and we really influence the way people eat and cook and just knowing what's out there in terms of food these days. I mean, I think, and I tell people this all the time, that Food Network has really helped America become a food superpower. It took us a long time to catch up to the rest of the world. But over the last decade or so, America has really become what I think the most important food power in the world. I mean, the diversity of this country's cuisine is amazing, and it's always been there, but now the viewers and everybody in this country actually know what's there. They know what they can eat. They know what's good for them. They know what's not good for them. They know what's available to them from fast food to 5-star cuisine. And I really feel that the Food Network has been a huge influence there.

In terms of leadership, leadership at every level is incredibly important. Ken has been the only CEO that I've lived with here for -- at Scripps Networks, and he's one of those people who just understands that when we want to be creative, sometimes it takes money to spend money to make money. And we love that philosophy and obviously, that's really come to pass over the years. It's something that I always feel comfortable having, sort of -- I always have -- I always feel comfortable having Ken in charge, because I know there's a fantastic foundation. And then at the Food Network level, the President, Brooke Johnson, who's been here for about 6 years. Again, Brooke is one of those people who always lets you know exactly how she feels about things, which I think is incredibly important, because productivity is the most important thing as we're moving forward, and we're looking forward to making better programming on the Food Network. And the other thing that I love about Brooke is that she listens to my every whim, even the ridiculous ones, and there's many of those. I get up in the morning trying to figure out how I can make the Food Network better. I feel like the Food Network and the people in the Food Network is part of my team. If you watch the Next Food Network Star, I'm one of the judges -- I'm the host and one of the lead judges on the show, and the thing that makes me so passionate about that show is that I know that we're looking to someone there to add to our roster, to strengthen the Food Network as the years go on. And so it's really, really important to me. It's not just about whether or not they cook something well that day. It's about, to me, it's the bigger picture, whether or not they can really strengthen the team that we have so far.

I just want to reiterate that Scripps pledges to create value with an investment here, and the only thing I can tell you for sure is that this is an investment that will taste good. Thank you very much. Have a great day.

Kenneth W. Lowe

Thanks, Bobby. Appreciate it. Thank you, Bobby. We launched the Food Network back in 1997, and it wasn't much here. Bobby's right. We walked in and kind of looked through the cardboard boxes and I said, "who's the fresh-faced kid down the hallway?" They said it's the chef at the Mesa Grill, and we think he's got some real potential. And here, this many years later, he's truly become an icon. And I'm so proud, and I know I speak for Brooke, that Bobby has been with us throughout the growth and throughout the maturation. And Bobby, you gave Brooke a couple of ideas, 42 shows in 7 days, sounds pretty good. She had a calculator out and all. That seems to work. And also, I'd like to note that I've had 2 influences on Bobby. One, I've made his golf game pretty lousy and two, he was serving biscuits this morning. So the southern influence has hit Bobby Flay. Thank you, Bobby. Appreciate you being here.

It has been about 14 years since we acquired the Food Network -- controlling interest, I should say, in the Food Network. It's definitely been one of our more dramatic successes. Our accomplishments here, have really contributed to the 16 years of consistent growth for this company and subsequently, for the creation of tremendous long-term value for you, our shareholders. The management at Scripps Networks Interactive has always placed great stock, no pun intended, in fulfilling the obligations that we have to our public shareholders. And those are: to grow this business, to deploy our financial and human resources effectively, to thoughtfully return capital, to prudently invest in opportunities with the potential for outsized returns and to protect and build on the unique competitive advantage that we've established for ourselves in the marketplace. To put it succinctly, we're confident, very confident, about the future of lifestyle media businesses and our ability to create shareholder value for the long-term. And that is always our goal. Our confidence really is rooted in the integrity and the intense popularity in our lifestyle content, and we've remained stubbornly and wisely, I might add, faithful to developing creative and compelling television programming and digital content in the home and food categories. We really defined both genres in new and creative ways that deeply engage media consumers, especially upscale female viewers. And that high level of engagement with this most attractive demographic group is why our advertising growth rate consistently ranks among the top of our peer group and why many of our advertising customers consider Scripps Networks content platforms a must buy, and they tell us that every day.

Now using that same successful formula, we intend to redefine Travel as a lifestyle category for television and emerging digital platforms. And as you've seen from our operating results, there has been an immediate positive impact on ad sales as the 20 or so months since Travel has been under our management. And under our guidance, the brand is taking a new and exciting character and identity on, and we're encouraged on many different levels by Travel's potential and the direction that it's heading. You'll hear more about that in just a second. So what all will you hear this morning? Well, we gave you a printed agenda. It's on the table in front of you. I hope you have a chance to pick it up and look at it, but let me quickly recap the order of things today. First, you're going to be hearing from our category leaders, Burton Jablin, Brooke Johnson, Laureen Ong about how they're taking deeper dives into our content categories and further defining Home, Food and Travel beyond television to new emerging platforms. And you'll hear their strategies for engaging media consumers and widening the moats, if you will, around their brands through partnerships with some interesting new business initiatives, very exciting stuff. John Lansing, President of Scripps Networks, who heads up all of our operating divisions, will serve as moderator for the category panel discussion this morning. And then after we take a quick break, we're going to introduce you to Henry Ahn. We're so pleased to have Henry join our company, 2 weeks ago as a matter of fact. He's fresh on board. He's Executive Vice President of Content Distribution and Marketing. Henry, as some of you maybe know, comes to us from NBCU, where he helped guide affiliate sales there. He is top-notch. And because he's just getting up to speed, John is going to briefly update you with Henry on our affiliate sales objectives and how things are going there.

And next, from our top ad sales executives, Steve Gigliotti and Jon Steinlauf. You're going to hear firsthand how we're building strong relationships with advertisers, both online and on-air, and why our unique brand of content gives us a real competitive edge. Now I admit upfront I'm biased, but in my opinion, these 2 gentlemen head up the very best, most respected ad sales team in the business. Our consistently solid advertising revenue growth gives credence to that bold claim. And we'll back it up with Steve and Jon this morning and some information they'll be sharing with you. And finally, we'll turn the stage over to Joe NeCastro, our Chief Financial Administrative Officer, who also oversees our growing international operations and our corporate development efforts. Many of you know Joe. He's going to provide some insight on how we're now successfully using Food Network as a calling card to reach out internationally and how that's going. He'll also discuss our new partnership with BBC Worldwide in the U.K., and he's going to wrap up things with a high-level financial review, and then we'll leave some time at the end for Q&A. So a busy morning. Hopefully, a very productive morning for you. And once again, let me just thank you for coming out and spending some time with us here at the Food Network studios.

So there you have it. By the time you leave, I think you'll have a strong sense of this company's potential for continued growth. I think you'll see how our focused strategy on creating compelling lifestyle content puts us in an excellent, excellent competitive position to capitalize on the many ways that consumers will be accessing media for years to come. So thanks once again for taking time today. If you haven't already, please check out some of the HGTV and Food Network product displays that we've got all around the studio here. These partnerships are an important part of our brand building and marketing efforts. Plus, they put some welcomed incremental revenue in the coffers. So you'll hear a little bit more about that during our category panel discussion.

Now before I turn it over to Joe and the category panel, a little housekeeping. Please remember that our discussions this morning will contain certain forward-looking statements. Actual results may differ from those predicted, and some of the factors that may cause results to differ are set forth in our publicly filed documents, including our Form 10-K. With that, let me turn it over to John Lansing to introduce our Home, Food and Travel category leaders. John?

John Lansing

Thank you, Ken. Good morning, everybody. Welcome to the home of the fastest-growing media brands in the Food category: Food Network and Cooking Channel. Come on up everybody, the -- we're going to have a conversation today around the leadership of our categories. And think about it, when you think about Scripps Networks, it's not just the collection of great lifestyle networks that we have, great as they are, but it's also the new organizational structure that we took on about 2 years ago, where we organized into the Food, Home and Travel category. So in the Food category, for instance, it's 2 networks, 4 world-class websites, including the largest website in the world in the Food category, and then all of this that you see around you, the extension, the brand extensions, the joint ventures, et cetera. And so from my way of thinking about it, our growth potential is really limited only by our imagination, and these are the people who lead that effort. So let me introduce them to you.

First, Brooke Johnson, President of the Food Category and President of Food Network; Laureen Ong, President of Travel Channel and our burgeoning Travel category; and Burton Jablin, who is President of our Home category. So let's just jump right in, ladies and gentlemen.

Brooke, Food Network has really been on a roll. Total revenue up, on a full year basis, 15% CAGR and 11% year-to-date. Audience growth 36% over that period and consistently a top 10 network. In fact, Food Network has really been on a roll, and we're really, really proud of it. But all of us know that earlier this year, we had a little bit of a speed bump after years of ratings growth. So I thought, let's just get that out there first. Talk to us about that speed bump and where are the ratings today?

Brooke Johnson

Happy to do that, particularly because where the ratings are today is great. But if you look at that chart that John showed, it's household rating, you see a pretty dramatic growth for the first 2 years and then a little bit of a flattening out. My proposition to you is that, that flattening out is pretty impressive, and it's somewhat by design, which is to say that we're not a roller coaster network. It looks like a bad EKG or something, like most of our competition is. So we have a committed, loyal audience that we go after assiduously, a highly desirable demographic, and they pretty much stick with us through thick and thin and even most recently when we've really been besieged, as Bobby mentioned, by copycats. So to hold your own in that period, I think, is pretty impressive. And I also think Bobby's right. I think they -- the food as genre du jour, I think, is receding a little bit, and people are starting to chase the pawn star genre, whatever that is. I want to tell you about the third quarter, but I'd like to start by showing a little piece of tape that just kind of talks about the power of the Food Network brand.

[Presentation]

I always say this is the best job I've ever had, because when I say I work at Food Network, people -- I mean, it's so consistent. I love the Food Network or my children love the Food Network, or my mother loves the Food Network. It's just a very satisfying place to be. We're experts in our genre, and then we use that expertise to make this connection with this quality audience, which -- and that connection is really the essence of a brand. We did have a slump in the second quarter, but halfway the third quarter, we popped right out of it. We were driven by some of our stalwarts, like Next Food Network Star, Diners, Drive-ins & Dives and Chopped, but then we added some -- a new show, Restaurant: Impossible, which is doing terrifically well and is a bit departure for us. It has a lot more human drama. There's a lot more at stake than has customarily been the case on Food Network, and I think you're going to see more of that into the future. We also rearranged the schedule slightly. We went to a stacking strategy, which makes the schedule a little bit more accessible, and it's also driven time spent viewing. And the end result of all that was just the third quarter is tied as the highest-rated quarter in Food Network history in the adult 25-54 demo. So we're really happy with that. The beginning of October is going really well. We haven't really been affected by network competition, which we normally are, so I think that points to the strength of the schedule and some of our new shows. I'm going to show you a little tape now, which is going to highlight some of the new shows that we have coming up in the next 2 quarters. Why don't I -- let me show you the tape now, and then I'll talk briefly about them.

[Presentation]

So those are just some brief snippets of some new shows. The first 2, Ree Drummond, Pioneer Woman and Sandwich King have debuted in August. They are, I'm so happy to report, the #1 and #2 highest-rated shows in our cooking blocks. So Ree Drummond is the nation's #1 food blogger, and so she sort of brought a built-in audience with her, and that's an arena that we're going to continue to mine. Sweet Genius is really Chopped in disguise and has been on the air for 3 weeks, doing very well. Chef Hunter, like Restaurant: Impossible, a show where a lot more human drama. I did not know this, but there are headhunters for chefs just as there are headhunters no doubt for yourselves. So it's a real person. They're real stories, real jobs. And the pilot, I swear to God, made me cry. So we have a lot of enthusiasm about that. Restaurant Steak-out, pretty unique format, bigger-than-life character and then of course, Rachel and Guy are home-grown, bigger-than-life characters. Steak-out and Chef Hunter in November, Guy and Rachel are January. So I feel pretty good. I mean, I feel great about the third quarter. I feel really good about how the fourth quarter has started, where it's going and heading right into the first quarter.

John Lansing

As do I. Those are terrific shows, very promising. I think we're back on track, to say the least. So put your hat -- putting your hat now on as the Category President, you and I had a conversation about 2 years ago about whether or not there was room for a second 24-hour food channel in the cable space. You were getting competition from all over, and you were very unequivocal at that time. You said absolutely, and you came up and your team came up with a concept called the Cooking Channel. And you may recall, we had at the network Fine Living, and we decided to replace Fine Living with Brooke's and her team's concept called the Cooking Channel. And since that time, in terms of audience, the Cooking Channel has grown 45% above where Fine Living was. And it happened almost immediately, literally almost on day one when we flipped the switch back in Memorial Day of 2010? So it's only 18 months old. It's even hard to imagine that it's only 18 months old. It feels and looks like a network that's been around for a long time. In terms of advertising, the CPMs on Cooking Channel are already 85%, if you can believe it, of the CPMs on the Food Network, which is just a remarkable achievement. That would be the mark of a network that had been around for years, if not decades. And then maybe, perhaps the best story is the distribution story. We all understand these days the most difficult part of either launching a new network or frankly, even flipping a new network is maintaining the distribution. And our affiliate sales team did a fantastic job securing all 57 million subscribers of Fine Living, which includes full basic distribution on DIRECTV for the Cooking Channel. And that made it, at the time, one of, if not the largest, most successful launches of a new or rebranded network in the history of cable. And then first half of this year, revenues are in, and they're up 32%. And that's excluding the amortization of the distribution incentives that we used to get that distribution. But in short, Cooking Channel, we believe, has been just an unmitigated success, thanks to Brooke and her team. But Brooke, I get this question a lot and I'll bet you do, too. People sort of figure or they wonder, does the success of the Cooking Channel come at some -- to some degree, of the expense of Food Network? Or do they succeed independent of one another?

Brooke Johnson

I genuinely think the latter. I don't know why people are fixated on the former. Because first of all, there are many examples of larger networks spinning out a smaller network and both growing. A&E and The History Channel leap to mind. E! and Style leap to mind. Secondly, we've actually looked at it scientifically, and while heavy Food Network viewers do watch Cooking Channel and love it, their time spent on Food Network continues to go up. And finally, 25% of Cooking Channel's audience doesn't watch Food Network. So you add it all up, and they're both growing at the same time. So we're really happy with the brand. It's fun. It's a little edgier. It's vibrant. It's more global. It's very distinct from Food Network. Affiliates like it. Advertisers, as John just said, absolutely love it. It's got a lot of buzz. Talent likes it. The website is growing by leaps and bounds. Everything just couldn't be better. We've got -- the programming strategy has a 3-legged stool, which gives it a really super strong economic model. One leg is original programming, the most expensive leg, I might add. That's things like Hungry Girl or Extra Virgin, shows that really give the network its definition. We do a lot of international acquisition, which is a much lower cost model of course. Bitchin' Kitchen, which has been a big hit for the show and gotten a lot of media placement. La Dolce Vita are examples of that. And then finally, we mine the library of Food Network if we think it's an appropriate show for the Cooking Channel brand. A recent example of that would be Good Eats, Alton Brown's longtime Food Network show, sort of a cult-y kind of show, debuted on Cooking Channel a week ago, #1 rated show that week. So we're really happy with that. And then finally, it gives us a real competitive edge in programming. It gives us a bigger appetite for programming so we can keep shows away from the competition. Let's say we're not quite sure we want it for Food Network, but we know that we don't want it on TLC or OWN or where ever, not that we worry about OWN of course, but sorry. So now we can buy that show, test it on Cooking Channel, see whether it's ready for Food Network. It's about -- the incubator role is another big plus for us, and an example of that would be Heat Seekers, which is this adorable show that launched on Cooking Channel, did really well, we moved it to Food Network where it's doing fine. So all in all, Cooking Channel is a very happy experience.

John Lansing

And rolling on.

Brooke Johnson

Yes.

John Lansing

Continues to get better and better. So again, keeping your Category President's hat on, you've had -- actually, to really dial it back a little bit, the reason that we, as a company, decided to organize around the categories was driven by what was happening at Food Network. Having already decided to turn Fine Living into Cooking Channel, prior to that, we had watched Food Network develop their licensing business, and their online business was growing very, very well. In fact, online statistics, just the Food Network websites alone, over 18 million unique visitors a month and 240 million page views a month on the Food website. And I'll let Brooke expand on that in just a minute. But collectively, the Food Network -- digital side of the Food Network business, under the leadership of Brooke and her team, represents 40% of all of our online revenue. And HGTV has roughly the other half of that, but that's just about $100 million business in total and 40% of it coming in the digital side of the Food category. This year, year-to-date, the digital side of the Food category is 19%, up over last year over the first half. And then switching over to the licensing business, the list continues to grow. Certainly, the Hallmark licensing deal was the big first deal that this team did with Kohl's Department Stores, and now roughly 13 million consumers go to Kohl's every month. And every day, on average, each Kohl's store sells 5 Food Network branded products. So the revenue, incremental revenue, is substantial and worthwhile. But just think about the consumer touch points and the inherent marketing support that that brings to the network. It's really remarkable, and now that list is also growing. In fact, the most recent addition to the list of licensing endeavors is the new line of wines with Wente Winery out in California, with a really nice line of wines called Entwine. Great price point, terrific wine.

So this is really one of the most interesting parts of, I believe, our business, is that it's -- again, it's not just great networks. These are brands that resonate in such a way that whether it's a magazine, a wine, products at Kohl's, people really, really rush to the brand and embrace the brand in every manifestation. So with that, Brooke, I just turn it back to you that you really have led our thinking as a company. In fact, we organized the company because of it. So how far can it go? What are we limited by? Are we limited at all how far we can take this?

Brooke Johnson

I don't think so. I don't think there are any limits of -- when I first came to Food Network, I thought about Food Network as potentially the ESPN of food with a lot of different businesses, mostly media business. I didn't initially think that we could have actually consumer product businesses, et cetera. So I think it's -- you have to labor in the fields. You have to prove the brand, which we have, and then I think -- I don't see any reason that there won't be big opportunities down the road. We've proven it with the success at Kohl's. We've clearly proven it with our magazine, which is just a blockbuster success story, the #3 book on the culinary category, #1 on the newstands. Speaking of ESPN, it gives us the only real triple play ad sales opportunity, ESPN being the only other one in the media business. So we get -- the beautiful thing about these brand extensions is this virtuous circle of cross-promotion, of cross-monetization. All of our businesses drive revenue above and beyond the business itself and extra advertising to Food Network in enticing a larger advertiser into the fold. And a recent example of this would be, you mentioned, the wine. Entwine, which just launched, it is, I was just given the stat, it is #45 on the top 2,000 brand name wines. Who knew? But I mean, it's pretty exciting. We've been in the stores for 2 weeks. But the example I was going to tell you about is that Kellogg's -- through our ad sales department, we have done this big deal with Kellogg's with their Tollhouse Cracker brand. So they sponsored Next Iron Chef. They did an integration into Next Iron Chef where they were pairing Entwine with the Tollhouse Cracker tidbits. They also paid for and produced a short form on our air, talking about our wine and their crackers. So now an advertiser is paying us to advertise our product. I mean, it's such a beautiful thing. And it gets even more beautiful because they also paid for point-of-purchase displays in grocery stores. And so the grocery stores are more apt to -- are more excited about taking our wine because they've got promotional dollars from Kellogg's. So that's a little case history that shows, I think, why we're so excited about this arena and again, the more success -- success builds on success. Digital, by the way, is a part of that, a big part of that. Most of our magazine subscriptions come from foodnetwork.com, which also gets paid by the magazine, a bounty on those subscriptions. The foodnetwork.com increasingly carries a lot of the brand weight of Food Network. The food authority, the cooking authority is just as important there with all the zillions of videos and the outstanding content, the digital events, Thanksgiving holiday, et cetera that we run across all our platforms. And we also -- Cooking Channel's doing great. Food.com is our fastest growing site. It's grow 60% since we rebranded it. This was Recipezaar, which we -- we owned the URL food.com, so it's worth -- I mean, it's a great URL obviously. And I only want -- sorry, I ramble on. The only other thing I wanted to mention was, we have a lot of excitement about the app space also. We've got our nighttime free app. I think we've got a little -- 1.2 million downloads. But the real impressive one is we're charging people $2 in the kitchen app, which is really just a better way of access our website. And 400,000 people have paid that. So I...

John Lansing

I'm sorry...at how much?

Brooke Johnson

At $2 a pop. So I mean, I understand it's low money but -- and it just, again, it just points to the power of the brand. I think we can do a lot of these. I think we're going to really accelerate our activities in this space. I hope to a lucrative conclusion.

John Lansing

So Brooke's been here 6, 7 years, and when she arrived, there's was no food.com, there was no Kohl's, there was no wine, there was no magazine, there was no Cooking Channel. And our optimism about this category is just really unbound. We have a very similar story actually on the side with Burton. We'll get to Burton in just a minute. But there's a reason we put Laureen between Burton and Brooke because Laureen, with the Travel Channel, represents the biggest growth opportunity for Scripps Networks over the next 3- to 5-year horizon. You can just see from listening to Brooke what that opportunity really is. Of course, It begins with ratings on the core property and then, as that brand develops and those ratings develop, then we believe the category opportunities come forth from there. But it has proven to be a terrific acquisition for us. The integration of Travel Channel has been complete now for the better part of the year, and it was on time and under budget. It was really one of the best integration experience that we've had any time that I've been here. The first and earliest success we had with Travel Channel was thanks to Steve Gigliotti and our ad sales team and Greg Regis, who went from the Food Network over -- from the Food category over to Travel Channel and hired a brand-new team. It's the first time, believe it or not, Travel Channel had a dedicated ad sales team selling the channel in the marketplace. So you've heard us talk in conference calls and other meetings about the amount of DR that represented the ad revenue for travel. That's because it really wasn't a priority when it was sold by prior ownership. No knock on them, it just wasn't a big part of the portfolio. For us, it's a significant part of our portfolio and as a result, we have an ad sales team that is ratcheting up the representation of high-quality spot advertisers and ratcheting down the direct response. And the results are great. We're seeing double-digit ad sales growth year-over-year and plus 12% through the first half of this year. So the business is healthy. The costs are under control. We're investing and programming in a significant way, and it's really poised to become another one of our trademark success stories in a very, very lucrative category. Laureen, when you arrived -- and we are really fortunate to recruit Laureen from News Corp, where she was the founding leader of Nat Geo, the cable network, and brought that to its level of success. And as she arrived, about 1.5 years ago, a pretty solid bench of programming, including Anthony Bourdain and Man v. Food, Bizarre Foods with Andrew Zimmern and then the Ghost Adventures Friday Night franchise. But that was really basically it. That was the sort of the core of the network, but there wasn't a lot of other programming. So Laureen, as you've taken over, you had something to start with, but not a shelf full of programming. But that's the fun of it, right? I guess. So how do you view this? And as you hear Brooke talk about the 36% growth over 4 years of Food Network, I'm sure our investors and everybody else think, well can do that again? Can lightning strike twice? How do you think about that?

Laureen Ong

Thank you, John. Good morning. Well, you're right. Sustainable results don't happen in a day. They don't happen in a year. But what I will tell you is at Travel Channel, we are positioned for growth as we look forward. 2011, without a doubt, has been a challenging year for us but not without a lot of learning and not without a lot of positive outcomes as a result, which I'll touch upon. But let's first talk about where do we start. Well, we start -- you don't become part of the family of Scripps Networks without an emphasis on the brand. So the evolution of the brand is something. If you've been watching us, you probably noticed. How do we contemporize and how we do talk about travel in a manner that is understandable by today's audience. So when you look at Travel, and we like to say, it is as important a word as food and home. It is something you do every day. It's something you do when you have a weekend, when you have a day off, when you go visit friends and family on holidays. And yes, it also includes that vacation and an airplane ride and a passport at times. But when you come to the network and you watch us, we do free you from that everyday. And what we do is with that compelling story, it's with our characters, whether we take you around the block or around the world. So it's understanding it from that concept. We make the unfamiliar familiar to you. And the personality of the network is that charismatic, up-for-anything, friend in the know. And we like to say, we also move our consumers beyond destinations with an emotional connection. So as we position the brand and we talk about ourselves, how does that manifest itself in our programming in particular? Well, as a dependable lifestyle brand, we do push the envelope, but we don't want to abandon the category. Subject matter is going to be around travel. We experimented this last year, and our consumers told us, no, we want to see more subject matter around travel. As John talked about the 4 shows that have been pillars on the network, I'm very happy to say that shows like Tony Bourdain's No Reservations has come back stronger than ever this season. He's more engaged. Same thing with Andrew Zimmern. Ghost Adventures, his premiers come back every season bigger and better than ever. And of course then there's Adam Richman, Man v. Food, which clearly was a breakout hit for this network 3 years ago. But as in all lifecycles of shows, there does happen -- audience fatigue does set in sometimes. And that's what we're experiencing a little of that, in this current year with Man v. Food, but it's still performing strong for us. But the most important news that I want to talk about is last year, at this time, we did only go into 2011 with 4 returning series. As we head into 2012, we have 12 returning series. And that's a very important factor to understand. And as we look ahead and if you've been watching us, you've probably seen shows like Off Limits with Don Wildman, Mysteries at the Museum. And when we talk about contemporizing the brand, shows like Sand Masters. We own beaches. That is the subject matter that is our province. And how do you talk about beaches that's not a travelogue, that's not a top 10 countdown? Well, Sand Masters help us do that. Truck Stop, Missouri, if you've ever driven across country. I have. You stop at truck stops. Things happen at truck stops, and that's the fun part of a show like that. So I want to show you some tape and give you a little bit of a glimpse into some shows that we've got coming out in fourth quarter and also into 2012. It's just a little bit of a sneak peek, because a lot of our shows are still in production, and you'll also get a look at the rebrand of the network as well.

[Presentation]

So that's just a little bit of a peek. And yes, we're in evolution. But I'm very proud of where we're going and the kind of feedback that we're getting from our consumers. So let's talk a little bit about some of the new shows we've got.

Hidden City. That's coming out the end of fourth quarter. And Marcus Sakey is the host of that show, and Marcus Sakey, you may be familiar with him if you read novels. He is an author, and he is very similar to Tony Bourdain on a lot of ways. They're both authors. They're both contemporary cultural anthropologists. Tony takes it from a food perspective, and Marcus Sakey takes it from an understanding of the back story of cities and understanding what happens in cities and what makes those cities tick and how they've evolved. Our Hotel Whisperer. That's a little bit of a page out of Brooke's book. It's our version of Hotel: Impossible. And Anthony Melchiorri has refurbished some very iconic hotels in this country, and he will go and he will also help refurbish some independent hotels and bed and breakfasts throughout the country. And you'll find him very compelling as well. But we don't only just borrow ideas from the food side. Vacation Crashers. As you all -- as you are probably familiar with the Crashers series on the home side. Bert Kreischer, who is our expert on amusement parks, he will go and he will help individuals, couples, families enjoy a city in a manner that they never imagined they possibly could. Baggage Battle, let me just talk about one more show. Did you ever wonder what happens to your luggage when it gets lost? Well, after 90 days, the airlines actually don't have any more obligation to return your bags to you. So actually, your luggage gets sold to various places and in some cases, auction houses. And you can actually go and buy other people's baggage and figure out what's in there. And people do this. And so this should be very entertaining, just to find out what is inside baggage that you can actually buy from other people.

John Lansing

Very good. Good shows. So you can just go and buy other people's luggage?

Laureen Ong

Yes, you can. And I heard from our Head of Ad Sales that the one item that is in most lost baggage are men's wedding rings.

John Lansing

Really? Why are they taking them off?

Laureen Ong

I don't know.

John Lansing

So why don't you touch on -- your first step into a category strategy is really building a web strategy that's not just a website about the channel but rather a utility in the Travel category. So talk about your development of the web strategy.

Laureen Ong

Exactly, yes. From our digital side of the house, we talk about it very succinctly. We entertain, we will inspire you, and there's activation there. On the travel.com part of our business, it's really entertainment through our talent and making the experience and the shows larger and coming to life. And earlier, I hear so many anecdotes about people telling me when they watch Tony's show and he's in Italy and he's having that parmesan bowl and they're watching going, I want to do that trip, I want to eat where Tony ate. Well, you're going to be able to do that, and that's what we refer to as activation. So in this next year, when you're watching Tony or you're watching any of our talent and they inspire you and you want to go there, you're going to be able, through our partnerships, go to Travel Channel-branded travel agents and actually book that trip. And you'll be able to eat where Tony ate, go to where he went to, specifically. So we're very excited about that. And speaking of partnerships, Oyster.com, they're now in 35 cities, over 1,500 hotels. They keep adding 300 hotels a quarter, and they are growing very quickly. They're 109% over last year-on-year with their page visits. Most of their traffic is coming from the travelchannel.com site. And lastly, on the mobile side of our business, if you are a fan of Man v. Food, there is a game, and so I would encourage you or encourage your kids to go download it and play it. It's fun, see how fast you can eat down the sandwich. And we're also very excited that our layover show, which is Tony's new show coming out in November, also has an associated app with it, so that the 10 cities that he does go to, where he does do a layover and he goes to visit various places in those markets, you'll be able to actually see where those places are, go to those places as well. It tells you how long it takes to get there from the airport, how much time you need. Because so many times, when you get laid over because you're plane got canceled, you have 24 hours, you're going to actually be able to do something more than sit around the airport.

John Lansing

So very good. So you think about your digital strategy, it's not unlike what Brooke was thinking a few years back. You have a, what is it, an $800 billion travel marketplace and that we don't expect to dominate that marketplace. But what's our slice of that based on? How we can think about both the utility side of travel and the entertainment side.

Laureen Ong

Exactly. That's correct.

John Lansing

So we look forward to watching that grow.

Laureen Ong

Thank you, John.

John Lansing

So let's move to the Home category. Burton Jablin has been with us since 8 months before HGTV launched in December of 1994, and he is one of the original founders of HGTV. And along the way, he not only ran programming for HGTV, he was the Network President, and then he was in charge of all of our networks prior to the time when we organized into categories. And we made an organizational switch, Burton took over as President of the Home category, and he's already taken great leaps in the spirit of where Brooke has taken the Food category to expand the business. But of course, our category structure begins with an emphasis on the core business. And in this case, it's HGTV, an incredibly sturdy cable platform over the last 16, 17 years. In fact, it's really sort of remarkable when you think about this. This is a network we own 100% of, created from scratch, it was Ken Lowe's original vision, as you all know, brought to life by Burton and his team. The revenue trends have kept this a very solid steady growth business for us. And if you were to look at the rating trends, household ratings over any period, look at the entire 17 years of rating trends, and what you really see is a very steady, slow, consistent record of attracting a very high-quality audience. In fact, this network is #1 among upscale women in all of cable. And so what's Burton's charge? His charge is to figure out how to continue to strengthen the core business of HGTV and then from that sort of centerpoint, build out the larger opportunity in the Home category. But that core business is really reliant, Burton, as it always is, on programming. So you -- maybe more challenging than even Food and Travel, you've been charged with leading a programming strategy through one of the worst housing slumps in American history that still has some ways to go. How do you keep the programming relevant? What do you think about when you invest in programming, knowing all of the macro issues associated with the category?

Burton Jablin

Well, there's no question. It's tough to have a network, an entire category that's about home during a period when the housing market has just been abysmal. But you're right. We have to adjust to that because we're focused on home all the time. And so you do that by evolving the programming by shifting tone and emphasis and making sure that we are consistent in delivering what we've always been known for. And those of you who followed HGTV for a long time know that we've said the same thing. We're here to deliver what we call the 3 Is: Ideas, Information and Inspiration in an entertaining way that helps people make the most of the place where they live. Now a few years ago, making the most of a place where you live was about improving it so you can sell it for more money, and there were a lot of programs on our network and others about that. But lately, the programming has shifted because of the economy in the housing market to be more the way we like to say it is you've got to love the one you're with, instead of look to the next one that's going to come along. And so it really is about helping people make most of where they are right now, still comfortable in their homes and to make their homes or apartments a sanctuary. And that kind of consistency in delivering a benefit to viewers, those 3 Is, consistency and the ratings that John just showed, there'd been some fluctuations over the last few years. But to maintain pretty much a million households a night on average through really difficult housing market over the last few years, I think, is testament to HGTV's staying power. And then you look at what we're trying to do to adjust a little bit. We've got our tried-and-true shows that have been around a long time but we're also adding new ones. So take the tried-and-true. Show like House Hunters, which is probably what HGTV might be best known for. House Hunters has been around, believe it or not, 12 years. That's a long, long time for any show in television but it's been around that long because it's changed. The House Hunters of today is not the House Hunters of 2000 or 2005. It's a show now that emphasizes more the stories of people looking for homes as opposed to the transaction and selling. And of course, over the years, we've added to the House Hunters line. We've got House Hunters International, which came on about 5 years ago. Both those shows by the way, even though House Hunters had been on a long time, are still among the top-rated shows on the network. House Hunters International actually often does better than House Hunters on any given night. And just to show how we can evolve, we took the House Hunters idea and created this past summer House Hunters on Vacation. The effort here was really to take the House Hunters concept and apply it to families, we took them on a vacation, they got to choose among 3 rental homes, really nice rental homes and great places, and we ran it at least 6 episodes just to test it out in the summer and it became one of our youngest skewing shows, did really well with families with kids. That's exactly the kind of emphasis that HGTV needs now in order to grow with a new and next generation of viewers. But the thing is we can't just rely on these stalwarts. We really do have to innovate some new shows, and I've got a tape as well that shows you some of the new ideas that are going to be showing up in the network in the coming weeks.

[Presentation]

So you get a hint there of what we're trying to do. Some new topics, new subjects like parties, party planning with a host who's known from another network. She was on Bravo's Real Housewives of New Jersey, and she comes with a built-in audience. And that show started off a couple of weeks ago and is doing nicely. A little note about Property Brothers, that's a show that we found in Canada. We picked it up as an acquisition. These guys are actually twin brothers, one dyed his hair just so people can tell them apart, which is helpful, believe me. But the show went on the air a couple of week -- a couple of months ago actually and became an instant hit. It became one of the top-rated shows on HGTV almost overnight, really with no promotion, and one of the youngest skewing shows. So we immediately went in, ordered a whole batch of new ones. You'll see those premiering beginning next week, backed by a consumer marketing campaign so we can chase lightning, if you will, and make sure that we pump that show up as much as possible. So there you get an effort of what I mean by adding some new ideas to the network while also nurturing the shows that had been around for a long time. And I've got high hopes for the next couple of months because between now and first quarter basically, we've got new episodes of about 2 dozen of our existing series coming online and we'll introduce about half a dozen new series between now and the first quarter, all of which look very promising.

John Lansing

Very good, Burton. And then you too have -- and now putting your category head on, you have a flanker brand, not unlike cooking, that predates cooking, called DIY, the Do It Yourself Network, a business that's doing very well for our advertisers and our affiliates. In fact, DISH Network will on occasion have a free preview of DIY on its basic service to help upsell the digital tier, and the ratings routinely double when that happens. And it's the #1 driver, they tell us, of their digital business, digital tier business at the Do It Yourself Network. So it's a robust, I'll call it little, but really robust, sturdy business, and how do you think about it and how do you think about growing it?

Burton Jablin

Well, it really is a critical element of the category because if we didn't have DIY, we'd be in a little bit of a pickle in programming all of the subjects of the Home category encompasses only on HGTV. If you think about it, HGTV's main stays really are real estate-type shows and home decor interior design. We do a smattering of other topics but that smattering of topics, like landscaping, home improvement, renovation, remodeling, constitute a large number of people who are interested. And that's what DIY specializes in and focuses on: Remodeling, renovation, landscaping. And so it fills out the category, goes after audiences that in themselves may not be big enough to program all the time on HGTV, but they certainly shouldn't be ignored, and they create a nice robust network that we won't call little by any means. Take shows like Renovation Realities on DIY. It's a show where we take just amateurs who try to figure out how to do a home improvement project. In a way, it becomes almost like a blooper show because they honestly don't know what they're doing and we just let them do what they do. Along the way, we give advice to the viewer about what they're doing wrong, but we let things happen the way they do. Nobody really gets hurt, I have to add. Or a show like Desperate Landscapes, where we do have an expert come in and help people. They do it themselves but we provide the assistance to make sure their yard goes from looking awful to looking great. And then Laureen made mention a series, a group of shows, that we call the Crashers franchise. This is a group of shows that include Room Crashers and House Crashers and Bath Crashers and we're just adding Kitchen Crashers. Goodness knows what we'll add next, Garage Crashers, Basement Crashers, I don't know. But the good news is it just keeps working. And this is an example of a series where a host or an expert just accosts somebody going into a home improvement or landscaping center and says "Take me home with you, I will help make your home or yard better." And, of course, people think these are nutcases and don't trust them but fortunately, some of them take them home and we get a great show out of it. And this just shows that even with a smaller network, you can take a big idea and make something of it. And this show tends to be one of top for these shows, tend to be among the top-rated on DIY. In fact, we're using some of them on HGTV as well.

John Lansing

So really good, and now I'm thinking also about keeping the category head on about the expansion of your licensing business. Brooke has been doing that now for what, 3 years, but you really in earnest began this about a year ago and the success has been remarkable. I know you have recent deals with Sherwin-Williams, Shaw, Bassett Furniture. Talk to us about what you think the potential is of our brand resonating in the Home category of products and also about the magazine that you're about to launch.

Burton Jablin

Yes. Well, as you said, products, we've come a little later to that. In part, that's because with the housing market is bad as it has been, it's been daunting to try to work with partners to start new lines of products for the home, but that has changed over the last year. We found great resonance with the HGTV brand. You can see around you we refer to it as the HGTV home brand of products, just to have a little bit of differentiation between that and when we talk about the network. And we've been very fortunate in getting great partners. Sherwin-Williams is our partner with paint. We've got a display over here, which you actually see in Sherwin-Williams stores. In the back, we've got our flooring with Shaw, both carpets and hardwoods and laminates. Basically anything you can put on your floor, we're selling under the HGTV home brand with Shaw. And then beginning next year, we just inked a deal with Bassett Furniture to come out with a line of HGTV furniture, and that will be out probably by fall of 2012. And a number of other things are in the works. And as you said, we went from 0, nothing in products a year ago. These products that I just mentioned along with bedding in Bed Bath & Beyond, when you total up the retail outlets, we'll be in about 5,000 retail outlets just among those together beginning this quarter. It really is remarkable growth. The other part of this is we do 3- to 5-year deals with most of these licensees. And in addition to spending money externally off HGTV to market the products -- probably seen some of those ads in magazines and on TV -- they're also required to spend money on HGTV to market the products there. So as Brooke said, it's really nice when you get an advertiser and your client spending money to market your own products. Now we also on-air run commercials to sort of give viewers a sense of what the entire HGTV Home category is about. So let's take a look at that spot.

[Presentation]

Now the key phrase in there is they all work together and these boards actually are not to consumers. These are what we show to potential licensees, to show how all the home at HGTV Home category products can work collectively. And I should add, DIY isn't left out. We've got a DIY back splash tiling kit that's available at Lowe's and Costco. And we've got one of my favorites, the DIY toilet repair kit. So we run the gamut. You can decorate, you can repair toilets with our products, which is where you need to be if you're going to be in this world. Now John mentioned the magazine and not to be left out in the cold, because Food Network has done such a great job, but the HGTV magazine was just published, It's on newsstands now and it's being sent to subscribers. We do already have subscribers. While we would love to have the success of Food Network magazine, that was so extraordinary that we don't want to overpromise on this one, but I can tell you that our partner Hearst, which is also the publisher of the Food Network magazine, is very, very pleased with the results so far. And we'll leave it to them to talk about any numbers but if they're pleased, we're pleased. And I'm happy to say all of you will get a copy of this before you leave today. So be critics, we invite criticism, but I think you're going to like what you see.

John Lansing

So really it's a great magazine. I went to every page of it over the weekend. It's fantastic. So before we leave the Home category, we should touch on your digital business expansion as well. You've had a lot going on there as well. Can you talk about that?

Burton Jablin

Yes, I'll be brief because I know we're getting a little long. But the Home category websites, there are 4: hgtv.com; diynetwork.com; frontdoor.com, which is our play in the real estate arena; and our newest one, hgtvremodels.com. Collectively, these sites really do rank at the top or near the top of all Home category sites on a monthly basis in terms of traffic over the last -- beginning, actually, with beginning of 2010 and right through now, we've had year-on-year monthly growth every single month. We're up about 25% to 30% page views this year collectively. It's all led by hgtv.com, which really is pretty much at the top among all Home category websites. And the idea here is to allow people to go deeper into the category, if the TV shows inspire you, give you ideas, and the websites give you even more ideas and information to help you accomplish whatever you want to do in your home. And FrontDoor, I should say, real estate might sound like an interesting area to be in given the housing market, but we believe it's the right play at the right time because as the real estate market comes back whenever it does, we're well poised to capitalize on that because we can promote it aggressively on HGTV. That side actually is doing very well. We're doing a lot of content on the side that isn't just about listings, celebrity real estate, things like that. And the newest HGTVRemodels actually is an evolution of another site that we've had for a number of years called HGTVpro.com. That was aimed at professionals in the building industry, but we found that so many amateurs, so many real people were using the site that we could make a much bigger play by going after them. And so we evolved, rebranded, HGTVRemodels began beginning of September, and I'm happy to say for the first full month of that site was up and running, its page views were about 67% ahead of where HGTVPro was a year ago so I think we made the right choice on that one.

John Lansing

Definitely, definitely. Well, in just wrapping up, you can see we're focused on growth on every platform. Our core networks are growing. Our flanker brands are growing. The products, the digital businesses, and let's just really touch on GAC a little bit before we wrap up as well. And it too is growing. In fact, GAC just had its best quarter of ratings that it's had in over a couple of years. And we're actually at the point now where we can invest in GAC a little bit more on the programming side. We've been successful in driving some affiliate revenue into GAC and some of our renewals. We hope to do the same in some upcoming renewals and we're taking that additional incremental revenue. We're plowing it into some programming investments. But we realize that GAC will not grow over the long haul reliant solely upon music videos but we also realized that the core audience for GAC, the passionate audience that is there, is really tied to the country music genre. And so we don't want to drift too far from that. And so our team at GAC is developing a lifestyle programming strategy in the country music genre that's really tied to looking at the lives of the country music stars behind-the-scenes and really it's coming together quite well. In fact, the launch of a few other new series have surprised us in terms of how well they've done. So stay tuned as you will see us talking more about investment in GAC, adding more original programming and continuing to drive GAC for a more affiliate revenue and growing that business into the future. So with that, I want to thank Burton, Laureen and Brooke, excellent job. Ladies and gentlemen, and we'll take a 10-minute break and after the break, we'll be back to discuss affiliate sales, international and corporate development. Thank you very much.

[break]

John Lansing

We're going to try to pull everybody back together here if you're ready. By the way, if you look at the screen, we have a free wireless WiFi access for you on the screen. You can see the username and password so feel free to use that for your WiFi.

All right. Okay, why don't we get started then. We're going to jump now in a brief update on affiliate. The first thing I'd like to do in welcoming you back from the break is also welcome somebody new to Scripps Networks. Henry Ahn has joined our company now, has been with us just for about a week as Executive Vice President for Content Distribution and Marketing. Henry is here. Henry, would you stand please? I don't know where he went. There he is, Henry. There's Henry. Henry joins us from NBC Universal, 25-year veteran of television and entertainment industry, 17 years there and wound up his time in NBC managing the distribution negotiations for all of their key networks at NBC. And then as SNI's EVP for Content Distribution, he'll be responsible for distribution on all platforms. That's something we haven't done in the past but we thought like the time has come for us to unify our distribution strategy as we think about our over-the-top opportunities and our other uses of video and other platforms such as Netflix and others and how we think about those in the context of our affiliate renewals. And just to update you on our affiliate renewals, our affiliate fee revenue has grown consistently after a significant step-up. You can see in 2010 when we reset the Food rate card. This year, we're in a period where the growth has moderated as we had no big significant renewals this year but we are in the process of finalizing the final 25% of the distribution footprint that has yet to step up to the new Food Network rate. And so that will happen at the end of this year and going into next year, going into 2012, we will have the entire footprint of distribution then back on the Food Network rate. And that represents that Food Network final piece of the puzzle for the rate reset, that represents our #1 priority for this year. We are progressing very well with that as we speak and we anticipate that, that will happen with no problems by the end of this year, as I said earlier.

The other priority for net [ph] sales distribution is Travel Channel. Going into 2012, 2013 and some into 2014, we have a shot at renewing the majority of the distribution for Travel Channel. I don't, by the way, expect the kind of step-up we had with Food Network in 2010. I think it's more of a 2-step step-up that we'll experience with Travel Channel and we've only had the network under management for one year so far, 1.5 year. The direction of the network as you heard from Laureen is very positive. When we think back to our Food Network experience, Brooke and her team really had a 4-year cycle of investment and growth that brought them to the peak in 2009 for that rate reset. And that will be the kind of approach we'll take with Travel: A methodical, multiyear investment strategy to take the network and its affiliate piece up in more than one step, not just in one step, in the next couple of years.

We'll also be working with our partners in distribution on the authentication initiatives. We, as you heard us talk about in the past, believe in the concept of authentication. We also believe we should be compensated for it, either through higher affiliate fees or in other ways. Those discussions are underway and they're going well. It may not surprise you to know that each of our major distributors sees authentication somewhat differently, but we're working to unify that strategy for ourselves. And at the end of the day, we do believe that that's good for everybody. It's good for the business, the ecosystem, the industry and good for Scripps Networks. Our networks are particularly useful in a multi-platform environment, whether that be iPads or any other device in or out of the home, and we believe there's a value proposition and, for the most part, the distributors understand that there's a value exchange to be had, we're just in the process of negotiating that. And on top of that, we're busy thinking about over-the-top strategies and how we can exploit our content with them and on the outside of our distribution agreements so that we can monetize it to the extent -- the best extent possible. And we are very busy working with our distributors as our #1 partners in doing that through authentication but also thinking about how to use our content outside of those distribution windows to expand our revenue for our content.

And so with that, we can take questions on that later during the Q&A period, but I can just tell you the way I think about affiliate and distribution is that we're very valuable to our distribution partners. For the most part, we are among the top, if not the top networks for them in terms of local ad sales for their local insert potential, and we're undervalued and to some extent compared to other networks. And so our ability to leverage higher rates and bring a value to our distributors is high and we expect that to continue and we'll monetize that as we go forward.

Now with that, I'd like to introduce our Ad Sales team, Steve Gigliotti, President of Ad Sales and Ad Sales Marketing; and Jon Steinlauf, Senior Vice President for Ad Sales. And gentlemen, I will leave that up to you. Do take it away.

Steve Gigliotti

Thanks boss. Good morning. Jon is the quarterback of our on-air networks. And I want to introduce Jeff Meyer who handles the interactive and digital platforms at the back, Senior Vice President of Ad Sales for the digital part.

If you listened closely this morning, I think you heard that our brands create a very special connection to our viewers. Now that sounds like a very underwhelming statement but in the next 20 minutes or so, I think I'm going to put some real meaning to that for you. Our advertisers really understand what that means and what it means for them. And I couldn't think of a better way to start this conversation off and for you to hear that from our talent.

[Presentation]

I've used Guy Fieri's line about 700 or 800 times since he said that earlier this year. Advertisers take advantage of that connection and what that means is revenue for the company and the networks. We've got a long run going back many, many years in ad revenue growth. This is a picture of the last 5 years, you saw this a little bit earlier, and you see that 12% average growth per year for those last 5 years. Note that during the recession period, I think the expression was "flat is the new up" and we did okay during that period of time. You can see in 2010 some nice growth there, part of that due to the addition of Travel Channel. In the first half of 2011, it started out in much the same way and growth over the first half of 2010.

We're very excited about Travel Channel, and this is a profile of 2011's percent contribution for all the networks so you can see the importance of Food Network and HGTV. We expect a lot of growth out of travel in the digital networks, the digital platforms that Jeff is responsible for, make a nice contribution as do DIY, GAC and Cooking Channel, all with some nice upside.

There's a lot of conversation these days about new platforms by which people can watch video and participate with video, but I'm very happy to tell you that the traditional way that people watch video and watch networks has a nice, steady 15-season growth pattern and is now 8.5 hours a day for the average American home. That's a new record. What are those people watching every day? I thought Jon would help you with that understand it.

Jon Steinlauf

Yes, well, they're watching a lot more advertiser-supported cable. The top half of this chart, the pies, show you back in 2000 that broadcast held a 26% advantage over cable in prime time, fast-forward 10 years. And now cable this season held an 82% advantage over broadcast, quite a turn of events over those 10 years. But the shift in ad spend on the bottom part of the chart has not kept pace with the shift in audience. However, that is starting to change. In this economy, advertisers are seeking greater value, greater targeting, and you're starting to see a big acceleration to cable. Since 2007, can we go back please, back one? Since 2007, broadcast has lost $400 million worth of billing. Basic cable has added $3 billion worth of billing. So if this wave to the cable continues, what kinds of networks are advertisers looking for? Well, we know that they love trusted brands. The programming image and the environment in which a commercial airs is of critical importance. They also have to reach viewers who can afford to buy their products. So upscale attributes have taken on a key focal point. And in this ROI-driven economy, viewer engagement and ad receptivity make ad expenditures work harder so they too are a top priority.

What happened in this past season? Inarguably the most important demographic of all, the wealthiest females in the United States well, in all of cable, not too bad. Scripps finishes #1 with HGTV across the entire season in prime time and #5 with Food Network, making our top 2 networks more desirable than ever before. In fact, the appetite for research has grown so much beyond just household income that 2 research companies, Experian and Simmons, have joined forces to develop data that shows financial ability to buy products. It goes to the heart of the matter: Disposable income. And in this metric in 2007, 4 of the SNI networks finished in the top 9 for adult viewers who have the most disposable income. And HGTV again, first place.

Because of the passion that people have for our categories, our networks engage viewers so much so that they see many of our endemic ads as engaging as the content itself. Simmons is the leading research company on viewer engagement, and once again, this year in their landmark study of 80 broadcast and cable networks, all 6 Scripps networks ranked in the top 10 in inspiring viewers to purchase the products they see advertised. Nothing is more important to an advertiser than that.

Steve Gigliotti

When you combine the trusted brands in that environment that we create and the large upscale audience with a high disposable income and the engagement metrics that you see here, and this is not one year, this is the last 6 or 7 years, has been this kind of response in engagement and ad receptivity, that's a great story. And when you have a great story and you do what I do, what John does and what Jeff does, you get it out on the road. And so we have one -- as you well know, the upfront is a big time or a brief period of time when networks take their story on the road or supposed to take it on the road. Most networks have an upfront right here in New York. Some networks have an upfront here and in Chicago. There's 1 or 2 networks that actually have an upfront in New York, Chicago and L.A. Scripps networks has an upfront in 8 major cities across the country and we've been doing that for the last 10 years. We not only have that one upfront presentation but we customize over 1,200 individual presentations for advertisers and agencies so that we can showcase how our assets can help them build their company and their business.

Now the great trademark of the Scripps Networks ad sales organization is the development of new advertisers and new business and particularly in the endemic categories that are involved with our lifestyle networks, our lifestyle network categories, Food, Home and Travel. So we go out to find new advertisers and one of the best places we go, and this is a secret by the way that I'm sharing. I don't like sharing secrets because you have friends at other companies, but I've been asked to do that today. This is one of our strategies. We have been going to the trade shows for the Builders' Show, the Kitchen and Bath Show, Consumer Electronics Show, the Gourmet Food Show, there are almost every weekend, there's trade shows in Orlando or Las Vegas. Many, many, many of them have to do with our lifestyle categories. And we've been going there, meeting with our clients, meeting with new clients and planting the seeds and developing new business. It is, as I said, it's the trademark of our sales organization. Why do we go through all that trouble? Well, we like to create a market of our own and that helps us insulate ourselves against the ups and downs of the ad business. What you see right here are 4 full-page ads from the Home category that we placed in the trades that thank some of our sponsors for being involved with some of our big events, Urban Oasis, Green Home, Dream Home and Blog Cabin.

Let's look at Dream Home for a minute. Dream Home, we've had it at -- you've heard before here at these meetings, have been an integral part of HGTV for 15 years. This is our 15th anniversary and this year was the largest in history. It is the biggest sweepstakes in television, it has been for many years. And this year, we had 77 million entries, 13 sponsors. Some of these sponsors have been with us for longer than I have, and that's a long time. And they -- you can't be a part of Dream Home unless you're spending quite a bit of money with us. Obviously with such an impact that it had, but what I want to draw your attention to is at the bottom here, you're going to see you some -- you certainly know GMC as an advertising you see everywhere but you're going to see some advertisers that you don't see everywhere

You see Delta Faucets, you see Bissell, Subzero. Rinnai is a hot water, it's a water treatment or water heater system. AZEK Decking, Lutron lighting, Wellborn cabinets, you'll even see Lumber Liquidators there, and that's a cute story. Lumber Liquidators started with us first time advertising. One store, a couple of stores, and now they have 200 stores across the country, you know their story, fabulous story. So there's -- when you think about that, we have about 400 or 500 unique advertisers. There's not enough room in one of these events like Dream Home to fit them all in, but all of them want a unique connection to our viewers through our network. Jon is going to talk about that.

Jon Steinlauf

Well, when you have -- well, we're fortunate. We have these great brands and we have these unique connections with the most upscale viewers in America. But to fully monetize those relationships, we have to create great promotional synergies for our ad partners. And we brought along 3 quick tapes to show you how we do that. The first one has 3 examples, Audi, Hershey's and Sears. And we're going to show you how we created custom content to get premium ad commitments from those 3 clients. Run the first tape, please.

[Presentation]

So now, in that last one, you saw how we created a series, an entire 6-week prime time HGTV event for Sears and we even included their CMO, Bill Kiss, as a guest judge in one of the episodes. Before that, you saw how Hershey's was integrated into cable's #1 food series, Next Food Network Star, as a challenge one week. And then the first piece you saw was how we created this connection for Audi between high-style Manhattan real estate and their car design, and we even threw in the star of the show, Shaun Osher, an endorsement for Audi. Next tape, you'll see 3 of TV's largest advertisers: Kraft, General Motors and Target stores. All 3 of them decided to use our stars and our talent and our shows in their own campaigns. There's no better indication that you've made it into pop culture than that. Kraft, you'll see first. They spoofed, in a mayonnaise commercial they spoofed our home makeover TV genre in a series of ads that featured 3 different HGTV designers. We'll show one of those. GM took more than a page or 2 from HGTV's signature show, House Hunters. By creating an entire advertising miniseries called Car Hunters, which look at comparison car shopping. And Target signed both Food Network's Giada di Laurentiis and HGTV's Sabrina Sotto as their own national spokespeople. We followed that up by crafting custom content to increase their billing with us. Next tape, please.

[Presentation]

And none of those companies would have done all of that had they not known that their advertising with us was working so well. Last tape, 3 more examples, this time you'll see how we put the full force of SNI's TV, print and digital media to work for Kellogg's and SC Johnson. And then we haven't shown you yet anything from or digital network so we have a quick promo for DIY's top sweepstakes the Blog Cabin give away, which this year attracted 11 sponsors and 9 million entries.

[Presentation]

I wanted to share with you our formula for success. If you start with a great set of trusted brands and you add the upscale sizable, upscale audience with disposable income and an engaged audience that's very receptive to the advertising and then our fairly aggressive sales team and that incredible toolbox that creates all the viewer connectivity, that's a pretty strong package. What does that do for us? Well, it gives us a big share of the general market advertisers but it is the even bigger share of the advertisers that I pointed out that fall into that market of our own. When you take all of that and add it together, you have an increased demand for our inventory that drives higher pricing for our inventory and that, of course, it drives more revenue, stronger revenue picture. So that's the formula for what we do and a little bit of the magic that we do to make it work. We'll take your questions at the end. Thank you very much.

John Lansing

And -- hold my coffee right there. Steve and Jon, thank you very much. Hopefully that gives you just a little insight into why when you see our quarterly results and you see that our ad sales percentage increases is always near the top of the heap. As I said earlier, a bit biased but I do believe we have the best ad sales group in the industry. And it really goes back to when we first started these cable networks, some of you may remember we launched HGTV many, many years ago. Lowe's Home Improvement Warehouse came in and was one of our founding sponsors, if you will, and brought over 40 different advertisers along with them. So it's in our DNA that our advertisers are our partners, and through that, you can imagine just how excited we are about the future of interactive sales, getting more data as technology improves that we can share with our advertisers and our customers. We didn't have time today, but Steve and Jon have put together a tape that we actually showed to both our employees and our board recently about 4 of the top agency heads just doing testimonials about not only our cable networks and our brands but our ad sales team and how important they are to their clients. So Steve and Jon, thank you so much. Jeff Meyer, who you can't miss because he's the tall guy in the back, actually started our digital interactive sales unit back in the late '90s, gets a lot of credit very, very proud.

Now we're going to have questions. We've save Mr. Excitement here for the end, Joe NeCastro, our Chief Financial Officer. I see that many of you have seen Joe's act before, so Mr. Excitement will be here in just a moment. But thanks for the feedback. Lot of interesting things. Jessica told me she's already figured out how to redo one of her rooms. Laura's got some new recipes for Thanksgiving. Barry's got some ideas on remodeling. So you're here, write them down, we'll help you. That's what we're all about.

But seriously, we also have a little takeaway gift bag for you so that'll be coming before you walk out the door. So to wrap it up, to talk about what we're really doing in corporate development, some of the international expansion that's going on, also a financial overview, let me bring up our Chief Financial Officer and our Chief Administrative Officer, and I think he's added a title just this morning that I don't know about yet. Here's Joe NeCastro.

Joseph G. NeCastro

Thank you, Mr. Lowe. Thanks, Ken. Good morning, everyone. I think we're a little ahead of schedule. I had planned to say good afternoon, everyone, but I think we're in good shape, so thanks for staying with us. So since our separation from E.W. Scripps, we made international development one of the company's top priorities. Our mission is threefold in international: To expand and monetize our brands on a global stage; to leverage our lifestyle expertise and best-of-breed television and digital assets; and to deliver the opportunity for global media consumers everywhere to experience, enjoy and rely on our brands.

We've taken a significant step in that direction via our new UKTV partnership with BBC Worldwide. For those of you who might not be familiar with UKTV, it's a joint venture that was created in 1997 to provide a commercial platform for BBC programming, as well as a venue for independently produced original content. UKTV channels collectively are viewed by about 39 million media consumers a month, representing about 4% of U.K.'s television viewing market share. With 8 pay and 2 free channels, UKTV has carved out a solid competitive position in the lifestyle, entertainment and nonfiction genres in the market. And we have a little UKTV sample here for you today, so take a look and roll that tape.

[Presentation]

Some of that should look familiar. We believe the opportunity to create value at UKTV lies on the enhanced editorial influence we'll have on the home and good food channels. We see upside opportunity in both brands. We believe we can hasten that growth by lending our expertise as lifestyle programmers, as well as some of our archived content. In addition to the lifestyle opportunity, we believe our shareholders will benefit from the attractive growth profile of UKTV's collective portfolio of networks. Investing in UKTV gives us immediate entree into one of the world's largest television markets and, as the BBC's newest partner, opens us up to conversations internationally that we haven't been a part of before executing this transaction.

Just to recap some key deal points, I'm sure you saw the announcement last week that we completed the transaction on October 1. For GBP 239 million, we've acquired a 50% equity interest in the partnership. We've also acquired the outstanding debt of the partnership owed to Virgin Media for an additional GBP 100 million. We used our cash reserves and tapped our $500 million credit facility to complete the transaction, and we valued the total enterprise at about GBP 585 million. As we indicated when we announced the transaction, we're negotiating a digital rights package for the partnership with the BBC. This follow-on deal would allow them to increase their equity stake to 60% for a combination of cash and a grant of digital rights without changing the governance structure. We'll update you when there's more report on this front. Those negotiations are ongoing.

As for the income statement impact, we expect UKTV's deal to be immediately accretive to EPS and make no mistake. We're very excited about the potential for this powerful combination of assets in the U.K. We'll be reporting results from the partnership below the line as equity earnings from affiliates due to that governance structure I mentioned.

In 2012, we anticipate that 60% of our equity earnings will come from our international joint ventures which, in addition to the UKTV, includes our Canadian partnerships. As a reminder, we own roughly a 1/3 stake in our partnership with Shaw Communications, which operates Canadian versions of HGTV, the Food Network and new just last year, the DIY Network. There's a lot of synergy in programming between the U.S. and Canadian networks, and you've seen some of that at work here today. And that's a model that we are confident we can develop between us and UKTV and the BBC in the U.K. as well.

Just some highlights from Canada. HGTV, anchored by our House Hunters franchise, launched a high-definition version earlier this year. Food Network Canada, which is having a record year for both viewership and profitability, followed suit with an HD channel last week. And DIY Network Canada has seen its revenues double during its second year on the air, some very, very positive trends north of the border. And just a little tease for you, stay tuned, there'll be more developments on this front in the near future, we hope.

So moving back across the pond, we now own 100% of our Food Network business in Europe, the Middle East and Africa. While we've used the Food Network brand as a calling card in a number of EMEA markets, as well as in Asia, our concentration and our most visible success has been in the U.K. and in South Africa. In the U.K., we launched Food Network on BSkyB and Freesat in November 2009 and quickly made a mark. It was the most successful launch on Sky's lifestyle and culture section in more than 4 years. In July, we extended the network's total reach to 26 million homes, essentially full distribution in prime time by adding Freeview to our distribution. As result, our prime time viewership has doubled in just a few months with very little marketing money behind it, I might add. And we frequently outpace our only competitor in the food space, which not ironically is the Good Food Network, part of the UKTV collection of assets.

Food Network's success in South Africa is a similar story. We launched on the DSTV platform in December, and it wasn't long before we overtook BBC Lifestyle and the Style Network. Food Network has quickly become the second most popular lifestyle channel on DSTV with more than 3.4 million viewers sampling the channel through July.

Now overseeing our London-based operations is a gentleman by the name of Nick Thorogood who we recruited a little more than 1 year ago from the BBC after a storied career internationally including the Far East. Nick's responsible for establishing and expanding Food Network's television, digital and branded business activities throughout the EMEA region for us. We've asked him to join us via satellite this morning to bring us up-to-date on how things are going and provide a little color on Food Network's performance in our 2 biggest markets.

And there is Nick.

Nick Thorogood

Hi.

Joseph G. NeCastro

Good afternoon, Nick. Glad to have you here. Thanks for joining us. I'd like, if you would please, to give us a little update on what's happening with the Food Network in -- both in the United Kingdom and in South Africa. Take it away.

Nick Thorogood

Okay. I think the thing for us, Joe, that's been fantastic is we've been building from the foundation of the Scripps archive, which makes about 80% of our programming on all U.K. and EMEA feeds. So we're starting off with solid, well-made quality programming, which is an amazing foundation for us to build upon. That leaves about 20% that we then bought in from local acquired programming and now from originated programming. In fact, in the last week, we've seen our first originated show, which is Andy Bates’ Street Feasts launched on the U.K. feed in quite extraordinary ratings. This show has actually come in the top 5 programs which, in all the time that I've worked in multi-channels, to be able to break brand new talent is just unheard of. And I think it's a testament to how quickly we've got the Food Network brand established in this market that we're actually able to do that. Alongside that, we've got our first origination that we've made for South Africa, which is actually going to launch in the U.K. first because we have U.K. talent within it, and that's called Reza, Spice Prince of India. And it takes a well-known popular face and actually has content that we've made for the South African market, reflecting the food taste of India. But also, it will appeal to the U.K. market.

Joseph G. NeCastro

That's great. So if you would then, give us a little color on the ad environment for the Food Network. That's obviously a very important topic domestically in the States and I know it is there as well. I know you're seeing some encouraging trends in the U.K. And of course, we just started selling advertising in South Africa in July, so why don't you give us an update on how that's going in both markets.

Nick Thorogood

Again, for us -- it's very interesting in the U.K. because the unique way that we sell advertising so the advertising that we're actually fulfilling at the moment was sold a year ago and we sell in advance. The increased reach that we've had means that we're now able to grow the number of commercial impacts that we can deliver. This year, we will absolutely cap out on the number of impacts that we can deliver and will drive additional revenues we weren't expecting. But more importantly, it will open up the opportunity for us to be able to deliver up to 3x the number of impacts next year and actually triple our revenues in the U.K. Alongside that, we then launched into South Africa with advertising in July. The early indications have exceeded our expectations. We are doing incredibly well. We've had a great response from the brands down there. And I think what we're seeing is a really interesting model about local advertising. But hopefully, we can start rolling out into other of the EMEA territories.

Joseph G. NeCastro

That's terrific. So then beyond advertising, tell us a little bit about how you're marketing the brand and extending the Food Network brand into -- in these markets as well?

Nick Thorogood

I think absolutely key to what we're trying to do, is use that power of the Food Network brand, and push it out into the various territories in both -- since we've launched. And in fact in South Africa, we did it immediately prior to launch by sponsoring one of the big live food shows there. We've sponsored food shows across the territory and we've had a great response. It's a great way to create a buzz and excitement and be a touch point for our viewers. Alongside that, we've done all sorts of pieces placed in consumer magazines, in newspapers. And very important that's drive our viewership, we've had an incredible uptake on pics of the day with people really responding to our programming and seem to engage with us. Alongside that, we've been doing the large-scale events that we try and get these people excited. We've just done a live version of the show Chopped in South Africa for 80 journalists, which was a tremendous day, an extraordinary event, and as you can imagine, quite a buzz to run that kind of event in a live space. And then, we are about to go in and sponsor the

Eat Out and Eat In Awards in Cape Town, which is a great way for us to make a touch point with both the food retailers in the restaurant scene but also the consumer retailers through the different food products of the Eat In Awards.

Joseph G. NeCastro

That's terrific. Thanks very much for the update, Nick. We're going to let you get back to your -- whatever you do at this time of day in London. One thing you should know is Nick is a master marketer, and we've really enjoyed our association with him. He's doing great work for us. One thing that evidences the strength of the Food Network brand is that it's almost as easy to get a table in London with a Food Network card as it is in New York, so keep that in mind. Anyway, thanks, Nick, for the update.

As you can tell, we have great momentum in both markets and proof positive that Food Network and our brand of lifestyle programming is resonating with viewers outside the U.S. Well, thanks again, Nick.

International development is still a work in progress as you can tell, but we're beginning to finally move the needle. So stay tuned, please. Going forward, we continue to explore potential partnerships that would marry our expertise in lifestyle programming with a wide distribution footprint. We're carefully building our programming -- sorry, program licensing business, being very selective on these titles and the amount of program we're making available. And we're developing a digital content strategy to leverage alternative platforms to reach international customers, much more to come in the near future there. Stay tuned.

Now before we open it up for questions, let me provide a brief financial review. Based on the appeal of our lifestyle networks to high-income consumers, we've generated a very healthy 16% compound annual growth rate over the past 4 years. Simultaneously, total segment profit increased significantly to more than $900 million last year. Feel good how we've done for the first 6 months of 2011. We're on pace to generate another double-digit growth rate in revenue and about $1 billion in segment profits, a significant achievement for such a young company.

Advertising is driving this growth, of course, coupled with the increases in affiliate rates as we renegotiated new agreements for HGTV in 2007 and 2009 and for 75% of the Food Network, also in 2009. The other important takeaway from this graph is that we grew revenues during the worst economic recession in a generation. That points directly to the resiliency of our advertising base, the attractiveness of our audience and the strong base of endemic advertisers in large consumer categories who continue to consider our networks to be must buys.

And looking at our revenue contribution by network, you'll see the 2 biggest contributors are, not surprisingly, our 2 largest fully distributed networks. You'll also notice the Food Network and HGTV individually generate almost 3x the revenue of Travel Channel, which is also fully distributed. So as we've said consistently, we look at closing that gap as our most promising growth opportunity over the near term. We recognize this is a significant long-term undertaking, but as you've seen and heard, we're confident that we're on the right track there.

Turning to revenue by source, you'll notice that with the Food Network rate reset, affiliate fees are contributing a higher percentage to our revenue than it were when we emerged from the spin in 2008. The ratio is about 80%, 20% advertising to affiliate fees then compared with 70%, 30% today. With the remaining piece of the Food Network distribution coming up at the end of this year and then Travel Channel renewals at the end of 2012 and '13, you'll see that delta narrow a few more points over the next few years.

Next, we continue to maintain a strong balance sheet. These numbers are as of June 30, so they will not reflect the GBP 339 million related to the UKTV transaction, the cash we used to repurchase shares or the cash flow we generated in the quarter. They do show, however, the continued strength of our business. We ended the second quarter with more than $700 million in cash, plus we generated a more than $350 million through the first 6 months of the year in cash flow from continuing operations. A long-term debt of $884 million, which we can't pay now for tax purposes, is related to the Travel Channel acquisition and remains on our books.

While we haven't provided specific leverage targets for the business, we've said that management and the Board are both comfortable in the 1.5 to 2x leverage range. So you'll likely see us continue to make use of our balance sheet to leverage returns for our shareholders, which leads us to a discussion on future uses of cash. I'd like to stress these are not mutually exclusive, and we feel we have ample capacity to accommodate multiple items simultaneously. Our most immediate use of cash is the $1 billion share buyback plan we announced in June. We started by repurchasing $300 million of stock from the E.W. Scripps Trust. Then, during the third quarter, we repurchased another $100 million in open market at an average price of just over $40.

We expect to continue utilizing this authorization in a timely fashion and will likely seek another one as this has depleted. Of course, that's assuming that our mix of investment opportunities hasn't changed in a material way, and more on that in a minute and I'll come back to that. And besides the buyback, our leading cash consideration continues to be the 31% minority stake the Tribune holds in our Food Category networks. We're hoping to see some movement toward that end whenever our partner emerges from bankruptcy. Just let me know when that is.

In comparison, the path to owning all the Travel Channel is very clear. There is a timetable and a structure in place to bring in that 35% minority stake that's owned by Cox. They have a put right in 2014 and we have a call in 2015, so that piece will come back in. Also related to the Travel Channel is the original $884 million of debt that we are carrying on our books. Other potential uses of capital include additional international opportunities as we explore potential partnerships.

Additionally, related to our existing networks and websites, we're considering a number of home-grown initiatives to extend our brands. Some of our more promising internal projects could involve some modest capital investment to build or acquire some needed technologies there. Now let me stress for a minute one thing. We can do all these things and plan to do all these things with no impact on the original buyback authorization. We didn't slow it down to be able to buy UKTV, and we have been proceeding deliberately on the heels of buying a large chunk all at once from the Trust. But given recent performance in the stock, we are actively considering accelerating that program and going back to the Board for more. We continue to be comfortable that the business will continue to generate cash flow in a material amount as we go forward. And we look -- we can -- honestly cannot see any better investment opportunity at this moment than our stock at these levels. So you'll see us get more aggressive. I'm confident.

Finally, we're going to reiterate our full year guidance today. That means we continue to expect to grow revenues by 10% to 12% for our domestic Lifestyle Media segment. While we've not explicitly provided guidance on affiliate fees. Through the first 6 months, they've been running at about a 6% growth rate. That rate of growth likely won't change for the remainder of the year. Many of you are obviously doing some math. I see computers spinning there. Your calculations are correct. We expect affiliate revenue to grow at 6%. Our guidance is 10% to 12%. That means we're expecting advertising to grow at a rate somewhere north of that obviously.

So for the first half of the year, advertising revenue has grown about 12%. We've also previously said on our second quarter call that we didn't expect advertising to grow at that rate in the third quarter given prior year comps. That implies we expect an acceleration of the ad revenue growth in the fourth quarter, all still true.

I'd also like to make some comments about programming expense guidance and trends. Our guidance for the full year, if you'll remember, is for programming expense to be somewhere between 6% and 9% growth. For the first 6 months, we've actually been down a little. However, because of program launches during the summer and through the remainder of the year, we expect programming expenses to increase in the second half. Programming cost will still fall within the range we provided for the full year. Non-programming costs are expected to continue at a similar run rate to the first half of the year. However, the third quarter will probably be a little higher than the fourth quarter due to the timing of some marketing and promotion expenses related to these program launches in the third quarter. Our guidance for non-programming expenses are flat to down 2% for the full year also remains unchanged.

Finally, there's certainly been no change in the full year guidance we've provided for capital spending or the effective tax rate or D&A or minority interest payments. So that should bring you up-to-date. I want to thank you all for hanging with us this morning. It's been a pleasure to have you. But before we let you head for the exits, we're going to open it up to questions and answers. I'd like to have, if you would, Ken and John join me on stage now. And all the other presenters are available to answer questions. So don't be bashful. I know people are dying to ask Steve questions. And if you would be so kind as to raise your hand with questions, we'll bring a microphone to you.

Question-and-Answer Session

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

I guess it's a question for John. Just following up on your comments earlier about the affiliate renewals for Travel. You said it's a 2-step process really to get where you want to be. Could you give us a sense of how we should think sort of how below market you are versus sort of where the first step is, like a range? And how much of a step up we should be really thinking? And how important really is the rating increment [ph] going into those negotiations?

John Lansing

Sure, Alexia. While the ratings are important as you point out, because that's the leverage we have going in, the rate for Food -- pardon me, for Travel is a better rate than what we had as our baseline for Food. So it's a little more rational in the marketplace although it's still underpriced. And I think that we have a chance in 2 steps to do something over 2 steps that would come close to doing what we did in one step with Food. And that is somewhat reliant on the terms, the length of the deals we do. And what we'll try to do is hold the lengths to something short to give us the chance to have a 3- to 5-year run at developing the rating stories so that when we get to the second shot at those renewals that we'll be in a position to take a more substantial leap forward. I would say the first step forward would be not the biggest step. I think the biggest step would come in the second shot.

Kenneth W. Lowe

Would you just state your name too when you ask your questions? We can't see everybody from up here.

Unknown Analyst -

Tom Alnerts [ph], Sanwick Capital.[ph] I guess my question was more so for Brooke, but if you guys could address it. I guess you made some comments that going into October, the network schedule hasn't really affected Food as much as it had in the past. And I was just thinking of something that happened last fourth quarter where you and a few of your peers in the cable business were specifically impacted by sort of a crossover of female viewers to the NFL. And I was curious if you could comment on what you've seen from that trend this year versus last year.

Kenneth W. Lowe

Why don't we let Brooke answer that? She's a big NFL fan, by the way.

Brooke Johnson

Sure. I think I still have a mic on, right?

Kenneth W. Lowe

Yes.

Brooke Johnson

First of all, Food Network is more gender neutral than most people expect it to be. HG is much more female to male. We're about 65%, 35%. So if that is occurring, and I believe it is, that is affecting us a little bit less than you might expect. Secondly, I think -- I mean, you never know for sure, but I think the stacking schedule that we put in place has really helped us against the new network competition and the proliferation and popularity of NFL football. Our schedule is much easier to navigate than it used to be, and that's what we ascribe it to.

Unknown Analyst -

You mentioned that you felt like the era of food copycat has maybe sort of slowed or run its course. Can you expand on that?

Brooke Johnson

Sure. We mostly picked that up through market intelligence, talking to producers and agents and what not. And what we hear is that whereas everybody had a food RFP on their list, less so. History is not looking for food programming anymore. Discovery is not looking. So it's word of mouth from the producers, but they are the people that I know. We're actually, for Cooking Channel, looking at a food program that History funded and then decided they didn't want to pursue.

Kenneth W. Lowe

Laura?

Laura Martin - Needham & Company, LLC, Research Division

Okay, this is Laura Martin from Needham and then, I'll hand it to Mike Morris who also has a question. So I'm actually interested in cost pressures because one of the things we're hearing out in Hollywood is increasingly companies like Michael Eisner's are spending $100,000 for Internet direct programming. And so I understand if the broadcaster is spending $6 million to $9 million an hour to have a non-substitutability threat, but your programming is a lot cheaper, kind of the $200,000 to $400,000. And as these Internet, made-for-Internet, kind of premium programmers kind of move up, to date they've had a lot of trouble with Discovery but finally, Google and YouTube is getting its act together. They're going to start channelizing. Tell me how you think about cost pressures in your business and competitive advantage of your types of programming when the Internet is kind of finally going to come after you over the next 5 years.

John Lansing

Sure, sure. Laura. Well, there has been a steady increase in our cost per hour over the last several years. A lot of that is driven by the cost of talent, and it's particularly true in the Food category, although it's happening more in the Home category and certainly will in the Travel category. And then competition, Brooke just spoke of the competition waning somewhat, but there has been heavy competition both in Home and in Food, and that drives up the cost of programming. But the way we think about it is that we have -- we really invented, if you will, the low-cost lifestyle programming and understand how to produce that. And we also understand how to use it and amortize it across multiple platforms. And what's different somewhat about our programming is that it works both in long form and in short form. And so our long-form programming will have a life within our affiliate windows. It'll have a life outside of our affiliate windows on the longtail and then it will also have a second or third life cut into special segments that can travel into digital businesses that might be more targeted and even more niche than our cable channels are today. So the fact that we can amortize our programming across multiple platforms in multiple ways allows us, I think, to stay competitive even as the general overall cost rises.

Joseph G. NeCastro

One thing that I'll add.

John Lansing

Go ahead, sorry.

Joseph G. NeCastro

A billing [ph] that we have that others don't, with all due respect to all those great programmers, is that we have a brand that's hard to duplicate built on other platforms, but certainly on that appeal brand -- you've seen it today. And what they're spending, what Google has committed to spending for a new, original programming on YouTube is a drop in the bucket compared with what even we spend -- the smallest programmer out there. And we have a brand that would be impossible to duplicate in terms of the authoritative voice in the lifestyle content category. So we feel like there will be pressure. There'll be other outlets for the content, but we also feel like we have a significant advantage just for the brand.

Kenneth W. Lowe

And I think just to tag on ever so quickly, we see this as opportunity, Laura, because we really -- when we started this company, we actually bought a small production company which was producing for other cable networks, Cinetel Productions. And it really gave us a lot of insight in producing shows. And initially, we thought we'd be doing more of this, shooting in the studio and less shooting outside, controlling our costs, et cetera. But what it has given us is a lot of insight in how to continue to use programming not necessarily on the cheap but much more on the economically efficient basis, so we can ramp that back up. We see opportunities that Brooke has helped show us, for example in ways to take shoots, to take things we're doing in the studios, duplicate those for the magazine at a lower cost basis in our partnership with her. So this to us is a real opportunistic area and to Joe and John's point, brands will matter and do matter, and I think we're proving that on various platforms already.

Michael C. Morris - Davenport & Company, LLC, Research Division

Mike Morris of Davenport. My questions are on some tiered pricing structures with the pay TV operators that are starting to gather steam. I'm thinking, Time Warner Cable's TV Essentials, Comcast with their Get Started. So 2 questions. One, how are you guys viewing, say, the public appetite for some of these lower-tiered pricing structures? What's your outlook for that and whether you see that being taken up? And then second, for you specifically, I noticed some of your networks don't appear to be carried on some of the lower-priced tiers, so you may have Food on one but not HG. How is that working for you? How are you protecting yourself? Or how do your existing contracts help or hurt you there? How should we be thinking about that?

John Lansing

It's a great question. It's a very timely question. The tiering flexibility that the distributors are looking for is real. And I think it has to do largely with the cap on how much consumers are willing to spend on a monthly basis for pay TV. And I think the biggest driver of the overhead is the cost of sports rights. And when you combine the cost of sports rights with the introduction of retransmission consent revenue into the fixed now revenue pie, then it's going to -- there's no question that it will force distributors to look at tiering opportunities. And that puts us in a position to be negotiating, to either hold the tiers we're on or potentially to be included in non-sports tiers that might in fact create another avenue for us. It may not penalize us in terms of revenue and in fact might be advantageous to us is if a non-sports tiers are developed. But it's a conversation we're involved in right now today directly with our biggest distributors in terms of how we can preserve our penetration and increase our rate. And the best case we have for that, Mike, honestly is, to Joe's point, our brands resonate. We're not a small insignificant network. On any given night, Food Network is delivering a larger audience than ESPN as long as there's not a big game on. And as you heard our Ad Sales team tell you, our HGTV is the #1 ranked network among all upscale women 25 to 54. It's the #1 network along with Food for local ad sales for our distributors. So we think we have a pretty good cushion against the downward pressure on penetration and tiering but at the same time, it will be a negotiation-by-negotiation process. And we're focused on trying to figure out a way that there's a value exchange for us so that we are making sure we're holding our penetration while still being responsive to the distributors on the issue of flexibility.

Unknown Analyst -

If I could follow up, TV Essentials for example doesn't have one of your networks currently -- my question is just if the packages that are currently being rolled out, if they don't carry one of your networks, do you have -- are they contractually obligated to pay you more? Do you have protection on the downside if those subscribers come off, and how does that work?

John Lansing

Well, that's exactly how it works, and that's how we mitigate the concern is that there are tiering penalties in most of our, if not all, but most of our contracts. So that in essence, they pay more when the penetration drops, but we still -- it's still not a good scenario for us because of the Ad Sales component. But to be honest with you, I think at this point, those are very small and experimental efforts market-by-market. And I think what's really happening is the distributors are trying to understand how flexible can they be with their most popular networks. And we are at the top of that list and they understand there's a penalty in terms of tier reduction.

Anthony J. DiClemente - Barclays Capital, Research Division

Anthony DiClemente of Barclays Capital. Still along the lines of digital, wondering if you could talk about the opportunity for distributing your existing content onto digital platforms, be they Netflix, Amazon. Talked about the 6% affiliate fee growth. Your competitors have signed deals like that, that have augmented their affiliate fee growth. And so I wonder if you could quantify the opportunity, that would be great or maybe Joe, if you could just talk about the opportunity there financially. And then also, would be interested to hear Brooke's perspective on the brand or the opportunities or the risk for the brand by distributing it onto digital platforms for a brand like Food Network.

John Lansing

Well, why don't I start and Joe can talk about the financial impact and talk about the issue of, I guess, does it create an erosion for the brand. But Anthony, right now, since we're in the heart of a pretty significant negotiation to finish and complete our rate reset for Food, we have decided to look to the other side of that before we look to the next over-the-top or other out-of-window distribution. But as you know, we have a healthy, robust library, and we're prepared to monetize that in any way that makes sense, but we're -- the first the we want to do is understand what our parameters are, DIRECTV everywhere and negotiations, and make sure, number one, that we're maximizing the #1 revenue stream, which is our affiliate sales revenue line before we put an inhibitor against that by going over-the-top too quickly. And I think that's right around the corner. Certainly, it's a 2012 issue for us. And in terms of the economics?

Joseph G. NeCastro

Yes, you will not be surprised by this answer. It is too early to tell. We do believe, based on library and the shelf life of our content and the brands, that there's a significant deal to be done there or a series of deals to be done there, but we're trying to keep the horse before the cart here. So Brooke?

Brooke Johnson

I was just going to say that where I get excited is outside of this realm. I mean, I agree that we have to dance with who brung us, which is the cable operator and that's where the money is. But based on what John and Henry are doing, I think there'll opportunity there. Where I get excited is in the other parts of digital, the rise of iPads and e-readers and the opportunities for potentially subscription revenue, et cetera. So that said, I'm looking at the upside more than I am the potential negative.

John Lansing

And just to round that point out. It's a great point, and this maybe ties Anthony and Laura's question together in that, because what we really know how to do is to create targeted, branded programming at a low-cost point, there's also beyond our library that there's ability for us to create content simply for the digital platforms beyond our ecosystem of the cable and satellite distribution system. So that doesn't get discussed a lot because most companies aren't in the business of creating content for other platforms. It's too expensive. But we see either through short form or long form, the opportunity to go direct to some of these platforms without disadvantaging us in these other business models.

Kenneth W. Lowe

One of the things you saw in Steve and Jon's presentation is, in some cases, to Jon's point, maybe even partnering with some of our sponsors and advertisers in ways that we might create content that currently we're not doing on the screen. So it opens up some more opportunities as well.

Unknown Analyst -

All right. I have one for Joe, one for Charlie [ph] one for Ken. Joe, the question will be is, clearly, the math is acceleration of fourth quarter advertising, And I wonder now, with your Ad Sales guys here, can you talk a bit about what are those elements that get you from a slower in the third to a better fourth? So can you talk a bit about the drivers of what you're seeing in the fourth quarter?

Joseph G. NeCastro

Yes, sure. It's helped by easier comps, first of all. Third quarter was very rough last year as you know, big, big numbers. So that's number one. But number two is, we had a very good upfront. And a lot of that new business starts to layer in, in the fourth quarter, and that will be very helpful. And we had -- and we certainly started the quarter or the fourth quarter with pretty healthy trends and scatter, and that will continue to help us through the quarter as well. So those are the main factors. I don't know. Steve, do you want to add any color to any of that?

Steve Gigliotti

I think that's it. The scatter marketplace was -- is looking stronger than we thought because a lot of advertisers over the past couple of years have moved from scatter to upfront because of the pricing in scatter. And you've heard a lot about that. That helped build that big upfront that's right now going into the fourth quarter. So our anticipation earlier was, where is that? How big is that scatter market going to be? But we're quite pleased with where it is today.

Unknown Analyst -

So scatter versus scatter is better fourth than it was third is what you're saying? Okay, and then one for Ken...

Joseph G. NeCastro

I wouldn't say when you say better. It's consistent.

Kenneth W. Lowe

So is scatter versus scatter better in fourth than third?

Unknown Analyst -

Yes. And then one for Ken. You programmed a long time, and I wonder, if you look at the weakness in ratings for your networks or for maybe other cable networks too, what influence do you think repeat programming is having in a world with more and more on-demand programming? So and how are you addressing that if that is a stress in the business? So can you talk a bit about how DVRs and maybe just repeat programming is changing the effect of cable networks?

Kenneth W. Lowe

Yes. it's a great question because it's presenting new challenges and new opportunities. And look, the overall, and you saw it in the numbers up here today, cable networks have continued to improve and get better. And our competition has gotten better. So on many -- on any given night, it used to be that we see the broadcast networks on the top 4 positions. Now easily, you see cable networks in 2 or 3 of the top 4 positions on any given night. So with stacking, and I think Brooke was alluding to that a little bit earlier and I might also let Burton comment on this, what we're finding is, repeats can actually benefit greatly depending on the way we schedule them. But at the same time, if there's not fresh programming coming in, it's a double-edged sword. So you see, in the case of Travel Channel, we have a lot of new programming coming down the pike, same is true with Home & Garden and Food. There seems to be more of a need to freshen programming these days. There's a tendency for the audience not to stick with it quite as long. But when you get a hit, you see more stacking. You see more repeating, and that can pop the ratings on any given cable network in any given night. But Burton, you haven't had a chance to comment. I know it's one of the things that all our networks are spending some time on, Brooke? Burton?

Well, no, both of you.

Burton Jablin

We usually think the same thing. So if I say something you disagree with, let me know. Now what you said is true, Ken. In fact, at HGTV, there's going to be a shift in the coming quarters between investing in many, many shows, fewer episode arcs and investing a little bit more on original episodes of the shows that really are working for precisely the reasons you said. That doesn't mean we can't use those repeats. They're used in other day parts. So we monetize them if not in prime time then in daytime or on weekends. So it still works, but the fact is, everything Ken said was true. And we are going to now be investing in more original episodes in a given year of a handful of shows that are working.

Kenneth W. Lowe

Brooke, did you have anything to add to that? Who's got a mic? Somebody have a mic?

Tuna N. Amobi - S&P Equity Research

Tuna Amobi from Standard & Poor's Equity Research. I've got a question, maybe kind of a perception about your content perhaps not traveling as well internationally relative to some of your peers. Can you address that perception? Rightly or wrongly, in which parts of your content do you think travels the best? And along those lines, how does that perception play to your programming investments on the international front? And I have a follow-up.

Kenneth W. Lowe

Okay, Joe, do you want to?

Joseph G. NeCastro

Yes, let me start, then you guys can jump in too. Look, I think it'd be fair to say that it's the -- the case is not made, right? We have very, very good track record in 2 English-speaking countries, and they've done quite well. That said, our programming sells globally. We have a very active program licensing business, and it's very, very appealing. What we've learned in all of this is that -- and one of the things that's as important as anything is the format of the show, and that's something that can't be duplicated very easily. So the fact that you have it, is something that you can version locally. You can use local talent, you can certainly use local language and shoot and produce programming relatively inexpensively as long as you have a format. You're not experimenting with a blank sheet of paper. So whether you can take Ace of Cakes somewhere and just show it as is, is one question. But you can certainly do a show like that with a local talent in local language and do it relatively inexpensively because you own the format or you at least understand the format. So there is something in the sauce for how to produce and market this kind of programming, and that's something that we have and can't be duplicated. I would certainly concur that Shark Week is easy to do anywhere because a shark is a shark, and you just put a different voice on it, and it's still as terrifying, right? Blood in the water, there's still blood in the water. And there is something cultural to our programming that is important, but don't underestimate the fascination that the rest of the world has with American culture, and a lot of our programming is becoming a little more international. And we actually look to a second benefit here, which is, as we originate programming or acquire programming internationally and maybe bringing some of that back here and versioning it for the States, so.

Kenneth W. Lowe

Yes, and I think, Tuna, just to add on, one thing that -- initially, we knew shows, for example, some of the home shows that -- or how-to, 2x4 is not the same in metric measurements, and some of that stuff does not travel very well. But just lately, I think we've been pleasantly surprised at how well Food has traveled, and food is the international language, you expect that. But some of our very iconic American-type shows like a Diners, Drive-ins and Dives because Guy Fieri is such a character. That show travels extremely well, and we're finding that out in the U.K. right now with the launches as Nick was alluding to with the Food Network -- how well those shows are doing. And in some cases, I can tell you, because I've had some discussions with my friends in the U.K., they've been rather shocked that our food shows are doing as well as some of the -- as some of the historically, "BBC-type food programs." So I think for us, what we're finding is, and we knew from Canada after being up there for years, it is a 2-way street to Joe's Point. We can export thinks but it also gives us an opportunity to maybe import some talent from around the world because the Food Network is kind of universally accepted. The Home Category is more almost entertaining, American lifestyle, what they're living, how they're decorating, how they're designing as opposed to so much how-to because of the different culture, so a lot of opportunities there. I think we've got about 5 more minutes, is that right, Mark? Because we've said we'd get everybody out on time.

Benjamin Swinburne - Morgan Stanley, Research Division

Ben Swinburne from Morgan Stanley. I just wanted to go back a couple of answers to previous questions on competition and programming investments. I think you talked about sort of competition driving up the cost per hour, and you've seen that over the past few years and probably continues to happen going forward and also that you're going to introduce more hours of new programming. So that would suggest to me anyway that the programming cost growth in the business is going to continue to be, I don't know, if it's high-single digits but maybe even accelerate, can you just help us think about what you think happens with programming costs over the long term, particularly after this next step up with the food? At that point, the margins sort of plateau on your business, or do you think they maybe continue to go up? Or could they go down if you have to really jump-start investing on programming, given the comments on repeats and DVR, et cetera? And then I just had one question on digital. I'm curious when you look at the consumption habits on tablets versus the PC, if there's any data you can show us about how that may differ and maybe how tablets could be a bigger advertising platform, given the potential for better engagement versus what we've seen historically just on an online PC setting.

John Lansing

Sure. I'll maybe start on the tablets, no data. One of the issues with tablets is there is no data, that there's no measurement. But I think intuitively, we would all understand that video on a tablet is just really a rich and rewarding experience. And we think our content looks very good on a tablet, and our content, I think, works well when it's portable whether it's in the kitchen or in the workshop or even on mobile. So we believe tablets or mobile in general are a big opportunity for our content and much better than a PC screen. And then thinking about the cost of content, I think it is fair to think of it as a high-singles growth as far as we can see. I mean in the near future is really all we can think about, but Food Network is the 7th ranked network, 7th or 8th, among all of cable, ad-supported cable. HGTV is the 12th. Travel Channel is 25th and on its way hopefully to the top 15. And you get there by investing in programming, and we're not the only programmers out there, and there are no cable networks now in the top 50 that are not aggressively investing in original programming either through acquisition or original. And so part of it is staying up there. There's no guarantee you get to stay there. You have to keep investing and that is what we do. So I think it'll have a margin impact, whether it tops out at the margin or perhaps even matures a little bit. I can't say, but I will say this, we're going to invest in our business and hold onto our market and our advantage. And we think ultimately, we can take that advantage in terms of brand building and we can move it across all of the other platforms, as well as these other things that we talked about today and just solidify that brand relationship with the consumer and monetize it on multiple touch points, but the core investment will be programming and it could, over time, cause our margin to at least mature.

Kenneth W. Lowe

I think it's a high-class problem too because as you saw today, the audience that we deliver -- upscale, highly-educated, is extremely valuable, is a premium in our audience to the advertisers so as you see the dollars between broadcast television and cable continue to decrease as Steve and Jon showed you on the charts. The ability to deliver a high quality audience becomes even more important in this continually fragmenting world. So I think Steve and Jon will tell us all day as long, to Jon's point, we can not only just stay competitive but maybe even eke out a little advantage here and there. Our ROI on programming is extremely high and just to reiterate what Jon said, we've never really managed the margins and never will. It's all about growth. It's all about investing smartly, prudently in the business because we do have a distinct advantage with the brands we have and the type of content we do and the type of audience we deliver. So we see it as I said, it's a high-class problem and one that would probably continue because I think more and more people are going to continue to move to cable brands and away from broadcast over the long-term, sports notwithstanding. Maybe one more question. Over here?

Matthew J. Harrigan - Wunderlich Securities Inc., Research Division

Matthew Harrigan from Wunderlich Securities. You've been a leader in measuring the efficacy of advertising in your channels. Can you talk a little about interactive advertising at Ebix [ph] And QR codes and all that and possibly how that increases the dispersion in CPMs among the various cable and broadcast networks as well?

Kenneth W. Lowe

That's a good question. We have Steve and I don't know if you got Jeff as well.

Steve Gigliotti

Let me start the response, then I'll let Jeff pick it up. Jeff, as I said, is in charge of our digital and interactive advertising areas. But when we talk about the expansion of our ability to put our video on for the consumer to get in other places after the video is aired in our traditional sense. That's going to expand impressions. That's what's happening now. A lot of advertisers are looking at that and saying, you know what, as long as a consumer is participating and taking that video and getting our message streamed to them, that's going to count. And I think that's where everybody's leaning right now is that the impressions will count and count as delivery and against the guarantees. It's going to create kind of an immediate, I think, expansion of impressions and when demand builds that expansion of impressions, it will continue -- pricing will continue to move up. Do you want to talk any -- specifically about some of that, Jeff?

Jeff Meyer

I think when you talk about QR codes, those are means of measuring engagement beyond the standard Nielsen metric. And so what -- just as Jon and Steve talked about the engagement metrics we see on air, we have those similar metrics online, and they are at the top of the heap in our categories. So we see the different forms of measurement. It's just solidifying our story from an engagement standpoint, and as Steve mentioned, being able to increase in terms of CPMs and other ways that we monetize those audiences.

Kenneth W. Lowe

Well, you've been very attentive, and we really, really, truly appreciate your time this morning, soon to be afternoon. On behalf of our management team, I want to thank you, all, for coming today. I hope you're leaving with a better sense of how we're building long-term value with our brands, how excited we are, enthusiastic we are about the future and the opportunities ahead of Scripps Networks Interactive. As always, we appreciate your interest in our company and our stock, of course, and we feel very good about the future. Markets notwithstanding, these businesses are powerful, powerful brands that we want to assure you are going to be around for the long haul, and that's how we intend to build shareholder value over the long haul. So thank you, all, again. Have a great day. We appreciate you being here.

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Source: Scripps Networks Interactive, Inc. - Analyst/Investor Day
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