Scripps Networks Tie-up with Amazon

Zacks

Leading lifestyle media company, Scripps Networks Interactive Inc. (SNI) recently entered into a content licensing deal with Amazon.com Inc. (AMZN). Per the deal, past episodes of Scripps Networks’ popular TV channels will be available on the online retailing giant’s subscription-based video streaming service – Prime Instant Video.

The shows will be available at Scripps Networks’ popular lifestyle TV channels such as HGTV, DIY Network, Food Network, Cooking Channel and Travel Channel. The financial terms of the deal were kept confidential.

This is Scripps Networks’ first online-only subscription distribution deal. But Scripps Networks already has another business tie-up with Amazon under which it sells branded books, cookware, furniture, accessories and other products through Amazon.com. Scripps Networks currently has a Zacks Rank #3 (Hold).

We see this deal as incrementally positive for Scripps Networks. The company’s advertisement revenue from current shows will remain unaffected while it will earn additional revenue from its past shows. Additionally, there is a possibility that the viewers of its past TV shows on Amazon’s Prime may in turn become viewers of its live TV shows, raising the ratings of these channels. Higher ratings may lead to an increase in affiliate fees and advertisement rates.

On the other side, Amazon is aggressively developing its online content portfolio for its subscription-based Prime Instant Video service. In this segment, Amazon directly competes with Netflix Inc. (NFLX). Prime Instant video currently holds a portfolio of over 38,000 movies and TV shows. Last month, Amazon successfully extended its non-exclusive licensing agreement with CBS Corp. (CBS) for some selected content of the latter to be available on Prime Instant video.

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