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Interview: Derek Chang, Scripps Networks Interactive

Derek Chang, Managing Director, Asia PacificDerek Chang, head of international lifestyle channels at Scripps Networks Interactive, talks to Digital TV Europe about the company’s priorities.

The maturing of the pay TV business and a growing focus on digital-only platforms and direct-to-consumer initiatives has been a key trend of the last couple of years. However, for US pay TV programmers, the extent to which international pay TV growth has levelled out depends on the stage of development they have reached.

Scripps Networks Interactive’s head of international lifestyle channels, Derek Chang, recently moved to London from Singapore to help drive the group’s next phase of growth for its lifestyle-focused pay and free TV offerings.  Chang has been tasked with growing the presence of a portfolio of services including Fine Living, Food Network, Travel Channel and HGTV.

Having spent the last few years “getting out to as many countries as we can”, Scripps is now turning its attention to analysing which markets offer the most promise and what the most appropriate routes to further growth are, says Chang.

“Some of the more traditional pay TV businesses around the world are more challenged than they have been in the past,” he says, adding that he believes there is still “headroom for us” to grow by comparison with media groups that have longer-established international businesses.

“What is also good for us is the growing appetite for lifestyle programming,” says Chang. “Lifestyle as a category tends to lag but also has more consistent performance and staying power. It is not hits-driven but based on consistency of performance. You create certain brands and people come to those brands with the idea that they will find categories of programming that they are looking for.”

Chang says that Scripps’ large library of US content “resonates across markets” and that this is “central to our business model”.  Beyond that, he says, the group looks to produce some local content as well as localise the look and feel of the channels. The degree of local content offered willvary from 5-20%, with more likely to commissioned if Scripps has, for example invested significantly in a large free-to-air presence.

Expanding the distribution of homes and gardens-focused HGTV is a key priority. Scripps only began launching the channel outside the US two years ago. The channel launched in Singapore, followed by New Zealand – in partnership with Blue Ant – and the Middle East – in partnership with BeIN Media Group. Scripps also provides an HGTV branded block for NineLife in Australia.

“HGTV is a relatively new international channel. There was probably some scepticism about whether it would play internationally but the good news is that it has played very well,” says Chang. “Our goal is to continue to launch HGTV in Europe and also in Latin America, where we have so far focused on Food Network. We are in constant discussions with potential partners – whether traditional pay TV groups or large media companies – not only for distribution but for the branding.”

Chang is agnostic regarding the merits of a free TV launch as against pay TV. “Our business model internationally is based on flexibility. We don’t have deep entrenched businesses in a lot of these markets so we don’t have legacy issues that potentially come with that such as restrictive agreements with pay TV providers,” he says. “We have a lot more freedom outside the US so we can have different ways to distribute our content and grow our brands.”

Chang says that “FTA is a component of a broader strategy of recognising what the realities of each market are and the realities of the industry these days”, with local partnerships playing a crucial role: “Teaming up with a local partner mitigates the risk…and is a great way to leverage into a market.”

While the company has launched FTA channels in a number of markets the company’s “bread and butter” remains pay TV, however. “To the extent there are viable pay TV opportunities in markets, we will go to those. We are not looking to get out of the pay TV business,” he says. “Some of the Latin American markets are robust pay TV markets that we haven’t fully tapped yet.”

In markets where pay TV has not taken off, there is an opportunity for new digital distribution businesses to emerge. However, existing business models are not so challenged that Scripps is looking to go it alone with its own distribution platform. “Direct-to-consumer businesses are frankly not easy, especially where you don’t have an existing brand. In a lot of markets we don’t have that. Is there enough there to go and do something like that? We haven’t and our goals on the international front right now are probably to find more efficient ways to drive our business,” says Chang.

Chang’s overall goal remains “to bring our brands internationally to some of the bigger markets that we haven’t been exposed to yet”, he says. “I don’t think we’re fixated on exactly how we do that. We’ve done it on a pay TV basis. We’ve done it with partners on a free-to-air basis. We’ve done it ourselves on a free to air basis and we’ re willing to do it on a digital basis.”

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