Given the parlous state of the housing market, Home & Garden Television seems a prime candidate for the roof to fall in. And yet HGTV is drawing some of its biggest audiences ever, vaulting ahead of the Sci-Fi, History, and MTV channels this year. "People may not be buying or selling houses," says Brad Adgate of Horizon Media, which advises companies on where to put their TV ads. "But they're still renovating them."
Of course, HGTV has had to make a few improvements of its own. The network's programming increasingly focuses on glitzy shows that will attract new viewers at a time when HGTV is in as many homes as it is likely to get. Meanwhile, with revenue growth slowing of late--9.4% for the first six months of 2007, vs. 12.8% for all of 2006--HGTV has been signing up mass-market advertisers who prize the network's audience of affluent women.
HGTV's staying power is partly a testament to a five-year housing boom that helped make the network must-watch TV for house-proud suburbanites. House Hunters got viewers guessing which of three houses a couple would choose, while Weekend Warriors inspired Mr. and Ms. Fix-its to keep up with the Joneses. Marianne Mohr, who is updating her kitchen in Randolph, N.J., praises HGTV'S "great ideas." It's a source of "limitless inspiration" for viewer Leanne Keirstead in Franklin, Tenn.
To a degree, the channel is immune to the vagaries of the market. Whether home prices rise or fall, say network bosses, HGTV provides a voyeur's thrill. "It's the same as people going to open houses just to look," says Burton F. Jablin, who runs programming for the Scripps Networks (SSP) unit of E.W. Scripps Co. (SSP).
Then again, a shift in programming began a couple of years ago--just as the first cracks began appearing in the housing market. Case in point: My House Is Worth What?, a year-old show hosted by Kendra Todd, the real estate broker who emerged triumphant in 2005 from Donald Trump's The Apprentice. Each week, three homeowners improve their properties and then learn how the redos have boosted their homes' value.
HGTV also is putting on American Idol-style talent contests. In Design Star, 11 contestants grapple with interior design challenges. The winner gets an HGTV show. The network's highest-rated show ever, with 2.3 million viewers on average for a recent episode, Star this year is laying on the glitz by airing from Las Vegas. Sure, its audience pales next to American Idol's 28.6 million, but for cable it's a standout. "It's really our big vehicle for the year," says content strategy chief Michael Dingley, noting that the network built its Sunday prime-time schedule around Design Star.
Traditional advertisers like Home Depot, Lowe's, (LOW) and real estate broker Coldwell Banker still account for some 30% of ad revenue. But that's down from recent years as mainstream advertisers buy more air time. Executives say HGTV'S national reach--93 million households and counting--makes it attractive to mass marketers such as Procter & Gamble (PG) and Samsung Group, along with foodmakers ConAgra (CAG) and PepsiCo (PEP). The draw: women, who account for nearly 77% of viewers. "Affluent, upscale females watch HGTV, and that's the target we're looking for," says Mark T. Spencer, a senior manager at Dodge, which plans to buy time for the new version of its Grand Caravan minivan, which launches on Oct. 1
HGTV is tailoring shows for advertisers, too. Example: a "green home" it will give away next spring in a contest. Advertisers such as a flooring maker and an energy-conscious appliance marketer will get product placement on shows planned around the giveaway. "Audiences want to understand how to be green at home," says Jon Steinlauf, senior vice-president for ad sales. Marketers, he says, are keen to help.
HGTV is Scripps' biggest revenue generator--more than $511 million a year, or 20% of Scripps' overall revenues. With its newspaper unit struggling and new viewers increasingly hard to come by, HGTV needs all the curb appeal it can muster.
By Joseph Weber