Interview Date: Friday February 04, 2005
Interviewer: Steve Nelson
Collection: Legacy Collection
Note: 2017 Cable Hall of Fame Honoree
NELSON: Ken, let's just start out back when you were a kid. What role did TV play in your life?
LOWE: Extremely important role. I was raised in a rural area of North Carolina and my dad happened to have one of the first television sets in the neighborhood. So my early memories were of neighbors showing up literally sitting throughout the house to watch this little small black and white box and then these pictures flying through the air and it was truly a miraculous experience for a lot of those folks, the first time in their lives they'd ever seen television. I don't recall some of the early shows that we really saw sitting around the television, but I do remember it was a focal point. It was the talk of the neighborhood and so immediately at my young age it became this magnet that just drew me and I got hooked on TV very early.
NELSON: And did you ever think at that point that this was something you'd get involved in? Obviously it's an entertainment and a social tool that there it was, but did you have any early ambitions to be in the TV business?
LOWE: You know, I really did – media business in general. I was drawn to TV because it was my window on the world. I grew near the fictitious town of Mayberry, North Carolina, which was actually Mount Airy, North Carolina, but because of living in a rural area, growing up on a tobacco farm, you read a lot, I listened to radio a lot, especially out-of-market radio stations from New York and Detroit and Cleveland and the television was my mind's eye. It was literally my window to the world, so I got to see things and experience things that my mom and dad's generation didn't. They would go to a movie theater to see news reels and there it was right in my living room. So it had a tremendous influence, so much so that when I was about seven or eight years old I built a radio station there in one of the back sheds of the farm and along with some neighborhood boys we were able to jack up the power where it would actually broadcast two or three miles out into the neighborhood. Our audience was primarily cows and chickens; there just wasn't a big population. But I was hooked on it early and I loved radio, I loved television, and I knew even at a young age this is what I was going to do.
NELSON: So the FCC didn't come after that station?
LOWE: No, you know, Westfield, North Carolina was not high on the FCC's list at that time but it was a great experience. One of the guys that helped me build the station was a 45 RPM – it dates me, I realize, but those were the small records with the big hole – he collected those and so as popular music really started to roll into the early '60s, when I was about ten years old, we're playing rock and roll music and we had a rock and roll radio station and it was a tremendous amount of fun, but I knew then, I knew in my heart this was a business I wanted to be a part of.
NELSON: So you were dee jaying at that point?
LOWE: I did. I ended up working my way through high school and then college doing commercial radio. My roommate in college was a guy named Rick Dees who went on to be a very successful radio personality. I tried to convince him early on there was no future in that. Fortunately he didn't listen to me. But I always enjoyed more the management side and also in college my real goal, even though I was working in radio, was to direct movies and I did about eight or nine what we call "college" movies. They were 16-mm, 12-15 minute black and white features that you really just kind of cut your teeth on. My goal was to transfer to University of Southern California and go to the film school.
NELSON: Where were you at the time?
LOWE: I was at the University of North Carolina Chapel Hill, but out of that it gave me a very good understanding of A) how truly difficult it is to do movies and B) maybe that was not where my talent truly lies, so it pointed me more back towards radio and television and I continued to work in those mediums once I graduated from school.
NELSON: So what was your first job? You got out of school; did you look for something right away in the radio business or...?
LOWE: No, you know, all through college I was a radio personality and making decent money, much better money sometimes than folks I was in college with who were graduating going into certain fields of endeavor and whatnot. So I had a pretty solid job and I became a program director for that radio station. It was in Raleigh, North Carolina.
NELSON: While you were still in school?
LOWE: While I was still in school. So when I graduated I had a career lined up, and at that time I thought it was going to be – for the foreseeable future it would be radio, but ultimately I wanted to get more onto the television side, the production side. I had a real desire probably because of my background and wanting to do movies to get into television production. So radio, you know, I was a young guy, it was a great way to meet women, it was a hot medium, we got to MC all the great concerts and I met a lot of great rock and roll acts, but it was really – and I knew it at the time – it was not where I was ultimately going to end up for my career, but it was a lot of fun at the time.
NELSON: So how long did you stick with that?
LOWE: I was in radio through my mid to late 20s and then in 1980 I joined the E.W. Scripps Company, at that time overseeing their group of radio stations.
NELSON: So had you had any radio station management experience at that point, because you talked about you seeing yourself more on the management side of the business?
LOWE: I did. I moved over to management. I was overseeing a couple of radio stations for a company called Southern Broadcasting, which was bought out by Harte-Hanks Broadcasting and then I went with Scripps Howard Broadcasting in 1980 to oversee their radio group and also with the understanding that they would allow me to move into their television side at some point, and that happened three or four years afterwards in the mid-80s. I moved over to programming and marketing for the Scripps Howard TV Group.
NELSON: What did that entail?
LOWE: At that time it was everything from...
NELSON: This was for their television stations?
LOWE: Yeah, this was their television group, which was one of the older TV groups in the country. The Scripps put the first television station on in Cleveland, Ohio, WEWS; Cincinnati, Ohio, WCPO. WEWS in Cleveland stood for E.W. Scripps, the founder of the company and CPO in Cincinnati, the Cincinnati Post, which is the newspaper. So it had a great heritage in the broadcasting history. Don Paris who ran the broadcast group was a true genius. He was the one who hired Dorothy Fuldheim, one of the really great TV interviewers of all time, a great journalist, and really he created what became Good Morning, America. He started in Cleveland with the Morning Exchange and ABC came and studied that and launched Good Morning, America out of it. So it was a great broadcast group, TV broadcast group, a great heritage, and it gave me a tremendous learning curve in getting into the television business. Scripps was a big believer in local programming and they really gave me an opportunity to start doing local programming beyond just news and public affairs where we did a lot of one-off specials. We'd go into any one of out markets and do some specials that heretofore you didn't see that much on television stations, so it really whetted my appetite to get into more programming and kind of opened my mind up to what opportunities might lie beyond just TV broadcasting.
NELSON: Now in terms of these local productions, were you involved with the production side – producer, executive producer – or were they just part of the business that somebody else did and that you aired?
LOWE: Well, you know how it is, you wear many hats and actually I enjoyed it. I played camera man sometimes, I'd play director, I'd play executive producer, but ultimately I ended up being exec producer of most of the specials. It seems the crew is always more talented than me so somebody else could do a better job with the camera, with the sound, with the lighting, but I knew what I wanted and it was maybe back to my roots of when I wanted to direct movies, it was easier for me to direct and it was easier for me to produce than it was to actually have hands-on experience. I just wasn't that talented in those areas and fortunately I recognized it.
NELSON: So where did the shift come from being at the television group? What happened next?
LOWE: As the '80s began to wind forward – and I was also in charge of buying all the programming for the television stations, all the syndicated programming. I'd be the guy that'd sit down with Roger King and cut the deal to get Oprah, or with any of the guys at any of the major studios when there'd be a syndicated show that we'd end up buying. When you're buying for nine or ten television stations you have some buying power, you have some leverage. So I got to know those guys in that end pretty well, but I also began to get quite frustrated with some of the programming that was being brought to our stations. I felt in some cases that they were going for, in many instances, the lowest common denominator. I don't want to sound like I'm on a soapbox, but about the time they were bringing me the Morton Downey, Jr. Show and the Jerry Springer Show, I felt we were starting to take a turn for even below the lowest common denominator and I always felt that there was an audience for quality programming that aimed a little higher, but because we were in the production business, we were at the mercy of buying these syndicated programs, it was very frustrating. The other thing that really struck me was when the syndicators would get a hit, as in the case of Roger King, Roger's a friend of mine, but as Oprah became more powerful you found negotiations when the show was up for renewal very much on his side of the table. He had all the leverage and if you didn't want to pay a 10, 15, 20% increase, there was a competitor across the street who would be glad to. It was a valuable lesson for me because I knew that to totally be in control of your destiny you had to own the content and I truly believed that content was going to become even more valuable beyond just airing on a local television station or a national television network.
NELSON: Why did you think that?
LOWE: Well, it was quite obvious that media was going to continue to fragment. You know, the old saying is "We always tend to overestimate technology on the short-term and underestimate it over the long-term". I really envisioned a very interactive future where viewers would have more control over the programming, and part of that was just, I think, growing up in the era that I grew up in. Technology was forever changing. For anyone else that thought, boy, the 8-track tape is where it's going to stop, along came cassettes, along came CDs. You knew that it was just going to naturally happen on the video side. Scripps also owned some cable systems. We had about 700,000 cable households. While the cable guys were down the hall from me I picked up quite a bit from them just about cable systems and the technology. As a company we were constantly upgrading, building bigger pipes to the households, and if you sat and talked to some of the technology people and let them dream a little bit, the far-fetched world of interactivity and hundreds of cable channels in my mind was very much a reality. So while I'm sitting there programming our television stations, I said, "I've seen this movie before and it's called FM radio." I'm old enough to have been a guy that was on AM radio when FM came along and most people scoffed at FM. For one thing, it was formats that were narrowly targeted to just one category, be it all classical music or all jazz music or all country music, while on AM we were playing Top 40, we were playing a little bit of everything.
NELSON: Which was a lot broader in those days.
LOWE: Yeah, it was very broad. It was broad and FM was not. FM was targeted, it was niche and it was a valuable lesson. I remember thinking, okay, this is going to be competition but it will never, ever have any huge impact on AM radio. Well, the rest of the story is obviously it did and I saw the same situation with cable networks and how they were going to impact and fragment broadcast television. A lot of folks in the broadcast business at that time – I'm talking about the '80s, even into the early '90s – didn't foresee that, in some cases because they didn't want to. They were in denial, but if you go back and look at some of the early success in the cable network business it was a lot of ex-radio guys. Bob Pittman and Lee Masters, also known as Yarrow Mawn, his real name, had really made their mark in cable with MTV and VH1 and some of the early targeted, what people were referring to as niche networks. I thought these are very broad mass appeal networks. In those days, people didn't consider them that.
NELSON: Yeah, they were the narrow-band of the day.
LOWE: Yeah, yeah. In some cases it was just moving broadcast television over to cable, right? But really the future of cable in my mind all along was targeted, well-defined, 24/7 you get the same programming around the clock. The broader appeal, back to the old AM radio analogy, had no defined genre, it had no defined brand and if you look back and you look at the truly successful networks, cable networks, now sitting here as we do this interview, it has tended to be the ones that were news, sports, information. The viewer knew what they were going to get 24/7. So with all of that background, and then a little bit of a frustrated architect thrown in in having built some houses in different parts of the country as a moved around, avocation was clashing with vocation.
NELSON: Talk about that because I know I've read some interviews you've done and you and your wife would buy a house, fix it up – you'd be the architect, I think she was the designer/decorator. Talk about that experience and part of your frustration was the lack of information that was available.
LOWE: Well, it was quite obvious to me, it probably was to a lot of people, there was just nothing earth shattering, I think, about the fact that the MTV generation was growing up and as they did they were getting married, they were starting families, they were either buying their first house, they were buying a house to be remodeled, and it was just so obvious that those dots were going to get connected and as I built houses and moved around the country – and part of it was I loved the whole process, I'd worked with my uncle in high school who was a contractor, and it one point I actually thought about becoming an architect. I still love the whole process, but it's a very complicated process. I always tell people who have never built a house, "Get ready" because it's like taking a final exam with nothing to study and you're going to have all these questions and you're not going to have answers, or they're not going to be readily available, so the building process can be extremely frustrating. I remember I used to get a cup of coffee and walk down the aisles of a Lowe's Home Improvement Warehouse or a Home Depot and just talk to people. To me that's still the best research you can ever do, just ask people questions. I would ask them if there was a television program – I didn't even say a cable channel because that gets a little beyond people's imaginations – if there was a television program that was about this and about that, and people would say, "Oh, I would love to see that. I would love to have a resource beyond magazines, beyond books," because it was a television generation. So it didn't take a rocket scientist to understand that the MTV generation was going to be wanting something beyond their MTV and in my mind it was just obvious that the next iteration was a channel aimed at that category, at shelter.
NELSON: Well, you know, you say that it's not rocket science, yet a lot of people – I'm sure you heard this phrase before when you were launching – would say, "Who wants to watch paint dry and grass grow?"
LOWE: There was a lot of resistance.
NELSON: Yeah, because a lot of even the niche networks like MTV aimed more music videos at younger people or CNN with news, aside from the news stations everything else was just pretty much entertainment. You're looking at something that is informational and perhaps somewhat entertaining at the same time – this is in the early days, I know you're a lot more entertaining now – but maybe it wasn't such an obvious leap. People would say, "What kind of a network is that? We want to have a network with fun programming on it. Who wants to sit around and watch somebody drive nails into a 2x4?"
LOWE: That's a great question because I think a lot of people missed the fact that informational programming does not necessarily have to be non-entertaining and not fun. I remember an example I gave an early cable operator who asked me that very question. I said, "Have you ever been walking down the street and there's a massive constructions project going on and they're building a building and the crane is lifting the steel up and people stop and just look up and watch?"
NELSON: They build little windows in the fence!
LOWE: Yeah, almost with childlike wonder, and I said, "You know, as a population we are entertained by people who can do great things with their hands whether it's sculpting or building. Who of us doesn't enjoy watching a master carpenter actually create something just out of nothing?" Norm Abrams in the New Yankee Workshop, people just sit and stare almost like you're looking at an aquarium just to watch a guy with a tabletop saw. So I never really felt that the information we were going to be putting on to HGTV or into these programs was not entertaining. It was both informative, it could be entertaining, it was all your perspective, but remember, in my mind we weren't going for a mass audience. I think the one thing about HGTV that still surprises me to this day is how big an idea it's become. People ask me, "When you came up with the idea for the network, did you truly think it would become this mass appeal, this big a brand?" and the answer is no. It's not because I didn't think it was a big idea, it was because I think that anybody who creates something is more focused in the target and the delivery of it. If it works... if it's Starbucks it works, right? But I bet if you asked Howard Schultz early on did he ever think Starbucks would become the brand it's become, I think he'd probably say "No, I expected it to really super serve people who were really into coffee." I expected HGTV to really tap into the passionate people that were interested in this category. Now, as it turns out we made the network a little bit broader and early on that was one of the difficult tasks putting all of these under one brand, but it really was five networks in one. It was home repair and remodeling, design and decorating, hobbies and crafts, there was another category, and I think gardening and landscaping if I didn't mention that already, but basically five categories that we put under, if you'll pardon the pun, one roof because people have different interests in a home and people who are necessarily really fixated on home repair and remodeling, the 2x4s and sawing and nailing maybe are not as interested in design and decorating. So putting it all under one brand was a bit challenging, but I really felt at some time in the future you could almost break it apart and as fragmentation continued and depending on the technology, that one network could possibly become five different networks that are even more super-targeted. So in my mind it was a narrow, fairly defined, focused delivery method that hit a bull's eye.
NELSON: It was based upon the growth of technology and continued fragmentation, which is really what your vision was. So you're harboring this idea, you're wandering around the aisles of Lowe's, you're sipping on your coffee, you're asking people questions. When did you get up the nerve to broach this notion to Scripps? It's one thing to talk to some guy in the aisle at Lowe's – and by the way, I should say that when we talk about Lowe's we should make it clear that there is no connection.
LOWE: I'm still trying to hopefully find a connection, to go to North Wilkesboro and claim my rightful place in the Lowe's family, but no.
NELSON: But you haven't discovered it yet?
LOWE: No, no, no. My dad keeps saying "You're the Lowe's of the tobacco field dynasty, not the home improvement."
NELSON: I just wanted to get that on the record that there was no connection.
LOWE: No, no relationship, unfortunately.
NELSON: Okay, so as I was saying, you're harboring this idea, at some point you decide, "Okay, I have to make a pitch."
LOWE: Well, during the '80s it was a hobby. I'd get an idea for a show on my network, which existed in a cardboard box in my basement and it was a real outlet for me – "Oh man, this would make a great show on the network" and I'd write it and toss it in the box, somewhat therapeutic. I never really envisioned that box becoming reality.
NELSON: This was a hobby.
LOWE: It was a hobby, but I kept saying to my wife and anyone who would listen, "Boy, you know, I don't understand why somebody hasn't launched this already." It was just so obvious. My wife, at one point, said, "Will you just please stop talking about this? Enough already." But a funny thing happened on my way to my television career. There was a change in management at Scripps. My boss was dismissed and basically I was to be let go and it was one of those life changing moments that I had not expected. You rationalize and say, "Why me?" and just the wrong place at the wrong time, but it truly gave me the opportunity to say, "You know, maybe now's the time to try to take that cardboard box to reality." So it really was about getting fired.
NELSON: Were you still on the job at this point?
LOWE: I was still on the job.
NELSON: But you knew it was tenuous.
LOWE: It was tenuous and as a matter of fact, my boss at the time, Frank Gardner, who came in to take over the television group from the gentleman who was fired that I'd worked for, he and I sat down, we'd been friends for a long time, and he said, "I'm not sure there's going to be a position here in the reorganization," and I said, "You know what? I'm not sure there should be. I think we agree and let's make it easy on each other. I've got other things I want to do. Work out a nice settlement and I'll be on my way." I think Frank was somewhat shocked by that.
NELSON: It's too easy, right.
LOWE: Yeah, this is too easy. What's wrong? Over the course of the next several weeks while we worked out the separation package, if you will, I asked him, I said, "Would it be possible that the company could send me to a cable convention, the NCTA?" and he said, "Why would you want to go to that?" I said, "I just always wanted to walk around that floor." He said, "Sure, no problem. That can be part of your package." One thing led to another and we started talking. Frank was a long-time friend...
NELSON: How did you know him?
LOWE: He'd worked at Scripps; he'd been a general manager of our Cincinnati television station and more or less reported up to me on that side. So he'd reported to me at one point, I was now reporting to him, and a great human being. Frank finally one night, I think he'd gotten enough wine in me, I'm not sure, convinced me to tell him what I was up to. I'd been very quiet about it because I didn't want to ever have in anybody's mind it was a conflict of interest just because I'd kind of worked on this idea. I never worked on it on the job, always at home. So to make a long story short, when I told Frank what I was planning to do, to go out and try to raise some money to start this cable network he said, "You know, you can't imagine, but Scripps, I think, would really be interested in bankrolling this. Why don't you stay here and I'll help you," which he did. Were it not for Frank Gardner there would be no HGTV.
NELSON: And you weren't expecting this? You weren't gearing up to make the big pitch to Scripps?
LOWE: No, Steve, probably one of the last companies I would've pitched would've been Scripps and part of it was it just wasn't in the culture at the time. We were a company that had been accustomed to acquiring assets. You buy a newspaper and you get a printing press and you get a building. You buy a television station and you get a license, you get a tower. To actually invest in something that A) didn't exist, was in one guy's head, you didn't need a license, you didn't need a franchise, you just leased satellite space and then went out and sold it, it was so in my mind...
NELSON: No physical assets.
LOWE: Yeah. It was something that would be very, very hard to explain to that board. As a matter of fact, when Frank told me he said, "Do you have a presentation?" I said, "Well, I'm working on it," I completely changed the presentation to gear it to the board. I took a newspaper and took sections of the newspaper and on the front section I put a big label that said CNN, the sports section CNN, and the comics were the Cartoon Channel, and I went through the whole paper with the board and I said, "Okay, think of a newspaper as cable networks and the sections of the paper." I pulled out the home and garden section and I said, "For example, here's one that nobody's done a cable network on," and I built two magazine racks and went out and bought tons of magazines in this category, in the shelter category, in the home category, from long time publishers like Meredith, Conde Nast, Hearst, and I put all these magazines on two big racks, we rolled it into the board room ahead of time and I covered it with some sheets and at the appropriate time in the presentation I pulled the sheets off and said, "This is over five billion dollars in advertising revenue." I really had to display to the board that there was something to go after and they understood, okay, this is all in print and there's nothing on the television side.
NELSON: And this is a very defined and heavily exploited marketplace. They understood that.
LOWE: Exactly, exactly. They understood that. They understood that it really wasn't being targeted from a video standpoint. There were a few shows in those days – This Old House and New Yankee Workshop and others rumored to be starting, but as syndicated shows, but not a cable network dedicated to it. Much to my surprise, the board okayed it. We asked for 25 million dollars to start this network. The board approved and I remember Frank and I walked out of the board room...
NELSON: They approved it right there?
LOWE: Right there!
NELSON: That must have been a shock.
LOWE: It was a shock.
NELSON: You expect the "Well, we'll take this under advisement and we'll get back to you."
LOWE: Yeah, "We'll get back to you, kid. Don't call us." Frank and I walked out of the boardroom and there's a movie The Candidate with Robert Redford and Peter Boyle where Peter Boyle as the campaign manager says, after he gets elected, turns to him and says, "Okay, now what the hell do we do?" Well, Gardner turned to me after we walked out of the boardroom and he said, "Oh my God, now what the hell do we do?" I said, "We launch a cable network."
NELSON: So the board says, "We're going to give you 25 million bucks." Do you have a business plan? Do you know what you're going to do with this money?
LOWE: We had a business plan; we'd actually been fortunate enough to be introduced to a young man, Brian Owens, who was one of the guys that really developed the E! Entertainment Channel. Brian had since left the business and I think was teaching at the University of Texas at Austin, but this wonderful renaissance type guy who for some reason took a liking to Frank and to me and probably just out of pity and mercy said, "Let me help you guys," and really helped us develop a business plan. We really didn't have any experience in the cable network business. Our experience and my knowledge base was greatly driven by what I was able to garner from the guys that ran our cable systems down the hallway and trying to pick up as much information as I could from them. I talked to a lot of people. I tried to become a sponge about the business. I had a pretty good handle on production, production costs and amortization and putting together a cable network. I had absolutely no knowledge base on how to get it launched and how to get it distributed. So we put a business plan together. In hindsight, it's the old cliché, Steve, probably had I known how difficult it truly was I would never have done it, but naïveté is a wonderful motivator.
NELSON: Entrepreneurs have to be naïve, I think, to some degree.
LOWE: Oh, absolutely, and you have to have this just unbelievable faith. In hindsight, I don't think at the time I realized it, but a lot of doors were closed in my face, a lot of people scoffed at the idea. One of the big turnoffs was the fact that the channel was targeted to women. Up to that point in the cable network business many of the channels were male driven, for different reasons, but let's be honest, early on it was pretty much a male dominated business, both on the distribution side and on the content side because many of the distribution partners ended up driving content. John Malone was probably the best example. I'm not saying that there was necessarily this point of view that programming has to be male dominant, but female programming – and by that I mean dominated by programming towards female on a network – was not found very often. One of the things I saw as a huge opportunity was to go after the female audience and I even used to pitch to cable operators "I know you guys think that the man is making the decisions in the house, but guess who's writing the check most of the time and guess who's suggesting what should be viewed." So HGTV, early on when operators said, "You know, Ken, I'm not real big on this channel because it's going to be a chick channel," and I couldn't resist, I said, "No, no, we're not going to have any agricultural, there's not going to be any chickens," and he said, "No, no, you know, chicks, women." It was just so out of his frame of cable networks that he'd launched. You launch a sports channel – bingo! You launch a news channel...
NELSON: They had Lifetime at the time. So I guess that's it. We've got our channel for women, we're done with that.
LOWE: They had Lifetime, but you know, even in those days as I recall, I don't think Lifetime, while it was targeted to women, a lot of health programming on in the mid-day, I don't think it was even branded as a network for women. It delivered more women but it wasn't a clearly defined women's channel. It eventually became that. In '93, '94, a women's channel, if you will, or a channel that was obviously going to deliver more women was a bit unusual so that in and of itself was a bit of a challenge, but the category was a challenge. I can't tell you how many offices I walked into pitching the idea to distribution partners and there were not television sets.
NELSON: In their office?
LOWE: No. There was not a lot, at that point, and I'll just use Scripps for example, I'll use our guys, it wasn't so much about the quality of the channel or what was on it as much as it was the deal points and what are you charging for it and how many minutes an hour do I get? And again, Steve, that was like a foreign world. I was on another planet. Fortunately fate played such a role in the success of HGTV, I was introduced to Susan Packard and Susan with just an incredible leap of faith believed in the concept, believed in the idea and was the first person that I hired because she came in and quickly put the house in order and started the whole distribution process which was totally lacking at that point. I had a pretty good idea of what the channel should be, the programming should be, the promos, the interstitial, but was totally out to lunch on the distribution side.
NELSON: Now I've heard that you're a pretty persuasive guy, you do a good presentation, and I asked Susan this, but I'm trying to imagine the situation where she's got a very good job, she's working for CNBC which is growing rapidly, it's an exciting area, finance – this guy comes along from the middle of nowhere with a network with nobody working for it. It's just him. Okay, maybe at this point you've got the money but that's all. What is it that you said to her that got her, or was it that she just got it because she obviously jumped on board into a ship with no sails and no oars practically.
LOWE: Well, Susan's a very bright lady, she's very perceptive and you're right, she had a great job, a great reputation. She was highly regarded in the industry, she was loved at NBC. She was working there with David and the folks at CNBC and they were launching America's Talking, which became MSNBC. I'm sure Susan is the best person to answer that. From my standpoint...
NELSON: Yeah, from yours.
LOWE: She got it. She really got the category. She understood that this was a hole, that this was an area that could be served. But the other thing that Susan and I truly clicked on was the fact that it was not about creating a cable network. It was about actually creating a culture and a business and a place that we wanted to put our imprint, if you will, on the people that we hired, the way we grew the organization. I really think at the end of the day that's why Susan and I hooked up. We saw eye to eye in that one very critical area because we were at the point in our careers – I'm a little older than Susan but she's wiser – she knew and I knew – and I remember her saying, because she'd worked for HBO and she'd worked for NBC, she said, "I don't know how many start-ups I have in me. Ken, you don't understand, these things are extremely difficult and they're very draining. The rewards are incredible but starting up a cable network from scratch is a really daunting task and I've done it a few times." She now had a young child; she now had a very successful career.
NELSON: And she was working and living in her hometown.
LOWE: Yeah, in Detroit. CNBC allowed her to work there. The whole question of having to move and her family was there, but when I think back about the leap of faith she took, I probably didn't completely appreciate it at the time. Now just talking about it I get chill bumps because I don't know that I would have done that and I'm a pretty persuasive guy. But she did get it. She really, really, passionately believed that we could create a culture and we could create an environment and we could grow a company within a company that would matter and make a difference, and I think that's why Susan joined. It was a big reason why I wanted to do it. So we hooked up on that. We've since become extremely close friends. She's like a family member and when we look back and talk about it now there's a lot we're proud of, but the people, the culture, is right at the top.
NELSON: How about other people that you brought in early? I've been talking to some of them today, but again from your point of view, Ed Spray?
LOWE: Well, you know, a good entrepreneur and anyone who wants to start a business, if you're going to succeed you hopefully have to be smart enough to understand that you're going to have a lot of great people. Each and every one of them should be better than you and in that area, Steve, I hit the mother lode. Ed was someone who I really didn't know; I knew his reputation. Ed had a similar job to mine at CBS where he was over the CBS O&O stations in programming and marketing and when the syndication salesman would call on me it would usually be, well, you know, I've got to charge you more because I just called on Ed Spray and he beat me down on prices.
NELSON: He had leverage.
LOWE: He had leverage. But I always had heard great things about Ed; I respected his abilities, but Ed had left the business. He was actually teaching at the University of Syracuse and Frank Gardner, who I mentioned earlier, and Ed had worked together at KCBS in Los Angeles and early on my desire was basically to have Ed's job. I did not want to be president of the network. I wanted to program it. I wanted to let somebody else worry about the headaches and fool with the distribution and put together ad sales. If this was going to be my network let me just do what I want to do, programming. Frank walked in one day and we'd interviewed a lot of people, mostly because nobody really wanted to take the leap of faith and go with this network and run it without some guarantees, Frank came in one day and said, "Well, it's settled, you've go to be the president." That was really not what I wanted to do. I wanted Ed's job. I said, "Okay, I'll do that but we've got to have somebody that's like my right hand to do this because this is what I want to do," and he said, "There's one guy I know in the industry that's hands down and that's Ed Spray, but he's at the University of Syracuse, he's teaching, he's very happy." So I went about convincing Ed to give up, as Ed always reminds me, tenure and join a start-up network. It's a great story because Ed came down to Cincinnati, I gave him the presentation and he was hooked.
NELSON: Well, he told me about the sheets coming off the magazines again. I guess you kept those sheets handy.
LOWE: Well, you know, anything to do a little song and dance. The presentation was important because it was about an hour presentation. It was very deep. I planned the network out for at least ten years including spin-out networks and call centers. I had a lot of time to think about it. There had been a lot of ideas that had gone into that cardboard box. Until, Steve, I started digging into the box and looking through I didn't realize how rich and deep it was, but because it was accumulated over a period of time and I'd had time to think and re-think, I really had unknowingly put together a pretty broad, deep plan. It wasn't just a cable network. It was actually a category buster, if you will. It was aimed at moving beyond just being a cable network and that's why early on it was essential that we own the content. I knew we'd probably move it to other platforms. Just because you're in FM or television broadcast or cable networks, somebody else is going to come along, there's going to be another technology, so don't limit yourself to just that one platform. That was our mantra. And the other thing that was no question was interactivity was going to become more of an important piece of the puzzle. I didn't know at what time. We actually were way ahead in some areas in thinking that. Technology, as we sit here ten, eleven years later, is just starting to catch up with some of the ideas we had on paper there, but Ed got that. The great thing, I think, about Ed going back and teaching and getting out of the business is all of the sudden he's back with 19, 20-year-old kids who are of a different mind, a different mindset, and it just completely opened Ed's mind to new ideas and ways of thinking. So Ed had actually, unbeknownst to me or Frank, been teaching a course on cable networks in the future, so I was preaching to the saved somewhat. Ed played hard to get, told me there was just no way he thought he'd be interested in this job, and as fate would have it one weekend I called him at home in Syracuse and I got his wife, Donna, on the phone and I introduced myself and Donna said, "Oh, yeah, I know Ed's been talking to you about this job and I think this is great. I can't wait to get out of here. We've got 22 inches of snow on the ground. We're ready to move!" So when I got Spray back on the phone I said, "Hey, I got you! Donna's giving me the inside."
NELSON: You found your closer there, right?
LOWE: Yeah, I did, I did. Ed came onboard, and again, back to Frank Gardner – as I said, without Frank there would be no HGTV. Frank had also had a young man who worked for him before Frank came back to Scripps at Fox News in Los Angeles, this bright young man out of Harvard who just was, as Frank said, setting the newsroom on fire with his creativity and his genius, by the name of Burton Jablin. We brought Burton in at that time and Burton was kind of on sabbatical. He was off climbing mountains and having a good time. As a young man that's what he should have been doing, but we were able to convince him to come on board and join the programming team, and even though Ed an d Burton had never met until after they were both hired, boy, what a team they became, like a hand in glove.
NELSON: Now, in terms of – if you'll excuse the term – luring Burton in, you said he was off climbing mountains somewhere, what did you have to do to persuade him to join up or did he just take the leap quickly?
LOWE: I don't think Burton could have been convinced, and by that I mean I think Burton either had to really get it and be passionate about it and want to do it or he was going to move on to something bigger and better, but fortunately for us he did. One of the brightest guys I've ever had the pleasure of working with, a true genius, and he was intrigued by the challenge. He'd worked in television news, he actually was the editor of The Crimson when he was at Harvard, he had a journalism background, but he had this curiosity about him like a lot of great journalists do and he was curious about this whole cable network industry and I think that brought him in and wow! What a marriage made in heaven. All these people were the right people, right place, right time, but I think Burton especially. He's just blossomed and today as we sit here he's not only president of HGTV, but oversees all of our cable networks.
NELSON: Now it's interesting that other than Susan these other names you've mentioned, yourself and Burton and Ed, really didn't come from a cable background.
LOWE: No. One very important person that did was Mark Hale. Mark we met when we were touring E! one time with Brian Owens. He got us a tour. I knew we wanted a facility that in my mind we could at least shoot some studio programming just to keep costs down. A lot of this programming could and should be done in studio, demonstration type stuff, and we were very fortunate in luring Mark Hale out of E! in Los Angeles to build the facility that we're sitting in today, which is state of the art in every way. But Mark had cable background experience and that was very crucial because Susan needed someone on the operations side that understood delivery, understood the satellite business, understood quote unquote, if you will, the vernacular. So we had in the right places the cable experience that we needed, but really on the programming side I think we had great minds in Ed and Burton and Kristen Jordan and people that came on early to really create the right content. They weren't wed to necessarily a cable system per se or a company that was trying to launch a channel because we had distribution systems.
NELSON: Now you mentioned the facility that we're sitting in which actually at least part of it was here. You did a deal very early on for a production company here in Knoxville which became key to your growth. Talk about that a bit, the Cinetel.
LOWE: Well, it was important to me early on when I realized the board was going to give us the money that the network be in a location where the employees could actually experience the category. They could own a home, they could have a backyard, and I wanted it to have four seasons. I wanted the network to live in a place that actually reflected most of America. I also didn't want it to be in New York or LA and that's not a knock on either city but I knew there would be a certain amount of distraction. I also knew we had limited funds. So in my mind all along I thought, my true prejudice showing, well, let's go back to North Carolina.
NELSON: I was going to say, you didn't fall very far from the apple tree.
LOWE: We actually looked at... Dino De Laurentiis had a studio at that time in Wilmington, North Carolina where Dawson's Creek was shooting. We actually went down and took a look at that. As it turned out things didn't work out, but as fate would have it this particular facility in Knoxville, the owner, the guy who had built it, a guy named Ross Bagwell, a true, true, genius, was approaching the point in his life where he thought it might be time to look at exiting and actually had a deal with Multimedia to sell it and fortunately that deal fell apart in the eleventh hour, we came in, bought the facility. The facility at that time was just a small factory cranking out cable shows. They were doing America's Castles for A&E, they were doing several home and garden shows for Discovery, for The Learning Channel, they were doing a lot of programming for the Nashville network, and they'd done programming for Nickelodeon. I was fascinated. They had a music publishing department; they were actually shooting on film. It was fascinating that you could have this kind of facility sitting in of all places Knoxville, Tennessee, and then I started to think about, well, wait a minute, we, at that time, owned the cable system in Knoxville. We had 100,000 households; we owned the newspaper in Knoxville, Tennessee. There was a lot of interesting technology research going on just over the hill in Oak Ridge, Tennessee, IPIX, the 360 degree internet video streaming and digital search pictures was created just down the road, and other things, and all of the sudden it started making sense that this might be a good place to place the network and certainly people could own homes. The University of Tennessee provided a rich educational environment as a great funnel, and then Whittle Communications, at that time – folks who remember back when Chris Whittle, who'd been extremely instrumental in creating a cutting edge content technology company – unfortunately was going out of business in Knoxville. Knoxville had happened to be his hometown, and we benefited a great deal by picking up a lot of those people. So again, fate just kind of pointed its finger at Knoxville and we ended up here and thank goodness we did. It's turned out to be one of the better moves we made overall.
NELSON: I assume during this period that there's some kind of reporting back that you have to do to the Scripps board? You've got their 25 million bucks; you've got to tell them something once in awhile.
LOWE: Well, you know, now the truth can be told, years later and with the network being a success, but Frank used to say to me, he said, "Do what you have to do. Get this network up and get it launched. I'll take care of the corporate guys here. I'll run interference," because the last thing we wanted, and there's no real knock here, but we didn't want corporate meddling, if you will, which is true in a lot of companies where "we'd like to take a look at this programming, we'd like to do this, we'd like to do that", all good intentions and hey, if you're the parent company and you've got 25 million dollars on the line, why shouldn't you?
NELSON: With a guy that's never run a network before much less started one!
LOWE: Yeah, right! Never mind that, never mind. But Frank was wonderful. He knew that we had the vision, we had the people, this thing was going to fly, but leave him alone. So Frank ran interference and did a masterful job of that, and believe me, we were very, very disciplined, both fiscally and also strategically, but we did have to go back pretty quickly and ask for another 50 million. It eventually became 75 million, but that...
NELSON: By the time you went on the air?
LOWE: Yeah, but that became actually easier to ask for because we'd really gone in, Steve, back to the business plan and our naïveté, we really hadn't built a model out to the degree it needed to be in the business plan and once we realized that we were on to something we went back to the company and said, "Look, it would be better if we could do this. We need more shows in this area." And then after we launched we were just blown away by the feedback, the viewership, and it was apparent that the programming we had was going to burn out very quickly. We'd had a high repeat pattern on, like a lot of cable networks do when they launch, and we quickly realized, you know, we've got something here so let's not burn it out, let's funnel some more programming in. So the company eventually told us we could spend up to 75 million. The good news is we never reached that amount. We turned black before we spent the entire 75 million. We actually turned black, profitable, in about 3 ½ years. The business plan called for 5, so all high-quality problems.
NELSON: That's actually fantastic when you look at start-ups. Can you remember the day you went on the air? You'd been having this dream now for years, driven people crazy with it including your wife, so what was your reaction when you're on the air? What were you thinking? You can actually see it on the TV screen.
LOWE: That's my most memorable day, point, mile marker in the past x number of years from the creation of this network, and it's interesting, I remember there were cameras there that morning, television stations were covering it, although not that many because "there's a cable network being launched this morning towards home and garden – oh, who cares".
NELSON: And besides, it's cable and we're broadcasters.
LOWE: Yeah, we're broadcasters. But we did have some local coverage and our paper covered it, but I remember one television station, and it was 7:00 in the morning and we were exhausted. Anybody that knows when you've got that start/finish line drawn and you're going to launch that network, and we had to get it launched before the end of 1994 because at that time cable operators had been allowed to pass through an extra $1.25 in additional programming expenses to consumers, however to be included in that $1.25 as one of the cable networks, you had to be on the air in 1994. We bought this facility; we closed on it on April 1, 1994. We launched the network in December with, I would say at that time, Steve, 80% original programming. So it was a freight train right to the launch, so we were all exhausted, but you know, you're on an adrenaline high. But somebody stuck a microphone into my face that morning and they said, "What does it feel like? What's it feel like to have your dream come alive, to have this network launched?" And I remember my answer, I said, "You know, I'm a bit melancholy because today it went from being a dream to a business. It'll never be a dream again; it will always be a business." And there was a bit of sadness. There was never going to be a time when I'd throw another idea in the cardboard box. There was never going to be a time when everything was leading up to that moment. Now on the other hand, I was exhilarated. I mean, how could you not be?
NELSON: Of course!
LOWE: But it was a strange feeling and I'll never forget it.
NELSON: These two competing feelings.
LOWE: Yeah, and really it's that old line about the creator, the originator, the entrepreneur, sometimes they can never stop creating because they don't want it to become a business. You almost don't want it to become a reality because the dream ends and the business begins, and believe me, I welcomed that because I thought it could be a great business, but in my heart of hearts it was a more emotional difficult day than I thought it would be.
NELSON: You just thought it would be congratulations, break out the champagne.
LOWE: Yeah, yeah, and I remember Frank and many of us were very emotional about it, as you would expect, and maybe it was just because we were all exhausted but it was an interesting day and certainly one, boy, when they finally devote my life to one paragraph that would be the one thing I'd have to say that the highlight was the launch day.
NELSON: You talk about the dream being over and the business beginning, but this business has also generated subsequent dreams that became additional businesses with more networks, an incredibly successful website and you've got the vision of VOD and of course you've always been interested in this new technology. So in fact, the dream isn't over. You're still motivated by the new things to be done. It's not just a going through the paces and cranking it out.
LOWE: No, it's a good point and if there's anything that I think I've contributed it's the fact that I have this restless pursuit of not allowing it just to stop here. I can remember, it was a week or two before launch and Ed Spray shows up in my office one night at midnight and he's really angry at me because I'd come up with two or three more ideas about some things we could do, some other businesses, and I remember Ed stomped into my office and said, "Would you just please stop creating long enough for us to get this network launched?" But gosh, there are so many ideas. As we sit today, it's interesting that while we're taping this just yesterday we had a business development meeting and just a couple of weeks ago we launched HGTVPro.com, which is really an offshoot of HGTV that's aimed at contractors, plumbers, landscapers. It's the business to business side of the shelter industry. It's a broadband, internet delivered streaming video business that's really geared for the next generation in the building industry, but that's something, HGTVPro, that we announced in 1995.
NELSON: I thought I'd heard that before.
LOWE: But the point being, it's taken this long for technology to get to the level of where the idea can become reality. So there were a lot of things in the hopper, Steve, ideas that were there in the original plan for HGTV because as I said, it wasn't to be just a cable network, it never was. My dreams and aspirations were far beyond that. HGTV was merely the entry point into the shelter business that if successful and had brand credibility, which was why it was so extremely important that we didn't do product placement – Scripps was a company that I'd worked for for a long time and had really been burned into my head that there's a separation between church and state, that this is a journalism company. You never mix editorial with advertorial. There was to be a line drawn, and I strongly and passionately believed that when people turn to this brand they needed to trust it, they needed to say "that's information I can count on", it's not being prejudiced or biased because some sponsor has to have their products in there. Early on, I've got to tell you, we walked away from a lot of business. When I did the first deal with Lowe's, and I did the first deal with Lowe's Home Improvement Warehouse because I didn't have a head of sales at that time, they basically said, "Look, if we can't put our products in the shows you don't have a deal," and believe me, this was a big deal. Lowe's was really very visionary led by a gentleman named Dale Pond who understood that truly this network was probably going to work and he wanted to be the first in, but they were using leverage to do product placement and we wouldn't do it, we walked away. We eventually did a deal because they agreed to come to the table without product placement, but it was essential that people could trust this brand. They knew that we couldn't be, if you will, bought off. I'm not sitting here suggesting that product placement is not a good idea and doesn't work in certain places. It's much easier in entertainment, it's much easier in movies, but when your network is based on credibility and information and take-away information where there's the cable network, the internet, mobile phone, whatever it might be, PDA, that information has to pass the sniff test. It has to be credible information. What we did is we created a call center because we knew people would have questions about it when you don't necessarily give a brand name or you have a product name that almost begs people to say well, what is that? So we set up a call center so people could call in and get the information. We wanted to be viewer friendly, and believe it or not, in 1994 that was unusual. Cable networks by and large didn't really encourage interaction with customers.
NELSON: It was one-way. You sit back and watch our shows.
LOWE: I wanted interaction from day one. We were an interactive network. I wanted it to be two-way. I really did believe... and I cannot tell you I was visionary enough to understand the impact the internet would have because in those days we did 1-800 numbers and postcards. The internet was not distributed deeply and widely enough where we could rely on just emails. It eventually happened a few years later. But it had to be interactive. It had to be a network that viewers felt that they not only could sit back and watch but they could talk to and we'd listen, and early on we put promos on the air showing real people. We'd go out and go to these home shows and let people talk in their language what the network meant to them. We had instances where people would call us and say, "My sister lives in Seattle; they don't have the network up there yet. I'm taping shows and sending them to her so she can see." The word that we got early on, constantly, from Florida to California to New England was "I'm addicted to this network". I knew we were onto something, Steve, right out of the box because the feedback that we were getting unsolicited was "Finally, finally, somebody's got a network for me." It was primarily from women but there were a lot of men, too, and a lot of that was built around what we also were very adamant about and that was this was going to be a network that didn't get too cute. We weren't going to allow profanity, we weren't going to rely on sexual innuendo or some of the early easy tricks to pull in some viewership. We wanted to raise the bar, we wanted to have a higher standard of programming. I don't mean to sound like I'm standing on a soapbox, but it was very important to us and that also resonated with viewers. Early on we'd get calls that said, "Thank you, finally a network that's not attacking my sensibilities, that I can allow my children to walk in the room and not have to flip the channel." You can't even always say that about the 6:00 o'clock news because of some of the images that come through.
NELSON: Not these days.
LOWE: So, believe it or not, it was a point of differentiation. I don't think a lot of people thought about it in those terms, but we did and we were conscious about it. So, credible information, you can trust us, we're never going to surprise you, and I think those are some of the big reasons that the network immediately connected with people and became a very passionate brand for a lot of people. In the marketing world, and in the creative world you can't ask for better than that.
NELSON: Passion around a brand.
LOWE: Passion, yeah.
NELSON: How about from the operators' standpoint? I know that you went on the air – we're just getting back to that moment in time – 6 ½ million subs, something like that, 6 million. Where did those come from since you seem to have run into a lot of resistance out there, at least initially? I know there was very rapid growth after that, but where did those first 6 million subs come from?
LOWE: Well, we used our retransmission consent of our ten television stations at that time, and at that time, the television industry, I think, was really of the opinion in general that we were going to quote unquote get paid for our television signals. Being a company that also owned cable systems and hearing from the guys that ran our systems I was pretty well convinced that was not going to happen.
NELSON: They weren't going to pay anything. You, who knew the cable business, knew that was not going to happen.
LOWE: Exactly. "So we've been getting these signals free for 25 years and all of the sudden you want us to pay you?" It just wasn't going to happen, and the broadcasters, in hindsight, while I think CBS led the charge, were not really united in that, and by that I mean ABC broke early, Cap Cities broke early and ABC said, "Okay, we're going to launch ESPN2 through retransmission consent."
NELSON: Give us carriage instead of bucks.
LOWE: Yeah. No money, but it'll just be a barter deal. Well, that left all the ABC affiliate stations, and we had six at the time, or five at the time, really kind of on their own. The O&Os have cut this deal, the network has cut this deal, and shortly after that Fox did FX. Of course NBC announced America's Talking and that became MSNBC and really CBS didn't have an idea. A great untold story is we were this close to partnering with CBS. CBS was going to own HGTV.
NELSON: Was this before you went on the air?
LOWE: This is before we went on the air. We were going to do a retransmission consent deal with CBS. Peter Lund was the president of CBS at the time, a good friend. We came very, very close and the deal fell apart in the eleventh hour, thank goodness, but retransmission consent was a wedge, it was a tool, and it was at least one that got us into some MSO offices and signed some deals. There were some operators early on that really did get it. They believed in the concept. Rob Stengel with Continental Cable at the time was one of those guys who stepped up, and actually Amos Hostetter and Rob really helped us. Continental Cable was, I think, the first distribution deal we signed. Once you broke through, once you got in the club, once you had a deal – Fred Dressler, shortly thereafter, at Time Warner. But again, it was built around retransmission consent and that leverage, but we were the only independent broadcast group that was able to pull that off. We were fortunate to have a viable cable network idea, and that was another thing, Steve, that probably prompted me to really think seriously about staying with Scripps because I knew, having run the broadcast group that we really didn't have a plan for retransmission consent. It was driven by Frank, so that tool helped get us in the door, get us some early distribution deals. They were not easy and our rate card was embarrassingly low, but in my mind it was not about trying to get a lot of sub fees, it was really about getting this network out there. I really felt once we got it out there and people saw it, it would drive its own distribution, and that's to take nothing away from Susan and her incredible team, but when you do have a product people want...
NELSON: Big difference.
LOWE: Big difference. The other thing that helped – and if you go back and look at the history of the industry – was when Direct TV and USSB came along and there was an alternative, and we were fortunate enough to get a deal done early on with Direct TV. Then it started appearing in marketplaces and we got some buzz and that got some cable operator's attention and then the network just kind of took off and it made it a much easier sale to the MSO community.
NELSON: And when you say "took off", give us a sense of what your growth was in the few years after you got launched.
LOWE: I think to the best of my memory, I think within four years we were up to 40 million.
NELSON: Which is phenomenal.
LOWE: Which is phenomenal. I think Home and Garden and History, as I recall, we were kind of neck and neck in growing together. History had the luxury of A&E as a big brother, if you will, to help push it along. We were a stand alone. We were on our own. But one of my favorite lines is one day somebody came up to me and said, "You know, I was one of those people that used to say I want my MTV, and now it's I want my HGTV." So that generation, I think, really helped drive it. We did a lot of promotions with advertisers. Lowe's, for example, partnered with us and they actually would go into cable operators and spend local advertising dollars on our two minutes if the operator would launch. We had some very innovative grassroots promotions. Hancock Fabrics had petitions in their stores where people could come in and sign petitions that would be taken to local MSOs to get HGTV launched. We really did a lot of things that other cable networks didn't. We had to. We were a stand alone, we weren't all that respected, we weren't known, but we were quietly building this reputation. Like Butch Cassidy in the Sundance movie, "Who are those guys?"
NELSON: Knoxville where?
LOWE: Yeah, then people would always say is this Nashville? No, it's Knoxville. But we quickly built a reputation of quality original programming. Customers, viewers, liked this thing. They're giving great feedback and we used that to our advantage and then Susan Packard just built a phenomenal distribution team, she really did, and those people went out and did their job. They got this network launched, and where it got launched it was immediately viewed as a quality network and the operators would tell us that. After awhile, it was most interesting how the tables turned. The operators would say, "We're pulling for you. You're not one of the big guys; you're not one of the big groups. We like you guys and we like your content and the viewers like it." So things started breaking our way, and back to your line, Steve, about passion – when you have people passionate about a brand then it makes your job a lot easier.
NELSON: Given the fact that at least initially there were some struggles getting it off the ground, getting it on the air, getting advertisers on, was there a moment in time that you can recall thinking, okay, we're really starting to hit it now. We're really going to succeed. Or was it just a big blur?
LOWE: Listen, I'm a paranoid entrepreneur, I'm not sure we've still made it.
NELSON: Well, I think you've got to accept that. Let's take that as a premise, you've probably made it at this point.
LOWE: No, seriously, the first few years I was still constantly looking over my shoulder. Who's going to launch against us? As I recall, just before we launched Discovery announced that they were actually going to do a home channel in their digital launching of networks when they were launching Wings, and actually did end up launching a home channel, but early on they were more focused, I felt, in coming right after us, and again, as fate would have it those plans got delayed. You know, it's a great question. There was no one point where the light bulb came on and said, "Whew! We're here," because I was constantly in my mind wanting to improve it, make it look better. You know, the promos are not good enough, the shows – this could be better. And I still feel that way today. Fortunately I've learned to sit on my hands a little more and we have great people, but I'm just never completely satisfied that we're there. So while I guess at some point along the way I thought, well, okay, this thing is working, it's going to be successful, it's going to make money, I never envisioned it would be this big, this deep. I never really thought you'd look up at a chart and see the most respected brands and HGTV would be sitting there along beside Discovery and CNN and ESPN and those kinds of brands. That just wasn't in my thought plan early on. It wasn't that I didn't believe in it. You still have to pinch yourself from time to time because there are a few folks in the industry that have been as fortunate as me and you can name them – John Hendricks, he had a vision, he had an idea and it became reality, but I don't know what John would say, I don't know what some of the other entrepreneurs would say, but when you start one you just want it to succeed. You want it to get out there and people to see it. It's not about making money and it's not about fame and it's not about anything other than getting that idea out there. What do people think of it? How will they react to it?
NELSON: You mention John Hendricks. Were there people like John that you looked at as a possible role model or inspiration for "he did it, I can do it?" and who would they be? Obviously John, I would think.
LOWE: Well, John would be at the top of the list because what I would read and see and hear about John, he was not a guy from the industry. He was just a guy with an idea, a vision.
NELSON: He was a school teacher!
LOWE: I've since gotten to know him and he's a good friend, just a fantastic human being, but so many other folks that had ideas – Bob Johnson, of course, with BET. So there were a lot of folks I looked to as real role models of people I was encouraged by and saw their dream come true and happen. So, yeah, I thought, boy, maybe I could do this too, but I never quite envisioned it would be this successful to be honest with you.
NELSON: And you think one of the attributes of succeeding is – in fact, you talked about this a little while ago – sort of never resting on your laurels, never accepting, okay, we're here, we can kind of let out our breath and coast along. There's always that need to continue to be driven, to continue to push, to continue to look over your shoulder, to let a little paranoia creep in there?
LOWE: Absolutely, because somewhere right now there's a Ken Lowe in a garage that is creating something that's going to be a competitor to HGTV. It may not be a cable channel; it might be a broadband channel, it might be delivered on cell phones. That, and the fact that I just see so many additional opportunities beyond HGTV. Of course we were fortunate enough to acquire the Food Network in '97 and then when we realized that Home and Garden was starting to move into more lifestyle and in some ways abandoning a little bit of the do it yourself category, we launched Do It Yourself in 1999. Fine Living, to me had always been an idea somewhat aimed at a different audience, a bit more upscale, higher income. We launched Fine Living a couple years ago. Broadband networks that we're creating now, all the work that's going on in VOD, our internet sites are robust. The Food website is the number one website in the world in the business as it can spring and go forth from that. Then being fortunate enough, now, to oversee the entire company, we're spreading those ideas into our newspapers, into our television stations. So the great thing about my job is I just get to get up every morning and dream more about more ideas and more things that can grow out of that cardboard box.
NELSON: I knew those dreams didn't go away.
LOWE: No, no, and it's also a curse, by the way.
NELSON: Well, yeah, but one you'll take. You mentioned the newspapers because going back to your presentation to the board where you take out the newspaper and say, "Look, we've got this, this, and this, we don't have this." It's a little ironic now that the newspapers are now being influenced by what you're doing on the TV from what you're saying, in terms of lessons you've learned from that in terms of reaching the market, and newspapers really have changed a lot in the last 10-15 years.
LOWE: Oh, certainly, and they've changed because two things – competition, fragmentation, if you will, and the third being technology. The internet has had a tremendous impact on newspapers, but yet I think there's a lot of life left in newspapers. Newspapers have to understand that they still are the most widely distributed media in any local market. On any given weekend a newspaper in a market like Knoxville, Tennessee will reach 50-60% of the population. You can combine all local media and you can't come close to that, but what can you do from that? You can't just continue to ride that because newspaper readership over the long haul will probably continue to decline. Younger folks now are more driven to the internet. They're getting their information from different places, so what can we do to take, if you will, that franchise and move it into different platforms, and the newspapers that succeed over the coming years will be the ones that do that, that reinvent their business. If you just stay in that particular business, you'll allow the future to be predicted for you. People ask me all the time, how in the world is it that Scripps was able to launch a cable network into the shelter category against the likes of Meredith and Conde Nast and Hearst, companies that had been producing shelter magazines for over a hundred years? I don't really know, except I think they were in the magazine business, not the shelter business, and by that I mean, your viewers, your consumers, your users are not yours, they're going to go to the next level, they're going to move to where technology gives them different, interesting things. I remember when I used to plan on houses and building houses, I'd just rip pages out of magazines to show a builder or a designer. Well, now you can walk in with your PDA, your cell phone, and say, "By the way, I just took this picture of my home and also downloaded these shots from HGTV and here's some video." Things change. Nothing is static. All glory is fleeting in the media industry. So where you are on the life cycle curve is critically important for you to know and for the consumer to know. If you think you're here and the consumer thinks you're here, then you're already disconnected. So what we want to do is continue to ride with HGTV but understand that people can use HGTV in different ways and will use it in different ways. The world of TiVos and DVRs will not go away. We're going to have to learn to compete in that world. Linear networks are going to become very modular, they're going to be broken apart and we have to learn how to not only compete there but to serve the end user. So every day's a challenge. I like to say you get up in the morning, they've moved the goal posts, they've widened the field, we're not playing on the same field we did yesterday, but that's what makes the business exciting.
NELSON: Let's have a new game plan. Now one of the ways in which things are changing, you mentioned TiVo and DVR, the whole concept of programming on-demand and particularly various flavors of VOD – I know you've been active in that. I'd just like to get your sense of where you think that's going. Obviously the industry is feeling its way, trying different things – free subscription, pay-per-view, etc., etc. What are you doing there and how do you see that stemming off of what you've done to date?
LOWE: We're not fearful of VOD. I think there will always be an HGTV, there will always be a linear program channel, but let's face it, Steve, if you're interested in remodeling your kitchen and you know you can actually go to a video library, and right now you can download and watch this episode and this episode of remodeling your kitchen – if that's available to you are you going to wait until Thursday at 8:00 for it to come up on the network? No, you're going to pull it down and watch it now. That's just reality and therefore we have to learn to live in that world. It probably has to be programming re-shot, re-edited. We can't very well tell our operator we're going to put it over here and put it over here too, so we're partnering and we've been one of the more aggressive network groups in getting out and partnering with MSOs in VOD. We want to learn viewing habits. All of our VOD is advertiser sponsored. If you're watching that half-hour show, let's say, on remodeling your kitchen, you don't necessarily view a two-minute Kohler sink spot as a negative, a commercial, if you will. It's information. "Gee, I'd like to learn more about sinks. Heck, I'll even tap into their website," and maybe we get paid for a click through there. They're new forms of advertising. I'm speaking just for us. I think movies, sporting events, live events in the whole VOD area, it gets a little more difficult when you get into first-run television. If you're Fox and you're running the 24 show you can't really put it on VOD if it hasn't already premiered on the network. So one size does not fit all here. I think we're working our way through it as content providers and as distribution partners, but VOD is going to continue to be a very vibrant piece of our business. It's looking like the model will be advertiser supported when it comes to networks like us, and we're okay with that as long as we can participate in it. We've always been good partners with our MSOs and our DSS partners and I think as long as we can continue to partner, learn together, work together, we can have our cake and eat it too.
NELSON: Do you think that the growth, and the growth is going to be very strong over time in VOD, does this mean that the opportunities of starting linear networks are declining because there is another way, really, to deliver stuff at this point?
LOWE: Oh, absolutely, absolutely. It's hard to envision why anybody would need another 24/7 network. First off, you take any network out there right now, even when they're on 24/7 there are repeat patterns, maybe there are x number of hours a week of really good content that you'd really want from that network. I think it's absolutely going to happen where we'll see networks created in a VOD type format. When you really think about it, Oprah Winfrey is a brand, a very popular brand, a very powerful brand. It makes a lot of money. It's one hour a day. That's a brand. Do you need an all-Oprah network? No, especially in a VOD world. For us, we see opportunities back to what I said early in the interview about under the roofline, if you will, of HGTV there are a lot of different networks. What we're doing now, for example Steve, is on any given month we will email to people who opt in up to 15 million per month electronic newsletters to homes, but they're segmented into design and decorating newsletters. In the case of the Food Network, different types of cooking, maybe just an Emeril Lagasse electronic newsletter. Those eventually can become video networks. You can stream video right to the home. They can become video magazines, subscription video magazines. That, in a way, is VOD taken to another level. So I think we have to take blinders off. If we sit here and say, gee, we just want to be this linear cable network, we don't want to get into the whole VOD thing, we're going to lose some tremendous business opportunities. There are going to be a lot of bumps along the way. There are going to be some surprises. There are going to be, as there always is in any content and technology business, there's going to be some things happening that make you say, wow, why didn't somebody foresee that? You have to be able to play in this arena and understand the business is going to move forward with or without us.
NELSON: So you'd rather it move forward with you?
LOWE: Absolutely, and you know, by and large we've had our squabbles, we have our disagreements, but at the end of the day content providers and MSOs, we've always had a good partnership. We'll continue to figure out how to work it out. It's a great business and it's going to continue to be a great business.
NELSON: I know it's an odd question to ask you since you're still so actively involved and still dreaming and moving forward, but to date, HGTV has been on now over ten years, what is the legacy that you think you've left to the industry? What's the mark that you've made? What would you like people to think is the mark you've made?
LOWE: What I really hope when people look at HGTV and look beyond the brand and the network is that, you know, Ken Lowe hired some awfully good people, motivated them, kept them together, and together as a team they built a pretty remarkable business. No one individual can take credit for this network, especially me, so HGTV is the legacy of a lot of very talented, incredible, dedicated people. So if I have a legacy I hope that's it, I really do. I think it's all about the people.
NELSON: And the channel itself? What has been its impact on the cable business? Its legacy, so to speak?
LOWE: I think a continuation of what has made this industry what it is, and that is entrepreneurs, self-starters can succeed. If you go back to the MSO side, if you look at the content side, there were a lot of folks who really were just dreamers. They were some of the first guys to string wire on poles to cities and people laughed at them. "Cable? Why would I want to pay for something when I can put an antenna up?" Some people who had visions on the content side, be it a Jerry Levin or a John Hendricks or a Bob Johnson and saw their dream through, I'm just a continuation of that. I'm not the first guy to come along with an idea and make it happen, but HGTV itself I hope will be always remembered as one of the networks that truly set about owning the content, creating original programming almost 100% of the time – that was a huge undertaking – and then did reach out to the audience and say "We want this to be two-ways. We want it to be interactive. We want to set up a relationship in which technology will allow you to interact with this network and grow us and take us into areas in ways that we probably even haven't thought of." That's a pretty tall order for just one network, but I think we did a pretty good job.