Newsy Spending $23M To Get Into Cable

Newsy, the national OTT news network focused on millennial audiences, has launched a major expansion into the cable and satellite marketplace, kicked off by the E.W. Scripps Co.’s purchase of carriage contracts from the Retirement Living Television (RLTV) cable network.

Scripps will take over RLTV’s carriage agreements for about 26 million subscribers and reprogram the network with Newsy’s lineup of shows already available on major OTT services including YouTubeTV and SlingTV. The transition from RLTV to Newsy will begin over the next few months, and Newsy expects to expand its reach to about 40 million cable and satellite subscribers by the end of 2018.

Scripps said the acquisition’s purchase price is based on the number of subscribers that come under contract with the cable companies and convert to Newsy. The final purchase price could be up to $23 million, no more than 93 cents per subscriber.

“At that price, we believe this may be the most efficient flip deal in recent history,” said President-CEO Adam Symson at an investor’s day conference in New York immediately after the announcement.

Symson said Scripps has already begun negotiating “the flip” with the MVPDs, which will include an increase in the carriage fees that RLTV has been receiving. He declined to say how much Scripps is asking for in fees.

The expansion into cable came about since, because Symson said, “there is no doubt that traditional TV is by far where the money is. We like the carriage contracts, we like the barrier to entry, we like the dual revenue stream of advertising and carriage fees.”

He said he didn’t expect the nature of Newsy to change much, although Laura Tomlin, SVP of national media, said that the live evening newsmagazine The Why block may expand from two to six hours in October. “Younger audiences are looking for the coverage with context that Newsy delivers,” Tomlin added. “Cable and satellite companies are seeking programming like Newsy to grow their subscriber base with younger viewers — a demographic that mainstream cable news outlets have struggled to capture.”

Symson added that he didn’t expect production costs to rise. “For Newsy, I would expect it to continue to generate the same modest loss next year as it did this year as we move into cable.”

He sees profitability in a little over two years. “I’d be disappointed if we didn’t see Newsy generate $50 million in 2020.”