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By Benjamin Mullin
Discovery Inc. is looking to generate more revenue from its stable of celebrity chefs- -- and help Amazon.com Inc. sell more groceries in the process.
The cable-TV network is launching a new video-streaming app called Food Network Kitchen in partnership with Amazon that will let subscribers attend up to 25 live cooking classes a week given by the likes of Martha Stewart, Guy Fieri and Bobby Flay. The chefs will also answer user questions on the service, which will cost $6.99 a month or $59.99 annually.
Discovery's expansion into the streaming-app business comes as media industry grapples with the shift away from cable TV. Major TV players like AT&T Inc., Walt Disney Co. and Apple Inc. are readying their own streaming services.
Discovery, the owner of more than 15 channels including Food Network, HGTV and Animal Planet, has gone a different route: Rather than launching a single all-you-can-eat service with scripted entertainment, as its rivals have done, the company is hedging against the decline of traditional pay-TV with several streaming services targeting different niches: food, home improvement and lovers of the natural world.
"That's going to be a street fight," Mr. Zaslav said of Discovery's competitors. "There are a lot of companies, it's going to get very messy."
Food Network Kitchen subscribers can use the app to buy ingredients for recipes shown in classes through an integration with Amazon Fresh and other food-delivery services such as Peapod and Instacart, said Peter Faricy, chief executive of Discovery's direct-to-consumer business. Discovery gets a cut of sales revenue from ingredients that Food Network Kitchen subscribers buy on those services, Mr. Faricy said.
The ingredients will be delivered in supermarket-sized quantities, differing from the meal-sized portions popularized by companies like Blue Apron Holdings Inc. or HelloFresh SE, Mr. Faricy said.
Food Network Kitchen will debut in October. Amazon will help market the app as part of a multiyear agreement, said Discovery Chief Executive David Zaslav. The app also will be integrated within Amazon's Alexa voice-controlled assistant.
"This is a foundational relationship for them, and it's a foundational relationship for us," Mr. Zaslav said. "This is another massive funnel that we can use to build this into tens of millions of homes in America."
Food Network Kitchen is the first in a series of streaming services that Discovery is planning to launch in the coming months. Also in the works: A new nonfiction streaming service that will feature Discovery's natural history programming and a home improvement streaming service featuring lifestyle gurus Chip and Joanna Gaines.
Expanding into new services is crucial for Discovery, which is battling a decline in traditional pay-TV subscribers alongside its industry peers. Last quarter, Discovery reported a 3% decrease in subscribers to its portfolio of cable channels compared with the previous quarter, though both advertising and affiliate revenue were up thanks to rate increases and strong demand for upfront ad buys.
Food Network Kitchen's live classes will be modeled on those offered by Peloton Interactive Inc., which streams spinning-class videos to users of its upscale exercise bikes, Mr. Zaslav said. Food Network Kitchen will also include 800 on-demand cooking classes and 3,000 step-by-step instruction videos. And Discovery is putting some of its cooking-themed Food Network shows, such as "Barefoot Contessa," "Guy's Ranch Kitchen" and "Good Eats" on the service.
The explosion of direct-to-consumer streaming services like Netflix Inc. and Amazon Prime Video has sent companies across the TV industry scrambling to launch their own offerings.
Discovery still makes most of its money on TV advertising and affiliate fees. The company earmarked between $300 million and $400 million in 2019 to develop, market and operate new video-streaming services. At full capacity, Discovery's direct-to-consumer division will employ at least 150 people.
A former executive at Amazon, Mr. Faricy was hired in 2018 to help Discovery find its footing in the industrywide battle for streaming-video subscribers.
Dave Limp, senior vice president of Amazon devices and services, said in a statement that the company hopes Food Network Kitchen inspires customers "throughout every part of their cooking journey."
Although companies like Netflix have a head-start, Mr. Faricy said that Discovery's vast content library gives it an edge over its rivals.
"We have a huge advantage," he said. "The recipes, the tutorials, the TV shows -- it's all content we already own."
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com
(END) Dow Jones Newswires
September 25, 2019 11:14 ET (15:14 GMT)
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