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Discovery buys Scripps for $14.6bn

Discovery Communications has bought Scripps Networks Interactive in a cash-and-stock transaction valued at US$14.6bn. The deal is expected to close by early 2018.

David Zaslav

The purchase price represents a premium of 34% to Scripps’ unaffected share price as of Tuesday July 18, according to Discovery.

The deal ends months, if not years, of speculation about whether Discovery or another party, such as Viacom, would buy the Knoxville-based cabsat channel operator behind brands such as HGTV and Food Network.

Under the deal, Discovery will also take over Scripps’ other channel brands, including Travel Channel, DIY Network, Cooking Channel and Great American Country, as well as TVN, a Polish network.

Discovery also gets Asian Food Channel, a pan-regional food network in Asia; lifestyle channel Fine Living Network; and Scripps’ 50% stake in UK-based cabsat channel operator UKTV, a joint venture with BBC Worldwide.

The combined entity will be a significant player in pay TV, both in the US and internationally. It will produce about 8,000 hours of original programming annually and have nearly 20% share of ad-supported pay TV audiences in the US.

Additionally, the combined company will be home to five of the top pay TV networks for women and will account for over 20% share of women watching primetime pay TV in the US, according to Discovery.

Internationally, Discovery said it saw “strong opportunities” to strengthen its existing global female networks with select content from Food Network, HGTV and the other Scripps brands.

Scripps’ position in international markets, including the UK and Poland, will also fuel Discovery’s content pipeline in growth regions such as Latin America, where the company operates its Home & Health network.

Kenneth W Lowe

Suggesting possible job cuts due to duplication, Discovery said it expects to create “significant cost synergies” – estimated at about US$350m – as the two pay TV operators combine into one company.

As well as job cuts, these “cost synergies” could be achieved by dropping channels that compete with each other or service the same niche among those operated by Discovery, Scripps and UKTV.

As part of the deal, Scripps chairman, CEO and president Kenneth W Lowe is expected to join Discovery’s board of directors. The transaction is subject to approval by Discovery and Scripps’ shareholders and regulatory green lights.

David Zaslav, president and CEO at Discovery Communications, said: “This is an exciting new chapter for Discovery. Scripps is one of the best-run media companies in the world with terrific assets, strong brands and popular talent and formats.

“Our business is about great storytelling, authentic characters and passionate super fans. We believe that by coming together with Scripps, we will create a stronger, more flexible and more dynamic media company with a global content engine that can be fully optimised and monetised across our combined networks, products and services in every country around the world.”

“This agreement with Discovery presents an unmatched opportunity for Scripps to grow its leading lifestyle brands across the world and on new and emerging channels including shortform, direct-to-consumer and streaming platforms,” added Lowe.

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