Discovery Communications will acquire Scripps Networks in a $14.6 billion consolidation deal that brings together the two cable companies amid a drop in pay-TV subscriptions as viewers turn to digital streaming options.

The merger, announced Monday, means the new company would control roughly 20 percent of ad-supported pay-TV in the U.S., and be home to five of the top women’s networks.

The cash-and-stock deal brings under one roof Scripps’ lifestyle channels including HGTV, The Food Network and Travel Channel, as well as Discovery’s Discovery Channel, Investigation Discovery, TLC, Animal Planet and OWN.

The move is expected to result in “significant cost synergies,” to the tune of $350 million in savings, create more international growth opportunities for Scripps, and boost the firm’s presence in digital, over-the-top and direct-to-consumer services.

The company will produce a combined 8,000 hours of original programming annually, with 300,00 hours of library content and 7 billion short-form video streams monthly.

A beefed up programming slate may also give the company more leverage in negotiations with cable distributors for inclusion in skinny bundles and online TV services such as DirecTV Now or Hulu.

“This transaction supports and accelerates Discovery’s pivot from a linear TV-only company to a leading content provider, across all screens and services around the world,” Discovery CEO David Zaslav said in a conference call about the acquisition.

The deal is expected to close in 2018, and has been in the works for a while. It comes after two failed attempts to merge—most recently in 2014. Viacom was also pursuing a Scripps acquisition but dropped its bid earlier this month after the price escalated.

Discovery will pay 70 percent cash and 30 percent stock for Scripps, for a total price tag of $14.6 billion, including $2.7 billion of Scripps’ net debt. Scripps shareholders will receive $90 per share.

“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 optimized and monetized across our combined networks, products and services in every country around the world,” said Zaslav in a statement.

“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 short-form, direct-to-consumer and streaming platforms,” added Kenneth W. Lowe, Chairman, president and CEO, Scripps Networks Interactive.

Viacom also had been kicking the tires on Scripps, allegedly offering to buy the group of networks in an all-cash deal, but ended up dropping out of the bidding.

Tags:


  Save as PDF