Discovery Buys Scripps for $11.9B, Looks for Online Muscle
The third time was the charm for Discovery Communications, which was successful in acquiring Scripps Networks Interactive on its third attempt. Discovery will pay $11.9 billion for Scripps, with 70 percent of that cash and 30 percent stock. The acquisition will pair Discovery's male-skewing channels (Discovery Channel, Animal Planet) with Scripps' female-skewing channels (HGTV, Travel Channel, Animal Planet). The stock market had a mixed reaction to the announcement, with Discovery stock falling 8.6 percent and Scripps rising 0.5 percent.
The motivation for the acquisition is increasing negotiating muscle both for traditional pay TV and over-the-top (OTT) offerings. With more programming behind it, the combined company will have more leverage as it negotiates, which includes finding placement in lower-priced skinny bundles. As viewers cut or trim their pay TV services in favor of online bundles, they're exposed to fewer channels, overall. It's crucial for channel providers to ensure their brands remain relevant to OTT viewers. Discovery channels are currently available to PlayStation Vue and DirecTV Now subscribers, while Scripps channels are available on those two services, as well as Hulu and Sling TV.
"The 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," said Discovery Communications chief executive officer David Zaslav during a call to analysts on Monday. Discovery executives are even considering launching their own OTT bundle, CNBC reports.
The deal requires regulatory and shareholder approval to move ahead.
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