US cable channel Discovery has agreed to buy Scripps Networks, the No 4 most watched US cable network, for $11.9 (€10bn) in a bet that uniting ownership of cable channels like Animal Planet and HGTV will help the company adapt to the changing television landscape.
Discovery, one of billionaire John Malone’s key holdings, will acquire Scripps for about $90 a share and assume long-term debt of $2.7bn, bringing the total price of the equity value plus liabilities to $14.6bn. The price represents a 34% premium over Scripps’ closing price on July 18, the day before news of the companies’ talks became known.
In Ireland, Mr Malone’s Liberty Media owns TV3 and cable firm Virgin Media.
Discovery, based in Maryland, is grappling with shrinking audiences at some US channels — including the Discovery channel and Animal Planet — as consumers drop cable subscriptions and get more entertainment online from Netflix and others. The deal combines two companies that specialise in so-called unscripted programming, focused on real-life adventures, travel, wildlife and home. With Scripps, Discovery gets the home-improvement channel HGTV, where hits like “Property Brothers” and “Fixer Upper” have made it one of the more popular cable networks.
The US combined company will have almost 20% of the ad-supported pay-TV viewership in the US, according to the statement. Buying Scripps could also help Discovery boost its international sales, which currently account for half of its annual revenue. Tennessee-based Scripps owns an interest in Polish TV operator TVN and is expanding HGTV to new countries.
Discovery’s offer had forced Viacom to abandon its own efforts to acquire Scripps, people with direct knowledge of the matter said last week.
After being left out of some new online TV packages in the US, Discovery has been looking to create a low-cost web-only TV service with its cable channels and those of others for consumers who don’t want to pay for sports, people with knowledge of the matter said in April. Neither Discovery or Scripps broadcasts live sports in the US.
Though smaller, Scripps has an especially valuable asset in HGTV with an average of 1.51 million viewers a night through July 16, according to Nielsen data. Deal talk is picking up in the TV industry as network owners grapple with the decline in cable and satellite services amid online competition. Mr Malone also has discussed a deal to buy all or part of Spanish-language broadcaster Univision Holdings, according to sources.
Bloomberg and Irish Examiner staff
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