SILVER SPRING, MD and KNOXVILLE, TN — Discovery Communications Inc. confirmed Monday it is acquiring Scripps Networks Interactive Inc. in a $14.6-billion cash-and-stock transaction that will bring together many of the leading lifestyle channel brands under one roof.
In addition to its flagship Discovery Channel, Discovery’s portfolio includes TLC, Investigation Discovery, Animal Planet, Science and Turbo/Velocity, and OWN (Oprah Winfrey Network) in the U.S., as well as Discovery Kids in Latin America, and Eurosport, the leading provider of locally relevant, premium sports and Home of the Olympic Games across Europe.
Scripps Networks’ channel brands include HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country. Scripps’ global brands include: TVN, a premiere multiplatform provider of entertainment, lifestyle and news content in Poland; UKTV, an independent commercial joint venture with BBC Worldwide; Asian Food Channel, the first pan-regional TV food network in Asia; and lifestyle channel Fine Living Network.
The combined company will produce approximately 8,000 hours of original programming annually, be home to approximately 300,000 hours of library content, and will generate a combined 7 billion short-form video streams monthly, according to a press release issued by Discovery Communications on Monday.
In addition, according to Discovery, the combined company will have nearly 20% share of ad-supported pay-TV audiences in the U.S. Furthermore, the combined Discovery-Scripps portfolio will include five of the top pay-TV networks for women and will account for more than 20% share of women watching primetime pay-TV in the U.S., the press release said. (Rumours regarding the deal were first reported by Reuters on July 18.)
“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 optimized and monetized across our combined networks, products and services in every country around the world,” said David Zaslav, president and CEO of Discovery Communications, in the press release.
“Through the passion and dedication of our incredible employees, and with the support of the Scripps family, we have built a lifestyle content company that touches the lives of consumers every single day,” said Kenneth W. Lowe, chairman, president and CEO of Scripps Networks Interactive, in the news release. “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.”
Lowe is expected to join Discovery’s board of directors following the close of the transaction.
In terms of non-linear growth opportunities, the combined company will bring together Scripps’ expertise in short-form video creation with Discovery’s investment in Group Nine Media, to create a new scale player with an outstanding presence on new video and social media platforms, Discovery said in its news release. Additionally, Scripps Lifestyle Studios will become a key component of Discovery’s content engine, making the company a leader in key strategic areas such as data-driven ad sales, endemic advertising, and branded entertainment solutions, Discovery said.
Discovery’s added scale, content engine and multiple brand offerings will present a compelling opportunity for new digital distribution partners, including mobile, OTT, and direct-to-consumer platforms and offerings, the company said.
Under the terms of the acquisition agreement, valued at $14.6 billion, Scripps shareholders will receive $90 per share, comprised of $63 per share in cash and $27 per share in Class C Common shares of Discovery stock, based on Discovery’s closing price on Friday, July 21. The purchase price represents a premium of 34% to Scripps’ unaffected share price as of Tuesday, July 18, 2017. The transaction is expected to close by early 2018.
The combination of the two companies is expected to create significant cost synergies, estimated at approximately $350 million. The deal is expected to be accretive to adjusted earnings per share and to free cash flow in the first year after close.
The transaction is subject to approval by Discovery and Scripps’ shareholders, regulatory approvals, and other customary closing conditions.
