Discovery to buy Scripps Networks for $12 billion beating Viacom

Discovery Communications has decided to buy Scripps Networks for $11.9 billion as part of the strategy of John Malone to offer cable channels like Discovery Channel and Animal Planet in new digital format to television users, Bloomberg reports.

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Discovery, based in Silver Spring, Maryland, is losing TV audiences at some of its U.S. channels — including the Discovery Channel and Animal Planet — as consumers drop cable subscriptions and get more entertainment online from Netflix and others.

Discovery wants more digital channels to boost its viewership for its programs and boost revenue.

Discovery Chief Executive Officer David Zaslav said he plans to use Scripps programming to strengthen the company’s international reach and expand its distribution options, including creating more short-form video for social media.
The strategy is to ensure inclusion of their channels in online TV services that offers fewer channels at lower prices. Both Scripps and Discovery networks are relatively inexpensive for distributors to include in their channels.

Hulu and Alphabet Inc.’s YouTube TV didn’t include Discovery networks in their web-TV services, and YouTube didn’t include programming from Scripps.

Discovery wants to package the Scripps networks with its own in an online service for $3 to $4 a month.

Discovery will acquire Scripps for about $90 a share and assume long-term debt of $2.7 billion, bringing the total price of the equity value plus liabilities to $14.6 billion.

Discovery’s offer forced Viacom to abandon its own efforts to acquire Scripps.

Discovery’s cable channels are losing 3 percent of subscribers each year, and his smaller channels are losing subscribers at a faster rate. Scripps said that ratings declines have forced it to lower its revenue and profit outlook for the year.

The report said the combined company will have almost 20 percent of the ad-supported pay-TV viewership in the U.S. Buying Scripps could help Discovery boost its international sales, which currently account for half of its annual revenue. Knoxville, Tennessee-based Scripps owns an interest in Polish TV operator TVN and a stake in Britain’s UKTV.