Discovery Mulling Bid for Owner of Food Network, HGTV (Exclusive)

TV Chefs Branding

Scripps Networks Interactive seen as prime acquistion target as cable consolidation heats up

Discovery Communications is mulling a bid for Scripps Networks Interactive, parent company of Food Network, HGTV, Travel Channel and other lifestyle-oriented cablers.

A source with knowledge of the situation said the prospect of Discovery making a run at Scripps Networks was discussed Tuesday at a Discovery board meeting.

SEE ALSO: Scripps Networks Interactive Shares Spike on Discovery News

A rep for Discovery declined comment on the matter, as did a rep for SNI.

“We simply cannot comment on any potential transactions one way or another,” said Discovery Communications spokesman David Leavy.

SNI’s holdings would be a natural fit with Discovery’s suite of lifestyle-driven cablers, which include the mothership channel, TLC, Animal Planet and OWN.

Knoxville, Tenn.-based SNI has been seen as a prime acquisition target for some time. The company has valuable brands, particularly in Food Network and HGTV, but is small enough to be easily integrated into a larger conglom with cable programming assets. SNI has a market cap of about $11 billion, with the stock closing Tuesday at $75.26, up 52 cents.

Discovery is known to have kicked the tires on SNI in the past, as has NBCUniversal, Fox and Disney. Disney is said to have been in advanced talks to acquire SNI about three years ago — until board member Steve Jobs nixed the deal, reportedly out of his lack of faith in the future of linear channels.

The company is publicly traded but tightly controlled by descendants of the newspaper magnate E.W. Scripps. The trust that previously controlled SNI was dissolved in October 2012 after the death of E.W. Scripps’ last surviving grandchild. The 24 heirs to the trust received stock in the company, but they face restrictions on their ability to liquidate those shares.

According to SEC filings, Scripps heirs have to offer shares to other heirs or SNI directly before they can put them on the market. That could be a cumbersome process, whereas a sale of the company would allow all Scripps beneficiaries to cash out at the same price.

SNI had until recently been looking to bring in new executive leadership to work under CEO Ken Lowe. Industry sources said the company had been hunting for a president-COO but recently tabled the effort — leading to speculation that a transaction was in the offing.

There’s been plenty of speculation that some M&A activity would transpire sooner than later in the cable programming sector given the increasing likelihood of consolidation on the distribution side of the business. Several different scenarios have been floated that could see Time Warner Cable be sold or split up in some form among Comcast Corp., Charter Communications and Cox Communications.

Part of what is prompting distributor consolidation is the imperative to increase leverage over programmers who have drove a hard bargain in the increasingly bruising process of setting carriage agreements. The prospect of facing larger entities across the negotiating table undoubtedly has content companies thinking about how they can increase their own clout with MVPDs. The more must-have channels that a programmer controls, the more leverage it has with operators.

If anything, a Discovery-Scripps tie-up may just be the beginning of further dealmaking in the sector. AMC Networks, Starz, Viacom and even Discovery itself have been mentioned as possible acquisition targets.

Cynthia Littleton contributed to this report.

Filed Under:

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 7

Leave a Reply

7 Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

  1. Quigley Spargus says:

    And then there were 8. 8 companies in control of 95% of what is displayed on your television. The consumer is raped and pillaged by excessive license fees and the never ending force fed tactic of bundling by these huge media conglomerates. It seems the profits of these marauders is then used to get bigger further limiting choice and hijacking even more money from consumers. It’s a vicious cycle and consumers are caught in the middle. The fleecing will continue until every last one of us has cut the chord. I’m joining those ranks today – enough is enough.

  2. A. Nonposter says:

    What in the world does this mean? Proofread much?

    “Part of what is prompting distributor consolidation is the imperative increase leverage over programmers who have drove a hard bargain in the increasingly bruising process of setting carriage agreements.”

  3. Kenny says:

    Woah, woah, woah…Viacom’s an acquisition target?

    • Believe it or not, it is, especially considering the Feds just opened up the possibility that foreign groups could buy majority stakes in American media companies. I could see someone like Bertelsmann, Sony, or even 21st Century Fox making a play for Viacom one day. More people see CBS Inc being more of an acquisition target by an American company, and folks think that Time Warner might buy that unit. Not a fan of media interests getting smaller.

  4. cxg says:

    Ugh… That’s just great. Discovery has a way of ruining network programming. If this happens Food Network will no longer feature food. HGTV will no longer have home or garden shows. Just crappy reality shows. Ugh….

    • Just like The Science Channel no longer shows science shows . . . wait, they do. The Hub doesn’t show kids shows . . . no, no, wait, they do too. Discovery Fit and Health doesn’t have health-themed programming? They’re still there. Animal Planet dropped animal-themed shows? Nope. Only TLC is a deviant of themselves these days. And besides, Food Network doesn’t need Discovery to stop showing food shows. They did that themselves concentrating more on food competition shows than actual cooking shows, many of which migrated to Cooking Channel. Plus, Discovery used to own Travel Channel and had more vacation shows and travelogues than the seemingly foodie-based lineup that’s on the channel these days. The idea of putting these “magazine” genres together seems like an interesting match. Still surprised it took them this long to be serious about it.

  5. Darlene says:

    More garden shows, please!!!

More TV News from Variety

Loading