(Pictured: Discovery Communications president and CEO, David Zaslav)
Stock prices for Discovery Communications and Scripps Networks Interactive (SNI) jumped during after hours trading on Tuesday (July 18) following a Wall Street Journal report that claimed merger talks between the two cable giants are being revisited.
The report says sources “familiar with the situation” have confirmed that the two companies are once again mulling over a merger, following similar discussions in 2014 that were ultimately abandoned.
Silver Spring-based Discovery is worth approximately US$15 billion, according to S&P Global Market Intelligence, while Knoxville-based Scripps Networks Interactive has a market value of approximately $8.7 billion.
In addition, a report from Reuters, citing two sources, states that Viacom has also thrown its hat into the ring as a possible buyer for Scripps. Reuters also says the current talks mark the third time that Scripps and Discovery have discussed a merger.
However, the cable landscape has changed considerably since 2014, in the wake of increased cord-cutting, the emerging skinny bundle era, and increasing uncertainty regarding the viability of smaller, niche networks.
Scripps’ lifestyle-centric, largely female-skewing portfolio includes HGTV, Food Network, DIY Network, Cooking Channel, Travel Channel and Great American Country. Those networks could complement Discovery’s roster, which includes its flagship Discovery Channel as well as TLC, Animal Planet, Investigation Discovery, OWN: Oprah Winfrey Network, Science Channel, Destination America, Velocity and American Heroes Channel. Bringing the two network groups together would provide potential for a unique value proposition for U.S. cable consumers, especially as discussion of non-sports, “entertainment packages” gains momentum.
However, some analysts caution that a merger could undermine negotiations with MVPDs, as both companies have multiple networks under their umbrellas. As bundles get skinnier, smaller networks, such as the “emerging” networks in both companies’ portfolios, are increasingly vulnerable.
Discovery’s international foothold could benefit Scripps’ brands in territories where the latter company hasn’t yet fully penetrated the market. Earlier in 2017, Scripps struck a deal with German broadcaster ProSieben Sat.1 for more than 1,200 hours of Scripps lifestyle programming stemming from across its channel roster. International operations for Scripps include multi-channel operator TVN in Poland; UKTV, a joint partnership with BBC Worldwide; Asian Food Channel and Fine Living Network.
Discovery’s recent international moves have included the acquisition of Eurosport, and subsequently, securing exclusive European TV and multiplatform broadcast rights for the four Olympic Games to be held between 2018-2024.
Spokespersons for Discovery and Scripps declined to comment on the reports.