Television

Discovery buys Scripps for $14.6 bn, to net 20% of US ad-pay-TV subs

MUMBAI: Discovery Communications, Inc. and Scripps Networks Interactive, Inc. announced that they have signed a definitive agreement for Discovery to acquire Scripps in a cash-and-stock transaction valued at $14.6 billion, or $90 per share, based on Discovery’s Friday, July 21 closing price. The purchase price represents a premium of 34% to Scripps’ unaffected share price as of Tuesday, 18 July. The transaction is expected to close by early 2018.

“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, Discovery Communications. 

“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 & CEO, Scripps Networks Interactive. “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.”

New Innovator Across a Broad Portfolio of Entertainment Assets

Together, Discovery and Scripps will offer a complementary and dynamic suite of brands. 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, demonstrating its commitment to delivering content as a top short-form provider.

Combined, Discovery and Scripps will have nearly 20% share of ad-supported pay-TV audiences in the U.S. Additionally, the combined company will be home to five of the top pay-TV networks for women and will account for over 20% share of women watching primetime pay-TV in the U.S.

The Combined Portfolio’s Brands Will Include: 

Discovery: Discovery Channel, TLC, Investigation Discovery, Animal Planet, Science and Turbo/Velocity, as well as OWN in the U.S., Discovery Kids in Latin America, and Eurosport, the leading provider of locally relevant, premium sports and Home of the Olympic Games across Europe.

Scripps: HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country, as well as TVN, a premiere multi-platform 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.

International Growth Opportunities

The combination will extend Scripps’ brands, programming and talent to a broader international audience through Discovery’s best-in-class global distribution, sales and languaging infrastructure.  Discovery sees strong opportunities to strengthen its existing global female networks with select content from Food Network, HGTV and all the Scripps brands. Scripps also has a strong position in key international growth markets, including the U.K. and Poland, and will help fuel Discovery’s existing content pipeline in growth areas like Discovery’s Home and Health network in Latin America.

Social, Mobile and Non-linear Growth Opportunities 

The combined company will deliver 7 billion monthly short-form streams, bringing together Scripps’ established expertise in short-form video creation with Discovery’s investment in Group Nine Media to create a new scale player with a strong ability to compete for audiences and ad dollars. The combination will give Discovery an outstanding presence on new video and social media platforms. 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’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.

Synergies

The combination 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.

Transaction Details

Scripps shareholders will receive $90 per share under the terms of the agreement, comprised of $63.00 per share in cash and $27.00 per share in Class C Common shares of Discovery stock, based on Discovery’s Friday, July 21 closing price. The stock portion will be subject to a collar based on the volume weighted average price of Discovery Class C Common Shares over the 15 trading days ending on the third trading day prior to closing (the “Average Discovery Price”). Scripps shareholders will receive 1.2096 Discovery Class C Common shares if the Average Discovery Price is below $22.32, and 0.9408 Discovery Class C Common shares if the Average Discovery Price is above $28.70.  If the Average Discovery Price is greater than or equal to $22.32 but less than or equal to $28.70, Scripps shareholders will receive a number of shares between 1.2096 and 0.9408 equal to $27.00 in value. If the Average Discovery Price is between $22.32 and $25.51, Discovery has the option to pay additional cash instead of issuing more shares.

Scripps shareholders will have the option to elect to receive their consideration in cash, stock or the mixture described above, subject to pro rata cut backs to the extent cash or stock is oversubscribed.

This purchase price implies a total transaction value of $14.6 billion, including the assumption of Scripps’ net debt of approximately $2.7 billion. Post-closing, Scripps’ shareholders will own approximately 20% of Discovery’s fully diluted common shares and Discovery’s shareholders will own approximately 80%. This calculation is based on the number of Discovery shares outstanding today.

The cash portion of the purchase price will be financed with a combination of new debt and cash on hand. Discovery has secured fully committed financing from affiliates of Goldman Sachs & Co. LLC to fund the acquisition. Discovery expects to maintain investment grade ratings throughout this transaction. As part of its commitment to de-lever its balance sheet, Discovery intends to suspend its share repurchase program until such time as its credit metrics are in line with its rating. Specifically, Discovery expects to be below 3.5x gross debt to AOIBDA within the first two years after the transaction closes, using substantially all free cash flow to reduce pre-payable and/or short term debt. 

Scripps CEO Ken Lowe is expected to join Discovery’s board of directors following the close of the transaction. The transaction is subject to approval by Discovery and Scripps’ shareholders, regulatory approvals, and other customary closing conditions.

John C. Malone, Advance/Newhouse Programming Partnership (“ANPP”) and members of the Scripps family have entered into voting agreements to vote in favor of the transaction and take certain other actions, in each case subject to the terms and conditions of their respective agreements.

In addition, ANPP has provided its consent, in its capacity as the holder of Discovery’s outstanding shares of Series A preferred stock, for Discovery to enter into the merger agreement and consummate the merger. In connection with this consent, Discovery and ANPP have entered into an exchange agreement pursuant to which ANPP will exchange all of its shares of Series A and Series C preferred stock of Discovery for shares of newly designated Series A-1 and Series C-1 preferred stock of Discovery. The exchange transaction will not change the aggregate number of shares of Discovery’s Series A common stock and Series C common stock that are beneficially owned by ANPP. The terms of the exchange agreement were negotiated, considered and approved by an independent committee of disinterested directors of Discovery, which committee was advised by independent financial advisors and legal counsel.

Guggenheim Securities, LLC and Goldman Sachs & Co. LLC served as financial advisors and Debevoise & Plimpton LLP served as legal advisor to Discovery. Allen & Company LLC and J.P. Morgan Securities LLC served as financial advisors and Weil Gotshal & Manges LLP served as legal advisor to Scripps. Evercore Group L.L.C. served as financial advisor and Kirkland & Ellis served as legal advisor to the Scripps family. UBS Investment Bank served as financial advisor and Sullivan & Cromwell LLP served as legal advisor to Advance/Newhouse.

Latest Reads

https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/25/ndtv.jpg?itok=k3PS9eAF
SAT further stays SEBI's impugned order against NDTV till next hearing

MUMBAI: The Securities Appellate Tribunal has further extended the relief to New Delhi Television news channel’s promoters Prannoy Roy and Radhika Roy, against the impugned order of the Securities and Exchange Board of India till next hearing. According to a BSE filing of the NDTV, “The Securities...

Television TV Channels News Broadcasting
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/25/all.jpg?itok=YvT2CY1Y
Sony Entertainment Television’s India’s Best Dancer to premiere on 29 February

After the roaring success of Super Dancer – a dance reality platform for kids, Sony Entertainment Television will launch India’s Best Dancer, a platform for dancers between the age group of 15 – 30 years on 29 Febraury.

Television TV Channels Viewership
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/24/sonybbcearth.jpg?itok=ZCSwjgfB
Sony BBC Earth concludes the third edition of ‘feel alive hours’ in schools across India

MUMBAI:In its continued efforts in inspiring, influencing and making students ‘feel alive’ with its enthralling content, Sony BBC Earth, India’s most loved factual entertainment channel, recently concluded the third edition of ‘feel alive hours’. Post the phenomenal success of the first and second...

Television TV Channels News Broadcasting
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/24/Trump-and-modi.jpg?itok=K3LFKS7w
News channels unveil programming, content strategy for Trump's visit to India

When the US president comes visiting, news channels need to stay on their toes. Indian news channels are now gearing up for a special and round-the-clock coverage of the maiden visit of the United States of America’s president Donald Trump to India on 24-25 February.

Television TV Channels News Broadcasting
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/24/9_0.jpg?itok=cjPHDCdS
Fakt Marathi to convert into full GEC from April 2020

The free to air (FTA) Marathi channel Fakt Marathi has made a strategic move to compete with pay broadcasters in the post NTO era. The channel is all set to become a complete GEC from April 2020. It will air three hours of original content in the primetime slot in genres like kids, mythology, socio...

Television TV Channels Regional
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/22/imsges.jpg?itok=m3hdX5z6
Sports channels reverse viewership loss but still weak in week 6 of BARC

MUMBAI: The viewership of overall sports channels continued to decline as per data published by Broadcast Audience Research Council (BARC) India. Sports broadcasters fell marginally by over 2 per cent in week six (8-14 February) as compared to week five (1-7 February). The decrease in eyeballs is...

Television TV Channels Viewership
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/22/alll.jpg?itok=_QN-bmfJ
English news records highest ratings in 2020 during Delhi elections, results week

Runup to elections and election results announcements are big viewership drivers for news channels in India. Assembly elections on 8 February 2020 and announcement of the election results of the New Delhi legislative assembly in week 6 of 2020 (Saturday, 8 February 2020 to Friday, 14 February 2020.

Television TV Channels Viewership
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/22/logos.jpg?itok=1vH4NSd9
BARC week 6: Four Zee regional channels lead regional markets

In week six of BARC India ratings, Zee's four regional channels  Zee Bangla, Zee Biskope, Zee Marathi and Zee Kannada led in Bangla, Bhojpuri, Marathi and Kannada markets respectively. Zee Punjabi and Zee were seen holding second position in their respective market, whereas Zee Tamil holds third...

Television TV Channels Viewership
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2020/02/22/barc.jpg?itok=yD9J7pqX
Hindi news channels viewership increases by 14 per cent in week 6 of BARC

Delhi Legislative Assembly election has proved to be most fruitful for the news channels across genres. However, Hindi news broadcasters’ viewership has substantially grown by over 14 per cent in week six as compared to week five, according to the data published by Broadcast Audience Research...

Television TV Channels Viewership

Sign up for our Newsletter

subscribe for latest stories

* indicates required