Monday, 31 July 2017

Media Guardian: Discovery Communications to buy Scripps Networks for close to $12bn

Story from Media Guardian:

Bear Grylls is joining forces with the Barefoot Contessa in the latest of a series of major mergers to shakeup the media landscape.

Pay-TV giant Discovery, owner of Animal Planet and maker of Grylls’ Man Vs Wild, Naked and Afraid and other reality shows, will buy Food Network and lifestyle programme giant Scripps Networks for close to $12bn (£9.1bn), tying together two powerful stables of TV shows.

Scripps also jointly controls Dave and Gold owner UKTV with the BBC, and the move will extend Discovery boss and cable tycoon John Malone’s control of UK media.

Discovery has sealed the $14.6bn (£11.1bn) cash-and-shares deal days after rival Viacom, owner of MTV, Nickelodeon and Channel 5 in the UK, dropped its bid.

The deal, three years after previous merger talks fell through, will create $350m (£266m) in cost savings, which are likely to include significant job cuts.

The deal comes as AT&T is trying to finalize its merger with Time Warner and the Sinclair Group pushes on with its controversial bid to take over Tribune’s local TV networks across the US.

Media companies are also continuing to adjust to the shift to online media consumption.

Online ads are still worth a fraction of TV ads but the audiences for the networks shows – and the ways in which they can package their content – has also grown enormously.

Discovery, which owns assets including Eurosport and spent almost £1bn on the rights to the Olympics across Europe, will add TV brands including Food Network, which airs shows such as Nigella Express.

In addition, Scripps owns a 50% stake in UKTV – which runs 10 channels with shows including Red Dwarf, Only Fool’s and Horses, Dad’s Army and the magician Dynamo – with the commercial arm of the BBC.

The deal will also increase the influence and control that Malone, the American cable tycoon challenging Rupert Murdoch’s dominance of pay-TV in Europe, has in the UK.

Malone is chairman of Liberty Global, which in 2013 acquired Virgin Media in a £15bn deal and owns a 10% stake in ITV, as well as a stake in Discovery Communications that gives him almost 30% of the voting power.

The UKTV business has grown tremendously in recent years: profits jumped 12% to £84.8m ($111m) last year, accounting for more than a third of the profits at BBC Worldwide.

The licence fee funded BBC relies on regular returns from BBC Worldwide, which top £200m ($263m) annually, to help top up its coffers.

David Zaslav, the deal-hungry chief executive of Discovery, said that the takeover would help the company compete better on the global stage.

“Scripps is one of the best run media companies in the world with terrific assets, strong brands and popular talent and formats,” he said.

“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.”

Zaslav had eyed a £1bn ($1.3bn) bid for Channel 4 when the government considered a part or full sale of the state-owned broadcaster.

Discovery has also considered finding partners to make tilt at Premier League rights.

In 2014, Discovery was a contender to buy Channel 5 from Richard Desmond, but pulled out with rival Viacom eventually stumping up more than £450m ($591m).

In 2014, Discovery and Liberty Global teamed up to buy All3Media, the TV production giant behind shows including Skins, Midsomer Murders and The Only Way is Essex, for more than £500m ($657m).


© 2017 Guardian News and Media Limited.