Discovery Buys Scripps for $11.9 Billion, Creating Cable Giant

Discovery agreed to buy Scripps for $11.9 billion in a bet that uniting ownership of cable channels like Animal Planet and HGTV will help the company adapt to the changing television landscape, according to Bloomberg.

Discovery, one of billionaire John Malone’s key holdings, 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, according to a statement. The price represents a 34 percent premium over Scripps’ closing price on July 18, the day before news of the companies’ talks became known.

Discovery is grappling with shrinking audiences at some U.S. channels, including the Discovery channel and Animal Planet, as consumers drop cable subscriptions and get more entertainment online from Netflix and others. The deal combines two companies that specialize in so-called unscripted programming, focused on real-life adventures, travel, wildlife and home. With Scripps, Discovery gets the home-improvement channel HGTV, where hits like “Property Brothers“ and “Fixer Upper“ have made it one of the more popular cable networks.

The combined company will have almost 20 percent of the ad-supported pay-TV viewership in the U.S., according to the statement. Buying Scripps could also help Discovery boost its international sales, which currently account for half of its annual revenue. Scripps owns an interest in Polish TV operator TVN and is expanding HGTV to new countries.

After being left out of some new online TV packages in the U.S., Discovery has been looking to create a low-cost web-only TV service with its cable channels and those of others for consumers who don’t want to pay for sports, people with knowledge of the matter said in April. Neither Discovery or Scripps broadcasts live sports in the U.S.

Though smaller, Scripps has an especially valuable asset in HGTV, which was the fourth-most watched U.S. network in prime time this year, with an average of 1.51 million viewers a night through July 16, according to Nielsen data. Parties to the Scripps Family Agreement control 92 percent of the voting stock.