As a result of “the ratings and impression softness in the USA market”, Scripps cut its full-year 2017 guidance for revenue growth to 4 percent from 6 percent and for segment profit to no change from 3 percent growth. The 8 months bearish chart indicates high risk for the $9.09 billion company.
The deal, announced Monday, puts the combined company in a strong position to draw more female viewers.
Neither company has links to a USA broadcaster or major domestic sports rights, so it will remain to be seen how much leverage the combined company will have with distributors.
The owner of the Discovery Channel has agreed to acquire Scripps Networks Interactive for $11.9 billion, creating a 19-channel, lifestyle content network as it tries to increase its negotiating clout with cable distributors and advertisers. As noted in the official announcement, the new company will deliver 7 billion monthly short-form streams and will bring together Scripps’ expertise in short-form with Discovery’s Group Nine Media to craft more of these types of videos for social media. The two media companies produce 8,000 hours of television content in addition to owning 300,000 hours of content, according to Lowe The company plans to invest about $3.5 billion on content annually, Zaslav added.
In addition to content delivery, the deal could also help keep costs down. Acadian Asset Management LLC acquired a new stake in shares of Discovery Communications during the first quarter worth about $134,000. Why the big discrepancy? Scripps family majority owners had been seeking a deal in which 50% or more would come in cash. The per-share price includes $63 per share in cash and $27 per share in Discovery’s Class C shares. The number of shares now owned by investors are 368.58 mln. Post-merger, existing Discover shareholders will own about 80% of the company.
The deal, which still needs to be approved by Discovery and Scripps’ shareholders as well as the customary regulatory agencies, is expected to close by early 2018. We think the deal makes some strategic sense, but does not really address cable TV’s existential issues, and we think the purchase price is on the expensive side. (NASDAQ:DISCK) news were published by: Prnewswire.com which released: “Discovery Communications Reports Second Quarter 2017 Results” on July 31, 2017, also Nasdaq.com with their article: “BUZZ-US STOCKS ON THE MOVE- Discovery Communications, CDI Corp, Hertz Global …” published on July 31, 2017, Nasdaq.com published: “Discovery Communications, Inc“.