Discovery, Scripps tie-up a subscale DIY fix

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Discovery CEO David Zaslav

Knoxville-based Scripps Networks Interactive received a rise in shares after reports of a possible merger with Discovery Communications.

Reuters reported that this is at least the third time that Discovery has held talks to buy Scripps.

Discovery's lineup includes the Discovery Channel, TLC, Animal Planet and the Oprah Winfrey Network.

Zacks Investment Research lowered shares of Scripps Networks Interactive, Inc (NASDAQ:SNI) from a hold rating to a sell rating in a research report released on Monday. Such a company would also have more leverage to negotiate favorable deals with some of the new over-the-top, streaming pay-TV alternatives that have sprung up, like YouTube TV, which now does not carry any Discovery or Scripps networks. (NASDAQ:SNI) shares were higher on rumors that two major media companies want to buy them.

The Standard & Poor's 500 index rose 7 points, or 0.3 percent, to 2,467 as of 10:03 a.m. Wednesday on Wall Street. Discovery rose 8.7 per cent, while Scripps rose a massive 12.5 pe cent. Discovery has a value of some $15 billion, while Scripps is valued at around $9 billion.

Scripps stock was indicated more than 14% higher, at $76.85, in premarket trading while Discovery was seen up more than 7% at $28.11.

Discovery, which generates about half its revenue outside the USA, could help Scripps expand its global footprint, especially in Europe, where Scripps has acquired an interest in Polish TV operator TVN. Discovery and Scripps both declined to comment. However, they had only been exploratory in nature and Discovery had not made a bid. Scripps has been considered a buyout target in the past by Viacom to add to its massive network. (NYSE:SNI) shares are seeing unusual volume mid-trading session today.

Cable networks have been losing subscribers as viewers pay more attention to their smartphone apps, YouTube videos and streaming services such as Netflix. It has launched new cable channels around the world which are heavily focused on food, lifestyle and travel. 604.94 million shares or 1.06% more from 598.58 million shares in 2016Q3 were reported.

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