Combination to Accelerate Growth Across Linear, Digital and Short-Form Platforms Around the World and Create a Global Leader in Real Life Entertainment
• Combined company will have nearly 20% of ad-supported pay-TV viewership in the U.S. • Becomes home to five of the top female networks in ad-supported pay-TV with over 20% share of women watching primetime in the U.S.
• Optionality for next generation growth opportunities through exploitation of brands, formats, talent and 8,000 hours of original programming annually
• Over 7 billion monthly streams creates leading short-form, mobile-first digital player
• Significant cost synergies estimated at approximately $350 million
• Expected to be accretive to Adjusted Earnings per Share and Free Cash Flow in first year after close
• Investor call scheduled for Monday, July 31, at 8:00 a.m. Eastern Time (ET)
Silver Spring, Md. and Knoxville, Tenn. – Discovery Communications, Inc. (Nasdaq: DISCA,
Discovery and Scripps Networks Interactive, Inc. (Nasdaq: SNI) (“Scripps”) 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, July 18, 2017. 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 datadriven ad sales, endemic advertising, and branded entertainment solutions. Discovery’s added scale, content engine and multiple brand offerings will present a compelling 3 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.
