Scripps A 'Natural' Fit For Discovery Programming

Discovery Communications Inc. (NASDAQ: DISCA) announced a major $14.6 billion acquisition of Scripps Networks Interactive, Inc. (NASDAQ: SNI) Monday, a deal rumored to be in talks for the past two weeks.

The move will enable Discovery Communications to lock down the female demographic with Scripps HGTV and Food network, according to the Washington Post.

Related Link: Discovery Shares Plunge On Earnings, News Of $14.6 Billion Deal To Acquire Scripps Interactive

The move shows renewed confidence in a struggling television market severely disrupted by cord cutting and streaming services.

The merger creates a “lifestyle programming engine with a global reach as cable companies navigate a disrupted media environment,” wrote the Post's Thomas Heath.

The acquisition of Scripps “creates leading proprietary content company with significant inroads in evolving video ecosystems,” said Barrington Research analyst James Goss following the acquisition.

Goss believes the acquisition will attract a significant share of audience attention across traditional and digital content options. The combined entity will now reach 20 percent of the video audience after adding Scripps’ 8 percent domestic share.

From a content creation perspective, these two brands appear to be a natural fit.

“From a 30,000 foot perspective, this combination is a natural. The products fit together well and the combined enterprise will in short order have substantial size and market share with anticipated accretion to the transaction and very moderate financial leverage.”

Shares of Discovery Communications were down 8 percent Monday. Goss has a Market-Perform rating on the stock, with no listed price target.

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Image Credit: "Assistant White House Pastry Chef Susie Morrison (right), White House Executive Pastry Chef Bill Yosses (middle), and HGTV host Genevieve Gorder (left) applaud the gingerbread house placed in the State Dining Room of White House for the Christmas holiday season on December 2, 2013." By The White House. Amanda Lucidon, photographer. [Public domain], via Wikimedia Commons