Yesterday, VARIETY reported that
Discovery Communications Inc.
) is considering a bid to acquire
Scripps Networks Interactive Inc.
). This is reflective of the growing consolidation trend in the
cable TV operators industry. This trend might soon be adopted by
the TV content producing industry. However, neither Discovery nor
Scripps Networks have confirmed this report.
We believe a merger between Discovery and Scripps Networks
will be significantly beneficial for both entities. Discovery has
a diversified content network. Its flagship Discovery channel is
known as a nature channel. Similarly, Animal Planet is a wildlife
The company has a military channel, an ownership interest in
Oprah Winfrey Network and has recently acquired the SBS Nordic
operations of Prosiebensat.1 Media AG. Moreover, Discovery is
highly geographically diversified in more than 200 countries with
over 100 TV networks.
On the other hand, Scripps Networks is a pure-play lifestyle
TV network consisting of six channels. All these cable channels
have loyal audiences, who also view the company's content in
several non-TV platforms.
This helps Scripps Networks to explore the non-TV verticals,
such as magazines (print media) and websites (Internet). The
company also acquired Asian Food Channel, a leading food-focused
pay-TV network in Asia.
Additionally, both the companies are gradually depending on
the video streaming or the TVEverywhere platform. Scripps
Networks has a content licensing deal with
) through which its popular TV channels are available on Amazon's
subscription-based video streaming service - Prime Instant Video.
Discovery recently renewed its agreement with
Time Warner Cable Inc.
) to offer Discovery's content on the TVEverywhere platform of
Current Zacks Consensus Estimate revision trend is indicating
7.2% revenue growth and 12.3% earnings per share growth year over
year in 2014 for Scripps Networks. Similarly, these figures are
expected to rise 11.5% and 28.2% year over year,
We believe that this favorable market trend raised the stock
prices of Scripps Networks and Discovery by 14.5% and 1.2%,
respectively, in the aftermarket trade on Nasdaq. Currently, both
Discovery and Scripps Networks have a Zacks Rank #3 (Hold).
AMAZON.COM INC (AMZN): Free Stock Analysis
DISCOVERY COM-A (DISCA): Free Stock Analysis
SCRIPPS NETWRKS (SNI): Free Stock Analysis
TIME WARNER CAB (TWC): Free Stock Analysis
To read this article on Zacks.com click here.