Personal Finance

Why Discovery Communications' Shares Spiked 12% in January

Line graph moving upward on dark blue background.

What happened

Shares of Discovery Communications (NASDAQ: DISCA) jumped 12% last month, according to data provided by S&P Global Market Intelligence , after the company announced that it would move its headquarters to New York City after it closes on its Scripps Networks (NASDAQ: SNI) acquisition.

So what

Discovery currently has its headquarters in Silver Spring, Maryland, but said last month that it will move to New York in the second half of 2019. While that may seem like a strange reason for a company's share price to rise, investors are likely seeing this move as a step in the right direction for the company's overall content strategy.

Line graph moving upward on dark blue background.

Image source: Getty Images.

Discovery's management said in a press release that the move will help it "take advantage of the proximity to business, investment and production partners in New York."

Being in close proximity to New York's media-centric companies could be beneficial for Discovery, particularly after it officially closes on Scripps. Once the two companies combine, Discovery will have about one-fifth of all advertising-supported paid TV programming in the U.S.

Now what

Shares of Discovery have fallen about 6.8% in February, which is tracking closely to the S&P 500 's drop of 5.6% this month. Transitioning its HQ from Maryland to New York is probably a wise move, but investors should be more focused on the company's acquisition of Scripps Networks and what it could mean for Discovery's future .

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Scripps Networks Interactive. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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