The Great Smoky Mountain Journal
Staff Reports
Posted: Monday, January 01, 2018 12:43 PM
Scripps, Discovery Merge In $14.6 Billion Deal
Media giant Scripps Network Interactive came to Tennessee in 1994, introducing the world to cable channels like HGTV. Former executives attribute much of the networks’ success to its locations.
“Ken Lowe, when he founded HGTV originally, he wanted to be in a place where people could experience the brand,” Cindy McConkey Cox said. “And where they could have a home and have a garden which was what the original brand was all about. It was a little bit more rural.”
The company’s longevity in Knoxville is becoming less certain, with Discovery Communications on track to purchase the network for $14.6 billion.
“Clearly there’s going to be some redundancies that will reduce employment,” Cox said.
The impact the move will have on Tennessee workers is also coming into question.
“It’s hard to predict,” Cox said. “Discovery has a very significant presence in D.C. That is their headquarters. That will continue to be their headquarters. I think it’s unrealistic to think that Discovery would move to Knoxville, so I would take that off the board right off. But the brands still need people running the brands, so when it comes to your programmers and marketers associated with HGTV, DIY and Great American Country, all of whom are located here, they may leave them untouched.”
Over its two decade-plus run in Knoxville, Scripps brought hundreds of jobs to the area and even helped other businesses grow.
Robert Twilley, senior vice president and general manager of Jupiter Entertainment, said the production industry in Knoxville is likely to change.
“It’s going to take some time to figure out,” Twilley said. “In the short term, it could mean that there’s more available labor on the market for companies like Jupiter. Longer term, it may mean that less people are attracted to this market for productive opportunities.”
With the deal still needing to be reviewed and approved by FCC, it could be several months before Knoxville sees the true effects of this merger.
“In many ways it’s kind of sad because I know a lot of the people there and life will change,” Cox said. “But for some of them, it’s going to change for the better.”
Scripps Networks Interactive CEO Ken Lowe spoke earlier with CNN International about the pending deal.
“For us a unique opportunity, not only for our brands, our stake holders, but also for our employees, to join a much larger company with many more opportunities,” Lowe said. “It’s an historic day. An absolutely fantastic partnership that we now have with discovery communications.”
The deal, announced Monday, puts the combined company in a strong position to draw more women viewers.
Other channels include Discovery’s TLC and the Discovery Channel. Scripps owns HGTV and the Travel Channel, among others. The combined company will house five of the top pay TV networks for women and account for more than 20 percent share of women watching prime-time pay TV in the U.S.
The transaction is valued at $90 per share, about a 4 percent premium to Scripps’ Friday closing price of $86.91. The per-share price includes $63 per share in cash and $27 per share in Discovery’s Class C shares. The transaction also includes approximately $2.7 billion in Scripps’ debt.
The companies said Monday that they expect about $350 million in cost savings.
The buyout, which still needs approval from the shareholders of both companies, is targeted to close by early next year.
Shares of Discovery Communications Inc. rose 2.6 percent before the market open, while shares of Scripps Networks Interactive Inc. edged up slightly.