Disney Should Buy Scripps, Says Analyst

7:58 PM PDT 8/14/2012 by Paul Bond

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Citi Research's Jason Bazinet says the conglomerate's "missing puzzle piece" are TV networks that appeal to women.

The Walt Disney Co. should -- and may -- purchase Scripps Networks Interactive for its television networks that appeal to upscale women, a Wall Street analyst said on Tuesday.

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"Disney and Scripps belong together," Citi Research analyst Jason Bazinet wrote in laying out the five reasons such an acquisition would be sensible.

No. 1 is that Disney needs to attract "older women," as it has been doing at ABC with shows like Desperate Housewives, Lost, Grey's Anatomy and Dancing with the Stars.

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"The problem for Disney is these broadcast series simply don't ring up the same sort of profits as lesser known shows on cable TV," Bazinet wrote.

With Scripps, Disney would get Food Network, Great American Country, HGTV, Travel, DIY and others that appeal to women over 49.

No. 2, according to Bazinet, is that Disney needs to diversify from ESPN and sports.

The third reason it should acquire Scripps is that Disney has successfully "filled holes with mergers and acquisitions in the past," as with Pixar and Marvel.

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Reason No. 4 is that Disney and Scripps have collaborated in the past with joint ventures and marketing tie-ins, such as with the HGTV show My Yard Goes Disney or when Food Network featured the best dishes at Epcot World Showcase.

The fifth reason is that cable networks are still too fragmented, Bazinet wrote. "We think it's only logical that some of the smaller cable networks -- like Scripps or AMC -- will fall into the hands of larger, well capitalized, global entities."

Bazinet said that Scripps is worth about $67 a share. The stock closed down 3 percent Tuesday to $59.31. Shares of Disney were off fractionally to $49.69.

Email: Paul.Bond@thr.com