Scripps secures 65% of Travel Channel

Scripps Networks, Cox Communications to form joint venture

NEW YORK -- Scripps Networks Interactive has won the auction for Travel Channel Media.

The company has agreed to take a 65% stake in Travel Channel and its related activities in a deal with Cox Communications that values the network at $975 million. That is well ahead of the original expectations of a $600 million-$700 million price tag.

Industry executives have expressed continued interest in buying cable networks, highlighting that their dual revenue streams have allowed them to perform better amid the recession.

News Corp. and private-equity firms also had been in the running for the channel.

Scripps Networks and Cox will form a joint venture. Under the deal, expected to close in the coming months, Cox will contribute Travel Channel Media. Scripps will contribute $181 million in cash and guarantee $878 million in debt that will be indemnified by Cox. The venture structure allows Cox to avoid a big tax bill.

Launched in 1987, Travel Channel reaches about 95 million U.S. households. Scripps Networks also runs such lifestyle networks as HGTV, Food Network and DIY Network.

"Adding the Travel Channel and its related enterprises provides us with a unique opportunity to meaningfully expand our portfolio into a lifestyle category that is highly desirable to media consumers, advertisers and programming distributors," said Kenneth Lowe, chairman, president and CEO of Scripps Networks.

Collins Stewart analyst Thomas Eagan on Thursday downgraded shares of Scripps Networks from "buy" to "hold." "We estimate that the (Travel Channel) venture is dilutive to Scripps' valuation," and the stock has had an "impressive run" with little near-term upside left, he argued.
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