Shares of Scripps and Discovery Soar After Report of Possible Merger

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Discovery CEO David Zaslav

With cord-cutting amid competition from Netflix, Amazon and others, Wall Street has been predicting consolidation among cable-channel companies.

Shares of Scripps Networks Interactive soared 14 percent after the closing bell on Tuesday while Discovery Communications shares were up 9 percent, a reaction to a Wall Street Journal report saying the two TV companies were discussing a possible merger.

Discovery, with its namesake channel as well as TLC, Animal Planet and OWN, is the bigger company with a $15 billion market cap, while Scripps, home to HGTV, Great American Country, the Travel Channel and Food Network, sports a $9 billion market cap.

With cord-cutting amid competition from Netflix, Amazon and others, Wall Street has been predicting consolidation among cable-channel companies and Discovery and Scripps, in fact, discussed merging a few years back but couldn't come to an agreement.

"There's more pressure on cable players around the world, satellite and mobile players, to merge or figure out how to offer all those together," Discovery CEO David Zaslav told Bloomberg at the recent Allen & Co. conference in Sun Valley, Idaho. "Two to three years from now you'll buy that all from one person. We have great, exclusive content to provide, so they're going to need us."

One recent deal had Lionsgate acquiring Starz for about $4.4 billion in cash and stock, while on a much larger scale, AT&T, which already owns DirecTV, is still trying to get regulatory approval to acquire Time Warner for $85.4 billion.

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