Discovery Gets Justice Department Clearance to Buy Scripps
The company, led by CEO David Zaslav, signals upside to the $350 million in promised cost synergies in the Scripps takeover.
Discovery Communications, the company behind such cable networks as the Discovery Channel, TLC and OWN, on Tuesday reported better than expected fourth-quarter earnings and said it has received clearance from the U.S. Department of Justice to acquire Scripps Networks Interactive.
The company, led by CEO David Zaslav, reported adjusted earnings per share of 47 cents for the period, compared with 56 cents on an adjusted basis. Wall Street had on average forecast adjusted earnings of 41 cents per share.
The company posted a fourth-quarter loss of $1.14 billion when excluding the adjustments, "as improved operating results were more than offset by a non-cash $1.32 billion after-tax goodwill impairment charge, $59 million of after-tax Scripps Networks transaction-related costs and currency-related transactional losses compared to gains in the prior year." The impairment charge was for the company's European unit.
Quarterly revenue rose 11 percent to $1.86 billion, with growth in the U.S. and international markets. In the U.S., Discovery posted 8 percent advertising and 7 percent distribution revenue gains.
Discovery has said it expects to close its acquisition of Scripps Networks Interactive for $11.9 billion, or $14.6 billion including debt, early this year.
"We are pleased to have passed this significant regulatory milestone on our path to acquire Scripps Networks Interactive," said Zaslav. "The conclusion of the Department of Justice’s investigation is an integral step toward closing our transaction. We look forward to combining these two great companies to the benefit of our enthusiast audiences around the world."
The closing of the proposed transaction remains subject to the completion of a review in Ireland and other closing conditions. Discovery said Tuesday it expects to close it within the next couple of weeks after previously saying it would wrap up the deal by the end of the first quarter.
Zaslav said the company's original promise of $350 million in cost synergies from the deal looks "increasingly conservative." He added that there is also room for revenue synergies, which the company hasn't outlined so far.