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Discovery, Scripps Merger Could Create Specialty Brand For Food, Animal Lovers

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Discovery, Scripps Merger Could Create Specialty Brand For Food, Animal Lovers
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Travel and home improvement, cooking and athletics might soon unite under a single specialty program producer with the potential merger of Discovery Communications Inc. (NASDAQ: DISCA) and Scripps Network Interactive, Inc. (NASDAQ: SNI).

The cable companies have allegedly reentered deal talks after abandoning earlier discussions in 2014, according to the Wall Street Journal.

A union would blend the niche portfolios of the $15 billion Discovery, which owns Discovery Channel, Animal Planet, TLC, Velocity and Eurosport, and the $8.8 billion Scripps, which runs HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country.

Consolidation

The talks come as traditional cable concedes an increasing number of subscribers to online streaming services and rising retransmission fees to broadcasters. Large cable networks are better positioned to negotiate distribution agreements, while smaller firms are exploited.

Consolidation of Discovery and Scripps’ midsize operations could potentially provide leverage in such negotiations,as their merger would be the largest in the media space since the proposed AT&T Inc. (NYSE: T)-Times Warner Inc (NYSE: TWX) deal still under regulatory review, the WSJ noted.

Some industry experts, including analysts at Macquarie Capital, expect continued contraction of the cable industry and greater media sector with additional mergers and acquisitions.

Scripps shares popped 15 percent Tuesday after-hours when reports of the deal first emerged. Discovery spiked as much as 11 percent in futures trading.

At time of publication, Scripps was trading up 14 percent at $76.41 and Discovery up 3.5 percent at $26.96.

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