LONDON, UK / ACCESSWIRE / August 2, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Discovery Communications, Inc. (NASDAQ: DISCA, DISCK) ("Discovery"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=DISCA. The Company announced on July 31, 2017, that it has signed an agreement to acquire Scripps Networks Interactive, Inc. (NASDAQ: SNI) ("Scripps"). The cash plus stock transaction is valued at approximately $14.6 billion. For immediate access to our complimentary reports, including today's coverage, register for free now at:
At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on DISCA; also brushing on SNI. Go directly to your stock of interest and access today's free coverage at:
Commenting on the acquisition, David Zaslav, President, and CEO of Discovery Communications said:
"We believe that by coming together with Scripps, we will create a stronger, more flexible and more dynamic media Company with a global content engine that can be fully optimized and monetized across our combined networks, products and services in every country around the world."
Kenneth W. Lowe, Chairman, President, and CEO of Scripps Networks Interactive, added:
"This agreement with Discovery presents an unmatched opportunity for Scripps to grow its leading lifestyle brands across the world and on new and emerging channels including short-form, direct-to-consumer and streaming platforms."
Highlights of the acquisition
Discovery has offered to pay Scripps' shareholders $90 for each Scripps' share they hold. The Scripps' shareholders will be paid $63 in cash and the remaining $27 in Class C Common shares of Discovery's stock. This offer price is based on the closing share price of Discovery's stock on July 21, 2017. Scripps' shareholders could opt to receive cash, stock, or a combination of both as per the decided ratio and this is subject to the pro rata cut backs in proportion to the cash or stock being oversubscribed. The offer price values the transaction at $14.6 billion and is inclusive of approximately $2.7 billion in Scripps' debts.
Once the transaction is completed, Scripps shareholders are expected to own approximately 20% stake in Discovery and the balance 80% stake will be owned by Discovery shareholders.
Discovery plans to finance the cash portion of the acquisition via a mix of cash in hand and fresh debts. It has already secured financing commitments from affiliates of Goldman Sachs & Co. LLC for the same. Due to the acquisition, Discovery has postponed its share repurchase program for the near future.
The acquisition has been approved by the independent committee of disinterested directors of Discovery. John C. Malone, Advance/Newhouse Programming Partnership (ANPP) who holds Discovery's Series A preferred stock and members of the Scripps family have signed voting agreements to vote in favor of the transaction. The transaction is expected to close in Q1 2018 and is subject to regulatory and shareholders' approvals and other closing conditions.
Once the transaction is complete, Kenneth W. Lowe of Scripps will join the Board of Directors of Discovery.
Benefits of the acquisition
The transaction is expected to result in cost synergies of over $350 million. The deal is expected to be accretive to the Company's adjusted EPS and cash flow within one year of closing.
The Discovery- Scripps deal will capture nearly 20% of ad-supported pay-TV viewership in the US.
The share of female viewership will increase as the merged Company would own five of the top female centric networks in ad-supported pay – TV channels, of which over 20% would be from women watching primetime TV in US. This would attract more advertisers.
The combined Company would have 8,000 hours of original programming annually and capture the newer audience from the younger generation. The merged Company is planning to deliver 7 billion monthly short-form streams by using Scripps' expertise in this format along with Discovery's Group Nine Media to create these types of videos aimed for social media. This will give it access to a new audience group who prefer spending time online than in front of TVs.
The deal will result in combining on Discovery's channels (like Discovery Channel, TLC, Investigation Discovery, Animal Planet, Science and Turbo/Velocity, as well as OWN in the US, Discovery Kids in Latin America, and Eurosport covering local, premium sport as well as Olympic Games across Europe) and Scripps' channels (like HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel, and Great American Country, TVN, a premiere entertainment, lifestyle and news content provider in Poland, UKTV independent JV with BBC Worldwide, Asian Food Channel, and Fine Living Network, a lifestyle channel).
The merger will result in the combined Company expanding its reach to a wider international audience especially in markets like UK, Poland, Latin America, etc.
The added scale, content, and multiple brand offerings will help the Company in negotiating better deals with advertisers, distributors, cable providers, and streaming services. These also provide the Company with the option of launching its own online bundle of channels; thereby handling competition from streaming services like Netflix, Amazon.com, and Sling TV.
The winning bid
Discovery outbid Viacom Inc. to seal the deal with Scripps. Viacom had been in the race to acquire Scripps till July 26, 2017, when it offered to pay all-cash for the acquisition. However, Viacom bowed out of the race at the last-minute due to financial limitations. The acquisition would have strained Viacom's resources and added to its existing debts, increasing the risk of losing its investment-grade status, as a result.
Last Close Stock Review
At the close of trading session on Tuesday, August 01, 2017, Discovery Communications' stock price marginally fell 0.89% to end the day at $24.38. A total volume of 8.09 million shares were exchanged during the session, which was above the 3-month average volume of 3.91 million shares. The Company's shares are trading at a PE ratio of 12.81. At Tuesday's closing price, the stock's net capitalization stands at $8.99 billion.
At the closing bell, on Tuesday, August 01, 2017, Scripps Networks Interactive's stock was marginally up 0.18%, ending the trading session at $87.57. A total volume of 8.88 million shares have exchanged hands, which was higher than the 3-month average volume of 2.56 million shares. The Company's stock price soared 21.84% in the last three months, 14.98% in the past six months, and 33.09% in the previous twelve months. Moreover, the stock surged 22.70% since the start of the year. The stock is trading at a PE ratio of 19.59 and has a dividend yield of 1.37%. The stock currently has a market cap of $11.30 billion.
Pro-Trader Daily (Pro-TD) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and Canadian stocks. PRO-TD has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles, and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.
PRO-TD has not been compensated; directly or indirectly; for producing or publishing this document.
PRESS RELEASE PROCEDURES:
The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst [for further information on analyst credentials, please email [email protected]. Rohit Tuli, a CFA® charter holder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by PRO-TD. PRO-TD is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.
PRO-TD, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. PRO-TD, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, PRO-TD, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.
NOT AN OFFERING
This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither PRO-TD nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://protraderdaily.com/disclaimer/.
For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:
Email: [email protected]
Phone number: (917) 341.4653
Office Address: Mainzer Landstrasse 50 Frankfurt am Main, Germany 60325
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
SOURCE: Pro-Trader Daily