The times are tough for cable-channel companies. Their success is at the mercy of cord-cutting entertainment networks that gave control back to consumers over their TV show selections. Therefore, Wall Street has already foreseen numerous mergers that would help the traditional organizations stay afloat. The latest such talks regard two lifestyle cable giants, namely Discovery and Scripps Network Interactive. Together they can really change the face of cable television.
The Two Lifestyle Cable Giants Feel the Pressure from Cord-Cutting Entertainment Industry
On Tuesday, shares of Scripps Networks soared 14% while Discovery Communications had a 9% hike. The explanation for such powerful performances concerns investors finding out about some merger talks between these two TV firms.
Discovery is home to popular channels such as TLC, Animal Planet, Oprah Winfrey Network, and others and managed to acquire a market capitalization of $15 billion. By comparison, Scripps assured a $9 billion market cap for itself. However, the company still has an influential collection of products such as Travel Channel, Cooking Channel, Food Network, DIY Network, and others.
Both of them experience large challenges coming from their young, yet popular cord-cutting counterparts, particularly Netflix and Amazon. As a consequence, Wall Street considers that each party in the cable industry has to adapt or face oblivion. There are few ways to mobilize against the online threat, and one of these is a merger between two or more rivals.
Discovery and Scripps attempted to unite their forces initially a few years ago. However, the two parties failed to agree on a certain contract. Discovery CEO David Zaslav claimed that the current conditions are tough for global companies that activate in cable, satellite, and mobile industry. On the other hand, he is aware of the fact that their original products are not redundant. On the contrary, they still represent a dominant force in the world of television.
“Two to three years from now you’ll buy that all from one person.”
Other recent moves that share similarities with the two lifestyle cable giants reveal Lionsgate’s $ 4.4 billion investment in Starz. Moreover, AT&T is still trying to enter television industry. The company is waiting for an approval from regulators regarding a merger with Time Warner for $85.4 billion.
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