Viacom is no longer in the running to acquire Scripps Networks Interactive, paving the way for a likely bid by Discovery, according to a report by the Wall Street Journal.
According to the Journal, citing unnamed sources, Scripps has decided to negotiate exclusively with Discovery after reviewing the rival bids.
The paper reported that heavily indebted Viacom was unwilling to overpay for Scripps, which would have given it a set of lifestyle and female-skewing channels to complement its youth-oriented services. Viacom CEO Bob Bakish has focused on putting the company on a financial even keel and developing its core cable channels since taking the helm at the company.
According to the Journal, Discovery is offering a mix of 70% cash and 30% stock for Scripps. The Scripps family, which controls over 90% of the New York-listed company’s voting stock, is believed to favour a transaction that includes as substantial cash element.
The latest twist in the Scripps saga follows a Reuters report that Viacom was willing to table an all-cash offer for the company. Such a move would probably have seen Viacom, which has debits amounting to over US$12 billion, lose its investment-grade status. Credit ratings agency Moody’s had downgraded the media company to its lowest level of investment grade last year.
Scripps Networks Interactive operates channels including HGTV, Food Network and Fine Living. In Europe, it owns Polish commercial channel TVN and a 50% share in UK multichannel network provider UKTV.