Media Consolidation Is in the Air, and John Malone Is Fanning It

So perhaps it is little surprise that he and a top lieutenant, Gregory Maffei, contacted two top investors in Univision at the Allen & Company media and technology conference in Sun Valley, Idaho, this month to broach the idea of a potential investment, the people briefed on those talks said.

Univision, which was taken private by a group of investors for $13.7 billion in 2007, has considered going public for several years and first filed preliminary papers to do so in 2015. The company’s leveraged buyout saddled it with a heavy debt load — roughly $8.3 billion as of March 31 — making determining a valuation somewhat tricky.

It is unclear whether the broadcaster and its backers will choose to take on a major investor, sell the company or continue to pursue an initial public offering. It is also unclear whether other potential bidders like Grupo Televisa, the Spanish-language content producer that had bid for Univision a decade ago, will emerge.

For the moment, Univision’s investors and Mr. Malone remain far apart on an acceptable valuation for the company, one of these people said.

If Univision pursues an initial offering, it would likely do so in the first half of 2018, this person added. The people who spoke of the Univision and Scripps discussions insisted on anonymity because negotiations were continuing.

Meanwhile, Scripps and Discovery have held merger discussions, people with knowledge of those talks said. Scripps has also discussed a potential transaction with other suitors, one of those people added.

News of the talks sent shares in Scripps Networks up 14 percent on Wednesday. That gave the channel operator a market value of just under $10 billion. Shares in Discovery were up nearly 5 percent, giving the company a market value of about $15.5 billion.

News of the discussions, as well as Mr. Malone’s interest in Univision, was reported earlier by The Wall Street Journal.

For Scripps, a tie-up with Discovery would make sense. The two companies held talks to combine several times — most recently in 2014 — though those discussions fell apart over a range of issues, including price.

Winning over Scripps would mean placating the company’s eponymous family, which controls roughly 92 percent of the broadcaster’s voting stock and which votes as a group.

Discovery, which is backed by Mr. Malone and the Newhouse family, has been an active deal maker since the collapse of the Scripps talks three years ago. The broadcaster has pushed abroad to expand its international presence, with deals to buy Eurosport and other foreign programming rights.

That could prove compelling to Scripps, whose portfolio of channels is primarily domestic except for holdings like a 50 percent stake in Britain’s UKTV.

Among the potential benefits of the deal for Discovery would be cost savings and an opportunity to dominate the market for women’s television. The deal would bring together Discovery’s Investigation Discovery, OWN and TLC with Scripps’s HGTV and Food Network.

Scripps has also developed a significant presence on emerging platforms like Snapchat’s Discover.

The two companies’ properties could also be combined into an entertainment-focused “skinny bundle,” a collection of channels that pay-TV subscribers could choose instead of a more standard and more expensive broad array of programming. Discovery has sought to create such an offering, which could include channels like OWN and TLC as well as Scripps properties.

And Scripps’s chief executive, Ken Lowe, is friends with his counterpart at Discovery, David Zaslav. Both men were inducted into the Cable Hall of Fame in April.

But some analysts seemed unimpressed by what a merger of the two companies would yield. Todd Juenger, an analyst at Bernstein, said combining Discovery and Scripps would allow them to cut costs but would not change the fact that many pay-TV providers simply do not want several of the channels that they have to offer.

“Do we find the pitch compelling?” Mr. Juenger wrote in a research note. “In a word, ‘no.’”

Continue reading the main story

Leave a Reply

Your email address will not be published.

two + nine =