Scripps Shares Soar 14% As Discovery Communications Reportedly Mulls Bid

(RTTNews) - Shares of Scripps Networks Interactive, Inc. (SNI) soared more than 14 percent in extended trading on Tuesday after reports emerged that Discovery Communications, Inc. (DISCA) is mulling a bid for the Food Network parent.

According to media reports, Discovery is said to have discussed the floating of a bid for Scripps Networks at its board meeting earlier in the day. Discovery is yet to make a formal offer for Scripps.

Discovery is another lifestyle media company that owns channels such as TLC, Animal Planet and OWN, and is seen as a natural fit for Scripps, which owns channels such as the Food Network, HGTV, DIY Network, Cooking Channel, and the Travel Channel. The combined company would have a market capitalization of about $43 billion.

Knoxville, Tennessee-based Scripps Networks is the developer of lifestyle-oriented content for television and the Internet markets. It was formed in July 2008, when E. W. Scripps Co. (SSP) spun off its cable television division as a separate publicly traded company, which currently has a market capitalization nearing $11 billion.

The company was until last year tightly controlled by descendants of the newspaper magnate E.W. Scripps. However, the death of E.W. Scripps' last grandchild saw the Edward W. Scripps Trust being dissolved in October 2012. Currently, the shares of the company are held by 24 heirs to the family trust which together represent 43 percent of the economic interest in the company.

Scripps Networks has been an acquisition target for the past one year as an acquisition will help the heirs of the family trust to easily liquidate their shares, which otherwise is restricted to sale in the public markets.

Cable companies could also be pushing for a consolidation in order to cut costs amid rising programming costs. The cable television industry has been losing television subscribers to satellite operators and phone companies, and is facing new challenges from online video.

Another hot bidding is in the process to acquire Time Warner Cable (TWC), with cable operators such as Charter Communications, Inc. (CHTR), Comcast Corp. (CMCSA, CMCSK), and privately-held Cox Communications in the fray.

SNI closed Tuesday's regular trading session at $75.25, up $0.51 or 0.68% on a volume of 0.99 million shares. The stock soared a further $10.90 or 14.49% in after-hours trading.