(Reuters) - U.S. media company Discovery Communications Inc is in the lead to acquire U.S. cable TV network owner Scripps Networks Interactive Inc, people familiar with the matter said on Wednesday, in a deal likely to top $12 billion.
The acquisition would bring together Scripps’ HGTV, Travel Channel and Food Network and Discovery’s Animal Planet and Discovery Channel, giving the combined company more pricing power with which to negotiate with cable TV operators such as Comcast Corp and Charter Communications Inc.
Discovery has entered into exclusive talks with Scripps after prevailing over a rival offer from Viacom Inc, another U.S. media company, one of the sources said. [nL1N1KH011]
While a deal could come as early as next week, negotiations are ongoing and no agreement is certain, the sources added.
The exact value of Discovery’s offer could not be learned, but sources said it is a cash-and-stock bid, comprising mostly cash, and valuing Scripps in the region of $90 per share. Scripps shares ended trading on Wednesday at $84.07.
The sources asked not to be identified because the negotiations are confidential. Viacom, Scripps and Discovery declined to comment.
Cable TV networks are coming under pressure as more viewers watch their favorite shows and movies on their phones and tablets, and there is also increasing competition for viewers from streaming services such as Netflix Inc and Amazon.com Inc.
By adding Scripps programming, Discovery, which has a market capitalization of $15.2 billion, could launch its own “skinny bundle” of networks at a low cost for viewers. The deal would also help Discover to sell its content overseas more easily.
Scripps has been considered a takeover target since the Scripps family trust that controlled the company was dissolved five years ago.
This is at least the third time that Discovery, whose shareholders include cable magnate John Malone, has held talks to buy Scripps.
Reporting by Jessica Toonkel and Liana B. Baker in New York; Editing by Lisa Shumaker