Scripps makes its travel plans, and they're not cheap
Scripps Networks Interactive has bought a majority stake in the Travel Channel in a deal that values the cable network at $975 million.
That price tag is sure to raise eyebrows in the industry. When Travel Channel parent Cox Communications first put the network on the market, most analysts and industry experts thought it would fetch a price tag in the $600-million range. Though the channel has been growing in ratings in recent years and is in more than 90 million homes, it does not have any shows that regularly draw over 1 million viewers and is hardly a cash cow.
But you know what happened next. Rupert Murdoch's News Corp. jumped in and started kicking the tires and drove the price up. Then when it got too high for even them (which is a pretty good sign that something's out of whack here), they bailed. Under the terms of the deal, Scripps will have a 65% stake in the network. Cox will get $878 million in a cash payout and keep 35% of the network.
For Scripps, the channel makes sense because it already owns Home & Garden TV and a big chunk of the Food Network as well as other lifestyle channels. It will likely cut and merge a lot of the operations at Travel Channel to save on costs. Also, Scripps will probably be able to leverage its current channels to boost what cable and satellite operators pay to carry the Travel Channel.
-- Joe Flint