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Discovery, Viacom each reportedly approach Scripps Networks on media merger

Both Discovery Communications and Viacom are reportedly considering merging with Scripps Networks.

<p>Hosts Giada de Laurentiis and Bobby Flay during the reveal of the Mentor Challenge, as seen on Food Network Star, Season 12. <span style="background-color: rgb(250, 250, 250); color: rgb(100, 100, 100); font-family: arial, sans-serif; font-size: 11px; font-style: italic;">(Photo: Eddy Chen for Food Network)</span></p>

Scripps Networks is reportedly being wooed by Discovery Communications and Viacom, as both media companies look to bolster their offerings amid market fragmentation spurred by consumer cord-cutting.

Discovery, which includes the Discovery Channel, TLC, Animal Planet, and the Oprah Winfrey Network in its portfolio, approached Scripps about a merger in 2014. Its renewed intentions toward the Knoxville, Tenn.-headquartered Scripps -- its popular channels include HGTV, DIY Network, Food Network, Cooking Channel and the Travel Channel -- was reported Tuesday by The Wall Street Journal, citing persons familiar with the situation.

Scripps is valued at $8.7 billion, according to S&P Global Market Intelligence, while Discovery, based in Silver Spring, Md., is valued at $15 billion.

Viacom, with a market cap of $14.5 billion, has also had talks with Scripps, Reuters reported. Earlier this year, Viacom CEO Bob Bakish said the company was in "very advanced" discussions on an "entry-level" entertainment programming pay-TV package costing $10-$20.

The company has seen some or all its channels, which include Nickelodeon, BET, Comedy Central, MTV and VH1, not being included on new Net-delivered TV offerings such as DirecTV Now, Sling TV and PlayStation Vue. And Charter Communications has moved Viacom channels to higher-priced pay-TV plans for new customers.

Discovery and Scripps were both among companies Viacom was reportedly talking with about joining the programming package. Discovery did not return request for comment on these latest reports, while Scripps and Viacom declined comment.

All three companies "are in particularly difficult positions, especially relative to owners of broadcast networks including Disney, Fox and CBS," said Brian Wieser, an analyst with Pivotal Research Group, in a research note to investors Wednesday. "Discovery, Scripps and Viacom each lack sports programming or much in the way of other high-end original content on their core US networks. Each of them will generally have a harder time persuading distributors to increase the fees paid by much, or to ensure carriage of every network."

A merger would not necessarily ensure the inclusion of the combined company's networks on newer streaming services, he said. "Consequently, it appears to us that the advantages that may be realized are probably less strategic than financial so far as we can tell," he said. "Further, whether or not any of these combinations actually occur is harder to assess."

Scripps (SNI) rose more than 15% in early trading to $77.56. Discovery (DISCA) shares were up nearly 5% to $27.33, while Viacom (VIA) shares were up 2% to $40.80.

Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.

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