Scripps Networks Interactive has notified Cox Communications of its intention to purchase the cable operator’s 35% interest in the Travel Channel it doesn’t already own.
On a conference call with analysts to discuss quarterly results, Scripps Networks chief financial officer Lori Hickok said the programmer has notified the cable operator of its intentions and the valuation process has begun. She added Scripps hoped the transaction would be completed by the end of the first quarter.
Scripps purchased a 65% interest in Travel Channel from Cox in 2009 for about $1 billion. According to the deal, Cox had the right to put its interest back to SNI on the fifth anniversary of the transaction and Scripps had the right to call Cox’s interest a year later.
On the call, Hickok said the valuation process is fairly typical of these deals – Scripps will determine what it thinks the stake is worth and Cox will make its own determination. If the two prices are within a certain range a deal will be struck; if not, a third party will be brought in to make its own valuation.
Finding a common ground may not be easy. While 65% of Travel Channel was priced at $1 billion in 2009, the value likely has changed. And though Scripps does break out revenue performance for its networks, some analysts have said it is difficult to determine how much of total programming and SG&A expense is allocated to the network to get an accurate cash flow number. According to SNI's 2015 results, Travel Channel reported revenue of $309.2 million for 2015, down about 1.6%.
Scripps has made some recent changes to the Travel Channel -- in December it named Courtney White as senior vice president of programming, it is continuing to add original porgramming and also moved Travel Channel HQ from Chevy Chase, Md., to Knoxville, Tenn., SNI's home base. Scripps also has other partnerships for networks -- Tribune Media owns 33% of Food Network -- and the company has expressed a desire to consolidate its interest in that channel over the years. However, no deal for Food appears to be in the works.
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