LOS ANGELES (AdAge.com) -- Scripps Networks is the new majority owner of the Travel Channel after acquiring a 65% stake in the Cox Communications cable network, valued at $975 million. The media company was the ultimate victor in a bidding process that included News Corp. and Time Warner, driving up the property's value from a reported $700 million back in August.
That Travel Channel would become such a hot property in an otherwise brutal year for media is a sign of the renewed optimism in mergers and acquisitions that's also driving the likely Comcast-NBC Universal deal currently in the works.
It's also a sign that cable companies are willing to invest in properties with long-term growth, as Travel Channel isn't exactly a money-making powerhouse just yet. According to SNL Kagan, the network is estimated to finish 2009 with net operating revenue of $185.8 million, ad revenue of $128.2 million and cash flow of $69.1 million. By comparison, Scripps' HGTV reported operating revenue of $153 million during third quarter 2009 alone, with an additional $119 million during the same period for Food Network. As a result, Scripps will pitch in $181 million in cash to finance the partnership with Cox, and it will take on an additional $878 million in third-party debt.
Before the Cox deal closes in January, Scripps will put an integration team in place to determine how to take over the assets currently operated by Discovery Communications, according to a Scripps spokeswoman. Discovery, Travel Channel's former majority owner, has run the network's ad sales, affiliate sales and technical operations since Cox ended its investment with the company in 2007.
Meanwhile, Travel Channel has established itself as a place for large-scale integrated marketing programs, as evidenced by this summer's partnership with Chase Sapphire that included talent endorsements from popular on-air talent such as Anthony Bourdain, Andrew Zimmern and Samantha Brown. And Travel Channel programming should also sync up nicely with a suite of networks that includes Food Network, HGTV and the forthcoming Cooking Channel, which could create promotional synergies for Mr. Bourdain's "No Reservations" and Mr. Zimmern's "Bizarre Foods," both of which are focused on culinary experiences. Travel Channel also has a growing suite of digital properties, including Travel Channel GO, an iPhone app that launched in 2008.
"Our vision for Travel follows the same script that's made Food Network and HGTV two of the most powerful brands in all of TV," Scripps Networks CEO Ken Lowe said in a statement. "By lending our unparalleled expertise in developing successful lifestyle media businesses, we have every confidence that we can build on Travel's strong brand identity and leverage the successes achieved to date by the top-notch team at Travel Channel and our new partners at Cox Communications."