In a joint venture with Cox, which retains 35%, Scripps Networks Interactive will contribute $181 million in cash.
Scripps Networks Interactive Inc., owner and operator of the Food Network and HGTV lifestyle television networks, will enter into a joint venture with Cox Communications by which it will acquire a controlling interest in the Travel Channel.
The two companies today signed a definitive agreement that, upon completion, will result in Scripps Networks Interactive owning 65 percent of the Travel Channel and Cox Communications retaining a 35 percent minority stake in the network.
Cox will contribute the Travel Channel, valued at $975 million, and Scripps Networks Interactive will contribute $181 million in cash to a newly created partnership. The partnership, in turn, will take on $878 million in third-party debt that will be guaranteed by Scripps and indemnified by Cox, with the proceeds to be distributed to Cox.
The transaction will result in the partnership having about $696 million in net debt and the companies said the deal is expected to be completed by or before January 2010.
“Combining the Travel Channel with Food Network and HGTV will make our fast-growing, young company the undisputed global leader in lifestyle programming,” said Kenneth W. Lowe, chairman, president and chief executive officer of Scripps Networks Interactive. “This collection of popular lifestyle networks will be in great demand worldwide and promises to create substantial long-term value for all of our stakeholders.
“Adding the Travel Channel, and its related enterprises, provides us with a unique opportunity to meaningfully expand our portfolio into a lifestyle category that’s highly desirable to media consumers, advertisers and programming distributors,” Lowe said. “Our vision for Travel follows the same script that’s made Food Network and HGTV two of the most powerful brands in all of television. 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.”
Scripps Networks Interactive will control the joint venture and the network will be run as part of the company’s growing portfolio of lifestyle media brands.
Scripps Networks Interactive was advised on the transaction by Barclays Capital Inc. and Skadden, Arps, Slate Meagher & Flom LLP.