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Why the owners of the Discovery Channel and Food Network are pursuing a $15 billion merger

Diane Bondareff/AP Images for Carnival Cruise Line
Guy Fieri’s Food Network home has a new hub, along with its sister brands.
By Ashley Rodriguez
Published Last updated This article is more than 2 years old.

It’s no surprise that TV is struggling. Fewer people in the US are paying for cable, satellite, and other pay-TV services. And many of the most-watched US TV networks are losing subscribers.

So why would Discovery, which already owns 13 TV networks, pay $14.6 billion in cash and stock to buy Scripps Networks and its collection of TV channels that also produce the same kind of DIY, lifestyle, and non-scripted fare, as was announced by the companies today? Well, it’s not all about TV.

Discovery and Scripps said in the announcement that the would-be company’s combined brands, which would include the Discovery Channel, TLC, Investigation Discovery, Animal Planet, OWN, and Scripps’s HGTV, Food Network, Travel Channel, Cooking Channel, and DIY Channel, among others, would (emphasis added):

…produce approximately 8,000 hours of original programming annually, be home to approximately 300,000 hours of library content, and will generate a combined 7 billion short-form video streams monthly, demonstrating its commitment to delivering content as a top short-form provider.

That’s the kind of stuff that would be right at home in a Facebook news feed, YouTube channel, or in Snapchat. “We may have more [intellectual property] than any other media company,” Discovery CEO David Zaslav told analysts on a conference call today. “We’re certainly up there.”

“The content that we have so successfully created on linear now has this huge opportunity on a digital basis, on a social basis, and in short-form content,” Scripps CEO Ken Lowe added. (“Linear” is how TV execs refer to old-fashioned live TV channels.)

As more advertising dollars shift online (paywall) and tech companies like Facebook, Snapchat, and Apple court TV-like programming, the deal would allow these two traditional TV-network owners to carve out a space for themselves in this evolving digital ecosystem. Back on the traditional TV side, Discovery plans to make cuts to its linear networks. “We’ll evaluate all of them,” Zaslav said on the call. “We had started to move towards looking at our 12 channels in the US and seeing a strong eight may be the direction that the industry is going.”

And those brands could find new homes online. “We haven’t got into it with Ken and the team to try and get their best sense about whether all of (their channels) will be survivors and winners,” Zaslav said, “or whether some of them could be taken in a different way, to mobile or consumers.”

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