Discovery pays $70M for majority stake in Oprah Winfrey's OWN channel

Discovery Communications
Discovery's deal for a majority stake in OWN comes as the company is looking to acquire Scripps for $14.6 billion. (Discovery)

Discovery Communications is shelling out $70 million to raise its stake in Oprah Winfrey’s OWN cable channel from 45% to 70%.

According to Bloomberg, Winfrey will retain a significant minority stake and will stay on as CEO of OWN while extending her exclusive contract with the network until 2025.

For Discovery, this will give the company another channel’s financial performance to integrate into its quarterly operating numbers. It comes at a time when Discovery is pursuing a $14.6 billion deal to acquire Scripps Networks Interactive.

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The deal, valued at $90 per share, is based on Discovery's July 21 closing price and represents a 34% premium of Scripps' unaffected share price as of July 18, 2017. The companies expect the transaction to close by early 2018.

The combined companies are expecting cost synergies of approximately $350 million.

RELATED: Discovery CEO Zaslav tees off on retransmission fees and sports, pushes for entertainment-only bundle

The combined company will 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.

Together, Discovery and Scripps will control about 20% of ad-supported pay TV audiences in the U.S. and will account for more than a 20% share of women watching primetime pay TV in the U.S.

The new combined network portfolio will include Discovery Channel, TLC, Animal Planet, HGTV, Food Network and Travel Channel.

During Discovery’s earnings call last month, CEO David Zaslav said that even though a combined Discovery and Scripps accounts for about 20% of the viewership, they only get about 7% or 8% of the money.

“That’s not something to brag about. It means we’re not getting paid a lot of money and there’s an opportunity to pay us more, and is it really worth having an argument over so many good channels when the price increase is a fraction of what you’re paying to one regional sports networks?” Zaslav said.

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