Discovery And Scripps Shareholders Approve Pending $14.6 Billion Merger

At a special shareholder meeting today in New York, Discovery’s pending $14.6 billion acquisition of Scripps Networks Interactive got overwhelming support.

In a brief SEC filing, the company reported the tally was 258.2 million votes in favor and 2.8 million against, with 104,127 abstentions.

Scripps shareholders met simultaneously, with similar results. Counting common voting shares and Class A common shares as a single class, Scripps said in its filing that the tally was 102.3 million in favor, 273,147 opposed and 103,061 abstaining, for an approval rate of a shade less than 79%.

Discovery’s beleaguered stock jumped almost 5% on the news, to $17.55 in midday trading. Scripps shares rose 1% to $80.87.

The merger would unite two titans of unscripted cable programming as programmers look to scale up as distribution and competitive challenges increase. Discovery’s portfolio includes the Discovery Channel, Investigation Discovery, OWN and TLC, while Scripps has the Food Network, HGTV and Travel Channel. During a conference call with Wall Street analysts this month to discuss third-quarter results, execs reasserted their belief in the deal and expressed confidence that it would close in early 2018.

That was November 2, which seems like a lifetime ago given what has transpired on the broader regulatory stage in the two weeks since. After AT&T’s $85 billion acquisition of Time Warner seemed to be on the 1-yard-line after a year of review, the Department of Justice said it was considering a lawsuit to block the deal unless AT&T agreed to part with Turner Broadcasting (including CNN) or DirecTV as a “structural remedy.” AT&T has said it would prefer to battle the government in court.

While AT&T-Time Warner is a so-called vertical merger, involving a company with largely distribution assets (AT&T) and a content giant (Time Warner), a horizontal deal such as Discovery’s would put former competitors under the same roof. Major Discovery shareholder John Malone said during Liberty Media’s investor day Thursday that the Scripps deal was getting a “little more of a look … than we would have expected.” Nevertheless, “We still have a high expectation that that will be approved.”

Malone observed that while the FCC has become more “flexible” and “capitalistic,” the Justice Department remains an unknown. “We don’t know yet exactly what their concerns are and what the hot buttons will be,” he added.

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