INVESTMENT RECOMMENDATION
Recommending that someone invest in Scripps Networks Interactive would be slightly misguided because as of March 6, 2018, Scripps technically no longer exists. The company merged with Discovery Communications, Inc., and will go by the name ‘Discovery Inc.’ moving forward, according to a press release posted on the Discovery Inc., website.
However, despite the loss of the Scripps name, it’s brand, legacy and assets will live on through the new combined company, and many of the issues Scripps faced when it was on its own might be mitigated by this new acquisition.
Scripps’ greatest strength was its assets; with big name channels such as Food Network, HGTV and the Travel Channel—to name a few—Scripps created a roster of media cash cows that are staples in many American households and beyond. Yet, despite the great success of their assets, the Scripps name itself was, and is, virtually unknown.
The Discovery merger might just be the remedy Scripps needed for this issue, because if Discovery did one thing right, it was linking at least one channel to its name. Discovery Channel. Even if someone didn’t know that the channel itself was owned by a higher power, the name is familiar enough that the ordinary person could make the connection and be compelled to invest.
Scripps failed to do this, and so its name was drowned out by its own assets. Scripps Networks Interactive, just isn’t that catchy either, and despite their strong profit margins and returns on equity, the company was continually “undervalued” compared to similar companies, reported Seeking Alpha.
Combining Scripps assets with the familiarity of the Discovery brand might bolster stock even more for the company (which is currently up 2.42 percent).
Scripps won’t just be bringing its assets to the table in this merger. Over the past few years the company showed a surprising amount of resilience and progression for a company founded in the era of automation when it acquired the millennial centric food publication Spoon University.
The company also increased its viewership on social media platforms by almost 500 percent between 2016 and 2017, going from 1.70 billion views to 9.95 billion and surpassing media darlings such as Buzzfeed Tasty, Tastemade and Delish, reported Campaign US. The Travel Channel and HGTV have also tripled viewership on their respective social media platforms.
Although Discovery has some equally recognizable brands, such as Animal Planet, its social media presence is not nearly as memorable. Scripps’ digital innovation and adaptability might just be what Discovery needs to bring their channels off the tube TVs of the 2000s, and onto today’s smartphone screens.
Although Scripps is peaking millennial audiences' interest with their Snapchat presence, on their traditional platforms, its core audience on cable is still an older, female demographic, according to a report by Simmons; Discovery, on the other hand, is the opposite, with primarily older, male viewer, according to a 2012 report by Scarborough USA. The combination of these two companies, as well as some new digital insights could mean finally hitting the sweet spot for viewership by creating content that appeals to a wider audience.
Based on available information and research, it would not be a good idea to invest in Scripps Networks Interactive, Inc. However, it would be a good one to invest in Discovery, Inc.
With a name like ‘Discovery,’ assets such as Discovery Channel, Food Network, Travel Channel, Animal Planet and HGTV and the digital adaptability demonstrated by Scripps media experts over the past year, it would appear that Scripps future is brighter than ever, one filled with technological innovation, iconic content and passionate storytelling.
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