Viacom out of running for Scripps

Viacom’s plan to buy US cable channels group Scripps Networks Interactive appears to be over.

Separate US reports claim that concerns over a planned all-cash acquisition spooked Wall Street and led to Viacom deciding against a deal for the Travel Channel owner.

This effectively leaves Discovery Communications as the only suitor for Scripps, which is currently valued around US$10.6 billion following share spikes related to a potential takeover.

Viacom’s deal would likely have seen its credit rating downgraded, which means future debt raises would have been difficult.

Viacom has been attempting to persuade investors its struggles over ratings and company strategy are over under Bob Bakish, the president and CEO who replaced Philippe Dauman last year.

Currently, the Scripps family owns almost 92% of company shares, and is looking for a significant premium on the current share price in order to sanction a deal.

Discovery would add Travel Channel, Food Network, Cooking Channel and HGTV to its portfolio, which already includes Discovery Channel and TLC, should it succeed with takeover.

The company has been toying with new distribution strategies for its channels as negotiations with cable and pay TV providers become increasingly difficult due to continued ratings erosion that’s happening across the board.

The Scripps channels would give it more leverage in carriage deals, and allow it to launch a beefed-up ‘skinny bundle’ offer to consumers.

Discussions between Discovery and Scripps continue.