Scripps Networks Interactive Inc. is betting that food and travel are an ideal combination. The company behind the Food Network is snapping up a controlling stake in the Travel Channel, giving the cable network a value of nearly $1 billion. Scripps said Thursday it will take a 65 percent stake in Cox Communications Inc.'s Travel Channel, which reaches about 95 million U.S. households. Under the joint venture agreement, Scripps Networks will contribute $181 million in cash. Cox, in turn, will contribute the Travel Channel, valued at $975 million. The partnership will then take on $878 million of debt that will be guaranteed by Scripps and further guaranteed by Cox, with the proceeds to be distributed to Cox. In the end, the partnership will have about $696 million of net debt, Scripps said. The Travel Channel is home to popular shows such as Anthony Bourdain's "No Reservations," where the sharp-witted author and chef trots the globe in search of tasty local cuisine and color. Many of its other popular shows, like "Bizarre Foods" and "Man v. Food," also revolve around eating. Scripps also owns HGTV, with home improvement, decorating and do-it-yourself shows like "Real Estate Intervention" and "Renovation Realities." Cox began to explore its options for the Travel Channel in June. News Corp., Discovery Communications Inc. and Time Warner Inc. were also in the running for the Travel Channel, noted Deutsche Bank analyst Doug Mitchelson. He said the channel is a good fit with Scripps' existing networks, and its strength as a brand should help the company as it pursues international growth. The companies expect to close the deal by January. Robert Willens, a tax analyst at Robert Willens LLC, said the structure of the deal allows Cox to put off paying capital gains taxes on the stake sale until the debt related to the deal is repaid _ something that can take years. Sometimes the Internal Revenue Service challenges the structure of such deals, he said, arguing that the debt's guarantee is not meaningful. Cox spokesman Todd Smith said the deal was structured this way so the company could keep a stake in the Travel Channel. Continued... |