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Shares of the lifestyle cable group Scripps Networks Interactive hit an all-time high yesterday spurred by growing investor expectations that it would soon be in play.
The Cincinnati-based cable group, home to Food Network, HGTV, the Travel channel and other properties, has been controlled by a family trust since its spin-off from the newspaper and TV stations sibling, E.W. Scripps in 2008.
But yesterday, the company announced the death of the 94-year-old Robert Scripps, the founder’s grandson.
His passing triggered the end of the family trust, which controls 98.5 percent of the voting power in the company.
In place of the trust, the Scripps Family Agreement kicks in — which will unify new family shareholders who have agreed to vote as a block.
SNI shares have been on a tear this year, anticipating some sort of deal — jumping 49 percent to close yesterday at $63.19.
The end of the family trust could make it easier for a takeover, according to Citigroup analyst Jason Bazinet, noting that any acquirer would only have to deal with the family agreement instead of each family member individually.
“If someone throws in a bid now, it’s a binary up or down,” said Bazinet, who believes Disney is the most likely buyer of the cable outfit since it offers the company a big female cable audience, absent from its portfolio of male and kid-targeted channels.
Discovery Communications, the most logical buyer given its nonfiction/reality bent, appears to be taking a pass, leaving Scripps watchers to suggest that perhaps CBS might take a run at the cable group, which carries a $9.41 billion market cap.
CBS is the lone media company without a portfolio of sizable cable assets.
SNI boss Ken Lowe, a frequent attendee at the Allen & Co. mogulfest in Sun Valley, had shaken the trees back in 2009-2010 to see what interest their might be in a potential sale — but nothing came of it.
The Scripps trust held 43 percent of the shares in SNI.
UBS analyst John Janedis poured cold water on the thought that a sale of SNI would happen soon.
“We think the trust beneficiaries may look to come back to the market to sell shares at some point, but do not believe a sale of shares is imminent,” Janedis said in a note to investors yesterday.
Scripps is a difficult buy since a potential takeover has been baked into the stock price — making it more likely a buyer would pay a super-premium price.
Plus, promised international growth has been hard to come by since the food category is uniquely a local topic and HGTV content is uniquely American.
SNI doesn’t completely control its biggest asset either. Tribune Co. holds a 30 percent ownership stake in Food Network.
Tribune has yet to emerge from bankruptcy proceedings.
In the US, Scripps has done a good job of renewing affiliate deals and pulling in ad revenue, making it harder for a buyer to wring out better returns, sources said.
Discovery, CBS and Disney had no comment.