While the all-cash deal could potentially downgrade Viacom’s investment grade rating, which is already at the lowest level, it can also act as a cost saving measure and give it more headroom during negotiations with cable and satellite providers.
According to sources familiar with the matter at hand, Viacom Inc has let it be known to Scripps Networks Interactive that it is willing to acquire it in an all cash deal.
With Viacom showing $12.17 billion in debt as on March 31, the move is likely to see the $14.3 billion media company lose its investment-grade status in its $10.6 billion quest to acquire Scripps.
In 2016, Moody’s had downgraded Viacom’s debt to its lowest level of investment grade, a status that it is likely to forego if it goes ahead with this acquisition.
As per sources, Viacom is bidding for Scripps, which owns channels including Food Network, HGTV and Travel Channel, against Discovery Communications, which is not expected to make an all-cash bid.
Sources have preferred the cover of anonymity since they are not permitted to speak to the media.
A spokeswoman for Viacom and for Discovery declined to comment.
Viacom’s move reflects an aggressive approach of its Chief Executive, Bob Bakish, who has pledged to turn around the media company.
If Viacom were to win in its acquisition bid, the deal would create a $24.9 billion cable network that will bind together non-scripted programming and scripted programming, including children’s shows and a movie studio.
A successful acquisition is likely to provide Viacom scale and cost savings since larger programmers are thought to have more leverage in negotiations with cable and satellite providers to carry their shows.
The move come midst increasing competition for viewers from streaming services including Amazon and Netflix Inc.