Lifestyle cable giants Discovery Communications Inc. (DISCA) - Get Report and Scripps Networks Interactive Inc. (SNI) are in talks to combine, the Wall Street Journal is reporting according to sources familiar with the matter, reviving talks of a merger between the two that fizzled in 2013.
Shares of both companies rose in after-hours trading on the news, which broke shortly after 6:30 p.m. ET. Discovery jumped more than 9% to $28.50 and Scripps shot up 13% to $76. The Journal didn't report any specifics, but noted that it's possible the deal could fall apart or that another bidder for Scripps could emerge.
A merger between the competing cable companies would bring channels including Scripps' Food Network, HGTV and Travel Channel and Discovery's Discovery Channel, TLC, Animal Planet and OWN: Oprah Winfrey Network under one roof, as cable networks look to compete with a stream of programming from providers like Netflix Inc. (NFLX) - Get Report and Amazon.com Inc. (AMZN) - Get Report .
This isn't the first time Discovery has considered an acquisition of Scripps. In December 2013, Variety reported that the Silver Spring, Md., company had discussed acquiring Scripps during a board meeting. But the deal never came together.
At the time, S&P Global Ratings had threatened to reconsider Discovery's rating if it proceeded with the acquisition. Currently, Discovery is rated an investment grade (barely) BBB- with a stable outlook by S&P, which notes the company's significant international presence and above-average domestic margins, as well as pressure from rising programming costs and shifts in the cable market. Revenue last year was $6.5 billion.
Knoxville, Tenn., headquartered Scripps Network, which is a subsidiary of E.W. Scripps Co., is rated a notch higher than Discovery, at BBB but was downgraded several notches in March following an announcement that the company would acquire a majority stake in Polish media company TVN S.A. Scripps posted $3.4 billion in revenue in 2016.
A spokesman for Scripps declined to comment on the report. Discovery also declined to comment.