(AP) Media conglomerate E.W. Scripps Co. will spend $49.5 million to take a majority stake in the Shop At Home television network to enter the TV retailing market.
In a statement, Scripps said the deal, which would give it 70% ownership of the Shop At Home Network business, positions the company to participate in what it called a growing $6 billion industry. Shop At Home sells merchandise through broadcast, cable, satellite, and Internet channels.
“The evolution of television retailing has created significant overlaps with the categories that are targeted by our popular and widely distributed lifestyle programming networks,” said Kenneth W. Lowe, Scripps’ president and chief executive. “We believe we can create value at the Shop At Home Network by building on the strong relationships we’ve developed with advertisers, distribution partners and viewers of our national cable networks, and the readers and viewers of Scripps newspapers and broadcast TV stations.”
Scripps operates 21 daily newspapers, 10 TV stations, and four cable TV networks, including Home & Garden Television and Food Network. It also operates Scripps Howard News Service, United Media, and 31 Web sites.
The deal must still be approved Shop At Home shareholders, but the companies said they hope to close the deal by the fourth quarter of 2002.
“It’s a decent step for Scripps. Shop at Home is not new, it’s been around and demonstrated it can make a little bit of money. With Scripps’ leadership maybe they can make more money and get some synergies going,” said Dennis McAlpine of McAlpine Associates, an independent securities analysis firm.
Under the terms of the agreement, Scripps would lend $47.5 million to Shop At Home Inc., the current owner of the network, to retire existing debt. The loan would be due in three years and would be secured by Shop At Home’s broadcast television stations in San Francisco, Boston, and Cleveland. Shop At Home Inc., which would retain 30% ownership, would also continue to exist as a publicly traded company.
Shop At Home reaches about 42 million households through 400 affiliated TV stations, cable systems, and direct broadcast satellite systems. It had sales of $142 million through the first nine months of fiscal year 2002.