* Cox Communications decides to sell Travel Channel
* Scripps Networks, Time Warner expressed interest
* Expected to fetch $600 million to $ 1 billion
(Recasts lead, adds analyst comments, valuation)
By Jui Chakravorty Das and Yinka Adegoke
NEW YORK, July 15 The Travel Channel is up for
sale in an auction expected to draw interest from media
companies such as Scripps Networks Interactive Inc SNI.N and
Time Warner Inc (TWX.N) and fetch $600 million to $1 billion,
two sources familiar with the matter said.
Scripps Networks and Time Warner have expressed interest in
looking at the sales prospectus, which will be sent out to
possible buyers within the next week, both sources said.
Goldman Sachs Group Inc (GS.N) is handling the sale.
The people requested anonymity because they were not
authorized to speak about the upcoming auction publicly.
Cox declined comment. The company said in June it was
considering strategic options for the Travel Channel, including
"maintaining the current business structure to joint ventures
and other potential structures," but added it had made no
decision. Scripps Networks, Time Warner and Goldman Sachs
The Travel Channel is known for shows such as "Anthony
Bourdain: No Reservations," in which Bourdain travels around
the world to showcase local cuisines; and "Bizarre Foods with
Andrew Zimmern," in which Zimmern tries out unusual delicacies
such as lamb eyeballs, squirrel brains and tiger pie from
places such as Tanzania and Nicaragua.
Interest in the Travel Channel could be widespread among
media companies, which have seen cable networks weather the
recession better than other media businesses that have been
deeply hurt by the pullback in advertising.
Cable networks are not entirely dependent on advertising
revenue because they also receive affiliate fees from cable
and satellite operators.
Companies such as CBS Corp (CBS.N) and General Electric
Co's (GE.N) NBC Universal might also bid for the channel,
Cox acquired Travel Channel in 2007, receiving $1.275
billion in cash along with the channel in exchange for its 25
percent stake in Discovery Communications Inc (DISCA.O).
Based on Discovery's market cap of $6.16 billion on
Wednesday, 25 percent of the company would amount to $1.54
billion. So a price tag of anything above $300 million would
translate into more than what Cox paid for the channel.
Discovery was privately-owned when it made the exchange,
making it unclear if its value had risen or fallen since.
With 99.1 million subscribers, the expected valuations of
$600 million to $1 billion for Travel Channel compute to about
$6 to $10 per subscriber -- a far cry from the $35 per
subscriber the Weather Channel sold for last July.
One of the reasons for the lower valuations is Weather
Channel's strong brand positioning online, which warrants a
premium as more subscribers and advertisers move to the
Analysts said the channel would be a good fit with both
Scripps Networks and Time Warner.
"For Time Warner, post the spin-out of AOL, almost half of
the revenues are going to come from cable networks like CNN and
TBS," said Collins Stewart analyst Thomas Eagan. "It's a really
good fit to take the Travel Channel brand and programming and
Time Warner, which plans to spin off AOL this fall, spun
off Time Warner Cable earlier this year and received a $9.25
billion payment as part of the deal. Acquisitions are likely to
be one of the ways it spends that cash, analysts have said.
Time Warner bid for Weather Channel last year, but lost out
to a group led by NBC Universal and private equity firms Bain
Capital and Blackstone Group LP (BX.N).
Miller Tabak analyst David Joyce also said Travel Channel
would work well with both Time Warner and Scripps Networks.
"The reason why Travel Channel would make sense for Scripps
is that they already have fine-living genre channels," he said,
referring to channels such as Do It Yourself, HGTV and Food
Network. "Travel Channel would be the next natural fit."
(Additional reporting by Paul Thomasch; editing by Gerald E.
McCormick and Andre Grenon)