Discovery's purchase of Scripps could help set up its own streaming platform: Discovery CEO

Key Points
  • Discovery Communications announced it will buy Scripps Networks for $14.6 billion in cash and stock.
  • The deal will allow Discovery to more of an advantage when negotiating pay TV and streaming platforms. It could also give Discovery a chance to launch its own "skinny bundle" of streaming content.
David Zaslav
Katie Kramer | CNBC

Discovery Communications deal to acquire Scripps Networks Interactive could give it the tools and content to make its own streaming network powerhouse, the CEOs told CNBC's "Squawk Alley."

Discovery said on Monday it will acquire Scripps Networks for $14.6 billion in cash and stock. Scripps Networks includes female-focused lifestyle channels like HGTV, Travel Channel and Food Network. On the other hand, Discovery's Animal Planet and Discovery Channel skew more male. Combined, the companies will have 20 percent of domestic 25 to 54-year-old adults, Scripps CEO Ken Lowe said.

"It's not about getting the biggest audience, its about getting an audience that you can nourish and loves you," Discovery CEO David Zaslav said.

The deal will give Discovery a bigger bargaining chip when it makes deals with pay TV and streaming platform operators. Discovery and Scripps could also make its own "skinny bundle" streaming service of lifestyle channels for about $10 to $15 a month, Zaslav said. Even though it lacks sports content, he believes there would still be interest among its fans.

"If you look at the skinny bundles around the world this is the only country that has sports and other stuff into that," Zaslav said, who will head the new company. "So eventually that will rationalize."

With 7 billion screens out there thanks to the growth of mobile proliferation, owning your own content will become more important, Zaslav said. The two media companies produce 8,000 hours of television content in addition to owning 300,000 hours of content, according to Lowe The company plans to invest about $3.5 billion on content annually, Zaslav added.

Scripps Networks Interactives CEO Kenneth W. Lowe, left and Discovery CEO David Zaslav
Getty Images; CNBC

Lowe said the companies fit together culturally, given both of them pivoted from just linear to emphasize digital content. The deal will give employees a much bigger company that has the ability to reach more consumers, Lowe said.

"This is a powerful combination, one of which sets up Scripps for years up ahead," he said.

- Reporting by David Faber