Scripps Networks shares are retreating slightly this morning from the all-time high they hit yesterday following a report from Citi Research’s Jason Bazinet who said be believes that “Disney may acquire” the Tennessee-based cable channel company. The analyst’s conclusion appears to be based on the logic of a deal, not inside information that a transaction is in the works. Bazinet says Scripps would enable Disney to appeal to older women — a demo it misses at properties including ESPN, Disney Channel, and Marvel. ABC tries to reach women over 49 with shows such as Desperate Housewives, Lost, Grey’s Anatomy and Dancing With The Stars. But shows on broadcast TV “simply don’t ring up the same sort of profits as lesser known shows on cable TV,” he says. That could change if Disney owned Scripps’ channels including Food Network, HGTV, and Travel Channel. It also makes sense for Disney to become less reliant on ESPN, which has become enormously profitable by demanding extraordinarily high and rising fees from pay TV distributors. In a slow-growth economy, “it’s not clear how many years – or decades – this can last,” Bazinet says. He estimates that Scripps could sell for as much as $10.3B, or $67.07 a share — up from its current trading price of around $60. If Disney used stock to buy Scripps, it might dilute earnings per share by about 11 cents which the company could make up by repurchasing stock. As a result, Bazinet says that “Disney’s stock would only pull back $1-2 on such a transaction.”

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