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Why Yahoo! Inc. (YHOO) – Scripps Networks Interactive, Inc. (SNI) Deal Might Not Be In The Pipeline?

Reports suggesting that Yahoo! Inc. (NASDAQ:YHOO) might be planning to acquire cable network Scripps Networks Interactive, Inc. (NYSE:SNI) are unfounded according to Re/code managing director Edmund Lee. During an interview on CNBC, Lee reiterated that such a deal would not make any sense as it would not translate into any cost saving synergies for both parties.

Yahoo! Inc. (NASDAQ:YHOO)

Speculations come in the wake of Yahoo! Inc. (NASDAQ:YHOO) completing the sale of some of its stakes in Chinese sensation Alibaba Group Holding Ltd (NYSE:BABA) thereby according it with billions of dollars that people believe could be used to acquire other companies. Lee does not expect such a deal to happen on the fact that Yahoo is already producing its own videos.

“Frankly, this kind of speculation is a little bit silly, Scripps Networks Interactive, Inc. (NYSE:SNI) has been on the block for at least the past year. So any company out there is going to quietly kick the tire on this thing. I wouldn’t be surprised if there were at least some kind of discussion, but I don’t think it is at all serious largely because it does not make sense for Yahoo! Inc. (NASDAQ:YHOO),” said Mr. Lee.

The fact that Scripps is not a fast growing company could also thwart the possibility of such a deal happening considering Yahoo is trading at a much higher rate than other web companies. A number of sources are already reporting that Yahoo! Inc. (NASDAQ:YHOO) held talks about a potential deal to acquire all of the parent company

CNBC’s Jon Frott notes that Scripps operates in demographics that Yahoo! Inc. (NASDAQ:YHOO) likes to play especially in dealing with women around the ages of 35 years as well as offering premium content. Last year Yahoo saw its ads business grow by 24%, but prices for the same ads were down 24% something that the company would wish to amend this year with such deals.

“Yahoo! Inc. (NASDAQ:YHOO) has been playing more with longer tail content stuff that isn’t necessarily premium but still sales, and they are trying to push out video. They are trying to push out more premium content to get advertisers to pay top dollar. That’s the type of content you would imagine that a Scripps would have, but it is highly unlikely you will see them buying a whole network,” said Mr. Frott

Frott also rubbished suggestions that this is a make-up or break-up year for CEO, Marissa Mayer affirming that she has huge cash balance at her disposal that she is expected to use to spur growth.

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