Nov. 5 (Bloomberg) -- Scripps Networks Interactive Inc. agreed to buy a controlling stake in the Travel Channel from Cox Communications Inc., trumping a bid by News Corp. in a deal that values the cable-television network at $975 million.

Scripps Networks will pay $181 million to get 65 percent of the channel through a joint venture with Cox, which will keep the remaining stake, the companies said today in a statement. Cox will contribute the channel and their partnership will carry $696 million in net debt.

The network became the center of a bidding competition after Atlanta-based Cox said in June that it had received unsolicited inquiries for the asset. Scripps Networks, the owner of Food Network, HGTV and the DIY Network, gets a channel distributed in about 95 million U.S. homes, with shows including “Anthony Bourdain: No Reservations,” “Man v. Food,” “Madventures” and “Most Haunted.”

“It makes Scripps appear strong because they’ve got food, shelter and travel now,” John Janedis, a New York-based analyst with Wells Fargo & Co., said in an interview. “They’re becoming more like a larger lifestyle network. That could play better when negotiating with advertisers.”

Scripps Networks rose 62 cents, or 1.6 percent, to $39.23 at 4:04 p.m. on the New York Stock Exchange. The shares have climbed 78 percent this year.

The channel’s valuation topped the $600 million to $700 million that Hale Holden, a Barclays Capital Inc. credit analyst in New York, estimated Travel Channel Media was worth when Cox disclosed the unsolicited queries. Travel Channel Media includes the cable channel and the Web site travelchannel.com.

‘In the Range’

The valuation is “in the range for what we thought Travel was worth,” Cox Chief Financial Officer Mark Bowser said in an interview. “The two areas where we would see the largest opportunity would be international and would be digital.”

Travel Channel’s size and genre made it attractive, Scripps Networks Chief Financial Officer Joseph NeCastro said at a Sept. 16 investor conference.

Scripps Networks will discuss the transaction on a conference call for third-quarter earnings at 10 a.m. New York time tomorrow. Mark Kroeger, a company spokesman, declined to comment before the call. Jack Horner, a spokesman for News Corp., declined to comment.

The transaction will close by the end of January, the companies said. The partnership will take on $878 million in third-party debt, they said.

The deal may boost Scripps Networks’ 2010 earnings by 9 cents a share, Janedis said in a report today.

Earnings Boost

Travel Channel’s revenue may rise 5.8 percent to $225.3 million next year, on a 3 percent gain in advertising and 10 percent climb in affiliate fees, according to Janedis, who rates Scripps Networks stock “market perform.” Earnings before interest, taxes, depreciation and amortization may jump 6.7 percent to $98.4 million, Janedis estimates.

Closely held Cox doesn’t disclose financial results for the channel.

Two years ago, Cox swapped its 25 percent stake in Silver Spring, Maryland-based Discovery Communications Inc. for the Travel Channel, $1.28 billion and other assets.

Scripps Networks, based in Cincinnati, and New York-based News Corp. were the leading contenders to acquire Travel Channel, people familiar with the bidding said last week.

News Corp. bowing out of the talks this week resulted “in a slightly lower value” for the channel after reports valued the deal at more than $1 billion, Janedis said.

Barclays Capital Inc. was Scripps Networks’ financial adviser, and Skadden, Arps, Slate, Meagher & Flom LLP its legal adviser. Cox hired Goldman Sachs Group Inc. in June to advise on its options for the channel.

Scripps Networks said it delayed reporting earnings by one day because of the Travel Channel announcement.

To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net

Last Updated: November 5, 2009 16:14 EST