Nov. 2 (Bloomberg) -- News Corp. may drop out of bidding for the Travel Channel because it isn’t willing to pay the $1.1 billion being sought by owner Cox Communications Inc., according to a person with knowledge of the company’s plans.

Scripps Networks Interactive Inc. had been the other frontrunner to acquire the cable channel as of last week, people familiar with the bidding said at the time.

Offers for the channel have climbed since Atlanta-based Cox kicked off a bidding competition by announcing in June that it had received unsolicited inquiries for the network. At the time, Hale Holden, a Barclays Capital Inc. credit analyst in New York, estimated Travel Channel Media was worth $600 million to $700 million. Scripps Networks and News Corp. led the bidding last week with offers of about $800 million, the people said.

“Although Chairman Rupert Murdoch had the reputation for gun-slinging at one point in his career, we think News Corp. has generally shown the willingness to stay disciplined in its acquisition activities,” Dave Novosel, a credit analyst with Gimme Credit in New York, said in a note today. Murdoch, 78, is also chief executive of News Corp.

Todd Smith, a Cox spokesman; Jack Horner, a News Corp. spokesman; and Mark Kroeger, a Scripps Networks spokesman, declined to comment. News Corp.’s possible move was reported earlier today by Reuters.

News Corp., based in New York, was unchanged at $11.52 at 4 p.m. New York time in Nasdaq Stock Market trading and has gained 27 percent this year. Scripps Networks added 27 cents to $38.03 on the New York Stock Exchange and is up 73 percent this year.

Cash Flow

The Travel Channel is distributed in 94 million U.S. homes.

The network’s cash flow from operations -- or earnings left after subtracting operating expenses from revenue -- is estimated to rise to $69.1 million this year from $62.5 million last, according to research firm SNL Kagan. Closely held Cox doesn’t disclose financial results for the channel.

A $1.1 billion price tag is also more than the estimate of $900 million to $1 billion by Thomas Eagan, an analyst at Collins Stewart in New York.

“That’s going to be expensive on a multiple-of-Ebitda basis but not necessarily on a per-subscriber basis,” Eagan said in an interview. He recommends buying Scripps Networks shares. “It comes down to their ability to raise ratings on the network and to improve programming enough to improve the ratings.”

Ebitda stands for earnings before interest, taxes, depreciation and amortization.

‘Hard Look’

Scripps Networks Chief Financial Officer Joseph NeCastro said at a Sept. 16 investor conference that his company was looking at the network because of its size and genre. NeCastro told investors that Scripps Networks would be “very reasonable, very rational” in the bidding.

“We won’t overpay for it,” he said. “We will be disciplined, but we are going to take a hard look at it.”

Scripps Networks, based in Cincinnati, owns lifestyle cable channels including the Food Network and HGTV. The Travel Channel hosts shows such as “Anthony Bourdain: No Reservations,” “Man v. Food,” “Bizarre Foods” and “Most Haunted.”

The Travel Channel “plays into the Scripps programming, which is a bit of lifestyle and obviously about the home and about food,” Eagan said.

Cox, the third-largest U.S. cable company, said in June that it was exploring joint ventures for the Travel Channel and also may keep the current structure intact. The company hired Goldman Sachs Group Inc. to evaluate its options. Cox swapped its 25 percent stake in Discovery Communications Inc. for the Travel Channel and other assets in 2007.

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

Last Updated: November 2, 2009 16:50 EST