Private equity firms Kohlberg Kravis Roberts & Co, Thomas H. Lee Partners, and Providence Equity have submitted bids for Cox Enterprises' Travel Channel, a source familiar with the matter said.
The private equity firms are bidding separately for the channel in an auction expected to fetch $600 million to $700 million, sources said. The people declined to be identified because the details of the auction have not been made public.
At least two of the private equity firms are in discussions with Discovery Communications to use it for services such as selling advertising and negotiating network-carry fees should they win control of Travel Channel, the sources said.
Discovery Chief Executive David Zaslav confirmed on Wednesday that his company had held talks about taking on a role where we would do a number of services for a fee.
But we won't be bidding on the Travel Channel as an equity holding, he said when asked about the possibility during a presentation at Goldman Sachs Communicopia media conference.
Privately held Cox, which could not immediately be reached for comment, is selling a 65 percent stake in the channel as part of an auction being handled by Goldman Sachs. All three private equity firms declined to comment on the sale.
Two other media companies, Scripps Networks Interactive and News Corp, remain in the auction, one of the sources said. The source added that NBC Universal, owned by General Electric Co and Vivendi SA, had bid for the channel but has recently lost interest.
The Travel Channel is known for programs such as Anthony Bourdain: No Reservations, in which author and chef Bourdain travels the world to showcase local cuisines; and Bizarre Foods with Andrew Zimmern, in which the food columnist tries unusual delicacies such as lamb eyeballs and squirrel brains.
Interest in the Travel Channel had been expected to be widespread among media companies, who, burned by the downturn in advertising, would welcome the steadier flow of revenue offered by cable networks.
Since cable networks draw revenue from fees paid by satellite and cable operators , they are not as dependent on advertising as other parts of the media business, such as network TV or print.
Cox acquired Travel Channel in 2007, receiving $1.275 billion in cash along with the channel in exchange for its 25 percent stake in Discovery.
With 99.1 million subscribers, the expected valuations of $600 million to $700 million for Travel Channel compute to about $6 to $7 per subscriber -- a far cry from the $35 per subscriber the Weather Channel sold for last July.
Industry experts have said that one of the reasons for the lower valuations is Weather Channel's strong brand positioning online, which warrants a premium as more subscribers and advertisers move to the Internet.
(Additional reporting by Paul Thomasch and Anupreeta Das; Writing by Paul Thomasch; Editing by Maureen Bavdek and Gunna Dickson)