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Oprah's
High-Flying Partner
Shares
in the talk show host's new cable partner, Discovery, are
outperforming all other media stocks—including
Google's.
By Richard Siklosa
February
1, 2008
[continued,
page 2]
Zaslav
says he approached Oprah a few months into his new gig after
his wife gave him a copy of Oprah's magazine, O, to peruse.
Thumbing through, he sensed a fit with Discovery's "knowledge
and curiosity" ethos and the solution to a bigger riddle
in Discovery's portfolio. As Zaslav explains it, cable operators
spend all their time trying to do three things: Get their
channels in as many homes as possible, build their brands,
and develop winning programming. At Discovery Health, he already
had broad distribution, but not much else.
“When I looked
at that I thought ‘We've got the platform and how do
we take advantage of that in a meaningful way?’”
Hence, Oprah: "There's no more powerful brand in the
media marketplace," he says. As far as the third component—programming—both
Zaslav and Oprah aren't saying yet what the channel will offer,
although it's no secret where Oprah's interests lie.
 Zaslav
is making a similarly bold move by announcing he will shutter
the low-rated Discovery Home channel and replace it with a
channel called Planet Green. If these deals are any indication,
Zaslav has a keen sense of trying to meld the zeitgeist with
Discovery's non-fiction mission. Whereas OWN will be devoted
to leading better lives, Planet Green will be about making
a better planet to lead them on.
Another instance
of Zaslav's makeover mindset: The former Discovery Times channel—in
which the New York Times Company sold its 50 percent stake
back to Discovery last year—will be relaunched this
week as ID, for Investigation Discovery, to capitalize on
the higher ratings that crime and sleuthing shows generate.
Next up, in February, the company is planning to revamp its
Animal Planet (whose ratings have been flat for a few years)
as a channel that is less about animal fancy and more an adult
TV channel featuring stories that include animals.
There's
one overarching change in store: Discovery Holding was a vehicle
that Liberty's John Malone set up a few years ago without
the acquiescence of his co-owners in Discovery, Cox Communications
and Advance/Newhouse. But Cox was bought out last year and
the Newhouse family and Malone have agreed to take Discovery
Communications public later this spring, at which time his
Holding vehicle will disappear.
Pail
Research's Greenfield estimates that Discovery Communications
logged 2007 earnings before interest, tax, depreciation and
amortization of $922 million on revenue of $3.1 billion, up
from $747 million and $2.85 billion, respectively, from the
year before. However, Greenfield also noted in a research
report last week that there are risks inherent both in the
rebranding efforts of the individual channels and in betting
on the future growth of cable networks in the face of all
the disruptive new video technologies swirling around.
That said, the
rapid rise in Discovery Holding shares represents investor
confidence that Zaslav and Co. will build more value out of
the company in light of the fast-changing media world and
with the new transparency and flexibility that being a public
company will give Discovery Communications.
In upcoming episodes
of Zaslav's show, look for remakes of other sleepy Discovery
properties like The Military Channel and Fit-TV. And, once
Discovery is public, he'll have a currency to make acquisitions—not
to mention the backing, via major shareholder Malone, of a
tireless deal-maker—to buy more channels and businesses
to provide plenty of material for future seasons.
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