Media
Discovery Channel Could Post Big Loss on Oprah Network (DISCA)
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Cable network Discovery Communications Inc. (NASDAQ: DISCA) could lose $143 million in 2012 on its $312 million investment in the Oprah Winfrey Network (OWN). That’s in addition to the $92 million that Discovery reported as losses related to OWN in 2010 and 2011.
Financial research firm SNL summarizes Discovery’s problems with OWN this way:
The problems the network faces are many. First, with all of the bad press that the channel is getting, advertisers may tire of playing the waiting game for shows to catch an audience. Second, the channel had to renegotiate carriage agreements in order to change the genre starting in January of 2011. Many of Discovery’s renewals with multichannel operators are up in late 2012 and 2013. When launching new networks, programmers generally try to get their contracts to align with the rest of the channels so they have more leverage. That means Discovery could end up negotiating carriage agreements for OWN again starting at the end of this year. Its hope for license fees of 20 cents to 25 cents per sub may now be unrealistic.
Discovery’s shares are down fractionally at $48.29 in pre-market trading in a 52-week range of $34.75-$48.50.
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