Discovery’s Store Closure Doesn’t Sound Like a Buyout is Coming

By Douglas A. McIntyre Updated Mar 27, 12:29AM EDT · Published May 17, 3:19PM EDT

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Discovery Communications (DISCA-NASDAQ) is announcing that it is closing the rest of its mall based stores to focus more on its own e-commerce branding and to focus on ‘other retailer’ distribution channels. This will cut off 25% of its workforce or about 1,000 workers. It also is increasing its Animal Planet brands with Toys R Us and will look for more television sales. So it is closing 103 mall-based Discovery stores. It claims that it has 12 million unique visitors to its DiscoveryStore,com e-commerce site and has relationships through Amazon.com and eBay. The 2006 e-commerc growth was a record growth and sales are up 144% year-to-date. This is part of the strategic review that was led by J.P.Morgan, and it is hiring Gordon Brothers Group as an advisory and restructuring to help with the closures and liquidations.

Jim Cramer on a May 8, 2007 Mad Money episode said this could be a buyout target, but it sure doesn’t sound and act like a buyout target here. There is also a financial structure that is more complicated than elsewhere. The company sin’t specific on charges but this is going to blow-out cash flows and lower profit hopes farther out. That is not the sort of issue that sounds like a buyout candidate in a flood of other "value companies" that can be acquired for cash flows. Maybe a deal is possible, but this doesn’t sound like that great of takeover material on the surface.

Jon C. Ogg
May 17, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.