By Annys Shin
Washington Post Staff Writer
Monday, March 13, 2006
Discovery Communications Inc. is launching a Web-based homework aid, the Silver Spring cable programmer's latest effort to diversify into the education business.
Cosmeo, a $9.95-a-month service that will be announced today, is aimed at students in kindergarten through 12th grade. With a Web site that resembles the screen of a handheld game device and features video clips and interactive games, it's the home version of an online video encyclopedia that Discovery already sells to schools.
Both services use video culled from Discovery's library and from educational content providers such as Scholastic Corp. and the Public Broadcasting Service, then customized to meet the curriculum standards of different states.
"We've gone out and aggregated the best of educational video content," said chief executive Judith A. McHale.
For now, Discovery has no direct rivals in offering streaming educational videos to the 11 million households with high-speed Internet connections that include school-aged children. "We beat Yahoo and Google in this space," Discovery founder John S. Hendricks said.
Discovery still earns most of its money from subscription fees and advertising on its 16 U.S. cable networks, though revenue from its international networks is growing rapidly. But a weak advertising market and recent ratings trouble at two of its flagship networks have underscored its need to diversify its business.
Discovery began about a decade ago to expand aggressively overseas. Today, it operates 101 networks, reaching more than 1.3 billion subscribers in more than 160 countries and territories. Discovery is owned by Discovery Holding Co., Advance Publications Inc., Cox Communications Inc. and Hendricks.
The company's education business kicked off in 2003, when Discovery happened on a key element. United Learning, a 50-year-old educational film and video provider, came to Silver Spring wanting to license Discovery content for United Streaming, a library it created of video clips that correlated with state curriculum standards. Discovery bought the company outright and made United Streaming the centerpiece of a new business unit, Discovery Education. United Learning had signed up 25,000 schools. In two years, Discovery increased that to more than 70,000 schools. The service costs a school $1,500 to $2,000 a year.
United Streaming has turned out to be a far more successful Internet venture for Discovery than its previous attempt in 2000 to spin off a dot-com. The Internet bubble burst not long after the company announced plans for an initial public offering, and Discovery had to scrap the IPO three months later.
Since then, the number of homes with high-speed Internet connections has grown to 38 million. Over the past year, Discovery has been working on its consumer version of United Streaming, Discovery Education President Steve Sidel said.
To get parents to check out Cosmeo, Discovery today is unleashing an ad blitz that includes direct mail pitches and two television spots featuring middle schoolers belting out songs that would appeal more to their parents, including Fleetwood Mac's 1970s hit, "Don't Stop."
Hendricks, who has lowered his profile since stepping down as chief executive in 2004, took on the task of coming up with a name for the new homework service. "I wanted something that relates to the cosmos, something large and vast," he said in an interview at his office last week. "The branding of something is so important."
He considers Cosmeo another example of the company's strategy of being "platform neutral," not tied to one way of distributing Discovery content. That approach has only become more important as consumers have become used to downloading music and watching video on demand, he said.
Selling Cosmeo directly to households will also help the company establish a closer relationship with consumers, which Hendricks said is increasingly important in today's increasingly fractured media landscape. As choices proliferate, Hendricks said, "people will go after what they perceive as the best content."