Discovery, CBS in Talks on Times Channel

Leroy Sievers, Ted Koppel, Elizabeth Edwards and Lance Armstrong in the
Leroy Sievers, Ted Koppel, Elizabeth Edwards and Lance Armstrong in the "Living With Cancer" program that aired this month on Discovery Times. (By David S. Holloway -- Getty Images)
By Frank Ahrens
Washington Post Staff Writer
Tuesday, May 22, 2007

Silver Spring's Discovery Communications is seeking to sell half of its Discovery Times channel as part of the company's reorganization under hard-charging new chief executive David Zaslav, sources said yesterday.

Discovery pitched the idea of a joint-venture partnership to CBS, which lacks a general-interest basic cable channel, and remains in conversations with the network, according to sources close to the situation who spoke on condition of anonymity because no deal has been made. The talks have not proceeded past the initial stages, they said.

The Discovery Times cable channel, seen in 47 million homes, features documentaries on such topics as North Korea and the oil industry, pegged to news events. Some programs star writers from the New York Times, including columnist Thomas L. Friedman. Like all of Discovery's digital networks, Discovery Times is profitable. The company believes it has substantial growth potential with a partner to foot half the bills and provide some programming and talent.

Discovery Times was a joint venture between Discovery and the New York Times Co., which each invested $100 million in 2002 to launch the channel, originally called Discovery Civilization. However, the Times Co. exercised its option to sell back its half of the channel in April 2006 as the company's focus shifted from long-form television programs to short-form Internet video. The Times Co. took a $7.8 million loss in the sellback.

Discovery is talking with a number of potential partners in addition to CBS, according to a company executive who spoke on condition of anonymity because the process is ongoing. If another company partners to take a co-ownership stake in the Discovery Times channel, the partner's contribution is likely to come in the form of programming, promotion and other in-kind assets, rather than cash, sources said.

The Discovery executive would not identify the companies involved in the talks but said a new partner was likely to come from the television side of the media industry, rather than the print side, like the Times.

Discovery would not comment on the record yesterday.

Under Zaslav, who started in January, Discovery is moving fast to shear off its underperforming businesses and beef up its moneymakers. So far, the company has announced plans to close all 103 of its unprofitable Discovery stores and lay off more than 1,000 employees, more than a quarter of its workforce.

At the same time, Discovery is converting its Home channel to the PlanetGreen channel, believing there is more advertising money to be made from a channel catering to the growing interest in environmentally conscious lifestyles than from a conventional home-and-garden channel.

Discovery, a private company, is seeking to cut losses, enhance revenue and raise its media-industry profile in anticipation of becoming a publicly traded company in the near future.

Zaslav said the Discovery Times channel, which was valued by the company last year at as much as $135 million, could be worth much more in advertising revenue with the right co-owner to share the cost of new programming and promote the channel heavily.

The channel is likely to be rebranded when a new partner is found.

When CBS split from Viacom in January 2006, it became the only major television network without a general-interest basic cable channel. (It owns Showtime and the CSTV sports network.) NBC has Sci-Fi and USA Network, ABC has ABC Family, and Fox has FX.

Without such a cable channel, CBS has no second opportunity to broadcast its news product and gain more ad revenue, in addition to a cut of cable subscription fees.

Zaslav phoned CBS chief executive Leslie Moonves one weekend earlier in the year to pitch the deal, and the two spoke at length, according to the sources. Soon after, a meeting was held in New York between Discovery and CBS executives, including Zaslav and Sean McManus, head of CBS News and CBS Sports.

CBS had no comment yesterday.

Zaslav was NBC Universal's cable chief in New York before coming to Discovery. He has close relationships with Moonves and other media brass, one of the attributes that led Discovery to hire him.

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