A June 20 Business article about Discovery Communications incorrectly said that the Discovery Channel program "American Chopper" made its debut in 2004 and that the bike shop featured in the show is in California. The show began in 2002, and the bike shop is in New York. (Published 6/21/05)
There is nothing more universal, it turns out, than a father yelling at his offspring.
Since its debut last year, millions of viewers worldwide have tuned in to watch "American Chopper," Discovery Channel's reality show about the battles between motorcycle builder Paul Teutul Sr. and his sons at a family-run business in California.
The show is No. 2 in Poland. It recently debuted in Malaysia. Teutul's sometimes vulgar vocabulary has been translated into Castillan, Portuguese and Chinese.
As Discovery marks its 20th anniversary, the Silver Spring media company has moved beyond the science-based premise of founder John S. Hendricks. It has set aside the risky Internet and video-on-demand ventures that cost it tens of millions of dollars during the dot-com craze.
Instead, it is trying to divine the tastes of 160 countries, hoping that U.S.-produced shows like "MythBusters" might take off in Tazania, or "FBI Files" might shoot to the top in South Korea.
Discovery is also trying to tap local sentiment with shows produced in Asia, Britain and elsewhere. The formula has already produced a couple of regional winners, such as "Virtual History," a British show that uses computer-generated imagery -- Adolf Hitler's face superimposed on an actor's body -- to re-create historic events. "Afterlife," a show popular in Asia, looks at how people in different cultures deal with death.
If that seems to be an exotic strategy for a company that began with a focus on documentaries about the natural world, there is a good reason. While its 16 U.S. channels still drive revenue at Discovery, they have been beset by challenges, including a sense that they are now at a saturation point with limited potential for growth. About 90 million U.S. households receive Discovery channels with their cable subscriptions.
Ratings are down at TLC, an important piece of the Discovery operation. The success of its popular "Trading Spaces" home-decorating show has been undermined by numerous copycats, and the loss of audience has forced the company to give advertisers several millions of dollars in make-good advertising.
The company brought in new management recently and stepped up program development. As many as 90 new shows are now in the works, with the first batch to debut this fall.
Discovery Communications Inc. chief executive Judith A. McHale said in an interview that consumer tastes are changing more rapidly than ever.
"We have to constantly reinvent ourselves," she said.
Discovery has room to add subscribers to its digital networks, such as FitTV and DiscoveryHome. But by and large, Discovery's U.S. networks are a "mature" business, said Andrew Baker, an analyst at Cathay Financial LLC.
So Discovery is setting its sights overseas -- and inside classrooms. The company is planning to invest $100 million over the next several years developing its international subscriber base, and will put an equal amount into a nascent education business.
Both the education business and the international channels take advantage of Discovery's library of programs.
The education division, for example, recently began marketing a service that delivers video clips to U.S. classrooms for about $1,000 per school. The clips are sorted so that they meet state education standards. They also come with lesson plans and quizzes. Discovery plans to expand the video-streaming service overseas and is testing a home service in the United States.
About 60 percent of the programs produced by Discovery's U.S. channels are reused abroad, but the company plans to sink more money into producing original shows for its international viewers.
"That's the key to our international strategy -- to customize programming for each country," said David C. Leavy, a spokesman.
Discovery also is recycling its international shows for domestic audiences: On Friday, Discovery launched two new U.S. channels that use material from Discovery's Latin American and Spanish networks.
McHale said she would like to explore more programming for emigre audiences all over the world, whether they're Japanese living in Brazil or Hindus living in London.
The education business and the international networks have begun generating returns for Discovery. Last year, the international division's revenue increased 23 percent and revenue from the education division rose 37 percent. Revenue from U.S. networks increased 19 percent.
Baker said investing in education and international networks are safe bets. A hundred million dollars "is not a big investment for them," he said. "They have the content already. It's probably a decent investment."
Others concur with Baker's assessment. After all, rerunning video clips of grasshoppers or "The Crocodile Hunter" has none of the bold vision of, for example, Your Choice TV, the video-on-demand service into which the company invested tens of millions of dollars in the 1990s. Nor does it have the cachet of the planned initial public offering of Discovery.com, formed in 2000 as an experiment in content delivery and online retailing.
But at this stage in the company's evolution, that's kind of the point, McHale said.
Video on demand finally caught on with TiVo and other digital video recorders. But Your Choice TV "was way ahead of its time, McHale said. "The technology wasn't there. The consumer habits were not there." And the planned IPO of the dot-com was canceled in late 2000. "In both cases we let technology drive the business model and we and just about everybody else got ahead of consumers. No one stopped to say, 'What does the consumer want?' "
Company managers learned from those failures, McHale said, and now pursue a strategy she describes as "conservatively aggressive."
The other avenue for growth is acquisition. Discovery will be in a better position to buy other media properties at the end of the month, when Liberty Media spins off its 50 percent stake in Discovery into a publicly traded company called Discovery Holding Company. Discovery's other owners are the privately held Cox Communications Inc., Advance/Newhouse Communications Inc. and founder Hendricks. If Cox and Newhouse contribute their shares to the spinoff, Discovery will effectively become a publicly traded enterprise. But neither company is expected to do so in the near future, for tax reasons.
There is little for Discovery to buy anyway. Liberty Chairman John C. Malone said he would like to buy the National Geographic Channel, which is co-owned by News Corp., and the National Geographic Society, among others, or E.W. Scripps Co., which owns the Food Network and HGTV. Malone said he has talked to News Corp. Chairman Rupert Murdoch about buying National Geographic, but would need the society and the channel's international partners to sign off on the deal. Scripps, he said, is not for sale.
Discovery has evolved into a company far larger and more complex than McHale said she ever expected, with $2.4 billion in revenue last year and about 4,000 employees.
She attributed the company's success to several strategic decisions, including an early move to own its content, which allowed Discovery to expand internationally and into other media, and a later choice to stick to factual programming and not be "distracted" by offering traditional entertainment.
The advantage of sticking to the stories of bugs or motorcycle makers, McHale said, is that by doing so, Discovery "taps into a common human characteristic to explore places and to say, 'I didn't know that.' "
TLC's "Trading Spaces," with its brush-wielding star Genevieve Gorder, has lost some of its audience, due in part to copycat shows on competing channels.
Maryland Gov. Rohert L. Ehrlich Jr., right, joined Discovery founder John S. Hendricks at the opening of the company's Silver Spring headquarters in 2003.