Discovery chief David Zaslav transforms television company

Bernstein Research expects net income from continuing operations to increase 114% this year to $559 million on revenue of $3.48 billion, up 1.2%.

"David's been reaching out for talent and energy in a number of directions, and it's reflected in the success so far of the business," says Liberty Media Chairman John Malone, a Discovery board member who controls 31.3% of the votes from his stakes in the company's three classes of stock. "What can you say? The guy's been terrific."

Zaslav has succeeded in part by injecting show-biz pizazz to his most popular channels.

At Animal Planet, "The original theory was that all the programming should be rated G," Zaslav says. "But the animal kingdom isn't rated G. A lot of those stories about nature and animals involve mysteries and danger. So we relaunched Animal Planet as a more aggressive and compelling brand. And we're finding some meaningful success."

The bullish case for the company, though, is based on faith that Zaslav will give an adrenalin shot to some of Discovery's widely distributed channels that have failed to excite viewers and advertisers.

"A lot of the channels we have, no one's ever heard of," he says.

The company has already turned Discovery Wings into the Military Channel, Discovery Home into the ecology focused Planet Green and Discovery Times into Investigation Discovery, which is devoted to true crime stories.

The boldest makeover will take place at Discovery Health, which reaches 76 million homes, when Winfrey transforms it into OWN: The Oprah Winfrey Network. The hope is that Winfrey's mantra, that people should live their best lives, will be as successful on cable as O, The Oprah Magazine has been for her company, Harpo, and Hearst.

"Look at some of the (television) talent she has developed: Dr. Phil, Dr. Oz, Rachael Ray— all these people," Zaslav says. "She has a great eye for talent. If we can own this niche, then this could be a very big channel for us."

He has a lot riding on this attempt to draw viewers and advertisers from established women's services, including Lifetime and WE. In addition to the channel that Discovery contributed to the joint venture, it agreed to lend $100 million through 2011 — to be paid back only if it's profitable. Winfrey contributed her website,, and the library of her daily TV shows.

The venture with Hasbro appears more straightforward. The toy company paid $300 million in May for 50% of Discovery Kids, which reaches 55 million homes. It will manage and relaunch the service under a new name, still undetermined, with several shows based on Hasbro games, including Scrabble and Trivial Pursuit, and toys such as G.I. Joe, Transformers and My Little Pony.

"Young people today consume more than eight hours of media over a six-hour period, so they're looking at multiple formats at once," says Hasbro CEO Brian Goldner. "We're going to provide our content in a number of different formats that they can enjoy in a complementary way between the network, smartphones, online and off-channel."

That may be a shrewd strategy, but some activists say it's a lousy idea to blur the line in kids' minds between entertainment and advertising.

"It's another slide down that slippery slope," says Susan Linn, director of the Campaign for a Commercial-Free Childhood. "Discovery presents itself as pro-environment, but they just bought into a channel that sells kids lots of plastic junk."

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