Cable becomes focus of the new Discovery

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John Malone's complicated entity known as Discovery Holding Co. will get simpler in the third mquarter under a plan to spin off assets, consolidate others and offer stock in a revamped Discovery Communications.

To do this, DHC will combine its interest in Discovery Communications with an interest held by Advance/Newhouse Programming Partnership so that the new Discovery Communications will own 100% of the Discovery Channel and Animal Planet.

The company — which executives call the top nonfiction media company in the world, with 1.5 billion subscribers — also will control the Science Channel, Discovery Health, HD Theater and TLC.

The new Discovery Communications will be led by current CEO David Zaslav. Board member and former CEO John Hendricks, who also is the company's founder, will be chairman.

Ascent Media Group, an asset of DHC that provides postproduction services, will be spun off to DHC shareholders.

Advance/Newhouse will own about one-third of the new, publicly traded Discovery Communications and is entitled to elect three board members.

Privately held Advance/ Newhouse is known for its interests in assets like cable company Bright House Networks and such Conde Nast magazine titles as the New Yorker, Vogue and Vanity Fair.

Malone, who is not only CEO of DHC but also chairman of Liberty Media, announced Dec. 13 his intentions to restructure DHC and offer shares of a simplified entity to the public.

Although Wall Street analysts heralded the announcement seven months ago, shares of DHC haven't moved much since then, closing Wednesday at $26.43, 26 cents less than where they traded Dec. 13.

The news, though, already might have been baked into DHC shares, the stock having run up 17% in the four weeks that preceded the December announcement.

Two weeks ago, CNBC stock guru Jim Cramer told The Hollywood Reporter that an unwinding of DHC's ownership would be "very bullish."

As of Wednesday, six analysts were calling DHC shares a "buy" or "strong buy," while none was advising clients to sell. (partialdiff)
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