Discovery Communications: OWN Funding Will Exceed Earnings for Next Two Years

10:29 AM PST 02/17/2012 by Georg Szalai
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The cable network giant's total funding to the joint venture channel with Oprah Winfrey now stands at $312 million.

NEW YORK - Oprah Winfrey joint venture network OWN is expected to be a business that takes more investment than it earns for Discovery Communications for the next two years, the company said in its annual report Friday. It also detailed that the company's funding of the channel now amounts to $312 million.

The company recently said that the network would continue to provide losses over the near-term without detailing when they would likely end. "The company’s funding to OWN is expected to exceed OWN’s earnings for the next two years," the annual report detailed on Friday. It didn't say what kind of earnings - or losses - OWN itself would bring in over that time frame.

But Discovery emphasized again that it expects to recoup its OWN losses over time. "While the company expects to provide significant additional funding to OWN, the company also expects to recoup amounts funded," the annual report said.

Discovery has recognized 50 percent of OWN’s losses since its launch at the start of 2011. Future net profit generated by OWN will initially be allocated 100 percent to Discovery until all its losses in excess of its ownership stake have been recouped.

Discovery's total funding to OWN, including interest on outstanding borrowings, stands at $312 million, compared with the previous commitment of $189 million, the annual report showed. The company had previously signaled that it would need to go beyond the commitment. Early financial trends at OWN have been "below its initial business plan," Discovery's report said. Discovery said it has not taken a writedown on OWN so far, but will monitor its financial performance to track whether an impairment may have occurred.

CEO David Zaslav had reiterated on Thursday though that he remains committed to OWN and expects it to improve its performance this year.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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