Discovery Communications regroups, goes public

Shareholders combine stakes, widening growth options

NEW YORK -- Cable network juggernaut Discovery Communications finally will become a fully public company with increased control over its strategic direction in a deal unveiled Thursday by its current shareholders, John Malone's Discovery Holding Co. and privately held Advance/Newhouse Communications.

The transaction will see the firms combine their stakes in Discovery Communications, which investors so far can only track indirectly via a 66% stake held by the publicly traded Discovery Holding. Discovery Holding also will spin off postproduction service business Ascent Media Group to its shareholders, thereby making DC a fully public firm.

The move will give DC CEO David Zaslav more flexibility to set strategy and make possible acquisitions. "As a fully public company, Discovery will be in a stronger position to grow organically and through acquisition," he said.

The tax-free deal is expected to close in the second quarter, with shareholders of Discovery Holdings getting stock in both the newly public Discovery and Ascent, a provider of video and audio postproduction services for film and television.

Advance/Newhouse will receive preferred shares that can be converted into one-third of the outstanding shares of the new Discovery. It also will elect two members to the new board.

"Discovery Communications is one of the most valuable and well-positioned media companies in the world," Discovery Holding chairman and CEO Malone said. "Today's transaction will unlock the full potential and value of Discovery and provide a broader range of options to pursue their aggressive growth strategy in the future."
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