Discovery Executives: OWN Financials on Track Amid Ratings Gains

7:14 AM PST 11/06/2012 by Georg Szalai

CEO David Zaslav says a deal with Tyler Perry will bring more comedy to the Oprah Winfrey Network, which he argued has "begun to really find a rhythm."

Discovery Communications' funding for OWN, the cable networks group's joint venture with Oprah Winfrey, is on track to come in below 2011 this year, management said during an earnings conference call Tuesday. And the company said it remains on track with or maybe even ahead of its previous cash-flow forecast.

Discovery CEO David Zaslav on the call also lauded OWN's recently announced content deal with Tyler Perry as another breakthrough that will provide further comedic elements for the network, which has seen its ratings grow in recent months.

Discovery CFO Andrew Warren was asked during the call about third-quarter losses in the company's "other" segment. He said they were higher amid increased marketing spending for OWN and content write-offs at the network but added that after $84 million in funding for OWN during the first half of the year, Discovery spent only $29 million in the third and expects to spend less than that in the current fourth quarter. Overall, funding in 2012 is on track to come in below the $150 million the company spent in 2011, he said.

Discovery previously has said that OWN would reach break-even cash flow during the second half of 2013. On Tuesday, he said cash flow is on track or even a bit ahead of when he made the comments about six months ago.

Zaslav said Tuesday that OWN has developed "big ratings momentum" this year after struggling in 2011. After an 18 percent audience gain in the first half of 2012, it continued to grow in the third quarter, he said.

The Perry deal is "demonstrating the power of the Oprah brand" to attract some of the industry's biggest names, Zaslav said. "This is something Oprah really wanted, we really wanted, Tyler really wanted. Next year will be a good year."

Perry's TV series will particularly add comedy to OWN. "We were too teachy, too preachy" and too serious when the network launched, he said. Audiences in response said "we want to have fun," he explained. With shows like Welcome to Sweetie Pie's the network has started to provide more fun, Zaslav added.

Zaslav called OWN's recent ratings among African-American viewers "dramatic," highlighting that when Winfrey interviewed Rihanna this year, the network drew more African-American women than ABC, NBC, CBS and Fox combined.

Overall, the Discovery CEO said: "The ratings are stronger. OWN has begun to really find a rhythm." And people view it at longer lengths than any but one other Discovery network, he said.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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