Discovery Communications to Invest $50 Million More in OWN: Oprah Winfrey Network

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The company wants to spend more on programming to fuel longer-term growth and expects to break even on the Oprah Winfrey Network on an operating basis this year.

NEW YORK - Discovery Communications on Friday said it will invest an additional $50 million in OWN: The Oprah Winfrey Network, particularly in programming, and break even on the channel this year on an operating basis.

President and CEO David Zaslav said on an earnings conference call that Discovery expects to increase funding to help drive the network, a joint venture with Oprah Winfrey, to longer-term profitability and growth with stronger content.

CFO Brad Singer said Discovery invested an additional $46 million in OWN in the fourth quarter and expects to spend an incremental $50 million on added funding beyond its previous $189 million commitment to the network. Programming investments will be the focus.

Zaslav said his firm is "confident that we can generate sustained momentum in ratings and reach [operating income before depreciation and amortization] breakeven in 2011," adding he still expects that OWN will be "a very big business" over time. Singer recently said the network would be in positive territory this year when it comes to earnings before interest, depreciation and amortization, and a spokeswoman said that expectation remains.

Zaslav on Friday said 24 new OWN shows are slated to launch this year, which should help boost ratings. While OWN currently features a lot of reruns, over the next six to 12 months, people should start to see the strength of its original programming, Zaslav told analysts. He said ratings should get an additional bump from Winfrey's move to the network after she ends the run of her syndicated show this fall and Rosie O'Donnell's new show, which is set for a fall debut on OWN.

Zaslav said that OWN had viewership that was up more than 30 percent in January over the year-ago performance of the Discovery Health channel that it replaced, while reports have pointed out weaker ratings this month. Zaslav also lauded OWN for having signed "strong" long-term advertising and carriage deals. Plus, "we have one of the best brands in media and a very engaged Oprah," he once again lauded Winfrey's brand power and involvement in the channel.

Overall, Zaslav said he is "very encouraged" by OWN and its outlook.

The news of the increased OWN investment came after Discovery Communications reported a fourth-quarter profit improvement amid a 7 percent revenue gain, but its financials fell somewhat short of Wall Street predictions.