The Great Discovery Channel Rescue Act

By K.C. Neel -- Multichannel News, 8/23/2010 12:01:00 AM

John Hendricks was in dire straits. His nascent Discovery Channel service was bleeding $1 million a month and was about to flounder. Tele-Communications Inc. executives John Malone and John Sie were already in his corner. But to succeed, Hendricks needed more support. Bob Miron was at the top of the list as a potential partner.

Sie, who was TCI’s executive vice president at the time, convinced Miron to meet him and Hendricks at a Chinese restaurant in a suburban Dallas strip mall during the National Show in 1986. Sie was convinced that Miron’s backing would create a tsunami of support from other operators.

Between the sweet-and-sour soup and the sesame chicken, Miron cut to the chase. “He grabbed a napkin and started writing down numbers and a new business plan,” Hendricks recalled. “We thought we could get 20 million customers and we could charge operators 5 cents a subscriber. Th at covered our transmission costs.”

Miron also promised to find another investor for the network. He reached out to Cox Communications CEO Jim Robbins. Robbins liked the concept, but his boss at the time, Cox Enterprises president Bill Schwartz, wasn’t keen on the idea. It didn’t take long, however, for Miron to convince Schwartz how important and potentially lucrative an investment in Discovery could be. Miron’s prediction came true. When Cox sold its 25% stake in Discovery back to Liberty Media and Advance/Newhouse in 2007, the company walked away with $1.3 billion in cash, The Travel Channel and a related website.

Advance/Newhouse has come out O.K. on the deal as well. The company owns onethird of Discovery with a value of about $6 billion today.

“I have often thought of that meeting as the second launch of Discovery,” Hendricks said. “It was such a crucial meeting. John Malone and John Sie valued his opinion, and if Bob had formed an opinion of the deal that was less than enthusiastic, I’m not convinced I’d have gotten the second round of financing I needed to stay afloat. With John Malone and Bob Miron on our side, we knew we could move brick walls and we did.”

The investment has been near and dear to Miron from the beginning. Although he is retiring as chairman of Bright House Networks at year’s end, he will continue to serve on Discovery’s board, and the company’s other board members are pleased with his decision to stay on.

“Bob has such a good sense of humor and nice personality,” said John Malone, Liberty Media’s chairman and a Discovery board member. “He doesn’t get cross-wise with people and he has always been willing to do more than his fair share of the work. It’s been a rewarding relationship even in situations that could have been confrontational. It’s always worked out well with Bob. He’s always been reasonable.”

Miron has long been a bull of programming. Advance/Newhouse has invested in several programming entities over the years, including E! Entertainment Television, Golf Channel, In Demand and Cable Value Network, which eventually became QVC Inc.

Miron will always be remembered for his ability to convince operators to do what he believed was the right thing. The one time it didn’t pan out as expected was when he, Sie and Heritage Communications chief Jim Cownie joined forces in the late 1980s to convince operators that they needed to bid on the NFL’s Sunday night games. Ultimately, they were unsuccessful in their efforts, and ESPN ended up with the Sunday Night NFL lineup.

Miron was instrumental in helping NBC craft its retransmission consent strategy in a way that benefitted operators and programmers alike, said David Zaslav, now Discovery’s CEO and previously president of NBC Universal cable and domestic TV and new media distribution.

“We were at an impasse on retrans,” Zaslav said. “Bob came in to see me. He closed the door and said, ‘We need to find a way for everyone to win on this.’ That meeting helped reinforce our desire to bring value for everyone and it helped us plot a course for the launch of MSNBC and a new pricing structure for CNBC. Bob is usually right but he rarely takes credit for it.”

Zaslav said his heart sank when Miron called him up to tell him he was retiring. “From the beginning, Bob has been a big supporter of Discovery,” Zaslav said. “I have sat on a number of boards, and invariably the partners want to take out money at the end of each year. But neither John Malone nor Bob have ever taken a penny. Th ey have always pushed for reinvestment, and it has allowed Discovery to become the company it is today. I am thrilled he is staying on the board.”