Emerging Nets Could Drive Discovery Growth

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Despite a sluggish ad market, Discovery Communications chief financial officer Brad Singer sees continued upside in the media giant's emerging networks - including the much anticipated Oprah Winfrey Network - that could help drive growth for years to come.
Discovery outpaced most of its peers in the first quarter, reporting 2% domestic ad sales growth. At the Credit Suisse Global Media and Communications Convergence Conference in Dana Point, Calif., Wednesday, Singer reiterated his past guidance that ad growth will likely be flat in the second quarter.
International ad sales are expected to rise in the single digits, Singer added. He said that while the ad market in the United Kingdom mirrors the U.S., some emerging markets in Europe should post strong growth. However, in many of those markets, the advertising market is still in its infancy.
But Discovery also has two new networks that are expected to launch in the next year - OWN, the Oprah Winfrey  and a joint venture with toy maker Hasbro. The latter network, a revamping of Discovery Kids, doesn't have a name yet, but is expected to generate some additional heat for the stable of cable networks.
Despite the network being half-owned by Hasbro - they paid about $300 million for the stake - Singer said that the kids' channel is expected to attract a wide berth of advertisers, including rival toy makers.
"Competitors in any industry have no problem advertising where the demographic is most suitable," Singer said.
Singer also pointed to other potentially lucrative networks, like Investigation Discovery, which recently hired former Hallmark Channel CEO Henry Schleiff as its president and general manager. Singer added that the channel will see some additional investment to help boost its momentum.
"We think the forensics genre and crime genre is one we can keep building on," Singer said. "We've had double digit viewership growth in that one. That's another key initiative that we are putting some money behind."
Singer said that the OWN network, which is expected to launch next year is another property with great potential, but does have its hazards as well.
"The upside could be meaningful, but it is a much higher risk proposition than incrementally investing in ID or Science or any of our smaller networks," Singer said. "That could be TLC-like one day, but it also could not go anywhere."
Still, being able to launch a well distributed network (more than 70 million homes) with the Oprah name attached is worth it, he added.
"We thought the risk-return is a pretty good risk-return investment," Singer said..