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Discovery's Chief Sees `Extremely Strong' Ad Market, Considers UKTV Deal

Discovery Communications Inc., the owner of cable television’s Discovery Channel and Animal Planet, is predicting rising fourth-quarter advertising sales and may consider buying Virgin Media Inc.’s stake in UKTV.

“Fourth-quarter advertising is extremely strong, it’s stronger that it was a year ago,” Chief Executive Officer David Zaslav said in an interview at a Morgan Stanley conference in Barcelona, Spain, today. “Everyone is in the market, financial, companies, automotive companies, almost all across the board.”

Discovery’s sales outside the U.S. are especially “strong” and the company will get $550 million “or more” in operating cash flow from its international business this year, he said. Asked about the company’s expansion plans, Zaslav said “our first preference would be to deploy our capital for strategic purposes, including acquisitions.”

Zaslav, who took over the Silver Spring, Maryland-based cable programmer in January 2007, is focusing on expanding sales outside the U.S. “‘We look at it, we are very opportunistic,’’ he said when asked about whether he is interesting in Virgin Media’s stake in British broadcasting company, UKTV.

Discovery and Scripps Networks Interactive Inc. are seeking to team up with the British Broadcasting Corporation to buy the UKTV stake for 350 million pounds ($561 million), the Sunday Times reported in October, without saying where it got the information. ITV Plc and British Sky Broadcasting Group Plc may also be interested in buying the 50 percent holding in UKTV, the Sunday Times said.

‘Strong Asset’

‘‘The UKTV asset is a strong asset, we already have 13 channels in the U.K.,’’ Zaslav said today, without giving more details. ‘‘But we are not going to buy just to pick up assets, we’re going to buy something where we believe we can get faster and more sustainable growth.’’

Last month, BBC Worldwide, the BBC’s commercial arm, sold to Discovery Communications its 50 percent interest in the television channels joint venture Animal Planet and Liv for $156 million. The two broadcasters at the same time extended a strategic programming relationship for co-productions and program acquisitions for North America by two years to 2014.

The BBC deal was a ‘‘great opportunity to deploy some our capital with assets that we know,’’ Zaslav said today. ‘‘Let’s see whether we can do more deals like the BBC or other deals.’’

Other regions where Discovery Communications wants to expand are emerging markets including Latin America, Russian, India and Turkey, he said.

To contact the reporter on this story: Simon Thiel in Barcelona at sthiel1@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net

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