Discovery's Age Of Exploration

The cable programmer sails to the Net and digital channels

John S. Hendricks loves the wild life. With Discovery Communications Inc., the cable programmer he founded in 1985 and still heads, he has built one of the hottest brands in cable TV. Now he's pushing Discovery into new frontiers, exploring digital cable TV, feature films, cyberspace, and even retailing.

On Oct. 20, Discovery will unveil four new digital channels focusing on kids, history, science, and travel and living. That's on top of the Discovery Channel, broadcast to 69 million U.S. households and an additional 30 million internationally, The Learning Channel, and Animal Planet, a wildlife channel launched last June. Sources familiar with the talks say Hendricks is also close to a deal with the British Broadcasting Corp. to create new highbrow channels for foreign markets and possibly the U.S.

Hendricks also is looking beyond the small screen. On Sept. 27, Discovery premieres its first feature film, The Leopard Son, which stars a real leopard cub in the Serengeti. Meanwhile, it is still digesting its April acquisition of 113 Nature Company stores, which it may convert to Discovery Channel stores. And the company has plowed $8 million into a Web site, which allows cybernauts to follow events such as the recent Titanic research expedition.

UPSCALE RIVALS. Gutsy moves, to be sure. The ad-supported Web site is expected to lose money for at least five years. And the retailing foray will require new skills. If Discovery stumbles, it "can hurt the brand," warns Ira Kalish, an economist with Management Horizons.

Discovery's digital-cable ambitions, moreover, depend largely on the rollout of new digital cable boxes with their massive new channel capacity. The Yankee Group, a research firm, predicts only 3 million households will have such gear by the end of 1998. And Hendricks will have plenty of competition from the likes of A&E Television Networks and National Geographic Television, as well as feisty startups.

Still, Discovery has plenty of advantages. Its channels can share content, keeping costs down. Hendricks also has strong allies at Liberty Media Corp., Tele-Communications Inc.'s programming arm, and at Cox Communications Inc. Liberty and Cox have stakes of 49% and 25%, respectively, in Discovery. Strong name recognition doesn't hurt, either. That and savvy programming helped Discovery rake in some $464 million in revenues last year. Now, the race is on to get Discovery's programming out there as quickly as possible. Says Hendricks: "If there's shelf space out there, we want to claim it." Spoken like a true explorer.

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