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Discovery's Oprah Problem

Discovery bankrolled the talk diva’s cable channel. So far OWN’s losses may exceed $330 million

Oprah Winfrey stood before advertisers and media executives in New York last month and offered a humble assessment of her effort to create OWN: Oprah Winfrey Network. Despite her popularity, the new cable channel attracts less than a 10th of the audience her syndicated TV show used to pull in. “I am in the climb of my life,” Winfrey told the crowd. “I am climbing Kilimanjaro, and it’s all on Wilshire Boulevard at the OWN offices.”

While the public spotlight has focused on the travails of the onetime queen of daytime talk, the uphill climb has been no less torturous for David Zaslav, chief executive officer of Discovery Communications, Winfrey’s partner and half-owner of OWN. Winfrey’s gold-plated brand has been tarnished by the network’s slow start, but Zaslav’s bank accounts may have suffered even more. Discovery, owner of cable’s TLC and Animal Planet networks, put up the cash for Winfrey’s network, and so far it hasn’t been a winning investment. From its 2008 inception through Dec. 31, OWN may have lost as much as $330 million, based on Discovery’s annual 10-K filing with the Securities and Exchange Commission. Even if OWN makes money in 2013, as predicted by a person with knowledge of the operation who was not authorized to speak publicly, it has saddled Discovery with such high costs that analysts say the company may eventually be forced to write off some of its current $420 million investment.