Discovery buys Eye on People CBS, the seller, says cable network wasn't profitable

Media

December 31, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

Bethesda-based Discovery Communications Inc. said yesterday that it has purchased CBS Corp.'s Eye on People, a fledgling cable channel focusing on people and personalities that has 11 million cable and satellite subscribers.

Discovery, which also operates the Discovery Channel, the Learning Channel and Animal Planet, had agreed in July to purchase a 50 percent stake in the CBS channel, which was launched in March 1997.

"Given the realities of the dynamic, ever-evolving cable programming marketplace, we did not think it made sense to co-manage a network," Discovery Networks U.S. President Jonathan Rodgers said in a statement.

Terms of the cash deal were not disclosed.

"It was not a profitable network," said CBS spokeswoman Cheryl Daly, "and we felt we could realize a financial gain by selling all of it."

Lynn McReynolds, a Discovery spokeswoman, said it's too soon to discuss specific plans to boost subscriptions and profit, but pointed to the company's success with the Learning Channel.

"When we bought the Learning Channel in 1991 it had around 14 [million] or 15 million subscribers and now it has 65 million subscribers," she said.

"It was recently valued at $2 billion, and we paid $31 million for it."

She said it generally takes about three to five years for a cable channel to start turning a profit.

Discovery plans to continue the channel's format and will include CBS-produced shows in its programming. Earlier this year, Discovery said it had outgrown its headquarters and needed a new location. After saying it was considering a move to either Washington or Virginia, the company announced in October that it would move its headquarters to Silver Spring after Maryland's Department of Business and Economic Development promised it more than $7.2 million in economic incentives.

Discovery said it plans to add about 300 employees to its 800-person staff after the move is completed in 2001.

Shortly after the Silver Spring move was announced, Discovery Chairman and Chief Executive Officer John S. Hendricks and his wife, Maureen, donated $8,000 to Gov. Parris N. Glendening's election fund.

While the donations were legal, Republican gubernatorial opponent Ellen R. Sauerbrey raised concerns about the timing between state economic incentives and election contributions. The governor's staff said the two issues were not linked.

Discovery is owned by Liberty Media Corp., Cox Communications Inc., Advance/Newhouse Communications and Hendricks.

Pub Date: 12/31/98

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