From her ninth-floor office in Bethesda, Judith A. McHale can gaze across a canopy of trees toward Silver Spring and point to the spot where Discovery Communications Inc.'s new headquarters is taking shape.
McHale, president and chief operating officer since 1995, has steered the Discovery Channel's parent company through an expansion that now has it bursting at the seams in Bethesda.
During her tenure, McHale has guided the launch of two U.S. cable networks and the acquisition of a third, led the company into the retail business with Discovery Channel stores, and pursued an international campaign that's extended its networks to more than 500 million subscribers in 152 countries.
"The 1980s were the foundation years," said McHale, who joined DCI in 1987 as general counsel. "The 1990s were really a significant growth era for the company, where we were really going out and launching a portfolio of channels and brands and new businesses. Right now, what I'm doing is looking at all the assets that we have and how we're now going to take all of those to the next level."
When DCI finally moves late next year to its two-building complex in Silver Spring, the company will have completed its evolution from cable upstart to multimedia giant with more than $1.4 billion in revenue in 1999 and 4,000 employees worldwide, including 1,700 in Maryland.
Late last year, however, DCI began to tame its own growth expectations, in part because of the popping of the Internet bubble. In late October, it dropped plans for a third building in Silver Spring, with 320,000 square feet. Three weeks later, it announced deep cuts at Discovery.com.
DCI's current challenges, analysts say, lie in wringing profits from its domestic and global network operations, fine-tuning its Internet strategy and keeping a watchful eye on the National Geographic Channel launched last month.
But DCI attacks those tasks from a position of dominance in nonfiction cable programming - a position that was far from assured when John S. Hendricks started the Discovery Channel in 1985 with a scant 156,000 subscribers. At that time, skeptics wondered if the documentary channel would ever capture a large following.
But some big media players, including Liberty Media Corp., helped finance its growth and secure its distribution among cable operators. Liberty, now part of AT&T Corp., remains its biggest investor, with a 49 percent ownership stake. Other stakeholders include Cox Communications Inc., Advance/Newhouse and Hendricks, who is also chairman and chief executive officer.
Since 1991, the company has capitalized on the success of its first channel to expand its dominance into various nonfiction programming niches. It acquired the Learning Channel in 1991, launched Animal Planet in 1996, acquired the Travel Channel in 1997 and launched Discovery Health Channel in 1999.
"They've got brand equity; they've been around; they're established," said Sean Badding, analyst for the Carmel Group, a media consulting firm in Carmel-by-the-Sea, Calif. "This is a company that has really the key executives, the content and the key partnerships that are going to make it a continued success."
In launching more networks, the company's strategy was to create competitors to Discovery Channel, rather than wait for others to fill the niches, said Johnathan Rodgers, Discovery Networks' U.S. president.
Its arsenal is potent:
The Discovery Channel, with more than 81.2 million U.S. subscribers, is the second-most-distributed network behind AOL Time Warner's TBS Superstation. The channel won four prime-time Emmy awards last year for two specials: "Walking with Dinosaurs" and "Raising the Mammoth."
The Learning Channel bills its programming as "life unscripted." Its fare ranges from "Trauma: Life in the E.R." and "Paramedics" to "A Wedding Story" and "A Baby Story." It's available in 77.3 million U.S. homes.
Animal Planet - home of the fearless crocodile hunter Steve Irwin and his wife, Terri - taps into people's fascination with animals. The channel was one of the fast-growing cable networks in the 1990s, and reaches 66.9 million households nationwide.
The Travel Channel was reaching about 20 million U.S. households four years ago when Discovery bought it. Today, it's in more than 50.8 million households.
Discovery Health Channel offers programming on medicine and related topics to about 20 million viewers. DCI also launched DiscoveryHealth.com, an online health information resource.
Discovery Digital Networks is a leader in the growing digital television sector with six digital channels: Discovery Science, Discovery Wings, Discovery Civilization, Discovery Home & Leisure Channel, Discovery Kids, and Discovery en Espanol.
Abroad, Discovery's more established networks - in Latin America and Europe - are booking solid revenue increases and have turned profitable.
