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OWN hones focus and ratings rise

In Q3 earnings call, Discovery topper says auds wanted more laughs from channel

Discovery chief David Zaslav says OWN is catching fire as the cabler at last has a good sense of what viewers want — less preaching and more laughs.

Ratings are up sharply, and length of view is the second highest in the company’s portfolio, which includes flagship Discovery, TLC and growing nets like ID, Velocity, Science and a rebranded Destination America.

“We were much too teachy and preachy and earnest when we started,” Zaslav said on a conference call to discuss last quarter’s financials. “Auds said, ‘We want to have fun, want to laugh, want to see families, want some comedy,'” leading to OWN’s content deal last month with Tyler Perry.

The venture with Oprah Winfrey lost money last quarter, with higher marketing spend and content writedowns, but execs said it will break even in the second half of 2013.

Discovery’s net income fell 13% to $206 million largely on one-time items like foreign currency shifts and higher taxes and interest expense.

Total revenue was about flat at $1.1 billion.

Revenue at U.S. networks fell to $664 million, with a 7% uptick in advertising offset by a 14% drop in distribution. Higher rates and subscriber growth, primarily from networks carried on the digital tier, were pulled down by tough year-on-year comps from expanded licensing agreements in the third quarter of 2011.

Revenue from Discovery’s substantial international business rose 7% to $390 million, with distribution up 8% and advertising up 3%.

Zaslav said that as the company renews deals, expanded carriage for its developing nets is as valuable to it as cash. TV Everywhere pacts, which Discovery hasn’t inked yet, “could provide additional value and accelerate when we do deals,” he said.

Discovery, like most non-NBC networks, took ratings hit from the Olympics last quarter and had a few soft weeks on the ad front in early October. European comps were tough as the London Games aired live throughout the region. But things have rebounded, Zaslav said, and “We have good visibility into next quarter.”

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