Restructuring Discovery's many worlds.

Ten years ago, founder John Hendricks had a dream of creating an all-documentary U.S. cable TV network. Today, his dream is a reality known as Discovery Communications, Inc. (DCI). The Discovery Channel, a subsidiary of the privately held DCI, now reaches 67.2 million homes in the U.S.; it is the fifth largest cable web in the U.S. and is distributed now to 93 million households in more than 97 countries around the world. According to Hendricks, the key to Discovery's competitive strategy now is to have "all worldwide rights." Currently, most of the revenue from the overseas channels comes from subscriber fees, and the hope is that future revenue will come from advertisers. Since documentaries cross borders better than almost any other genre, DCI began selling its programming abroad in 1987. Co-productions with television entities around the world (such as the BBC) followed. Now DCI is pre-selling its programming, enabling it to generate revenue for original programming and/or co-productions that will be owned by DCI.

As a leader in documentary/edutainment programming, the Discovery Channel continues to move its programming beyond the world of cable television. To this end, Discovery Enterprises Worldwide (DEW) was established in 1989 to take the Discovery Channel brand to new heights; it is now a force in home video, multimedia, licensing and retail and merchandising.

Linda Frazier was named vice president of DEW in July 1994 when the global library and the Enterprises Group were consolidated. Frazier brings 20 years of sales management, operations and new development expertise to her position, which involves supervising domestic sales and new business development, the global library and international sales. Frazier also manages domestic and international home video distribution for Discovery Communications. Through these efforts, the Enterprises Group is taking the Discovery Channel brand into new international and domestic markets.

Discovery's positioning of its brand involves developing retail partnerships and program sales initiatives as well as more consumer products. To avoid customer confusion over unrelated products and companies using the word "discovery," a new logo has been designed for DCI and a single positioning statement, "Explore Your World," has been created.

In October 1995, the Discovery Channel launched its own catalog, offering videos, CD-ROMs, books, audio CDs and educational items, among other products. The home video direct response division of DEW offers home video and related products through 30-and 60-second promotional spots. International sales and licensing of Discovery Channel Video product are handled via DCI's International Product Sales and Licensing initiative, which was launched in 1994. Thus far, licensing agreements have been made in the U.K., Scandinavia, France, Italy, Australia and Spain.

Additionally, the Discovery Channel's domestic retail presence is growing in the areas of home video, special markets (like national parks and zoos) and Discovery Channel Stores. Currently, Discovery has 11 retail stores. Frazier commented that the company's retail strategy is an ongoing process in which the "retail and merchandising go back to branding and is primarily a networking business with a goal to develop new product annually for domestic and international distribution." DCI's home video sales are moving into more specialized markets such as museum stores and nontraditional retail outlets.

A new business for DEW is in-flight entertainment. The Discovery Onboard division not only licenses programming for onboard entertainment but also provides a complete dedicated Discovery channel to air and cruise lines. Sarah Stone, account executive for the division, said that the in-flight channel, which started in 1994, came "just in time" for the airlines because they were very interested in the service. Now Discovery programming is seen on more than 20 airlines, including United Airlines, which currently provides a dedicated channel on its fleet of 777s. By early 1996, British Airways is expected to present a branded Discovery channel to passengers during its first test run of an onboard entertainment system.

Recently Hendricks announced vast organizational changes at DCI designed to better manage the company's current expansion and future global growth and product diversification. As a result, four company veterans were given new titles: Judith McHale (formerly executive vp of Corporate Services and General Counsel) was named president and COO for DCI; Gregory Moyer, formerly president of Discovery Networks and Worldwide Programming, has the new title of president and chief editorial and creative officer for DCI; Mark Hollinger was promoted from vp and deputy general counsel to senior vp, International Business Development and General Counsel; and Jim Boyle (formerly vp, Discovery Networks, U.S.) was named senior vp of Corporate Communications, a new position in which he will be responsible for all external and internal communications at the executive level and across all five business units, reporting to McHale. In addition, Charles Humbard was named the new vp of Network Distribution and Technical Operations for the company's Discovery Networks International business unit and Gregory Durig will continue as executive vp and chief financial officer for DCI.

McHale will now have the company's five operating business units (Discovery Networks, U.S.; Discovery Networks, International; Discovery Consumer Products; Discovery Theme and Retail; and Discovery Educational Services) reporting directly to her. Moyer will be responsible for guiding the global brand into new areas. At the same time he will oversee Discovery Channel Online, develop designs for new content services, including those for television and computer screens, and serve as editor-in-chief in developing "global" specials and series and the related marketing campaigns.