Oprah Winfrey Network finally making money for Discovery
By Liana B. Baker
(Reuters) - The Oprah Winfrey Network is making money four years after its debut, as stronger ratings and advertising growth helped turn around the joint venture with Discovery Communications Inc sooner than expected.
The news was a bright spot for Discovery, which has invested more than $500 million in OWN, as it posted weaker-than-expected second-quarter results and cut its earnings forecast on Tuesday.
The media company's stock fell 4.3 percent to $80.74 on Nasdaq at mid-afternoon.
Discovery Chief Executive David Zaslav said OWN, which it formed with talk-show host Oprah Winfrey, benefited from two popular new series by producer Tyler Perry, "The Have and Have Nots" and "Love Thy Neighbor."
"OWN is now cash flow positive and starting to pay down the investment Discovery has made in the venture," Zaslav said.
The network, which replaced Discovery's Health channel in January 2011, had expected cash flow to break even in the second half of the year.
Lazard Capital Markets Barton Crockett said it was encouraging that one of Discovery's biggest bets was paying off.
"We knew that OWN was working because ratings have been great. The fact that it is bouncing back into positive isn't a huge surprise," he said. Continued...