OWN Turns a Profit

Discovery CEO Had Expected the Network to Break Even in the Second Half of This Year

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After very public early troubles, the Oprah Winfrey Network turned a profit in the most recent quarter, earlier than recent expectations, part owner Discovery Communications' said today as it reported second-quarter earnings.

Oprah Winfrey and Tyler Perry in a promotion for his new shows on OWN
Oprah Winfrey and Tyler Perry in a promotion for his new shows on OWN

Discovery CEO David Zaslav said ratings success combined with significant advertising growth to move OWN into the black earlier than anticipated. The network signed over 30 new advertisers during upfront negotiations for the upcoming TV season, he told analysts during a conference call to discuss Discovery's results. And its recent deals for commercial time in the so-called scatter market have yielded ad prices at least 10% above the 2012 upfront, he said.

OWN also began receiving higher subscriber fees this year, in some cases reportedly about 20 cents per subscriber. The network will now begin to pay back Discovery for its investment.

OWN hit some bumps in the early going after arriving in January 2011, including several failed series and a period of management turnover. Mr. Zaslav originally predicted that OWN would make a profit in its first year, but later said OWN wouldn't reach that milestone before the second half of 2013.

OWN has lately seen success with its first scripted programming from Tyler Perry, which began in the second quarter, and new reality fare like "Life with LaToya." OWN reported a 39% jump in second-quarter viewership among its core target, women 25 to 54 years old.

While OWN was a bright spot for Discovery, which also owns networks such as Animal Planet and its flagship Discovery Network, the company's second-quarter profit missed analysts' estimates due to higher-than-expected marketing and programming expenses. Still, its U.S. networks posted a 10% increase in advertising revenue.

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