SPECIAL REPORT;CABLE TV; AT DISCOVERY, IT'S SURVIVAL OF THE FITTEST;SOPHISTICATED BRANDING EFFORT PREPARES NETWORK FOR FUTURE-AND EARNS SALUTE AS AA'S CABLE MARKETER OF THE

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Television's leading authority on survival in the wild, Discovery Channel, knows a thing or two about getting along in a cutthroat environment.

As it reaches its 10th anniversary this year, Discovery Channel has been named Advertising Age's Cable TV Marketer of the Year for its sophisticated, integrated marketing efforts in an increasingly competitive cable TV landscape.

It's still king of the jungle in the science and nature TV documentary arena. But Discovery Channel is ensuring its long-term survival by preparing for evolution, making ready for regulatory changes that may breed new competition and for media technology that could change the small-screen delivery system dramatically.

Aggressively reaching to meet these challenges, Discovery Channel this year launched a raft of new retail, direct-mail catalog, cross-promotional and high-tech ventures-all centered around its core cable TV content but aimed at broadening its definition and exploring diverse communications formats.

"We won't make the mistake the network TV broadcasters made in the 1970s, of refusing to acknowledge a new delivery technology like cable TV, while the delivery means is revolutionized before our eyes," says John S. Hendricks, Discovery Channel's 43-year-old founder, chairman and CEO.

A revolutionary of sorts himself, Mr. Hendricks got the idea for Discovery Channel when he was a 29-year-old graduate student. Through his work-study program, he discovered archives of historial documentaries that were of great interest to him, his family and friends.

It took waiting many years and overcoming desperate financial difficulties, but he finally launched the cable TV channel in 1985. Today he oversees a huge company that's surging into more new spheres than ever envisioned.

This year Discovery Channel launched a computer online operation with its own separately staffed World Wide Web site, offering original information and content that draws upon-but goes beyond-its cable TV programming.

It also acquired a chain of 11 retail stores being renamed Discovery Channel Stores, planned to expand to 300 outlets nationwide over the next few years.

In October, the first Discovery Channel catalog was mailed to viewers and fans offering a diverse range of merchandise derived from its TV offerings, including videos, computer software, books and related merchandise.

And Discovery has formed new promotional relationships with other marketers. Among them: a permanent tie-in with the national pet supply chain PetSmart, which showcases Discovery Channel products and videos in its stores.

The non-TV venues are increasingly important for Discovery Channel, as new technology opens up new methods of distributing entertainment.

"We're not looking at ourselves as merely a cable TV company. We're in the content business and we satisfy curiosity and entertain people. And we'll do that through any media worldwide," Mr. Hendricks says.

Despite these activities, Discovery's main focus remains cable TV. Competition is getting more fierce, and while Discovery advertises on some cable channels such as ESPN and CNBC, others including documentary rival A&E won't sell ad time to it.

Many new specialized cable channels. are focused on the type of non-fiction, how-to material that's been successful for Discovery.

"There's a lot more competition, with more channels coming onboard every month, and many of them are very good. Many are copying our non-fiction format and capitalizing on documentaries, but we welcome the competition because we're at the front of the pack," says Chris Moseley, senior VP-marketing and communications.

Advertisers have noticed Discovery Channel's improving ratings and marketing efforts. Regular core advertisers include General Motors Co.'s Chevrolet division, Chrysler Corp.'s Chrysler/Plymouth division, IBM Corp. and Microsoft Corp.

Ad revenue has increased an average of 20% annually and now comprises 60% of total revenues; the rest comes from cable operator fees.

Among Discovery Channel's other achievements this year:

A new worldwide brand campaign was implemented to unite its diverse efforts.

A refocusing of the U.S. prime-time program lineup was enacted, offering one regular telecast each evening at 8 p.m. of its core nature documentaries, in a one-hour weeknight program called "Wild Discovery." The lineup boosted ratings 50%, garnering a 1.5 average rating in mid-September through mid-October, according to Nielsen Media Research.

Heavier marketing and promotion efforts surrounding special "theme" weeks for programming, such as its "Creepy Critters" series that ran this Halloween and Shark Week, one of its most successful theme weeks.

Beefed-up live on-air promotions themed "You View It, You Do It," offering viewers chances to win adventure trips themed around a program.

Discovery Channel is in the midst of major international expansion, adding Latin America and Asia this year.

Since its first overseas foray with Discovery Channel Europe in 1989, the channel has grown by leaps and bounds. As it gradually expands in Australia and China, it expects to increase total viewership tenfold within the next decade.

The Learning Channel, acquired by Discovery in 1991, also is booming.

Its focus remains centered on educational programs, the humanities, ancient history and theoretical science, and has grown from 14 million viewers in 1991 to 43 million today.

TLC added 10 million viewers this year and is outpacing cable-darling Court TV with its growth.

Both TLC and Discovery Channel have traditionally drawn higher numbers of male viewers, especially during prime time, and have enhanced that positioning with a heavy emphasis on history, science, computers and technology programs. One key example: "Wings," Discovery Channel's long-running anthology series tracking the evolving technology of military aircraft.

Female viewership on Discovery Channel is higher during the day, and it's seeking to expand its viewership among women and children with more cooking and home programming such as "Graham Kerr's Kitchen" plus its six-hour block of commercial-free children's programming offered each weekday morning, hosted by Discovery's own Rory.

But Discovery Channel's non-TV ventures are now the most intriguing area for Mr. Hendricks, who this year launched a big-screen film division that will offer its first movie in 1996, tentatively entitled "The Leopard Son."

He's looking into virtual reality and other multimedia opportunities to explore non-TV formats that will continue to evolve.

"We're learned a lot from our experiments with CD-ROMs, including what people want from interactive media. But we also recognize that the deep-seated human nature to be entertained, driving TV today, is only going to become more powerful with time," Mr. Hendricks says of the various new formats being explored.

Mr. Hendricks now oversees a company that's grown so large he hardly recognizes it, but he makes sure Discovery Channel still possesses the same entrepreneurial spirit in which the company was born.

"New ideas are listened to, and we work hard at making sure our minds are open so we can keep growing. It's harder than you realize to take risks, even after succeeding," he says.

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