Seeking Alpha

Jabulani Leffall's  Instablog

Jabulani Leffall
Send Message
Jabulani Leffall, 33, is an award-winning journalist and writer who attended Journalism School at the University of Missouri. His work has appeared in the Financial Times of London, Dow Jones Marketwatch, The Baltimore Sun, Investor's Business Daily, Variety, CFO Magazine, Compliance Week, Black... More
My blog:
Common Currency
View Jabulani Leffall's Instablogs on:
  • Do it like they do on the Discovery Channel

    Media conglomerates may seem in this recession, big and clunky with all swagger and no steps, lots of content real estate but no sustainable building plans.

    As the line between old media and new media blurs from less of a de-militarized no man’s land separating the two, to a cornucopia of distribution points with better ways to measure consumer demand, companies stuck in the old model are scrambling for fresh ideas.

    The trickiest thing to achieve it seems is the right mix of old and new, to create a model of what a profitable media giant could look like. For the time being that model seems to be best lived out by Discovery Communications

    Nevertheless with 100 television networks in 35 languages, fascinating programs and good synergies between online and offline properties as well as lucrative content partnerships with old media flagship brands, such as the New York Times and good estimates to boot, Discovery is proving that the niche game pays.

    As of late November, A shares of Discovery were markedly outpacing the broader S&P, up around 123% year-to-date and up about 150% on a year-over-year basis.

    Discovery recently revised its revenue expectations for 2009,now seeing between $3.45 billion and $3.50 billion. The consensus estimate is $3.49 billion.
    Beyond cost-cutting, you may ask how has Discovery come to this point?

    Mostly by making low profile, snap-on M&A plays. Here's an example, albeit with a slight digression.

    Over the holiday weekend, HowStuffWorks.com capitalized on Turkey Day by announcing a content blitz of little-known facts from an article titled, “How Thanksgiving Works.” 

    Reading the content one finds that Plymouth Colony Governor William Bradford bragged of the store of Wild Turkeys not long after the Pilgrims landed on Plymouth Rock and this is in part why we eat Turkey on Thanksgiving. On its face, this has little to do with a media conglomerate’s long-term strategy and in fact some of these facts on sites such as these seem to be dinner party banter at best and time wasters at worst.

    But sites such as these do attract eyeballs, which can attract ads and product-driven content. Thus, the appeal raised the eyebrows of Discovery Communications, which bought the site in 2007 to add to its portfolio of companies. Such blockbuster deals include Treehugger.com and something called Petsincredible to go nicely with the Animal Planet franchise.

    As evidenced by its quiet but persistent acquisitive nature since 1997 - just under 20 deals since then - when it first bought the Travel Channel, Discovery has laid out the template of what a 21st century media conglomerate should be: a company with knowledge of self and the ability to meld new media with old media.

    Other more over-extended media conglomerates would do well in perhaps looking into doing it like they do on the Discovery Channel.

    Disclosure: No positions






     
    Tags: DISCA
    Nov 29 3:07 AM | Link | Comment!
Full index of posts »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.