- Associated Press - Tuesday, May 8, 2012

SILVER SPRING, Md. — Discovery Communications Inc. is known for programming a week of terrifying shark shows each year. But a scarier figure for the local cable giant these days might be Oprah.

The operator of pay TV networks such as Animal Planet and the Military Channel said Tuesday that its first-quarter net income fell 28 percent as it booked losses on its half-ownership investment in the former talk-show host’s struggling Oprah Winfrey Network.

The results fell short of analysts’ forecasts, and shares fell $3.28, or more than 6 percent, to close Tuesday at $50.80 on the Nasdaq stock exchange. Net income in the three months ended March 31 fell to $221 million, or 57 cents per share, from $306 million, or 74 cents per share, a year ago.

That was less than the 60 cents per share expected by analysts polled by FactSet.

In a conference call with reporters, Discovery President and CEO David M. Zaslav expressed confidence that Miss Winfrey’s network, which has racked up a reported $330 million in losses so far, will turn the corner soon.

“We expect to achieve cash-flow break-even in the second half of 2013” for the Oprah Winfrey Network, Mr. Zaslav told reporters on a conference call, adding that Discovery anticipates that funding for OWN in 2012 will be less than in 2011.

But, he added, “We have a long way to go.”

Miss Winfrey, who has been revamping her network’s lineup and cutting payroll in a bid to boost ratings and attract advertisers, issued her own Twitter message of gratitude Tuesday, tweeting, “I’d like to thank David Zaslav, my partner at Discovery who keeps speaking up for me with his unwavering support of @OWNtv.”

Last year, Discovery booked a gain of $102 million after contributing the Discovery Health network to OWN. This year, it booked a loss related to its 50 percent stake in the network of $10 million, or 3 cents per share.

Revenue rose 16 percent to $1.10 billion from $951 million. That beat the $1.06 billion analysts expected.

Discovery’s share of subscriber fees from distributors rose 19 percent to $576 million while advertising revenue rose 16 percent to $453 million.

For the full year, Discovery said it expects revenue of $4.55 billion to $4.65 billion. The midpoint of $4.60 billion is above the $4.56 billion analysts were looking for. It expects net income to be $1 billion to $1.1 billion. Analysts were looking for $1.06 billion.

Discovery shares had hit a 52-week high of $55.36 last week. Despite the troubles at OWN, Discovery shares are still 45 percent above their low of $34.75 in early August.