- The Washington Times - Wednesday, April 17, 2002

Discovery Communications Inc. said yesterday it will introduce a high-definition television network and a video-on-demand service this year, becoming one of the few media companies to experiment with the fledgling technologies.

The Bethesda parent of the Animal Planet, the Learning Channel and several other cable networks will begin the new channel, Discovery HD Theater, June 17. The date marks the 17th anniversary of its flagship Discovery Channel.

The new network will air shows that are produced for high-definition sets, featuring sharper pictures and better sound than traditional television.

Discovery said it has more than 115 high-definition programs ready to air. It has commissioned several new shows, primarily science, nature and historical documentaries and high-definition versions of signature programs like Animal Planet's "The Crocodile Hunter."

"We are aware that some people may never see the Great Wall of China or may never go into space. We want to help give those people these experiences through the clarity of high-definition television," said John S. Hendricks, chairman and chief executive.

Half-hour programs will have no commercial breaks, but longer shows will have intermissions, Mr. Hendricks said. This is because some advertisers have been slow to embrace high-definition television, he said.

The new network was announced almost two weeks after Michael K. Powell, chairman of the Federal Communications Commission, issued a statement urging the television industry to speed the rollout of digital television.

Congress granted major broadcasters $70 billion worth of new television spectrum in 1997, mandating their conversion to digital signals by 2006. The technology has been slow to catch on, primarily because networks have been reluctant to invest in digital technology when so few viewers have high-definition television sets.

Between 5 percent and 6 percent of households in the United States will have high-definition television sets by the end of the year, according to the Consumer Electronics Association, a trade group for electronics-equipment manufacturers.

More than 2 million high-definition products either high-definition sets or converter boxes that allow traditional sets to receive high-definition signals have been sold since October 1998, the association said. By 2006, an additional 8 million products will be sold, according to the association's projections.

High-definition TV sets generally cost between $1,000 and $8,000.

"The sets are just coming down to mere-mortal levels in pricing, so it's a smart move for Discovery to get out there early," said Tom C. Wolzien, senior media analyst for Sanford C. Bernstein & Co.

The major broadcasters ABC, CBS, NBC and Fox send out digital signals of some of their shows. Comcast SportsNet, a regional cable-TV network, said last month it will offer high-definition versions of more than 200 professional sporting events in 2003.

Discovery planned to announce its new high-definition TV network in September, but it moved up the announcement after Mr. Powell's April 4 statement urging networks to speed up digital conversion.

"We wanted to get a competitive advantage over those channels that may be a little tardy to the game," Mr. Hendricks said.

Discovery's video-on-demand service, which is expected to roll out this summer, will allow viewers with digital conversion boxes to order programs from the network and have them electronically delivered to their sets. At any time, viewers will be able to choose from 500 hours of Discovery programming, Mr. Hendricks said.

AOL Time Warner Inc. is experimenting with similar video-on-demand services around the nation. In South Carolina, subscribers of AOL-owned HBO can choose when they want to watch programs like "The Sopranos" and "Six Feet Under."

Discovery has been at the forefront of such "content delivery," Mr. Wolzien said. The company has been an early investor in TiVo, a "personal video recorder" service that automatically records viewers' favorite programs.

Discovery is growing at a time when other media companies have been hampered by the recession and a soft advertising market.

Some analysts estimate Discovery will produce $700 million in cash flow this year, up from $560 million in 2001.

The company announced plans this month to partner with the New York Times on a revamped version of its Discovery Civilization Channel.

Discovery also is continuing construction of its $200 million headquarters in downtown Silver Spring. The building is expected to open on schedule early next year.

The Maryland General Assembly approved a $15.6 million tax break for the company this month. The measure passed over the objections of some Montgomery County lawmakers, who described it as corporate welfare.

Discovery had hoped to apply for tax breaks created under an earlier incentive deal given to Marriott International Inc. When the company determined its project would not create the 1,250 jobs needed to qualify, Montgomery lawmakers crafted a new tax break tailored to the specifications of the Discovery project.

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