OWN turnaround good news for Discovery, analyst says

Improved ratings at OWN has Sanford C. Bernstein media analyst Todd Juenger bullish on Discovery Communications, which co-owns the cable channel with Oprah Winfrey.

In a Monday report, Juenger raised his target price for Discovery shares to $76 and pointed to OWN and smaller Discovery networks including Animal Planet, ID and Science as key reasons. Ratings for those networks are up.

Although those channels are still not nearly as popular as Discovery or TLC, Juenger notes that, “we feel much better about a company with a portfolio of a half-dozen solid networks as a opposed to a company of hyper-important flagship networks.”

With regards to OWN, Juenger said it is becoming a “go-to destination for celebrity personalities to address PR issues.” Indeed, Lance Armstrong is expected to come clean about doping in an interview with Winfrey on OWN on Thursday.

Part of the appeal of Discovery for Juenger is that most of its programming is low-cost unscripted fare. While content such as “Here Comes Honey Boo Boo” on TLC may have limited long-term value, it is not nearly as expensive to produce as traditional sitcoms and dramas.

Interestingly though, while OWN is finding success with Winfrey’s interviews and its own unscripted shows, it is pushing ahead into scripted shows via a production deal with Tyler Perry. Discovery is also working on its first scripted project -- a miniseries called “Klondike” about gold mining.

On Monday, Discovery was trading at $67.40.

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Follow Joe Flint on Twitter @JBFlint.

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