According to a prediction made by SNL Kagan analyst Derek Baine, the network will likely record some record losses this year and may suffer a ‘write-down,’ amid the major changes.
OWN’s financials have been the subject of guessing games for analysts because Discovery doesn’t disclose details. The company reported a loss of $35 million for 2011 — down from a loss of $57 million in 2010 — from its equity investments, but those also include other channels, such as kids network The Hub, which the analyst believes was at about break-even.
“Net-net, we estimate that OWN lost $107 million on a cash-flow basis in 2011, but Discovery has invested much more,” Baine said in his report, projecting that OWN’s losses could rise to $142.9 million this year. Other analysts have made more optimistic projections for OWN.
But the other half of the business/network says OWN will be fine.
Discovery’s CEO David Zaslav commented that the recent layoffs were made to improve the network’s financial growth.
OWN is “on more solid ground and has more business momentum than ever before,” a Discovery spokesman told THR. “We are superbly confident in the future of OWN and the long-term value creation we’re building.”
He also said that the analyst report was “riddled with inaccuracies and bad information.”
But sources say that OWN can expect other financial burdens to come soon, such as higher carrier fees.
With all the factors in place, Baine is sticking to his guns and projects a major write down for the network.