As Discovery Communications (NSDQ: DISCA) gets set to trade as a standalone company, it has filed a detailed, preliminary proxy filing, explaining what the business consists of, its financial picture, and what it's new ownership structure looks like. Key points on that: Liberty's John Malone will control 23 percent of the voting shares, and 31 percent of the voting power when it comes to electing directors. Advance/Newhouse will control 26 percent of the voting power.
-- Executive pay: As WSJ notes, the company's executives have been very well compensated, putting them near the top of the media heap. Founder and chairman John S. Hendricks received total compensation of $57.9 million through cash and options in 2007 (page 95), while CEO David Zaslav received about $19.1 million.
-- Digital Media: Discovery's digital ops consist of three main sites: HowStuffWorks.com, TreeHugger.com and Petfinder.com. It doesn't break out the revenue for each one, though it does offer the basic numbers for them combined. While they're growing fast, they're still loss making: "Revenue for the U.S. networks digital media businesses totaled approximately $31 million in 2007 and $19 million in 2006. Operating expenses for these businesses were $43 million and $28 million for 2007 and 2006, respectively." However, the company suggests it will not make any major acquisitions that do much damage to the bottom line: "Discovery expects these amounts to increase in the future due to its recent acquisitions of PetFinder.com, TreeHugger.com and HowStuffWorks.com, as well as any future organic investments in this arena, with Adjusted OIBDA losses remaining below 5% of Discovery's consolidated Adjusted OIBDA".
-- Anti-Takeover: Among the risk factors the company cites are its measures at preventing a sale: "It will be difficult for a third party to acquire New Discovery." There are a number of provisions in place to prevent a sale, including its use of multiple classes of shares. Also, it looks like the company will adopt some sort of poison pill preemptively: "As a condition to and immediately preceding the consummation of the Transaction, New Discovery will adopt a shareholder rights plan in order to encourage anyone seeking to acquire New Discovery to negotiate with its board of directors prior to attempting a takeover."
By Joseph Weisenthal