Discovery shutters shops

David Johnson May 18th, 2007

David Zaslav has been cleaning house since he took over at Discovery Communications, stripping out low-performing units and supporting Internet video and high-def TV, which promise higher revenue potential. Discovery has announced they are closing up shop in their 103 retail stores around the nation, a move that eliminates a cool 25 percent of the private company’s workforce. While Discovery is shedding the outlet overhead, they are not getting out of the business completely. The edutainment-focused toys and other merchandise will be distributed through other retailers like Toys-R-Us and also be available at discovery.com’s online store, where sales have jumped 144 percent YTD. There is speculation that Zaslav is gearing up to take the company public, having already simplified the ownership structure by buying out partner Cox communications. Dumping the low-margin, high cost retail outlets is the kind of move private investors will like. They’re also going to like that Discovery’s Q1 revenues are up 10 percent and cash flow is up 24 percent compared to last year.