Discovery to Take Over London Uplink Center - Broadcasting & Cable

Discovery to Take Over London Uplink Center

Signs deal with Ascent Media for ownership, continued relationship in Asia
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Discovery Communications has reached an
agreement with Ascent Media Group to take over the London uplink center that Ascent
built to support Discovery's European operations but will continue outsourcing
technical operations for its networks in Asia to Ascent, the companies
announced Tuesday.

Discovery has signed a non-binding
Letter of Intent to transfer ownership of Ascent's Chiswick Park facility in
London to Discovery effective February, 2010, while extending Ascent's role as
Discovery's technology solutions provider in Asia, offering origination,
uplink, post production and disaster recovery services out of Singapore. As
part of the deal, Discovery will also participate on a trial basis as a content
seller in Ascent's Global Media Exchange (GMX), the online media marketplace
Ascent founded in 2008.

Financial terms of the deal remain
subject to final negotiations, and completion of the transaction is subject to
approval by both Ascent's and Discovery's boards and negotiation of binding,
definitive agreements.

In 2005, Discovery retained Ascent
Media to design, build and operate its London-based facility, which has the capacity
to deliver over 60 television channels in the U.K., Europe, Africa and the
Middle East. The 10,000-square foot server-based facility was designed to
accommodate emerging formats including HD television, 3G mobile technologies
and broadband content delivery. Over the course of five years, Ascent has
launched more than 50 channels on Discovery's behalf.

"We designed and built the
Discovery Networks Europe facility solely for Discovery's purpose," said
Ascent Media CEO Jose Royo in a statement. "After providing comprehensive
operational support for the last five years, now is the perfect time to turn
over the operation to Discovery.  We wish them great success with the
facility."

Taking
ownership of the Chiswick Park facility makes sense for Discovery for
several reasons, says Discovery Chief Media Technology Officer John
Honeycutt. The facility is actually located within a large office
building that serves as Discovery's European headquarters and houses
some 400-odd employees, and taking it over will allow the playout
operation to connect to other departments, such as editing systems in
creative services.

While Ascent built the facility as Discovery was
growing a relatively young European operation, that business is now
established and Discovery has the necessary technical expertise
in-house to run it. And owning the facility will also give Discovery
more flexibility as it expands into more on-demand and online
distribution of its content.

"We can do this ourselves and be
more efficient," says Honeycutt. "That's not only on the core TV
origination side. The real opportunity is about integration of this
into the wider business."

Moreover, Discovery was the only client
for the Ascent facility at Chiswick, while at Ascent's Singapore
facility (formerly Group W's Asia Broadcast Center) there are multiple
clients, including MTV and ESPN. That provides for economies of scale
as Ascent invests in additional people or new equipment in Singapore,
says Honeycutt, that it wouldn't get in Chiswick. Thus, the decision to
"insource" versus "outsource" in London was easy, said Honeycutt.

"The
fundamental difference between the situation in Chiswick and the
facility in Singapore is it's a dedicated facility with us as the only
client, and it's inside our office space," he says.

Discovery's relationship with Ascent in Singapore will stay the same, adds Honeycutt, and is planned to run through 2014.

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