Reality Shows

Behind Discovery's global TV empire

July 24, 2012: 5:00 AM ET

The cable network's strategy has always been to create authentic reality TV, long before the genre took over the tube.

By Richard McGill Murphy, contributor

Filming a scene for Discovery's Frozen Planet

Filming a scene for Discovery's Frozen Planet

FORTUNE -- "I was obsessed with the idea that there had to be a great documentary TV channel," recalls Discovery Communications (DISCA) founder and chairman John Hendricks, 60. Hendricks launched his flagship Discovery Channel in 1985, long before a tsunami of low-budget reality shows hit screens in the late 1990s. Today his creation is the undisputed global leader in nonfiction-TV programming and the world's most widely distributed TV brand. Discovery operates channels in more than 200 countries. Recent Discovery hits include Deadliest Catch, Mythbusters, and Frozen Planet. Wall Street likes Discovery's global footprint and pure-play TV content model: Unlike behemoth competitors such as Comcast (CMCSA), Viacom (VIA), and CBS (CBS), Discovery is unencumbered by less valuable media assets like cable networks, movie studios, and radio stations. "Branded TV content attracts higher valuation premiums than other forms of content," says S&P Capital IQ equity analyst Tuna Amobi.

Fastest-Growing rank: No. 7

HQ: Silver Spring, Md.

Employees: 4,000

The business: Nonfiction-TV producer; distributed in more than 200 global markets

How it makes money: Discovery sells ads and charges fees to cable and satellite companies that distribute its programming. So far the company has been cautious about venturing into the much-hyped Internet video market. In May, however, Discovery dipped its toe into the online-programming business by acquiring web video producer Revision3 for a rumored $30 million. And Discovery has posted significant revenue from licensing older content to online partners like Netflix (NFLX) and Amazon (AMZN) in recent quarters. "It's a good thing as long as it doesn't interfere with fees from distributors," says Morningstar analyst Michael Corty.

This story is from the July 23, 2012 issue of Fortune.

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