Comcast, Discovery mend rift with new distribution pact

Discovery Communications has survived its brush with mighty Comcast.

The two companies said Monday that they have reached a new distribution pact, replacing one that expired last month.

The long-term agreement ensures carriage of Discovery’s 12 U.S. networks, including Animal Planet, Discovery and TLC, on Comcast cable systems.

It also grants Comcast permission to include the channels in its TV Everywhere offering so that Comcast Xfinity customers can watch the channels on mobile devices inside and outside the home.

Wall Street has been watching distribution deal renewals more closely these days. That’s because a handful of programming companies, including Discovery and Viacom, risk losing leverage in these all-important negotiations because of TV ratings struggles and a weaker ad market.

Discovery, based in Silver Spring, Md., provoked the ire of Comcast last year during Comcast’s failed campaign to buy Time Warner Cable.

Discovery was among the first companies to publicly express concerns about that proposed merger of the nation’s two largest cable operators.

Comcast quickly accused Discovery of using the government review process to gain concessions in Discovery’s contract negotiations with Comcast.

“Such extortionate demands are patently improper,” Comcast wrote last year in a regulatory filing. But the move backfired on Comcast, which is known in the industry for exhibiting hard knuckles during negotiations.

“The very public spat between Comcast and Discovery Communications was presumably going to end badly for Discovery as Comcast’s management was going to exact retribution for Discovery’s objections to the now-failed Comcast-Time Warner Cable merger,” Wall Street analyst Michael Nathanson wrote in a research report Monday.

However, deal terms were not revealed so it was unclear whether Discovery was forced to take a haircut on some of its demands.

Discovery on Monday went out of its way to heap praise on Comcast.

“Comcast is a dynamic and innovative company and has been a great partner of Discovery’s for over two decades,” David Zaslav, chief executive of Discovery, said in a statement. “We look forward to continuing our relationship and unlocking the value of Discovery’s content in even greater ways for Xfinity viewers.”

Twitter: @MegJamesLAT

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