UPDATE, 5:05 PM: “The (SNL Kagan) report is riddled with inaccuracies and bad information. The venture is on more solid ground with more business momentum than ever before. Last Sunday, OWN was the number one cable network for women and people at 10pm. We remain confident in the future of OWN, and the long-term value we are building,” Discovery Communications spokesman David Leavy emailed to Deadline just now. 
 
 PREVIOUS, 3:16 PM: Research and investment firm SNL Kagan is the source authority for the kinds of financial information about cable channels that everyone wants to know, and that most companies don’t want to disclose. So it’s sure to attract a lot of attention with a report today from its respected long-time analyst Derek Baine who says that Discovery may need to take “a significant write-down” in Q1 for its investment in OWN to account for “programming costs for shows that are not working, as well as severance costs for those being laid off.” Last week the joint venture with Oprah Winfrey cancelled Rosie O’Donnell’s talk show and fired about 30 employees. Baine says he “would not be surprised to see Discovery ask Oprah Winfrey‘s Harpo Productions to finance some of the network’s losses going forward. Discovery has already funded well-beyond its $189 million commitment and they may want Harpo Productions to have more skin in the game.” Baine’s estimate of OWN’s $142.9M operating loss this year is up 33.6% from the $107M loss that SNL Kagan figured for OWN in 2011. Discovery reported a $35M loss for its equity investments last year, but that includes The Hub – which Kagan says probably broke even — as well as 3net and channels in Canada and Japan. 
 
 Discovery’s on the hook for much more: It has invested $312M in OWN. Yet Baine notes that the channel still has big hurdles to overcome. For example, ”advertisers may tire of playing the waiting game for shows to catch an audience.” In addition, many of Discovery’s deals with pay TV providers begin to expire late this year. ”Its hope for license fees of 20 cents to 25 cents per sub (per month) may now be unrealistic.” And here’s the kicker: ”Without a significant ratings boost by year-end, this could be Oprah Winfrey’s last chapter in the cable network industry.” 

 Kagan: OWN Losses Could Climb to $142M 
 
 Low ratings create issues with advertisers, cable operators; Discovery says report is inaccurate 
 
 By Jon Lafayette -- Broadcasting & Cable, 3/21/2012 7:19:32 PM 
 
 OWN could saddle Oprah Winfrey and Discovery Communications with a $142.9 million loss this year, according to a report from SNL Kagan.Kagan analyst Derek Baine says OWN faces a number of problems. They include bad press that could make advertisers impatient and having to renew carriage deals with cable operators in 2012 and 2013 unless ratings move up quickly. "Discovery could end up negotiating carriage agreements for OWN again starting at the end of this year. Its hope for license fees of 20 cents to 25 cents per sub may now be unrealistic."Baine says Discovery management remains bullish and management including Discovery David Zaslav has expressed confidence that having Winfrey in charge full-time at the network would improve the situation. Last week, the network announced the cancellation of Rosie O'Donnell's low-rated show and a restructuring that includes the departure of 30 staffers and the transfer of some functions to Discovery and Winfrey's Harpo Productions.Nevertheless, "we're expecting a big write-down in the first quarter and we would not be surprised to see Discovery ask Oprah Winfrey's Harpo Productions to finance some of the network's losses going forward," Baine says. "Stay tuned, the story at OWN is far from over. Ratings for OWN in January were up 10% to a 0.13, after Oprah's new show, Oprah's Next Chapter, aired, but it's still a miniscule rating compared to the programming investment. Without a significant ratings boost by year-end, this could be Oprah Winfrey's last chapter in the cable network industry."Discovery spokesman David Leavy responded to the report saying it was "riddled with inaccuracies and bad information." Leavy added that "The venture is on more solid ground with more business momentum than ever before." He pointed to Winfrey's show last Sunday, which made OWN the number one cable network for women and people at 10 p.m. "We remain confident in the future of OWN and the long term value we are building."
– Yet more bad news for the Oprah Winfrey Network: SNL Kagan estimates that its losses could hit $142.9 million this year. Low ratings and bad press could make trouble with advertisers as well as cable operators, says an analyst at the research and investment firm. "We're expecting a big write-down in the first quarter and we would not be surprised to see Discovery ask Oprah Winfrey's Harpo Productions to finance some of the network's losses going forward," he tells Broadcasting & Cable. "Without a significant ratings boost by year-end, this could be Oprah Winfrey's last chapter in the cable network industry." But, the analyst adds, ratings were up in January and Discovery Communications continues to be confident that the situation will improve now that Oprah herself is at the helm full-time. In an email to Deadline, a Discovery spokesperson calls the report "riddled with inaccuracies and bad information," and insists OWN "is on more solid ground with more business momentum than ever before."