• by David Goetzl , September 11, 2009

After acquiring multiple Web sites for an estimated $300 million over the past three years, Discovery Communications has yet to turn a profit with its online ventures.

"We still lose money in digital," said CFO Brad Singer. "Not a lot of money -- and it's a lot less than it was over the prior years -- but it's not a positive cash-flow business."

Singer said Discovery remains uncertain about the most effective business model for the Web, while saying it is "basically done" with acquisitions. Discovery has been one of the few programmers not to stream full episodes of its shows free on the Web. It recently linked with Comcast on a trial that limits access to people who also have a cable subscription.

"When there's a business model that becomes more apparent or a way that we can better monetize, you'll see us probably focused on making incrementally more investments," Singer said at an investment conference last week.

Singer said Discovery is looking for its digital operations to approach a $55 million business this year. Discovery pulled in $2.1 billion in revenue for its U.S. networks in 2008.

In 2007, Discovery made the $250 million purchase of HowStuffWorks.com. The company also bought TreeHugger.com for a reported $10 million that year, and PetFinder.com for a reported $35 million in 2006. The sites were intended to complement networks Discovery Channel, Planet Green and Animal Planet, respectively.

Singer said Discovery continues to search for ways to make those sites work more in concert with the various channels. Efforts are also ongoing to upgrade the Web sites directly linked with the company's slew of networks.

Speaking at the event, Singer indicated that Discovery will continue to look to re-brand some of its lesser-distributed channels. Fitness network FitTV (in 41 million homes) and the Military Channel (in 54 million) remain as candidates to join Planet Green and Investigation Discovery.

Singer said any refashioning of FitTV or Military would have to be done in line with agreements Discovery has with cable and satellite operators -- which requires that programming remain within a certain genre, however broadly defined. He said Discovery does not want to overextend, as it focuses on building up Planet Green and ID and executing launches of OWN, the Oprah Winfrey network, and a joint venture with Hasbro.

"We want to make sure that we are performing within [the] covenant(s) with anything we do," Singer said. "And we have not focused on [FitTV and Military] -- just because we've tried to pick our spots where we want to make investments.

"Ultimately, we will do something with those networks to provide value for us and for the affiliates, and that may be to bring in strategic partners; it may be putting more investment into them; it may be doing other things with them." "