Move over, TV for voyeurs. It's voyages of Discovery that rule the world's airwaves

People love watching documentaries, asserts John Hendricks. That's why his American TV station is worth $15bn. Rupert Cornwell reports from Washington
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The Independent Online

Was there ever a less likely media mogul? John Hendricks is a gently spoken American southerner. With his engaging style, dark suit and open-neck shirt, he might still be the university fundraiser and consultant he once was, as far removed as can be from the swollen egos and imperious ways of the barons of network TV.

Yet Hendricks heads Discovery Communications, whose brand-leading Discovery Channel (said to be the single most-watched TV channel on earth) sits atop a mighty cable empire that includes Animal Planet, the Learning Channel, the Travel Channel and a dozen other digital and HDTV (high-definition television) ventures. In the US, it also distributes BBC America under a sweeping 1998 global alliance with the Beeb. And last January, just to show Discovery has no favourites in the British market, it signed a $16m (£9.6m) co-production and "first-look" programming deal with Channel 4.

Not bad for a man who started out a couple of decades ago with little more than one big idea: that a lot of people liked watching documentaries. Hendricks had become hooked on them while a university student in Huntsville, Alabama, digging out archive film material for his history professors and realising that huge quantities of the stuff were available - virtually free - from the BBC, TimeLife and others.

By the early 1980s, cable was starting to revolutionise and fragment the TV industry: first an all-news channel, CNN, then the ESPN sports network, then the all-music MTV. So, he wondered, why not an all-documentary channel? For three years Hendricks laboured to find financial backers. But even when he did, helped by a personally signed letter from the legendary newsreader Walter Cronkite, it was a close-run thing.

"In the early days I was just trying to keep my house," the 51-year-old Hendricks recalled the other day, looking back on the humble beginnings of the Discovery Channel in the basement of his house in Maryland, on which he had taken out a $100,000 second mortgage.

"But things just mushroomed. We were fortunate with this great window of opportunity in the 1980s, when the broadcast networks were asleep. They could have started a CNN, a sports network or got into the Discovery Channel business. It's true of so many entrepreneurs: you have to have the idea but also a good deal of luck."

These days the BBC's prime American partner operates out of a brand-new $165m headquarters in the Washington suburb of Silver Spring - a steel and glass complex that The Washington Post described as "accented with hand-hewn Jerusalem limestone". In the lobby you get the message instantly, as you contemplate a replica T. Rex skeleton called Stan and a New York hot-dog stand converted into a 130mph dragster.

Purists might argue that the Beeb, acknowledged master of the documentary genre, has taken the "dumbing down" route by hooking up with Discovery. But the BBC also got a pretty good deal: a 50 per cent stake in new Discovery channels outside the US, as well as a 20 per cent stake in Animal Planet.

Hendricks argues that "the BBC relationship is critical". Not only did it open the door to massive new resources, "it was strategically advantageous for us to work out a deal." In America, the BBC's image is forged by the upmarket productions (Masterpiece Theater and the like) shown on public television - channels funded by donations, not advertising. In Britain the licence fee is in- creasingly controversial, but, said Hendricks, "with its guaranteed public financing, the BBC is not so ratings driven. It can experiment and we can take advantage of that experimentation."

It's not the only deal that Discovery has taken advantage of. It now has some 250 million subscribers in 155 countries, broadcasting in 33 languages, using 85 separate satellite feeds. Only 10 per cent of its programming is in-house, leading to Discovery's very strong ties with the independent production community. These days, Wall Street analysts value the group at $15bn or more and Hendricks expects revenues to jump from $1.7bn in 2002 to some $2bn in 2003. Earnings have been climbing by 20 per cent annually - not bad in what is not exactly a halcyon era for the cable TV industry.

The real danger is that the surging growth of Discovery may dilute its brand. This in turn could undermine Hendricks' ambition of making his channels "must view" choices rather than rest-stops for the casual channel-surfer.

The threat does not seem to bother Hendricks overmuch. "Sure, we have to reinforce the Discovery brand as a stand-alone entity," he agrees. But thanks to digital TV, channel capacity worldwide is growing by leaps and bounds. And new producers, he argues, "will try to fill that capacity. If we don't offer an additional product, someone else will. If we didn't do a science channel, say, someone else would. And viewers migrate. I'd much rather they migrate to our services."

The possibilities of migration grow monthly. The digital Discovery Times is up and running - with "context" pieces on hot topics like terrorism or big game poaching reaching 30 million homes - in a joint venture with The New York Times. Discovery also plans a $65m series of documentaries on individual countries, starting with India in 2005.

Always the emphasis will be on what Hendricks calls "real world" viewing. He decries the networks' lurch into the "contrived reality" of reality TV, which he believes is killing off the sitcoms that are their most distinctive feature. "We're trying to take the high road. Factual programming is so much more compelling. Take the construction of the Panama Canal, or the Three Gorges Dam in China [both recent Discovery topics] - you're telling real stories."

Right from his initial idea about a documentary channel, you suspect that Hendricks has always adhered to the "big picture" school of management. By all accounts he is a masterly delegator. "The secret to being a successful entre-preneur," he once said, "is to turn the operations over to someone else." Today that philosophy lets him devote more time to his family than many in similar positions - and to his interest in women's soccer and the WUSA league, of which he was a co-founder. It also enables him to ponder on the future of the industry.

In little more than 20 years, TV has moved from analogue to cable and satellite and now to digital, and the next step is likely to be video on demand. But at this point, says Hendricks, a dilemma arises. "Do we continue to develop more channels, or do we go for video on demand, where people will be able to go to an on-screen programme library catalogued by topic or subject?"

Most important, however, the industry must be ready for anything. "We absolutely mustn't repeat the mistakes of the broadcast networks, when they missed out on cable. I don't ever want our company to have the attitude they had - that 'we've done all we can do'. Technology today changes so rapidly."

If flexibility and imagination are the key, Discovery looks well placed. Hendricks has a 3 per cent stake in the group, with the rest split between Liberty Media, Cox Communications and Advance/Newhouse. The four shareholders meet six times a year to discuss strategic development, free of the need to gear everything to please Wall Street.

There is no sign of anyone wanting to cash in their investment, as Discovery's value has risen from $100m in the mid-1980s to perhaps $15bn today. Even that sleek new HQ in Silver Spring, with its hand-hewn Jerusalem limestone, may yet prove merely a waystation.

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