Retail a Deadly Catch for Discovery

Sometimes, discovery leads nowhere. Just ask Geraldo Rivera.

For Discovery Holding (Nasdaq: DISCA  ) -- Inside Value recommendation and operator of The Discovery Channel, which broadcasts hits Deadliest Catch and Mythbusters -- retail has stolen away hope for riches, just as Al Capone's vault once did to Rivera.

Last week, the retailer announced it will close all 103 of its mall-based stores. Color me unsurprised. A brief check of the Discovery Channel store online reveals little in the way of unique products.

Sure, there are plenty of DVDs. For example, multiple seasons of Deadliest Catch, which documents the risks taken by Alaskan crab fishermen, are easily found. And Discovery says that its PLANET EARTH DVD mini-series, which chronicles life across the globe in all its forms, has set company records.

But when it comes to products, all you really get from Discovery's store is The Sharper Image (Nasdaq: SHRP  ) with a sweet collection of DVDs. Seriously, would you consider buying this radio-controlled shark? I didn't think so.

And you're not alone. Discovery's commerce group booked a $20.1 million operating loss on $34.4 million in revenue during the quarter ended in March.

What's next? Discovery says that roughly 1,000 employees, or 25% of its workforce, will be affected by the store closings. In the meantime, management plans to beef up its e-commerce site -- which, according to Discovery, hosts 12 million unique visitors a month -- and its partnership network, which includes both Amazon (Nasdaq: AMZN  ) and eBay (Nasdaq: EBAY  ) .

I'm hoping for more emphasis on the latter. Though I'm sure Discovery wants to keep profit margins for its original works, working through well-managed resellers can be a wonderfully lucrative business. With Amazon and eBay, Discovery has already found two of the best.

Explore your portfolio with related Foolishness:

Amazon and eBay are Stock Advisor picks. Click here now to get 30 days of free access to the entire portfolio, which is beating the market by nearly 38%. There's no obligation to subscribe.

Fool contributor Tim Beyers, who is ranked 6,267 out of more than 29,000 rated investors in our Motley Fool CAPS investor-intelligence database, used to hunt for quahogs along the Cape Cod coast. He didn't own shares in any of the companies mentioned in this article at the time of publication. Tim's portfolio holdings can be found at his Fool profile. His thoughts on Foolishness and investing may be found in his blog. The Motley Fool's disclosure policy prefers crab legs to crab cakes.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 528230, ~/Articles/ArticleHandler.aspx, 10/24/2014 2:12:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement