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TV Business Adds Up for Discovery's New CFO

Andrew Warren, Discovery Communications' new CFO, has done the math on the media business and has come to a conclusion.

“Having been in different industries, a bad day in the entertainment world beats a good day anywhere else,” Warren says.

Growing up in Connecticut and attending James Madison University in Virginia, Warren had no interest in show business. Instead, after graduating he signed on with one of the biggest marquee names in the world of corporate finance, General Electric. He rose quickly at GE, first working on businesses in different industries as part of the company’s leadership development track. At 25, he was presenting to CEO Jack Welch on acquisitions and strategies. He also worked for Bob Wright, who was CEO of NBC, as part of the network’s ! nancial planning and analysis team.

“In the early days, he used to do all the charts for Bob Wright when we would go up and pitch Jack Welch,” recalls David Zaslav, who ran NBC’s cable businesses back then and now, as CEO of Discovery, is once again Warren’s boss.

“He was one of the great strategic chart makers,” Zaslav says. “We’d talk for five minutes about what we wanted to do as a leadership team at NBC, and Andy would come up with two or three charts with the takeaway that would clearly articulate what the vision was.”

And that, Warren says, is when he fell in love with the TV business. He worked as CFO for NBC’s cable division under Zaslav and then as CFO of its entertainment division under Jeff Zucker.

It wasn’t just the creative side of the business that seduced Warren. “The business model is also unique,” he says. “It’s a more predictable, higher margin, higher cash flow industry than most, which from a financial perspective is kind of a dream scenario.” And that goes double for cable, he adds.

Warren left GE for the fashion industry, becoming CFO of Liz Claiborne Inc. But Zaslav says they stayed in touch, and Warren was the obvious candidate when Discovery CFO Brad Singer decided to leave.

“I always felt like he had the bones and the intellect and the passion, and then we got lucky because he had an opportunity to get out of Liz Claiborne,” Zaslav says. By spending time at Claiborne, Warren acquired experience as CFO of a public company, a prerequisite for the Discovery post. “I think we got him at the right moment, with the right experience, with all the right skills to take us now to the next level,” Zaslav says.

Zaslav adds that Discovery has about $2 billion in cash. “We’re looking for opportunities to deploy that, whether it be by investing in our existing businesses, acquiring businesses or buying back our stock. Andy’s strategic background is going to be a big help,” he says.

Among other things the two men have in common, Warren is a bundle of energy. “It drives my wife crazy but I’m never tired,” Warren says, adding that his work style hasn’t changed much. “I’m very engaged in operations. I love to surround myself with people who are better and smarter than I am. I did that at NBC; I’m going to do that here.”

He says he’s seen two big differences between Discovery and NBCU. “One is that Discovery is truly global. NBC was 95% domestic. Discovery is 40% international and that’s a growing piece of our business.

And unlike NBCU’s short-term focus, at Discovery it’s more about long-term asset value creation, and he’ll be concentrating on growing global revenues, profit margins and free cash flow per share. “I’m a big believer that cash is king,” he says. “Free cash " ow per share is probably the greatest metric that we can deliver to our shareholders.”

Discovery already had a solid balance sheet and was regarded favorably on Wall Street when Warren arrived. So far, he’s made a good impression on analysts.

He’s “very pleasant and level-headed,” says David Joyce of Miller Tabak + Co. “He has been rolling up his sleeves with all aspects of Discovery since he came on board.”

Acting quickly under Warren, Discovery did a billion-dollar debt offering recently at industry- leading interest rates. “I think it reflects how investors view us and how they view our long-term vitality, he says.

Warren also oversees Discovery’s Media Technology, Production & Operations division. Warren says the division is “the efficiency engine of the company,” which keeps the signals of Discovery’s channel on the air 24-7 in 210 countries. “So as we grow and go after smaller markets, this is the group that drives the efficiencies,” he says. “There are very few functions that have a truly global perspective and influence. The finance and operations teams have that.”

Another of Warren’s duties is representing the company at its three U.S. joint ventures, OWN: Oprah Winfrey Network, The Hub and 3net.

As far as programming goes, “I absolutely have a point of view on lots of those things,” Warren says. “The channels that are most on in my house are Animal Planet and Discovery.” But while every programming decision has a financial element to it, “we have a very capable team that does that better than I ever could,” he says.

Warren lives in Ridgefield, Conn.—he grew up in the area and has owned five houses there. His kids have had some of the same high school teachers who taught him. But he plans to move to Discovery’s headquarters in Silver Springs, Md., after his eldest graduates from high school.

Warren plays golf, and his family enjoys bicycling and boating on nearby Candlewood Lake. The family also eats out about 100 nights a year. “It’s our time to get away from the TV and get away from phone calls and share stories and talk about the real stuff,” he says.

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