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Who Will Own Discovery?

As Discovery Communications Inc. (DCI) looks to replace exiting CEO Judith McHale, the company could be facing an even bigger change. McHale’s departure could help trigger a breakup of the partnership that owns the programmer, most likely leaving DCI a publicly traded company controlled by Liberty Media Chairman John Malone.

Three inside candidates are in the lead to replace McHale. The best-known is Billy Campbell, president of Discovery’s U.S. networks, who arrived four years ago to broaden the programming of Discovery Channel, TLC and their myriad sibling channels. Campbell has had a rocky ride, with ratings surging then plunging. Discovery and TLC have rebounded in recent months.

Lower-profile candidates are Mark Hollinger, senior executive VP, corporate operations (a 15-year veteran, he is also general counsel, a job McHale once held); and Dawn McCall, president of Discovery’s international operations.

Headhunter Spencer Stuart is just starting to inquire into outside candidates. Among them are ex-Nickelodeon Networks Chairman Herb Scannell; ex-MTV Networks President Mark Rosenthal, currently on medical leave as CEO of Interpublic Media; and Landmark Communications President and former National Cable & Telecommunications Association President Decker Anstrom.

The hiring process could force the hand of DCI’s partners in resolving the ownership issues. DCI’s three owners—Malone’s Discovery Holding Corp., Cox Communications and Advance Newhouse—have for years had on-again, off-again conversations about shuffling the ownership structure: one or two partners selling out, taking DCI public, or—at one point—selling the company to NBC.

Malone took the extreme step of spinning the half that had been owned by Liberty off to shareholders, creating Discovery Holding Corp., which holds little other than DCI stock. He had hoped Cox and Newhouse would participate.

Cox may be getting ready to cash in. Industry executives familiar with the partnership say that, after taking on $6 billion in debt to go private two years ago, the cable company wants liquidity for its stake in DCI. Cox is interested in trading it for other media assets or rolling it into a publicly traded company.

A Cox spokesman declined to comment. Advance Newhouse President Bob Miron—the partner who has long been the least interested in selling or going public—says only that there is "no pressure" for a change right now: "Everybody’s committed to Discovery; it’s still a very united board."

DCI’s owners are already prepping for a future as a public company. Before McHale resigned, DCI had already hired a headhunter to replace current CFO Barbara Bennett, who is stepping aside. Industry executives familiar with that search say DCI has a new requirement: a finance background at a publicly traded company.

McHale will remain until Dec. 1 and will be an advisor on Discovery’s education initiatives.