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Discovery Communications LLC , owner of cable channels such as Discovery Channel and Animal Planet, announced Monday Oct. 15 that it will acquire online media property HowStuffWorks Inc. from Internet business developer HSW International Inc. Financial terms of the deal were not disclosed but the Wall Street Journal reported that the deal is worth $250 million. Discovery Communications said that acquiring Atlanta-based HowStuffWorks "further strengthens its global position as the number-one nonfiction media company dedicated to providing knowledge and satisfying curiosity across all platforms." HowStuffWorks.com is a closely held company whose owners include billionaire investor Carl Icahn. The purchase also includes a number of digital properties, such as a map database and ConsumerGuide.com, owned by HSW, which isn't yet profitable. "The HowStuffWorks acquisition is a strategic bull's-eye for Discovery," David Zaslav, president and chief executive of Discovery, said in a statement unveiling the deal. He added that one of his challenges at Discovery was to determine how to best build "a robust digital media portfolio". With HowStuffWorks, he said, "Discovery now has a solid platform for strengthening our digital businesses." Since taking the helm at Discovery, Zaslav, a former executive at television network NBC, has replaced much of its top management, closed its chain of retail stores and cut 20% of its work force. Discovery plans to incorporate HowStuffWorks in its future programming plans. On completion of the deal, Discovery Communications will hold a minority equity position in HSW International, which has the local language rights to the HowStuffWorks content and brand in Brazil and China. Those rights could also be extended to India and Russia if HSW International exercises its option for those countries under the terms of its existing agreement with HowStuffWorks. The impact to Discovery Communications' operating cash flow will be immaterial in year one, the company said in the statement. Discovery Communications is a closely held company owned by John Malone's Discovery Holding Co., Advance/Newhouse Communications and John S. Hendricks, Discovery's founder and chairman. HowStuffWorks will continue to be based in Atlanta and Discovery said it has no immediate plans to significantly change the 160-person team or its operations. The deal is expected to close before the end of the year pending regulatory approvals. Discovery Communications turned to Lehman Brothers for financial advice and Debevoise & Plimpton LLP for legal counsel. HowStuffWorks tapped Allen & Co. for financial advice and Alston & Bird LLP for legal advice. Founded in 1998 by Marshall Brain, a university professor in North Carolina, HowStuffWorks built its audience in part by focusing its content on topics that are often the subject of search queries on Google and other search engines. The Convex Group, an Atlanta-based investment company headed by Jeff Arnold, bought the business in 2002 for an undisclosed amount but reports peg the sale at more than $1 million. Arnold will continue as chief executive of HowStuffWorks. HowStuffWorks subsequently raised a total of $125 million over three rounds, with investment from Icahn, and Capital Research & Management, Chilton Investment Co. and several others. For its independent international venture HSW International, it formed a partnership in 2006 with Chinese company INTAC International, and raised a total of $50 million.  Deal Video
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