Media Company Starts Buying Into Retail : Broadcasting: Discovery Communications says its purchase of a small chain is just the beginning.

Discovery Communications Inc., the company that owns the Discovery and Learning cable channels, is buying a small chain of retail shops and signaling that it has plans for more.

Bethesda, Md.-based Discovery acquired the similarly named Discovery stores of Dallas, whose 11 outlets sell educational games and gifts.

The purchase will cost about $10 million, people at Discovery Communications said. The media company intends to change the stores’ name to the Discovery Channel Stores, to identify them more closely with the channel that will promote them.

Discovery Communications Chief Executive John Hendricks said the purchase will form the foundation of a major push into the retailing business. He said the company wants to open as many as 350 stores nationwide within the next two years. Such a move could cost the privately held company more than $300 million.

Discovery is in discussions with CML Group of Acton, Mass., owner of the Nature Company stores, over Discovery’s participation in a joint venture or minority investment in the chain.

Major entertainment companies such as Walt Disney Co. and Time Warner Inc. have branched into retailing in recent years, offering a variety of merchandise that ties into movies or TV programs that the companies produce. In effect, the stores advertise for the companies’ other products and vice versa.

Hendricks said he foresees similar cross-promotional opportunities for a chain of Discovery stores. Discovery now promotes videos, books, CD-ROMs and other products based on its documentary and educational programming through direct-marketing ads that appear on its two channels. The same products could be offered in stores owned by the company and promoted on the channels.

For example, he said, Discovery intends to create a section in its stores to sell children’s educational products that will be based on the Learning Channel’s “Ready, Set, Learn” programming.

“We’ve got a wonderful brand name,” Hendricks said. “In a world of fragmenting (audiences), having a recognized and respected brand name to glue everything together is paramount.”

Some Discovery products are already sold through video stores, but Hendricks said a company-owned chain will allow Discovery to control the merchandising and display of its products.

The Discovery Channel began service 10 years ago. It is available in about 63 million households nationwide, making it among the most widely distributed networks in the industry. Learning Channel distribution is about half that.

The company is privately held--it is owned by Hendricks and cable TV giants Tele-Communications Inc., Cox Enterprises Inc. and Newhouse Broadcasting--and does not disclose its results. According to company executives, it is approaching revenue of $500 million a year.