A Curious Discovery: An Entrepreneur's Story

by John S. Hendricks

It was perhaps this combination that led President Kennedy to recognize and advocate this “paradoxical truth”: shift funds out of government to grow the future revenues of government. The history of Discovery Communications proves President Kennedy’s “paradoxical truth” that investment funds left in the private sector ultimately lead to more tax collections by government. In 1985 and 1986, thirty individuals and seven companies used a portion of their after-tax earnings to make a risk investment in the start-up of the Discovery Channel. This $25 million private sector investment fully funded the creation of not only a new business enterprise that created more than 4,000 new jobs in the world, but also a company that, to date, has paid more than $900 million in taxes to the federal government. And Discovery’s annual tax payments to support U.S., state, and foreign governments are increasing. In 2011, Discovery paid $253 million in U.S. federal taxes, $38 million in state and local taxes, and $109 million in foreign taxes. Remarkably, this total of $400 million in taxes is only part of the tax benefits enjoyed by government through Discovery’s operations. Our 4,000 employees also pay tens of millions of dollars in personal income taxes, as do the many suppliers and vendors that share Discovery’s annual cost expenditures—which, in 2011, had climbed to more than $2.4 billion. Thus Discovery Communications is a vibrant contributor of billions of dollars to government and to the...