UPDATE, 2:30 PM: Discovery says that OWN is draining cash — the company added $12M to its investment in the joint venture during 3Q. Still, CEO David Zaslav says he’s optimistic, although “this is going to take some time”: The challenge is “putting up really good content that drives the Oprah brand.” He’s gearing up for a series of negotiations with cable and satellite operators to score payments for the Discovery programming they want to run on their TV Everywhere digital services. Currently “no distributor has the right to take our channels on to TV Everywhere.” Some talks will take place soon even though Discovery’s carriage deals run to the end of 2012. “We’re very supportive” of TV Everywhere, Zaslav says. “We just need to find value.” One hurdle is to figure out digital ratings. “Today it’s measured on computers, but not on iPads.” He adds that Discovery’s deal with Netflix is “a big net positive for us” since it only involves the U.S., it’s not exclusive, and it involves shows that are at least 18 months old. But he says that “nobody knows” whether online viewing cuts into TV ratings. “We couldn’t find any discernible degradation,” he notes although “there isn’t enough data out there.”  Discovery shares were up 1.7% in after hours trading.

PREVIOUS, 1:30 PM: Discovery says that it saw strong growth both in the U.S. and overseas. The company had net earnings from continuing operations of of $238M, up 45.1% vs last year’s 3Q, on revenues of $1.1B, up 18.3%. Earnings at 59 cents a share exceeded the 55 cents that analysts expected. The company says that revenues at it U.S. networks was up 19% to $$695M due to improved ad sales and revenues from pay TV distributors. That offset the loss of $4M due to the deal that in January turned its wholly owned Discovery Health into the joint venture with Oprah Winfrey, OWN.  The channel had a rocky start, but CEO David Zaslav says that “Oprah is starting to nurture her audience.” He also says that the company benefitted in 3Q from its recent program licensing deal with Netflix and soaring ratings for ID: Investigation Discovery. The company reports that ad sales remain strong. It expects to end the year with as much as $4.3B in revenue and $1.1B in net income for stockholders.

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