Discovery: Be the Ball

Discovery Communications is positioning itself to help distributors find the net while looking for new content to fill traditional and non-traditional pay TV offerings both in the U.S. and internationally, CEO David Zaslav told analysts Thursday.

On a conference call with analysts to discuss third-quarter results, Zaslav said Discovery sees its pending purchase of Scripps Networks Interactive in furthering that strategy, giving it the compelling content that traditional and non-traditional distributors crave.

Zaslav said that the future seems to be pointing to large tech companies like Google, Amazon, Facebook and Apple getting deeper into the content delivery weeds. But as they expand their offerings, they’re going to need to partner with content creators.

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“We think that if Apple wanted to do a deal with one person and offer a Family Pak everywhere in the world, or if Facebook wanted to do that or Amazon or if the mobile players wanted to do it in Europe, who could they go to?” Zaslav asked on the call. “There [are] very few companies; it’s maybe less than three.”

Discovery and Scripps, which have established worldwide brands, are among that group.

“We see Scripps as a beginning,” Zaslav said. “Within two years we will be less than three-and-a-half-times levered. And we will be looking for what other IP do we have, how do we accelerate direct-to-consumer, how do we accelerate our overall market share. We think we are trying to be where the ball is. We see those big distributors are looking more and more for the ball, and the ball for them is content.”

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Zaslav has been a big proponent of skinny bundles, and he has continued to point out how in Europe, sports-free packages are prevalent. On the call he said that the lack of a compelling non-sports bundle is one of the factors in the 3% decline in pay TV subscribers, and predicted such smaller offerings would become prevalent in the U.S., eventually.

While Discovery has had success with smaller bundles in Europe, it has been missing from key offerings in the U.S. from Hulu and YouTube. But Zaslav pointed out that Discovery is on DirecTVNow and Sony PlayStation Vue and is in talks with other OTT providers for carriage, He hinted that could come after the Scripps deal closes, expected early next year.