Discovery Touts Global TV As Key To Fiscal Health

While the U.S. advertising marketplace remains weak for TV networks overall, Discovery Communications believes its international TV will help keep the company growing strongly.

Speaking at the UBS’s Global Media and Communications Conference, David Zaslav, president/chief executive officer of Discovery says: “We should outperform most media companies in the U.S."

Much of that comes from international advertising, carriage fees and subscription revenue. “We think we can sustain double-digit growth,” he says. For example, while the Discovery Channel has been relatively flat in the U.S., it is up 13% in 229 countries where the networks exist.

Zaslav says Discovery’s effort around creating its own content is working  particularly now with regard to viewership on cable networks that run off-broadcast network TV shows, which has suffered somewhat.

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He says many cable networks buy off network content — but only for that platform. In recent years, networks like TBS and USA Network have done well. “They could get big ratings; that was challenging to us,” says Zaslav.

But now that viewers can get that off-network content in many other platforms, including the likes of Netflix, that presents a problem — and that’s an advantage for Discovery. “We have great IP [intellectual property],” he says. “We think it’s a big differentiator.”

With regard to the U.S. advertising market, Zaslav says: “The advertising market is soft; we just have to wait for the volume to come back.” He notes that the disparity between broadcast networks and mature cable networks continues -- where cable networks cost per thousand viewer prices are at a 30% discount to broadcast networks.

Zaslav notes that its Investigation Discovery channel in daytime has strong viewership — in the top five for women 25-54. But, he says, “we are not getting as much value in terms of CPMs.”

Internationally, advertising revenue is growing more rapidly than in the U.S. “You get about what your market share is. We have been getting 20% growth in viewership and its translate into 20% advertising growth.” Zaslav says 23% if its U.S. business comes from of U.S. advertising.

Zaslav notes that OWN — a network where Discovery and Oprah Winfrey Studios are 50-50 partners — will be in 90 million homes in a year and a half.

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