Discovery Predicts Strong Upfront, Company's Global Revs Soar

David-Zaslav-ADiscovery Communications estimates some strong advertising revenue results for the upcoming U.S. upfront market -- but perhaps better gains worldwide.

In speaking at a Sanford C. Bernstein conference, David Zaslav, president and chief executive officer of Discovery Communications, says, "the advertising market remains very strong. We head into the upfront with strong characteristics."

He notes that scatter pricing was up more than double digits in the first quarter -- and expects second-quarter results will see "high single or better" in the cost-per-thousand viewer (CMPs) gains. "For the upfront, we will have to see. We don't lead it out -- the broadcasters lead it out," he says.

Worldwide, Discovery advertising growth has seen 20% gains for both the fourth quarter of 2012 and the first quarter of 2013. Zaslav notes that 40% of Discovery's overall business comes from revenue outside of the U.S.

Over the last six years, Discovery's market share from all its 14 U.S. networks has grown to a collective 10% market share from 4%. Zaslav notes that although CPMs will continue to climb for Discovery channels, many are still way behind the broadcast networks.

For both its male-targeted and female-targeted networks, the difference in CPMs -- versus the broadcast networks -- can be at a 30% to 35% discount. "The difference comes in broadcast networks having larger [overall] audiences. There is nothing you can do about that," he said.

On the subject of the possibility of a wholesale change to a la carte programming, Zaslav says it seems highly unlikely that the current system would move to one where customers get to pick and choose their own channels.

"I don't see that happening," he says. "This is a very sturdy system. Viewers like the package [of programming]."

Discovery's investment in OWN: Oprah Winfrey Network finally seems to be working out after a slow start. Zaslav says the network will be profitable in the second half of 2013.

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